Friday, February 11, 2011

Ahh, Love New York

Most of my two readers know that I reside in the Finger Lakes, where I also once produced wine. Because of that relationship, and because some truly outstanding wines are produced here, I try to keep abreast of what’s going on in the region and in the state.

I recently joined a teleconference that was arranged to fill the media in on the latest findings concerning the wine in grocery store issue that has fermented in New York for about 30 years.

The closest the state ever came to legislating to allow grocery stores to sell wine was in the state’s 2010 budget, when a compromise bill was introduced to answer all the objections of the retail liquor lobby. Alas, when push came to shove, the lobbyists’ response was simple: we don’t want any changes at all in the present system. Essentially, they never negotiated in good faith and have no plans to do so in the future.

Now, with a new governor and a new budget, the issue seems to be dead as a budgetary item, but it is not quite dead as an issue.

The teleconference was set up by Archstone Consulting, a division of The Hackett Group, which bills itself as “a global strategic business advisory, operations consulting and finance transformation firm.

The New Yorkers for Economic Growth and Open Markets (NYEGOM) funded Archstone’s study.

According to Matt Tepper, spokesman for Artchstone, NYGEOM is, “a statewide coalition of family farms, liquor stores, supermarket chains, independent food stores, grocery wholesalers and small businesses.

Archstone investigated last year’s proposed legislation and budget and determined that if enacted, allowing wine to be sold in grocery stores would have generated for New York State almost $347 million during the first year in license fees, and about $71 million annually for the next five years through licenses and excise taxes.

State revenue is, however, a small part of the benefits.

First, 35 states out of 50 allow wine sales in grocery stores, and of the top ten wine-producing states, New York is in fourth place but it is the only one of the ten states that does not allow wine sales in grocery stores, and in most of the other nine states small retailers operate along with large grocery store chains.

More important, according to the study, if passed, last year’s proposal could have produced a net job gain at wineries, wholesalers, plus all retail outlets of almost 6,400 jobs in the first year and more than 7,600 over five years.

The study looked in depth at four other states—Washington, Virginia, Florida, and Michigan—where wine is sold in grocery stores and pharmacies as well as in retail liquor stores. The findings included double-digit growth in the number of liquor stores between 2002-2007 in each state.

Conversely, in New York, where wine is not sold in grocery stores, there were about 8,000 liquor retailers just 20 years ago; there are about 2,500 today.

Finally, the study found that in states where wine is sold in grocery stores, liquor retailers must keep up with the market. The result is better choices for consumers as well as better prices, thanks to entrepreneurial competition (as opposed to the static, protected turfs that New York State provides to liquor retailers).

The newly elected State Senator for our region, Thomas O’Mara, was in on the teleconference. He voiced concern that everyone involved needs to have an open and frank dialog and also to recognize that change is difficult and it offers a potential negative impact to retailers.

The following is for the senator’s benefit: during the last go-round with proposed legislation on this issue in 2010, the retail lobbyists, Laststoreonmainstreet.com, turned down changes, including some that liquor retailers have been clamoring for years to achieve: the ability of liquor retailers to sell mixers and food items; the chance for liquor retailers to form cooperatives to buy products to gain access to large volume discounts; the chance for liquor store retailers not only to sell their licenses at fair market value, but also to hold more than the one license which they are presently confined to owning; the chance for relaxing stringent rules that force retailers into negative relationships with wholesalers; and the chance to change shop owner/order takers into free market entrepreneurs (I believe this is the one that gives most of the retailers the jitters).

To drive home their point, Laststoreonmainstreet.com stated flatly and plainly that it didn’t want anything to change in the way wine is sold in New York State—nothing.

Mr. Senator, can the dialog be any more frank or open than that?


Copyright Thomas Pellechia
February 2011. All rights reserved.
Lifting a blog entry without the author's permission (and without recompense) is a copyright infringement--period.

13 comments:

Vinogirl said...

I had no idea you could not pick up a bottle of wine, along with your bran flakes and baking soda, in New York supermarkets. Now admittedly, the selection of wines in my local supermarket is not great (fantastic choice of champagnes however), but you can't beat the convenience of one stop shopping.

Thomas said...

The liquor lobby here is amazingly powerful, and it's a bear to get legislators to stop looking at campaign contributions and start looking at what consumers want and what makes sense.

The retailers use two blatant lies to make their case against wine in grocery stores: that it will automatically create alcoholics out of underage drinkers and that it will put mom and pop stores out of business. The fact is that mom and pop stores have been going out of business for two decades, thanks to large retailers that get around the one-license per owner rule by various methods and also develop discount buying clout to price small shops out of business.

The retailers don't want to have to compete when they have a nicely government-protected business going.

Marcia Macomber said...

Thank you for the more detailed explanation of how the liquor lobby is doing their bit to maintain status quo, per se. No surprise there.

What was fascinating were the results in the study conducted IF the proposed legislation had been enacted. I was also unfamiliar that the mom 'n' pop retailers were going (so far) by the way side in NY to become veritable dodo birds in the 21st century.

I'm sure you're not holding your breath to see changes enacted anytime soon. (But don't give up either!)

Thomas said...

Marcia,

I'm so stupid that last year I thought the grocery store legislation would happen. It wasn't that I underestimated the power of lobbyists--never do that. It was because things are so bad in NY that any change seems like a necessity, and so I thought the governor would be able to slip it through.

We have a Democrat head of the state senate, who is a teetotaler, and who is also a money-raising powerhouse with open pockets for lobbyists who blatantly stated, against all polling, that there is no call for legislation on this issue in the state.

The liquor lobby in this state is a holdover from the gangsterism that gave us liquor control after Prohibition, and politicians are generally as corrupt as lobbyists. Lose-lose situation for a populace that is so dumb it consistently votes against its own interest.

Vinogirl said...

Crazy!
...And don't get me started on the fact that ADULTS have to wait a further 3 years to be able to legally but and consume a glass of wine!

Vinogirl said...

That would be BUY not but!

Carol said...

Excellent summary of the situation, Thomas.

Selling wine where food is sold is such a no-brainer.

I don't think non-drinkers appreciate that they pay more overall taxes because their state reps won't let grocery stores buy a wine license and collect taxes from the sale of wine.

Chey said...

I appreciate your insights, Thomas. Thanks to Carol for pointing me here!

The state is in an increasingly desperate situation. It's losing revenue because people with money are leaving due to the tax liability. Our new governor (whose campaign was well-supported by the liquor lobby, incidentally) intends to throw more money down the rat hole known as high speed rail. Revenue must be raised, and WIGS is a no-brainer. It might not happen this year, or next, but I am convinced that it will happen.

Thomas said...

Thanks for stopping by Carol and Chey.

Tina said...

Thank you Thomas! I really appreciate that you participated in the press call with us, and summarized the issue so well here. You certainly hit the nail on the head about Senator Omara. I am really tired of him "walking the line" on this issue. There has been plenty of discussion, the liquor store lobby has been very clear. The Senator needs to step forward and support all of the wineries and grape growers in his district.

Thomas said...

Tina,

My reading of the senator: only someone uninterested in making the leap could have said what he said.

Scott said...

So when wine is allowed to be sold in grocery stores I think the liquor stores instead of fighting this to the bitter end they should be embracing the change and start to approach this like every other business in the US that has competitors and learn what their customers like, and learn about customer service, do a marketing plan, figure out how to compete against the grocer like most liquor stores in other states where wine is sold in grocery stores do.

Thomas said...

Scott,

I think that's what they are afraid of: work and entrepreneurial spirit.