The Herald, Sharon, Pa.

March 20, 2013

Beer retailers eye latest legislative fizz

By Michael Roknick
Herald Business Editor

MERCER COUNTY — Reaction among local beer distributors on changes in liquor sales and licensing under discussion  by Pennsylvania lawmakers ranged from a stout, “It ain’t gonna happen’’ to a pale “Something is going to happen.’’

A bill to overhaul the state’s liquor laws emerged from a House committee on Monday. But as of 4:45 p.m. Tuesday, 36 new amendments had been tacked onto the measure with more expected before debate begins today.

The main part of the plan is for the state to exit the liquor store business and sell licensing rights to private enterprises.

Initially, Gov. Tom Corbett’s plan would have required beer distributors to pay $150,000 to get enhanced licenses to become one-stop shops for beer, wine and liquor.

After an outcry on that pricetag, the newest measure slashed the cost of the licenses between $37,500 to $97,500, depending on the location. Further, the new privatization plan would give beer distributors a full year jump start before other businesses would be allowed to get wine and liquor retail licenses.

Reaction from local beer distributors was mixed, but it did stir up emotions.

“It could be quite a shakeup for the industry,’’ said Jim Logan, owner of Greenville Beverage Co., a Hempfield Township beer distributor.

The biggest feedback he gets from customers is that they want to be able to buy beer by the six-pack from him, which distributors are forbidden to do under current law.

“I would love to be able to sell them those six-packs,’’ Logan said.

As for him being able to sell liquor and wine, there was no way Logan said he could have afforded the initial $150,000 fee for that license. Getting the fee whacked would help.

“I like the idea of being able to sell booze and wine, but I don’t know if I have that kind of cabbage (money),’’ he said.

Michael Magnotto, owner of M&M Beverage in Hermitage, said it’s been difficult to keep track of what may ultimately be in the final measure.

“There’s been so many different drafts, so many different proposals, I don’t think anyone knows what’s going on,’’ Magnotto said. “It’s hard to be for or against something if you don’t know what the plan is. I think you may see a little reform in distributorships in being able to sell six-packs and 12-packs, but I don’t think at this time it’s a good idea to get rid of the liquor stores.’’

If the beer distributorship is overhauled, Magnotto said he would like to see mandated minimum prices on beer products like Ohio has. Otherwise, giant retailers like Walmart could come in and sell beer below cost and drive out smaller distributors.

“The only ones who would survive under that plan would be the master distributors,’’ Magnotto said.

As owner of Erme’s Distributing Co. in Hermitage, Mike Erme is a master distributor and he said allowing more retailers to sell beer isn’t going to increase consumption. A master distributor sells certain brands of beer to smaller distributors, bars and restaurants.  

“I like it the way it is,’’ Erme said of the law. “The way you increase sales is to get more people back to work here.’’

Two area legislators’ opinions fell along party lines. Republicans, who control both the House and Senate, support the measure; Democrats oppose it.

Dick Stevenson, a Republican from Grove City representing the 8th District, is a solid supporter of the measure.

“This moves us in a direction of privatization and is as fair as can be with all the parties concerned,’’ Stevenson said.

Polls have consistently shown that privatizing the state’s liquor system generates a 60 percent approval, he noted. Utah is the only other state which has control of spirits and wine sales, he added.  

“People are looking for convenience and selection,’’ Stevenson said. “They see those benefits in the 48 other states.’’

Also, he said, there is a conflict of interest in the current system with the state Liquor Control Board having the responsibility to enforce and police alcohol sales and to market those products.

Democrat Mark Longietti of Hermitage, who represents the 7th District, said he has serious reservations with the plan. As the nation’s single largest buyer of liquor and wine, Pennsylvania gets a discount that can be passed along to consumers, he said. Smaller towns that dominate the greater region would see higher prices and less selection and availability than state stores offer.

“Even the governor’s own consultants agreed prices in northwestern Pennsylvania would go up,’’ Longietti said.

Also, it would be false to think this proposal would be a simple matter for grocery and convenience stores to begin offering beer.

“The reality is you would have to find an existing restaurant that has a liquor license and buy the license from that restaurant,’’ he said.

As for which way the political brew is sloshing on the measure passing, Stevenson says now this is the best chance ever for approval. Longietti isn’t sure the votes are there for passage.

Logan’s thoughts are based on a long track record: “I think it’s going to get stalled in the House again like it has for the past 80 years.’’