Under the Sale and Supply of Alcohol Act 2012 (and former Sale of Liquor Act 1989), grocery stores are legally able to obtain an off-licence for the sale and supply of alcohol.
However, many applications for an alcohol licence by small community shops are opposed by the reporting agencies (being the Police, Medical Officer of Health and Licensing Inspector) on the basis that they do not qualify as grocery stores.
A recent decision of the Alcohol Regulatory and Licensing Authority has helpfully clarified the law around what factors must be in place for a premises to constitute a grocery store. In Patels Superette 2000 Limited, ARLA found that a premises previously declined an off-licence by the Wellington District Licensing Committee (on the basis that it was “akin to a dairy”) was in fact a grocery store.
In December 2015, the Wellington District Licensing Committee declined an application by Patels Superette 2000 Limited for an off-licence in respect of premises in Aro Street, Wellington. The application had been opposed by the Medical Officer of Health in part based on s.105 of the Act (which contains the criteria for granting licences), and in part on the basis that the premises was not a grocery store. The Committee determined that the premises did not qualify as a grocery store, and it therefore did not go on to consider the criteria at s.105.
Patels Superette’s arguments
Patels Superette appealed this decision to ARLA, arguing that the Committee failed to have proper regard to relevant factors such as the size, layout and appearance of the premises, and the number, range and kinds of items available for sale. Patels Superette further argued that the Committee gave undue weight to the Medical Officer of Health’s evidence (regarding the size of the premises), and failed to accord proper weight to the Licensing Inspector’s contrary opinion of the premises.
The relevant law
The legal test for determining whether a premises is a grocery store has been modified through case law over recent years, with the previous legal test (being, in simple terms, whether a customer could purchase his or her weekly groceries at the premises) now firmly outdated. Instead, the definition is now contained in s.33(1) of the Act, which defines a grocery store as a shop that:
(a) has the characteristics normally associated with shops of the kind commonly thought of as grocery shops; and
(b) comprises premises where -
(i) a range of food products and other household items are sold; but
(ii) the principal business carried on is or will be the sale of food products.
Section 33(2) of the Act then provides matters that must be considered by the licensing committee or authority when determining the whether a given premises is a grocery store:
a. the size, layout, and appearance of the premises;
b. a statement of the annual sales revenues (or projected annual sales revenues) of the premises;
c. the number, range, and kinds of items on sale (or expected to be on sale) on the premises.
The Committee may also have regard to any other matters it thinks relevant; and may determine that the premises “do not have the characteristics normally associated with a shop of the kind commonly thought of as a grocery store” (ss33(2)(b) and (c)).
Regulation 13 of the Sale and Supply of Alcohol Regulations 2013 provides for the specific categories that the sales revenue must be allocated to, one of which is “the sale of food products”, which must comprise the “principal business” of the premises under s.33.
The Committee at first instance had expressed reservations regarding Patels Superette’s statement of annual sales revenue, as it had been projected based on only 28 days of trading. Before ARLA, Patels Superette produced supplementary evidence of the premises’ sales revenue over an almost eight-month period. This evidence demonstrated that 50.01% of Patels Superette’s gross sales revenue was from the sale of food products. The Authority did not question this evidence, and found that it pointed in favour of the premises being a grocery store.
ARLA also considered the number, range and kinds of items available for purchase. The Committee had expressed concern in its decision that there was little “fresh or freshly prepared food of any description, including bakery, butchery, or fresh fruit/vegetables” for sale. It went on to note that a customer would have difficulty completing a week’s worth of grocery shopping at the premises. However ARLA found that the ‘weekly grocery shop’ test no longer applies, stating that the “negligible” quantity of fresh fruit and vegetables did not detract from the range of products available for sale.
Finally, ARLA commented on the size, layout and appearance of the premises. The Licensing Inspector had advised the Committee that there were no issues of concern regarding the proposed layout of the premises, which “would likely be” a grocery store. In contrast, the Medical Officer of Health had reported that at 73m2, the premises are too small to be considered a grocery store , and “is more akin to a dairy, rather than a Superette.” However ARLA noted that the premises was in fact 100m2 when the storage area was factored in. It further found that the Committee had failed to accord appropriate weight to the Licensing Inspector’s view of the premises.
Having applied the relevant statutory tests, ARLA concluded that the premises did constitute a grocery store, and referred the matter back to the Committee to determine whether the application satisfied the matters set out in s.105 (such as the suitability of the applicant to hold an alcohol licence, and the effect the premises would have on the amenity and good order of the locality).
This case demonstrates that even small community shops can legitimately qualify as grocery stores provided that they stock a wide range of grocery items and primarily sell food products.
It is therefore important that reporting agencies look beyond their first impressions of a premises and consider the relevant statutory criteria (including the range of items available for sale along and the relevant sales figures), before concluding that a premises is “akin to a dairy”.
We have recently successfully represented several grocery store owners before the District Licensing Committee and ARLA. Please contact Jason Welsh if you require assistance in obtaining an off-licence for your business.
  NZARLA 254.