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- Jerry D Mead - 03-26-1999
Jason...Sorry babe...I don't give up easy.
The liquor taxes are paid by the wholesaler...NOT the retailer...so those are already paid. That's part of the government's love affair with the middle tier...it serves as its tax collector. And if it's sales taxes to which you refer, stores (at least in California and Nevada) have waiver forms if a product is being bought from a retailer for resale purposes. The small merchant would then collect the sales tax when he resells the product. So the tax issue is a non-issue.
And a liquor license is needed to SELL wine, beer and spirits, so would still be needed. And the small merchant wouldn'r bypass the wholesaler all together...only when he could buy cheaper than wholesale.
Once again, no argument with Costco or Safeway getting a discount on a carload drop...just don't think it's morally right that if I'm a merchant I have to buy it from a wholesaler who will charge me more than I would pay at retail. Presumably the wholesaler made a profit with which he was happy when he sold that 5000 case drop, and if I buy it from Costco for resale...the wholesaler has no billing or delivery or sales costs...and presumably will sell through at Costco and get a reorder sooner.
The Dom thing happened in Northern California this past season (I can refer you to the merchant)at the same time Dom was on sale about $20 below wholesale at a major supermarket chain (Albertson's).
And the best freestanding restaurant in Northern Nevada gets tightly allocated on Silver Oak because he doesn't use a lot of the wholesaler's booze in his well, nor buy a lot of Gallo product (though he does by quite a bit of Gallo Sonoma)...and then hurts when he sees the stuff floor-stacked at the local discounter so the wholesaler can use up his allocation to keep the supplier happy.
And so the debate goes on.
Curmy The Free Trader
- Jason - 03-27-1999
Curmy, Curmy, Curmy.
Tenacious little bugger aren't you?
I don't know exactly how many, but to my knowledge, a lot of states tack on extra taxes on the on premise guys. Here in Florida, several people I know have been audited.
If these guys were to buy at retail there would be no paper trail for the state.
The distribs also regulate the license (by law) IE expired license, or someone with a beer and wine license buying Cognac. The state would lose control over all this if you could buy anywhere.
I know this sounds like the "man trying to keep us down" but we're sitting here on the wine side of things (where people do the right things and are generally good folks.)
The government is afraid to let any control of this go for fear of revenue loss and letting the liquor business go unchecked.
The wines guys like to laugh that if it wasn't for us, the liquor guys would still be driving around in cheap suits saying "Have I got a deal fuh you". These were the people, from not so long ago, that the rules were made for. Only relatively recently have we had a nice clean wine industry come along and make the laws look overly restrictive.
Remember, we are highly regulated because the government saw my industry as the cashflow for the "outfit" in years past.
Putting everything on a distribs invoice is another way to prevent tax fraud in an industry that was (until recently) cash dominated and ripe for picking from the bad guys. This all sounds ludicrous in today's environment, but only because the biz has been cleaned up and the laws have not been adjusted for it. We as wine people are seen as cohorts in that group.
Look at the elected officials, half these guys are dead, they just haven't gotten the memo that tells them that.
Dom thing - wow, I can't imagine purchasing enough cases to be $20 below wholesale and still make $. Sometimes on an order this large, these guys get a major chunk of free goods (of something else) and use that chunk to subsidise what would be the Dom in this case. Other people simply take the loss and make it up on traffic of other non wine items.
Silver Oak - I'm sure your local guys don't have any problem getting rid of the wine.
The practice of using a "cherry" as a wedge is a hot button right now for a lot of wineries. Even though the distrib buys the wine, the wineries are getting very "hands on" over where the wine goes and how much.
The prestige properties are very careful to not use there stuff as a hammer for other brands. The irony comes in when the topic of their less desirable (or second label) wines come up, then there are no rules. The folks at Silver Oak would not be happy with your scenario. The other side is why take care of someone who does little or no biz with you? Tough call sometimes.
- n144mann - 03-27-1999
Jason, about the silver oak thing here, it is my understanding that until a couple of years ago it was available here on the shelves... not sure who made the decision to move it to the restaurant only. The retailers are unhappy tho, so must have sold okay or they wouldn't really care. Just my observations.
[This message has been edited by n144mann (edited 03-27-99).]
- Jerry D Mead - 03-27-1999
Point to Jason...if not the game. I forgot about "redneck" Florida and its outrageous additional tax on on-premise accounts, over and above the already ridiculously high state tax paid by the wholesalers and mark-ed up down the line.
It's off on a different tangent, but all liquor taxes should be collected and paid by the retailer and not the wholesaler...and for two reasons: (sorry to propose an additional bookkeeping burden on all you retailers) 1. It would save one mark-up for the public. When the wholesaler pays the tax it is incorporated into the price and marked up 25% or whatever, right along with the value of the product. Ditto for the taxes the producer/importer pays, except they get marked-up at least twice. So consumers would save a ton, and the goods would be a lot cheaper if the taxes, state and federal, were put on at the back end rather than the front. 2. And it would allow the merchant to show the true price of the product with and without the taxes. If people actually knew what portion of every bottle price we pay is taxes, we just might get some backlash. It's just like tax withholding...the government not only wants its money instantly but knows people don't notice as much how much they're paying if they never hold it in their hands. That's why you always hear small business people scream louder about taxes...because they have to write a check for them every quarter...they had the money and had to pay it so they're aware of the amount.
I'm not sympathetic the government keeping the criminal element out of the liquor business...the government put the gangsters into the alcohol business in the first place...just as they're doing now with the recreational drug industry. Don't get me started on that one.
Florida's on-premise tax (which you are no doubt aware has a good chance of being phased out thanks to a bill sponsored by the Florida Restaurant Assoc that has flown through the house and that apparently Gov. Bush would sign if it passes the senate), does put a different spin on things in your state.
But concerns that if a licensed retailer buys from other licensed retailers because he can get a better price than that offered by his wholesaler, that beer and wine licensees might start selling hard spirits or other products for which they aren't licensed simply makes no sense...they couldn't get away with it anymore than a totally unlicensed premise could get away with starting to sell liquor. If nothing else, his competitors would snitch on him...and probably his wholesaler!
And when you get rid of your unique on-premise tax, there won't be any justification for the restriction in Florida that I can really see.
Curmy The Free Trader
- Jason - 03-27-1999
You know you live in Redneck Florida when you have a full set of salad bowls and they all say "Kool Whip" on them.
Seriously though, Florida is neck and neck with NY for the second biggest market in the country.
Nancy - The winery probably pulled Silver Oak from retail. If you can sell it all for $60 on a wine list, why let retailers beat each other up over it and drive down the going price? Every winery marketer dreams of allocations. Several wineries have specific ratios for on/off premise and if you don't get it right, they'll find someone who can.
I've actually seen cases where the winery doesn't care if the distrib payed for the wine, they want to tell you who will be allowed to buy it from you. Invariably, its a wine we could not give away 5 years prior.
Fortunately, these are the minority.
- n144mann - 03-27-1999
Jason, you are probably right....doesn't make much difference for me...results are the same.
Nancy
- Jerry D Mead - 03-28-1999
Jason...You're right...the winery/importer will find some else to sell it the way thay want it sold...UNLESS they happen to be in a "franchise" state.
JDM