Vintage argument leaves bitter taste

Grocers, liquor store owners spar on wine sales

If the Tennessee Grocers and Convenience Store Association has its way, customers throughout the state will be able to buy their merlots and chardonnays at the same place they buy their milk and Cheerios.

Blount County liquor store owners say if the bill becomes law it will increase the number of underage drinking offenses, force lay offs at their stores and possibly even put them out of business.

Supporters of current legislation to sell wine in grocery stores tout the measure as a convenience for customers, saying that it is allowed in 33 states, including five bordering Tennessee, and that grocery store wines sales aren’t a factor in underage drinking.

Joe Anderson, owner of Wine and Spirits Cellar, said the wine and spirits businesses statewide generate 3,000 jobs and $190 million a year for the state in terms of jobs, charitable donations and tax revenue. No state has voted to put wine in grocery stores in 23 years and the measure has been voted down in Kentucky, Colorado, Minnesota and Massachusetts, he said.

House Bill 1157 is being sponsored by Rep. David Shepard (D.) of Dickson; Rep. Jon Lundberg (R) of Bristol and Rep. John C. Tidwell (D.) of New Johnsonville. The Senate Bill 0121 is being sponsored by Sen. Bill Ketron (R), Murfreesboro.

State Sen. Doug Overbey said several aspects of the bill concern him, particularly whether it will lead to loss of existing jobs in Blount County. “If we have wine in grocery stores, would it cause job losses in existing liquor stores? I tend to think it would,” Overbey said.

Overbey said he’s also concerned about the local investments made in Blount County. “Those who have opened liquor stores bought property and built buildings and invested in inventory. They were playing by the rules that existed at that time. What would be the impact on them if, three to five years later, we change the rules?” he said. “Have they been given sufficient time to recoup the investment they made in the community.”

The senator said those local business people also invest in the community. “You assume whatever profits they make are being reinvested somehow back in the community whereas if you expand it to grocery stores, I don’t think any of them are headquartered in Blount County. Those profits will be going out of our county,” he said. “These are, I think, some serious questions about changing the game.”

Maryville City Councilman and Calloway Oil president Tommy Hunt said he was told this measure would affect grocery stores more than convenience stores. The councilman said his thoughts are on where the 17 percent wholesale tax would go when grocery stores such as Kroger would have wine delivered to hubs such as Nashville before shipping it to the other stores. “My assumption is it’s still going to be locally distributed even though it may be going to grocery stores,” he said of the tax revenue.

Easier for teens?

One concern regarding the measure is whether putting wine on grocery store and convenience store shelves will give teens and underage drinkers easier access to alcohol.

Jarron Springer, president of the Tennessee Grocers and Convenience Store Association said it won’t. Two to three years ago the state passed the Responsible Vendor Act, which provides for universal carding for beer sales, he said.

“We’re the only state in the country that does that, and our industry supports that. We would apply that to wine sales,” he said.

Springer said that a check of underage-related crimes or incidents that are recorded through statistics in other states showed no correlation between wine sold in food stores like it is in 33 states and underage-related crimes.

“No other state has rescinded wine sales in stores,” he said. “There’s never been any movement to change and take wine out of stores once it’s in.”

Browns Creek Wine and Spirits owner Greg Williams said the county has seven well-run package stores that are very concerned with making sure underage drinkers don’t get their alcohol at their stores.

“Our license is valuable, and we protect it by being sure we keep underage people from purchasing alcohol,” he said.

Williams said if the wine in grocery and convenience store bill becomes law, there could potentially be 6,000 outlets for selling wine versus the approximately 525 liquor and wine stores now in business in Tennessee.

“It’s hard to keep eye on 6,000 outlets versus the 525,” he said.

Williams said the big argument for the bill seems to simply be convenience. “Alcohol has been tightly controlled since prohibition was repealed. That’s why we have local option elections. In this county, nearly 50 percent were against it when we first voted in package stores,” he said.

Creekside Wine and Spirits manager Ed Forton said if grocery stores sell wine, they won’t have employees who specialize in selling wines tending the wine aisle.

“You’ve got 16-year-olds who can work in a grocery store. They can’t sell it but they’re around it and that gives them access to it, whether they have someone purchase it for them or do other things with it. It’s in their hands and that’s a no-no,” he said.

Forton said wine and liquor stores have specially-trained employees. “The specialized retailers are trained to identify people who are too young to drink or who have already had one too many,” he said.

Topside Wine and Spirits owner Darrell Tipton said he’s skeptical grocery stores can police underage drinkers like a liquor/wine store can. “We don’t permit anybody in our store who can’t buy. If there’s any question of anyone being of age they hit that front door. They’re ID’ed and turned back around,” he said. “Definitely the controls are much better. In grocery stores, anybody goes in. The likelihood of somebody going in and shoplifting is far greater in a grocery store than in mine.”

Green Meadow Wine and Spirits manager Eric Harrell said that with the large number of underage employees working at grocery stores, there’s also the possibility of underage drinkers getting through checkouts without having to show identification.

“The possibilities of it happening are far greater than in a controlled environment like a liquor store,” he said. “Our employees are all trained. We’re trained to look for fake IDs and know how to tell if someone is intoxicated and not to sell to them,” he said.

Anderson said the only thing he sells in his store is alcohol. “Therefore, you must be of age to enter my store. There is no reason for an underage person to be in my store,” he said. “At grocery stores and convenience stores, they can say they’re in there to buy potato chips.”

The Reserve manager Dale Murnan said everyone is carded who tries to buy at his store. In grocery stores there’s a great chance someone can sneak out a bottle of wine. Also, there’s more of a chance employees won’t really know much about what they’re selling. “We really probe into that stuff. We take our job to the extreme to be professional and know what we’re talking about when we talk about grapes and where they’re grown,” he said.

Chardonnay or Coors?

Alcoa Wal-Mart manager Boyce Smith said they’ve sold beer the entire time the store has been open and never had any incidents or citations.

“Our systems won’t let an under person buy alcohol. We feel we are in a very good situation with not having any issues with that,” he said.

Smith said that traditionally when underage drinkers buy alcohol, they’re probably going to buy beer before wine. “The biggest thing is it’s going to add revenue to the tax base. Anytime you make an item more available to the public, there is going to be a higher amount of people purchasing it,” he said. “It’s more convenient. I think it’s a good thing for the taxpayers.”

Generating tax revenue?

One of the reasons proponents of the legislation say they are pushing for wine sales is that it will be more convenient for customers and create more sales tax revenue.

“For us, it’s been about consumer choice. Consumers want to buy wine where they buy food. It’s one of the No. 1 questions we get,” Springer said.

The Tennessee Grocers and Convenience Store Association started their Red White and Food campaign to allow customers the opportunity to support the bill that would allow wine in grocery stores. They put 6-foot tall cardboard cutouts of wine bottles in grocery stores across the state with the message “Where’s the Wine?” Customers can then fill out post cards voicing their support.

Springer said he and his staff have only processed about 1,900 of 6,000 post cards received and 70 of those were from Overbey’s constituents in Blount and Sevier counties.

Williams said the bill doesn’t benefit consumers. “I think it is for the benefit of a few out- of-state corporations who would like to increase their bottom line at the expense of local business liquor store owners who are restricted to owning one store. That’s it.”

Unfair competition?

Forton with Creekside said from the liquor and wine store retailers perspective, there’s nothing positive about the legislation. The measure would threaten 3,000 plus jobs in 525 liquor and wine stores across the state, he said. “It’s one most negative reasons against the small businesses, which are what built this country,” he said.

Topside’s Tipton said another issue is that when package stores were voted in for Alcoa and Maryville, nothing was ever said about allowing wine sales in convenience stores and grocery stores. There were only going to be limited outlets, he said.

“People went out at every one of the locations, made major investments in buildings to accommodate the sale of wine and liquor based on the rules established,” he said. “Now you’re less than two years into the game, and they’re talking about changing the rules.”

Tipton said changing the rules now would be unfair to the voters and to those who made investments in the liquor and wine stores.

“To me, that’s the burning issue,” he said.

Tipton questioned whether there would be increased sales tax revenue just because more locations would sell wine. “If you’re saying we’ll increase sales, there’s a certain amount of people who don’t want those sales increased. It’s available enough as it is,” he said. “We have enough people involved in drunken driving.”

Tipton said wine sales make up 40 to 50 percent of his sales. “If you take away from that, you impact it. There’s no way that all the stores will be able to survive if you do that. Every store here is locally owned and operated and provides jobs,” he said. “I dare say Krogers and Wal-Mart are not going to add addition people because they start selling wine.”

Harrell with Green Meadow Wine and Spirits said the argument from the grocery retailers is they need larger margins. “They work on such short margins, they need items they can make extra money on in tough times,” he said.

Harrell disagreed that more outlets would generate more sales tax revenues. “You’re not going to increase the amount of tax revenues or the number of drinkers by putting it in more places,” he said.

Murnan at The Reserve said the measure is going to lead to layoffs at liquor stores. “If you have stores that have 50 percent of their volume on wine sales and cut it down to 30 or 20 percent, there’s payroll lost,” he said. “You have to make substitutions somewhere. Usually it comes right off the top. It’s all about profit.”

Murnan said liquor stores like his can provide better customer service. “When customers come into our stores, we are their personal shoppers,” he said. “We’re here from the first to the last bottle. We can help customers pick the right wine without them spending the most money.”

Anderson asked why state lawmakers would choose to hurt their own small businesses like liquor and wine stores just to help multi-national corporations who have billions of dollars of revenue and profits they send to out-of-state home offices.

“That is beyond me why the only argument grocery stores have is convenience. We’re willing to destroy 500 small owners of a businesses who live in the state of Tennessee and risk 3,000 jobs for the sake of convenience,” he said. “I don’t understand that at all.”

Smith said he has friends who are liquor store owners. “I understand their concern but, by and large, 90 percent of the time we find when competitors start selling merchandise you may have exclusively, the customer wins and in the long run, all the businesses win,” he said. “Competition always makes the business environment better.”

Springer with the Tennessee Grocers agrees that competition is great for business.

“Our industry competes fiercely everyday. It’s good for the consumer and marketplace. If you look at the 33 states that allow the sale of wine in food stores, you note per capita there are more liquor stores in those states than in Tennessee,” he said.

Springer said liquor and wine stores are able to compete with grocery stores because they have a niche market. “They provide a specialized service. They provide wines we don’t have and varieties we don’t have and services we don’t have,” he said.

Springer said the association wants small businesses like liquor and wine stores to thrive. “We want small businesses to do well. The majority of our membership is small business, and we serve the consumer,” he said.

Williams said doesn’t think the competition will reduce wine prices much. “We do our best to keep our prices as low as possible, and we have plenty of competition already,” he said.

Forton said competition from grocery stores or convenience stores isn’t necessarily unfair, but state law requires that wine and liquor store owners live in the counties where their stores are located. “When you put wine in big box stores headquartered out of state, you take revenue out of state,” he said.

Harrell said liquor and wine store owners and operators have followed the rules.

“We can’t sell potato chips, crackers, wine glasses or corks. We’ve always let grocery stores and other outlets have those. We’ve follow the rules and now, after all these individuals have invested money in these businesses, the grocery stores want to change those rules,” he said.

Murnan said if grocery stores are allowed to sell wine on Sundays the rule also should apply to liquor stores. “If they allow grocery stores to do it, they should allow me to open on Sundays,” he said.

Smith said selling wine in grocery stores make for a better situation for the consumer and for the liquor and wine store owners who then can sell more exclusive and higher priced wines and provide more of a selection than grocery stores.

“In the long run, it makes it better for them,” Smith said.

Anderson with Wine and Spirits Cellars said the laws were put into effect for a reason.

“Wine is not food. It is alcohol, and it needs to be controlled,” Anderson said.

Progress of Bill

Currently, both the House and Senate bills have been introduced and referred to the State and Local Government committees.

Bill summary:

Alcoholic Beverages - As introduced, creates an additional class of licenses allowing the sale of wine at certain retail food stores; requires person purchasing wine at certain retail food stores to present photo identification. - Amends TCA Title 57.

Summary excerpts from bill:

Present law regulates the manufacturing and selling, at wholesale and at retail, of alcoholic beverages through the issuance of licenses by the alcohol beverage commission. This bill creates the “wine at retail food store license,” which authorizes the sale of wine at retail food stores. “Retail food store” means an establishment where food and food products are offered to the consumer and intended primarily for off-premises consumption, not including the following:

(1) Roadside markets that offer only fresh foods and vegetables;

(2) Food and beverage vending machines; or

(3) Establishments selling only tobacco, beer, or gasoline.

The license would be issued by the alcoholic beverage commission and only in a county or municipality that has authorized the sale of alcoholic beverages. There would not be any additional application, renewal, maintenance, or any other fee for this license.

Senate Bill 0121 sponsors: Sen. Bill Ketron (R), Murfreesboro

House Bill 1157 sponsors: Rep. David Shepard (D.) of Dickson; Rep. Jon Lundberg (R) of Bristol and Rep. John C. Tidwell (D.) of New Johnsonville

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