Restrictions on Tennessee Wineries
Tennessee Wineries cannot sell directly to any restaurants or wine retailers; they can only sell their wines to Tennessee wholesalers [57-3-404 (c)] or at retail to winery visitors who take the unopened bottles of wine with them.
A Tennessee winery is not allowed to acquire a wholesale license so they could sell directly to their local Tennessee retailers and local restaurants. [57-3-404 (c)]
Although Tennessee wineries are not allowed to charge for wine that they give to visitors for tasting, they still must pay a state excise tax of $1.21 a gallon on wine [57-3-302 (a)] that they are mandated to give away for free [57-2-105], [57-3-204 (f)(6)]. (We think that if the state of Tennessee wants to tax for wine given away, the winery should at least be able to charge a moderate fee for the tasting.)
Availability of Wine in Grocery Stores
Wine cannot be sold in grocery stores in Tennessee because of several laws passed over the years:
1. No licensee shall sell intoxicating liquors at retail in connection with any wholesale business, or as a part of or in connection with any other business or in the same store where any other business (i.e., groceries) is carried on [57-3-404 (e)(1)]
2. It is illegal for any person or common carrier (i.e., grocery store chain or supplier) to bring or carry into this state for delivery or use in this state any alcoholic beverages unless the same shall be consigned to a manufacturer (winery) or licensed (alcohol) wholesaler. [57-3-402]
3. And yet alcohol wholesalers can sell food products up to 50% of their total gross revenues if they so choose [57-3-404 (2)]
Tennessee wineries are allowed to sell their own wine on the winery premises and in addition to its own wine, they may sell:
(1) Juices or concentrates derived from their own winery, or any Tennessee agricultural products;
(2) Items used in home winemaking; and
(3) Other gift, tourism, or wine related items as defined by regulations duly promulgated by the alcohol beverage commission. [57-3-207 (h) (1)]
Comment - If grocery stores were allowed to sell wine, retail alcohol stores would have to be allowed to sell food products and perhaps corkscrews and wineries would have to be allowed to sell food products and other products that were not Tennessee agricultural-in-origin.
A wine and spirits retailer is not allowed to own more than one store (This prevents economic competition from a chain of stores who might negotiate lower prices from wholesalers and thus sell to the consumer at lower prices.
[ 57-3-406. (a)]
No retailer shall offer or make any discount in the sale or delivery of liquors in case quantities. No reduction in the standard price per case shall be made for sales in excess of one (1) case. (i.e., a retailer can give you a discount for one case of wine but if you wanted to buy 5 cases for a wedding, you cannot get a further discount). [57-3-406 (b)]
No wholesaler contract for a given brand of alcohol (e.g. Kendall-Jackson, Louis Martini) shall include the entire state of Tennessee as the specified area in which such wholesaler will sell any brand. [57-3-301 (3)] The state is divided into 4 regions, West TN, Middle TN, Southeast TN and Northeast TN. The wholesale distributor who holds the rights to a given brand in his area has a monopoly on that brand in an contract that has no time limitation. There is no price competition to sell a brand you have a monopoly on at a discount.
Restaurant and bar alcohol prices either by the drink or by the bottle already include a 15% excise tax that goes to the state as well as the local sales tax (i.e., 9-10%). Thus the posted price on the menu already includes a total of 24-25% in state tax. Additional sales tax is NOT SUPPOSED to be added on top of that. [57-4-301 c]. Consumers should watch to make sure restaurants are not adding an additional sales tax on top of the posted menu prices by mistake.
Restaurants cannot buy wine directly from Tennessee wineries. [57-2-105 a]
Retail Wine Stores
Retail wine stores are now allowed (as of July 2012) to have wine tastings in their stores (one ounce pours) .
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