NY liquor stores face battle with grocers over non-alcoholic booze

New York wine and liquor stores are struggling as their customers dry out from the boozy days of the pandemic — and a pair of state lawmakers has concocted a potentially controversial remedy for the hangover.

At the start of the year, New York state Sen. Michelle Hinchey quietly introduced a bill to allow wine and liquor stores and their distributors to sell “non-alcoholic versions of alcoholic beverages” — a comparatively small but fast-growing niche that some liquor store owners say could help prop up stalled sales.

While US sales of alcoholic beverages edged 0.8% higher to $105 billion during the past 12 months, sales of non-alcoholic booze soared 34% to $620.4 million during the same timeframe, according to NielsenIQ.

“It’s incredibly important to us to support our liquor stores,” Hinchey told The Post. “They are family owned, local small businesses that are on our main streets and this could be a new revenue stream for them.”

The Empire State is one of just 17 states that don’t allow wine and liquor stores to sell non-alcoholic beer, wine and spirits. But it’s also one of just 10 states that don’t allow grocery stores to sell wine and liquor — a law that has been in place since the Prohibition era, and which New York liquor stores have defended vigorously.

That’s despite lobbying by supermarkets, which are only allowed to sell beer in New York. Last year, grocers pushed a bill that failed to advance.

Accordingly, insiders say Hinchey’s legislation — which has a companion bill from state Assemblyman Al Stirpe — is sure to face fierce opposition from grocers and convenience stores, which currently are the only legal distributors of non-alcoholic wines, spirits and mocktails. There are also a handful of specialty stores that just sell booze-free beverages.

So far, there’s been no negative feedback or opposition to the proposals, according to Hinchey.

“There hasn’t been a big push yet,” she said. “It’s a new bill.”

But Nelson Eusebio, who heads up government relations for the National Supermarket Association, which represents 600 independent stores in the city, said he hadn’t been aware of the bill before he was contacted about it by a Post reporter — and added that he’s skeptical.

“It’s a fair trade provided that we get to sell the wine,” Eusebio said. “We would block their bill if they don’t allow us to get wine. They keep making a scene about us selling wine, so why would we give them even potato chips?”

Liquor store owners argue that their businesses are the natural destination for non-alcoholic booze drinks. 

“People don’t walk into a grocery store looking for gin,” said Michael Correra, a Brooklyn liquor store owner who is executive director of the Metropolitan Package Store Association.

Ed Carino, co-owner of ProofnoMore — a three-year-old retailer and wholesaler of alcohol-free booze — agreed, noting that “consumers don’t know to look for a non-alcoholic rum in a supermarket.”

The dustup is taking shape as liquor manufacturers have lately revealed disappointing US sales. Brown Foreman, the distiller of Jack Daniels, said in March that “the operating environment continues to be challenging following two years of double-digit organic net sales growth.” The company warned that it expects its sales to be “flat” this year.

Diageo – owner of Tanqueray, Johnnie Walker and Smirnoff – said North American sales dropped 2% during the six months ended in December. Consumers are “being more conscious about their health” and have “less discretionary spending” power, Diageo executives said during an earnings call.

In New York, retailers claim liquor store sales are even worse. Members of the Albany-based Metropolitan Package Store Association, which represents 3,500 liquor stores, say their revenues are off by at least 10% — with many experiencing even steeper declines.

“2023 was a difficult year for us,” Daniel Posner, owner of Grapes the Wine Company of White Plains, told The Post. “Most retailers’ sales were off anywhere from 15% to 35%.”

“Consumers are not purchasing as much alcohol for at-home consumption,” noted Kaleigh Theriault, NielsonIQ’s director of beverage alcohol thought leadership.

Younger consumers are far less into alcohol than previous generations, according to a Gallup poll last year. The number of adults under the age of 35 who drink alcohol has fallen to 62% — down from 72% a decade ago.

Experts say demand for non-alcoholic wines, spirits and mocktails is likewise exploding in a trend that coincides with a rise in marijuana use and a new focus on health and wellness.

“There is more reporting about the harms of alcohol [while at the same time] cannabis is displacing drinking and being heavily marketed as being healthier than alcohol,” Erica Deucy, founder and podcast host of The Business of Drinks.

“I think the legalization of marijuana is taking business away,” Correra added. “And Ozempic is an issue for us because people are not drinking when they are taking those drugs.”

Meanwhile, specialty retailers like Spirited Away, which opened the first non-alcoholic store in the Big Apple in 2019 is “steadily growing,” with Dry January 2024 being its best month ever, co-owner Alex Highsmith told The Post.

Spirited Away offers some 300 products — including a $13 Phony Negroni, a bottle of Spiritless Kentucky 74 for $23 and Monday Gin for $40 a pop. There are about 30 such stores nationwide, including seven in New York City.

The booze-free options appeal not only to teetotalers but to those engaging in ‘flex drinking’ — the practice of switching between alcoholic and non-alcoholic drinks — “to last a little longer when they go out,” Highsmith said.

When Carino first pitched local bars and retailers many were skeptical. One restaurant-grocery owner upstate turned him down, telling him, “We don’t get a lot of people in recovery or pregnant women in our market,” Carino said.

Now that retailer is a regular, as is the posh Manhattan eatery Gramercy Tavern, whose sommelier is well-versed in mocktails, according to Carino.

Nevertheless, New York wine stores and their distributors acknowledge that food retailers will be the major hurdle for non-alcoholic booze finding its way to their shelves.

“The biggest opponents to this would be the grocery industry,” said David Waldenberg, head of the New York Alliance of Fine Wine Wholesalers and president of BNP Distributing Co.