Originally published on April 5, 2o09
The biggest news in the New York wine industry this year (with the possible exception of Southern’s price hikes, but that’s another story) was Governor Paterson’s proposal to allow wine sales in grocery stores. I initially wrote about it here and my thoughts also popped up on Dr. Vino here. The proposal was removed from the budget, but as reported in Newsday (and many other outlets) it’s likely to resurface at some point.
In case you didn’t click through to the links above, here’s the summary: Governor Paterson put forth a proposal to raise state funds by allowing stores that currently sell beer to also sell wine. Big grocery stores loved the idea. Independent wine and liquor stores hated the idea. Lobbyists lobbied, press people spun, the entire political machine ground into gear.
I even got involved, entering the fray of New York City and State politics. I sat in on meetings with my State Senator’s (Daniel Squadron) chief of staff, with the Manhattan Borough President (Scott Stringer), and the Speaker of the New York City Council (Christine Quinn). I even wrote a Letter to the Editor of the Downtown Express in response to an op-ed piece by Whole Foods.
My biggest issue was that the proposal was incredibly one-sided. It benefited the big grocery stores without addressing any of the constraints on existing independent stores like Frankly Wines. Not a big surprise given where it came from: Whole Foods essentially proposed the proposal here. Also not a big surprise that none of the legislators we talked with were aware of the existing constraints: there’s no reason anyone would ever imaging these rules exist. I can barely imagine they exist and I live with them every day.
But just in case there are any senators or assembly people, council members, community board members, borough presidents or other New York State or City elected or appointed officials lurking around the Frankly Wines blog, here’s a rundown of all those wacky rules.
- You can get a license to sell wine.
- You can get a license to sell wine and liquor.
- If you have one of the above licenses, you can only sell wine or wine/liquor + a few other items listed in the ABC laws. Not allowed: wine gift bags (a store upstate was fined $10,000 for doing just this), reusable wine carriers, and wine gift boxes.
- Also not allowed: FOOD, including the sorts of mixer you would naturally want to pair with liquor.
- You can get a license to sell beer (but you can’t sell beer, wine, and liquor. No existing license exists for that.)
- To get a beer license, 50% of your “displayed inventory” needs to be comprised of the following: diary goods, canned goods, baked goods, fruit and veggies, meats, fish, and the mysterious “other groceries.” Only 25% of “displayed inventory” can consist of snack food and beer.
- Wine/liquor licenses may be denied if the location is within 200 feet of a school or church. This does not appear to be the case with a beer license, either in the application requirements or in the actual retail landscape.
- Applications for wine/liquor licenses can face opposition from the four closest stores currently holding wine/liquor licenses. This does not appear to be the case for those seeking a beer license.
- You can only have 1 wine/liquor license per person (“person” includes corporations and partnerships.) Not the case with a beer license, where one corporate entity can hold multiple licenses (and because they can buy across multiple outlets, they can buy more and get better pricing.)
- Wine/liquor stores must be closed on Christmas and during certain hours each day.
- Beer sales are also somewhat restricted, but less so. And the stores in which beer is sold (ie grocery stores) have no restrictions on their opening hours.
So to be somewhat equitable, a “fair” proposal would need to allow wine/liquor license holders to sell food (although that 50% requirement shouldn’t be forced on us) and any other wine-related items we want to sell. It would need to allow wine/liquor license holders to open multiple locations…or even form buying groups in order to get better pricing. It would allow wine/liquor license holders to sell beer. And to enjoy the ability to get a license without concern for opposition from existing licence holders. And to not have to worry about those pesky schools and churches. And to enjoy the less restrictive opening hours that beer sales enjoy. To be truly fair (and to offer true consumer convenience and choice) it would also allow grocery stores to sell liquor, but they don’t seem to be very interested in that. In short, it would require a major easing of the restrictions currently governing wine (and ideally) liquor sales.
What it shouldn’t require is to incorporate the proposed restriction to limit grocery stores to selling wine from wineries that produce fewer than 250,000 gallons of wine annually. This is an attempt to ensure that the grocery stores actually sell New York State wines (rather than simply taking them at their word that they will do so.) I think this is a bad idea for 2 reasons. 1) If you want the stores to sell New York State wines, than force them to sell NYS wines (although this probably violates all sorts of interstate commerce laws. 2) In states where grocery stores can sell wines, the groceries tend to focus on big, mass, brand names – wines that produce considerably more than 250,000 gallons of wine each year. The smaller independent stores differentiate themselves by seeking out smaller, more unique producers. Yes, this is a broad generalization. There are plenty of big grocery chains offering great, boutique selections and plenty of independent stores offering big, corporate brands. But by forcing the grocery stores to stock smaller brands ONLY, the proposal would be removing one of the ways smaller stores can effectively differentiate themselves and compete.
Ideally, any proposal would also have some type of phasing-in period. At the risk of sounding whiny and anti-free-market, I think it’s worth noting that retail spaces and leases were selected and signed based on an existing set of rules and regulations. Sure, things change. In other retail sectors, small stores need to content with big box stores moving into their neighborhoods. But a Whole Foods, Walmart or Home Depot doesn’t spring up fully formed overnight. There’s usually at least a year, probably longer, during which the little guys can make plans to adjust to the new addition, even if that adjustment means making plans to close up shop.
So there’s clearly a lot more to consider than just slapping a wine license into the hands of anyone with an existing beer license. I’d like to think one reason the initial proposal failed was that the legislators realized the one-sidedness of what they were presented with…and that there was a lot more they needed to understand before making any changes. Maybe. Or maybe it was the lobbyists.