New York State of Wine

Posted on December 18, 2009 in Wine

It’s remarkable what we can sometimes take for granted—perhaps less today that say, two years ago. But, an example that quickly comes to mind is Trader Joe’s, which was critically influential in the development of wine-culture in Southern California, going back four decades. They made wine readily available, and affordable—progressively convincing an otherwise largely unknowing populace that wine is an extension of food and that it should be incorporated into daily life. Whether discounted first growths or six-dollar Vouvray, they’re still thriving in the new luxury vertical, completely devoid of snobbery—and, most importantly—giving the customer what they want.

Well, almost. Three-hundred stores and 25 states later, this privately owned and operated company—along with every other “grocery store” in the state of New York—cannot sell wine. Californians can now do nearly all of their shopping at Trader Joe’s—in addition to their more traditional dry-goods, alternative independents and earth-friendly products—they offer produce, meats and myriad artisan goodies. But, if you couldn’t get wine there, would it change the value of your experience?

Apparently, David Paterson, New York’s governor wants more. He proposed this week that the state’s 19,000 grocery and convenience stores be allowed to sell wine. Who could oppose that, right? Well, how about the 2,400 wine and liquor retailers—who are already fighting formidable behemoths with rocks and slings. Think ecommerce giants like wine.com and the pending, much-anticipated arrival of Amazon; not to mention the augmenting dominance of forces like Costco and Whole Foods.

In Southern California, around the same time that Pronto Markets became Trader Joe’s, an Angelino named Steve Wallace was scouring the unspoiled back roads of California and abroad, in search of new wine. A decade or so before that, the Hanson family opened Hi-Time Cellars, an hour or so down the coast; another two decades before that, Sherry Wine and Spirits Co. was founded, in 1934, now Sherry-Lehmann; and over a hundred-years earlier, Acker Merrall & Condit, which prides itself as being America’s oldest and finest wine shop, was founded in 1820.

In 1998, my suggestion that Costco, in the hands of David Andrew, would become ‘one of the largest retailers and potentially dominate the fine wine category in volume,’ was met with both fear and indifference. I recall a specific example from someone who shall remain nameless, in the interest of retribution, who jested about buying Château d’Yquem where he gets his dog food and trash bags. Deep knowledge and customer-service would prevail. We all know how that’s turned out. In its first year, Andrew’s wine program saw a 30 percent increase in fine domestic wine, a 54 percent increase in fine imported wine and a 35 percent increase in imported wine in the under-$10. In 2007, Costco generated $456 million of U.S. Fine Wine sales.

This week, Decanter quoted Mike Martin, owner of Martin Brothers, a thriving shop near three supermarkets on Manhattan’s Upper West Side, said, ‘I’m not worried. They won’t carry what I carry. They won’t compete on ‘82 Latour.’

What’s appealing about opening the doors to 19,000 outlets? The more than ‘$150 million in revenue for the state in licensing and franchise fees over three years, while boosting the state’s wine makers and customer convenience.’ Not only does this proposal allow for additional state revenues, but it also furthering the collective cause—in establishing an even greater omnipresence through convenience and consumer education.

Only time will tell the fate of retailers in Manhattan, America’s single-biggest wine market, and throughout the state of New York. California has a few success stories to offer: Wally’s continues to thrive, as does Hi-Time Cellars, not to mention a few other folks like K&L, now on their third location, this one in Los Angeles—the second largest wine consumption city in the United States.

Lest we forget the trailblazers of decades past—what set them apart then, is what defines the success of today’s independent players: innovation. Food for thought.

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