Liquor Industry Takes On Activists in Political Arena : Alcohol: Well-funded wholesalers wield power in federal, state capitals. They also alter marketing strategies.

James Colquitt stocks bread, milk and school supplies at his convenience store in South Los Angeles. But three products--beer, wine and hard liquor--account for about half his sales, and Colquitt acknowledges that alcohol is critical to the little store’s profitability.

But alcohol also puts Fair-Way Liquor and its competitors at the center of an escalating conflict about drinking’s impact on the inner city. On the streets of Los Angeles, liquor stores are being blamed for drug dealing, drunkenness, loitering and public urination.

The accusations mystify the 62-year-old Colquitt. “It’s a spontaneous, emotional campaign with no long-term solution,” Colquitt said of the campaign to close liquor stores in South Los Angeles.

After all, he does not create the demand for the alcoholic beverages that cross his counter. He does not air television commercials or post billboards. Those are the work of the alcohol industry--a $90-billion-a-year business to which Fair-Way Liquor contributes less than $400,000 in sales.

Yet it is only recently that the distillers, brewers, vintners and distributors who market liquor and lobby on its behalf have begun to be drawn into the raging debate over the future of stores such as Colquitt’s.

Last month, Mayor Tom Bradley’s liquor store task force proposed that the industry dip into its profits to compensate merchants who voluntarily shut down inner-city liquor stores. Bradley sent letters to Anheuser-Busch, Seagram, Miller Brewing Co., Bacardi and other companies, pleading for them to come to the aid of riot-ravaged Los Angeles.

“IBM committed $31 million and Vons $100 million,” Bradley wrote on the task force’s behalf. “We collectively appeal to the alcohol manufacturers to make a similar contribution to the rebuilding of our city.”

The request propelled the furor over alcohol to a new plane. “Merchants feel like they’re being scapegoated,” said Mary Lee, a South Los Angeles attorney who is co-chairwoman of the task force. “They say: ‘What about the liquor industry?’ ”

*

What about the liquor industry?

As South Los Angeles residents struggle to shut down liquor stores, the National Beer Wholesalers Assn. is using its political muscle in Washington to combat groups such as the Community Coalition for Substance Abuse Prevention and Treatment, which is waging the liquor store battle in Los Angeles.

The wholesalers contend that grass-roots organizations seeking to reduce the availability of alcohol have an ally in the U.S. Office of Substance Abuse Prevention. The trade group claims that this federal office, funded by the Department of Health and Human Services, is using federal funds to finance the anti-alcohol lobbying efforts of some community groups.

“When you listen to them, they don’t talk about abuse; they talk about use,” said Ron Zarasin, president of the beer wholesalers’ group. “These are legal products. About 95% of consumers use the product moderately and responsibly. And it’s one of the pleasures of life. Their efforts really relate to an old, failed idea--and that’s Prohibition.”

The wholesalers--the trade group represents 1,800 of the nation’s 3,200 beer distributors--last spring persuaded 109 members of the House of Representatives to sign a letter calling for a General Accounting Office probe of the Office of Substance Abuse Prevention. Eleven signatories were Californians; 88% of all the letter-writers had received campaign donations from the wholesalers.

The industry’s chief fear is the prospect of a hike in levies on liquor, wine and beer. Company representatives have given millions of dollars to state and federal politicians on both sides of the political aisle to keep excise taxes in check.

Of the top 20 House recipients of alcohol industry money, nine are members of the Ways and Means Committee, which would sponsor such legislation. Two Californians were in the top 20: Rep. Vic Fazio (D-Sacramento), who received $36,250 in alcohol money, and Rep. Robert T. Matsui (D-Sacramento), who received $27,500.

Overall, the industry doled out more than $5.7 million in contributions, honorariums and other funds to federal lawmakers and political parties from 1989 through mid-1992, according to a study by the Center for Science in the Public Interest, a Washington group that has fought for tighter restrictions on alcohol.

The money, which makes the alcohol industry one of the top political givers in Washington, comes from a variety of sources: political action committees, trade associations, the companies and the individuals and families who control empires built on the sale of such beverages.

“As millions of Americans suffer from alcohol-related problems,” the center’s study said, “the well-heeled alcoholic beverage industry is trying to put Congress and the Administration under its influence.”

Denying that anything sinister is going on, the industry maintains that it is simply participating in the democratic process.

“Yes, our industry does contribute what some might call heavily to the political process,” said Jeff Becker, vice president for alcohol issues at the Beer Institute. “(But) most American corporations do. It is naive to think that the political process can be bought through contributions.”

If the alcohol industry wielded such power in Washington, Becker added, the government would not be spending hundreds of millions of dollars on what he termed “anti-alcohol propaganda.”

Industry groups also say that they have had a broad coalition of allies in their fights, including groups such as the Congressional Black Caucus, the National Governors’ Assn. and Citizens for Tax Justice, all of which have supported the industry’s opposition to hikes in federal alcohol excise taxes.

With the domestic alcohol market shrinking, the industry has sought government assistance in developing overseas markets.

The 1985 farm bill, designed to promote American agricultural products overseas, was amended the next year, granting the alcohol industry tens of millions of dollars annually in subsidies. Last year, the Wine Institute received the third-largest grant overall, $14.3 million, just behind the associations representing cotton and bean farmers.

The industry’s next targets: two advertising bills coming out of the House.

One would require labels on alcoholic beverages listing the alcohol content, number of servings and a toll-free number for those who suspect that they have a drinking problem. A second bill calls for warnings in advertisements similar to those required on the products.

In Sacramento, the industry’s ability to stave off a substantial California tax increase in 1990 showed the extent of its political muscle, some observers say.

The industry poured $19 million into its campaign to defeat Proposition 134, the so-called nickel-a-drink tax, hiring a Sacramento public relations firm and funding a group called Taxpayers for Common Sense. Backers of the measure, which would have substantially increased alcohol taxes and dedicated revenue from the tax to treatment programs, spent less than $200,000.

Complicating the ballot for some voters, the industry spent another $4 million to promote Proposition 126, a rival tax measure. Both initiatives were defeated at the polls.

But the industry’s savvy showed most clearly the next year. It supported tax increases far lower than those proposed in Proposition 134--hikes that left California’s alcohol taxes below those in many other states, but took the political heat off the industry.

Former Assemblyman Lloyd G. Connelly, who wrangled with the alcohol and tobacco industries in numerous legislative battles, said the alcohol business seems to have learned the benefits of being flexible from the failed tactics of the tobacco lobby.

“Both are formidable foes,” the Sacramento Democrat said. “Both are used to getting what they want.”

*

Without a doubt, Augie Maldanado considers Mexican Independence Day worthy of celebration. But he says he has lost some of his spirit in recent years as the Sept. 16 festivities in downtown San Fernando have come to resemble something closer to the Budweiser Games.

A Budweiser truck blocks the main street. The Budweiser Girls sign autographs for admiring fans. Budweiser promotional calendars are distributed to the crowd. And a giant inflatable Bud Light bottle is set up next to a game area for children.

“An alcohol company has infiltrated our national celebration,” Maldanado fumes. “Alcohol is killing us, and we’re celebrating with Budweiser. We have families here, children running around, and everywhere you look you see Budweiser. “

Alcohol companies pour millions of dollars a year into the nation’s ethnic communities, supporting civil rights groups, sponsoring scholarships and celebrations and buying advertisements on inner-city billboards and in the ethnic press.

Industry representatives acknowledge that they direct marketing efforts at minority communities, but they add that such promotions are commonplace among many industries.

“Yes, our industry does use market segmentation, like every industry,” said the Beer Institute’s Becker. “We do shape advertising to the minority market. That’s Marketing 101. Do those billboards cause alcohol abuse? No.”

Although many financially strapped minority organizations and businesses are more than willing to snatch up the industry’s funding, others are beginning to question this flow of dollars.

Locally, a grass-roots study found a significantly higher number of alcohol billboards in South-Central Los Angeles than in predominantly white neighborhoods on the Westside. Furious that their community is being targeted, members of Bethel African Methodist Episcopal Church have attempted to pressure the industry to lay off. Church members have taken action into their own hands, painting over some billboards near the church and covering them with banners saying “Jobs-Not Alcohol.”

Similar concerns have led another Los Angeles group, Wings of Hope, to launch an “alcohol-free zone” in the middle of South-Central. Starting in the 90062 ZIP code, the church coalition plans in the coming months to lobby the industry to eliminate alcohol billboards and other advertisements and dramatically reduce the sale hours of liquor outlets.

“We have to take our community back from the industry,” said the Rev. Ed Grise, director of the Southern Christian Leadership Conference program.

Around the country, some companies have felt the impact of community pressure.

Coors had been the chief sponsor of North America’s largest celebration of American Indian culture--up until 1990, when a mother complained about her daughter wearing a Coors logo on her back.

“How do I explain the irony to her,” Jody Lee Halfmoon wrote in an American Indian newspaper, “that the very poison that took her father away from her is the same product being advertised on her little body?” Soon afterward, Coors was replaced by Borden Inc., the milk manufacturer, as the chief sponsor of the Gathering of Nations.

The industry contends that turning down philanthropy does not make sense.

“Why can’t alcohol companies be good corporate citizens?” asked Bill Scriber, president of the Beer Drinkers of America, an industry-funded group based in Costa Mesa. “It’s terribly unfortunate if these anti-alcohol groups are discouraging major corporations from helping the United Negro College Fund and other worthwhile causes. That’s destructive, wouldn’t you say?”

Even some community organizers disagree with those who say that alcohol money should be avoided at all costs.

“I think we should be cautious about why we’re receiving the money, but at the same time I don’t think every donation is sinister,” said Irene Tovar, a Latino activist who serves on the board of Rebuild L.A. “Poor communities don’t get all that many people giving us money, so it’s a big temptation when the alcohol industry comes along.”

Coors--and about 70 of the country’s largest firms--have entered into covenants with minority groups, pledging to provide business opportunities to minority-owned firms or return benefits to minority customers.

“The covenants are good business because we are now sensitive to the needs of these communities and it gives us a bigger and more knowledgeable presence in these communities,” said Coors spokesman John Meadows.

The ethnic press is a major beneficiary of the industry’s outreach.

Alcohol advertisements are second only to cosmetic and hair products in black-oriented publications, according to “Marketing Booze to Blacks,” a study by the Center for Science in the Public Interest.

Publications in other ethnic communities receive similar revenues, the report said, leading to a reliance on the industry and making the publications hesitant to raise issues of alcohol abuse.

Yet those accepting the liquor ads deny that they are any more influenced by the industry than are mainstream publications. It is easy to be principled and turn money down when survival is not at stake, they add.

“It’s companies like Miller and Anheuser-Busch that keep the black press running,” said Bill Reed, director of communications for the National Newspaper Publishers Assn., a black publishing trade group. “Our newspapers stay afloat because of beverage, automobile and tobacco companies. Without them, we’re gone.”

Indeed, in a Las Vegas address to an association of black California liquor store owners, Benjamin Hooks, executive director of the National Assn. for the Advancement of Colored People, encouraged alcohol companies to place more advertising in the black media.

Calling for the elimination of such advertising in the black media is “patronizing” to black consumers, Hooks said. Like other consumers, African-Americans can make reasoned judgments about purchases, he said--regardless of advertising.

Meanwhile, the industry has become a prime mover in another kind of advertising--public service announcements aimed at curbing alcohol abuse.

Leading the industry-funded efforts is the Century Council, created in Los Angeles last year.

With an annual budget of about $13 million, the council’s primary focuses are underage drinking and drunk driving. This year it launched a program aimed at reducing Latinos’ disproportionate share of drunk-driving arrests.

Critics such as Karen Bass, who heads the Community Coalition for Substance Abuse Prevention and Treatment, say the group is the industry’s tool for currying public favor. “This is supposedly the industry’s attempt to police itself,” Bass said. “The industry will always carry out these kinds of anti-abuse campaigns with the profit motive at heart.”

The council rejects the criticism.

“We don’t represent the licensed beverage industry,” said council Chairman John Gavin.

Gavin, a former actor who served as ambassador to Mexico in the Ronald Reagan Administration, said some of the council’s critics sponsor their own campaigns against underage drinking and drunk driving. Their opposition, he suggested, may be self-serving.

“Problems exists, and these drinking-related problems should be addressed by the entire community,” Gavin said. “Instead of turf arguments, the arguments should focus on how we solve these problems.”

*

At James Colquitt’s store on South Hoover Street, promotional materials from the Century Council are posted beside glossy advertisements for beer, vodka and malt liquor. One placard produced by the council declares: “I will card my mother.”

Hyperbole aside, Colquitt--acknowledging how controversial alcohol has become--is trying to send a new message to the community, one that stresses his role as a provider of groceries, not inebriants.

Sometime over the next few weeks, he will take down the eye-catching black and yellow “Fair-Way Liquor” sign outside his store and replace it with one that reads “Fair-Way Market.”

“The word liquor is not going to be mentioned up there,” said Colquitt, who spent $1,300 on the new sign. “That word seems to antagonize the neighbors. We’re trying to accommodate them. Let’s soothe the feelings.”

The industry behind him says it, too, has made efforts to soothe public discontent.

Anheuser-Busch officials say they have poured $1.3 million into South Los Angeles since the spring riots, donating food to riot victims and creating 200 summer jobs for young people. But they--like executives of other companies--have no plans to participate in the city’s effort to shut down liquor stores.

“While we appreciate the spirit in which Mayor Bradley voiced his request for assistance,” said Stephen K. Lambright, an Anheuser-Busch vice president, “we are concerned with any approach that simplifies complex social and economic issues to a question of the number of alcoholic beverage licenses within a given area.

“This can easily appear to be an effort,” Lambright said, “to allocate blame rather than find a solution.”

Bellying Up to the Political Bar

The liquor industry is among the nation’s biggest donors to political campaigns. Here are the industry’s top political action committee contributors from January, 1989, to April, 1992. 1. National Beer Wholesalers Assn.: $1,009,731 2. Philip Morris Cos.*: $1,007,796 3. Wine & Spirits Wholesalers of America: $288,250 4. Anheuser Busch Cos.: $219,520 5. Joseph E. Seagram & Sons Inc.: $212,350 6. Wine Institute: $125,848 7. Brown-Forman Distillers Assn.: $119,100 8. Distilled Spirits Council of the U.S.: $116,038 9. Smirnoff/Inglenook: $76,550 10. Heublein: $56,300 * Parent of Miller Brewing Co.

The top alcohol-industry families who made political contributions from January, 1989, to April 1992 , were: 1. Gallo family (wine): $433,223 2. Bronfman family (Seagram liquor): $140,000 3. Coors family (beer): $97,208 4. Mondavi family (wine): $12,398 5. Busch family (beer): $11,975

Source: Center for Science in the Public Interest