Does true reform start in Pennsylvania’s liquor cabinets and beer caves?

Posted by By at 2 February, at 11 : 54 AM Print

(By Tom Dochat)  There’s been plenty of talk already this year about privatizing the state liquor store system, with many proponents licking their chops because the new governor supports the measure.

But what about the desires of Joe Sixpack, who wants more options to buy beer? That talk is a little more subdued. Gov. Tom Corbett has made his position on the state store system abundantly clear: sell it off and get the state out of the retail and wholesale liquor business.

House Majority Leader Mike Turzai, R-Allegheny County, will submit a bill this session to do just that by auctioning retail and wholesale licenses.

Less well publicized is the plan by Sen. John Rafferty, R-Montgomery County, to liberalize beer sales by allowing grocery stores and convenience stores to sell six-packs for takeout. Gov. Corbett’s position on this bill? We’re still waiting for his spokesman, Kevin Harley, to get back in touch with us on that one. Repeated calls from RocktheCapital were not returned.

Sean Moll, legislative assistant for Rafferty, said the senator has not been approached by anyone in the Administration regarding the beer legislation. “No feedback yet,” he said. But Steve Miskin, House Republican spokesman, did note that beer sales are already in private hands in Pennsylvania, unlike wine and liquor stores. “People have invested their savings” into these businesses, Miskin said. “They built their business plan” on the model in Pennsylvania.

Amy Christie, executive director of the Pennsylvania Tavern Association, said she’s talked to a number of legislators over the past decade, and her impression is that “they don’t want to mix liquor and beer.” She said they feel they are “two different animals.” Everyone knows about the state store system. And they will be given plenty of opportunities to express their likes and dislikes as Turzai’s bill goes through the legislative process.

Beer sales in Pennsylvania can generate the same amount of likes and dislikes. When customers need a six-pack for takeout, they generally go to eateries and bars that serve food and alcohol. Grocery stores are getting involved more and more, but they have to go through hoops by having sit-down restaurants and separate doors and cash registers to handle takeout transactions. Convenience stores, if they sell gas, must have the gas pumps deeded to a separate property, and they also need spaces for sit-down eating and on-premise alcohol consumption.

Beer distributors, meanwhile, can’t sell six-packs. They are limited to cases and larger size quantities, and they can’t sell wine or harder liquor. To Stan Sheetz, president and CEO of the Sheetz Inc. convenience store chain, it doesn’t make much sense. “Why does it have to be this complicated?” he asked. He won a protracted legal battle recently just to sell takeout beer at one of his Altoona stores, but he must maintain an eatery with on-premise sales, plus a separate deed for the fueling station property.“ The entire process of buying alcohol in Pennsylvania is ridiculous,” he said. If a family is planning a party, they have to go to a beer distributor to purchase a case, another type of retailer to buy six-packs, and the state stores for their harder liquor, he said. And they can go to some supermarkets these days to purchase wine, if, Sheetz noted, the vending machines are working.“It’s ludicrous,” Sheetz said. “Everyone in Pennsylvania wastes their time because of outdated legislation.”Sheetz has a basic solution. “I think the state has no business retailing anything,” he said. “The purpose of government is to govern. Not to sell stuff.”That’s the basic philosophy behind those who want the state to exit the state store system.

Neither Turzai nor Rafferty has formally introduced their bills. Turzai’s bill will be House Bill 11, while Rafferty is currently seeking co-sponsors for his proposal. Both introduced similar legislation during the last session. Since the bills haven’t been introduced, many vested interests are taking a wait-and-see approach before commenting.

Dave Shipula, president of the Malt Beverage Distributors Association of Pennsylvania, said his organization has hired a Philadelphia firm to evaluate what impact a sale of the state stores will have on his industry. He said the study should be completed in the next month or two. “We haven’t seen anything in writing,” said Jay Wiederhold, president of the Pennsylvania Beer Alliance, which represents beer wholesalers. “The devil is always in the details.”But he noted his group does have a position on deregulation. “We are opposed to deregulation of alcohol in Pennsylvania, period.”The organization also took a position on the Rafferty bill in the last legislative session. “I know we were dead set against it last time,” said Fran O’Brien, who does legal work for the Beer Alliance.

It’s fair to say that this a divisive issue, and not along party lines. With the state stores, there are interests opposed to privatization aligned with state store unionized employees and social conservatives who fear any change will increase the proliferation of alcohol sales in the state . Those supporting privatization note this will increase convenience and pricing for consumers, and generate additional revenue for the state.

Turzai has previously estimated that the auctioning of licenses (750 retail and 100 wholesale in his proposal in the last legislative session) will generate upwards of $2 billion for the revenue-challenged commonwealth. A firm is going to be hired to pinpoint how much the state could gain from license sales to private businesses.

Views on beer sales also run the gamut. First, there’s the question of whether those supporting state store privatization are interested in the beer issue. Turzai’s Web site empathizes that his privatization efforts would not affect beer sales in Pennsylvania.(Moll said Rafferty’s proposal would generate no net increase in licenses. Supermarkets and convenience stores could purchase distributor, restaurant, or eatery licenses and convert them to a food merchant license.)There are other issues with beer sales. “We would like to sell smaller than a case,” said Shipula of the distributors association. Shipula, who owns Beer Super in Wilkes-Barre, said the grocery chains selling takeout are allowed multiple licenses (usually restaurant licenses), while the distributors are limited to one. “Obviously, it puts a small family business at a disadvantage,” he said.

But Christie, of the tavern association, takes a different view. ”Distributors bought their licenses knowing they can sell cases and above,” she said. Allowing distributors to sell six packs will “be the piece of the license that (her members) paid for,” she said. At the same time, Christie said she doesn’t have an issue with grocery stores entering the take-out game, so long as they follow the same rules as her members.

The Beer Alliance takes a contrasting view on the supermarket issue. “We believe government has to be very careful about any deregulation of alcohol,” said O’Brien. “This is not like selling Wheaties in the supermarket.”But the Alliance’s Wiederhold said he has no problem with distributors selling six packs. “It gives the public some of what they’re looking for at a supermarket,” he said.

Sheetz, meanwhile, just wants to sell beer in his stores, like he can at his retail outlets in five other states. He admits supporters must make their views known. Sheetz believes that changes in beer retailing in Pennsylvania “can be a revenue generator as well.”

Matt Brouillette, president and CEO of the Commonwealth Foundation, is a strong supporter of state store privatization, and his libertarian oriented organization has issued a number of policy statements endorsing the concept. He added that he’d “like to see some reform (in beer sales) too. We favor a more competitive marketplace.”

What the future holds for Pennsylvania’s beer, wine and liquor policies is anybody’s guess. Shipula, for one, is hopeful that “somewhere in there will be a compromise that will help everyone.”

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Tom Dochat was a newspaper reporter for more than 32 years, with most of that time at the Harrisburg Patriot-News. He received or shared journalistic awards for his work on the hostile takeover attempt of AMP Inc. in 1998, the manufacturing restructuring plan at The Hershey Co. in 2007, and the botched retrofit project at the Harrisburg incinerator. - Email tdochat

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