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.