Wine shops in states with supermarket sales – three views

shelftalker New York legislators are considering a shift to allow wine to be sold in supermarkets–and wine stores to sell gourmet cheese, cigars, beer and even have ATMs. To find out how small shops can even exist in such an environment, we turn to three “mom & pop” shops in three of the 35 states that currently allow such competition. Click through for tales from The Bottle Shop in Wilmette, IL, Wine Authorities in Durham, NC, and Wine Expo in Santa Monica, CA. To their thoughts, after the jump!

Joe Alter and Amy Lafontant own The Bottle Shop in Wilmette, IL. Joe responds:

How long has your store been open? Amy and I opened the store December 15th 2005. 4 years, 2 months and counting.

How many wines do you have? Less than 300 wines (SKUs). We’d like to be even smaller. Smallish, smaller and tiny producers where possible. Avg price $15. Low $8. High $45. Less IS more (esp. vs. the BIG BOYZ)

Do you sell food, beer, cigars or have an ATM? We sell beer, microbrew and imports, mostly. We added a wine bar, so we sell by the glass and serve small plates, cheese, cured meats, that kinda thing. We call it Amy’s Wine House. Other than the wine bar we don’t sell food. No cigars. No ATM.

How many locations do you have? One location. Would consider expanding, but not actively pursuing the option.

Please describe your “shelf talkers.” Don’t use them except for a few Champagnes because the kind of Champagne we carry — R.M. — needs a little explanation, in which case I print out the product page from our website and lay it underneath the bottle. Small print. Customer would have to pick up the bottle to read it. Background info written by us, the importer, mainly Terry Theise, and some reviews from Galloni, Tanzer, Meadows. such as this one for Henri Billot brut rosé.

What would you say is the secret of your success in a state where people can buy wine at supermarkets? We try not to carry grocery store wines. We call attention to the fact that we don’t carry icky grocery store wines. It’s a good will gesture. New customers often say they don’t recognize any of our labels to which we say, “Awesome, that means we are doing a good job!”

Approximately what percent of your sales are done via the internet? Less than 1%

Any advice for NY wine retailers as they brace for a possible era of increased competition?
Be a merchant in the old fashioned sense of wine merchant. Have opinions. Supermarkets and big chains, such as we have here — Binny’s, Sam’s (R.I.P.), Wine Discount Center (my alma mater) and even Whole Foods — sell based on price, press and points. It’s as faceless as buying a washing machine from Best Buy. People come to Amy’s and my shop because we offer personality if nothing else. It makes (some) wine buyers feel better about themselves and their purchases to have a relationship with a merchant rather than a score or the lowest price. I empathize with small business people facing off against big box stores, but more COMPETITION IS GOOD. I’m all for anything that chips away at the scope of Amendment XXI ’cause god knows it ain’t going to be repealed. Free at last.

Craig Heffley, co-owner of Wine Authorities in Durham, NC and the “Grand Poohbah Wine Swami”

How long has your store been open? Two years

How many wines (SKUs) do you have? 450-500 selections of estate wines under $50/bottle from small, up-and-coming, family-owned wineries. No corporate brands, no fake brands. The selection is skewed toward typicity of varietal, region and style. We stock these 450 selections heavily, with hundreds of them case stacked and several end-caps. When somebody steps in, they understand that we’re there to sell them wine before we even say a word. No wines are carried as “shelf dressing.” If we’re going to carry it, we’re committed to moving volume. One last note of interest. All wine in NC is sold from distributor to retailer or restaurateur C.O.D. only! We have no terms, and own every bottle. Spirits are sold at NC State-owned liquor stores and we cannot carry them.

Do you sell food, beer, cigars or have an ATM? We have a limited selection of domestic craft beers available chilled by the six-pack (about 25 selections). We also sell local artisan: salami & chorizo, chocolate, cheese, biscotti, bread and locally roasted coffee from Counter Culture Coffee. 97% of our business is wine though. No cigars, no ATM.

How many locations do you have? One location and considering another.

Please describe your “shelf talkers”? Our shelf talkers are core to making the shopping experience less perplexing and more enjoyable for our customers. They are easy to ready and identical in format. We print them ourselves on photo paper. We break our wines up into three color coded price categories: Daily Wines for everyday drinking (under $12), Weekly Wines for that once-a-week splurge ($12-$19.99), and Monthly Wines for special occasions like Thanksgiving, Birthdays, Anniversaries, etc ($20-$49.99) They also decipher the label so customers can understand the basics like which word is the region, and which is the grape, etc. We write every shelf talker ourselves instead of relying on copy from wineries or critics reviews. They are fun and informative and don’t give the customer useless info that they can’t talk about over a meal. They’d rather discuss the origin of the winery or something special about the wine instead of its oak regimen & ph. There are no ratings anywhere in the store. Customers don’t really need them if the staff is knowledgeable and can make recommendations based on the context of how the wine is to be enjoyed. Is it a wine to be consumed like a cocktail on its own, or is it to be paired with a meal? Most wine critic’s points don’t take this into consideration and are typically skewed favorably toward wines that are more powerful and more cocktail-like. The stores that surround us use points to sell their wines, but we are only asked about scores once every few months. Really, the consumer is not looking for them unless a retailer has “trained” them to shop that way. All of our talkers have food Serving Suggestions.

What would you say is the secret of your success in a state where people can buy wine at supermarkets? We created our store to stand out distinctly from any other wine shopping experience they’ve ever had. It’s fun, informative, comfortable and empowers the consumer to track their purchases from our website. We only carry wine that we are 100% proud of, and would drink ourselves. And we’re wine geeks! For a store that focuses on wine under $20 a bottle, that’s saying something.

Approximately what percent of your sales are done via the internet? Right now only 5%, but about a third of our customers use our website to track their purchases, rate them and keep notes. Our internet sales are starting to take off though and by the end of this year, we should have a much more significant amount. One problem is that our store is so fun to shop in, many people just don’t want to skip a visit just for the convenience of online ordering. We hear that regularly.

Any advice for NY wine retailers as they brace for a possible era of increased competition? Don’t steal our ideas! Just kidding. Be original! Think from the customers perspective. Overcome hurdles that make the wine buying experience difficult for them. Make them really want to return. If you blow them away, they’ll talk about your store to their friends who will become customers who will tell their friends, etc. Do great things that big stores will never be able to do, and that will distinguish you.

Roberto Rogness, general manager, Wine Expo, Santa Monica, CA
How long has your store been open? 18 years

How many wines (SKUs) do you have? About 2000 of which well over half are Italian, one quarter are Champagne and the rest is split between Spain, Portugal, beer and spirits.

Do you sell food, beer, cigars or have an ATM? Yes on Beer, no on others

How many locations do you have? One

Please describe your “shelf talkers”?See here:
http://blogs.laweekly.com/squidink/wine/wine-expo-best-of-la-tequila/ (source of above image)

What would you say is the secret of your success in a state where people can buy wine at supermarkets? Providing far superior service, a more interesting range of products and better value.

Approximately what percent of your sales are done via the internet? 15%

Any advice for NY wine retailers as they brace for a possible era of competition? What doesn’t kill you makes you stronger!

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91 Responses to “Wine shops in states with supermarket sales – three views”


  1. As a consumer, I was glad to read the thoughts of these retailers. When I drank wine rarely, I’d pick up a bottle of wine occasionally in the grocery store. As I drank wine more frequently, I still bought at the grocery store, but was pickier about what I bought. As I become more interested in wine, I pretty much stopped buying at the grocery because the choices just aren’t that interesting. They stock mass-market wine because mass-market is what they do. And there’s a legitimate market for that. The competition for serious wine stores really will be small specialty markets that stock wine more selectively and have some good choices. However, I do most of my bricks-and-mortar wine buying at wine stores because the selections generally are more interesting and there are people who will actually talk to you. Wine shops in general will draw fewer buyers, but far more repeat customers and certainly ones who buy more than a half-dozen bottles per year, which I’m guessing is a good percentage of grocery store shoppers.


  2. Thank you for the extremely useful post! I work at a wine store in Ohio, where wine sales are allowed in supermarkets, and I will definitely take some tips from these other stores!


  3. As a purchaser in a state that allows wine sales in grocery stores (Virginia), I still prefer to bring my business to my local wine stores.

    Grocery stores generally have a ho-hum, big volume selection of wines with little attention paid to regional variety and smaller producers. They do not have knowledgable staff to point you toward wines that may interest you, and I have no sense that wines are stored properly before reaching the shelves (particularly Trader Joe’s and the big box merchant Total Wine).

    The average consumer who only purchases wine for gatherings, parties, gifts, or the occassional dinner will certainly enjoy the convenience of grocery store wine, but wine lovers (who purchase more frequently) will always prefer to find the gems offered by a local proprietor who takes pride in his or her selection.


  4. [...] Wine shops in states with supermarket sales – three views « Why Fred? [...]


  5. Nice work, Tyler. Maybe NYS retailers will see how they can be successful…Who would have thought that stores can survive and even thrive like that?

    Well, it works in 35 states…


  6. Wish you had picked Ohio for comparison.

    We are NY winery that sell to both NY wine stores and Ohio shops and supermarkiets.
    The proposed NY “wine in grocery stores” is a terrible piece of legislation as now constructed. Bad for NY wineries, grape farmers, wine shops and consumers. However Ohio has gone about having wine in grocery stores much more inteligently and with much greated concern for temperance, wine quality, simplicity, & local economic development.
    To argue whether moving to “WIGS” in NY is a good or bad thing is abstract to the point of being vapid. The details matter. Ohio has it about right, the NY Initiative is a loser all around.


  7. FS,

    Could you kindly explain why this is a “terrible piece of legislation?”


  8. I used to work for TitleTom Schmeisser at Marty’s in Newton, MA. He taught me that the wine business was first a service business and secondarily a knowledge business. This has proven to be excellent advice.


  9. Sorry, that’s Tom Schmeisser. Always check your work.


  10. Great topic. I own a 800sq foot store about 500skus wine 100 beer and a small selection of spirits. I have 2 large grocery stores close by that both sell wine, beer, spirits and there is also a big box retailer not far away. With all of this competition I have grown significantly in the past year in a garbage economy. I base my business on service and knowledge not on scores and price. NY retailers will be fine, or at least the good ones will.
    Cheers


  11. From my perch in the NY wine world, I see the retailers who are already invested in volume products afraid as can be, and the retailers who are invested in service and premium products welcoming as can be. FS, I can’t imagine one scenario how wine in grocery stores will make it worse for NY wineries, who already have to beg the majority of retailers to carry their products, or at least to raise them from the bottom shelf on the back wall.

    When my partner and I opened our shop in Manhattan’s East Village, we did it with our eye on the possibility of a change in the law. But the change was taking too long for me, and so I got out–because I had no interest in becoming a box stacking, volume slinging, hard-nosed “discounter” retailer.

    The odd thing in NY is that because of the laws, large volume retailers have been knocking mom and pop stores out for decades, without a grocery store bill. With a grocery store bill, the mom and pop store will have a means to fight back, if the owners want to be merchants and not just order takers.


  12. TP,

    Good to see you posting here. But we all know why NYS wineries are against this. They were not always, but the laststoreonmainstreet coalition was calling wineries and making threats. The coalition told the wineries that they would pull all NYS wines off of their shelves in retail stores if the wineries did not jump on board with them. The wineries got scared and jumped on board.

    “FS, I can’t imagine one scenario how wine in grocery stores will make it worse for NY wineries, who already have to beg the majority of retailers to carry their products, or at least to raise them from the bottom shelf on the back wall.”-TP

    Truer words could not be spoken.


  13. I sell wine here in Oregon. We have a similar system in that we must buy all beer or wine from local distributors. Here we can buy direct from Oregon wineries as well. I work for a large grocery chain that is owned by Kroger. I have about 1500 SKUs of which 950 are from a corporate mandatory list. The rest I get to pick. I have been in my store for almost 20 years. We also have numerous wineshops, many that have been around for a while. In this down economy we have still done pretty well. There motto has been one stop shopping. We have grocery, apparel, and home improvement. I carry lots of more unusual wines from smll producers. I get to taste about 80-100 wines a week in the store. It has been a fun job most of the time.


  14. I don’t think I would worry about competition with grocery stores too much. I expect certain high volume brands will become uneconomical to continue to sell, but this is probably not the best segment anyways.

    As a consumer, I have been more loyal to shops with greater quality of selections, helpful staff who will direct me to try new bottles that I will enjoy and provide value (sorry, can’t afford $20-50 bottles for daily drinking). I’ve lived in both Michigan and Georgia where grocery store sales are permitted and it is not really how I to spend most of my wine dollars, although I will pick up the occasional bottle there out of convenience.


  15. A couple of other rules we have here is no quantity discounts and all alcohol is COD.


  16. As a General manager of a Retail Wine and Spirits Store in NY, I have to say that the stores interviewed here have good information on how they differentiate themselves from the supermarkets. However, I didnt get that any of these stores had to endure the transition from supermarkets not selling wine to a market that allows them to compete. Also, it should be known that selling beer or cigarettes are NOT being added to my store’s product mix. I know that eventually NY will have wines in supermarkets, but the current plan and reasons to allow this is not well designed. We will be granted the ability of being allowed to sell-get this-wine gift bags. Yes we are not allowed to sell them for profit. Basically this transition will result in approximately a 32% loss in revenue. Again, as I know this plan will eventually come to pass, the timing of it is ill-advised in an economy where job loss is escalating. This is certain to spike that number even higher, and although Supermarkets may have to create additional jobs, with centralized buying from one location, the number of jobs created will be far from filling the ones lost.


  17. Anthony,

    The only reason beer and cigs are not added is that because the wine store lobby has refused to negotiate. Instead, laststoreonmainstreet has taken on the adage, all or nothing.

    Ask and ye shall receive.


  18. Glad people are finding this comments from these retailers useful!

    Anthony – Could you describe how you estimate that your store will lose 32% revenues under the current proposal? Also, beer is not in the current proposal, which means that grocery stores could continue selling (mass market) beer as well as wine while no store in NY could adopt a strategy as they have at Wine Authorities or Wine Expo. (The proposal includes these items for wine stores: “non-alcoholic beverages, food products, newspapers, cigars, gift packaging, glassware and storage items for wine and spirits.”)


  19. Tyler,

    The 32% is a number that came from a research project–I think at Cornell. People throw around all kinds of untested statistics to make their point.

    The same research project I believe also stated that the other items (and it recommended beer be included) would offset the loss.

    But taking the issue back to NY wineries: which of that 32% of product does anyone think the retails stores would lose? It will have nothing whatsoever to do with losing NY wines from the shelves.

    Dan Posner is correct: instead of negotiating, the phantom group laststoreonmainstreet refuses to consider any change whatsoever. I call them phantom because they don’t seem to have hired anyone to answer email sent to them, which would also make it hard to start negotiations, wouldn’t it?


  20. Let’s pretend that the 32% figure was never even mentioned. That stat is a joke. Purely made up. For the right amount of money, any study can be produced to show anything.


  21. Dr. Vino The link below should help

    Glassware and wine storage is already allowed, as well as anything aiding in wine appreciation. Again I know this will eventually pass, but considering the governer is simply looking for quick dollars through licensing fees, its just not well thought out at this time. Could someone please provide me with an accounting of a state in which wine was allowed to be sold in groceries under similar economic conditions and where the retail liquor environment was exactly the same. If this exists, please provide me with the results of that economic situation. Look I’m just concerned given my position…can you blame me? I know Supermarkets will not be able to provide the type of service and knowledge that stores like mine provide.

    http://devsoc.cals.cornell.edu/cals/devsoc/outreach/cardi/publications/minute.cfm


  22. Thomas – I was under the impression NY wineries (not including Constellation-owned ones) are good at selling directly to consumers, both through tasting rooms and mailing lists. It seems that would be higher margin than selling to a grocery store. So unless they had a lot of excess inventory, it’s hard to see why they would be in favor of selling through supermarkets, which seem to compete on price and brands…


  23. Tyler,

    Yes, the tasting room is the higher margin and it is a good market, but that market falls apart in winter. Plus, people go home and then they seek the wines they remember. Plus, is wine a food or isn’t it? There’s a mixed message about wine in NY.

    Anthony,

    Your argument reminds me of the health care debate: if not now, when?

    I’ve been in the wine biz in NY State since 1984, and since then I’ve been hearing wine in grocery stores will come, but not now.

    Next you’ll say that large volume liquor stores haven’t been putting mom and pop out of business for decades–without wine in grocery stores. There are things in the law that can help change that fact, such as cooperative discount buying for small stores, no more controls over payment dates, and so on. And what about the multiple licensing, plus making the license a commodity that gives the owner equity? When I operated a wine shop I probably would have given my first born for such changes.

    Even these changes don’t appeal to thelaststoreonmainstreet.


  24. Tyler,

    The winery owners that I spoke with that do want to see wine in grocery stores have two basic issues: they are tired of begging most retailers and they want wine to be treated as if it really were a food item.


  25. TP,

    You did not get the memo? Change is bad. That is what the rallying cry is! Change is bad!


  26. TP
    I don’t think you understand my “argument”, cause its not necessarily against wine in groceries. New Yorks existing laws are the issue already, and that I think we agree on. So yes we do need Change, but its being addressed half-assed, and let me say once again, the reason this proposal is even on the table is because the governer wants the additional licensing revenue to begin with. And speaking of licensing, It does make sense for owners to have equity in their license, but that’s not being addressed. Plus Retailers would have to pony up anywhere from 200,000 to possibly 500,000 or more for the license. Those numbers, if its anything like New Jersey, would depend on township/borough. Bottom line is that there is a ton of issues that need to be addressed before we can move forward with something like this. Create a better foundation first. See you in Albany!


  27. This is a good piece on the visible issues surrounding WIGS. I too would be interested in the “before and after” picture (number of stores, volume sold, local wine sales, etc). There are several components of the NY legislation that are not good for the wine industry and those details are not often discussed. Net 60 terms, auctioning defunct retail licenses to grocers, warehousing/distribution and a 6 month delay in implementation are among those.

    Any change this big would (at a minimum) have to be phased in over several years and should be done in the context of looking at best practices in other states. Find the states where it works well, look at the laws and see if it can be made to work. The current proposal was written by one grocery store with little input from anyone else. It increases costs of government long term for the short term gain of a one time licensing fee (which won’t really help the budget).

    Personally, I would think they NY gov’t would be able to find 8 Billion in cost cuts with a budget of 134 billion (I am sure any of us could probably find that and more!) Why does it always have to be “raise taxes”?


  28. Anthony,

    Have you read the State Assembly and Senate proposed bills on this issue?

    If not, you should: (S5787) introduced by Senator Liz Krueger (D-Manhattan) (A8632A) by Joseph Morelle (D- Irondequoit).


  29. TP,

    Why read it? The answer will always be, “Not now” or “This just is not the right time” or “I am going to go out of business” etc etc etc.

    These people only know how to say, “NO!”

    No negotiation, just no.


  30. TP –

    Do you have a link to the legislation? I would love to read it but it’s not so easy to dig up the source docs. The devil is in the details and I’m concernd the details still favor the grocery stores. For example – I own a wine-only store and am concerned our legislatiors don’t even realize such a license class exists and haven’t factored it into their proposal. If you have a link, please send!

    -Christy


  31. Christy –

    Here’s the Senate version.

    Here’s the Assembly version.

    Please let us know your thoughts.

    Tyler


  32. Who would you have them negotiate with? As far as I can see, it is being driven by one retailer and some lobbyists. Textbook development of legislation would involve industry and a review of “best practice” (looking at other states who have done an exceptional job). I don’t see any of this with these bills. I think this might be one of the reasons NY state remains dysfunctional – the process for writing and passing legislation is very poor.


  33. What retailer?
    What lobbyists?

    I would think that, just like last year, Gov Paterson would like to see this passed, at some level. Has laststoreonmainstreet ever tried contacting him beyond the “obvious” death threats? Or did they just save those threats for NYS winery owners?

    I am unfamiliar with how passing legislation works in other states, muchless NY, but I would think that a deal on this could be struck, but even wine retailers coming here (with the exception of me) say this is no good at any level. So what is there to negotiate?


  34. I am a wine retailer, but only for the past few years so I can offer a balanced viewpoint. The current NY budget proposal is horrible for the industry. I have read the comments here about uniqueness, but the reality is many customers want national brands, that is why they are popular. Those are the same brands that wil be on supermarket shelves. And I can’t fathom how this could be good in NY where supermarkets and liquor stores reside in the same plaza. Would two pizzerias survive in that scenario? Like it or not, the national brands pay the bills. My unique wine selection pays my salary. Asa retailer of NY wines, I can tell you there will be very little incremental distribution. Supermarkets will quickly discontinue any product that does not sell through quickly enough. Copetition is fierce among liquor stores and the consumers have the best choices as each store is individually owned and operated. The supermarkets complain that NYis 46th or 47th in terms of wine outlets per capita. One missing fact – it is the number 2 wine CONSUMING state. That tells me that people are findingthe products just fine. However it goes many of us will survive, buy some of us won’t. It’s unfortunate in these times that politicians are looking to destroy small businesses for the sake of a small economic gain. The right answer is to amend the liquor laws and raise fees from liquor stores and keep the laws as is.The system works well and has worked well for over 75 years.


  35. Wine Guy 2010 might want to change his “name” to Wine Guy 1933!

    Anyone know what % of NYS wine retail stores are in shopping plazas with supermarkets?

    How much should NYS raise the annual fees for a licence, Wine Guy?


  36. Because the governor is proposing this move strictly to raise revenue (he doesn’t care a bit about the issue), there are fixes for each concern that you retailers bring up, which means it is all negotiable. Of course, to make that happen, you have to be willing to negotiate.

    NY legislation is indeed among the most dysfunctional and corrupt in the 50 states, but that has little to do with NOT negotiating for what you want.


  37. How is this transfer of wealth from independent retailers to supermarkets or big box stores going to benefit our state? I thought we were trying to create a nation of entrepreneurs not continue to stack the cards against them.
    Take a look at the sku’s sold in the state of Florida versus sku’s sold in the state of NY…not a pretty picture for small producers.


  38. Daniel,

    I can count about 5 wine retailers in Wegmans plazas.

    Do you think they will make it? Does this make them a bad wine shop OR just a victom of location OR should spend the money to move?

    It is most likely these “shops” are month to month if Wegmans owns the plaza which they probably do.


  39. TP

    Ok then expain to me these fixes for each concern we retailers have. And how will these fixes will be negotiated with the most corrupt and dysfunctional legislation.

    Cooperative buying?
    Extended pay terms?
    Cigars and Cheeses?
    Multiple Licenses?

    I hope you don’t consider these fixes, but please elaborate on what else can be negotiated. You keep asking the retail side to come up with proof of percentages and studies but I haven’t heard one compelling reason for a retailer to consider this current bill. Yes Large Volume Stores that open up, effect smaller stores and in some cases can force them to downsize, but what percentage of stores actually go out of business. And guess what, when a smaller store opens up it effects the larger ones too. These examples, in most cases are a function of the NYS liquor Authority failing to control the amount of new licensees and not taking into consideration the demographic environment. In any case when this occurs the new stores opening up(large or small) have ZERO customers to start with and have to work to build their business with competitors in essentially the same environment. Now, in the case of WIGS, Established Supermarkets are being given a product that although may very well be a natural fit, it also gets bundled in with the already 1000′s of customers per day that they already have.
    Now tell how you expect general market wine and liquor retailers to get on board with something like this. We know that the supermarkets are going to be stocking their shelves with the volume items Like Cavit, Yellow Tail, Woodbridge, Ruffino etc…, all of which in some combination represent a large portion of the retailer’s revenue.

    Tell me how you would fix this loss in revenue which if you don’t think it’s significant (regardless of the studies done that you may feel are paid off by lobbyists) your kidding yourself. The Stores interviewed here don’t seem to have had to endure a transition such as this, and one of them has an On-premise aspect as well.

    So let me hear something that could get us Retailers on board with this. List all the fixes you say can be achieved to account for the loss of revenue and reduce job loss. I have no knowledge of the negotiation process, if there is one, or whether one side is refusing, so these points have no impact on this argument at this time. Most retailers are fine the way it is and would like to see it stay that way because we are very scared at the prospect of losing our jobs. For any negotiation to begin, it should start with a compelling plan from the governor that makes sense for a retailer to begin a back and forth. As of now there is no such plan, so I would understand if negotiations are nonexistent.

    So please tell me how you would fix my concerns so I’m certain that I’m not signing up for a pay cut, or very possibly, a pink slip.


  40. Lou,

    I feel your pain and respect your honesty. Your viewpoint is refreshing in many ways. You have hit the nail on the head. This is all about wine retailers and lost revenue. So lets keep MADD, SADD, NYS wineries, and wholesalers, etc out of this equation.

    Retailers against this should just say they are against this because they are scared! They are afraid to adapt. Many know nothing about the products they sell. Retailers should be scared, but for me, as a wine retailer, that is not enough. We adapted our business a few years ago. Took out mainstream items, in planning for a new world of wine. That new world is upon us. Let’s start adapting.

    35 states allow wine sales in supermarkets. 70%!!! Consumers will have the ability (if they so choose) to do one stop shopping.

    Those reasons are compelling for me.

    Saying change is bad because change is bad is not compelling.


  41. [...] since I own a small wine import & distribution business that sells exclusively in NY)…here’s a link to Dr. Vino’s post…read on February 15th, 2010 | Category: Politics, Wine Business [...]


  42. Lou,

    You need to take those questions to the state legislature and to your liquor lobby. Arguing with me will neither you nor I anywhere. But I will ask this question with regard to your comment: “These examples, in most cases are a function of the NYS liquor Authority failing to control the amount of new licensees and not taking into consideration the demographic environment.”

    What you guys seem to be arguing is that we live under a system of free enterprise except for your business, where the strong arm of government control (your word, not mine) is there to protect you from competition.

    I find that a big problem in any business.


  43. Daniel,

    Congrats! You are set up properly for this, and I applaud you for it. I don’t know your history or how many people you employ, but yes we do need to adapt because this will pass eventually. You obviously did the right thing by cultivating a product mix designed to differentiate yourself enough from the general market, great job! I have worked a nice portion of the business I manage into this area as well. However, as a large store we have become know for having price, selection and service(including yes, product Knowledge). The thing is, we employ a fairly large number of people, and these large volume general market brands provide the ability to keep these people employed. If the bill is passed I’ll take a pay cut for a while and let go of a good number of employees, as will a lot of other stores that have done the same thing.

    Lets also remove the 35 state’s that have WIGS from the equation as well, Because whats compelling for you is not compelling enough for most retailers. Plus, Nobody has given any examples of states that had the same structure NY has while implementing such a transition.

    Needless to say I’m happy for you. And if this passes I’m glad that you won’t have to let anyone go. I wish I could say the same.

    So this not just about retailers and lost revenue, its also about the actual reasons this proposal is on the table. Please tell me someone has more compelling reasons for most retailers to entertain this other than, 35 states are doing it so we should too, and one stop shopping. Those are great reasons for consumers, I get it, but just not for me, the people I employ, and the people out of work looking for jobs that may not be there.


  44. Lou

    Hypothetically, if you have to lay people off, which we do not know yet, can’t those people find jobs working for other stores, maybe even supermarkets?
    With all due respect, this is hogwash, “these large volume general market brands provide the ability to keep these people employed.”

    Sales of anything keep people employed. If you are in the business of selling generic wine, then that is what keeps people employed, but no one is saying that you cannot adapt your store, except you.

    My guess is that TP is done here. My suggestion to you and others is to go to Albany and negotiate, rather than just saying no.

    I am pro consumer. Let the consumer decide.


  45. TP,

    I just want to hear your fixes that you claim to have, because I haven’t heard any yet. All I’m hearing is NY retailers are supposed to jump on board with this because 35 states are doing it, and we need to get with them.


  46. Daniel,

    You’re right we don’t know yet. I’m not gonna get into the particulars of product mix and percentages of sales, and I’m not going to question anyone’s demographics. I care about my employees, and I don’t want to have to tell them to look elsewhere. The store I run has taken 30 plus years adapting to selling all types of wine, and giving the consumer a huge selection. But when your selling 60 cases a month of 1.5′s of Wine X Cab, and 50 cases a month of 750ml of wine Y Pinot Noir, and 75 cases of wine b merlot, all of which are almost certain to be endcaps at the Supermarket in the same shopping center, how many cases per month am I gonna loose, and how long will it take for me to change people over and how much will I never recover? These losses have NOTHING to do with adaptability they will begin being realized pretty much immediately.

    I will be in Albany!


  47. We destroyed butchers, bakers and green grocers for the sake of convenience.
    I for one as a consumer and someone in the business does not like the idea of so much purchasing power being consolidated into the hands of the few. This is nothing more than moving revenue from a independently owned store that has been “purpose built” and solely designed to sell wine and spirits to large organizations that have unlimited financial resources and for the most part the flexibility to change the structure of their store at will. The existing stores, many family owned, do not have the access to capital to flip a switch and invest the monies required to compete and completely change their model.

    For what? $300 million (recently adjusted) over 2 years. I don’t see the reward.


  48. RRainey,

    I agree with you. I shop local whenever I can and it makes sense…however, shouldn’t the consumer decide how they want to shop, not the NYS Retailers?

    Look at other markets and look at all of the independent wine stores thriving in the same states where supermarkets sell wine.

    Lou,

    Why would your customer abandon you to shop at the supermarket? If your prices are good and your staff is courteous, I would assume those magnum shoppers, the ones writing paychecks for your entire staff, would still come in and shop.


  49. Lou,

    Thanks for elaborating on your perspective.

    I thought these three other retailers might offer some paths to take. Yes, the Bottle Shop offers some on-premise wines now–sure, it is not currently legal in New York, but why not push to make that an option as well? As a consumer, I might like to try a few wines in a relaxed setting and then take a few bottles to go. It might also open up educational and other paid events for you (currently in a gray area). Since you seem to be in a shopping plaza with lots of traffic already, then maybe that is something that could be of interest to you and your consumers.

    Maybe if you were able to sell (specialty) beer, that might help with some wine volume loss. Good, store written shelf talkers like Wine Expo or Wine Authorities? Those might help. Or starting up internet sales?

    When I lived in Chicago, there was a Whole Foods, a Trader Joe’s and a big wine store all selling wine within about 200 yards of one another. They all seemed to do fine, each with a slightly different focus.


  50. Daniel,
    I’m not necessarily promoting one way to shop or the other but sense you brought it up then the best thing to do is to let everyone sell grocery, wine, spirits, beer and motor oil if that is what moves them. This is not what is being proposed. You have a group of business that structured their model to fit the laws of NYS which limited their growth opportunities and by circumstance capital. I’m assuming you are familiar with the laws that stores must abide by?
    I am very familiar with other markets and you will notice that most of those markets are lacking in independent operators and most of the business is controlled by a few very large retailers and distributors (sound familiar?) which ultimately DOES NOT benefit small growers – in this instance NY wine growers, who by the way, are being sorely misled.

    In New York we have incredible opportunities to purchase wines from all over the world because of the fragmented market we enjoy. Put wine in grocery stores and say good-bye to this luxury.

    I just spent 2 weeks with a group from the mid-west that had an average of 10-15 years experience “on the street” in a state that has wine in grocery stores and they all chuckled gleefully about what a pleasure it would be to sell wine in NY and how the “big box” stores have adversely effected the wine business in the state.

    By the way, the grocery stores are all chuckling at this game being played – they have nothing to loose and absolutely no accountability for what they do. Watch what happens in six months – Nielson and slotting fees will rule the day and the NY wine industry will have an even bigger hangover to deal with.


  51. Are you serious?
    “In New York we have incredible opportunities to purchase wines from all over the world because of the fragmented market we enjoy. Put wine in grocery stores and say good-bye to this luxury.”

    And yes, we agree, NYS wineries are being misled. For years, we, as retailers, have neglected their wines, then last year, laststoreonmainstreet needed their support, so the retailers started calling wineries and threatening them.

    Brilliant


  52. Great article. “What doesn’t kill you makes you stronger!” Competition is always scary, so the little guy just has to figure out how. I don’t know about you, but I’d never bet against a small-business owner who’s hungry.


  53. Daniel,
    Yes, I am serious. We have an abundance of importers/distributors in NYS. I’m not sure of your location but if you are in Upstate it can be a challenge but not an impossibility to find great producers to purchase (I’m happy to give you a short list of distributors) and additionally more and more small importers are now self distributing – Weygandt-Metzler comes to mind…that’s a huge plus for a variety of reasons.

    I would be happy to discuss the situation with NYS wineries but it would require us sitting down with several bottles of wine as it is not as simple as retailers neglecting them. Yes, I have heard that this happened though I don’t know any producers, other then one, first hand where this was the case.


  54. RRainey,

    Thanks, I am in metro NY, not upstate.

    I guess my “Are you serious” remark was more angled at you giving credit to the three tiered system as the reasoning that we have so much great wine here.

    Seriously, that is preposterous. The three tiered system exists in every state.

    We have a great selection here because our customers DEMAND a great selection. If they only wanted yellowtail, the three tiers would just sell Yellowtail.


  55. Daniel,
    A fragmented market was a reference to the fact that our current licensing structure keeps the market “open” and had nothing to do with giving “credit”.
    The 3 tier system is another conversation and has it’s pro’s and con’s depending on where you are sitting and what your needs are.

    You’ve asked if I was “serious” and then suggested that one of my statements was “preposterous” and then tried to convince me that only customer demand drives selection. You must be a lot of fun to hang out with.

    Cheers.


  56. You have no idea.

    Sorry for the confusion.

    Although, I fail to see how limiting who can sell wine is an “open market.”

    We are going in circles.

    I think indy wine stores can do well in a supermarket environment.

    I look at states such as California, Florida, NJ, Illinois, and a host of other states as examples.


  57. Daniel

    Convenience of course. Just like when new liquor stores open up, there will always be a degree of convenience shopping done. In the case of Supermarkets as I have already stated, they have huge customer count to begin with, as opposed to a new one with no history.

    And please don’t assume anything when it comes the establishment I run, my concerns are real to me and most retailers regardless of what types of wine they sell. I never came on here to point out reasons why this shouldn’t pass, but I did come on here to say why I was concerned, and why most retailers, based on the bill in front of us, would want things to stay the way they are.


  58. Lou

    Of course, we all have reason for concern, everyday. A new huge SUPER liquor store could open up 4 blocks from you, a supermarket could get the right to sell wine, a cool little niche store could open in your town.

    Everytime, competition faces you, it is cause for concern.

    It is how you handle it that determines your success.

    I think just to say no because “we are happy since prohibition” is the wrong outlook and the sooner wine stores start realizing that this will happen, the sooner we can advance ourselves as well. We should be negotiating to better our stores, to encourage people to want to come ship with us, once this all happens.


  59. Dr. Vino

    Thank you! That’s the first time I got something that could get me negotiating. I just hope some of those things would be an option.

    Good Start and I appreciate it.


  60. Unfortunately, no retailers were interviewed from states where the owner was forced by law to not be allowed to carry more than two products and purchase square footage just for those two products. Too bad they forgot to ask that question.

    When you can’t provide rack space for new items, you can’t sell those products. That is the unfortunate situation for NYS liquor stores. None of the people interviewed had that situation. Perhaps you should go back and ask how they would feel in that situation and whether they deem the could be successful when they can’t carry new item due to no space and the grocery store is next door.

    Stupid article.


  61. Tim,
    I think I understand what you are saying and it essentially it is this – you can’t ask a business that was specifically designed, created, etc. etc. to change their entire model overnight. No amount of chips, lottery tickets or cigars will replace the fact that these stores have been essentially purpose built. The state has been happy to collect the revenue from these businesses for untold years and now that is not enough because they see a short term gain, a drop in the bucket actually, and want to transfer vast sums of wealth from independent’s (where the money stays in the area) to large corporate entities that do the exact opposite.

    BTW – we haven’t even touched on what this will do to the scores of high paying salesreps that will suffer when 6 or 7 stores are replaced by one central buyer calling the shots for a regional grocery chain.


  62. A few notes:

    1. I’m glad no one has pulled the underage drinking card here. That alone caused me to lose most of the respect I had for laststoreonmainstreet. If you don’t understand how ridiculous that argument sounds to a underage kid, just ask one. They’ll tell you it doesn’t make a difference at all.

    2. Yes, changing to a new market is scary for store owners. I will be working for one soon, but they already have a product line with limited sku’s and all stuff that isn’t found in bulk (at all prices). They’re not afraid of the new legislation.

    3. Yes, if a new market is scary enough, stores should lodge protest, but the grounds that “change is scary” isn’t legit. Protest for the right to sell something more, beer for example. What would the argument against that one be? “We haven’t done that since we lifted prohibition! Thats preposterous!” Hmm, sounds familiar…

    4. WIGS does not kill niche wines. There are too many examples that disprove that. If that were the case, there would be 35 states plus Britain claiming that there was nothing to drink but Yellow Tail and Woodbridge. Demand drives sales, and this legislation won’t change demand for those specialty wines.

    5. laststoreonmainstreet reminds me of gangsters/the old anti-communist organizations that bullied people into supporting them. Threatening wineries that are already having a tough time due to their fledgling status is low. Lower than the anything the WIGS lobby has pulled for sure. I’ve talked to two different NY winery employees that have mentioned such threatening communications. The organization could do much good in getting more concessions for liquor stores, but it has chosen the all or nothing, slash and burn warpath, which is sad. It is a sign of fear, not opportunity.

    6. Personally, as a consumer, I love small stores. I support a local store run by 3 old Polish women who make the best Pierogi imaginable. I support multiple small liquor stores who stock wonderful, interesting selections and who I would continue to support regardless due to their passion and knowledge.
    I buy most of my meats from a local chain of butchers who give wonderful service and stock/cut excellent versions of common products. All of these stores have thrived/will thrive no matter how much grocery stores sell. The small business will never die.

    The small business is powerful because it is nimble, adaptable, tenacious and offers great service. Consumers have long ago dictated that, often, price and convenience are of the utmost importance. Consumers chose supermarkets over small stores, not lawmakers. Why should lawmakers stand in the way of that competition now?

    7. I, in no way, want to see the dozens of crappy small liquor stores, no matter who owns them or whether they’re the only store in town, defended by law. If you’re too lazy to stock interesting products, know them all, or offer excellent service, frankly I’m all in favor of you closing up shop. That goes for any store selling anything.

    8. No one’s mentioned that liquor stores are still the only ones that can sell liquor. They still have a huge monopoly.

    Thats all I can think of for now.

    -Brad


  63. Brad – I agree with everything you have said. I don’t want to see anyone lose their job, but on the other hand, business is business. Markets change. Listen, as a former wine industry employee in upstate. I have learned a lot and worked for a retailer that will do just fine and a retailer that may fall on hard times. They will be hurt because they aren’t adaptable and were never a good business to begin with. The business that are run properly, are creative, adapt… they will continue to succeed.

    In Virginia, having the WIGS is great. There are specialty shops as well, all of which have a niche, a firm market hold, and are all freindly to one another. Supermarket stores and the mom and pops can co-exist, they have totally different customers and are okay with it. I shop at both for different reasons.

    also, I still have to get my liquor at a state controlled store which has terribly high pricing and a poor selection. So the NY stores, you will have a huge niche with liquor that we would ALL love to see be privatized here in VA.

    Go Finger Lakes Wine!


  64. To answer a question (far) above, there are 1100 stores UPSTATE that are in a grocery plaza. These guys would likely go out of business. Moving might be an option for some.

    The 35 other states that have WIGS have different laws, many include fixed pricing, no discounting, etc to ensure a level market. NY used to have many of these laws, but made changes to allow discounting that have benefitted consumers.

    Regarding Big Box and selection, anyone who has ever worked in a large chain will tell you that they have a limited amount of items and items that don’t sell quickly are replaced with those that do. This may leave some opportunity for some stores as providers of the higher end or less popular products, but at a lower volume than they sell today.

    We are all going around in circles here – it’s a complex set of issues that doesn’t lend itself to an on line discussion. It would be nice if the state would set up a commission to look at the issues and look at how other states reconcile the large store interests with the small stores and the wine industry. Getting some facts would be helpful.


  65. After reading all the comments, can someone tell me how for everyone bottle sold in grocery/gas station/Wal-Mart/7 Eleven/Ect, this can be made up on the wine store side? I am not looking for an answer of selling chips & salsa or cheese. I am talking about losing a wine customer.

    For the current wine retailers that have a dense population, sure, niche brands and fine wine can surely continue business as usually. But for the wine retailer that has to scrape every demographic in an already competitive landscape, the shift in traffic alone will stunt sales and growth.

    Also, lets not be to quick to praise the consumer being so loyal to the small wine shop, this is a a small percentage that truly will go the extra mile for the wine they might need for the evening meal………the average person is not going to make the 2nd stop.

    Like someone said earlier, this small percentage may pay for a portion of his/her salary but it is traffic and other brands that pay the bills.

    Thanks for listening.

    dc


  66. [...] Wine shops in states with supermarket sales – three views [...]


  67. In my experience in travelling to many different markets in this country, I would say that usually a supermarket is never the cheapest place to buy wine, whether it be standard brand or boutiquey type wine. Costco being an exception.

    Duncan,

    Are you for a level market now? Price fixing, no quantity discounts, etc?


  68. I think it makes sense to do an evaluative study to see what works in other states and why. It would have to include impact on the industry. The outcome would be recommendations for if/how to implement. Any large business would do an evaluation prior to major process change – it is odd that the state won’t (even though it was recommended by the governor’s staff). The current bill has so much wrong with it, starting at the mandated net 60 payment terms and ending with only 6 months of adjustment period for the current retailers (that’s just too fast to be practical after 80 years of draconian law).

    The way this is being handled now is adversarial and counter productive. We could be focused as an industry on selling a higher percentage of NY wine in existing channels, but instead we bicker about this. Imagine what a difference it could make in NY if we took all this energy and money and spent it on marketing NY wine.

    As far as I can tell, Wegman’s is the only grocer pushing this – Tops has not been vocal. There may be other grocers east that I am not aware of (and the city is a different animal all together). In any event, the process is not transparent and there are no forums for industry participation outside of lobbyists (and those lobbyist setting up groups to lobby more). It’s not a good way to get things done.


  69. Duncan

    I agree. The amount of money wasted last year and this year is absurd. Lobby firms getting rich off this foolishness is embarassing. Stores fighting this and stores like Wegmans pushing this could be doing so much good for this industry rather than bad.

    Why not put the money into breaking down state barriers on wine. Why can’t a consumer buy from a supermarket in NY or a retailer in Indiana, if they so desired?

    Why must wine be treated with such kid gloves? This is not 1933 anymore.


  70. Yup, theres a reason why the gov’t and others pay Policy Analysts to research areas they plan on changing and ask them to gather facts and make recommendations. I see very little of this (though I can’t imagine I’d see a lot if there was something being done, I’m not horribly politically connected). Has anyone asked a state senator lately whats up with this plan? I’m sure someone from the finger lakes end of life would be willing to co-author part of the bill to make sure NYS wines aren’t penalized in all this. NYC reps would likely support the smaller stores in this legislation. Talk to them y’all! Thats what theyre there for!


  71. For all of the shop keepers poo pooing this and suggesting that Albany hire analysts to review, what do you propose? What could convince you to allow wine in supermarkets?

    From what most of you say, nothing will convince you, you are still living in 1933, so what is the point of hiring people to do a study on this?


  72. A study would allow the legislators to become educated about the impact of any particular course of action. Right now they don’t understand the legislation or it’s consequences.


  73. Duncan,

    I would think that looking at other markets where WIGS exists coupled with the states that most closely mirror NY, like California, and that would be all of the research that the legislators need to look at. But, heck, why let real life examples get in the way of a needed study.


  74. You are joking about California being like NY, right? NY crushed 6,000 tons of vinifera in 2009, California crushed 3,700,000 tons. If it were up to me, I’d look for states that had a similar sized wine industry and then focus on how they keep wineries, stores and grocers happy. Maybe it’s not possible, but it should be looked at.

    At the end of all that it would not surprise me to have a different set of rules for NYC. Part of the problems with liquor law today in the state is that it tries to treat upstate and the city the same, though they are very different.


  75. Duncan

    This is about WIGS, not how we can sell more wines from the FLX and Long Island, unless I did not get that memo?

    Do you work for a winery?

    Just about every state in this land has vineyards and wineries…just about every state allows WIGS…looks like you found your match?


  76. I own a winery that self distributes to 90 or so stores and restaurants. Half our sales are through stores. In states where wineries don’t have good retail outlets they are limited to direct sales for most of their revenue. I think it’s a good idea to see which states are doing it right before just blindly legislating the replacement of half the upstate stores with mini marts and big box grocers. In general, I like to think before acting and I would hope our government would too.


  77. Re Duncan’s question: Michigan is a WIGS state, and although its wine industry is smaller than New York’s, it’s more comparable to it than California’s. I can only speak from a consumer standpoint, but my experience is grocery stores mostly stock low-end sweet wines, both fruit and wine-grape based, in their “Michigan sections” – not the wines around which the industry wants to build. Those you need to buy from the winery or from specialty wine stores. Most Michigan wineries are still very small, so it may be that retail distribution is not yet a big priority for most of them. But, I see no reason to think the local Kroger stores will ever stock the state’s good stuff. That leaves the market open for wine stores to be the specialists in Michigan wine and build that part of inventory as production and consumer demand grow.


  78. The Post had a brief item about this today:

    Booze giant fights wine bid

    ALBANY — The big-money booze industry is secretly bankrolling the organized whining over Gov. Paterson’s plan to let grocery stores sell wine, The Post has learned.

    An internal letter sent to liquor stores recently by the London-based liquor wholesaler Diageo reveals it has been quietly subsidizing The Last Store on Main Street, the self-proclaimed “mom and pop” coalition pushing to cork Paterson’s wine-in-groceries plan.

    “Together with our lobbyists and government-relations team at Diageo, we have remained fully engaged in lobbying to fight the governor’s recent proposal,” reads the Jan. 28 letter.


  79. Some studies are showing that consumers want wine in supermarkets.

    http://www.whec.com/news/stories/S1429916.shtml?cat=565


  80. This subject will be on Stossel on the Fox Business channel Thursday night, 2/24. I’ll be a guest representing my small independent store which has thrived amid Big Box stores and grocery stores selling wine by specializing and being creative.


  81. Hey, that is great, Craig! Given her newfound love of wine (speaking at the WSWA convention) I wonder if Sarah Palin will interview you? Oh wait, I guess she over with Papa Bear on Fox News, not the business network…


  82. Actually, we’re recording it tomorrow, and I just got word that it’ll air either next Thursday, March 4th or the following Thursday, March 11th. I’ll let you know when I get the word.


  83. [...] in supermarkets and liquor stores? Blogger Dr. Vino asked some retailers questions related to this (Wine shops in states with supermarket sales – three views). The responses from those retailers is interesting; the comments to the blog post are [...]


  84. Mr. Posner,
    My “consumer advocate” friend. You brag about neglecting local wines? There are several wine shops that don’t. That is why most local wineries support the wine stores, not some percieved threat(Fox Run, Anthony Road and Red Newt are still sold in many of the “Last Store on Main Street” stores). If you remove the outlets that sell NY wines and replace them with box grocery outlets that won’t sell NY wines, it will have a negative impact on sales. This is common business sense.


  85. Drinkriesling,

    Fascinating name, BYW.

    I am not bragging about neglecting local wines. I sell what I want to sell. Wines that I think represent good value in the marketplace. Typically we stock 1-2 FLX Rieslings at a time.

    Should I sell the over oaked terrible Chards from LI because they are local?

    Why wouldn’t supermarkets sell NYS wines? Is there study to show that they will not?

    And, if they do not, which, I am sure they may not, isn’t it their right not to sell them? It is also the customer’s right to buy wine anywhere, as well…oh except in NY…my bad.


  86. [...] expand to owning several shops rather than just one. New York retailers should also read another blog post by Dr. Vino highlighting wine shops in other states and how they compete with supermarkets. It [...]


  87. [...] expand to owning several shops rather than just one. New York retailers should also read another blog post by Dr. Vino highlighting wine shops in other states and how they compete with supermarkets. It [...]


  88. [...] expand to owning several shops rather than just one. New York retailers should also read another blog post by Dr. Vino highlighting wine shops in other states and how they compete with supermarkets. It [...]


  89. I would love to buy wine in nys Supermarkets most people would rather do all one shopping.


  90. [...] Wine shops in states with supermarket sales – three views | Dr … [...]


  91. [...] blog often delves in some rather contraversial subjects. Case in point, his recent blog entitled “Wine Shops in states with supermarket sales – three views”, in which he has initiated a rather, some times stormy “conversation” between various [...]


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