Awaiting NY Supermarket Wine Sales

Dr. Vino has a an excellent post today updating consumers on legislation in New York State to allow some grocery stores to sell wine. Currently, in New York State you can only buy wine from liquor stores. The state also bans retailers from owning more than one store/license. Allowing grocery stores to sell wine and allowing all retailers to obtain multiple licenses could dramatically change the quality and selection of wine available to consumers in the state.

Liquor stores may be adequate in some areas, but as a former Long Islander, who visits family there often, I can attest to the horrible selection under the current system. Out on the eastern part of the Island, there is a dearth of good wine shops and the local ones near where my family lives contain uninteresting selections of dusty, stored in poor conditions. I have to travel about 10 miles to find a halfway decent wine selection!

It is very odd that Virginia supermarkets have far better selections than New York shops specializing in wine and spirits! And Dr. Vino notes that New York has 2,400 retail licenses, while smaller Virginia has more than 6,000 retail licenses for shops of various kinds–including drug stores, gourmet shops, supermarkets, convenience stores, and gift shops–to sell both beer and wine for consumption off premises. That does not include wineries, hotels, restaurants, concessions, and places selling only beer. With all this competition, it is not surprising that wine retail shops in Virginia are fantastic with lots of high-quality, unique wines. They also contain knowledgeable and helpful staff, and host tasting events. In fact, even Harris Teeter’s supermarkets have knowledgeable staff at hand to help consumers select wine.

What explains there difference? Competition fostered by fewer barriers of entry. With supermarkets, Costco, Trader Joe’s, and even Walmart and Target selling wine, retailers all need to compete. The result is a wonderful selection with many different niches being served. Instead of liquor stores, we have boutique wine shops often with wine bars and tastings. Unfortunately, we do have to go to a separate, government-owned ABC store to buy liquor–but that’s another issue.

I would welcome such competition in New York with glee. Unfortunately, change in New York may prove sluggish, as Dr. Vino reports from intelligence he found on Twitter, posted by Dainel Posner, owner of Grapes The Wine Company. Posner is apparently one of the few enlightened retailers in the state, offering a more unique retail experience that could compete with in an open market. Dr. Vino notes that the proposals create a transition period, obviously to get at least some existing liquor stores on board by delaying liberalization and giving them the chance to expand first. Dr. Vino explains:

According to Posner, the new proposal would offer existing retailers two “medallions,” requisite to maintain or obtain a license for wine retailing. The first medallion would be for their existing store. Shop owners could do what they wish with the second, including use it to obtain a license on a second store as the current ban on owning multiple licenses would be lifted. They could also sell it to another party, including a supermarket, to apply for a wine retail license.

This would effectively cap the number of new licenses to only double the amount of existing stores, currently 2,400 in the state. This medallion period would be a transition of three years before the market was further liberalized, phasing out the medallions.

Existing retailers will continue to lobby for such protection as long as they can. But in the end, competition would be good for many of them too. They could become part of a robust and growing market like the one we have in Virginia. I suspect that some might go out of business but many will change their strategies to provide a better product and others are likely to spring up to fill new niches, such as the boutique wine shops here. In fact, if wine is sold in supermarkets more consumers will likely try it, and there will be a growing wine appreciation market as a result. Those consumers are then likely to try other wines and eventually seek out the boutique ones as well.

Rather than fear competition, New York retailers should learn to embrace it. The ones that do, will be the ones that survive and thrive, and maybe even expand to owning several shops rather than just one. New York retailers should also read another blog post by Dr. Vino highlighting wine shops in other states and how they compete with supermarkets. It shows that competition could be a winner for the shops that are willing to offer consumers lots of options and services–which is certainly a huge win for consumers.