Advocates clashed Tuesday over Gov. Dannel P. Malloy’s proposal to eliminate minimum alcohol pricing in Connecticut on wine and liquor – as either a great economic advance for consumers or a foolish move that w0uld prompt layoffs at small package stores.
Under the law, Connecticut currently has a system where retailers cannot sell a bottle of wine or liquor lower than a certain price – which has helped small package stores compete against gigantic outlets that can buy multiple cases that would cut down the price per bottle.
Malloy has offered the idea for two consecutive years, but he dropped it last year as part of an overall compromise that allowed the retail sale of alcohol on Sundays for the first time in supermarkets and package stores.
“We would not allow the car industry to set a minimum price on cars,” Malloy told reporters Tuesday at the state Capitol. “We wouldn’t allow other industries to conspire to set prices. Somehow and some way, we decided it was OK to charge people in Connecticut more for liquor than they are charged in the surrounding states and to defend that system. And for the life of me, I don’t understand it.”
Malloy added, “I like the free market system. I like the system that allows goods to be purchased and sold less expensively in other states, which is why they take our business away on a daily basis.”
Former Senate President Pro Tem Kevin B. Sullivan, who is now the state’s tax commissioner, said that Malloy wants to end the “arbitrarily established minimum bottle price” that “serves no legitimate public purpose” in Connecticut.
“It is a system that is so complicated and so antiquated,” Sullivan said.
But Carroll Hughes, the chief lobbyist for the Connecticut Package Stores Association, said that ending the longrunning system would be a blow to the 1,150 package stores that employ about 4,500 employees in small businesses all across the state.
Malloy’s idea, he said, will drive out the small businesses, and they will be replaced by gigantic liquor outlets in the same way that locally owned hardware stores and the small, independent, neighborhood pharmacies have disappeared.
“You’ll get replaced by CVS and Home Depot,” Hughes told legislators during a public hearing Tuesday. “That’s what will happen when you open this trap door.”
Malloy estimates that changing the law would generate an estimated $2.6 million per year in sales tax and alcohol taxes, starting on July 1. But Hughes rejected that number as “a real optimistic guess” that could never be reached “when you’re dropping the price.”
Some legislators agreed during a public hearing of the legislature’s general law committee, which has jurisdiction over liquor issues.
Malloy’s plan “will wipe out Connecticut’s small mom and pop’s,” testified state Rep. Brenda Kupchick, a Fairfield Republican. “It unfairly impacts these job creators in the state. … These are your neighbors. They are the people who coach your kids’ baseball team or basketball team. … This bill is basically a job-killer.”
State Rep. Daniel Rovero, a Killingly Democrat who serves on the committee, said the small savings for consumers is not worth it if jobs are lost.
“You’re going to end up with 100 large outlets,” Rovero said. “One minute we say we’re going to create jobs. The next minute we say we’re going to save 50 cents a bottle and kill jobs.”
Rovero dismissed the notion when told that Connecticut’s system is unlike any other in the United States.
“If we’re the only state that protects jobs, I don’t mind being the only state,” he said.
State Rep. Dan Carter, a Bethel Republican, told Sullivan during testimony that the state has established certain regulations because “we’re regulating a controlled substance” for consumers.
“When they all go out of business, we will have these large conglomerate stores and box stores,” Carter said.
But Dominic Alaimo, who has operated a package store in Enfield for the past 34 years, strongly supports Malloy’s plan to remove the minimum bottle pricing.
“The only ones making money on the minimum bottle are the wholesalers,’’ said Alaimo, whose small store is on Route 5 near the Massachusetts border. “The wholesalers are making the money, and Connecticut consumers are paying the price.’’
The removal of the pricing “would be a beautiful thing,’’ Alaimo told Capitol Watch.
Jay Hibbard of the Distilled Spirits Council of the United States, known as DISCUS, said in a statement that “the bill puts Connecticut consumers first. By eliminating the minimum bottle price requirement, the free market would have a chance to work as intended by providing greater competition and ultimately, we believe, lower prices for Connecticut consumers. The changes set forth in HB 6361 are sensible, will provide expanded opportunities for Connecticut businesses, will enhance Connecticut’s competitiveness and contribute to an improved economy – not to mention provide much-needed benefits to the state treasury.”
Hibbard says that the revenue estimates are conservative saying that an economic analysis projected that the state might be losing 16 percent of beer volume, 12 percent of spirits, and 15 percent of wine because of the current system.
“Recovering half of the lost sales opportunities from surrounding states could amount to nearly $10 million in new excise and sales taxes for the state,” said Hibbard, who traveled to Hartford to testify. “The current pricing requirement simply imposes higher prices on consumers who either flee to other states or don’t make purchases at all. Getting rid of the minimum bottle price is a positive marketplace change and great for consumers.”
But Doug Rankin of the Missing Link Wine Company, who serves as the vice president of the Connecticut Small Brand Council, said, “We are toast if min bottle goes away.”
Adam Von Gootkin of Onyx Spirits of East Hartford agreed, saying that the minimum bottle system helps his brand to remain competitive. Gootkin serves as the president of the Small Brand Council, which represents about 30 small manufacturers, retailers, and wholesalers.