Monday, April 06, 2009

Budgeting Back

According to the NY Times, the state's budget that was passed on Friday may have to be held together with chewing gum and tape-and it's almost inevitable that, because of revenue shortfalls, it will have to be revisited: "But the document may only be a first draft. The governor, a Democrat, has warned that it is likely to be reopened this year amid declining state tax revenues and Wall Street’s troubles. There are questions whether the Legislature has seriously addressed the state’s problems; lawmakers are relying on federal stimulus payments over the next two years and on a three-year state tax increase on the highest earners to balance the budget."

Given this need for another cash infusion-and with taxes and fees already sky high-it is a good bet that wine in grocery stores will be given a second look; and that second look should be crafted around a compromise that allows NY's liquor stores to expand their limited retail offerings. This is a scenario that forward thinking liquor store owners have already begun to embrace.

One such owner, writing in last month's NY Times, outlined his willingness to embrace a change in the law if it were to include his business as well: "But these proposals will bring increased competition, and it’s only fair that there should be commensurate opportunities to expand our small businesses. If supermarkets can have multiple locations, why are we prohibited (pardon the pun) from operating more than one store? Or from keeping the same hours? If grocery stores can sell a Côtes du Rhône, then why shouldn’t we be able to sell baguettes and cheese? How about artisan beer? Or just reusable shopping bags? (A Rochester store was recently fined a whopping $10,000 for doing this.) What goes for the grocery stores should go for us too."

And the compromise that will be most viable will also need to include some ability to address the question of underage sales. This is something that Assemblyman Ortiz has addresses in a draft piece of legislation that will allow for training for store owners and mandatory carding of all purchasers of alcoholic beverages-something that Florida mandates with much success. Now we believe that this issue was a huge piece of propaganda from the Last Truth on Main Street crowd, but the Ortiz proposal should quiet the disinformation on that front.

Another issue that will need to be addresses is the fees for the smaller, NYC-based, independent supermarkets. Under the current draft from the governor's office, a mid-sized city supermarket-of, let's say 10,000 square feet-that grosses around $100,000/week, would have to pay a wine fee of approximately $25,000! This is too much for a retailer that will lack the space to really devote a lot of room to a wide selection of wines. And, if the fees are made more reasonable, there will be 600 or more Main Street stores in the city that will be able to add a profit center to slow the disappearance of supermarkets from New York.

With the short fall already mounting-and tax payers in high dudgeon-isn't it a good idea to look for revenues-an estimated $160million from wine license fees-that don't include additional taxes? And as long as the small liquor stores get an ability to grow at the same time, this should be an idea that the legislature can embrace.


An article from the Rochester Democrat and Chronicle highlights our general point on the likelihood that the wine issue will indeed return to the Albany stage in the very near term: "I'm positive it will come up again," said New York State Liquor Store Association President Stefan Kalogridis, owner of Covin Wine Merchants in Albany."

And on the side of goodness, the folks over at Wegmans agree: "Paterson's proposed budget had estimated that allowing wine sales in grocery stores would add $105 million to state coffers. Gates-based grocery chain Wegmans Food Markets Inc. spearheaded a campaign to get public support, bankrolling a series of television ads as well as having a petition drive in its New York stores."We will continue our efforts," said Jo Natale, director of media relations for Wegmans. "We owe it to our customers, 70 percent of whom want this. We owe it to our employees because it would create new growth opportunities. And we owe it to the New York wine industry because they, too, would benefit."

But the liquor stores still resist compromise, claiming-get this-that their stores are too small to expand: "State law currently allows wine sales only in liquor stores, which in turn are prohibited from selling merchandise much beyond that. "Our business model was set up to sell liquor and wine — 95 percent of our stores aren't able to bring in foods and other items," Kalogridis said. "We don't have the room."

So the liquor stores are so small that they can't expand the scope of their operation, but the owners feel that this is the kind of consumer depriving environment that they need to defend at all costs? Good sense needs to prevail here. "We have no room to expand," is not a rallying cry for the 21st century-not when the state is in dire need of the license fee money from new wine sellers.