Daisuke Utagawa faced a dilemma. He built the reputation of his D.C. restaurant, Sushiko, by combining fine Japanese cuisine with Burgundy wines. It was a revolutionary food-wine pairing concept that caught on not only in France but also in Japan. Yet he couldn’t take it to Montgomery County.
Sushiko’s sister restaurant opened in Chevy Chase, just across the District line in Maryland, in 2008. But while Utagawa was able to purchase the same quality fish for his sushi and sashimi in Maryland as he had in the District, Montgomery County’s monopoly on alcoholic beverage distribution stymied his efforts to buy the limited-production wines he craved. The problem became more acute when the D.C. Sushiko closed in 2012, and Utagawa and other burghounds were unable to get their fix of raw fish with France’s best pinot noir.
The county monopoly inflates prices and limits product selection. While the county’s Department of Liquor Control carries some 29,000 products in its catalogue, it only stocks about 4,500 in its warehouse. The rest must be special-ordered, and it can take weeks to receive the product. The lack of competition frustrates retailers and restaurateurs who want to offer distinctive selections of wine, beer and liquor.
“The wines get lost,” Utagawa says, noting that the DLC is not accustomed to handling special orders of small amounts of wine. Even if a wine is available, “You don’t know when it will come, or if it will come.”
After several years of effort, Utagawa is finally offering a reserve list of Burgundy at his Chevy Chase restaurant. The wines are purchased from Country Vintner, a distributor that works through the DLC but delivers the wines directly to the restaurant. While the new list is not as extensive as he’d like, “it’s something we’re not embarrassed by,” he says.
Efforts to change the system have hit two roadblocks: The DLC and its network of county-owned stores account for about 400 jobs and $30-$35 million in revenues for the county’s budget. But two proposals to be introduced in the state legislature next year would modify or eliminate the county’s distribution monopoly. The first, endorsed by the county council, would allow restaurants and retailers to purchase “special order” beers and wines — those not actually stocked in the county warehouse – directly from distributors. The county would retain distribution of liquor and more commercial labels such as Budweiser or Kendall-Jackson. It would also add five new stores to help offset the revenue loss from the direct sales of special orders.
“The current system has made it hard for restaurants to succeed,” says Councilman Hans Riemer (D-At Large), who chaired a special committee that developed the proposal.
Privatizing special orders “would solve about 80 percent of our problems,” says Geoff Tracy, chef and owner of Chef Geoff’sin the District and Northern Virginia, and Lia’s in Chevy Chase. (A Montgomery County outpost of Chef Geoff’s in Rockville recently closed.) Like Utagawa, Tracy has dealt with missing orders and late deliveries. “In the District, if a distributor makes a mistake on an order, it gets fixed the next day. The county delivers only once a week. With special orders, we can build a nice list without fear of running out of craft beers or wines. When we’re out of something, customers blame us, not the county.”
Tracy said he “would certainly support full privatization, but I don’t think the political will is there at this time.” The council proposal would maintain the county jobs and most of the revenue, while lowering prices and improving service for restaurants and consumers, he said.
Full privatization is exactly what Maryland Comptroller Peter Franchot wants. Franchot, a Montgomery County resident, recently wrote in The Post that he will advocate a measure to dissolve the county monopoly on alcohol distribution altogether. Franchot’s proposal would not dissolve the DLC, but it would make the county office compete on an equal footing with established distributors that currently are locked out of the county market.
“The only way to solve the problems with alcohol control in Montgomery County is to end the monopoly and allow the private sector to compete,” Franchot said in a written statement for this column. This is an outdated system that inhibits consumer choice, frustrates small businesses and levies a significant tax on residents. Doubling down on a bad idea just isn’t a good idea.”
Franchot predicted economic activity generated by free competition would offset the loss of the DLC’s revenue. But Riemer called Franchot’s proposal “half-baked” and warned that two competing proposals could result in legislative stalemate.
“The risk is that nothing will happen,” Riemer told me. “After decades of inaction on this issue, we have a common-sense proposal that will open the door for restaurants without blowing a hole in the county budget.”