SALEM — When Washington state voters approved a measure privatizing liquor, Alan Dietrich with Central Oregon’s Bendistillery, whose specialty spirits are sold up north, watched the sale of his products there plummet.

Now, with Oregon being eyed as the next state to privatize liquor sales, Dietrich is worried.

“I’m not going to say it would be catastrophic; that’s hyperbole,” he said. “But it would be a huge setback. … Based on the experience in Washington, it would set us back three to five years.”

Oregon’s involvement in liquor sales, Dietrich said, helps create a level playing field. If large grocers with limited shelf space have to choose between his distillery’s Crater Lake Vodka or perhaps the better-known Grey Goose Vodka, the little guy could lose out. And so could a growing industry.

His concerns are echoed by other craft Central Oregon distillers, some of which are still in their infancy. The state currently has about 70 distilleries, which generated about $53 million or 12 percent of Oregon liquor sales in 2011, according to the Oregon Liquor Control Commission.

Pat McCormick, spokesman for Oregonians for Competition, which is pushing several initiatives to privatize liquor sales and whose clients include retail outlets such as Fred Meyer, said craft distilleries would be protected under the proposals. All the initiatives under consideration would allow grocery stores larger than 10,000 square feet to sell spirits.

“We have great examples of how Oregon retailers dealt with Oregon craft beers and Oregon craft wineries. I don’t know a store in Oregon that doesn’t have Deschutes (beer) stocked on its shelves,” he said.

Any measure to qualify for the ballot would have provisions protecting the distillery industry, McCormick said. Smaller distilleries would be exempt from certain fees to give them a price advantage. And fees included on container sales would be used to create an Oregon Distillers Board to encourage growth of the industry. The goal overall, McCormick said, is to get the state out of the business of selling liquor, make it more convenient for consumers and create more competition. The promise of lower prices, however, is harder to make since prices rose after privatization in Washington.

David Hodgert, who works in sales for Desert Juniper Gin in Bend, said Washington state created a road map that Central Oregon craft distillers would rather not follow.

“It hasn’t bode well in Washington for small craft distillers,” he said.

Another lesson learned from the neighbor to the north is it won’t be an easy battle.

“You’re talking about a lot of individuals and smaller companies” fighting some of the retail giants such as Fred Meyer, Hodgert said.

The state has long been a key figure in supporting both Oregon’s wine and craft beer, said Brad Irwin, who started Oregon Spirit Distillers four years ago. And now it’s doing the same for craft distilleries by giving them equal shelf space as some of the larger brands.

“It’s a great time and a critical time for the distilling movement in Oregon and the Northwest,” Irwin said, blasting the proposed ballot measures as “written by the grocers, (benefiting only) the grocers.”

State lawmakers are also working on a plan that would ease the state’s control on liquor. Coined the “hybrid” plan, it would allow large retail stores to stock spirits but would keep state control over liquor sales and agency stores.

“The goal is to meet the competing objectives. Lots of Oregonians want more access,” said Sen. Lee Beyer, D-Springfield, who is one of the lawmakers spearheading the effort. “We’re trying to do that by providing a reasonable way for the groceries to get into the business and to protect Oregon’s small craft brew and distillery industries, that’s what we’re trying to do.”

Beyer called it the “Oregon way” to find a middle ground and said lawmakers are more equipped to write a measure that incorporates more voices than a ballot measure backed by a particular interest group.

Dietrich hopes so.

“Right now, we have a pretty straight pipeline to consumers who are interested in products we make and sell, and if it were to shift, if we were to privatize in the manner of the initiatives are proposing, it would become more difficult,” he said. “We would become a mass consumer state.”

— Reporter, 541-554-1162,ldake@bendbulletin.com