There is no question that the liquor industry has held a tight monopoly in New Jersey for decades.
That is glaringly evident for any business that attempts to grow in this heavily-regulated marketplace, quickly shot down by an anti-competitive state law that bans any entity from having more than two retail liquor licenses.
The chain store liquor industry has found a way to further its grip, circumventing the law and building upon a monopoly that leaves absolutely no room for competition.
There has been one glimmer of hope. New Jersey Attorney General Gurbir S. Grewal and the state Division of Alcoholic Beverage Control recently announced a crackdown on this rigged marketplace, shining a light on unscrupulous wholesale liquor and package goods storeowners colluding together to prevent fair competition at the expense of free consumer choice.
The Attorney General announced that New Jersey’s two largest wine and spirits wholesalers must pay $4 million each in fines because of their discriminatory trade practices that unfairly favored their largest retail customers. The unprecedented sting also netted 20 retailers statewide, paying a total of $2.3 million in fines for their part in this expansive scheme. These staggering fines illuminate what is wrong within our state’s liquor industry.
In a revealing enforcement action, state regulators unveiled that sidestepping the law had been standard alcohol beverage business practice for decades in New Jersey. Officials shined a piercing spotlight on deliberate acts to blatantly circumvent the state’s two-license limit.
The state released a list of entities involved within the same chain liquor stores, many hiding behind different business names so as to appear unaffiliated. The state’s press release lists many well-known companies, such as Vingo Wine and Spirits, Gary’s Wine & Marketplace, Bayway World of Liquors, Roger Wilco and Joe Canal’s. All were fined in the scheme, as well as alcohol wholesalers Fedway and Allied Beverage.
It is absurd that different entities can conspire together to engage in unlawful liquor business violations while operating under the same trade name, but this is the only way they can work around the two-license limit for liquor stores in New Jersey. It seems almost unfathomable that New Jersey still embraces antiquated laws, with shady, backroom deals like this, hearkening back to Prohibition.
While many layers of this onion remains for state regulators to peel, we strongly encourage the state Legislature to use this opportunity to ensure that there is finally fair competition in liquor business in New Jersey.
For years, the state’s liquor monopoly has been fighting a measure that would allow more supermarkets to compete in this retail space, creating more tax revenue and more jobs. If you are new to this state, I am sure you quickly discovered that grocers are severely limited in selling beer and wine. It has never made sense, yet the arrangement has been very convenient for the large liquor store chains that the Attorney General recently cited.
The liquor monopoly has concocted outrageous reasons as to why publicly traded supermarkets should not have more than two licenses. They falsely claim that supermarket workers would be unable to ascertain if someone was 21, as opposed to liquor store workers. They surmised that liquor stores would go out of business in New Jersey, drowning in “unfair” competition. Yet, if you go anywhere else in the nation, liquor stores are thriving, despite being located next door or in the same neighborhood as grocery stores that have been selling liquor for decades. Why not New Jersey?
And here is the best so-called argument: If this 60-year-old law isn’t broke, why fix it? This illicit, unethical practice has morphed into protecting a trade monopoly. And that has morphed into an industry talking point that makes no sense for these unlawful practices.
The absurdities are boundless and, frankly, tiresome. The proposed bill to increase the limit on licenses for supermarkets is awaiting action in an Assembly committee, and it is the desperate hope of these liquor store monopolies that, once again, it will never see the light of day.
But perhaps with the recent public revelations of the industry’s dirty little secret, courtesy of state regulators revealing the latest illegal shenanigans in the liquor industry to quell competition, these monopolies will finally go the way of other organized malfeasance – to the history books.
A.J. Sabath is executive director of the Retailers for Responsible Liquor License Coalition
Disclosure: The publisher of TAPInto New Brunswick is affiliated with this coalition.