House panel advances contentious grocery store wine bill, liquor store owners vow fight on chamber floor

An eleventh-hour agreement that attached a six-page amendment to legislation allowing Walmart and other grocery store chains to sell an expanded selection of wines was approved late Wednesday (Feb. 22) after two hours of emotional debate at the State Capitol.

An amended Senate Bill 284 was approved by the House Rules Committee before an overflow crowd of more than 150 people who turned out for the committee hearing long after both chambers had emptied and most lawmakers had left the Legislature for the day. Republican House sponsor Rep. Jon Eubanks of Paris began the tense hearing by joking that he was an unlikely choice to carry legislation that has been negotiated for nearly three years because he was not a “drinker.”

“This is not a process that has been rushed. We had a similar bill two years ago and it was pulled down at the request of quite a few parties,” Eubanks said. “We asked these people to try to take the time before our next session to go ahead and try to come to some sort of agreement that all the parties might be agreeable to.”

Afterward, Eubanks went through all 12 sections of the newly agreed upon bill that struck nearly all the language in a previous version approved by the Senate last week. That version, sponsored by Sen. Bart Hester, R-Cave Springs, would have enabled grocery stores to obtain permits to sell wines of all types in local grocery stores. Grocery store chains operating in Arkansas, such as Walmart U.S., Kroger’s, Edwards Food Giant and Brookshire’s, now can only sell Arkansas and other small farm wines that produce less than 250,000 gallons of vinous product yearly.

That earlier Senate bill also spelled out the potential revenue the state would generate from increased wine sales. For example, a grocery store seeking a wine permit would pay $1,000 for building space of less than 35,001 square feet. Larger stores with space over 75,000 square feet would pay $5,000 for wine permits. That version also allowed fees from the wine permits to be equally divided between the “Arkansas Wine Grant” program and the Tourism Development Trust Fund, which would be designated to the Department of Parks and Tourism to promote the state’s wine industry.

The newly negotiated amended bill adds eight additional provisions to the engrossed bill. Those new provisions included allowing liquor store owners to sell consumable and edible products that complement alcoholic beverages, giving incentives to Arkansas-bonded wineries operating in state more than five years, preventing dry counties from getting into the wine business, and adding language that grocery stores with a wine permit cannot derive more than 20% of their gross sales from the sale of alcoholic beverages.

John Crow, a liquor store owner in Sherwood, told the House committee that the amended bill would possibly put him and other locally-owned liquor store owners across the state out of business. He said he was surrounded by Walmart, Kroger’s and other “big box” chains that would take advantage of the new permitting provisions and sell a wide variety of wines at their local retail locations.

“Two years ago I joined (the Arkansas Beverage Retailers Association) to fight Walmart running a constitutional amendment to ‘wet up’ the entire state and remove the local option for dry counties,” Crow said. “Thirty days ago, I learned a small (group) of eight county-line liquor stores colluded with Walmart and big box chains to lay down on this bill in exchange for a promise not to push for wet counties for eight years. I felt like I was stabbed in the back.”

Later in the proceedings, testimony pitted members of the well-known Post family wineries against each other. Mary Jane Cains, owner of the Mount Bethel Winery and a member of the Post family, told the committee she supported the revised bill because it would benefit her small winery near Altus.

“I find this difficult to come up here and say this is something that happened suddenly. I agree with Sen. Eubanks that this is something that has not happened overnight,” Cains, said refuting earlier testimony of HB284 opponents. “To me this bill is consumer driven. I have been in a lot of Walmart’s stocking wine and there are lot of people that complained because they want more choices. And that’s the way the world is moving.”

Near the end of the debate, Andrew and Joseph Post of Post Families Vineyards in Altus spoke in opposition of the bill. Andrew Post said the legislation has split many of the varied interests in the Arkansas wine and liquor store business that were once allied together.

“Senate Bill 284 has put me in a position worse than being in between a rock and a hard spot,” said the Arkansas vintner. “Every faction involved in this bill is threatened by this.”

Post later said similar legislation across the U.S. has benefitted a small list of large wineries that dominated 90% of wine sales across the country.

“I predict that (this bill) will create the same trend in Arkansas and this will result in less choice for the Arkansas consumer by small farm wine off the grocery shelf,” he said. “I predict up to half our employees will be lost and we will be pulling up vineyards. This is big business wanting to do business with big business at the cost of leaving the little guys out.”

Michael Lindsey, director of government relations at Wal-Mart Stores Inc., and Impact Management Group Managing Partner Terry Benham, key negotiators for HB284, defended several key provisions of the legislation.

“We just want to give our customers what they are asking for. And they are asking for a complete section of wine, not just small farm wines, but that also includes our native wines,” Benham said.

The Little Rock lobbyist added that the small winery fund provision in the bill will also help state vintners improve and better market their products. Lindsey, son of Sen. Uvalde Lindsey, D-Fayetteville, also attempted to placate concerns expressed by some of HB284 opponents that Walmart would drive Arkansas liquor stores out of business through bulk purchases, lower prices and other anti-competitive measures.

“What I can assure you is that Walmart is not going to turn into a wine store,” Lindsey said. “We are still going to be grocery first, so we are not going to be turning aisles and aisles of our stores into selling wine.”

The Walmart representative also noted that 34 states already allow sales of wine in grocery stores, and the liquor industry has remained competitive in those states.

“If the wine and grocery (bill) passes, it’s not the death knell for liquor stores here in Arkansas,” he said.

In response to questions from House members, Benham and Lindsey promised the committee that Wal-Mart and other parties involved in negotiating HB284 would not come back to the legislature to ask for a provision to allow liquor sales in grocery stores before 2025. Not long after that assurance, the House panel approved the bill in a voice vote. The bill now goes to the House floor, where opponents say they plan to put up a fierce fight.

Earlier Wednesday, the newly created United Beverage Retailers of Arkansas (UBRA) released a study suggesting that if HB284 is enacted into law, wine and spirits retailers could conservatively see a 25% drop in wine sales, which translates to an annual loss of about $31 million and 110 jobs.

“The findings validate what we already knew to be true, this legislation will deeply hurt small wine and spirits stores across the state, forcing many to close, resulting in a loss of revenue for the state and the jobs many people depend on,” said UBRA president John Akins.