“At Rest” – A Monopoly Risk, Part II
David and Goliath by Titian
It’s amazing what a day in social media will bring. The response to the impending “At Rest” legislation, which stands to alter the New York State Wine Industry in ways that benefit not the consumer, nor the industry itself, was mammoth. Following on the late heels of Arab Spring and the Occupy Wall Street movement, it is clear that the 99% majority are unwilling to remain silent when bullied by dictators, dirty politicians or greedy corporations, dominating wine wholesalers not excluded.
In addition to this petition, there’s a memo being circulated amongst members of the New York Alliance of Fine Wine Wholesalers, a group of 11 importers/distributors that includes Admiral Wine Merchants, BNP Distributing Co., David Bowler Wine, Opici Wine Co., Polaner Selections, Martin Scott Wines, Michael Skurnik Wines, Monsieur Touton Selections, Verity Wines, Winebow and T. Edward Wines. And since the general public is without access to this internal information, I decided to list a handful of helpful facts (taken from said memo) here:
“‘At rest’ language in either the budget or legislation would be detrimental not only to almost every wholesaler in the state other than the two largest, Southern Wine & Spirits and Empire Merchants, but also the state itself, in lost taxable revenues, lost license fees, lost excise taxes and lost jobs. We, the New York Alliance of Fine Wine Wholesalers, believe that “at rest” would force the closure of more than a hundred of the New York licensed wholesalers who are currently warehousing in New Jersey due to many logistics issues and costs that would arise, making it impossible for them to continue doing business.”
Truth, not fiction:
- Approximately 79% of the 235 NY licensed wholesalers operate out of warehouses in NJ (185). The only significant operating wholesalers warehousing in NY are the two biggest: Southern Wine & Spirits and Empire Merchants.
- Every NY licensed wholesaler already has an office in NY, and thus has NY employees and pays local taxes.
- All 11 members of the Alliance are Small Business!
- Should “at rest” pass, we would not willingly give up our share of the market, but rather suffer an economic hardship that some of us could not survive.
- Warehousing in NY has higher costs than NJ. Not only would freight-in costs skyrocket, as containers would have to go through multiple stops to unload and travel much further than from the docks to nearby New Jersey warehouses, but also the warehousing, storage and delivery costs would be prohibitively higher.
- By virtue of higher: real estate costs in NY, electricity costs, labor costs, insurance, fuel, tolls, local fees, and the costs per case to warehouse and deliver, would increase exponentially. Fond Du Lac Cold (in NJ) storage recently conducted an economic assessment of how much more per case it would cost to provide services in NY over NJ and found that it would cost approximately $5 extra per case of wine!
- Although “at rest” would simply mean “leasing or renting” warehouse space, there is NOT ample space located within a radius of NY that would allow for daily deliveries by all of these companies in existence, nor is there space available that is properly retrofitted to accommodate temperature and other specific needs for storing fine wines.
- Having to manage two inventories, in NJ and NY, would mean holding more stock, which would hurt our cash flow.
- Having a second warehouse would require another layer of IT, thereby increasing costs to the wholesalers.
How would the passing of “at rest” would affect the consumer?
- Brands would be forced to leave New York, and so would the revenues from their sales. Currently, NYS is considered the most important wine market in the U.S. with almost 25,000 different wines available, which is largely due to the number of wholesalers. Decrease the number of wholesalers and the number of available wines will follow.
- The retail costs of wine would most certainly increase, due to our costs and due to the decrease in competition.
The stakes are high!
Thank you for your participation! Working together we’ll beat down the empires, the wine industry’s 1%.