“Whenever we’d proposed any changes…they said, ‘No, we had a deal and this would break the deal.’ Well, now they came along and broke the deal,” said Rob Ikard, president and CEO of the Tennessee Grocers & Convenience Store Association.
Ikard’s remarks were in reference to recent political maneuvering that has eliminated case discounts on wine sold in grocery stores. The move has created ripple effects for what had been a legislative win for the association back in 2014.
Prior to the passage of the Wine Act eight years ago, grocery stores weren’t allowed to sell wine. By 2016, most if not all were doing so. However, in the most recent legislative session, liquor store lobbyists succeeded in passing an amendment that does away with the case discounts.
“They negotiated a very tough deal that allowed wine to finally be sold back then,” Ikard said. “This year, they came along and altered it. One of the features that the deal takes away is the ability to sell case discounts…liquor stores don’t really care. [Case discounts] isn’t something that really matters to them.
Throughout the six years that retailers were selling wine, they had become accustomed to relieving some of the markup when selling cases to customers. Tennessee grocers need a markup of a minimum of 20 percent, according to Ikard. That’s how a majority of retailers marketed wine in their stores.
The amendment won’t take effect until Jan. 1. Retailers still will be able to offer a discount, but they can’t go below the minimum markup. While this isn’t a win for Tennessee grocers, TGCSA sees it as a potential avenue to further changing the Wine Act in the best interest of its some 300 members.
“They came along and broke the deal. So we believe this removes one obstacle in pursuing other alcohol options for grocers…as a result, we feel liberated to pursue other ideas,” Ikard said.
While TGCSA has not put forward anything official, Ikard hopes to pursue the ability for grocers to sell ready-to-drink cocktails such as Jack Daniel’s & Cola or El Jimador New Mix mineral sodas. Changing the Wine Act had been impossible for grocery advocates due to “stonewalling” by liquor stores.
“This liberates us to seek other categories of alcoholic beverages,” he said.
The state legislature does not return until January. Until then, the association will consider what alcoholic beverage legislation to champion.
In other legislative matters, the state’s food sales tax has been suspended during August thanks to a budget surplus of about $3 billion.
The state, which does not have an income tax, is distributing the surplus back to residents by forgoing an estimated $50 million the tax would have generated. Grocers had been preparing for the holiday since it was announced at the end of April.
“It’s a good way for them to give back and alleviate food inflation,” Ikard said.
The TGCSA is also working toward legislation that would prohibit credit card companies or banks from charging retailers interchange card fees on post-tax amounts on transactions. The aim of the effort is to allow card companies to only charge their percentage-based fees on transactions before tax.
TGCSA has been working for three years to get this measure passed. It estimates that credit card companies gain “an additional $200 million every year” from the fees they generate just from taxed portions of card-based transitions.
Ikard and the association think the goodwill generated on behalf of its members, as well as the state legislature looking to give back to constituents, were motivating factors in the reinstituation of a policy that had been discontinued in 2000.
“As another way of returning some money to the taxpayers, some of that surplus, they reinstituted a vendor’s allowance for collecting tax,” Ikard said.
The vendor’s compensation had been stopped due to a budget crisis at the time.
The measure will allow merchants to keep a small portion – up to $25 a month – of what they collect for the state as compensation for their efforts. This applies to the whole company, not per store.
To Ikard, this still is a step in the right direction. Retailers will collect their first vendors compensation at the end of August, but TGCSA hopes to make the current 12-month policy permanent.
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