In a bill that took seven years to materialize, most everyone seems “satisfied” with pending legislation
UPPER CUMBERLAND – In any given week, roughly 70 cases of wine exit Danny Brooks’ store, American Wine & Spirits in Cookeville, toted away by customers carrying their favorites, Freschellos, Camelots and the like.
That number is expected to drop due to proposed legislation allowing for the sale of wine in retail food stores as soon as 2016. As a result, Brooks estimates a loss of 10-15 percent, but don’t expect him, along with some other package store owners in the region, losing too much sleep over the issue.
“Right now, you don’t see me in panic mode at this particular point,” he said. “I think they (the state Legislature) did it as good as to right as they could. It is going to affect the stores; it is going to hurt the liquor store sales of wine. But I think we’ve positioned ourselves to where we’ll make it regardless.”
Brooks, a member of the Tennessee Wine & Spirits Retailers Association (TWSRA), a group of independent package store owners, has followed the legislation closely over its most recent run, a nearly decade-long fight that formally ended with Gov. Bill Haslam’s signature in March. The Tennessee General Assembly gave many concessions to package store owners during the legislation process, including the main provision that voters in cities or counties – that is, cities or counties that already have liquor stores or liquor-by-the-drink sales – will be required to pass individual referendums to allow it.
Other restrictions levied on food stores included no central warehousing or buying, meaning that large retailers could miss out on bigger discounts, 20 percent minimal markup and no tastings. Package stores, on the other hand, will also be allowed to deliver.
The issue could be balloted as soon as November, but even if it passed, sales of wine in grocery stores wouldn’t begin until July 2016 at the earliest.
That gives package store owners almost two years, Baxter Crossroads Wine & Spirits store manager Greg Vinson said, to rethink their business model. He admits the legislation presents both challenges and opportunities.
“The two-year head start (for us) is critical,” Vinson said. “If they had passed this bill and basically told us they’re taking wine away and not giving us anything in return, it would be a really dire situation. But the fact that we have a two-year head start to rebrand, that’s an advantage for us.”
At Crossroads Wine & Spirits, located off Highway 70, wine sales account for 30 percent of business. That number had been higher – around 40 percent, Vinson said – before package liquor stores opened in Cookeville in 2011.
“Before Cookeville, wine was a real money maker for us,” he said. “Now that we’re only doing 30 percent, I think we can make that revenue up.”
One way for package stores to close that gap is by selling “extras” – namely wine and beer accessories like stemware, kegs or growlers, cigarettes, coolers, ice and lottery tickets, items that had previously been barred at package liquor stores. Sales of those items will start at Crossroads “as soon as possible,” Vinson said. The law says that can begin July 1.
“We see that as an obvious opportunity, because, by law, we’ve been so restricted before,” Vinson said. “Of course, your margins are lower (with those items) – your margins aren’t 40 percent like wine – but hopefully we make that up with volume. If you do enough volume, you’re going to be OK.” It’s also important that package stores upscale their wine selection, Vinson added – by “specializing” and carrying brands not found in a grocery store setting, they can set themselves apart.
That’s the angle Brooks, at least, is most heavily considering, more so than turning his store into a convenience- type outfit, by selling cigarettes and beer and lottery, all of which is available at an adjacent store. He already carries 600 varietels – or 600 different types of wine. Bringing in more higher-end selections, types that customers can nab for special occasions, could help with the projected shortfall.
“We have pretty good choices now, but we’re going to go a little bit deeper,” Brooks said. “We want to keep people coming back for the experience, whereas just placing a bottle of Yellowtail in the cart when buying dinner.
“That’s the only thing you really can do,” he added. “If it hurts us profitability wise, then we’ll make adjustments as it goes.”
Of course, all that planning really falls on the hands of the voters. In order for a referendum to be placed on the November ballot, hundreds of signatures need to be obtained, more specifically, a number that equals 10 percent of the ballots cast in the last gubernatorial election in 2010.
Putnam County administer of elections Debbie Steidl said for a Cookeville city vote, that would mean 684 valid signatures are required. A county-wide referendum would mean 1,886 valid signatures. As of press time, no one had expressed interest in starting such a petition.
“Some folks have asked about the way the legislation would provide for wine in grocery stores…(but) no one has asked on how to phrase such a petition,” she said via email.
“It’s going to be real interesting regardless,” Brooks said. He, and others, don’t think wine in grocery stores will create a lot of new drinkers; it’s more about convenience.
“We knew this was coming (at some point),” he continued. “I knew it was going to come even when we opened our store three years ago. I just wanted to make sure (the legislation) was done halfway right and fair. If I do the things that I need to do, it could actually balance itself out in the long run.”