Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, November 13, 1993 TAG: 9311130120
SECTION: VIRGINIA PAGE: C2 EDITION: METRO
SOURCE: BONNIE V. WINSTON STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
In a high-stakes challenge to the state's wine distribution system, a bevy of lawyers for Haft told three officers at a state hearing that a Charlottesville wine distributor should have the right to sell Dom Perignon champagne and other wines to Haft even though Haft's discount wine outlets are in a Northern Virginia distributor's territory.
Haft says he can get Dom Perignon from Charlottesville's E.C. Robins International Inc. at a fraction of the price charged by the Northern Virginia distributor, Forman Distributing Co. of Virginia. He said he passes the savings along to consumers.
"They charge $264 more for a case [12 bottles] of Dom Perignon," Haft said outside the boardroom of the Virginia Alcoholic Beverage Control Department.
"I can sell it for $67 [per bottle] and still make a 20 percent profit," he said. "They charge $22 a bottle more," or $89 per bottle. Retailers must mark up the price even more to make a profit.
At issue is the Virginia Wine Franchise Act, which requires wineries and wine suppliers to grant Forman, Robins and other wholesalers "primary areas of responsibility." Traditionally, wholesalers have confined their business to their primary areas; Haft's challenge could open up new territories for them and expose them to new competition.
Haft claims that the law allows Robins to go outside its "primary area of responsibility" in Charlottesville and sell to Haft, although his three Total Beverage stores are in Forman's Northern Virginia area.
Late last month, the ABC board blocked Robins' and Forman's supplier, Schieffelin & Sommerset Co. of New York, from selling up to 4,000 cases of wine to Robins, which had agreed to sell it to Haft.
While the restraining order has since been lifted, and some of the wine has been delivered, Forman's lawyers argued to the ABC hearing officers Friday that Schieffelin has violated the act by selling to Robins.
"We think the winery . . . knew in its heart that this was wrong," said Walter Marston, lead attorney for Forman. "They did this out of coercion."
Marston charged Haft with "thuggish behavior" and threatening to sue.
Haft has filed suit in federal court against Forman and wine distributors in Roanoke, Norfolk, Chesapeake and Danville, alleging a price-fixing conspiracy in violation of federal and state antitrust laws. Last month, he took out full-page newspaper ads in several Virginia cities alleging "price gouging" by a group of Virginia wine distributors.
The outcome of the ABC hearing won't affect the suit, several lawyers said Friday. Lawyers for distributors Haft has sued were busy scribbling notes at Friday's hearing.
A CBS network news team, planning to air a story about the flamboyant Haft early next year, also sat through the daylong hearing. The retailing mogul is in the middle of a well-publicized divorce and a fight with his son, Robert, for control of the family's business empire.
Haft's wine law challenge "may have short-term benefits, but it's a long-term disaster," said Forman spokeswoman Marina Ein of Washington.
She said Haft wants to gain control of the Virginia market by undercutting smaller retailers.
"When he gets a complete monopoly, where would the incentive be for Mr. Haft to keep the prices down?" Ein asked. "The consumer would be held hostage."
Haft, a dapper dresser with a shock of white hair, acknowledged that he plans to build "dozens of stores" in Virginia but wouldn't divulge where his next stores will be.
Arriving in Richmond by private jet, Haft railed against Forman and the "gang of price fixers" he said have Virginia lawmakers and the ABC Commission sewn up.
"This is pervasive corruption . . . and a rip-off to the citizens and Virginia," Haft said, his embroidered initials - HHH - showing on his shirt cuffs.
He said Virginians routinely trek to Washington to buy lower-priced wine and spirits, costing the state millions annually in sales tax.
by CNB