Dr Vino's wine blog

New York City’s wine market can be surprisingly backward and parochial for being the biggest in the US. Fortunately, part of that may be changing.

New York appears on a fast track to deregulate laws on wine shipments. Governor Pataki submitted a bill to the state legislature that would remove the barriers that currently allow wineries in-state to ship to consumers directly while preventing those from out-of-state from having the same privilege. The Supreme Court ruled this discrepancy unconstitutional last week.

In a show of bravura, New York wineries support the decision to remove the barriers to what had been a captive market. And Pataki wrapped his proposal in language to aid the state’s wineries:

“By permitting the interstate shipment of wine in New York, we will allow New York’s wineries to grow even more by opening the doors to new markets across the country that were previously closed to them,” Pataki said in a statement.

Shipments to consumers in New York from New York wineries are bound to decline. The small section of the population that currently orders directly from wineries will likely celebrate the diversity of being able to order from California, Oregon and Washington instead. So they are betting on increased demand from out of state buyers, seemingly a risky proposal.

Legislative resistance to Pataki’s proposal is dissipating (story). On June 8 wine will be the topic of the day in Albany.

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Below Grade

Evan as wine shipments appear to be opening, the NY retail scene remains uncompetitive because of blue laws. Whole Foods Market, the high-end, organic grocery chain, has just closed its wine shop in its Time Warner Center location, reports Florence Fabricant in yesterday’s NYTimes. Although constructed with a separate section and a separate entrance, the shop violated laws that prohibit the sale of wine in grocery stores. A grocery store can operate a wine shop in an adjacent property but it must have a separate entrance at grade. The wine shop at Columbus Circle was in the basement. Yikes! Whole Foods will open a wine shop with the proper entrances at a forthcoming location on East Houston street.

The story also points out that a retailer is only allowed to have one liquor license in New York State. That means that a national chain such as Whole Foods (or Trader Joe’s for that matter, which doesn’t even sell wine or beer at any of its New York locations) must decide which ONE location in the entire Empire State that it wants to have as its wine store. Since chains can offer lower prices and greater selection to consumers, that means one-stop shopping in New York is not an option.

Perhaps wine consumers will target these retailing laws next to create a further opening? With no allies in the shops or wineries, the issue is not likely to get very far (unless, in an ironic twist, the distributors, who oppose direct shipping, get behind it!)

New York, a state where wine consumers have a great deal of choice (particularly in the NYC area) but some already high prices, may have to brace themselves for slight rises in prices. Governor Pataki is proposing to raise the state tax on wine from $0.05 to $0.28 per liter.

But consumers don’t have to worry unduly since it would just affect wines made in New York state (the country’s second largest producing state with 4% of national production). Nor do producers need not fret unduly since Pataki is also providing the state’s wine makers with $3.5 million in promotional funds. A nice silver lining.