Wine in Grocery Proposal Could Be Cure in a Bottle for N.Y.

Although the sexual indiscretions of disgraced former New York governor Eliot Spitzer amounted to his political ruin, the episode may not have been such a bad thing for New York grocers. In fact, several conditions — including Spitzer's recent resignation, a state budget deficit of several billion dollars and tomorrow's looming deadline for budget approval — have converged in a perfect storm that creates renewed hope for a wine in grocery proposal.

Current New York law restricts supermarket chains from obtaining more than one license to sell wine. But the wine in grocery plan would allow current off-premise beer licensees to sell wine in their grocery store.

The proposal's proponents contend that, if included in the budget, the plan would produce $130 million in new revenue through no new taxes.

“It's still a pretty long shot, but we've learned through some back-channel sources that there appears to be some interest in the plan,” Jim Rogers, president of the Food Industry Alliance of New York State, told me at press time last week. “Though we haven't heard it out of his mouth yet, the proposal might stand a better chance under [current governor David] Paterson. Every couple of days, the revenue projections for the state get worse and worse, and we've picked up that we might be looked at more favorably because there is such a severe revenue crunch.”

Although the clock is ticking, Rogers is doubtful that a conclusion will be reached by tomorrow. He points to the change in administration and the financial discrepancies between the Democratic-controlled Assembly and the Republican-controlled Senate.

“The Senate thinks there is more money to spend than the Assembly does, so they're not necessarily concentrating on how to appropriate the dollars, but how many dollars will be coming in,” he said.

Should the measure be included in an approved budget, about $65 million would be contributed by sales and excise taxes gleaned from the increased sales of wine that are projected to result from supermarket merchandising initiatives. The difference would be made up by a one-time franchise fee. Fees would be based on sales volume and would be contributed per unit. A larger store would have to pay about $20,000 per unit, said Rogers.

Off-premise beer licenses are much easier to come by in the state. Chains can obtain as many of those as they'd like.

In any event, Rogers and the FIA's retailer members will not give up their fight for the right to sell wine.

“We're going to keep at it — the more it's being talked about, the more they'll get used to it and think, ‘Why not?’” said Rogers. “We don't want to drop the cause, because it'd be difficult to revitalize.”

Rogers' cautiously optimistic approach is a wise one. The FIA initially gained Spitzer's support for the plan last year, but after reminding him of it at budget proposal time, the alliance was informed that wine in grocery wouldn't be included, since the revenue it would generate wasn't needed for the state budget, according to Rogers. He blames sympathy for the liquor and wine store operators for the decision.