Savage gears up to take on big-box liquor competition

The highlight of Stacy Schmidt's day, week, maybe year, was the customer who came in, gazed at her new craft beer selection, and said:

"Finally, a store south of the river, close to home, that has good beer! I don't have to go to Blue Max anymore!"

Adds Schmidt: "I'm like, 'Say that again!' I wrote it on our new chalkboard" — the chalkboard that sits behind the new sampling zone of her freshly remodeled liquor store on County Road 42 in Savage.

Schmidt arrived in Savage last year at the behest of the City Council to revive a flagging municipal liquor operation in that suburb.

Blue Max is a store in Burnsville that all day long issues tweets like this one to adventuresome beer lovers: "FYI, I still have Central Waters Illumination and Peruvian Morning here, as well as Dark Horse Double Crooked Tree."

Blue Max "jumped on the craft beer craze probably 10 years ago and has done a ton of volume," said Brenda Visnovec, operations director for the city of Lakeville's municipal liquor stores. "Everyone else is just catching up."

Lakeville, for whom Savage's Schmidt used to work, is her role model. It's No. 1 in sales among the state's hundreds of municipal liquor operations. It battles Edina to be No. 1 in profits and contributions to city operations.

Savage is responding with a major makeover of its County Road 42 store, which is having a grand reopening this weekend featuring at least 10 tables of samples, each with three to five items — beer, wine and spirits.

Visnovec has been around to check out the competition, and she's impressed. "It looks very classy. It needed an update. It was a little worn down."

Gone are the old carpet squares, hard to scrub clean of wine stains. In their place is gleaming, polished-black concrete, like an upscale loft.

The sampling zone has been given new sophistication, as well. There's much clearer labeling of where everything is. A design firm has applied Savage's city logo, and images of some of its iconic institutions and history, to all the signage.

In fact, one major new step, both inside and out, is to begin to scream out, "City-owned store feeding profits back to city causes!" It's an appeal to the loyalty of residents and a far cry from a previous era, when management strove to look like a private entity. Back then, "the muni" didn't always have a refined connotation.

"When I worked for Lake­ville," Schmidt said, "at almost every store, they would shout out what they do for the city."

Last year, Visnovec said, Lakeville municipal liquor poured millions into city coffers, including $1.4 million to pay off fire station bonds, $420,000 for snowplows and trucks, and an array of other contributions. The total exceeded $2 million.

Back in the days when Savage liquors was still churning enough profits to contribute, said Amy Barnett, city spokeswoman and a key player in the rebranding of the stores, it was able to:

• Make annual bond payments on the city's library building, with $2.51 million in debt that is to be paid off in 2018.

• Make annual bond payments on the two city liquor buildings, downtown's Dan Patch as well as the remodeled Marketplace store, with total debt of $2.27 million, to be paid off in 2019.

The irony today is that, just as it's seeking to stress that role with customers, it actually has ceased to make such contributions. The latest state auditor's report on municipal liquor found that Savage was the only major metro-area suburb whose stores, in the most recent year audited, 2011, didn't contribute a dime.

Not everyone else was a massive contributor. Wayzata eked out a mere $20,000. But civic profits arguably are the main reason, these days, to justify city involvement in what has become a mostly private-sector enterprise.

"The liquor store continues to be profitable," Barnett stressed. "Competition and the economy have just made it more difficult to generate the same level of revenue we had been used to seeing."

So Savage is raising its game.

An area of the Marketplace store used to contain little-used cash registers, and, Schmidt said, turned into a "junk collection site."

"Craft beer is a huge trend," Schmidt said. "There are so many local brewers now, and it's fun to work with. Some places are so small they don't deliver, they don't have trucks, and we will go grab it from them. A lot are in Minneapolis, not far from each other.

"We just brought in Surly and Boom Island. In May we're going to have a brewfest that just focuses on Minnesota products."

So, how's it going so far?

The audit for 2012 isn't complete, Barnett said, but so far it's looking good, even before the store makeover is complete.

"Sales at Marketplace were up slightly at the end of 2012 and in January and February of 2013," he said.