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February 23, 2009

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There are more than a few wineries on this list with mass-produced, broad-appeal wines which would, in theory, benefit more than the smaller operations if grocery store sales were allowed.

The opposition of these establishments signifies to me that even the NY wineries with the low, flexible price points due to high production volume are still not confident that they can compete with the super-volume producers that would appeal to the buying policies of most grocery store chains.

Without the personal relationships developed in the small liquor stores, will the wine giants drown out even the biggest NY producers? Maybe this is what the this list is telling us.

Jason,

This list is also, at least in some measure, an insurance play. Think about it: you're a relatively large NY winery. Your distributors and liquor stores are on your back about your position. What's the smart thing to do? Probably to oppose the proposal, maintaining their loyalty to your products, when you will benefit regardless if the bill passes.

I'm not saying that's the only thing this is about -- certainly not. But there's no doubt it's in play.

Regarding smaller producers, I've spoken to plenty who are passionately opposed to this bill because they worry about selection in grocery stores and the fate of their friends in the liquor store industry.

Btw, Lenn - That first sentence is not complete. I assume you're saying the list of those opposed is much larger.

I know for a fact that many wineries on this list are absolutely in favor of wine going in grocery stores. The reason they are on this list (that was created by the liquor stores) is because they were blackmailed. Liquor stores have been threatening to remove wines from their shelves if a winery doesn't agree with their position!

Hudson-Chatham Winery is also against the bill.

It is may be too late for this, but at least I want it on the record, in reply to Mary Contrary. If in fact there are wineries that are in favor of wine going in grocery stores let us hear the arguments that makes this a compelling choice.

At the risk of being repetitive here are the reasons why it is not such a good idea:
1. There are it seems about 19000 grocery stores vs about 2000 wine stores, almost 10 to 1. Even if only 10% of grocery stores would apply to sell wines that doubles the points of sale of wine.
2. It is unlikely that wine sales will grow just because there are more points of sales. I do not buy more toothpaste when I see more of it. Even if demand should grow it will not double. Therefore someone will lose and the liquor stores have invested dearly and they are more likely to be mom and pop types than large corporations. Where is the logic that tells the State to take sides and drive hard working people out of business?
3. Grocery stores value their shelf space even more than wine stores and are more likely to stock so called "name brands" and discount them. There are no NY wineries, save perhaps Canandaiga/Constellation Brands, (which has very little NY production in its portfolio), who qualify to fill such profile.

While there are some grocery stores that have said they will sell NY wines, they are unfortunately in the minority. All in all this plan is misguided, unfair to the stores. If it works for the state in the near term by raising more tax revenue, over the long term it will hurt NY wineries, and the state will likely not benefit if the larger sales volumes are of mass produced cheaper wines. As to the consumer, those who prize quality will likely have to pay more for it.

So those wineries that believe it will help them may be the very few that have, near term, secured some shelf space with a couple of stores. In the end everyone looses.

We Anthony Road Wine Co.,are one of the wineries that have stood up and believe that the sale of wine in food stores is a positive thing. 1.For the consumer, convenience - unlike toothpaste- wine is currently available in a limited number of locations. Wine is food and should be sold with food. Wine belongs on the dinner table and shared by the family. As a nation we are inching past 3 gallons per capita - no where near many other parts of the world.
2.The only reason that our wines are on any shelf is that a consumer comes and takes them off that shelf with enough frequency that the store owner profits. We are currently sold in grocery and wine stores in Wisconsin. We compete on quality, taste and value.
3.I believe that the 2500 outlets for wine in New York, down from over 5000 years ago, are missing an opportunity to change some of the antiquated laws that they have to operate under. I know there are stores that would welcome multiple licenses, opportunity to sell other items, such as gift bags, etc.
4.Prohibition ended 75 years ago, monopolies are restrictive and stifle competition, it is time for a change to let wine out of the dark ages, put on the dinner table and move on. If I can't compete - so be it - but I would like to try.

John, I know Anothony Road is in favor but you really should read what you just said. We have laws about underage drinking that other areas of the world do not! Wine is not a food it contains alchol and if abused is a lot more dangerous than a pork chop! I am a small wine & liquor store owner and can tell you that this proposal will be devastating to me and probably cost me my business. I have not threatened to pull your products off my shelves because I think you will do that on your own if this passes. The big guys want more of the pie and the little ones are the ones that will lose, that is you and me. We have been flooded with new and stricter laws that is why most stores have closed down but now that the big stores like Wegmans and Walmart want more they will ease the restrictions for them. You should give your support to the ones that have supported you all these years like we store owners have. Good luck if this passes and I hope you can afford the prime shelf space you will be charged and the sales quota for your product keeps you on the shelves.

Kenneth,

Would your business benefit from being able to sell beer and/or food? There are some store owners and winery owners who think the liquor stores association should be negotiating for the green light to sell other items.

Thanks for posting your thoughts.

As a consumer who likes wine, I kind of want to side with the proposal for 2 key reasons:
1) simple economics - - more competition and more distribution options should yield better pricing options for the consumer.
2) more importantly, I believe that distribution through grocery stores will bring better quality to liquor stores.
Why do I believe this? Because I'm from CT and have lived it in terms of beer. In CT, liquor stores can sell beer, wine, and liquor while grocery stores can sell beer only. The grocery stores carry the usual suspects (Bud, Miller, Coors, etc) plus a half dozen smaller production beers. While the liquor stores still carry the usual suspects, they have turned their focus to increasing their selection of small production and micro brews. There is a liquor store in Fairfield that carrys Blue Point Ale - - and I can assure you that no grocery store in CT does.
Can you see the parallel?
Grocery stores would end up carrying Kendall Jackson and a lot of criter wines, not small production specialty wines. This should enable the liquor stores to focus more of their inventory and efforts to these smaller wines. After all, how many times do I hear that liquor stores in NY don't carry many NY wines? It's quite possible that many liquor stores will make space for NY wines and other small producers if the grocery stores are filled with the high production bottles.
I've seen this model work in CT related to beer and it has benefited me in terms of price on the high production items (because of grocery store competition) and in terms of selection (because of better focus at the liquor stores).
Remember: there is nothing in the proposal that says liquor stores are going to be shut down. They must change their business model a bit (for the better if you ask me), but they can still thrive.

Evan, we have not been allowed to sell anything but wine & spirits for years, not even a gift bag without getting HUGE fines, but now that the large grocery stores have run all the mom & pop grocery stores out they have focused their attention on the rest of main street. There is no way that a small store can compete in business with the large stores due to their buying power and most small stores do not have the floor space for all the equipment needed. Remember when all the neighborhoods had a drug store, grocery store, soda shop, liquor store etc., now they are all in shopping malls or big box stores. We pay huge prices for out licenses and have been for years and have had to obey the regulations set by the state in regards to every aspect of our business but now that the big boys want it they are willing to change the rules for them and drive the small guys out. Realy, the optionhj of selling other products is not going to keep our doors open because soon they will be pushing for spirits in the grocery stores, this is but the first step.

Does the consumer really benefit as Dave Foley expects?
If selling wine in grocery stores, not only increases competition but also the total demand for wine, so much so that wine stores are not driven out of business, then wine stores may be able to compete as suggested in the beer example.

Demand for wine is not as elastic as that and while demand may grow a little, many wine stores, especially those that are co located in a shopping center with a supermarket will be driven out of business.

If so how does that help NY wines, as there is broad consensus that grocery stores are unlikely to stock them.

The problem with the current proposal is that it does nothing to remedy the certain losses that wine stores will suffer and that is patently unfair in our system. The current proposal has not given the stores any relief.

So if grocery stores will end up carrying "commodity" wines and there are far fewer stores left standing, a consumer seeking quality wines may find less outlets and therefore higher prices. Hard to see how that benefits the consumer.

Furthermore as has been suggested by someone else, there is a system elsewhere (is it Arizona?) where grocery stores can only sell wines from wineries that produce below a certain ceiling ( is it 250,000 gallons?). That might benefit NY wineries.

Either way there has to be some measure to protect existing stores, such us prohibiting a grocery store from selling wine if there is a wine store within an x mile radius or allow wine stores to sell cheese and other items that complement wine. But to just create overnight such competition to put half the stores out of business is irresponsible.

And, Dave Foley, I do not know where you get the idea that wine stores do not carry NY wines. Half of our wholesale business at Paumanok is with wine stores and the other half with restaurants.
As to the suggestion that wine stores have to change their business model I think they would love to do that if only NY state would let them. But as indicated by Mr. Cole he will be fined for selling even a gift bag. And as stated earlier one of the problems with the current proposal is that it provides no relief to wine stores. Unfair!

I don't see Mr. Massoud's arguments for opposing wine sales in grocery stores compelling in as far as benefitting consumers. In fact you can see his post quickly drifts back to arguments for protecting local wine stores (btw Charles, I've been a big fan of your wines for many years).
Unfortunately, for me, I know of no really interesting local wine shoppes in my area (Islip), save one. "Down The Rabbit Hole" in Sayville has interesting wine and a knowlegable and engaging proprietress, but I am sure this boutique store would not be affected by the Stop & Shop across the road selling plonk.
Most local wine shoppes push the same middle of the road offerings that the supermarkets would. Most have a shelf for LI wines but they are usually the same producers and the same basic entry level stuff. I have rarely, if ever, seen LI wines "pushed" at the local shoppe. I'm sure there are some terrific local wine shoppes scattered across the Island, but I'm equally sure they are the ones that would adapt and survive.
I also say let the local liquor store sell beer, gift bags, cheese, cheese doodles, whatever. Level the playing field. I just don't buy how consumers suffer from having greater choice and competition.

One interesting aspect that I haven't seen addressed is how the big box stores fit into this legislation. Will Costco, Sam's, BJ's be allowed to sell wine? If so, that is a game changer for wine lovers, in my opinion. In my travels to states that allow these "big box" stores to sell wine, the selection and prices are quite good. I doubt I'd buy wine at Pathmark, but I know I would at Costco.

Mr. Massoud,
Thanks for your response, but I do see the consumer value. A couple quick points:
1) CT allowed beer sales many, many years ago, so the CT liquor stores have had plenty of time to adapt; the market here for beer between the grocery stores and liqour stores is very mature and each seems to have found a beneficial niche. I would expect some growing pains in the first few years of this new wine proposal in NY which might cause consternation, but I still believe it ultimately will benefit the consumer.
2) In terms of having NY wines available in NY stores, I see many, many posts on Lenn's site about New Yorkers who can't get LI wines that Lenn recommends. I would guess there is a decent amount of liquor stores on the LI forks that carry local product, but my sense from reading this post is that it doesn't stretch far beyond that. Also, I'm from southern CT (Fairfield) and I barely see any NY wines other than Pindar and an occasional entry level bottle of Pellegrini. (I buy the Pellegrini every time I see it to support the region.) Maybe the issue of distribution in the TriState area has lots of layers and complexity, but I have to believe that added channels for sale couldn't hurt.
I'm a HUGE supporter of Long Island wine and I want to see it grow as much as anyone. Some day, I'd love to head to my local liqour store in CT and pick up a Paumanok wine on the shelf, but until distribution can expand I'm stuck to my twice-a-year visits to the North Fork.

PS for Sean: In CT, grocery stores cannot sell wine, but BJ's and Costco can. Not sure the reason?? When I do go there, they have the mass producers only (Beringer, Little Penguin, etc) and that's it. Prices are good, but selection is nothing to write about.


Dave and Sean,

The bottom line is that the current proposal is flawed. I want wine sold everywhere of course, including at the barber shop! However if you allow grocery stores to sell wine without giving the stores any relief it is unfair. The proposal should be modified to allow stores to sell wine accessories and cheese and bread and beer, and olive oil and vinegar ( a wine product!!) for example, which they are not allowed to do today. If the playing field is leveled then let everyone sell wine, of course. With such modifications then the stores have a chance to modify their business model and make up what they might loose to the grocers.

Charles,

Hello. I'm late to the debate, but your final post is right on. The problem is: retailers are uninterested in what you propose, that "...should be modified to allow stores to sell wine accessories and cheese and bread and beer, and olive oil and vinegar ( a wine product!!) for example, which they are not allowed to do today."

If they were interested in doing that, they'd be lobbying for the change instead of lobbying to kill the idea completely. The fact is, retail shops like the protected market that they have, and they can't seem to imagine a better possibility.

I have spoken with a few of the wineries on the above list and from their comments I do think one should check all the wineries on that list and see which ones actually gave their permission. The big question is how does one get off the list with out seemingly to take a position?

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