Grocery Wine Sales Bill Gets Industry Support—and Retailer Criticism

Could this finally be the year Tennessee gets wine sales in grocery stores? Don't hold your breath.

It's a debate as old as the hills, and this year it's heating up again—the battle to allow wine sales in grocery stores in Tennessee. But unlike the past few times similar measures have been introduced in the state Legislature, proponents of the change are cautiously optimistic this time that it might actually stick around long enough for a committee vote, at least.

There are a bevy of bills that address wine sales in retail food stores, but the one the industry is throwing its weight behind is SB 0316/HB 0406, co-sponsored by Sen. Bill Ketron of Murfreesboro and Rep. Jon Lundberg of Bristol, who are both Republicans. The main provision of the bill (as currently written—no amendments had been added as of press time) would allow wine to be sold almost anywhere one can buy beer—i.e., grocery stores and convenience stores, but not tobacco stores—in addition to liquor stores.

But the difference with this year's bill, as opposed to ones from past years, and the reason its supporters think it might actually stand a chance, is in its concessions to the liquor lobby. Because for all the hype about consumers, and how it should be easier for them to buy wine if they want, this is at heart a battle between two strong, well-funded business interests—the grocery industry and the liquor industry.

Liquor store owners have long opposed wine sales outside their doors; they say that grocery stores would have an unfair competitive edge, as the latter can sell food. Under current state law, liquor stores aren't allowed to sell anything other than alcoholic beverages—no food, no mixers, no ice, no corkscrews. SB 0316 would change this. Liquor stores would now be able to sell whatever they wanted—snacks, nonalcoholic beverages, wine glasses—even, if they so desired, beer.

"We want to just let them do what works for them. If it's cheese, that's great. If it's underwear, that's great," says Jarron Springer, head of the Tennessee Grocers and Convenience Stores Association, which is the main lobbying force behind the legislation.

In another concession to the liquor lobby, wine sales would still not be allowed on Sunday, even in grocery stores. Also, any place that sold wine, whether a grocery store or liquor store, would be allowed to have tastings on premises. For liquor stores, this means they could hold liquor tastings, too.

The legislation also removes the state's strict rules about who can own a liquor store. Currently a person must have lived in Tennessee for two years (or have lived in Tennessee for 10 consecutive years in the past) to qualify for a retail liquor license, and if you do qualify, you're only allowed to own one store. No longer.

In short, in one fell swoop, SB 0316 removes liquor store owners' most common complaints about state law and brings wine to grocery stores, meaning chain grocers that specialize in wine sales, like Trader Joe's, might actually locate in Tennessee. So what's not to love?

A lot, says Terrance Pate, the manager of Ashe's Wines & Spirits in Bearden.

"How do they keep kids from getting their hands on bottles of wine in grocery stores?" Pate asks. "What if we don't have room to expand to sell other things besides wine and liquor? We don't have room for a Coke machine, we don't have room for a chip rack.… We'd have to buy in bulk to be able to keep prices low, and we don't have the storage. We don't have room to compete."

Pate's use of "we" is more of a collective thing, speaking for all liquor stores—he admits that even being so close to Earth Fare, the Fresh Market, and Kroger, Ashe's business probably wouldn't be hurt too much. "We're a high-end market," he says.

But Thad Cox, the owner of Ashe's, is more wary. Cox is on the board of the Tennessee Wine and Spirits Retailers Association, which is opposed to the legislation. He says the bill doesn't ease restrictions nearly enough—retail food stores could get just one statewide license to sell wine, whereas liquor stores would still have to deal with municipal restrictions that prevent them from existing within a certain distance from schools and churches, for example. (It should be noted that dry localities would remain dry under the bill; even if Kroger had a statewide permit to sell wine, a Kroger in a dry county would still be wine-free.)

"Every two years we have to go before the Knoxville City Council and apply for a certificate of good moral character—basically a background check—in order to renew our license," Cox says. "Grocery stores don't have to do that."

But Cox says his—and the TWSRA's—primary concern is the loss of jobs. He says the majority of his store's profits comes from wine sales, and any drop in his sales would mean laying off staff. Springer admits that there would be some jobs lost in liquor stores, but he insists the measure would actually create many more jobs than it killed—hundreds, possibly thousands more.

The TGCSA commissioned a study on the economic impact of wine sales in grocery stores from Stonebridge Research, a strategic consultant company to the wine industry based in California. The 47-page report (available at uncorknewjobs.com) estimates that 5 to 28 percent of jobs in liquor stores would be vulnerable (104 to 597 actual jobs), but that 1,597 new jobs would be created, directly and indirectly, as a result of the legislation, as wholesalers, marketers, distributors, and retailers would hire new people to meet an increased demand for wine sales.

But that's the catch—those employment projections are based on a projected 25 percent increase in wine sales in the state. That's something Springer says could easily happen. He notes that Tennessee has one of the lowest per capita average wine consumption rates in the country—.20 gallons of wine consumed per person annually, compared to .31 gallons on average in the South as a whole, and .38 gallons across the nation. Springer says if wine is more easily available then more people will drink more wine. The more people get into wine, the more they'll turn to local liquor stores and their more extensive selections.

"The wine market in Tennessee is artificially low because of the limits on location," Springer says.

Cox disagrees with those statistics.

"Each Tennessee wine buyer will have to drink 50 percent more for wine sales to increase that much," Cox says. "That study is based on North Carolina and Georgia, where the drinking-age population is twice the size of that in Tennessee."

Wherever the truth lies, one statistic offered by Springer does seem to hold water—that over two-thirds of Tennessee wine drinkers would like the option to buy wine in grocery stores. We conducted our own (thoroughly unscientific) poll on the Metro Pulse Facebook page, and the overwhelming majority of responses were in favor of wine sales in groceries. And even some longtime liquor store employees aren't exactly opposed.

Matt Pacetti, a beverage consultant at Downtown Wine and Spirits, says SB 0316 sounds like a "fair compromise." He's also in a good position to know.

"I used to work in a liquor store in Florida that was right next to a grocery store," Pacetti explains. (Florida allows wine sales in grocery stores; liquor stores are also allowed to be open on Sunday.) "We always stayed busy—because do you really want to go fight the crowds in Kroger just to save 50 cents on a bottle of wine?"

The legislation is currently before the State and Local Government committees in both the House and Senate. In past years, the bills have been effectively killed before even coming up for a committee vote, much less making it to the floor. Only time—and lobbying pressures—will tell if this year will be any different.

The original version of this story incorrectly stated that the proposed legislation would not allow liquor store owners to sell beer. This is incorrect, and we have updated the story accordingly.