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    Sunday, May 26, 2024

    Supermarkets and package stores in Connecticut battle over wine sales at public hearing

    A high-stakes battle came to a head Thursday between Connecticut’s supermarkets and package stores in the state Capitol’s most contentious public hearing so far this year.

    In a battle over wine and profits, the supermarkets have been putting on a full-court press in their stores and on the internet to allow wine to be sold in grocery stores for the first time.

    But the state’s 1,250 independent package stores fought back against the proposal, saying that some stores could go out of business because wine is their most profitable product. The package stores are portraying the clash as a David vs. Goliath battle as small, family-owned retailers are up against major players like Stop & Shop, a gigantic Dutch corporation with more than 60,000 employees and billions in annual revenues.

    The Wine and Spirits Wholesalers of Connecticut Inc. rented three buses as pro-package store owners gathered at Rentschler Field in East Hartford before heading to the Capitol together. More than 350 people submitted testimony on House Bill 5918 to the general law committee, and hundreds of package store and supermarket supporters filled the atrium at the Legislative Office Building in Hartford.

    Sen. John Kissel, an Enfield Republican who is among the longest-serving legislators, said the argument that the package stores will not be hurt is “unbelievable’’ to him. He said he has seen local hardware stores impacted by their larger competitors in various industries.

    “The big fish gobble up the little fish,’’ Kissel said. “I don’t think this is a good direction for the state of Connecticut. ... It’s going to be the small package stores that lose out. ... I think it’s a bridge too far. I think we’ve got the best of all worlds as it is.’’

    While the package stores have fought numerous battles through the years regarding Sunday sales and extended hours, they said the latest proposal marks the biggest threat to their livelihood.

    “Of all the time I’ve been doing this, which is several decades, this is the biggest,’’ said Jean M. Cronin, chief lobbyist and executive director for the Connecticut Package Stores Association. “This is the biggest push I’ve ever seen by the grocery stores.’’

    The two sides argued over the convenience of the consumers, but the package stores argued that most stores are currently open 92 hours per week — the maximum time allowed by the state in a highly regulated, age-restricted industry.

    “No one is going to be drinking more wine because it’s available in more venues,’’ Cronin said. “This is a game-changer, and it will completely up-end business plans.’’

    In the opening panel of speakers in favor of the proposal, University of Connecticut economics professor Fred Carstensen said he was initially skeptical when asked to analyze wine sales in grocery stores. But he said that his economic study under the REMI model showed that there would no deleterious effects on the current system.

    “We simply found no evidence that there was damage to package stores,’’ Carstensen told legislators on the general law committee. “At the end of the day, we found that it looks like a reasonable policy. ... We looked very carefully.’’

    State Rep. David Rutigliano, a Trumbull Republican who is also a chef who owns several restaurants, was skeptical about the various conclusions.

    “I’m suspect about economists and the things that they say,’’ Rutigliano said. “These are the people who said inflation would be transitory.’’

    Cronin said she was “completely confounded’’ by the economic argument that there would be no impact on the package stores.

    “I’m having a hard time understanding that,’’ Cronin said.

    Huge supermarkets, she said, can already obtain a package store permit, citing Costco’s, BJ’s, and Stew Leonard’s that currently sell wine through their package stores.

    The leaders of the various industry groups testified first before legislators, who heard testimony from the general public in a hearing that lasted six hours. Based on the legislative deadlines, a committee vote is expected by March 21 for the proposal to move forward.

    Supermarkets

    The supermarkets have hired one of the most prominent lobbying firms at the Capitol, known as Gaffney Bennett, and a key figure for the firm is former House Speaker Joe Aresimowicz, a well-known political leader who became a lobbyist after retiring from the state legislature.

    The grocery stores have created their own website and have been urging their customers to sign a petition to show support for the convenience of buying wine where they want.

    “For today’s time-starved shoppers, the sale of wine exclusively through package stores no longer makes sense,’’ the group says on the website. “Connecticut residents should be able to buy wine where they buy their food instead of having to make a separate trip somewhere else. As grocery retailers and their customers work to recover from the pandemic, we believe the time has come for Connecticut to remove existing barriers to the sale of wine in grocery stores and enable food retailers to create more jobs, help consumers reduce their daily travel needs, and provide new sources of revenues for the state’s budget.’’

    Known as the land of steady habits, Connecticut has one of the strongest systems in the country for package stores. By contrast, 42 states and Washington, D.C., currently allow wine sales in grocery stores. In the Northeast, Rhode Island and New York do not.

    Numerous groups have a stake in the battle, including farm wineries, supermarkets, Teamsters members who deliver liquor around the state, the newly created Indian American Package Stores Association, and the wine and spirits wholesalers.

    Each side has been honing its arguments in a battle of highly paid lobbyists, and a huge crowd gathered in the atrium of the Legislative Office Building in Hartford.

    “You may hear the argument that every bottle of wine sold in a grocery store is a bottle not sold in a package store. This claim is patently false,’’ said Wayne Pesce of the Connecticut Food Association, which represents the supermarkets. “If the law is amended, a fair portion of supermarket wine sales will be incremental, as wine in grocery store sales in other states has shown. It’s also disingenuous to say some of these sales would not come at the expense of package stores. An amended law should allow package stores to sell a variety of highly consumable food products in order to recoup the potential wine sales lost to them. An amended law would make shopping trips to the package store and the grocery store more convenient for Connecticut customers.’’

    The food association unveiled an online poll of 500 respondents that showed that 84% favored the idea of buying wine in grocery stores. This included approval by both men and women, along with various age, political and demographic groups.

    “Most issues don’t have such strong support as this,” pollster Ken Dautrich, the head of the polling firm, said in a statement. “It’s off-the-charts high. I can’t think of another instance where I’ve seen this much support for an issue.’’

    But Lawrence F. Cafero, the former state House Republican leader who is now general counsel for the wine and spirits wholesalers, questioned the polling results and wondered if the respondents were asked about “secondary or tertiary issues that surround the sale of wine in supermarkets.’’

    Cafero also disputed the concerns about buying for convenience when most towns have multiple package stores as state law allows one store for every 2,500 residents.

    “You cannot throw a rock without hitting a package store,’’ Cafero told The Courant in an interview. “This whole notion put out by the supermarkets that it’s a matter of convenience — I ain’t buying it. Wouldn’t it be nice if you could get your dry cleaning at the grocery store? It’s not happening.’’

    Tennessee

    Tennessee had a similar system to Connecticut until 2016, when wine sales were allowed in grocery stores, he said. After that happened, the liquor stores saw an 8.6% drop in the sale of spirits because consumers shopped only at the supermarket and never went back to the package store for liquor in a ripple effect.

    Rob Ikard, president of the Tennessee grocery and convenience stores association, testified by Zoom at the hearing Thursday that 4.5 million people have been able to buy a bottle of wine at supermarkets in a move that has been “overwhelmingly positive’’ in his state. In recent years, he said that the number of package stores has actually increased — rather than decreasing.

    “It is a booming market for wine right now,’’ Ikard said. “The package stores are doing very well in Tennessee.’’

    But the package store proponents said that Tennessee is a far different state with a larger population, faster population growth, and only 740 package stores when compared to about 1,250 in Connecticut. Tennessee is more than three times larger with almost twice the population but has almost half the number of package stores as Connecticut. Today, there is a bill in the Tennessee legislature to expand the wine sales to other types of liquor.

    “After wine, maybe it’s going to be something else,’’ Cafero said.

    Stores out of business?

    Opponents of the bill have said that they are not exaggerating that stores will close. James Valentine, co-owner of the multistore Connecticut Beverage Mart, said previously that he was forced to close the New Britain store in January 2021 after losing business to a Total Wine superstore and Costco that are each about one-half mile away on either side of the package store. The owners said they were paying $70,000 in annual property taxes for their 13,000-square-foot store, which was losing money.

    Rep. Michael D’Agostino, a Hamden Democrat who co-chairs the general law committee, said he is looking for as much data as possible regarding the economic impacts.

    “We heard how Sunday sales were going to drive everyone out of business, and that has not happened,’’ D’Agostino said.

    But Cronin countered that the longtime owners who were against Sunday sales did not go out of business but instead sold their stores to avoid working seven days a week. Many of those stores are now owned by members of the Indian American Package Stores Association.

    For years, the leader of the Connecticut package stores was legendary Capitol lobbyist Carroll J. Hughes, who spoke passionately at public hearings in defense of the industry and lobbied legislators on a constant basis. Hughes died in 2021 at the age of 79 after 47 years of lobbying, and this year marks the first major liquor battle without him. Cronin, who is his wife and longtime lobbying partner, is now spearheading the opposition along with their son, Sean Hughes.

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