I'm on a family ski vacation in Utah, which is one of the most restrictive of the 18 alcoholic beverage "control states." A "control state" is where the state maintains a monopoly over the retailing and/or wholesaling of some or all categories of alcoholic beverages.  See Wikipedia definition for a good history of how this practice came about.

Goal of curtailing demand not met

When I arrived in Utah on Saturday afternoon, I stopped by the Utah State Liquor store in Park City to buy some wine for the week for our group. The first thing I noticed was that there were 15 people in line at each of 3 cash registers.  While this was inconvenient because it meant wasting my time, I suppose it was consistent with the Utah state philosophy (by helping discourage buying) as listed on the Department of Alcoholic Beverage Control (DABC) website:

"Utah's liquor laws are based on the general philosophy of making alcoholic beverages available in a manner that reasonably satisfies the public demand.  In this respect, however, the state does not promote or encourage the sale or use of alcohol." (emphasis added)

Maybe Park City is an exception because of the tourist traffic but it seems like demand has not been moderated by state policies.

No benefit of state stores vs. privately licensed agencies

Utah operates 36 stores and 100 "package agencies" (click here for details).  The latter group is simply an extension of the state operation with all products still being purchased from the state acting as the wholesaler.

The only possible argument I can think of for perpetuating Utah's (and other control states') anti-free market regulatory structure is that it somehow makes enforcement of liquor laws more effective.  But how?

If all the stores were state-operated, then perhaps they could claim that employees of the state were better trained than those in the private sector to enforce age checks rigorously when selling liquor.  But Utah has 100 private parties who are licensed to sell alcohol so they presumably have already had to create an enforcement mechanism to monitor sales through these outlets (as have the 32 non-control states).  So what real purpose is served by operating stores (and being the sole wholesaler)?

Wine selection is limited

Utah publishes its price list online (all 151 pages in February 3rd list, not searchable).  While the length of the list may seem impressive, this is for all alcohol, not just wine.  More importantly, just because a product is listed does not mean it is available.  If one looks at red Bordeaux (see pg 112), for example, there are a grand total of 150 items listed (including some first growths).  But when I inspected the selection at the Park City store, there were less than 20 items to choose between (and they were not the better ones in the list of 150)!  In contrast, Vinfolio's current selection of red Bordeaux numbers 293 items available to order.  Maybe limiting selection is the real strategy for trying to reduce demand.

Lack of out-of-state purchase option

According to the Utah DABC website, "private individuals may not lawfully import or transport [liquor products] into the state."  Also, "you may not bring alcoholic beverages into Utah for any purpose whether it be for personal consumption, to serve at your hospitality house or at a private social function, or to give it or sell to others."  Forget about Fedex'ing it either, as friends who have tried to do that have generally not succeeded and they've incurred double shipping costs when the wine is returned.

Bottom line: The "control state" approach for regulating alcoholic beverages does not serve consumers' interests nor does it in itself help achieve the typical control states' objectives.  If the control state's goal is not promoting or encouraging consumption, this could easily be achieved via a licensed-based regulatory model together with a law prohibiting advertising or promotion of alcohoilic beverages.   A licensed-based model without expanded sourcing channels would dramatically improve the range of wine selections available to consumers.  Out-of-state retail purchases could also be enabled with an appropriate shipping permit system requiring sales taxes to be collected and sales reports to be filed.