The Herald, Sharon, Pa.

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February 2, 2013

Will privatization plan serve all?

More than price at play in Pa.

MERCER COUNTY — Gov. Tom Corbett’s bid to dramatically remake the way liquor and beer is sold in Pennsylvania raises questions about whether the change would improve the shopping experience for consumers.

For most people that means:

• Will there be more or fewer places to get liquor and beer?

• Will those locations be open at more convenient times and will they offer better prices?

The answers to those questions will vary depending on where the consumer lives as privatization is expected to play out differently in rural parts of the state than it will in metropolitan areas.

The five most populous counties generated 48 percent of the sales in state-run liquor stores, according to Liquor Control Board data.

The smallest 40 counties combined to generate 10.5 percent.

Speaking after Corbett’s announcement, Sen. John Wozniak, D-35, of Cambria County, voiced doubt that small beer distributors or other local residents will be in a position to win the bidding wars to gain the new liquor licenses.

Corbett’s plan offers one layer of protection: Each county is guaranteed at least one of the 1,200 liquor licenses that will be awarded to replace the 600 state stores.  In addition to liquor stores, Pennsylvania has about 1,200 beer distributorships.

Lawmakers said the governor’s office has given them a more detailed description of his privatization plan, and those contacted Friday said they were still slogging through the document.

Rep. Lynda Schlegel-Culver, R-108 of Northumberland County said “the devil is in the details,” and she is interested to see how the governor proposes to replace the roughly $100 million in profit from the Liquor Control Board.

Rep. Jaret Gibbons, D-10, of Lawrence County, said he is most concerned to see how the proposal will impact the family-owned businesses that have invested heavily in beer distributorships over decades. Corbett’s plan is particularly complicated because it so dramatically impacts beer distributors, in addition to closing the state stores, Gibbons said.

Pennsylvania is one of just two states with complete state control of liquor and beer sales. The other is Utah.  

Washington just went through a privatization process similar to the one proposed in Pennsylvania. But the change was not as dramatic, because beer and wine were already available in grocery and convenience stores.

The privatization process in Washington might be sobering.

“Prices have soared and sales are down, even though liquor can be found in four times as many places now,” said Brendan Williams, a former state lawmaker in Washington who had led the unsuccessful opposition to privatization there.

One of the problems in Washington is that the state added fees in a bid to generate the kind of revenue politicians had projected.

“The irony is that Washingtonians are fleeing across the borders to buy from state-run stores in Idaho and Oregon,” Williams said.

Ed Coleman, vice president at Total Wine and More, the nation’s largest private wine and spirits retail chain, said that even in Washington, the “rural areas continue to be properly served.”

Coleman also pointed to the difference in price at Total Wine and More shops in Delaware and New Jersey, compared to state stores prices in Pennsylvania as evidence that consumers can expect to see a decrease.

A bottle of Jack Daniels, for instance, costs $3 more in Pennsylvania than it does in Delaware and $1.90 more than it does in New Jersey. Captain Morgan’s spiced rum costs $7 more in Pennsylvania than in Delaware and $4.90 more than in New Jersey.

A check of advertised specials shows that a case of Coors Light at a Harrisburg beer distributor is $18.99, more than the same case of beer at grocery stores near Cleveland, $17.99, or at a store near Seattle, $18.67.

“There will be access to beer and wine from the grocers, convenience stores and other retailers,” Coleman said.  “Privatization will bring greater convenience, enhanced selection and lower prices.”

 

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