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New York States of Mind: Vintner Promotes Supermarket Wine Sales

Fox Run Vineyards’ Scott Osborn has risked upsetting wine-store owners to support a proposal to allow grocery stores to sell wine

Ben O'Donnell
Posted: February 25, 2010

Wine Spectator spoke with two prominent New York vintners on the controversial subject of grocery store wine sales. See Charles Massoud of Paumanok Vineyards' Q&A for the opposing point of view.

Scott Osborn, an upstate New York native and owner of Fox Run Vineyards since 1993, has long been recognized as a leader in perfecting and promoting Finger Lakes wines. He is an outspoken proponent of Gov. David Paterson’s initiative to allow the sale of wine in grocery stores in New York, which is one of only 15 states where the practice is still prohibited. Last June, after the same proposal was ejected from the state’s 2009 budget, Osborn helped found the New York Wine Industry Association, of which he is president.

The grocery store wine sales initiative is once again on the budgetary docket in the Empire State, and this time the proposal includes concessions to liquor store owners who fear losing a share of the wine market. Between franchise fees and wine tax revenues, the state is expected to make $300 million in the next two years alone from this measure, if passed.

Q: How do you think the proposal to allow wine sales in grocery stores would benefit wineries, and specifically New York wineries?
A: Right now, there’s a monopoly, without a doubt. I, by law, as a winery, have to sell to the liquor stores. There are only 2,700 of them. So having wine in grocery stores is a real benefit to me and my neighbors because it adds another 19,000 outlets where we can potentially sell our wine. One of the great things about food stores and grocers is that many of them focus on local products. They want to promote local meats and vegetables and the produce that’s grown within a few miles of them. And wine happens to be part of that. Right now, there’s not a spot for everybody, because liquor stores have a certain amount of shelf space that they devote to New York. When I go into a liquor store to sell my product, they try my Chardonnay, and they go, “That’s great, we’ll take it,” and they walk over and take the Glenora off the shelf. They don’t expand their New York section because of the expansion of the wine industry in New York. Our industry is remaining static because we can’t expand within our own state. Grapegrowers are hurting. People are going out of business because of the glut of grapes. A guy from Cornell said [the effect on winery revenues] could be as high as a 40 percent increase in the New York wine industry alone.* It’s been proven in 35 other states that it works. North Carolina, 15 years ago, had fewer than 10 wineries. They’re now ranked eighth [in U.S. wine production]. I believe that that is a direct result of having the outlets and having the choice of where they want to sell their wines.

Q: Do you think it’s a risk with wine in grocery stores that entry-level wines from large producers would squeeze more of the market away from small or local wineries?
A: I’m already fighting Yellowtail in every liquor store in the state. Our wines here in New York can compete with anyone in the world, and that has been proven with over 8,000 medals in the past few years. I’m not afraid. And none of my neighbors are afraid to compete on this level.

Q: In 2009, some liquor stores threatened to pull your wines from the shelves. Has your business been hurt at all by you taking a stand on this issue?
A: Yep, I’m down. In the year-end numbers, you can see how all the stores reacted, in terms of ’08 versus ’09. It’s substantial.

Q: What do you think the chances of this measure succeeding this year are?
A: Three-hundred million dollars is a lot of money. And that’s without raising taxes. If it goes through, it’s going to go through because the state needs the money. It is the right thing to do, because our industry will grow in leaps and bounds. Lots of jobs. Not only jobs at the wineries or the vineyards, but jobs in manufacturing, at label companies, bottle companies, all that kind of stuff. It’s going to be huge.

*Cornell professor Bradley Rickard’s study projects a zero to 50 percent increase in in-state winery revenues from this measure, with about a 15 percent increase in the most likely scenarios.


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Steve Mann
Norwalk, CT —  February 27, 2010 7:58am ET
Mr. Osborn must feel quite strongly about his stance, literally having bet the farm on this coming to pass.
Joe Domaney
ma. —  February 27, 2010 10:10am ET
i cant imagine that mr osborn will be too happy when the big box super stores start dictating to him what they will pay for a product.big market stores all get what they want...while at the same time the only thing the consumer wont be able to get from these markets is someone who knows anything about the product on their shelf..i rather frequent the smaller stores. ever see how competitive n.y.wine shopps are!!
David Rodriguez
New York, NY —  February 27, 2010 9:32pm ET
It's a sticky issue. As a consumer, I'd love to see prices driven generally lower but I'm conflicted. Large supermarkets will have every opportunity to sell wines as an effective loss-leader, attracting customers to their stores with low prices on the wines they know and enjoy.

This puts downward pressure on prices overall--especially on widely-available brands. Yet overhead and fixed costs for many specialized wine retailers mean that they can't compete.

If this legislation brings the disappearance of my local wine shops then I unequivocally disapprove. Of course, there's no real way for me to know that it does. So if this means that the wine shops will give up on competing on Yellow Tail and concentrate on smaller brands, then that's not necessarily a bad thing.
Tamar Shahinian
Albany, NY —  February 28, 2010 3:47pm ET
No state in the history of Wine sales has ever TRANSITIONED from this to Supermarkets sales.....EVER. Therefore, the effect of how this will hurt the people of NY small business owners is immeasurable, but certainly detrimental. It is already difficult to do business as a small business in this state. All of the 35 states that already allow the sale of Wine in Grocery stores began that way after Prohibition.

I am a wine salesperson for a distributor and it is a quick way to make an unguaranteed dollar for our budget, but the long term effects include sales to minors (more underage sales occur in Supermarkets vs private wine stores...proven statistic), another proven statistic is that there are more drunk driving accidents and deaths that occur in the states with sales in grocery stores, the plaza store fronts will now have another vacant window...they already have empty windows from all of the Butchers, Florists and Bakeries, there will be a loss of jobs...all 2700 stores who employ 10,000 people.

It makes the rich Richer.....for what? A convenient, one stop shop? The consumers do not realize how the small wine shop needs to be able to sell the Yellowtail because those wines are a majority of their business and helps them pay overhead. The esoteric wines are a joy to sell, but do not pay the bills. Also, the 300 Million the state predicts they will earn....hmmm. That dollar amount is considerably high. Not all grocery stores will be soliciting for a license. If they all do, that would mean our New York State liquor Association would have to issue 16,000 more licenses in a matter of how long? There are restuarants that have waited 9 months for a license. Our SLA is not capable of handling all of the licenses.

Oh and one more thing, for all of the small New York State wineries that believe this will improve their business.....shame on you. If you believe for one minute that these big stores give one iota about small wineries....you need to check out the wineries that are sold on shelves of the stores that already are allowed to do so.....it is about the PROFIT MARGIN. If you want to improve your sales, work on improving the quality of your wine to the dollar it costs.
Nick Wolfe
Washington, DC —  February 28, 2010 9:56pm ET
The insistence of NY's monopoly retailers is simply offensive. As a consumer, I appreciate choice and selection, and my ability to select the widest variety of wines possible. Liberalized laws support this.

I live in a liberal jurisdiction with a restrictive one next door (DC and Maryland, respectively). I've had the unfortunate experience of needing to pick up a bottle in MD for a dinner party and having to go to a seedy liquor store with a bad selection instead of the local Whole Foods (in Annapolis no less). My local Safeway is far classier and actually has a better selection.

NY's wine industry folks scream bloody murder and flat out lie. Case in point--Iowa transitioned to supermarket sales in 1983. Transitions have happened with no apparent ill effects. As a matter of fact, consumers there can now select a wine to go with what they will cook for dinner. The disregard that the monopoly wine retailers in states like NY have for their consumers gets them nothing but disgust from me.

Thank God I live in a place with rational laws when it comes to wine.
Gillian Dircks
Rocky Point, NY —  March 2, 2010 12:40pm ET
@ NIck Wolfe - How would you describe 2700 INDIVIDUALLY owned wine and liquor stores a monopoly? 80% of all retail wine stores in NY are already in supermarket shopping centers(terribly inconvenient for consumers, by the way). Putting wine sales in these supermarkets 20yards away would certainly cause the PRIVATELY owned stores to close their doors. The majority of wine sales would then be put in the hands of the handful of CORPORATE CHAINS. This can be described as a monopoly. In a time when unemployment is at an all time high nationwide, legislators should worry about how people put bread on the table, NOT where people buy their wine.
Joshua Parent
NY —  March 3, 2010 4:56pm ET
@Nick Wolfe I'd also be curious where you got your information about Iowa. All I can find is in 1985, when they went from a state controlled alcohol system (A real monopoly, Mr. Wolfe and Mr. Osborn) to a privatized one. It was not a move from independent wine stores to grocery stores.

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