February 19, 2010

Wine In Grocery Stores A Horrible Idea

As Joe Olenick of the Tonawanda News covers in this piece, Governor David Paterson is once again proposing the sale of wine in grocery and convenience stores as a part of his 2010-11 state budget. Paterson estimates that the change in state law will generate an additional $162 million in revenue for the state. It's a bad, bad idea, especially for Niagara County and our economy.

As anyone who is familiar with the grocery industry knows, virtually every product in a grocery store is placed there by the manufacturer at a cost. Products that are placed at eye level, the premium spot to appeal to the consumer, generate the highest revenues for grocery stores. Therein lies the problem.

Grocery and convenience outlets will have a specific, limited location for wine, and that location will go to the highest bidder. Giants of the industry, companies like Gallo Winery, Constellation Brands, Bronco Wine Company and The Wine Company, as well as foreign wine manufacturers who have the resources and desire to enter the U.S. market, will buy their way into that limited space, and the local manufacturer will get squeezed out.

Local wine manufacturers have invested millions of dollars into cultivating the wine industry in Niagara County, and that industry is thriving. Wineries such as those that are part of the Niagara Wine Trail are a crucial part of the local economy, and they rely on locally-owned wine and liquor stores to promote and sell their product. Never in a million years will these locally grown brands have the financial resources to be able to compete with the industry giants for that crucial shelf space. If the local wineries can't sell their product, they won't have a product. VoilĂ  - it's the end of a vibrant contributor to the local economy.

In this case, Paterson is offering a short term solution to a long term problem. Not long after the increase in revenue that would be generated, revenue that barely puts a dent in the state's $8 billion budget deficit, the reality of closed liquor stores, abandoned wineries and thousands of lost jobs will set in.

One could also question Paterson's motivation on this issue. Is it a coincidence that shortly before proposing the notion of selling wine in grocery stores, he received $25,000 in campaign contributions from a large liquor-industry distributor? Considering the dire straits of his fundraising efforts, it would hardly be a stretch to state that he is motivated not so much by what is in the best long term interests of the state, as opposed to his own short term goals as a politician.

New York's wine regions cross the entire state. Unfortunately this legislation, in addition to being proposed by Paterson, is being driven by Democrats from New York City, an area not exactly known for its wineries. But to get it passed in the State Senate, one of the five upstate Dems is going to have to break ranks with his party. Let's see which one, in reality it had better be all five, who has the balls to do the right thing.


Mr. Pink said...

Kudos Hobbes for one your most thoughtful posts in a long time. At first, I thought why would anyone be against wine in grocery stores but your facts make a compelling argument that had me in complete agreement with you by the end.

It's as if our goal is to conglomerate every conceivable product and service into one large warehouse. How long until Wal Mart starts offering heart surgey at a discount price and Wegman's will cut your hair?

This is a solution in search of problem.

Rocketboy said...

So, your opposition is that Grocery stores will only carry big name brands?

Gee, that sounds to me like a reason to go to a store that has a large wine selection.