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New York State Cracks Down On Top Wine Merchants, Reports Wine Spectator

October 9, 2014

Business is getting tougher for wine merchants in one of America’s biggest markets, and consumers may pay the price. The New York State Liquor Authority (NYSLA) is taking a dramatic new tack in its role as regulator of alcohol sales in the state, reports Wine Spectator. The independent agency, created after Prohibition, is expanding its reach and heightening enforcement as part of an initiative by NYSLA chairman Dennis Rosen to reform what he sees as an unfair marketplace. To ensure those rules are followed, Rosen’s team has imposed more than $3 million in fines on wholesalers and retailers in the past three years.

According to Rosen, first appointed in 2009, the rules are designed to make sure wholesalers and retailers aren’t engaged in sweetheart deals. They are the latest tactic of this former assistant attorney general’s multi-year campaign to improve efficiency and oversight at the agency.

Several merchants, however, say that the chairman has now gone too far, that the NYSLA is just making business more difficult and that Rosen’s rules may make it harder for consumers to buy the wines they want at good prices. “[The NYSLA is] trying to level the playing field, but really what they’re doing is limiting business from taking place,” said Daniel Posner, owner of Grapes the Wine Company, a White Plains, N.Y.–based retailer. “Why is the state interfering with business?”

Before the new regulations, it was standard practice for wholesalers to offer discounted wines or rare wines to retailers who were loyal customers. The new NYSLA rules forbid those kinds of deals, mandating that wholesalers post prices with the state in advance of all sales and that all retailers have access to discounted and limited-availability wines.

“If I have a client that wants 10 cases of Rombauer Chardonnay for a wedding in two weeks, I have to tell him, ‘Sorry, I cannot get you 10 cases in time,’” said Posner. “How many states are limiting how much Rombauer Chardonnay you can purchase?”

Rosen says it’s about leveling the playing field. “There were some large retailers who would get special deals because of their size,” Rosen told Wine Spectator. “The same retailers time after time would get the great deal, and it’s called a closeout, but it’s pre-sold to them, or an item that is of limited availability, they would get it all. That hurt the marketplace.”

The new rules impact business in what is already a highly regulated market. “Where do they come off dictating everything to us?” asked Rona Vesce, wine and spirits manager at Peekskill-based distributor D. Bertoline & Sons. “Their guidelines are absolutely ridiculous. How do you not allow us to keep beer and wine in the same warehouse? It’s alcohol!”

Other members of the industry, however, are taking the new regulations in stride. “In one or two cases, we’re getting significantly less wine than we would have,” said Jamie Wolff, partner at Chambers Street Wines. “But I’m hoping in the long run that this is balanced out.”



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