Monday, March 09, 2009

Remnants of Prohibition

In the past few weeks we have seen the liquor stores escalating their claim that allowing grocery stores to sell wine will lead to, well, an escalation of underage drinking. It does a heart good to see the local liquor store elevated as a guardian of the public morals; but does the argument hold any water?

Let's take the one assertion-made over and over by the lobbyists-that the governor's proposal will lead to a huge increase in, the number of outlets selling alcohol! Flat out false; since those grocery stores already sell alcohol-particularly those products such as beer and malt liquor that are the drinks of choice for the underage. In fact, liquor industry studies show that wine is way down the list (around 4%) when it comes to the choice of young drinkers.

But the argument is understandable. After all, what kind of policy position can, "Protect my retail monopoly" be? So we read this from a liquor store owner in yesterday's Newsday: "The only thing I'm licensed to sell is wine and spirits. If I sell to a minor, the state can shut me down and I will earn nothing. If a grocer loses the ability to sell wine for a while, that's no skin off his knuckles; the rest of his store is still bustling."

The reality, however, is that grocery stores and supermarkets-unlike drug stores-are doing a great job at insuring that stores comply with the underage drinking laws; so if we would look to tweak the governor's proposal to limit the availability of wine at the local Walgreen's or CVS; that's an idea worth exploring.

Once the prohibitionist arguments are put aside, we're left with the protect our stores-damn the consumer rhetoric that, quite frankly, doesn't withstand even the slightest independent scrutiny. Here's the industry view in yesterday's Poughkeepsie Journal: "Jeff Saunders, founder of the Last Store on Main Street Coalition, a group of retailers that opposes the governor's proposal, believes about 1,000 liquor stores will close, costing 4,000 to 5,000 jobs. "We feel that if one bottle of wine is sold in a supermarket, that's one bottle that comes from our stores," Saunders said. At a time of high unemployment, "why would anyone want to do anything to add to those numbers? We don't know." The coalition is made up of three trade associations representing retailers, including liquor stores."

Now, even if we accept the alarmist projection of a 40% loss in the number of liquor stores-an assumption that is contradicted be only a cursory look at other states where supermarkets and liquor stores co-exist-the idea that New York State will lose thousands of jobs is pure propaganda. As the Journal pointed out: "Allowing wine sale in grocery and drug stores would provide sizable economic benefit through the creation of 2,000 additional jobs, $93.4 million in added tax revenue and increase consumer spending in the state. Overall, wine sales would increase by nearly 19 percent," according to MKF Research, a California-based company hired by the Wine & Grape Foundation."

The increase in wine sales, then, would act as the proverbial rising tide lifting all boats-even the leaky liquor store row boat As Jim Rogers of the Food Industry Alliance says: "Rogers added there could be 2,000 net new jobs created related to wine sales and distribution if the law were to pass. "There will be more business and there will be a need for more employees," he said." The large percentage of these jobs would be high paying, good pension and benefits jobs that are driven by the unionized supermarket workforce.

What's totally clear in this debate-a point that is made with an erudite historical flair by Michael Lerner in yesterday's Newsday-is that the current patchwork quilt nature of the alcoholic beverage laws in NY need to be overhauled: "We've been through this before. New Yorkers have sought to allow grocers to sell wine on a half dozen occasions in the 75 years since Prohibition's end. ("Wine is food, wine belongs in food stores," was the slogan of a 1951 campaign.) Each time, the arguments offered by liquor stores - understandably offered in the interest of self-preservation - have prevailed. But what is really at work here is the legacy of Prohibition, and what is at stake is an opportunity to adopt a more rational approach to the way we think about, and enjoy, wine."

The opportunity is upon us to act rationally-in the interest of the state's wineries, consumers and local economies. Will the special interests once again prevail? That's up to the legislature.