Impact of Alcoholic Beverage Reclassification

A non-profit group representing the alcoholic beverage industry retained Anderson Economic Group to analyze the impacts of reclassifying a subset of mixed spirit drinks (MSDs), including canned cocktails and cordials, from “spirits” to “wines” under a state’s Liquor Control Code. Such a reclassification would allow more retailers to sell these drinks and would reduce taxes levied on this subset of beverages.

We constructed a liquor consumption model to determine the impacts of the reclassification on the size of the MSD market and to determine the fiscal impact of the reclassification. Our model took into account the anticipated market shares for different types of alcoholic beverages under both reclassification and no reclassification scenarios.