Festival Foods planned at old Hudson House site

After being awarded the only available liquor license on June 5, Festival Foods plans to open a location at the site of the old Hudson House Grand Hotel in the fall of 2024.

Once a liquor license became available in September 2022, the Hudson Common Council began to weigh the community's desire for a new grocery store and the fears of local liquor stores. After discussion, the council decided the community benefits outweighed the risks, approving the application of Skogen Foodliner, Inc. for a Class A license for the sale of liquor for off-site consumption.

In the growing Hudson community, having “a liquor license will allow Festival Foods to offer a full shopping experience to guests that shop our store,” representatives of Festival Foods said. 

The company plans to begin construction in the spring of 2024 and must build its store to comply with Hudson’s ordinances.

Per the ordinances, liquor stores must be separate from grocery stores, requiring a distinct area, entrance and checkout. 

Festival Foods has other locations with wine and spirits departments that already comply with these restrictions. 

As the first big box store to possess a liquor license, some local liquor store owners are concerned about competition.

At the May 15 public hearing about providing liquor licenses to grocery stores, owners from Spirits Seller, Casanova Liquor, Lucky’s Wine and More, and others expressed a fear that the Hudson market might be replaced by chains. 

From bringing in tourism to providing jobs to sponsoring local events, they claimed that liquor stores are essential pillars of the community. 

“They do more than any grocery chain that comes in is going to do, and that’s what makes our community special,” Lily Van Allen — daughter of a previous liquor store owner — said at the meeting.

Owners and other community members say they are concerned that competition from big box stores could drive out local businesses, taking away from the community’s character and uniqueness.

Logan Kelly, chair of the economics department at the University of Wisconsin-River Falls, claims that predicting competition is complex in the alcohol market. 

With many old, overlapping layers of regulation, price competition is often prevented. 

Famously, in 1993, Walmart was accused of underpricing their pharmaceutical products in an attempt to drive out competition, a practice known as predatory pricing.

Today, limits like minimum markups, along with an assortment of other regulations, such as not allowing exclusive discounts by wholesalers, prevent big box stores and others from utilizing these practices.

“[The pricing issues] I don’t think you’re actually going to see in alcohol,” Kelly said. “There’s just too much regulation.”

According to representatives of Festival Foods, the store will bring several positive impacts to the community.

Throughout the COVID-19 pandemic, overwhelmed supply chains led to chronic inflationary pressures on many foods that require shipping. Although the problem has since abated, many Hudson residents have been hopeful for a new grocery store. 

“It doesn’t matter to them whether there’s a liquor store attached to it or not. They want that grocery store,” Alderperson Joyce Hall said at the June 5 session. 

With Festival Foods’ current plans, those desires will be fulfilled. 

The company also plans to generate about 250 jobs by opening its new store.

However, Kelly claims that, statewide, “we need more workers, not necessarily more jobs right now.”

By this statement, Kelly means there is a lack of employees that meet the criteria that employers require. While there will be an impact from the jobs generated, there are other types of “business ventures that would generate employment that would have greater impact,” Kelly said. 

Festival Foods also claims it will add to the property tax base, personal income tax and sales tax. According to city administrator Aaron Reeves, it is too early to know a definite value as of right now.

Since Festival Foods has secured a liquor license, the company will likely file a development application soon. More information will become available as the city’s formal review process begins.

Additionally, representatives from Festival Foods said the company looks forward to being an active member of the Hudson community, participating in events and initiatives.

“We believe there is a place for all businesses in Hudson, including us, to best serve residents in the area,” the representatives said. 

Regardless of intent, Kelly believes there may be a reduction in the number of independently owned liquor stores in Hudson, reducing the diversity in the product mix.

Big box stores tend to gravitate toward the profit leaders, whereas independent stores tend to carry more boutique products.

For Kelly, the bottom line is that competition already exists in the liquor market.

“If Hudson doesn’t have a good wine shop, then Stillwater does,” Kelly said.

Other big box stores such as Trader Joe’s and Costco continue to operate in nearby cities with liquor licenses. Many consumers in Hudson can already choose to utilize these other competitors.

Nonetheless, local liquor stores continue to remain open. 

These businesses still hold value for many – even Kelly.

“I am going to go to a wine shop where there’s somebody who actually knows as much about wine as I do,” Kelly said.

The impacts of a grocery store selling liquor and the resiliency of Hudson’s local businesses have yet to be fully quantified. In 2024, both will be put to the test.