Soju exemption spurs cocktail sales by beer-and-wine licensees on both coasts

Nation's Restaurant News,  Sept 26, 2005  by Alan J. Liddle

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Executives of BJ's were unavailable for comment about the chain's sale of soju cocktails at select units. But an employee at a BJ's unit in Huntington Beach said that outlet had sold such $5.95 soju cocktails as the Sour Apple Martini, Cape Cod and Cosmopolitan for about a year.

In California, as in New York, there is a great difference in cost between a beer-and-wine permit and a license to sell all alcoholic beverages. The initial cost of a beer-and-wine license in California is $300 and the annual renewal fee is $304. By comparison, full-bar licenses in the state range from an initial $6,000 to $12,000 and have an annual renewal cost of $758.

However, a full-bar license in California can cost far more because of bidding wars for the limited number of existing licenses that may come on the market. That's because the number of licenses available is based on a formula calling for the issuance of one per 2,000 residents on a county-by-county basis.

With those economics in mind, many restaurateurs and chains opt for beer-and-wine licenses only. But with exemptions for soju in California and New York, thrifty operators can have their cake and eat it, too.

"We considered getting a full license, but with soju we don't feel the need now," explained Bodega Wine Bar owner Seares.

At least one official of the Distilled Spirits Council of the United States, a Washington, D.C.-based liquor industry trade group, has been quoted in published reports as suggesting that the soju exemption is not fair. Officials of DSCUS did not return a call seeking comment.

However, restaurant operators with full-bar licenses do not appear to have shown any resentment toward rival soju marketers. "Complaints have not come from chains," said Patrick Deasy, chief of business practices for the California Department of Alcoholic Beverage Control in Sacramento. "They may be out there, but typically complaints about soju are from consumers who are not aware of the soju exemption."

Though Deasy has been quoted in some news reports as suggesting that the expanded use of soju for cocktails in non-Korean restaurants comes close to violating the spirit of the exemption, he indicated that his department was not likely to take the lead in getting the law changed.

"We don't tend, as an agency, to go in and say [to lawmakers], 'We'd like to sponsor our own legislation to change this law,'" Deasy said.

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