Is it a Good Idea to Allow NY Grocery Stores to Sell Wine?

February 11, 2009

wineIt has recently been reported that Governor Paterson is suggesting that one way to boost revenue to New York State is by changing New York State law to allow supermarkets, Bodegas, and the like to begin selling wine. He hopes that through liquor licensing fees from those supermarkets, to collect an additional $150 million over three years.

Due to my diligent reporting work for the Elliot Schlissel New York Law Blog, I had read about and was familiar with the facts of Gov. Paterson’s proposal when I strolled into a local liquor store on Friday to buy some wine. I was talking with the owner of the store, as I was checking out, she asked me to sign a petition to ask Gov. Paterson not to pursue this plan, as it would put many liquor store owners out of business. I said I wasn’t sure that I would sign it, so she asked me if I supported the proposal.

I told her that I hadn’t made up my mind for sure, and so I didn’t want to sign the Petition without thinking out the issue. I suggested that initially I liked the idea because it would mean not having to make a separate trip to a liquor store. I also pointed out that 35 states are already allow grocery stores to sell wine, and things seem to be going well in those states so I asked her what the arguments were against the plan.

Her were a few of her main arguments:

  • She said that in the old days, much of the liquor store business was in selling liquor, and not wine. But today, she said 60%-70% of the business is in selling wine. If most of that business would go to the grocery stores and bodegas, it would put the majority of the liquor stores out of business.
  • Furthermore, the only way those who are left could survive is by “going boutique” and selling only specialty or very expensive wines that can’t be bought in regular grocery stores, which is not necessarily the direction these small business owners want to go.
  • She argued that the Paterson plan wouldn’t accomplish it’s goals long term in any case because of the loss of tax revenue due to the closing of 1,000+ liquor stores and the laying off of over 4,000 people that would result from those closings.
  • She suggested that Long Island wineries would be hurt because grocery stores would only carry the big name wine brands, but not the local brands.

I hear what she’s saying, but I still have certain doubts. Certainly, one major function of government is to promote the feasibility of doing business in the State, but I’m just not sure that it is proper for the government to be the one making the choice about which businesses should prosper and which ones shouldn’t. Who’s to say that the liquor store owners have any more right to run their businesses the way they want  than bodega or grocery store owners? Why should New York State be the one to make that decision? Shouldn’t the State get out of the way by allowing anyone who wants to sell wine to sell it and thus allow entrepreneurs and their customers make these decisions by voting with their feet and their dollars?

Picture courtesy of the NY Times.

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