A recent decision by the New York State Court of Appeals outlawing minimum mark-ups on wine has resulted in a price-cutting binge by the city's major liquor outlets. It also has caused widespread consternation among owners of so-called Ma and Pa stores who fear they will be the major victims of the price war.
Most of the price-slashing has been on popular brands such as Gallo, Mateus and Bolla.
Advertised prices this week were well below the prices of the same brands in Washington, which until now had prided itself on being the home of low-priced wine.
Under New York's minimum-pricing law, which had existed since the end of Prohibition, wine companies set minimum prices for retailers, which were enforced by state authorities.
Then, on March 3, the United States Supreme Court ruled that a law in California providing for price-fixing on wine by brand owners or agents violated the Sherman Antitrust Act.
The New York court, citing the Supreme Court decision, outlawed the practice in this state on Sept. 9.
William McDevitt, executive director of the Metropolitan Package Store Association, predicts the decision will have dire consequences for small shops.
McDevitt says that before the decision the minimum markup on wine was between 40 percent and 50 percent. Noting that there are 4,360 liquor stores in the state, only 2 percent of which have annual sales of $1 million or more, McDevitt predicts that "500 to 1,000 stores will go down the drain soon, and in no more than two years we'll have one-half of the stores we have now."
The court decision leaves intact minimum pricing on liquor, which means that the retailers must charge at least cost plus 12 percent. Some experts here predict that this pricing mechanism is bound to fall, too.
In newspaper ads today, one group of stores was offering wine at wholesale prices. A check on Washington prices showed they were well above those in New York.
For example, a bottle of Bolla was $3.13 here compared with $3.98 in Washington; Harvey's Bristol Cream, $6.19 against $7.98; and a four-liter bottle of Gallo burgundy, $4.37 versus $5.99.
Prices apparently also have been cut on some of the snazzier imported wines.For example, Sherry-Lehmann, which reputedly is the major wine retailer here, dropped the price of Mouton Rothschild 1976 from $39.99 a bottle to $32.50. But Sam Aaron, president of the company, said that prices for the rare wines will be lowered "on a selective basis" where there is "a sufficient inventory . . . The court decision is making us re-evaluate, so the consumer will get a better deal."
On the other hand, Peter Morrell of Morrell and Co., a major wine and liquor store on the east side of Manhattan, says he doesn't expect that the court decision will have a impact on the most-valued imported wines.
"While retailers will cut prices on the popular domestic and imported brands, the court is not going to affect the price of wines from the major vineyards in Europe, where the prices have been climbing because of supply and demand." Morrell says.