Total Wine wins legal case against state regulator

US wine retailer Total Wine has won a legal case in Massachusetts against the state alcohol regulator that will allow it to offer its shoppers greater discounts.

The Maryland-based alcohol retailer, which sells wine in 20 states and has ambitious plans to grow its estate from 162 shops now to around 200 by 2018, was given several day-license suspensions by the Alcoholic Beverages Control Commission in January for allegedly selling spirits below cost price.

State regulators maintained the practise is prohibited in Massachusetts, in order to prevent excessive drinking and “predatory” pricing, however the retailer challenged the decision in court, claiming that it had qualified for savings from its wholesales by bulk buying and therefore reflected the true cost of the alcohol.

However last week a judge in the Suffolk Superior Court in Boston ruled in favour of Total Wine & More, The Boston Globe reported, allowing alcohol retailers to discount booze that they buy in bulk, effectively passing on the savings to their consumers.

The retailer has previously succeeded in challenging state restrictions on alcohol sales in other states, including discounting in Maryland, a cap on the number of licenses an alcohol retailer can have in South Carolina, and closing times in Connecticut.

Speaking to the drinks business last week for db’s upcoming US retail feature, Richard Halstead of Wine Intelligence said new players coming into the US retail market were likely to see greater efforts and lobbying to “liberalise” the retail system in the US and loosen some of its inflexible licensing laws. He pointed out that retailer Costco had already challenged some rules successfully – for example back in 2011, it led a successful campaign backing a vote to allow private retailers to sell alcohol in Washington State – and said the rise of larger chains offering lower costs wines would prompt “an interesting debate”.

“The area to watch in the US is still very much bound up in regulation,” he said. “It will be an interesting battlefield and if things do change, there will be a seismic effect on trading in that state or area.”

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According to an article published by The Boston Globe in May, Total Wine & More is waging a “total war against alcohol regulations”, which includes a PR campaign in Massachusetts against alcohol retailers not being allowed to issue discount coupons and loyalty cards. It is questioning the laws that prohibit these types of savings, and promotions they can offer consumers, through its ‘Consumer First’ campaign.

Rodrigo Maturana, VP of marketing and international business for Fetzer Vineyards, told db that in some cases increased regulation prohibiting promotional business practices for alcohol retailers, such as not allowing instantly redeemable coupons on booze, had put them at a disadvantage compared to other categories. However he argued that there was an advantage.

“While this puts them at a disadvantage from a price-promotion perspective, it has the potential to create more consumer confidence,” he said. However he argued that a strong marketing mix was more important than ever. “Providing value and reasons to believe for consumers is essential as the promotional landscape continues to evolve,” he said.

Please see the August issue of The Drinks Business for a full appraisal of the US retail market.