Wine in NY food stores – food in NY wine stores? A 2,400 part series
Buying crudité and rosé at the same time might help New York solve its budgetary woes. Or so Governor Paterson thinks.
That’s why he has proposed to allow food stores to sell wine, a subject we discussed the day the idea was floated. To recap the budgetary logic, he proposed to more than double the excise tax on wine and increase the points of sale beyond the 2,400 wine and liquor stores in the state and allow the 19,000 grocery stores to sell wine. The Governor’s office estimates that it will bring in an additional $150 million over three years, presumably from new store license fees and excise taxes rather than an increase in overall purchases. The deficit for next year alone is forecast to be $15 billion.
Shortly after I moved to New York State from Chicago four years ago, I was looking for a supermarket wine for a story and wondered where you found “supermarket wine” in New York. The answer is epitomized in this store I saw the other day, which we can call “Wines & Liqu” since that’s the only part of the neon sign that was illuminated. It’s these stores, uninspiring package stores, that don’t much invest in human capital and stock high-volume brands that will be most threatened by the impending change.
But alongside the Wines & Liqu stores are thriving boutiques that is probably the best concentration of wine stores in the universe. Check them out on my map of NYC wine stores if you want to explore some of the rich tapestry that blankets NYC. In the best of times, these stores would have little to fear from Costco, Whole Foods, Trader Joe’s, Food Emporium, and Fresh Direct (oh wait, they already do) selling wine. But this is not the best of times; it is the worst of times economically so an erosion of even a small percentage of these stores’ business could bring them to the edge of a precipice.
So the challenge for these stores is to make this into an opportunity. One option is to take a page from the Chicago store playbook and add cheese, cured meats, and craft beers, sort of a gourmet deli with a strong wine focus. Another option is to continue to invest in staff training, since big box retailers all too often let the flaps of paper do the talking. In my view, the staff represents one of the great assets of small stores; forming a good relationship with someone on the staff can be worth it’s weight in, well, Cabernet. A final strategy that requires more capital (you remember back when banks made loans, don’t you?), would be taking a winning wine store and expand it to other parts of the city or state.
Many stores offer a discount to purchases of 12 bottles or more, in part because they get volume discounts when they buy from wholesalers. But food stores selling wine could siphon off the one or two bottle customer. Far be it for me to want to clog up my wallet any more, but perhaps a loyalty card scheme might come in handy and apply a discount retroactively after twelve bottles purchased. Or take a page from the air miles rewards program and offer customers tiered service through loyalty discounts or other perks based on total expenditure in the year. Price competition is likely to be more acute in the next chapter of NY wine retail, particularly if interstate wine shipping becomes a more widespread reality (but even this holds within it the opportunity to legally expand the market for boutique wines to states that don’t have such a varied selection).
Could interesting wines end up on supermarket shelves? Absolutely; I’ve certainly gotten interesting wines in supermarkets in Chicago and California. But supermarkets often operate with a regional buyer who sets up an approved list. And the list at even the best may not be extensive and small wineries, often the source of tasty bargains and interesting splurges, may not on the list since they don’t have sufficient volumes to supply a regional or national chain. As to drinking locally made wine, it’s probably a fair guess that since most wineries in New York don’t produce a lot of volume, they wouldn’t be winners under the reform either.
It will be fascinating to see what New York wine retail looks like in five years, assuming the proposed legislation passes. But to survey what the situation looks like now and hopefully generate some ideas, I’ve talked to several wine shop owners about their stores and their thoughts going forward. Check back for the first in our 2,400 part series, Better Know a Wine Shop.
On February 10th, 2009 at 9:03 pm ,mydailywine wrote:
There is no doubt that the smaller independent liquor shops in NYC will feel the pain if grocery stores are allowed to sell wine.
But I believe in the marriage of food and wine and it does seem archaic to not be allowed to purchase them in the same shop.
And yes, as you point out, the majority of the wine/liquor stores are dusty little shops selling limited amounts of high production wines at big markups.
On February 11th, 2009 at 10:03 am ,Steve wrote:
I’m usually for less restrictions on business, but this one is definitely in favor of large retailers at the expense of consumers.
The situation here in the UK – where supermarkets completely dominate the wine trade – should be seen as a warning. It’s not just big brands dominating. The real problem are the exclusive brands that are usually substandard as well as poor value but define comparison. Think the Trader Joe’s model but on a wide scale.
The tough regulations in New York have accidentally made it one of the best places for the wine consumer in the world – it will be a shame to lose a wonderful thing.
An example of a good use of regulations is the NFL – they are highly regulated (and strangely quasi-socialist) to level the playing field between teams. In the end, the fans benefit since the leagues aren’t dominated by a small group of teams.
On February 11th, 2009 at 12:40 pm ,Cheryl Butera wrote:
The Governor is wrong and will only close more businesses NOT create new jobs. I agree with Steve from the UK. Our liquor stores in New York State are gems to recognize and cherish not destroy!
On February 11th, 2009 at 7:30 pm ,Dylan wrote:
“Wines & Liqu†is a great sign. One of my favorites was actually for a store lighting store, called “Capitol Lighting,” except the lighting for the sign was burnt out to say, “Capitol L—-ing.”
What’s positive about these stores having to defend their turf are the very suggestions you mentioned they would need to remain relevant. Competition like this forces you as an owner to weigh-in on details like a properly informed staff, or the concept of loyalty programs. Perhaps you have weekly tastings with a free information session, first come, first served? Whatever the choice, it only serves to improve upon the prior business model and it’s thanks to the fear of losing out.
On February 12th, 2009 at 1:05 pm ,Hey wrote:
Ahh the bleatings of a protected rentier class at seeing true competition and customer service. Let us assemble the tiny violin section!
Wine at grocery stores works perfectly well in California and the UK. Trader Joe’s and Whole Foods do interesting wine just as they do interesting food. Larger chains (ok, so NYC doesn’t know what that means) focus on larger markets.
Specialist wine stores will thrive, just as they do in California and the UK. Berry Bros are thriving despite people being able to drop into the local Tesco for a bottle of wine, while California has some of the most interesting and passionate wine sellers despite competition from Safeway, Von’s, Ralph’s…
The people hurt will be those running crappy liquor stores, though by their continued prevalence in California not too badly, and marginal NY producers. The impact there is likely to be minimal as well, with the structure of the NY retail economy, and if a winery truly depends on ridiculous state regulation to stay in business they should be embarrassed and deserve to go broke.
Some of the better wine stores will branch out as you suggested. Others will just need to raise their game slightly on service and pricing.
Treating wine as some dangerous good is insane and destructive. Treat it like cheese – availabel from grocery stores, farm stores, markets, gourmet delis, and specialty cheese shops. All those stores serve a purpose and niche in distributing cheese, just as the same (or similar) stores will serve a niche in wine retailing.
The idea that UK wine retailing is horrible is beyond laughable. To further destroy the point, look at how wine is sold in France and Italy. Is it locked up in specialized (or government controlled) stores, or is it freely sold across a range of outlets? Are these countries viewed as having strong or weak wine cultures? Since we’re supposed to be learning so much from France and Italy in treating wine as a part of life, and they are viewed as sources of the “good life”, shouldn’t we emulate their retail culture for wine by letting grocery stores sell wine?
The bad thing in Patterson’s proposal is the increase in excise tax. We don’t need to further overtax wine or to further complicate the state’s revenue generation. Eliminate all taxes but the state income tax so that voters know what the true cost of government is.
On February 12th, 2009 at 5:56 pm ,kim wrote:
What the general public doesn’t seem to understand is that this proposal isn’t promoting proper competition at all. The SLA makes billions a year fining stores over ridiculous things and I refuse to believe they’d consider letting up on any of the restrictions already in place. Which means basically grocery stores will be allowed to sell wine alongside cheese, accessories, gift bags, wine baskets, etc while liquor stores are left in the dust.
It’s also not a valid comparison to suggest “well it works in California, so it should be okay here.” California’s been selling wine in grocery stores for decades, of course they’re okay with it now. I’m sure they didn’t attempt to institute a job-crushing proposal like that in the middle of a recession when stores were already hurting from reduced sales.
On February 13th, 2009 at 11:49 am ,Silenos wrote:
Line me up with Hey on this one. The last time I checked, the rating pages of Decanter, the only useful wine glossy in a universe of dog poop paper, are filled with wines picked up at Tesco. Of course, in the short to medium term, we can expect supermarkets to stock reams of Yellow Tail and the like, but is it really a bad thing to free the space taken by that type of swill at wine shops and have it filled with potentially better juice?
Face it, the stores that will survive if this goes through are those that have done their homework and toiled hard to find interesting stuff and cultivate an audience for it. I know a store buyer who made a killing recently selling grower champagne over the Holidays, something inconceivable even a few years back. It took him months and months of strongly held faith to wean his customers from just pointing at the overrated yellow labeled bottle which lazy shop owners play the lost leader game with. As for the plexiglas armored shops, well, they’re dead as wine haunts. They’d better hope their hard liquor sales are strong.
True, there are problems with the proposal, the excise tax for one. And there is a risk that boutique importers may find some of their producers siphoned off by the giant “might as well be selling cars” distributors looking to edge their way into the better shops, but that’s el capitalismo, baby, and I trust that the small guys will remain at the vanguard of what’s new and different that hits the shelves because it is passion that drives them and not just loot. Besides, that tasty little Languedoc Syrah they once had a tough going placing in the midst of oceans of pissy Shiraz may now find room to grow.
On March 9th, 2009 at 11:50 am ,waltpete wrote:
If grocery stores can sell wine, the liquor stores need to be allowed to expand the kinds of products they can sell as well. This makes it more of a truly level playing field. Right now, there is no provision to do this for liquor stores. This would help them to better fill that niche of a gourmet food/beverage shop that most grocery stores aren’t that interested in. Opening up the markets would be a good thing, but it needs to happen for both sides.
Unfortunately, the heated rhetoric around this issue is drowning out the truly harmful one of tripling the excise tax. This will have a much bigger impact on NY wineries than who can and can’t sell wine. Yes the tax is currently lower than many states, but if you look at the total cost of producing wine in this state, whether you grow grapes, make wine or both, everything else (except land, which most vineyards have long since paid off) is MUCH more expensive.
On March 13th, 2009 at 2:49 pm ,My Kids Mom wrote:
Yes…the liquor stores SHOULD have been asking for all kinds of extra products to sell. To upgrade their shops to an inviting place that celebrates the sensory wonders of a great wine and a piece of dark, rich chocolate, for example. But the truth is they did’t. Unfortunately…the lobby spent ALL of their time fighting to keep the monopoly they have had for so many years by spreading ridiculous lies such as “if wine is sold in grocery stores it will make it easier for underage drinkers to get their hands on it”. ARE YOU KIDDING ME? First of all…KIDS DON”T DRINK WINE! They drink beer and if they can get it (out of Mommy and Daddy’s liquor cabinet) hard alcohol. Did any parent of a teenager buy that garbage? And the local liquor stores are notorious for selling beer and liquor to underage people. Ask any 18 year old “where can someone your age buy beer?†and as long as they don’t think your going to “narc†them out, they will quickly tell you 2 or 3 local shops. They will not tell you to go to Wegman’s or Stop & Shop because they card EVERYBODY. Even their 45 year old mother’s. The real problem is that the “Mom and Pop” liquor stores have NOT moved into the 21st century. Some are still dark, dirty and stocked with hundreds of BOXES of “wine” while the good bottles sit on the shelf (if they were ever there to begin with) collecting dust and oxidizing because the clerk doesn’t know anything about that wine and never recommends it. So if New York wineries sold just 15% more wine next year because someone who would never go into that dark, dank liquor store bought a bottle to compliment that steak and fresh LOCAL produce…GREAT! Wine in grocery stores will sell more wine to a completely different customer than the liquor stores sell to. Yes…I said MORE wine. Not wine sales taken from liquor stores, additional wine to people who watch the Food Network, people who enjoy great meals and may need to tighten their belts by enjoying a great meal IN every once in a while. What could be a better silver lining to these very difficult economic times than to make dinner together, carry on a real conversation with a glass of wonderful New York wine and connect to your partner like “the old daysâ€?
On March 13th, 2009 at 2:49 pm ,My Kids Mom wrote:
If you agree, go to
http://www.voteforwine.com
On March 25th, 2009 at 12:22 pm ,Bryan Bonn wrote:
This will put my store out of business. WIne is 60% of my liquor store business which runs on a thin margin as it is. Put 3 more people in the unemployment line when my store closes. New York has a bloated government with nothing else to do but take and take everything away from business owners. Gee, do you think that is why people/businesses are leaving this state left and right? How much more “stuff†does Danny Wegman need to sell, or Price Chopper or Walgreen’s? How much more money do they need when we are just trying to survive? They have there own lobbyists who are fighting for them. Who do I have fighting for me?It’s a one time money grab and the State will lose in the long run.
On January 26th, 2010 at 5:40 pm ,Wine in New York food stores – an encore! | Dr Vino's wine blog wrote:
[…] food and knickknacks. (For the boring shops trading on location–last year we called these the wine & liqu–they will have to rely on spirits sales and ATMs. Or step up their service or […]