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.

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