The Virginia Alcoholic Beverage Control Board has decided not to buy liquor for state-run stores from an unauthorized "gray market" seller, though doing so would have saved the state or consumers money.
ABC Board Chairman J. David Shobe said the board plans to send a letter today declining the offer of a marketer in Norfolk to sell foreign-manufactured liquor to the state at a lower price than charged by distributors designated by the manufacturers to import their products to the United States.
Authorized distributors have a monopoly on sales of specific brands of foreign liquor, such as scotch and other whiskey, and independent marketers have claimed they can undercut a distributors' markup of 20 to 30 percent.
To do so, they buy from wholesalers in Europe, where the markup is only 5 percent, and sell here over the objections of the manufacturer, they say.
"We have to be above the gray market activity," Shobe said yesterday in a telephone interview. While acknowledging that "there are savings, undoubtedly" to buying from the independent marketers, Shobe said, "We have no obligation to give just cheap merchandise to the people in Virginia."
Shobe said that gray marketers scratch off serial numbers and identification markings so the manufacturers will not know where the liquor was bought.
If a problem developed with the liquor, this practice would make it difficult to trace the distribution chain, he said.
Some of the bottles -- of Johnny Walker scotch, for example -- have been taped over to make the European labels look like the slightly different American labels, he added. "I didn't like the looks of that . . . . They call it the gray market, and that's next to the black market."
The Virginia ABC Board considers revising its purchase list quarterly, and the Norfolk marketer had wanted to start selling to the state at the beginning of the next quarter, which begins Nov. 1.
The state of Washington was the leader in going to the gray market 1 1/2 years ago, and officials there have said the savings were substantial.
Washington state officials estimated that consumers were paying 12 to 25 percent less for foreign-made liquor than they had when the state was buying from authorized distributors.
In Virginia, distilled spirits may be sold only at state-run stores. Beer and wine may be sold at grocery and convenience stores.