- The contentious battle that has pitted liquor and wine retailers against grocery retailers and wineries may have come to an uneventful end as the New York State Legislature has agreed to a budget that excludes consideration of a bill allowing wine to be sold in supermarkets and other grocery outlets around the state.
Proponents hoped that the state's budget shortfall would usher in the bill, which they insisted would create as much as $160 million in added revenue over two years. Instead Gov. David A. Paterson
and state lawmakers reached a deal to close the budget gap by raising taxes on the state's highest wage earners. In spite of the fact that a well-financed media campaign was waged on behalf of the bill and it received strong editorial support from multiple media outlets, it is unknown at this time if the bill was even brought up for consideration as the budget negotiations were held behind closed doors.
Opponents suggest large grocery chains would fill their shelves with mass
produced wine bought in bulk for higher profit margins, resulting in no real
benefit for the smaller, independent wineries in New York State.
Photos by Robert Romer.
Although grocery stores and other food outlets are permitted to sell beer in New York State, the sale of wine has been the exclusive domain of independent liquor stores and the vineyards themselves. With the exception of the recent change in the "Blue Laws" permitting the sale of hard alcohol on Sundays, the liquor laws in New York State have essentially remained unchanged since the end of Prohibition
. Although the idea of changing the law was first aired in 1960, the last time it was seriously considered was when it was proposed by then Gov. Mario Cuomo
in 1984 to, again, try and close a budget gap. Proponents were optimistic that the bill would pass this time around, despite the fervent opposition to it by the liquor lobby, because of the need of the state to close an estimated $15.4 billion shortfall in the 2009 budget.
The bill in question would have changed the state liquor laws and allowed the sale of wine in grocery stores, as is the case presently in 35 other states. Lining up on the side of the bill were large grocery chains and upstate wineries that hoped to expand the reach of their product around the state. Opponents to the bill, which included The New York State Liquor Store Association, claimed the bill would have literally put a third of its membership out of business.
Also lining up against the bill was the Teamsters Union, fearing the possible loss of independent distribution contracts that benefit its membership. Opponents claimed that any deficit gains realized by the state would eventually be offset by the loss of revenue in the failure of already struggling liquor stores. They also raised the red flags of employee layoffs at wine and liquor stores and a feared rise in underage drinking due to increased availability and the difficulty of monitoring the sale of wine in such high-volume, expansive retail outlets as grocery chains. Opponents suggest that the large grocery chains would fill their shelves with mass produced offerings from wine producing areas such as California, Argentina and Australia, bought in bulk for higher profit margins, resulting in no real benefit for the smaller, independent wineries in New York State like those found on the East End.
Upstate wineries were more willing to take the grocery chains at their word, joining the grocers in support of the bill as they seek more exposure for their products in the metropolitan and suburban communities downstate. On Long Island the reaction to the bill was more cautious.
In response, the proponents point out that states already permitting wine sales in retail food outlets have identified no adverse effects regarding underage drinking. According to the Vote Wine 2009 website fact sheet, "There is absolutely no evidence to support the suggestion that the sale of wine in grocery stores would increase underage drinking.
In fact, according to an FBI statistical report, there is no correlation between states that sell wine in grocery stores and increased incidences of underage drinking or drunk driving." They also contend that increased availability will, inevitably, produce increased consumption and sales to the benefit of New York vintners. It should be noted that grocery chains including King Kullen
and Whole Foods have said that they are committed to giving shelf exposure to New York wine producers, however, there was no provision in the bill to force them.
Upstate wineries were more willing to take the grocery chains at their word, joining the grocers in support of the bill as they seek more exposure for their products in the metropolitan and suburban communities downstate. On Long Island the reaction to the bill was more cautious. "The bill was clearly not well thought through," Charles Massoud, owner of Paumanok Vineyards
, commented. "It was presented as an easy way to generate revenue by charging 1,900 grocery stores for liquor licenses, but they didn't think about the collateral damage. Any bill of this nature must have a quid pro quo for the liquor and wine merchants. If a grocery store can sell wine, the liquor stores should be allowed to sell bread, cheese and other products that compliment their wine business. What our industry needs more than a bill like this one is better leadership and funding, a better business model. The Long Island wine industry needs to do a better job of marketing and distribution." There is, of course, the obvious concern as to what effect it might have on the East End vineyards' tastings and wine tours.
There is, of course, the obvious concern as to what effect such legislation might have on the East End vineyards' tastings and wine tours.
Tom Gilberti of Hamptons Wine Shoppe in Westhampton Beach expressed the wine retailers concern about being priced out of the market, but also brought up the point of service. "We are definitely nervous about it and we believe it will hurt the consumer as well as the retailer. We are selective, specifically tasting and picking the wines that will most benefit our customers. When we taste and select a $100 bottle of wine, we want it to taste like a $200 bottle, we want to pass that value along to our clients. We educate as well as sell, we want the customer to see the differences. We are professional wine merchants and take great pride in our industry." Although high-end wines and small, boutique vintners will remain the strong suit of the independent wine and liquor stores, according to many of the wine retailers we interviewed, sales revenue generated by lower cost bulk producers go a long way to help pay the rent. Losing that percentage of their sales to supermarkets could spell the very end of their existence.
Although not included in this year's budget negotiations, it is clear that the disappointed supporters of the bill have no intention of giving up. According to a statement released by Jo Natale, Media Director for Wegmans Food Market, Inc., "Wine in supermarkets would have produced badly needed revenue of $159 million at a time when New York State needs it most. It would have also given our state's wine industry and New York food retailers, who employ hundreds of thousands, a real shot in the arm. We believe that there will be additional opportunities to move forward on this issue. We are not giving up."
Frequently mistaken for the "Most Interesting Man in the World" from the Dos Equis commercials and the iconic gray-bearded Sean Connery, DMH is the Senior Contributing Editor at Hamptons.com. www.hamptons.com