Account Login




Massachusetts Alcohol Sales Tax Repealed But How Will it Affect Purchase Patterns Long-Term?

Posted on  | January 13, 2011   Bookmark and Share
Written by | Robert Dwyer

The two bottles of wine I bought on December 30th, 2010 hopefully be the last alcoholic beverage purchase I’ll ever make in Massachusetts subject to sales tax. A bottle of sparkling wine for New Year’s Eve was understandably time sensitive, but the other bottle – a highly recommended 2009 Beaujolais - won’t be opened for a year or two. The sales tax was repealed on January 1st, 2011 - why didn’t I just wait a couple more days?

Well, primarily because the tax implication on the small purchase wasn’t significant. I was there, I wanted the wine, and I bought it. I think that’s the way a lot of people look at their decisions in a liquor store - sales tax just isn’t a big deal.

But to value-hunting wine enthusiasts like me the tax repeal is a big deal. At least potentially. Over the course of a year it’ll probably save me around $400. As I consider purchases in 2011, especially larger ones, I’ll be thinking about the sales tax savings we’ll now enjoy compared to most other states.

That’s why the tax repeal presents a new opportunity for the Massachusetts wine trade to earn more business from enthusiasts. Although we’re merely returning to the pre-2008 situation where alcoholic beverages were exempt from sales tax at the point of purchase, consumers are more aware of the sales-tax-free situation than ever. If retailers can leverage this in conjunction with other advantages of being local this could be a great year for business.

In Massachusetts, we’re fortunate to have a number of excellent wine shops run by people with deep knowledge and a commitment to helping their customers. But I still know Massachusetts enthusiasts who buy almost all of their wine directly from wineries and out of state retailers who ship to neighboring states. How can the Massachusetts wine trade earn more business from these kinds of consumers?

It starts with availability and ends with fully loaded costs. Many wines are still simply not available in Massachusetts. Broader distribution of boutique wines from around the world would help. In terms of cost I still see situations where European imports are available in California, New York, and New Jersey for 25% less than the best price in Massachusetts. Would you blame a consumer for price shopping online nationally when savings like these are potentially available? Wholesalers and retailers need to work together and compare prices nationally to make sure they’re in line.

Will Massachusetts distributors and retailers offer wines enthusiasts are looking for at competitive fully loaded prices in 2011? We shall see, but I’m more optimistic than I’ve been in a long time about buying wine in Massachusetts.

Comments

One Response to “Massachusetts Alcohol Sales Tax Repealed But How Will it Affect Purchase Patterns Long-Term?”

  1. R.K. STOCKTON
    May 28th, 2011 @ 3:29 pm

    As I remember, Massachusetts has some of the highest wholesale & retail mark-ups in the US. I believe retailers get rather long terms with payments to wholesalers. If this is still the case, it drives wholesale prices up because of the extended terms and their cost of money over that period of time. Oddly, these long terms extended to the retail end of the trade in MA does not give the retailer the same motivation to sell cheaper/faster to turn inventory, as in a state where terms are 30 days net; ergo, Higher retail prices for wine in MA regardless of the taxes. The terms to retailers from wholesalers may have changed now.