A landlord's hostile takeover, a 'deceptive' greengrocer, the combination of Charleez Fried Chicken with prawn vindaloo, the mysterious accounting of 3.8 tonnes of poppy seeds – and now Aro Valley's latest colourful licensing decision sets the stage for the Government's review of the sale of alcohol
For the community of Aro Valley, the feud between their three convenience stores is a soap opera that seems to have been around as long as Shortland St.
But this time, it's different. As Wellington's district licensing committee decides its latest alcohol licence decision, the question of which retailers meet the statutory definition of a "grocery store" will now be watched nationwide.
Patels Superette has confirmed to Newsroom that it is seeking to renew and extend its licence to sell beer and wine, in the face of opposition by Wellington's licensing inspector, the police and the Medical Officer of Health.
"When Mini Mart stole our place and forced Patels Superette to move onto other premises, that forced both to apply for a new licence and tagged proliferation to Aro Valley." – Vinod Hera, Patels Superette
At issue is the retailer's suitability as an alcohol licensee, and the question of whether it meets the tight definition of a "grocery store" set out in the Sale and Supply of Alcohol Act 2012. This is more than local entertainment for the 4000 workers, students and state house tenants who live in (arguably) Wellington's most colourful community.
The Government has agreed to reconsider constraints on the supply of alcohol by dairies and convenience stores – and central to its review will be that definition of a "grocery store". If Cabinet agrees to loosen the rules, to enable small grocery shops to better compete with the two powerful supermarket chains, then hundreds more corner stores around the country will be eligible to apply for alcohol licences.
Aro St is not alone in having a group of homeless people and window-washers who congregate in the neighbourhood park, drinking, getting drunk and causing discomfort to the community.
So why has Aro Valley become the legal case study? It starts with Wellington's more sympathetic approach to licensing grocery stores, three (unrelated) families named Patel, and their aggressive fight for market share.
Manjula Patel and her husband, Gunvantrai Patel, first opened Patels Superette in 2000.
It was a Four Square co-op member that was soon in competition with another one, Shalimar Four Square just 1km down the road on the corner of Aro St. Shalimar was owned by Nihil and Nalini Patel. Both stores had licences to sell alcohol.
But in 2015, just as the new Sale and Supply of Alcohol Act was tightening the rules on grocery stores renewing their licences, landlord Has Patel terminated Manjula Patel's lease on 103 Aro St, and moved in his nephew-in-law, Jayesh Patel (who used to work for Manjula) and business partner Raj Solanki. They opened the Aro Valley Mini Mart on the site.
Manjula Patel, meanwhile, went into business with Vinod Hira and shifted Patels Superette across the road to 100 Aro St.
Grocery stores and wars
The two opposing stores went to war over which of them should get a liquor licence, and the battleground was the Wellington City Council District Licensing Committee. The Mini Mart owners objected to the Superette's application in a dispute that divided the community.
At issue was whether the stores met the definition of "grocery store" under the new law. That definition is contained in a lengthy s33 of the Sale and Supply of Alcohol Act, which requires that a store's principal business must be the supply of food products, as well as selling other household items.
(2) In forming for the purposes of this Act an opinion on whether any premises are a grocery store, the licensing authority or a licensing committee—
(a) must have regard to—
(i) the size, layout, and appearance of the premises; and
(ii) a statement of the annual sales revenues (or projected annual sales revenues) of the premises, produced in accordance with any regulations in force under this Act prescribing what information such statements must contain and how it must be set out; and
(iii) the number, range, and kinds of items on sale (or expected to be on sale) on the premises; and
(b) may have regard to any other matters it thinks relevant; and
(c) may determine that the premises do not have the characteristics normally associated with a shop of the kind commonly thought of as a grocery shop by virtue of characteristics that the premises and the items on sale there lack or will lack, characteristics that the premises and the items on sale there have or will have, or a combination of both.
The section specifically excludes ready-to-eat prepared foods, snack foods, confectionery, alcohol and other small beverages from the definition of "food product".
For months, neither store was able to sell alcohol, leaving the market uncontested for Shalimar down the road. Eventually in December, the committee approved the Mini Mart's licence, but declined Patels Superette's licence, saying it was “akin to a dairy” rather than a grocery store. Manjula Patel appealed to ARLA, the Alcohol and Regulatory Licensing Authority, and the following year ARLA overturned the Wellington committee's decision.
"Given the volumes sold in this case, there is a strong inference that the poppy seed sales are not for the maintenance of life or growth, or nourishment," the committee ruled. "It is difficult to escape the impression ... the poppy seeds sold by the applicant in this case are being used for their psychoactive properties." – Wellington district licensing committee
For four years, all three convenience stores had grocery store alcohol licences.
That wasn't enough for Patels Superette and, in 2017, it applied for a licence to convert its greengrocer store (next door at 102 Aro St) to a bottle store. The community was not impressed. The police went door to door with flyers advising residents how to oppose the licence application. Patels had some local support – in an editorial, the Dominion Post newspaper criticised police for overstepping the line.
But eventually, Patels failed to win its bottle store bid – and over the subsequent few years has faced further trouble as repeated police and licensing inspectors have exposed compliance breaches. On about 10 occasions the duty manager was next door in the greengrocers rather than present in the superette to oversee alcohol sales.
On one of those occasions, according to evidence to the licensing committee, police spotted Manjula Patel hastily changing the sign identifying the duty manager, in what police condemned as a "deception".
"Having considered the applicant's past interactions with the regulatory agencies including their wilful non-compliance, their unresponsive attitude to advice and instructions provided by the reporting agencies, and evidence of direct alcohol harm occurring from these premises, I believe the object of the Act cannot be met by granting a renewal of this licence," said Police Senior Sergeant Shane Benge.
The repeated breaches culminated in Patels' alcohol licence being suspended for three days.
Turning away drunks
Across the road, the Mini Mart was having its own trouble with the local drunks. When they were refused service, they spat in the doorway and graffitied the window.
Director Raj Solanki said it was "a bloody headache".
"Most of the time, they will come in and they're drugged, and they don't know what they're doing. And we have to say, sorry, get out from here. You know if you do it, a man will break the window overnight," he said.
"Aro School is still there by the park. And the community hall is there. And there's not much they can do. There are a few rough people here, mucking around and drinking in the park, anywhere they can. I mean, cops are doing the best, but you know what they like, you know?
"My partner Jay Patel has been doing business here in the same place for the last 22 years and he reckon it never used to be like this in the area, never never ever. But in the last seven or eight years, it's got really worse."
3.8 tonnes of poppy seeds
And meanwhile, Shalimar Four Square was facing a battle of its own. The licensing committee baulked at renewing its alcohol committee, concerned that grocery food did not make up the biggest share of its range and revenue.
So Nihil and Nalini Patel asked their accountant to take another look at their revenue figures – then came back to the licensing committee with new accounts in which food was the biggest earner. They had done this by shifting $66,255 of revenues from an extraordinary 3.8 tonnes of poppy seed sales into the food column.
The licensing committee was dubious. In refusing to renew Shalimar's alcohol licence, it pointed to newspaper and medical papers outlining how poppy seeds could be used to produce a tea that contained an opioid content sufficient to produce psychoactive effects.
"Given the volumes sold in this case, there is a strong inference that the poppy seed sales are not for the maintenance of life or growth, or nourishment," the committee ruled. "It is difficult to escape the impression ... the poppy seeds sold by the applicant in this case are being used for their psychoactive properties."
"I don't know why you're bringing up the poppy seeds again, we don't know what people wanted them for." – Nalini Patel, Shalimar Four Square
Shalimar appealed to ARLA but was unsuccessful; two years on, it's still without an alcohol licence.
Nalini Patel told Newsroom they hadn't decided whether to apply for a new one if the rules were loosened. "I don't know why you're bringing up the poppy seeds again, we don't know what people wanted them for."
This all culminates in a new and previously undisclosed battle: Patels Superette is again fighting tooth and nail to renew its grocery store alcohol licence and, indeed, to extend it to cover the greengrocers next door.
‘Wine, beer – Patels LOWEST PRICES in Aro Valley’
According to Vinod Hera, there has been no public objection to Patels renewing its licence. Even its opponent Aro Valley Mini Mart hasn't lodged an objection. "We have history," said Mini Mart director Raj Solanki. "Seven years ago, we would fight in the court and the hearing and all drama, because the very tricky owner didn't like us.
"They're not really a grocery store, they went back to bloody court and they got the licence. So since then, we don't bother with them. If we try to do anything, especially in liquor matters, it's too much trouble."
The application may not yet have attracted the attention of the community – but it's certainly provoked concern from the three agencies that advise the district licensing committee. It's complicated by Patels restructuring its business so all its income from its adjacent premises – alcohol, groceries, Charleez Chicken, Indian takeaways, and fruit and veges – are counted as revenue to the one business, the superette.
The Charleez Chicken and Indian takeaways revenues threaten to overwhelm the food groceries section, meaning the business would no longer meet the definition of a grocery store. After lengthy delays since Patels' alcohol licence was meant to expire in February 2021, the district licensing committee heard the application for renewal late last month. It asked Patels for updated accounts, to assess how its sales figures have changed in the subsequent 15 months.
Hera said the law allowed the licensing committee to refuse a store a licence because of the risk of alcohol sales proliferation, yet consumers still had easy access through online shopping offered by all supermarket – which also guaranteed supermarkets a competitive advantage.
"Consumers will still purchase the alcohol from anywhere regardless," he told Newsroom.
He argued the definition of grocery store should be loosened, as people's shopping behaviour and the availability of ready-to-eat meals had totally changed over the past two or three decades. The definition did not reflect modern lifestyles.
"Even supermarkets have more ready to eat or prepared food then raw groceries, but because they are tagged as supermarkets due to their size, they automatically qualify for off-licences, which is not fair.
"The district licensing committee or reporting agencies should look and weigh up all the criteria defined in the Act, rather than only revenue off food products. They should look at the range of product availability at the suburban grocery store which people use on according to their budget."
"People go in and get drunk or whatever they do in town and then just come to Aro. That doesn't mean that Aro is selling them the alcohol." – Vinod Hera, Patels Superette
He was still angry at their former landlord for forcing them out, and giving the bigger premises to Aro Valley Mini Mart. "One of our staff was talking with the landlord behind the scene, and they kicked us out and he took it.
"When Mini Mart stole our place and forced Patels Superette to move onto other premises, that forced both to apply for a new licence and tagged proliferation to Aro Valley.
"Mini Mart had an advantage for being on a larger space, but Patels Superette achieved the licence thru the Alcohol and Regulatory Licensing Authority by proving it was a grocery store and levelling the playing field."
He did not believe there was a proliferation of alcohol licences in Aro Valley. He said the valley was essentially part of central Wellington, and so it was wrong to treat is as a separate community. "There is a bunch of window washer and others, and they were causing of little bother, sitting and drinking, but nothing major. Things happen.
"The debate about alcohol sales in dairies and convenience stores is simply a red herring and irrelevant to the duopoly issue, but has serious implications for the cost to New Zealand of alcohol-related harm in the health and criminal justice sectors." – Alastair Sherriff, licensing lawyer
"We know them very well. It's only like four or five of them anyway. We won't sell to them. Aro is pretty close to the town. People go in and get drunk or whatever they do in town and then just come to Aro. That doesn't mean that Aro is selling them the alcohol."
He acknowledged there were six licenses premises nearby, but said they all served different markets. There is one other off-licence on the street, the Garage Project's craft beer bottle store. And there are three on-licences: The Garage Project Tavern, and restaurants Rita and Aro Cafe.
And according to evidence from Regional Public Health regulatory officer Daniel McDonald, there are 10 off-licence alcohol stores within a kilometre of Patels Superette, in the densely populated Te Aro neighbourhood. They serve a community that includes five big blocks of social housing, and six student hostels.
How many is too many?
Buddle Findlay lawyer Alastair Sherriff has worked for 45 years in alcohol licensing, and has formed strongly held personal views on minimising harm. He previously cited the Patels Superette precedent in an address to a conference of district licensing inspectors, as an example of the "heightened threshold for the applicant's suitability" in a community that is recognised to be vulnerable.
"The orthodox oft-quoted key statistic about alcohol sales in New Zealand is that 80 percent is sold by off-licence holders," he says now. "The worst thing any law change could do would be to make off-licences easier to obtain as that would immediately increase proliferation of outlets and increased availability of alcohol. All you have to do is ascertain how many dairies and convenience stores there are in New Zealand to see that."
He is dubious that enabling dairies and convenience stores to compete against supermarkets should take precedence over minimising alcohol harm. "Commerce Act considerations emphasise competition and choice and probably price as drivers of efficiency in the marketplace.
"The concern over the supermarket duopoly is clearly food-fruit-vegetables and basic household groceries based. The supermarkets do not have a duopoly in alcohol sales. If anything, the Ministers of Health and Justice should be concerned about increasing the price of alcohol in accordance with the Law Commission’s recommendation in 2010.
"There are real issues with people when they start making their money pushing large volumes of cheap alcohol out into vulnerable populations. The sharp end of that has been drinking behaviour in the park this year.” – Roland Sapsford, Aro Valley Community Council
"The debate about alcohol sales in dairies and convenience stores is simply a red herring and irrelevant to the duopoly issue, but has serious implications for the cost to New Zealand of alcohol-related harm in the health and criminal justice sectors. The last thing New Zealand needs right now in a post-Covid economic recovery period, where there are huge health professional shortages and increased crime, is to increase the availability and proliferation of off-licence outlets to dairies, convenience stores or any other form of business.
"Aro Valley does not need to have more off-licences in its community in my opinion nor in the opinion of folk I represented some years ago resisting a new off-licence there then."
Matthew Lane, the general manager of the 57-outlet Night 'n Day convenience store chain, argues the Government review need only tweak the rules to make a retailer's range of food products carry greater weight than its food revenues.
But Sherriff reiterates that under the existing law, revenue is only one criterion. "Other important criteria include the size of the premises, the layout of the premises, the appearance of the premises, and the number, range and kinds of items on sale."
Under the previous 1962 Act, liquor licences were quantitatively controlled. "To get a new licence equivalent to an off-licence, the applicant had to prove an additional licence was necessary and desirable. Those criteria were an effective barrier to proliferation of off-licences. Perhaps it is time to reintroduce those criteria for off-licenses in the 2012 Act."
A solution to proliferation
For many years, Aro Valley has been a forum for robust political and social debate. Its election debate, every three years, is famously raucous. And when police broke up the anti-mandate protests at Parliament this year, some moved to Aro Park where local community leaders say they caused drunken disturbance.
Roland Sapsford, the chair of the community council, said nobody in the community wanted to outright opposs the availability of alcohol, "but there are real issues with people when they start making their money pushing large volumes of cheap alcohol out into vulnerable populations. The sharp end of that has been drinking behaviour in the park this year.”
All three convenience stores would deny selling alcohol to the window-washers, homeless people and other drunks that are so visible in the Valley. But the debate over their alcohol licences goes to the heart of the government's upcoming review of the Sale and Supply of Alcohol Act 2012.
"We will review the Government's proposal when it is made available." – Ally Orr, Woolworths
The Commerce Commission expressed legitimate concern that supermarkets had gained an unfair market advantage since the 2012 law change imposed stringent new rules on dairies and convenience stores selling beer and wine. Night 'n Day says 85 percent percent of its stores had alcohol licences previously; now just three of its 57 stores have licences.
It's true that the two big supermarket chains have not only been able to attract shoppers with their dominance of beer and wine retail, but also price food products out of the reach of convenience stores, so they don't even meet the criteria to apply for licences. It's a vicious cycle.
Foodstuffs, which has Shalimar Four Square as a co-op member, declined to comment in the review of alcohol sales. And Woolworths' responses were terse: The company's position was not to oppose alcohol licences for dairies and convenience stores, said spokesperson Ally Orr. "We will review the Government's proposal when it is made available."
The Government and the community will weigh up whether the inflated grocery bills of the supermarket duopoly are a price worth paying, if the alternative is a renewed proliferation of off-licence alcohol outlets.
There is one other solution that neither the Commerce Commission nor the Government has suggested.
If the supermarkets' dominance of beer and wine sales is hurting small independent retailers, then the answer may not be to loosen the rules for convenience stores – but rather, to tighten up controls on supermarket alcohol sales.
