The pros and cons of proposed "Sunday sales" alcohol bill
Dinnertime approaches on a Sunday, but as you slap a perfectly marbled New York strip on the grill, you
suddenly realize that you forgot to buy beer... or wine... or vodka for the martinis.
Is this a major inconvenience? Do you briefly curse Connecticut's blue laws? Or do you just reach for the nutmeg on the spice rack, throw a pinch of Connecticut (and its blue laws) over your shoulder, and calmly switch to juice or water?
The answer to these questions is at the heart of a bill, reintroduced last month in the State House of Representatives, that would allow the retail sale of alcohol in Connecticut on Sundays. House Bill 6264 would only apply to the retail sale of alcohol, since restaurants are already allowed to serve alcohol on Sundays.
The law would not force a retailer to open on Sundays, but most observers agree that retailers would feel strong competitive pressure to open. Certainly, that is what has happened in New York and Massachusetts, where most retailers have taken on Sunday hours.
Supporters, cheered on by the new governor, view the bill as a measure that is fiscally restorative. Stores would have one more day of sales each week, the state would receive the added sales and excise taxes from those sales, and Sunday spending by border shoppers would stay in Connecticut instead of going to neighboring states.
At the tail end of a recession, and with a huge state budget gap to fill, the financial argument is quite appealing to many legislators whose ears were deaf to similar bills in past years. According to supporters, states that have recently allowed Sunday sales have seen state tax revenue increase anywhere from 6 - 12 percent. Connecticut stands to gain between $7.5 and $8 million in additional tax revenue.
Supporters also deride Sunday prohibition as "the last of the antiquated Blue Laws." Not only is the present law inconvenient, it is also at odds with the laws in all but three states: Connecticut, Georgia and Indiana. Sunday laws have been falling regularly in other states during the past decade. Why is Connecticut holding out?
In addition to Governor Malloy, who has called Sunday sales a "no-brainer," the alliance in favor of the bill includes several multi-store liquor retailers and the local representatives of the large supermarket chains.
It is assisted by a national interest group, the Distilled Spirits Council of the United States (DISCUS), which lobbies on behalf of the nation's liquor manufacturers. The bill is sponsored in the House by Representative Kathy Tallarita of Enfield, who would like her hometown residents to spend locally on Sundays, instead of driving over the border to Springfield in order to get their booze (and shop in Massachusetts malls while they're there).
Will it also lead to supermarket sales of wine and liquor? Many consumers are well aware that in states where supermarket sales are allowed, wines have been commoditized. Selection amounts to plain vanilla "fighting varietals" that, far from waking the taste buds, inspire them rather to wary hibernation.
Will supermarket sales compromise service? Many consumers enjoy going into a local store, where they are known and where they get new or unusual selections from knowledgeable wine specialists, instead of walking into a large store, where untrained employees can point out where to find a wine, but know nothing about its style or flavor.
Connecticut package store owners, who annually fought off Sunday sales bills with the help of Governor Rell and a solid argument on the equities, appear to have been surprised by the latest bill.
Retailers brought out the arguments that have worked well in the past and continue to make sense to many. The costs in labor and electricity of opening on Sundays would not be offset by the profits. Moreover, Sunday sales would only amount to sales deferred from another day, so overall weekly profits would remain the same, but with the higher costs.
It is true that eventually, many retail operations are overtaken by more efficient corporations that have greater flexibilities in their cost structures. That is the nature of competition. But Connecticut's blue laws indirectly prevent that competition from ever taking place.
The change to Sunday sales will force many small retailers to sell their stores or go into bankruptcy. Skilled workers in small shops will, sooner or later, be replaced by unskilled workers in corporate stores. Allowing Sunday sales will most likely lead the state legislature to allow supermarket sales someday.
The revenue projections also make no sense to retailers. This year, the tax revenue projections are $7.5 to $8 million per year, when just a year ago, a legislative report found that they would amount to $5 million per year.
Are revenue increases in other states directly attributable to Sunday sales, or to other coincidental factors, or to plain exaggeration? The budget gap in Connecticut amounts to billions of dollars. Is even $8 million an amount that balances the financial effects of so much dislocation?
Retailers may yet save the prohibition on Sunday sales by appealing to the equities and showing an overall loss in profits and tax revenues when long-term consequences are taken into account. However, a better long-term tack, especially as supermarket sales inevitably make their way onto the legislative agenda, would be to show Connecticut citizens the skills and services that independent package stores offer and that larger stores do not.
The average Connecticut package store also needs to spruce up its image in a major way. Consumers have become infinitely more sophisticated in their beer, wine and liquor choices in the past 30 years. In Greenwich, we are particularly blessed with at least five stores that offer a warm, value-laden shopping experience.
Yet for every great wine shop in this state, there are a dozen or more stores that beg you to make a U-turn after taking one step in. The lighting is dim, the feel is tawdry, bottles are packed too closely together, dust fills every nook and cranny, prices are marked on each bottle not on a shelf tag, and regions and varietals meld together pell-mell.
It is true that Nutmeggers avoid shopping in Connecticut for some wines. But that has nothing to do with Sunday convenience, and everything to do with the fact that our prices are generally higher than those in other States. Over 30 years ago, profit margins were assured and fixed by state law. That gave way to minimum pricing, which is still in effect. Minimum pricing is detested by most customers, despite the fact that it helps prevent predatory selling.
If Connecticut retailers want to strengthen their overall position, they will also need to address price reform at some point. I do not expect the state to overturn minimum pricing anytime soon. Talk about a revenue champion!
In fact, Connecticut's higher prices cannot be attributed to minimum pricing alone. Connecticut's per capital wine consumption is far lower than neighboring states, and the added price may simply reflect the cost of doing business here .
What is irksome, however, are the items with notoriously large price disparities as against, for example, New York. When a producer sells their non-vintage champagne for $27.99 in New York City, and $54.99 here, there is a problem. I am advocating pricing structure reform, where minimum prices should stay within a reasonable percentage of national average prices or the price recommended by a winery. Finally, retailer strength in Connecticut will also depend on the choices Connecticut retailers offer walk-in and Internet customers. A major reason cited by distributors for the comparative lack of choice in Connecticut is the cost of label registration with the Connecticut Liquor Commission.
Currently, registration costs $250 for each label. If a winery wants to sell a line of five varietal wines in Connecticut, all with virtually the same label, it has to pay $1,250 to the state. For a $15 wine with average markup, five to six cases of each wine have to be sold just to recoup the registration cost. For the entire line, that means 25-30 cases. Is it any wonder that distributors think twice about introducing the most cutting-edge wines in Connecticut?
How many up-and-coming producers are shut out of the state because their name recognition does not warrant the five-to-six-case risk? How many single-vineyard wines with exceedingly low production are completely shut out? How often is a great Viognier or Bonarda shut out of our market because customers may not understand the grape yet and will not buy it?
In New York, New Jersey and Massachusetts, if a label has federal approval (as all labels crossing from one state to another must), it is automatically accepted by those states. Any other wine has a maximum label registration fee of $50.