Wine Debate Spills Over

Local liquor stores battle a new grocery store wine sales bill

Red and white wine sales are spawning arguments about the red, white, and blue. At issue: Is the sanctity of small business, jobs, and local ownership more important than free enterprise and the consumer's right to choose?

State lawmakers will contemplate these all-American values as they consider Senate Bill 121/House Bill 1158, co-sponsored by Rep. David Shepard (D-Dickson) and Sen. Bill Ketron (R-Murfreesboro), which would authorize the sale of wine at retail food stores.

Opposed to the bill, saying it threatens jobs and small businesses, are groups such as the Tennessee Wine and Spirits Retail Association. "There are about 540 liquor stores in the state, and this new law would open up 3,000 to 5,000 more locations where you could sell wine, including some convenience stores, if they sell dairy products or the like," says Thad Cox, Jr., owner of Ashe's Wine & Spirits in Bearden, who is TWSRA treasurer and served on its board for 10 years. "We're such a highly regulated small business, unlike any others. We're only allowed to carry three products: wine, spirits, and high-proof beers—over 6 percent. We can't sell anything else. Not glasses, not milk, not snacks. That's been the set-up in Knoxville since 1962. With wine going in grocery stores, that's going to take away one of our three items.

"On the economic front, that will leave some stores cutting back on employees, and others going right out of business."

In favor of the bill—and open competition—is the Tennessee Grocers and Convenience Store Association, which supported a similar bill Ketron originally introduced last year. "Consumers are demanding this," says association president Jarron Springer, who is based in Nashville. "We've had 10,500 members join our campaign to pass this bill, called Red, White and Food, since Jan. 1, and just this morning I received 612 more from cards (that) supporters can fill out at the grocery store."

Cox says consumer demand is not enough reason to threaten the jobs of local workers, or the livelihood of store owners, who by law must be Tennessee residents. The corporations that own most chain grocery and convenience stores are based in other states. "I testified in front of the Senate subcommittee with the last bill, and Springer and the others who also spoke all said, ‘We want wine in the grocery store!' They never talked about an increase in jobs. The grocery stores are not going to hire people to sell the wines. They're just going to create another aisle and send the profits to Cincinnati or Bentonville. Meantime, the 3,000 people who work in the state's liquor stores are at risk."

Springer, though, says that new regulations could actually increase the number of independent alcohol stores. "There are 33 states that allow grocery store wine sales, including five of the eight surrounding Tennessee," he says. "In most of those states they have more liquor stores per capita than we do. When you can sell wine in grocery outlets, more people are exposed to the product. New wine consumers are created.

"We're only going to carry so many varieties in our store, so consumers will move up to more specialty wines that are only available at the independent stores. And they'll choose to go to the liquor stores based on the service and quality they provide. Right now, Tennessee is underserved. We have a lot of potential to sell more wine to consumers."

Springer also says a new law could add $16 million annually to the general fund and $11 million to local revenue streams. The revenue would depend on 75 percent of the food stores that qualify to sell wine (excluding, for example, farm stands and gas-only gas stations) and are located in areas that allow alcohol sales to apply for licenses—around 2,730. The tally also accounts for increased expenses, such as salary and benefits for the estimated 20 additional agents and 10 administrative staff required by the Alcoholic Beverage Commission if the bill passes.

"Those aren't numbers we produced—that's what the state fiscal review board that evaluated this bill came up with," emphasizes Springer.

Cox quarrels with the math regardless of its source. "To raise $16 million for the general fund, based on those numbers, would require selling 1.2 million more cases per year," he says. "But there's a finite number of wine drinkers in the state. They'd have to drink 50 percent more per year to hit those numbers. Wouldn't that bring a social cost to the state?"

As for the "all the other states are doing it" argument, Cox points to another statistic: "The last state that changed the law to allow wine sales in grocery stores was Iowa in 1986, 23 years ago. Some other states have reversed the law in that same time. Is this really all that pressing?"

The TWRSA's biggest objection, though, is that while the bill intends to provide fair competition, it still leaves independent liquor stores at a severe disadvantage.

"Liquor stores have to be 1,000 feet away from each other, and from a church, and from a school, and 500 feet from a cemetery," says Cox. "It makes it very difficult to find a location, and once you've found one and invested in the building and business and all of the sudden the grocery stores can just move in, and with that new wine and food store license, they can immediately start selling wine, and they've got the advantage of being in the chain, with chain cost-efficiencies, and without having to follow any of those requirements.

"Last year's bill didn't pass, and when they reintroduced it they did throw us some bones—you can sell ice, napkins, cocktail stuff, corkscrews," he adds. "But it still pigeonholes the small retailer under the current laws. I mean, how many times do you buy a corkscrew?"