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Wine Spectator: The Sad Decline Of The Queen Of New York Wine Stores

January 6, 2023

Once arguably the queen of wine shops in America’s biggest wine market, Sherry-Lehmann is facing potential financial ruin. Several leading wholesalers tell Wine Spectator that inventory at the store is low because the company owes money to multiple suppliers, who now refuse to send the store any more wine. The New York State Liquor Authority (SLA) has placed the store on a list of retailers who must pay cash on delivery to distributors because of delinquent payments. The company owes back taxes. And several customers have filed lawsuits alleging Sherry-Lehmann failed to deliver Bordeaux wines they bought as futures.

Sherry-Lehmann’s inventory shortfall, cutting across all categories of wine and spirits, appears to be the result of its periodic failure, beginning as early as 2018, to pay its suppliers promptly—if at all. New York’s SLA requires payments to be made within 30 days of delivery. Failure to pay any supplier promptly requires the retailer to switch to cash on delivery (COD) to all suppliers: Cash payment must be made before any wine is delivered until all past-due accounts are cleared. “It’s a pretty simple premise,” said Victor Schwartz, proprietor of VOS Selections, which once sold wine to Sherry-Lehmann. “You ask me for wine, you pay me.”

Another wholesaler told Wine Spectator that he did sell wine to Sherry-Lehmann late last year, but, after several checks bounced he would deliver wine “only after payment was in my bank account for two days.”

“Sherry-Lehmann is meeting all financial obligations with vendors and suppliers on a timely basis, as the company has for over 88 years,” a spokesman for the firm told Wine Spectator. Not true, according to the state liquor authority. SLA spokesperson William Crowley told Wine Spectator that the firm is “on the COD list and is delinquent on payments with numerous wholesalers (and has been since at least December 5). They are currently behind on paying approximately 75 different invoices.”

That may be why Sherry-Lehmann is not receiving deliveries from Southern Glazer’s and Empire Merchants, New York’s largest distributors. In early December, KKR, a global investment firm located in Hudson Yards, ordered 90 bottles of G.H. Mumm rosé Champagne from Sherry-Lehmann. Four days before Christmas, KKR was informed that the order could not be filled. In a panic, firm executives turned to a shop in Hudson Yards. Mumm’s distributor, Southern Glazer’s, delivered the 90 bottles of rosé Champagne to that retailer the next day.

Along with supply issues, Sherry-Lehmann faces tax troubles. As of December, it owed $3.2 million to the New York state tax authority in sales and use taxes. Sherry-Lehmann’s spokesman states the company “is actively working to resolve its back taxes issue, which began under our former CEO in the midst of the COVID-19 pandemic. We have been communicating with the N.Y. state tax department since early spring, and have been making monthly payments to reduce the outstanding balance since then. At the same time, the company is meeting all its current N.Y. sales tax payments—and will continue to do so going forward.” Wine Spectator has the full story.

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