Rents are high on the Eastern Seaboard, as much as three times higher than elsewhere in the United States. And the stores are small, because the rents are so high. There are few of the multi-thousand square foot superstores common in the rest of the country. Plus, because there are so many small stores, there is increased competition and decreased margins.
And, if that’s not enough, the Eastern Seaboard has some of the most restrictive licensing laws in the country. In New York, no one can own more than one retail license; one county in Maryland doesn’t allow privately-owned liquor stores; and no one can own more than two retail licenses in New Jersey.
“I really don’t see how they can make it work with such small stores and such high rents,” says Jane Kettlewell, the co-owner of Creative Palate Communications, a New York City wine marketing firm. “And in one way, they’ve got more competition and lower margins because of the higher costs of doing business.”
So how do wine retailers on the East Coast make it – let alone thrive? Because, despite all of the obstacles, some of the leading off-premise locations in the country are on the East Coast between Washington, D.C., and Boston, an area that includes New York City and its New Jersey suburbs. It doesn’t include Philadelphia, since the state of Pennsylvania owns the liquor retailers in the sixth largest city in the country.