By MARJORIE NEEDHAM
Connecticut Gov. Dannel Malloy is describing his liquor store bill, Governor’s Bill No. 14, as a benefit for the consumer. Local package store owners say the bill will benefit big-box liquor stores and put many of the 1,150 or so small package stores in Connecticut out of business.
Because they perceive the bill as a threat to their businesses, Robert Heusted of Middlebury Fine Wine and Spirits attended Tuesday’s hearing on the bill, and Sanjiv Gupta of International Wine and Spirits was represented at the hearing by his brother, Bhavesh Patel, who also owns a liquor store. Bob Zabit of Larry’s Fine Wine and Spirits was unable to attend, but has attended previous hearings.
Heusted said more than 500 people attended the hearing. During the time he was there, he heard only one person testify for the bill. That person worked for Gov. Malloy and testified the bill would provide lower prices for consumers.
Heusted disagrees. “It was clear changing the price structure was a tool for the largest of the box-store types to aggressively go in with predatory low prices, close businesses and then be unfettered down the road. So any low pricing schemes would be short-lived. It’s clear this was a proposal to allow them to dominate the market,” he said.
He said much of the testimony was that Connecticut prices are not harming consumers and are relatively competitive overall.
Gupta agreed big-box stores will benefit. He said, “Malloy is supporting the big box stores. Total Wine came into the state and now has three stores here. They have a gigantic amount of money behind them. For the first few months, they will sell everything at cost. Once they put the small businesses out of business, the prices will go up, and they will be the only game in town.”
The Total Wine website says the company operates 130 superstores in 18 states and continues to grow.
Zabit said, “I don’t understand why, with the state’s financial problems, that this is a big issue. Consumers aren’t looking for minimum bottle pricing to change. It’s big-box stores that are looking for this, not the consumers … When the big stores come into Connecticut, they will drive us little guys out of business. They will drive half of us out of business in the first year. Then they can set the prices wherever they want once their competition is gone.”
With current pricing, the wholesale cost of a single bottle sets the lowest price a liquor store can charge a customer. For example, if a single bottle of wine costs the retailer $11.99, that is the lowest price the retailer can charge a customer. Buying a case will cost the retailer less per bottle, but they still have to charge $11.99. If this pricing were not in place, the large stores could purchase 100 or 1,000 cases, get a huge discount, and undersell the small package store.
Heusted said he buys some items by the bottle, and many small package stores buy most of their stock by the bottle. He said if the big stores can buy and sell cheaper, he will be unable to match their prices.
If the act goes into effect, Heusted said he expects stores like Total Wines to operate at a loss in Connecticut until Connecticut’s small package stores have gone out of business.
He said minimum bottle pricing, as the current system is called, also provides consumers with a diversity of products, something like 143,000 different items. “With minimum bottle, it’s easy to bring in new products and try them,” he said. He predicted consumers would find fewer choices on the liquor store shelves if the bill passes.
He also said a representative from one of Connecticut’s first distilleries, Onyx, which opened two years ago, said at the hearing that minimum bottle pricing allowed him to get his product out there without big distillers trying to squash him by low-balling him on price.
Gupta said he didn’t understand why Malloy wanted to support the big stores. “They don’t greet the customers. The owners live in another state. Their staff doesn’t care about the customer. We hire the local people so they know everyone. And 80 percent of the time I am behind the counter and greet them. I have relationships with my customers and their families. If I don’t see them for a while, I ask them if everything is OK,” he said.
This new bill, Gupta predicted, will close down about 600 small businesses if it passes.
Zabit said every small town used to have its own hardware store. Now most small hardware stores are gone, and consumers have to drive to a big-box store somewhere for items they used to buy in their own town. If Malloy’s bill passes, Zabit expects the same thing will happen with local liquor stores.
