Grocery store wine bill passes House Rules committee | Arkansas Blog

Thursday, February 23, 2017

Grocery store wine bill passes House Rules committee

Posted By and on Thu, Feb 23, 2017 at 12:28 AM

FROM BEER TO NUTS: New legislation would allow liquor stores to sell both drinks and food.
  • FROM BEER TO NUTS: New legislation would allow liquor stores to sell both drinks and food.
Earlier this month, a combine of Walmart and county line liquor stores introduced legislation to allow sales of all wines in grocery stores, not just Arkansas and small producer wines.

The county line liquor stores — huge operations that draw on big business from neighboring dry counties — entered the deal in return for Walmart and others agreeing to cease for a time the aggressive effort to call local option alcohol elections in dry counties. They've claimed Gov. Asa Hutchinson has signed onto the deal, though his office has disputed that.

Most of the other liquor stores in the state weren't too happy to see the door opened to grocery store competitors. That has slowed the progress of the original bill. It has also produced new legislation from Sen. Jeremy Hutchinson that would allow retail liquor stores to pool to make purchases to take advantage of volume discounts; allow liquor stores to ship to purchasers in-state, and allow liquor stores to sell food, under rules promulgated by the Alcoholic Beverage Control Division.

Hard to imagine passage of this relative earthquake in liquor store regulation, but it might find its way into efforts to amend and compromise on the original grocery store wine bill. It, too, is in the process of being amended. It, too, may introduce a way for liquor stores to sell food, at least foods associated with consumption of alcohol (think salty snacks, though I think just about anything goes along).

Up for discussion, too, is a portion of the original bill that extended a two-year delay in grocery store wine sales in counties where alcoholic beverage sales had been approved since 2014 (Saline County being one of those, also Franklin). UPDATE: This carve-out was removed in an amendment added to the bill later in the day. That amendment included the sop for retail liquor stores to allow them to sell food, as Hutchinson's bill would do.

Hard to pick a hero in this fight. We'd all be better off without the special interest-protection aspects of Arkansas alcohol laws. It would be best if there was wide open competition to sell everything everywhere (and with a somewhat less burdensome sin tax levy). But it's hard to figure why liquor stores shouldn't sell food if grocery stores can sell alcohol. It's hard to figure why rules should be written to advantage Walmart and Bruce Hawkins' clients in Conway County and disadvantage others. But the politics of alcohol are among the most intricate and hard-fought in Arkansas.

UPDATE: Huge crowd in the House Rules Committee after adjournment of the House this afternoon to talk about the bill. Small Arkansas wineries oppose, as do many liquor store owners. Preachers and Mothers Against Drunk Driving expected to add to the opposition.

UPDATE from Benji:  The bill passed out of committee on a voice vote after extended testimony.

At the beginning of this afternoon's meeting, an amendment was introduced by Rep. Jon Eubanks (R-Paris) which rewrote the entire bill. The committee approved the amendment without dissent — although it was not available to the general public on the Capitol website until much later in the evening — and proceeded to hear extended testimony from both sides.  The bill's detractors argued SB 284 would create "two sets of rules" for retailers, in the words of John Crow, a liquor store owner in Pulaski County — one for liquor stores, another for big retailers such as Walmart. "This bill benefits big business at the expense of Arkansas small wine and beer retailers," he said.

Ed Wright, a liquor store owner who is in the process of opening a 15,000 square foot store in newly wet Saline County, said the bill's effect would be "devastating" for his business model. "We started this process by a set of rules that all of our competitors have had to follow," he said. He said corporate retailers such as Walmart and Kroger are within sight of his location, and that he selected that real estate under the assumption that he would not have to compete with such stores for wine sales.

Jimmy Hamilton, general manager and sommelier at Legacy Wine and Spirits in Little Rock, spoke forcefully against the bill. He said a proposal to allow liquor stores to sell food items would do little good: "This was not accounted for in [our] business plan, and cannot be made up for by selling crackers and cheese," Hamilton said. Liquor stores such as Hamilton's complain that grocery chains will be able to squeeze better price deals out of wine distributors by virtue of their size, and although the SB 284 says grocery stores must negotiate prices with wine distributors on a store-by-store basis, Hamilton was unconvinced that that would actually occur.

"I think everybody knows … Walmart doesn’t leave it up to their local stores to negotiate prices," he said.

But other retailers supported the bill. Paul Rowton, a representative of Edwards Food Giant, a grocery chain in Central Arkansas, said the bill would allow Edwards "to carry an expanded selection of wine in some of our stores." Rowton said allowing broader wine sales in grocery stores would benefit consumers. "Soccer moms ... don’t want to take their kids in a liquor store," he said. "This bill isn’t about Walmart and it isn’t about the liquor stores. It’s about consumer choice in Arkansas."

Mary Jane Cains of Mount Bethel Winery supported the bill, which would give direct financial support to Arkansas wineries. "From a winery standpoint, this bill offers things that we can’t turn our back on," she said. She said consumers want more choice in the wine they are able to buy in grocery stores, and that such a change was inevitable. "You can’t stop progress," Cains said.

She also argued that some consumers — especially female consumers — want to purchase wine from grocery stores rather than liquor stores. "There are so many women that are intimidated to walk into liquor stores … I mean, as a mother of four children, when I go see the halfway naked women that are in the windows, it makes me feel a little self-conscious," she said.

That drew a reflexively angry response from the audience, which included a large number of liquor store owners. “How much money did you get from Walmart?” one man jeered.

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