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Wholesalers bail on packies. Supermarkets to beat up on both.

Posted by Stephen Meuse  November 1, 2011 11:42 AM

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Capture.JPG Peter Schworm's October 15 Boston Globe story describes how the Massachusetts Packages Stores Association and its ally the Wine & Spirits Wholesalers of Massachusetts recently agreed not to contest a lifting of limits on the number of beer and wine licenses that can be held by a single entity in the state. As a result, a bill is moving forward under the sponsorship of the Joint Committee on Consumer Protection and Professional Licensure that will gradually raise the number of licenses that can be held from the present three to nine by 2020. The bill was filed by Senator Michael Rodrigues, a Westport Democrat. 

The concession represents a failure of both nerve and financing for the state's package stores and wholesalers. The last time the two organizations teamed to resist a ballot measure to raise the limit in 2006, they were the winners - but at a high cost.  According to sources who were present at a recent meeting, MPSA leadership informed members that it would likely cost $10 million to push back the latest initiative whose main supporters are the state's large supermarkets fronted by the Massachusetts Food Association.  The wholesaler's group is reported to have put up most of the cash last time, but dug in their heels at committing to funding the opposition to another ruinously expensive ballot question. 

The new bill doesn't require cities and towns to increase the number of licenses available, however, which will likely mean existing licenses will become more valuable.  

While it's clear that package stores of the Mom and Pop variety will be the ones to feel the squeeze as more supermarkets compete with them for the same customers, it's not immediately apparent what dog the wholesalers have in this fight.  

Persons I spoke to who are close to the industry suggest that powerful wholesalers would always rather deal with a fragmented and weakly organized consortium of neighborhood packies than with large supermarket chains that can drive wholesaler margins down by their sheer buying power. Apparently $10 million, with no guarantee they wouldn't have to do it again and again, was just too high a price for the wholesalers to pay.    

The arcane and seemingly arbitrary laws that govern the sale of alcohol in this state date from the repeal of Prohibition in the early 1930's when most responsibilities for alcohol regulation were handed off by the Feds to the states. In the Commonwealth, lawmakers chose to limit the public's access to alcohol with rules governing the opening and closing times of bars and retail outlets and by establishing and enforcing a rigid separation among producers, wholesalers, and retailers.  Lately, we've seen market forces making inroads on these rules.  

Retailers can now open on Sundays, for example, and direct-to-consumer shipment seems destined to (eventually) become law despite bitter opposition from entrenched interests. How long do you think it will be before the Mass Food Association uses its membership power to convince cities and towns that they ought to provide more licenses? My bet is those plans are already in the works.  

Whether loosening strict, decades-old rules designed to limit the damage alcohol can do in communities will turn out to be a good idea is hard to say. For some, it will always be a  simple matter of consumer choice - as in the more the better and damn the consequences.

But it's interesting to note that the world of banking and finance, where legislation of a similar sort (separating banks from investment banks, for example) was put in place at around the same time in response to the excesses and follies of Great Depression, repeal hasn't necessarily served us all that well.     

       

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Sheryl Julian, the Globe's Food Editor, writes regularly for the Food section.

Devra First is the Globe's food reporter and restaurant critic. Her reviews appear weekly in the Food section.

Ellen Bhang reviews Cheap Eats restaurants for the Globe and writes about wine.
 

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