Competitors’ concerns prompt state investigation of Total Wine & More

Updated: Dec. 29, 2020 at 6:49 PM EST
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CHARLESTON, S.C. (WCSC) - One of the largest wine retailers in the country is under state investigation, and it is not the first time the company has been under the microscope.

Live 5 Investigates has learned that the State Law Enforcement Division is investigating Total Wine & More’s South Carolina stores because of competitors’ claims that the company has an unfair advantage. The chain has Lowcountry locations in West Ashley and Mount Pleasant.

Owners of other liquor stores allege that a North Charleston wholesaler called Liquid Culture is giving Total Wine & More total control over certain products that rival businesses are not getting a chance to sell.

“People that have had other retail stores have pointed out this issue and that’s why we pursued it,” said John Kelsey, a former president of ABC Stores of South Carolina and the owner of three Hilton Head Island liquor stores.

Kelsey said that ABC Stores of South Carolina, which represents owners of small liquor stores across the state, asked for the SLED investigation because of concerns involving what is known as the three-tier system of alcohol distribution.

The first tier consists of the manufacturer or producer who sells their product to a licensed wholesaler, the second tier includes the wholesaler who is required to sell to all retailers interested in carrying their products, and the third tier is made up of the retailer who sells to the public.

3-Tier System
3-Tier System(Live 5 News)

The South Carolina Department of Revenue says that the three-tier law is designed to ensure fair competition. Kelsey alleges that instead of following this system, the Liquid Culture wholesaler is working exclusively with Total Wine & More, causing other retailers to be unable to sell their products as well.

Total Wine & More’s corporate office has not responded to requests for comment.

George McLaughlin, the co-owner of Bottles Beverage Superstore in Mount Pleasant, alleges that every time he tries to acquire the same alcohol that Total Wine & More has, Liquid Culture says that it is not available or that they do not know what it is.

“[It] hurts us in the sense of we don’t have a product for a customer that requests it,” said McLaughlin. “It’s not a fair-trade practice how it’s written in the laws.”

Documents obtained by Live 5 Investigates shows that back in 2014, SLED met with Liquid Culture’s general manager and found that the company was only selling their products to three stores in the state. All three stores were allegedly Total Wine & More locations.

Wholesaler Liquid Culture
Wholesaler Liquid Culture(Live 5 News)

Total Wine & More stores were accused of several violations at the time, including failure to purchase from a wholesaler. The Department of Revenue even sought to revoke Total Wine & More’s West Ashley liquor license and fine them, according to the documents.

However, in court, both sides disagreed over whether violations had been committed and agreed to dismiss the case under several conditions. One condition stated in part that Total Wine & More had to agree to comply with all applicable South Carolina laws and regulations relating to the sale of alcoholic beverages.

“In theory, if I violated the liquor laws and had three violations, the next month I might lose my license, as well I would pay a fine,” said Kelsey.

Documents show that Liquid Culture was accused by SLED in 2014 of solely selling alcohol to Total Wine & More, instead of to all retailers. Agents also alleged that the company failed to give quality discounts to all retailers.

The Department of Revenue even threatened to revoke Liquid Culture’s wholesale liquor license for their alleged 2014 violations, but documents show Liquid Culture agreed to pay a $1,000 fine to the Department of Revenue and the case was dismissed. Liquid Culture also agreed to not purchase alcohol for the exclusive use of any retailer.

Six years later, Total Wine & More stores are facing new violations from the state. Documents from the Department of Revenue show that on August 17, 2020, the agency cited the chain’s locations in Charleston, Columbia, Greenville, and Myrtle Beach.

These accusations are similar to the ones from 2014 and include allegedly violating the three-tier law, failing to purchase alcohol from a wholesaler, and buying alcohol for their exclusive use. Liquid Culture was charged on the same day in August for allegedly violating a rule calling for beer and wine to be delivered to licensed premises by a wholesaler.

It is not clear whether Liquid Culture is currently under investigation by SLED. Live 5 Investigates visited and called the company to ask about the violations they have been issued and their relationship with Total Wine & More, but the owner of the business has not responded.

A SLED spokesperson declined to provide specific details regarding their current investigation into Total Wine & More. Live 5 Investigates asked the Department of Revenue if Total Wine & More and Liquid Culture have responded to the August notices of violation, but the agency said in November that they did not have any updates yet.

Kelsey says his organization does not want to shut down Total Wine and that he just wants a level playing field.

“We’ve been working on this six, seven, eight years,” he explained. “No, I don’t see a resolution coming. That’s one of the reasons we want to talk about it publicly is to let people know what they do.”

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