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While not as germane to the discussion about augmenting the three-tier system, the wine in food store issue has probably generated more attention throughout the state than has the direct shipment of wine to Tennessee residents ("The Grape Debate"). The Tennessee Grocers and Convenience Store Association launched the most recent effort to get wine in food stores because, says Jarron Springer, president of the TGCSA, the number one question that consumers ask his grocery store members is, "Where is the Wine?"

"Whether it's cooking or pairing it with meals, the consumer feels it makes sense to be able to get wine and food at the same location," he says. "Consumer demand has pushed us to this."

Such demand should come as no surprise. Thirty-three states sell wine in grocery stores, including six of Tennessee's border states—Alabama, Georgia, Missouri, Virginia, North Carolina and Arkansas. That leaves Mississippi and Kentucky, with the Bluegrass State actively considering it.

So why not Tennessee? Naturally, the state's mom-and-pop liquor stores are against it—it stands to impact their bottom line. But the state's 29 wine and spirits wholesalers are also against the change. That may come as a surprise—after all, how many salesmen do you know who actively fight to keep their products out of more stores? Let's step inside their world and consider their arguments against such a proposal.

The Argument: Customer loyalty

They don't want their customers, many of whom they've known for years, to suffer.

"I support those people that I've been in business with for 70-plus years," says Robert Lipman, president and CEO of Nashville wholesaler, Lipman Brothers. "If you bring in the big box retailers, the local liquor stores will lose a lot of their wine business, and they won't be able to stay in business."

On the grocery store side, however, Springer asserts that other states that sell wine in food stores have just as many, sometimes more, liquor stores per capita than Tennessee. He believes that people will continue to visit liquor stores for some of the very reasons Lipman says Tennesseans shouldn't want such a bill to pass.

"Customers will continue to shop in those locations because of customer service they receive and the experience those stores have with wine," Springer says.

Plus, he believes liquor stores will have a market for the higher-end, harder-to-find wines.

But whether Tennessee will have more or less liquor stores isn't necessarily the point. Few would deny that there's a chance that liquor store business will suffer if Wal-Mart or Whole Foods began selling wine down the street. Still, the government shouldn't shield them from these mega-corporations. After all, the local hardware store or the mom-and-pop grocery store wasn't protected from the Wal-Marts and the Krogers.

Not so fast, says David McMahan, lobbyist for the Tennessee Wine and Spirits Retailers Association.

"If you owned a hardware store, you had the opportunity to modify your sales and specialize your sales to a degree that Wal-Mart couldn't compete," he says. "In the liquor store business, you're limited to wine and liquor. Other businesses don't have their hands tied in terms of the number of locations, and some have been able to compete because they have been able to diversify. We have strict laws we have to abide by."

So basically, the very laws the wine and spirits wholesalers and retailers have been instrumental in keeping in place prevent liquor stores from competing in the unsheltered marketplace. Proponents of wine in grocery stores might argue that's conveniently circular logic that leaves out a simple solution: changing the laws themselves.

The Argument: What about the children?

Increased access to wine will increase underage drinking.

"We are opposed because we are of the opinion that it would establish access for teenagers," explains John Robilio, secretary and treasurer of the Victor L. Robilio Co. in Memphis. "Whenever you increase the accessibility of wine, you heighten the possibility of teenage access because they are very resourceful."

Despite the fact that wine would be subject to the same mandatory identification law as beer, wine and spirits wholesalers and retailers believe teenagers will find a way to get around the law. In fact, with beer, they already have, says Chip Christianson, president of the Tennessee Wine and Spirits Retailers Association and owner of Nashville's J. Barleycorn's wine and spirits store.

"Kids go in and swipe and swap—they scan a six pack of coke and drop a six pack of beer in the bag, and do you think people in grocery stores are watching as closely at 10 p.m.?" he says. "You cannot get away with that in a retail store. We don't allow teenagers in the store—they have no reason to be in there."

Springer rejects the idea that wine in food stores leads to an increase in teen drinking, saying there's no evidence demonstrating a correlation and that other states that allow such sales actually report less underage drinking than Tennessee.

With beer already taking up space in grocery store aisles and the mandatory identification law in place, it's probably harder to buy beer in Tennessee grocery stores than in any other state in the United States. There's little reason to think the same would not be true for wine.

The Argument: Slippery Slope

First wine, then liquor. One thing will lead to another, until laws regulating alcohol become too liberal.

"We have a very efficient system in place and there's not much abuse. I don't see any reason to change," Lipman says.

Lipman and Christianson advocate balance, citing England as an example of a country where laws pertaining to alcoholic beverages have become too liberal.

"Look at what happened when they deregulated the wine and spirits industry in England," Christianson says. "They've got binge drinking issues. It's awful the mess they have over there. And to the extent that now they're trying to re-regulate even more strictly than what it was before."

Perhaps the best answer to any slippery slope argument is perspective. Nothing being discussed in Tennessee involves deregulation. Nor is selling wine in grocery stores exactly breaking new ground—other states have been doing so for decades, and the sky has yet to fall.

The Argument: Increased Costs

More accounts will mean more costs in personnel, fuel, etc.

Robilio and Lipman say their costs will increase because they will be servicing more accounts. Today, Robilio, says his company services about 600 restaurant accounts and about 200 retail liquor store accounts in the 21-county West Tennessee region. If the wine in food store bill passes, the fiscal note associated with the bill estimates that about 2,730 of the eligible (located in wet counties) stores statewide would apply for the license to sell wine. If, for the sake of example, one assumes that one-fourth of those stores are located in the Memphis area, that would mean an extra 682 accounts.

"This would entail having to hire more personnel and also buying more trucks," he says. "Volume would increase, but it's my understanding that retail grocery stores are very demanding purchasers. Based on my conversations with wholesalers in Georgia and Florida, we'll be dealing with a chain of accounts that has to buy frugally so they can pass savings on to customers, so there would be an increase in volume but our margin would be lowered and tightened."

Although the fiscal note estimates that if the bill had passed in 2008, wine sale/consumption would increase 50% in 2009, Lipman says volume will not increase permanently.

"Consumption of wine doesn't increase dramatically," he says. "There will be a little uptick, but it won't increase dramatically." In which case, he's stuck paying for more personnel, which also requires training and education, and more trucks, which leads to higher gas costs—two of the issues that he identified as being the most challenging aspects of doing business today.

Of all the arguments presented thus far, "We'd be busier and have to expand operations," might be the most jaw-dropping for the average business owner striving to increase sales. It also might be the most instructive in conveying just how comfortable a position the wholesalers are in.

The Argument: The Comfort Zone

Why mess with the status quo?

And why should they? As Tom Wark, executive director of the Specialty Retailers Association, points out, the status quo is pretty good for Tennessee wholesalers.

"They delivered $800,000 to state politicians [between 2000 and 2006]—where does that enormous amount come from?" says Wark, who compiled a report regarding wholesaler (beer, wine and liquor) campaign contributions in each state. "You can't contribute that kind of money unless you're making money. When you consider the enormous amounts of money that they make based on the system existing just the way it is, I can't think of a good argument as to why they would want anything to change.

Alex Heckathorn, a Compliance Services of America attorney who advises wineries, importers and wholesalers across the nation, explains that for a wholesaler selling a product, there's a big difference between sitting across from one of those mega-corporations, say Publix, Kroger, Costco or Wal-Mart, and sitting across from a wine/liquor store owner who you've known for years and, by law, only has one store in Tennessee.

"The wholesalers recognize that big players will put margin competition into play," Alex Heckathorn says. "[If I'm a wholesaler,] it's not about pricing as much as it is about the mark up that I get to charge. With independent retailers, I can leave margins as high as I want, but someone like Publix is going to say, 'Your margin is going to be X because the volume is Y, and you're going to make $4,000 on this order. Publix will do the math, but the guy at the local liquor store isn't doing the math."

Granted, the Wal-Marts of the world would still be relegated by the same laws as the liquor stores when it comes to purchasing various brands. If they wanted to buy Gallo, they would have to purchase it from the only Tennessee wholesaler that sells it. But the Wal-Mart has more buying power, and will be able to say things like, "Whether we run a special on your wine in all of our stores is dependent upon the price," Heckathorn explains.

Who's right, who's wrong, and are all the right questions being asked? That's for industry lobbyists and a legislative summer study committee to grapple with later this year. One thing is for certain, there are plenty of arguments on both sides to chew on.