Wine in Grocery Stores
By Will Cheek, Alcoholic Beverage Practice Group Leader
Media hype seized upon the recent Kentucky case that ruled in favor of wine in grocery stores. The front-page headline of The Tennessean trumpeted: “Wine-in-groceries effort gets boost from Kentucky Ruling.”
Wine in grocery stores has been a hot topic for several years. Tennessee is one of the few states that prohibit the sale of wine in groceries. From a legal perspective, however, Tennessee and Kentucky liquor laws are vastly different. It is an apples and oranges comparison.
A 2011 MTSU poll found that “69% of Tennesseans say a store that sells food should also be allowed to sell wine, provided the store is located in a place that allows the sale of alcoholic beverages.” Yet legislation to legalize the sale of in wine groceries has been essentially dead on arrival at the Tennessee General Assembly over the past few years. With broad public support, many ask why Tennessee does not legalize wine sales in grocery stores. A brief history lesson may help explain why.
Tennessee has traditionally been very conservative about liquor sales. Even in cosmopolitan areas like Williamson County, sales of liquor and wine are banned, except in cities like Franklin and Brentwood. The map below shows that most Tennessee counties only allow the sale of wine and spirits in limited areas in most counties – usually in cities.
As of last count, 26 Tennessee counties completely ban the sale of alcohol. Only 3 counties are wet.
Keep in mind that legislators from more rural areas have to answer to conservative voters who fervently oppose all alcohol sales, period. For many legislators, their constituents demand that they vote against all liquor bills, even those that only affect cities like Nashville.
Wholesalers are adamantly opposed to wine in grocery stores, and for good reason. . The wholesalers’ lobbyist does an excellent job protecting wholesalers, who operate local Tennessee businesses that employ hundreds of workers and are often worth tens, if not hundreds of millions, of dollars.
In Tennessee, wine can only be sold in a retail package store. No one can own more than one retail package store. Importantly, every liquor store must be owned by a Tennessee resident. Retail package stores can only sell wine and spirits, cash checks and sell lottery tickets. Stores cannot combine purchasing power for discounts from wholesalers.
The places where you buy wine are the quintessential mom and pop shops, owned by locals. Wine in groceries could devastate hundreds of these local business owners, a message that has resounded well to legislators, particularly in a recession.
The little guys are no match for the wholesalers. Huge players like Kroger, Wal-Mart and Publix would be a game changer for the wholesalers. Groceries will undoubtedly negotiate large discounts for the privilege of carrying a wholesaler’s brand in dozens of high-volume stores. Wholesalers justifiably fear that large grocery store chains will be able to dictate terms; exerting power that small independent liquor stores do not have.
The recent Kentucky case was a challenge involving drug stores, which can sell liquor inside the drug store. Grocery stores are required to have separate stores, where access by minors is controlled.
The Kentucky law dates to the repeal of Prohibition in the 1930’s, when prescriptions were required to buy alcohol at drug stores. Grocery stores were frequented by minors, while drug stores were not. Today, drug stores and grocery stores sell similar goods and both are frequented by minors. The Louisville Times Courier has more details.
Tennessee liquor laws do not allow drugstores or grocery stores to sell liquor. Neither qualify for liquor licenses in Tennessee.
There may be legal issues with Tennessee’s retail liquor store laws, but the problems that led to the failure of the Kentucky law are not relevant to Tennessee.
We expect the push for legalization of wine in grocery stores in Tennessee to be strong in the upcoming legislative session. Stay tuned.
*Please allow us to state for the record: we are not hired to advocate for any side in this battle. We have clients on both sides and do our best to be objective.*