What’s in store for New York wines?

Ontario County, N.Y. — The holiday season is a crucial time for most retailers. It is no different in the wine business. The weeks leading up to Thanksgiving and through New Year’s Day are by far the busiest of the year for wine retailers and wholesalers. It is safe to estimate that we do about 35 percent of our volume in the last quarter of the year.

Recently Gov. David Paterson unveiled his budget proposal, which address a $15 billion (yes, that’s a “b”) deficit by recommending wide-ranging budget cuts and revenue generators. Some of these proposals may drastically affect the wine business in New York. Some of the changes advocated by the governor are the elimination of funding for the New York Wine and Grape Foundation, permitting the sale of wine in grocery stores and increasing the excise tax on wine.

I feel badly about the possible demise of the Wine and Grape Foundation, not only because I know the people there but also because they do good work. They fund research programs at Cornell University, support a dozen wine trails, sponsor varied wine competitions and generally keep the state’s wine business moving forward. For the first time ever, there is no money included in the budget for them. There is also no funding included for the apple and maple industries nor for any other agricultural entity.

The increase in excise tax is fairly cut and dry. Paterson proposes raising the tax from 19 to 51 cents per gallon. The wineries, or the wholesalers representing them, would be responsible for paying this and the governor figures the state can generate about $53 million annually. The bigger question is how much would this impact smaller, family “farm” wineries. Many are already struggling with higher energy costs, labor costs and internal competition from other wineries.
Raising the excise tax means one thing for certain — the cost of wine at the retail level will go up as this tax will ultimately passed on to the consumer.

It seems every year we are confronted with the possibility of grocery stores selling wine. But this year feels different. My gut tells me the proposal has a larger head of steam than in past years, primarily because it is coming right out of the governor’s office.

The aspect that intrigues me about the proposal is that it always seems to be predicated upon being beneficial to New York wineries. I disagree to a point. It probably would be helpful to the grape growers and some larger wineries. But it would likely not help most smaller “farm” wineries, which don’t have the production to support grocery distribution. Couple that with the increase in excise tax to these smaller players and we could be looking at a crippling effect. Our current system has been in effect for 75 years and liquor store owners see no reason to change it.

On the other hand grocery stores see this as an opportunity to provide convenience and variety to their customers. They argue that wine is a food-friendly product and would relish the opportunity to cross-merchandise the two.

The arguments that will take place in Albany over these issues will be tantamount. The only constant seems to be change, and all of us in the wine industry are bracing ourselves for it.