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Convenience for consumers or threat to small business? Wine legislation spurs debate

Sharon Hayes • Feb 27, 2009 at 12:00 AM

Legislation moving through the Tennessee General Assembly would allow consumers to purchase wine at grocery stores across the state.

But opponents say the bill threatens hundreds of small businesses and the livelihoods of thousands of their employees.

The bill, introduced Feb. 18, would create an additional class of licenses allowing the sale of wine at certain retail food stores. Wine sales in grocery stores would be allowed only in counties and cities that have authorized the sale of alcoholic beverages by local option election. The legislation would require the buyer to present photo identification at the check-out counter.

The bill is sponsored by Sen. Bill Ketron, R-Murfreesboro, and Rep. David Shepard, D-Dickson, and is co-sponsored by Rep. John Tidwell, D-New Johnsonville, and Rep. Jon Lundberg, R-Bristol.

Ketron said the bill is all about choice.

“It’s about listening to the consumer and giving them the opportunity to buy wine as a convenience to make their lifestyle and their quality of life better,” Ketron said. “It’s time for Tennessee to be progressive.”

Lundberg said Tennessee is bordered by several states that allow wine sales in grocery stores, and many people now travel across state lines to buy their groceries and their wine at the same time.

He said the legislation would help keep more wine sales in Tennessee, thereby putting more sales tax dollars in state coffers.

“Clearly we are sending people out of state to make purchases,” Lundberg said.

Steve Smith, chief executive officer of Abingdon, Va.-based Food City, said his stores on the Virginia side see lots of customers from Tennessee who buy wine.

“We know first-hand that there are a lot of folks who leave Sullivan County and Kingsport to go to Weber City and buy their wine at our Weber City store,” Smith said. “I think with Tennessee needing additional revenue, this would provide an opportunity to be more competitive with some of the border states that do sell wine.”

The Tennessee Wine and Spirits Retailers Association adamantly opposes the bill. It says the legislation would put more than 500 small businesses in the state in jeopardy, and could force 3,000 workers out of their jobs.

“This legislation would jeopardize the jobs of these people, many who have devoted their careers to the responsible sale of alcohol,” according to the association’s Web site.

Moreover, the association maintains the bill would increase availability of high-proof alcohol in the state, and could lead to increases in drunken driving and under-age drinking.

Plus, the state would have to hire more law enforcement officials to police grocery stores, the association argues.

And the association contends that the legislation would benefit large grocery store chains that are based out of state, while hurting locally owned small businesses that have operated in Tennessee for years.

“This legislation would take business away from small Tennessee stores and turn it over to mega corporations ... all headquartered out of state. This at a time of serious financial crisis for Tennessee, its businesses and families,” according to the association’s Web site. “The grocery and convenience store industry says it’s backing this legislation to make life easier on Tennesseans. It doesn’t mention how much it stands to profit. At a time when the industry is feeling a financial pinch, it wants to use alcohol to push sales — at the cost of regulation and control.”

More than 30 states across the country now allow wine sales in grocery stores. At Food City, Smith said folks moving to Tennessee expect to be able to buy their wine when they buy their groceries.

“We want to live up to what consumers expect. We’d like to be able to sell the product and sell it responsibly. We’ve proven as grocers and retailers that we can do that,” Smith said.

But some package store owners question whether grocery stores — some of which hire teenagers to man cash registers — can responsibly make wine sales.

“It’ll be handled by young people, and they’ve got a way of getting their hands on stuff. It would just make it easier for them,” said Charlie Large, owner of Sam’s Package Store on Stone Drive.

Thomas Carter, owner of B&B Package Store on Fort Henry Drive, said he has purchased beer at a local grocery store in the past, and was asked to scan the beer himself by the teenager behind the cash register.

Carter noted that package stores don’t allow admittance to anyone under 21, helping to ensure that sales are made by adults, to adults.

Carter said the legislation is simply unfair to small package stores, which are only allowed to sell products containing alcohol.

“You can buy anything from a drill bit to a diaper to an air conditioning filter in a grocery store. They want a monopoly on everything,” Carter said.

The legislation now moving through the Tennessee General Assembly would allow package stores to sell merchandise associated with drinking alcoholic beverages, such as ice, soft drinks, mixers, glasses, and corkscrews.

Carter said the legislation should allow package stores to sell a broader variety of merchandise if it allows wine sales at grocery stores.

“Let me have an opportunity to have a deli. But they don’t want to do that,” Carter said.

Similar legislation has been introduced in recent years in the Tennessee General Assembly. Lundberg said the package stores and their lobbyists are giving the same arguments now as they have in the past.

“They put out propaganda — not reality,” Lundberg said. “They’ve had a monopoly and they don’t want to lose that.”

Phil Scharfstein, owner of One Stop Wines & Liquors in Johnson City, rejected the idea that package stores have a monopoly. He said he considers package stores in Kingsport, Bristol and Greeneville as well as other package stores in Johnson City as his competition.

“I’ve got a competitor less than 300 yards across the street from me,” Scharfstein said.

And he doesn’t buy the convenience argument, either. Scharfstein said Johnson City has 11 package stores, while Kingsport has nine, Bristol has three, and Greeneville has four package stores.

“I hear convenience. But it’s not a convenience issue,” he said.

Scharfstein said the state has a lot of control over the two products sold in package stores — wine and liquor — and they should keep it controlled, particularly since wine has three to four times the alcohol content of beer.

Scharfstein said the legislation now being considered would essentially deregulate the industry.

“I look at where our nation is today, and I look at the deregulation that took place in the banking industry, and 20 years ago, I would say there were a lot of men and women who thought that was a great thing for this country. But look at us today,” Scharfstein said. “Sometimes opening things up — we really don’t know what is going to take place.”

Still Ketron, the Murfreesboro senator who sponsored the bill, said people should be able to purchase wine from whomever they want.

“I feel that the strong survive,” Ketron said. “We should open it up to folks to make as much money as they possibly can and for people to have choice to buy whatever they want to buy.”

Steve Smith at Food City said he views the legislation as a win-win for the consumer and the state.

“We know we’ve got support of a lot of legislators, and we’re going to be asking our customers to weigh in on it as well. We hope they will let their legislators know that they approve of it,” Smith said.

If the legislation passes, package stores would still have an advantage over grocery stores because of their knowledge of wines and the customer service they offer. For instance, consumers looking for advice on a certain type of wine most likely couldn’t get that information from a grocery store.

And grocery stores most likely wouldn’t carry the specialty boutique wine varieties.

B&B Package Store carries 2,400 wine labels, and wine sales make up 40 to 45 percent of the business.

“If I survive, that’s what’s going to pull me through — and our knowledge of wine,” Carter said. “I think we’ve got a lot of customers who will continue to trade with us even if wine is in the grocery store. But you’ll still have that convenience factor — ‘While we’re here, let’s pick up a bottle.’ That’s going to hurt us.”

B&B has a petition that customers can sign to show their opposition to the bill. Carter said he’s already got several pages of signatures.

“We’ve spent a fortune building our license and our name, and all the sudden you’re going to give it to Food City? That’s what they’re doing,” Carter said. “It’s the same old scenario — the big man stomping on the little man.”

Charlie Large at Sam’s Package Store said he’s worked for 39 years to build his wine business. The store has been involved in various community events through the years, including hosting the Fun Fest wine tasting for 25 years to introduce people to the finer wine varieties.

“We’ve tried to educate people and build our business, and we’ve done a lot of tastings for charities over the years,” Large said.

He said 40 percent of his business is made up of wine sales, and the legislation, if approved, would have a big impact on that.

“The value of our business would go down. It wouldn’t be worth what it is today,” Large said. “I just can’t see the Tennessee legislature doing anything to hurt small businesses in Tennessee. I can’t imagine it.”

For more information, visit www.redwhiteandfood.com (pro legislation) and http://twsra.org/ (anti legislation).

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