Liquor store owners pop a cork over plan to let grocery stores sell wine

A scramble for budget funds has blown the cork out of an aged battle between grocery and liquor stores in New York.

In order to close a $15.4 billion budget deficit, Gov. David Paterson has proposed raising $105 million in licensing fees by allowing grocery stores to start selling wine.

With wine comprising more than 50 percent of most liquor stores’ sales and growing steadily, opponents say the move would put thousands of family-owned liquor stores out of business. That has left them locked in a high-stakes fight both sides are prepared to take to the mat.

“We’re going to fight as hard as we can for the livelihood on which we depend,” said Mark Ressler, vice president of the state Liquor Store Association. “It’s a fight for survival.”

A study commissioned by the trade group found the loss of wine sales would add another 4,000 to 6,000 people to already spiked unemployment rolls — jobs that wouldn’t be recouped by grocers.

But supporters of the change, including State Agriculture Commissioner Patrick Hooker, the Food Industry Alliance, Wegmans and Tops Markets, believe the move would boost wine sales, especially those from New York wineries.

“Increased partnerships with local wineries and farmers would be a win-win situation for both Tops Markets and New York State,” said Tops spokeswoman Kate McKenna.

Liquor store owners don’t see the benefits.

“It’s going to take away our last healthy mom-and-pop business, just like it did with the bakeries, the florists and the butchers,” said Ressler. “All so grocery stores can add one more aisle of merchandise to the zillion other items they already sell.”

It’s not a request for unfair advantage, owners said, it’s a plea for the state to play fair.

“I believe in capitalism. I believe in free trade. But that’s not what we’ve got in this state,” said Dianne Bloom, owner of Clarence Wine and Spirits. “If we had free enterprise, shouldn’t I be able to carry cheese and crackers or napkins?”

“I believe in capitalism. I believe in free trade. But that’s not what we’ve got in this state. If we had free enterprise, shouldn’t I be able to carry cheese and crackers or napkins?” Dianne Bloom, owner, Clarence Wine and Spirits

Bloom is one of many owners already feeling strangled by a tightly regulated government liquor authority. The same laws keeping grocery stores from carrying wine are the ones that have prevented liquor stores from carrying cigarettes, drink mixers and other items regularly requested by customers.

“They’re changing the rules in the middle of the game,” said Bill Caputi, owner of Caputi’s Sheridan Pub in Tonawanda.

Though there are indications the government would relax laws pertaining to what goods liquor stores can carry, owners said those concessions wouldn’t even the playing field.

Liquor stores are prohibited by law from becoming a chain of more than one store. It’s also required that they be owned by on-premise operators. In addition, owners are barred from forming collective buying groups with other stores, which would increase their purchasing power through bulk orders.

If the change passes, grocery stores would immediately sidestep those rules, making wine available in chains of stores and giving chains an intense price advantage.

Many large grocery stores, including Wegmans and Tops, are looking forward to the possibility of carrying wine, citing improved convenience for customers, as well as a better shopping experience.

Wegmans has already seen great success in its Virginia and New Jersey stores, where wine sales are permitted.

“Our employees work hard to educate customers about pairing wine and food,” said Ann McCarthy, Wegmans spokeswoman. “We’ll bring that same level of passion to our stores in New York State.”

But some independent grocers are batting for the competition.

“If I was a greedy person I’d love to clear out a few shelves of stuff that’s not selling and make some money on wine,” said Frank Budwey, owner of Budwey’s Supermarket. “But let’s be fair. It’s short-sighted.”

Ressler agreed, saying the move would be a “quick fix” bringing an influx of cash, only to cost the state money in the long run through unemployment, lost income tax, real estate tax and emptied retail space.

“You would have a two-year windfall in new licensing but even the governor admits it would fall to a small increase after that,” said Ressler.

In fact, liquor stores have offered to pay an increase in liquor license fees to make up the revenue and keep the status quo.

The liquor store association also is skeptical of claims that the change would increase sales of New York wines.

The LSA said the same kind of push years ago by New York wineries to put locally-made wine coolers in grocery stores ended with unintended negative consequences. Sun Country Wine Coolers went out of existence when California wine coolers such as Bartles & Jaymes and Seagrams saw higher demand.

“Grocery stores only have so much room, so they’re going to end up carrying what is most popular, which are California wines,” said Caputi. “It’s going to hurt the wine and grape growing industry in New York state not to have our support.”

But Wegmans insists its passion for local produce would carry over into local wines.

Another charge lodged by liquor store owners is that their owner-operated stores would do a better job of guarding against underage purchase and theft. But both Tops and Wegmans said they have proven systems in place to keep both risks under control.

“We already have a 100 percent proofing policy in our stores that sell beer, so it wouldn’t be a problem for us,” said McCarthy.

Whatever the outcome may be, liquor stores owners said the proposal has left them feeling vulnerable and stung.

“We did everything right. We followed the rules. We took the gamble and invested in New York state,” said Ressler. “It’s a slap in the face.”