Dan's Papers - January 30, 2009 -

As President Obama struggles to implement his economic stimulus package, Governor Paterson works on the state budget. One plan to bolster state coffers would allow supermarkets and grocery stores to start selling wine, resulting in a franchise fee. Although this may appeal to some supermarket chains, which have the space and staff, local vineyards and liquor stores say it could present a great hardship.

"This would put many of our mom and pop wine and liquor stores out of business," said Paul Tavernier, a 31-year owner of Atlantic Wines and Liquors in Amagansett, and a member of the Metropolitan Package Store Association. Tavernier called his state representatives and is circulating a petition in his store that says, "Keep wine out of supermarkets."

"Governor Paterson is looking for quick money, and he thinks if he gets wine into supermarkets they'll need a wine license. But if he knocks out the small stores, he'll have fewer licenses overall." Tavernier said his three-year wine license cost him $1,626, including the filing fee of $90.

"If all these small stores close, he'll lose this added revenue as well," said Tavernier, adding that he buys maybe five cases of each wine, which he marks up by a percentage. Supermarkets can buy 50 cases and sell them at a lower price, which also hurts liquor stores.

"For us smaller stores to stay in business, we'll have to charge more for liquor, to make up for what we lose in wine. Right now 70% of my business is wine," he explained. "In the long run, this will hurt the industry and the state."

Governor Paterson is hoping that by bringing the wines into the supermarkets, he could bring in about $105 million the first year, and about $54 million the next. He is also proposing to raise the tax on wine from 18.9 cents per gallon to 51 cents, and the beer tax from 11 cents per gallon to 24 cents. Right now, New York is only one of 15 states that does not allow supermarkets to carry wine.

"A lot of small liquor stores out here live week to week, especially in this economy," said Dan DePetris, whose family has owned DePetris Liquor Store in Bridgehampton since 1945. "If King Kullen gets wines, I think they would probably undercut our prices, and if small stores like mine go out of business, then they'll raise their prices after we're gone. That's my theory - it's just not a good thing."

Mark Fashion, owner of Six Corner Wines and Liquors in Westhampton Beach, said he and his employees now make a living, own their houses, and live in the community where they work. But he said if wines are sold by big chains, the revenue would go to corporate headquarters, which are often out of state.

Mike Carolan, of Finest Kind Wines and Liquors in Montauk, said he is sending a petition to the retail association against having wine in supermarkets. "If mega chains are allowed to sell wines, then pricing would be tough for stores like ours. They can afford to buy in huge quantities. How can we compete with their prices?"

But the larger supermarkets, like Waldbaum's and King Kullen, say they'd like to be able to sell wines, like chains in other states offering one-stop shopping. King Kullen is about to make a petition available for customers to sign, in an effort to get the okay from state lawmakers.

The manager of the Waldbaum's store in East Hampton, who declined to be identified, said his store is already carrying one brand of wine but they're not allowed to sell an assortment. He said that, outside New York State there are liquor stores within grocery stores, something he'd like to see happen here.

But some of smaller grocery stores in the Hamptons worry about the possibility of competing with their neighboring liquor stores, and jeopardizing their businesses. Matt Schiavoni, an owner of Schiavoni's Market in Sag Harbor, said, "For us, it's not something we're looking toward doing. Our neighbor, the Sag Harbor Liquor Store, has been there for a long time. We have a grocery business that's growing in many directions, so we don't need to carry wines. If we were to carry wines we'd have to be knowledgeable about them. It would be a whole new business. We would have to set it up right, and it's just not something we need or care to do."

NYS Assemblyman Fred Thiele of Sag Harbor said he also thinks it's "a bad idea" to sell wine in supermarkets and grocery stores. "I think it would adversely impact the small wine and liquor stores, and it would also open up more possibility of having DWIs," he said. "Our local wineries also have concerns that if they allow wines in grocery stores, they will be carrying wine from other vicinities as well, which will give our local vineyards more competition." Thiele said the state has been considering the idea of selling wines in grocery stores for "about 30 years, every time they need to think of ways to increase money in their coffers."

Tom Morgan, wholesale wine manager at Lenz Winery on the North Fork, said he's against having wine sold in grocery stores because "in most stores they don't have the skills to sell the higher priced wines, and it's a betrayal of the trust between the state and retail license holder.

"This is a short-sighted, money-generated contrivance that the state came up with, and there is no long-term benefit to the consumer or the wine business," he said.