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Proposed Liquor Store Has Wegmans Connections

Ninety percent of a proposed liquor store in Wegmans would be owned by the husband of Wegmans' president.

The 10,000 square foot liquor store proposed for the second floor of the Columbia Wegmans would be 90 percent owned by the husband of Colleen Wegman, the president of Wegmans, according to testimony by Ralph Michael Smith at Tuesday’s Liquor Board hearing.

Smith, who has been the of the proposal, revealed at a packed hearing before the Howard County Liquor Board Tuesday night that he has a 10 percent stake in the business.

IAD LLC, a Delaware company owned by Christopher O’Donnell, would own the other 90 percent. Smith testified a member of Wegman’s legal department steered him toward O’Donnell to provide capital to start the store.

“I’m not conversant with those types of sources,” said Smith. “Chris was suggested to me as a possible source of capital. I looked into his background; he is a venture capitalist. I thought it was a good fit.”

Smith was vague about how much the business would cost to start up, saying it would be in the hundreds of thousands. Smith denied knowing who O’Donnell’s wife was.

“I don’t even know what her job title is,” said Smith of Colleen Wegman.

The hearing drew about 100 liquor store owners and managers from Howard, Prince George’s and Balitmore counties. One after the other they came forward to offer emotional testimony as to why a liquor store at Wegmans would hurt their businesses. Even before the meeting the proposal .

Two lawyers who represented local businesses also quizzed Smith about his plans.

Maryland law prohibits liquor licenses being used in conjunction with a chain grocery store. Smith denied any involvement with Wegmans. He said the store would not participate in setting prices, picking inventory, transporting his products or storing liquor. He said he would not carry or sell any Wegmans inventory.

Smith’s testimony did little to convince the small liquor store owners in the room.

Amran Pasha of Columbia said Smith is “a front for Wegmans.”

Parth Dave, of Pikesville, said, “This is a big chain, it’s going to get the money and take it out of the state.” And Sandeep Patel of Laurel said the proposal “looks like a Wegmans operation from the bottom up.”

There were so many small business owners prepared to testify that the meeting ran four and a half hours. With 20 people left to talk, the meeting was adjourned because the building had to be closed at 11 p.m. The meeting will resume on June 14.

For that meeting, liquor board member Anne Santos asked Smith to be prepared to provide more information on the entrance to the store, how he plans to transport liquor into the store and that the landlord be present.

After the meeting, Smith said the backlash was expected.

“I think the existing businesses don’t want additional competition,” said Smith. “I don’t think it would have made a difference if I was providing 90 percent of the financing and someone else was providing 10.”

He said he plans on continuing to fight for the store.

“Frankly, I’m more interested in pursuing the store,” said Smith. “I want consumers to have a lot of choices.”

MG42 May 02, 2012 at 01:29 PM
So why didn't the "small business owner" liquor stores partner with Safeway, Superfresh, Giant, etc. years ago? Don't be mad at Wegmans for innovating in ways that save consumers money.
tooraa May 02, 2012 at 02:14 PM
Who cares about the small business owners this is about the consumer. Why should we have to pay higher prices to support the state sponsored monopoly of all the liquor store owners. Mostly the stores are dirty and drab. Have you ever seen a Wegmans store? They are immaculate and fun to be in.
Andrew Metcalf (Editor) May 02, 2012 at 02:34 PM
Last night, Eric Stein, owner of Decanter Fine Wines, which is located in Hickory Ridge Village Center said, "The average person doesn't care that much about alcohol sales. But the people involved in the industry want others to follow the rules... If the public wants to change the rules there should be an outcry to do so."
MG42 May 02, 2012 at 03:53 PM
Good point, hopefully this example will lead to public outcry. Most people probably don't give our absurd liquor laws a second thought since they've been that way forever. However, when these outdated laws are clearly standing in the way of progress, it's time for a change.
BOH May 02, 2012 at 03:55 PM
Not Fooled--so why is the only complaint about the liquor? Why aren't you and others concerned about high volume and low prices of food and other products Wegmans (or CostCo, Target, etc.) will carry? Lots of those things are quite unhealthy, and we don't need to push frozen boxes of chocolate chip pancakes n' sausage on a stick (yes, this product exists) into smaller shops to drive up prices. Have you ever even lived in another state? I've lived in six now, and Maryland is by far the most absurdly conservative about its alcohol laws. Even my home state of Kansas allowed sale of 3.2% ABV beer in grocery stores and gas stations, and recently (2003) began to allow alcohol purchases on Sundays. Texas allowed all types, but has two tiers of licenses, with products above 15.5% ABV requiring a the higher tier, resulting in most grocery stores selling only beer and wine. That's a pretty liberal alcohol policy by comparison, and I could definitely live with that compromise for Maryland. Quite simply, what you're advocating is the price-fixing racket the liquor store industry has in Maryland. The vast majority of independent liquor stores offer nothing special in terms of service to make the much higher prices one pays for alcohol in Maryland even close to worth it, so why are you and others so quick to swallow the lines they feed you?
Frank in Elkridge May 02, 2012 at 04:15 PM
Maryland blue laws are archaic and would be laughable if they weren't for real. Supermarkets, Target, Walmart , Costco, Trader Joes, etc should all be allowed to sell liquor, wine and beer. Maybe all supermarkets should have an "independent" liquor store inside them. As a consumer, anything that makes a product cheaper and easier to buy is better. The purpose of liquor licensing isn't to protect existing stores from competition anyway. Everywhere else in the country Trader Joes and Safeway are known more for wine and beer than anything else. Maryland is so backward in this regard...
BOH May 02, 2012 at 06:11 PM
Do you think this is only a problem with liquor stores? Is it safe to assume that you don't shop at any supermarkets (Giant, Safeway, etc.) or big-box stores (CostCo, Sam's, Best Buy, Home Depot, Lowes, Target, Wal-Mart, Kohls, Barnes and Noble, Toys R Us, etc.)? I ask because you seem awfully concerned about the plight of the small business owners, which would make it clearly hypocritical if you were to buy your groceries, electronics, books, etc. from somewhere other than mom-and-pop shops.
Chris Bachmann May 02, 2012 at 07:05 PM
Ohai - It's hiring people, yes. Probably at a lower wage? Yes. Killing small businesses, also yes. I mean, that's what I hear from conservatives all the time. "Small businesses are the engine of our economy". And then we allow a chain to come in, change the market dynamics and close quite a few small businesses. Here in this state, it's one of the areas where we protect small businesses from larger ones. It's worked out well. There's quite a few liquor stores in the area around Wegman's already and each has their own strength and weaknesses because that fosters a healthy competition and makes a loyal customer base more likely. When chains come in, stores like that close and instead of 6, there's one. That's hardly competition. It's the competition fairy.
ABC May 02, 2012 at 07:22 PM
Chris Bachmann-Wegmans is listed as number 4 on Forbes top 100 companies to work for. Most common job (salaried): Store Department Manager $56,040 Most common job (hourly): Store Customer Service $29,286
ABC May 02, 2012 at 07:31 PM
The argument as to whether grocery stores should sell liquor is ridiculous. There are plenty of states where you can buy liquor at the grocery store and these states also have small liquor stores that have somehow managed to survive. Perhaps it's time to change this archaic law and allow for some real competition.
MG42 May 02, 2012 at 08:10 PM
Thanks, @ABC, for doing the research on that. It's amazing to me that people like Chris Bachman think doing more with less is somehow bad for the economy.
P90Noir May 03, 2012 at 02:42 AM
Remember when the Five Guys opened and Cheeburger Cheeburger, Red Robin, and Fudd Ruckers all went out of business? Oh wait, you mean that didn't happen because there were enough customers to go around? I forgot about that part.
Laura Moreno-Hill May 03, 2012 at 02:59 PM
The Columbia Cheeburger Cheeburger, Red Robin and Fudd Ruckers are ALL are still in business...so not sure which ones "went out of business". And with all that, "BGR" (new gourmet burger place in Dobbin Square) STILL opened up. So please...these liquor laws (and a few others one I can think of) in this state are so totally out of date. I love independent owned stores of any kind...they are eccletic and the personal service (so long as there's good service) is great. But, having the OPTION to CHOOSE where I shop is what I find lacking here.
MG42 May 03, 2012 at 03:39 PM
Honestly, the entire three-tiered system of alcohol distribution needs to go. It's so absurd only government could come up with it.
BOH May 03, 2012 at 03:58 PM
Fully agree, Frank. That's one of my biggest problems with Maryland governance.
Not Fooled May 03, 2012 at 08:37 PM
Here is an interesting section taken from http://www.bbc.co.uk/news/business-17900577 Moves to deregulate alcohol in the US go to the heart of debates about its role in society and the concerns that led to prohibition. Mr Wolf says many Americans have grandparents who remember what the country was like before controls were established. "We don't want to cast aspersions on England - but if you look very carefully at what happened, there was deregulation. There are now 24/7 sales there, there's vertical integration there with big box stores controlling the retail operation - or big retailers controlling the suppliers. "Prices of alcohol are below sale cost all over England, sometimes less than a bottle of water. And there's terrible binge drinking. We look at that and say what's different about our system? "Our's is a much more regulated system. There are many more checks and balances, not only between market players but also from government on the market players." Truly, only a sociopath would want to tear down the carefully reasoned checks and balances (three tier system) and replace it with unrestrained capitalism. What's next; buy vodka with food stamps and a gin and tonic dispenser in the middle school lunch room? Believe me, if this were not forbidden some entrepreneur (Wegman's?) would innovate these "system improvements."
Mike M May 03, 2012 at 09:24 PM
Only a sociopath? And what do you call people who like to decide for me what's right for me and my family? And the "won't someone think of the children!!??" argument just makes me laugh (maybe I am a sociopath - BOO!) I do feel for these small business store owners, but honestly, if I want cheap booze I can already go to Corridor fine wines and get things cheaper than what the local liquor stores offer anyways - with traffic, it's really not that much further. I usually go to the local guys simply because they're more convenient.
MG42 May 03, 2012 at 09:46 PM
Haha. Slippery slope much? Do you work in the alchohol distribution business?
P90Noir May 04, 2012 at 02:30 AM
Laura - I think you missed the sarcasm in my post. I was poking fun at the notion that this new liquor store will put the currently operating stores out of business.
P90Noir May 04, 2012 at 02:30 AM
Not Fooled - I realize you are trying hard to make a point, but dismantling the three tier system would in no way lead to buying vodka with food stamps or G&T dispensers in middle school lunch rooms. And really enjoy that you find the "check and balances" within the three tier system to be "carefully reasoned." I'm pretty sure the only "checks" in the three tier system are those that go from the distributors to the lobbyists and politicians.
Not Fooled May 04, 2012 at 03:30 PM
OK, here is another interesting quote taken from http://www.centerforalcoholpolicy.org/2012/05/03/national-alcohol-experts-alcohol-is-different-requires-effective-regulation/ ------------- Brannon Denning, professor at Samford University’s Cumberland School of Law and CAP Advisory Council member, began the session by providing a global perspective on alcohol regulation, discussing factors that influence alcohol laws such as religion, ethnicity, climate and history. He recounted the history of America’s experience with alcohol, noting how unique it is for a product to be the subject of two constitutional amendments. America’s history of abuses with alcohol leading up to national Prohibition is important to remember, he argued, in order to understand why we have the state-based alcohol regulatory system that we have today. “According to national polling, over three-fourths of people say they understand that alcohol is different and needs different rules,” Denning said. ----------- Apparently my slant on this issue is supported by 75% of the population. I am the majority opinion, not you. We don't want your liberal ideas about mass marketing alcohol. We want alcohol, but we want it controlled. We want three distribution tiers and we want local, home-town retailers that live in the community and share it's values and need for control. You yell a lot louder, and you try to push us down through insult and sarcasm, but you are by far the minority opinion.
P90Noir May 04, 2012 at 04:42 PM
From the Center for Alcohol Policy website - "The Center for Alcohol Policy was founded by the National Beer Wholesalers Association and receives funding from America’s beer distributors and others interested in exploring, researching and expanding education on alcohol regulation." I never would have expected that an industry-backed group would report findings that support the continuation of policies that make them rich. Where's that sarcasm font when I need it? And just because 75% of the population "understand that alcohol is different and needs different rules," doesn't mean that they are in favor of the current set of rules. It just means they understand the need for them. I understand that alcohol needs different rules. But I think we could do much better than the current antiquated ones.
MG42 May 04, 2012 at 04:42 PM
Doing away with the three tiered system is not "mass marketing" alcohol and it's intellectually dishonest to suggest such nonsense. Anyone who wants cheap booze has access to it. All liquor stores sell cheap beer, 40 ozs, M/D 20/20, etc. Obviously, you are pretty old based on your old school opinions on alcohol. Strangely, you never answered my question. Do you work in the alcohol business somehow?
Vic May 04, 2012 at 09:57 PM
Believe me its not going to be cheap....
Vic May 04, 2012 at 10:03 PM
State will lose on personal income taxes. Currently most of the beer wine and liquor store owners most are residents of Maryland and thus pay state taxes on the income they make in MD. Ownership of suggested wine store Inside Wegmans will take all that to New York.
Vic May 04, 2012 at 10:06 PM
for those who believe that liquor prices are high. I don't know where they come from....but Maryland liquor, beer, wine prices are very competitive, if not cheaper... compared to NY, NJ, PA,VA NC
MG42 May 05, 2012 at 04:30 PM
Even if that's true (and i have doubts) that's the state of Maryland's stupidity. They should change their tax apportionment rules while they're revising their moronic alcohol laws.
A J May 07, 2012 at 02:58 AM
forget the hoopla about big stores getting liquor license and hurting small stores not only in the county but in the state. Is nobody getting whats wrong with the picture here? The guy, "MIke Smith" told the board under oath that he has not done any background checks on his 90% partner and denied to know much about him. He claimed that he did not know his wife, Collen Wegman. I mean, seriously......You have been a Wegman attorney for over 10 years and you are getting money for your liquor store (90% NOT 10%) and then you claim in front of the board that you don't know that the guy you are getting money from is husband of Wegmans' President then I am sorry but I can only call it a LIE, nothing short of it. My real problem with this guy getting a liquor license is HE IS CLUELESS. He did not know who was going to sign the credit app for the store, he did not know who was going to hire and fire, he did not EVEN KNOW who was going to place order, he did not know how much inventory he would require (first time the question was posed to him he said TEN THOUSAND DOLLARS), he did not know how far the cafe seats were going to be from the door of his store.....I mean c'mon you don't provide a liquor license to such a clueless individual. For all we know, he might duplicate what Wegmans did in PA, put vending machines with Alcohol in them....SO IRRESPONSIBLE. At least, we know that our local stores are responsible and own up to their mistakes, if they make it. THIS LICENSE, BAD IDEA...
MG42 May 07, 2012 at 11:52 AM
Well if he's so clueless he'll go out of business rather quickly, right?
A J May 08, 2012 at 02:01 AM
So why jeopardize so many laws, family shopping experience, make many neighborhood stores for the fun of watching Mr. Smith fail in Mr. Odonnell's business venture......

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