LANSING — More than a dozen statewide beer, wine and liquor retailers spoke out against a potential liquor license at the Michigan Liquor Control Commission Wednesday as corporate retailer Total Wine & More seeks to establish its first store in Michigan.
Some of the recurring concerns from speakers included over-saturation of the market, unfair purchasing power and the company’s history of pushing back against state-specific regulations elsewhere.
“They are strategically picking high-volume demographics so they can literally steal existing business from an otherwise healthy dichotomy of independent and big box,” Rishi Makkar, owner of Rishi’s International Beverage in Kentwood, told commissioners during the virtual hearing.
The more than two-hour session centered on licenses for the Bethesda, Md.-based alcohol retailer, which has leased a 34,250-square-foot space — formerly a Babies R Us — at 4923 28th St. SE in Cascade Township to open a new store.
The liquor license application was filed by Michigan Fine Wine and Spirits LLC, which shares the address of Total Wine & More’s corporate headquarters in Maryland.
Total Wine is seeking state approval to purchase a specialty designated distributor license from Bostwick Lake Inn Operating L.C. for $150,000, according to the filings. The license would allow it to sell packaged liquor for off-premise consumption. Total Wine is also seeking MLCC approval to sell beer and wine for off-premise consumption, as well as offer Sunday sales and beer and wine tastings, according to state records.
MLCC Chairman Patrick Gagliardi — along with commissioners Dennis Olshove and Geralyn Lasher — heard opinions from 16 individuals opposing Total Wine’s effort to set up shop on the 28th street corridor. Total Wine is the largest independent liquor store chain in the U.S.
Other opponents included Joel Smitter of Smitty’s Specialty Beverage in Grand Rapids, Mike Tobias of the Michigan Coalition to Reduce Underage Drinking, Gurleen Kaur of Bottlenecks Party Store and Grand Rapids, and Brian Zetouna of Allied Liquor Stores of Michigan.
They were accompanied by several business representatives from southeast Michigan, where rumblings of two possible Total Wine stores in Sterling Heights, Novi, and Pittsfield Township near Ann Arbor, as Crain’s Detroit Business previously reported.
Makkar pointed to over-saturation in the area, noting that Cascade Township has a population of 18,000 with 33 percent of those being minors. Still, it is home to five liquor licenses and 25 beer and wine licenses. Four of the five liquor licenses are held by major big box retailers, according to Makkar.
He noted that $11 million in liquor purchases were made last year within a 3-mile radius of Total Wine’s proposed location. Additionally, $5.2 million of liquor was sold within a mile of the proposed location.
“It’s blatant corporate strategy at its finest,” Makkar said. “It’s crystal clear that this area is already over served and does not need any new licenses.”
Smitter has operated his business at 1489 Lake Drive SE in Grand Rapids’ Eastown since 1982, saying big box retailers are slowly “cannibalizing the industry” and the addition of another big player could be the death blow for Smitty’s Specialty Beverage.
“I built this legacy and all of a sudden it looks like we’re really going to be in trouble,” Smitter said. “I would just beg the MLCC to think back to all the rules and regulations that we had in place that made us want to work so hard to build our businesses and ask that they protect our businesses.”
REPUTATION UNDER SCRUTINY
Some of the speakers pointed to a particular instance in Connecticut, in which Total Wine dropped its prices below the state’s minimum pricing — and advertised as much.
The company paid its fine for the violation and publicly protested the state’s minimum pricing, comparing it to price fixing. Total Wine then sued the state.
Commissioner Olshove appeared aware of Total Wine’s prior litigation, requesting that the company put together a listing of lawsuits it initiated against states where it operates. He also asked Total Wine General Counsel Robert Shaffer if the company planned to push back against the regulations Michigan has in place, which are especially tight as a control state.
“Are there folks in the business down the hall that are trying to beat our regulations and the way we’ve done things here?” Olshove asked Shaffer.
Shaffer responded: “I can assure you they’re not. …We are focused on how we can persuade you that we’re worthy of your trust and to have the right to come in and serve the community like we have in 25 other states. …We don’t have any grand plans.”
Chairman Gagliardi also got into a lengthy back-and-forth with Shaffer about allocation and whether Total Wine establishes deals with suppliers to give it products that other licensees don’t have access to.
“What I’m struggling with is the use of the word ‘deals,’” Shaffer responded. “We try to tell a supplier who has a limited ability to manufacture any product how much we think we’re going to need in any 12-month period. … That’s what we do on a regular basis.”
The MLCC is expected to decide on the licenses in the coming weeks during a public meeting. Gagliardi said the MLCC would also continue accepting written statements from interested parties.
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