A newly signed New Jersey law that allows small wineries to ship directly to retailers and customers has local winemakers happy, but others concerned about the future strength of the state’s liquor industry.

Beginning May 1, wineries in and out of state that produce 250,000 gallons per year or less – that's every producer in the state – can ship their product to consumers, and also purchase a permit to distribute their wine to retailers.

“This law balances the modern needs of our wine industry with the need of liquor stores and distributors and positions both for even more economic, job-creating success,” said bill co-sponsor Assemblyman John Burzichelli (D-Gloucester/Cumberland/Salem) in a news release.

Wineries around New Jersey worked together with the Garden State Wine Growers Association to push for the bill, but not everyone is popping corks. Some in the liquor industry aren’t thrilled with the new law.

“I’m not sure how it’s going to help me or hurt me at this point,” said Chenna Nukala, owner of Super Saver Wine and Spirits in Barnegat. Now that retailers have direct access to wineries, they could push smaller stores out of some markets with their buying power, he said.

Nukala said his business model likely won’t change much, but the structure of the liquor industry in New Jersey will. He said the new law undermines the existing three-tier system in which producers sell to distributors, who sell to retailers, who alone sell to consumers. If retailers and consumers can bypass distributors, he said, eventually, people will be out of work.

“This is going to eliminate jobs,” Nukala said. The three-tier system “helps salesmen, it helps drivers. They’re impacted with this more than we are.”

But Larry Sharrott, owner of Sharrott Winery in Winslow in Camden County, said that argument, pushed by the powerful liquor industry lobby in New Jersey, just isn’t true.

In the last decade or so, 38 other states have allowed similar direct shipping, Sharrott said, “and there’s no evidence that the three-tiered system is harmed in any way.” In New York, he said, opening up the distribution process has been followed by growth not just in the wine industry but in the liquor industry in general, and tax revenues from alcohol sales have ticked up.

“Studies show that people go to the liquor store because it’s convenient,” Sharrott said. “People go online or call the winery because they want a specific wine. People are still going to walk into their stores.”

Nukala pointed out that there's less room for economic wobbles in New Jersey, because the cost of liquor licenses is so high. "I have a ten-year mortgage just to pay off my license," he said. 

But Sharrott said introducing wineries into the retail market on a small scale won't dilute the value of a Jersey liquor license. "Competition is competition," he said, and liquor store "have always been more competitive with themselves than with wineries."

Wineries aren’t looking to tear down the three-tier system, Sharrott said. After all, if a winery wants to grow, it will eventually need a distributor to help it tap into a wider market. Small producers like him just want a fair chance at reaching customers who are seeking them out.

“The goal was to maintain laws as an incubator for small wineries,” he said.