NY considers wine sales in supermarkets

WINE TALK
1

NY Times: Chardonnay in Aisle 3?

It’s been so long since I’ve lived in NY that I’d forgotten that you can’t buy wine in grocery stores. Granted, I rarely buy wine in grocery stores anyway, but what a PITA. Just tonight, I stopped at a Whole Foods type place here in Portland called New Seasons to pick up a last-minute white (Biggio Hamina Melon de Bourgogne) to take along to a dinner party for which I’d only packed reds. Very convenient.

Good luck with this one, New Yorkers… although, what will “tripling the excise tax on wine sold in New York” do to prices? Is it a significant amount to begin with?

2

I just received this in the mail today. I could not find a link to it on the website http://www.state.ny.us/ if anyone can please post a link. Sorry this is long, but I feel that it is important and relevant. While the Governor is asking for input in particular from retail store owners, consumers should certainly use this opportunity to have their voices heard on this matter. Typing 1 was probably the most useful class I took in High School! [training.gif]

Dear (business owner),

I know that as a business owner you understand the challenges to protecting your bottom line. They often force you to make hard choices about cutting expenses, but they also encourage you to find innovative ways to generate new revenue.

This year, I am facing a $7.4 billion challenge to New York’s bottom line. To close that gap in our budget, I have cut state spending—nearly $5.5 billion. But as you know, expenditure reductions alone often are not enough and cutting too deeply can put you out of business. That is why I have had to find innovative ways to generate revenue without raising taxes on New Yorkers. One innovation that I believe holds great promise is the expansion of the marketplace for the sale of wine.

As you have probably heard, my budget includes a proposal to allow grocery and convenience stores to sell wine. You may have also heard that this is exactly the same proposal I included in my proposed budget last year, and that it does nothing at all to help grow your business.

This could not be further from the truth.

Last year’s proposal expanded the marketplace for wine, but did not go far enough to help liquor stores remain competitive and grow. I listened to your concerns, and this year the proposal includes many elements that liquor store owners have said could help their businesses prosper. These include:

–the right ot hold multiple licenses for the operation of additional liquor stores;
–the right for liquor stores to form cooperative purchasing agreements in order to achieve lower prices on higher volume purchases;
–the right for liquor stores to sell to restaurants and bars;
–an increase in the credit period from 30 to 60 days;
–allowing liquor stores, if they are in default with a wholesaler, to continue purchasing on credit from other wholesalers with which they are not in default;
–allowing for combination purchasing of different sized bottles from the same manufacturer;
–the right to sell other non-alcoholic beverages, food products, newspapers, cigars, gift packaging, glassware and storage items for wine and spirits, and
–the right to operate ATMs.

In addition, the proposal would provide liquor store owners with one medallion for their store and one additional medallion. Both medallions could be auctioned, sold, kept or transferred at your discretion. For three years, no new liquor stores would be able to open without possessing a medallion. This would give you both a say in the growth of your liquor store competition and a valuable instrument that could generate cash if sold.

Last year, individuals and coalition groups purporting to represent liquor stores across New York refused to discuss any ideas that could help liquor stores thrive. This year, they are already misrepresenting this new proposal as having nothing good for liquor store owners.

I want to hear from you—a person whose business will actually be impacted by what I am proposing. I want to know how we can help you thrive in a newly competitive market, and I want your ideas to make this proposal stronger. More importantly, I need your support to get a proposal passed that gives you the modern day tools that you need to compete.

If you have ideas on how to make this a better proposal, I will consider them all. Please email me as soon as possible at: governors.office@chamber.state.ny.us with your ideas and support. Also, please contact your Assembly and State representatives and let them know that you want them to seize this opportunity to grow revenue, create jobs, and give you the means to help you build a stronger business.

Warmest Regards,

David A. Paterson

3

Put me down in the ‘Yes" column for getting this done. I understand wine store owners’ worries about competition, but it is time to remove the artificial monopoly they have.

4

Oh Brother! Here we go again! headbang

So Posner, does this mean we should piggyback on all of your orders or sell sandwiches? [scratch.gif]

5

Last Store on Main Street’s response: http://www.lastmainstreetstore.com" onclick="window.open(this.href);return false;
Dear Retailers:

Today you have received the latest attempt to mislead you from Governor Paterson. He must think we are all a bunch of fools to think he can so easily mislead us. We know his “compromise” is nothing more than an attempt by Big Box stores and their lobbyists to destroy our business.

Remember – the “compromises” he is offering come only if we agree to Wine in Grocery Stores. That is no compromise at all and will only cause nearly 40 percent of us to go out of business. The smaller stores will be the first to go for sure, and all those of you in a supermarket plaza are clearly in jeopardy right away. All of us, even the largest stores, will feel the impact of this “compromise.”

Cornell University says stores on average will lose up to 32 percent of their income – who among you is ready to take a 32 percent pay cut? Can you even survive that kind of cut on top of the drop we have all seen in business in recent months? How many potato chips will we have to sell to make up for that kind of loss? It’s a joke.

The Governor and his staff claim that those stores in opposition to his plan make up a minority of all stores. Yet in all the media accounts about his plan, just one owner has come out in support – and his support is based on an erroneous and pessimistic view that we are going to lose this fight.

Let’s all send the Governor a message right away: Send an email to the address he gave you right away letting him know you are adamantly opposed to his phony compromise. Make your message short and to the point: Governor, I oppose your phony compromise. Stop trying to destroy my business and appease the Big Box lobbyists. Sincerely, (your name and store name).

Please email us back to let us know you have sent this message. We don’t need to get into a debate with him – he doesn’t care about us or the facts. Just hit him hard and soon. We will then announce the results of this email campaign to the world to let them know we will not be fooled by these tactics or his phony compromise.

Please reach out to other store owners near you to make sure you get this message as well. The Governor is trying to divide us, so he can conquer us. So long as we stick together, we will be still standing long after he is gone.

Sincerely,

Michael Correra
Executive Director
Metropolitan Package Store Association
Stefan Kalogridis
President
New York State Liquor Store Association
Jeff Saunders
President
Retailers Alliance and coalition founder

6

Well I wouldn’t expect the wine stores to come out in support - but shouldn’t the issue be what’s best for the people as a whole? NY might be very different, but in WA we’ve long had the ability to buy beer and wine in grocery stores and we still have good wine shops. However, the wine shops need to offer something other than the stuff you find in stores - they need to offer… gasp… value. By value I don’t mean low prices, but some reason for people to go to the wine shop. Outside of personal reasons, that usually falls into selection (breadth and/or depth) and knowledge.

What store owners might be overlooking, too, is that this could increase the percentage of people who buy wine. I live about 10-15 miles north of downtown Seattle… if someone out here was interested in buying wine they’d have to trek 15-30 mins (depending on direction, etc) to get to a store. AS it is, we have several supermarkets to choose from. While that might seem bad for the wine stores, it also means that there’s a chance that wine will be come more of a habit for more people… some of whom will want to go beyond what they can find in the supermarket and end up in a wine store.

Are there any states that have done what NY is contemplating? What was the outcome?

7

Rick,

No state has approved such a radical change in the last 28 years, according to the store lobby. This would be a big shift in the marketplace.

8

Apart from the fact that it looked like a good idea one year ago (I think it was one of the very first topics debated here) and that the store owners get even more with this bill, I’m going to write down the names of everybody who think it’s wrong and come back at them whenever they use sentences like “socialism sucks” or “land of the free” neener

As for the petition letter, it reads like this to me:
Dear guys we’ve been sucking money off for years,
[blah blah blah]
This bill is very, very bad.
[more blah blah blah]
Signed: guys who won’t get a cut on wines sold by grocery stores.

The one thing that looks funny to me is that with this bill, wine stores will become… grocery stores.

9

After some thought, as a retailer who worked most of his time in the wine biz in NYC, I am in favor of sales in supermarkets. One thing to consider is that the passage of such a bill will have very different effects on those who live in densely populated areas such as Manhattan or Brooklyn and those who live in the suburbs or the hinterlands (that weird, rumored to exist place north of Westchester). You cannot lump what will happen together as regards both demographics.

My sense is that many independent wine shops in suburban or more rural areas will fold. There will not be sufficient “sophisticated” customers to support them. But, then again, a lot may hinge on the sale of hard alcohol. If supermarkets cannot sell booze and someone is having a party they may buy wine and, say, vodka at the same store. Or, they may buy win beer at the supermarket and make a special trip to the wine store for vodka and gin. Hard to predict. Anyway, my time outside of NYC has shown me that the selection at supermarkets satisfy the customer the vast majority of the time. Adios, wine shops with customers who aren’t looking for Dolcetto, Barbaresco, Albariño, Grüner Veltliner. Without a lot of low end, low price sales only a few stores will survive on high ticket items and hard alcohol. But that’s capitalism as written in the book (which is almost never how it cashes out in reality).

In NYC most of the stores will survive. The non-value local stores run by non-wine aficionados, that is, the “package store” that sells some pedestrian wines… A lot of these will go under. Their higher end customers will have to get off their ass and travel more than 10 to 20 blocks to get their higher end or more obscure wines. Supermarkets will serve a good deal of the need for “everyday” drinkers. This will erode some profits of the urban stores which remain. But I would guess that places like Chambers Street, Garnet, Astor, PJ’s, Acker, Union Square would all survive, if with less overall profit. But costs might drop too as less staff needed and less money needed to invest in cheapies or case stacks that are competing with wines at Trader Joe’s or Gristedes. Note that there’s not a lot of open square footage in existing NYC supermarkets so maybe this lessens the brunt on NYC specialty wine stores.

I would guess it would take a year or so for things to “normalize” in NYC after supermarkets can sell wine. After a few places go under, the rest cruise as before. Upstate and anywhere people load up cars with purchases (be they from Target, Wal-Mart, Whole Foods, big grocery chains, etc.) stores will have to be smart and lucky to survive. Those with an internet presence will have an advantage.

The American Way comes to New York. Shit, there’s an Olive Garden in Times Square, there’s not much further to fall!

10

Marc,

I pretty much agree with your assessment. Stores that already focus on fine wine will be fine, and most decent shops in the city should be ok. The bad operators will fold. But in some of these cases it’s going to be a person who’s trying to get by on low cash flow and it’s going to put some good folks out of work. There will also be some opportunities to grow. Jeff Z. may not want to give up the jug wine business, but by adding accessories and gourmet foods there are other profit opportunities. Having worked at Marty’s in MA I can attest to that.

Mainly, no rational owner wants to give up the monopoly. Fighting change is easier than changing.

11

Marc, I have been told that Macaroni Grill is a step below Olive Garden, but I cannot vouch for that myself, though we do have both up here in “that weird, rumored to exist place north of Westchester”.

Generally, I agree with your assessment. A lot of folks on this board could not imagine what the typical corner liquor store is like up here. It is about as far from Chambers Street as it is from, well, Chambers Street. The lifelessness with which these stores are run up here is staggering. We have lots of little store selling cards and bicycles and pizza and whatever. They all have a different feel from a local liquor store. Those folks know that have a protected racket and act accordingly. Any other small business knows that have to work for your business. Not these folks.

Of course, this is a generalization and there are some places, even up here, which fall somewhere in between the typical store and a place like Chambers St (or Posner’s store or Max’s or Zachy’s, etc.) One up here some people may know is Empire Wine. All-Star has a good selection, but unless you’re in the habit of following a Wine Searcher page until the very last entry, you might not have heard of them. There are one or two others, but that’s it.

12

What makes wine so different than other products (other than the “sin” factor of it)? Grocery stores sell all kinds of items, yet there are still bakeries and delis and meat markets, and on and on. Did Costco and Whole Paychecks put a ding in these local stores? I am sure they did. Do I mind? Not really. The surviving stores provide me with services that Costco and WholeFoods can not provide, so I take my business to them for that. If Costco can provide me with a quality product at a good price, why should I not have access to it? Because someone else demands that they be given the absolute right to sell it to me for more? Absurd.

Yet the wine store owners’ argument is to demand, in essence, that I pay for their continued monopoly. Why should I be forced to stick money in someone’s pocket just so they can comfortably stay in business?

13

I’m annoyed whenever I hear someone say, “You know what this legislation is, right? Just an attempt to destroy you. You’re a VICTIM, man!” Like we need to encourage victimhood in this country.

We ought to be encouraging the entrepreneurial spirit, not victimhood. Stop crying for yourselves and go kick some ass. Differentiate. Add value.

The system that was propped up for years was wrong, and the proposal last year did indeed favor grocery stores at liquor stores’ expense. This year there is more of an effort to address those concerns, but ultimately you can’t make everyone happy. I will never buy wine in a grocery store, but it’s hard to get on board a plan to prevent the consumer from having more choices (even if there will be fewer diverse wines as a consequence).

14

Marc,

Thanks for your thoughts guys. One data point on the ‘people will probably buy cheap wines in the supermarkets’ thought - some will. But the wine stores I know in Seattle make most of the actual revenue on wines in the $10-15 range. What they sell in that range, though, isn’t the Mondavi Woodbridge, etc buy decent Cali Chards, CdRs, Spanish wines, etc. Hell, I picked up 2 nice wines (a Ch. Gigault Cote des Blayes and a Corbieres from Vaugelas) for that price. Wine stores will survive if they can bring in fun, interesting stuff. But ADD VALUE. The shop I buy at has good stuff… but the hook is that the owner and manager taste everything in the shop. Nothing’s brought in because of a wholesaler special, etc.