Feb 09, 2009 Ami Olson Uncategorized
At the first in a series of Town Hall-style meetings Assemblyman Will Barclay has planned throughout the 124th District, school budget and general economic concerns were among the top priorities for attendees, but one issue was revisited more often than others: wine in grocery stores.
Of the group of about 15 people who attended the meeting, several were representing local liquor stores as owners or employees, and none of them were in favor of Gov. David A. Paterson’s proposal to allow grocery, convenience and drug stores to begin selling wine.
Barclay said he was not surprised to hear from storeowners at the meeting; he had been notified earlier that several business owners would be present.
“They are very organized,” Barclay said. During the meeting, Barclay intimated he had the impression grocers had assumed the move was a done deal, but didn’t count on how united liquor storeowners would become against the proposition.
He added that he felt Paterson had probably made the proposition because of the revenue potential – estimated at more than $100 million to be gained by the state in the first two years if enacted – and had not realized, as Barclay hadn’t at first, the impact it could have on liquor store business.
The Last Store on Main Street coalition is the manifestation of small business advocates and wine sellers hunkering down to take on the often regional or national grocery, convenience and drug store chains.
Bad for business
“The balance will be destroyed,” Ray Rudolph stated. Rudolph owns Plaza Liquor Store in Camillus.
That fragile balance exists for liquor proprietors between wine and liquor, and the ratio of tax and profit each product presents. Grocery stores want to sell wine, but not liquor, because of the low state-imposed tax and the high markup, Rudolph said. Selling hard liquor imposes a high excise tax in New York State and the profit margin is negligible.
“The majority of our profits are from wine sales — there’s no money in liquor,” agreed Jon Hallinan, a fifth-generation proprietor at Hallinan’s Liquor. He also pointed out his family’s store, as well as many others throughout the state, have built a business over almost 100 years since prohibition was repealed. Wine in grocery stores could mean the end to family-owned businesses with a long history in their communities.
Rudolph said individual stores employ several people, occupy rental space and purchase insurance — revenue that would be lost if independent liquor stores went under.
Grocers are not going to increase their space to make room for wine, or employ more people, Rudolph said.
But, maybe not
On the contrary, Paul Speranza, vice chairman of the general counsel and secretary of Wegmans Food Markets, Inc., noted in a telephone interview that selling wine in stores other than liquor stores would create jobs on the production side of the wine business.
It is unlikely liquor stores would hire more people than they already employ, Speranza added. But if the retail outlets for wine is increased, grape farmers and wineries will be able to employ more people to meet demand for product.
Speranza testified to the New York State Senate Finance Committee and Committee on Ways and Means to state his case and discredit liquor store owners’ two main arguments: that liquor stores can’t survive selling the hard stuff alone, and restrictions placed on liquor and wine sellers will not allow them to compete with grocery, convenience and drug stores.
Speranza claimed 30 to 40 percent of liquor stores’ profit comes from hard liquor, not wine.
“So they’ll still have the monopoly on that,” he said. And as for the limited hours of business and restrictions on items sold, imposed by the state – liquor store owners need to take that fight to the state, not grocers.
The bottom line
The collaborative efforts of liquor store owners throughout the state, and even in the same small towns, is a sign that competition between local stores has taken a back seat to the threat that none of them may be able to survive if the proposition passes. Hallinan and Rudolph sat side-by-side during Barclay’s visit, finishing one another’s sentences at times.
But a little more competition is only fair, Speranza pointed out.
Liquor stores hold the monopoly on liquor and wine sales, and it’s only fair to consumers to break the monopoly at least on wine and pass competition-induced price savings on to shoppers.
Among the many arguments against the proposition, increased underage drinking and drinking and driving provide more statistical ammo, but facts and figures are handy for the pro-proposition side, too.
As Speranza pointed out, this is but the most recent battle in a decades-old fight.
He and Danny Wegman, who founded the chain, started working to put wine in Wegmans stores more than 30 years ago, Speranza said.
The difference this time is that the move is part of the Governor’s budget.
But that isn’t making Speranza any more optimistic about this go.
“We still need to be realistic,” he said.
In the end, the proposition is but one of many controversial issues enveloped in Paterson’s budget, and business owners and consumers alike will have to wait and see whether this proposition makes it through the legislature.
The other side of the aisle
“We are looking at the issue. I am very concerned at this point how it will affect small business owners in New York,” Assemblyman William Magnarelli said. Magnarelli will wrap up his own series of town hall-style meetings Thursday Feb. 19 at Geddes Town Hall at 7 p.m.