As the Connecticut state legislature considers a bill that would allow grocery stores to sell wine, a group of UConn researchers has provided a comprehensive economic impact report to inform the decision-making process.
Currently, many other states allow the sale of wine in grocery stores. Connecticut only allows the sale of beer in grocery stores at this time.
The Connecticut Food Association asked the team from the Zwick Center for Food and Resource Policy in the College of Agriculture, Health and Natural Resources and the Connecticut Center for Economic Analysis (CCEA), a non-partisan research center in the UConn School of Business, to provide an objective economic analysis of what impact this policy would have on liquor stores, grocery stores, and other segments of the state economy.
The team was led by Fred Carstensen, professor in the Department of Finance and Kimberly Rollins, professor and department head for the Department of Agricultural and Resource Economics and director of the Zwick Center.
“We were really clear from the beginning that anything that we do through the University and the Zwick Center is nonpartisan,” Rollins says. “We strive to provide information based on high quality research, and that’s what we did.”
The group’s major findings are (1) a clear majority of almost 82% of the general public support changing the regulation to allow wine sales in grocery stores, and (2) the policy would have little impact on consumers’ overall wine buying habits.
The CCEA researchers used the REMI model to predict the economic impact of the policy. The model forecasts changes to employment, gross domestic product, disposable income, and taxes, among other outcomes.
They used data from survey responses from a representative sample of Connecticut residents over the age of 21, and actual outcomes from Ontario, Canada, which began allowing wine sales in grocery stores in 2016. They used Ontario because many other U.S. states changed the law decades ago when the profile of the average consumer’s behavior would have been much different than today, or, as in the case of Tennessee, very close to when the Covid-19 pandemic begun. The researchers also needed an area where the profile of wine drinking was similar to Connecticut, a state where people drink more wine than beer, unlike many U.S. states.
After running the model, the researchers found that the policy would likely create a few more jobs and profit for sellers and producers.
“We found that in this scenario, the impact to the Connecticut economy would be mildly positive,” says Marcello Graziano, associate professor of management and international business at Southern Connecticut State University and member of the research team. “The impact is not huge because people are not going to spend an enormous, additional amount on alcohol, just enough to balance out the fact that people would have multiple outlets to purchase wines.”
The Zwick Center researchers surveyed Connecticut households to gather data about
sentiment toward the proposed policy, which was incorporated into the economic model.
“We conducted a household-level survey to fully understand current behavior toward grocery and wine purchasing of Connecticut consumers, how they feel about the proposed change, and how their own behavior might change were this law to pass,” says Cristina Connolly, assistant professor of agricultural and resource economics at UConn.
The survey included 503 people drawn from a random sample.
Having an understanding of how people would react and how their behaviors would change allowed us to generate a better economic analysis because they go hand-in-hand. — Alyssa McDonnell
The researchers found that nearly 82% of Connecticut households supported the bill. However, a majority reported that they would still buy most of their alcohol at liquor stores if the bill passed.
“Having an understanding of how people would react and how their behaviors would change allowed us to generate a better economic analysis because they go hand-in-hand,” says Alyssa McDonnell, research assistant and a PhD candidate in UConn’s Department of Agricultural and Resource Economics.
While the model showed that there would only be a small, yet positive, impact on the overall economy, the policy could provide an opportunity to promote the sale of Connecticut wines. Survey respondents who reported having tried Connecticut wines reported they enjoyed them, but that they are difficult to find in stores.
“By protecting a retail industry that is already quite protected…the existing regulations suppress important benefits to consumers that reach larger number of people across the state, and possibly suppresses the growth of a nascent Connecticut wine industry that is important to rural areas,” Rollins says.
In other words, the research team found that increasing the number of outlets selling wine could significantly benefit the sale of these local products.
“These vineyards don’t want another subsidy,” Graziano says. “They want the opportunity.”
The team plans to work on another study examining the impact of Connecticut allowing the sale of alcohol on Sundays since 2012. They will compare the impact of this policy on liquor versus grocery stores to infer the impact of other policies, like the bill currently under consideration.
“I love the fact that the University of Connecticut is a place that encourages collaboration across academic units and University Centers to provide policy-relevant information necessary to better understand societal effects of public decision-making, and we plan to do a lot more of it,” Rollins says.
The research team also included Peter Gunther, CCEA senior research fellow and Ethan Grumstrup, assistant research professor in the Department of Agricultural and Natural Resource Economics.
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