State's beer distributors warn of negative consequences of HB 790

Pennsylvania's beer distributors today warned members of the PA Senate's Law and Justice Committee that current efforts to expand beer sales in House Bill 790, the so-called Liquor Privatization bill, will result in the closure of hundreds of businesses and the loss of thousands of good paying jobs. Consumers will also suffer less selection and higher prices, according to the Malt Beverage Distributors Association (MBDA).

Testifying today before the Pennsylvania Senate's Law and Justice Committee, MBDA said the effort to reform the state's liquor system has instead become a takeover of the beer market by large corporate interests: "This initiative has now mutated into an attempt to have grocery and convenience stores conquer the off-premises (for take-out) beer market in PA, which will crush our livelihoods and that of our 12,000+ employees," said MBDA President Mark Tanczos.

Written testimony released by the Pennsylvania Food Merchants Association does not dispute this position that jobs will be lost nor does it contend that grocery and convenience stores will employ additional personnel to make up for the lost opportunities.

Tanczos also noted that "beer may be available in more locations under this bill, but there will actually be less selection, higher prices and, in the final analysis, less real 'convenience' for consumers. Most beer distributors offer thousands of brands, while grocery and convenience stores will only focus on the 20% of national brands that comprise 80% of all beer sales."

Tanczos added that "beer distributors are already a privatized industry comprised of specialty retailers. We feel strongly that specialty retailers provide the best balance between cost-effective enforcement and convenience. We sell beer well, and safely, because our livelihoods depend upon our being responsible - this is not the case for grocery, convenience and big box stores."

MBDA's testimony was augmented by an independent study provided by Consult Solutions, which noted that 'the proposed legislation contains many provisions that will harm beer distributors. They will suffer from increased competition from grocery stores, convenience stores and gas stations. The net effect will likely be that some independent distributors would go out of business, either because they would be purchased by well-capitalized chains, or would realize diminished sales from new competition.'

Consult's study also noted that 'the benefits of selling wine and spirits is going to be negligible because of the increased number of outlets selling alcohol, thereby decreasing the profit margins for everyone involved in retail sales. The market for beer isn't increasing, meaning the existing market will instead be divided up among nearly triple the current number or retail outlets offering beer sales.'

Also testifying on MBDA's behalf was alcohol policy expert Pam Erickson, President and CEO of Public Action Management, and the former director of the Oregon Liquor Control Commission. Erickson's two main points were that "selling beer is not the same as selling bread, and that selling alcohol in a limited number of specialty retailers provides the greatest protection for public health and safety."

Erickson added that the "drive for expansion is actually very limited, in that surveys indicate only around 30% of the public are regular drinkers - a percentage that is actually less than the number of non-drinkers in the state(33%). It is unlikely that most Pennsylvania citizens would benefit from any increased convenience because they drink rarely or not at all."

MBDA Release 

MBDA Testimony 

Public Action Management Testimony 

Econsult Summary

House Bill 790 and Liquor Privatization

As most citizens are aware, the Pennsylvania House of Representatives passed a liquor privatization bill in late March that incorporates sweeping reforms to Pennsylvania's system of controlling liquor sales.

Gov. Corbett's proposal to create a $1 billion "windfall" for state government by making substantial changes in the retail alcoholic beverage industry will likely close 1,200 small family-owned beer distributors. The plan also will raise prices for consumers and result in fewer choices at the multitude of new outlets. Is this what consumers want?

Our state's alcohol distribution system is a descendent of the post-Prohibition hopes of separating brewers who manufacture beer from retailers who sell it. After 1933, reformers did not want "big business" retailing beer - and today most malt and brewed beverages sold for off-premises consumption are made available at locally owned, family-operated beer distributors.

We operate these family businesses in a niche market that sells beer by the case, with 80 percent of the beer being served by 1,200 distributors. Those of us who are in this business got there by borrowing and investing. Corbett's plan collapses this "niche" market by adding 6,200 new sellers. Diluting the market would result in the closure of our businesses and put more than 10,000 employees out of work.

Why should the public care?

First, prices will undoubtedly increase. A key part of the governor's proposal is a new merchant fee, effectively a 70 percent increase in taxes on retail establishments selling alcohol. Is there anyone who doubts that alcohol sellers will pass these new fees onto their customers?

Currently, retailers pay an annual fee to state government of $700 or less. Under the governor's plan, that cost will dramatically increase, ranging from $5,000 for a tavern to $35,000 for a big-box or grocery store, with distributors paying $10,000 annually. The governor expects this fee to generate more than $200 million each year, which he calls a "windfall." His plan adds these fees to the current tax on beer and the Johnstown flood tax, which currently provide the commonwealth with $290 million of revenue.

As alcohol prices in Pennsylvania increase, so will border bleed. Consumers will travel out of state to take advantage of the lower prices of alcohol - and the lower taxes - in neighboring states.

And, finally, while the number of sellers here will increase, clearly the selection at each outlet will decline as retailers selling lower volumes strive to stock only fast-moving brands and thus reduce inventory. Customers will have less selection than is currently available through a beer distributor, and with us closed, cases will only be available at big-box stores.

Our small group of family-owned and operated beer distributors has been playing by the rules designed in 1933 to "keep beer sales local" and prevent big out-of-state corporations from controlling the beer business. Though we've always been "privatized," we are heavily regulated and limited in what we can offer. For example, this is our 76th year of asking the General Assembly to allow us to respect our customers' wishes and sell them packages that they desire, often smaller than a case.

We believe that this commonwealth can devise a "more convenient and rational system" of distributing alcoholic beverages, and stand ready to help the governor and the General Assembly devise one.

From Philly.com

Watch this episode of "On the Issues" on PCN.

Our analysis of the Governor’s proposal clearly shows that it will put alcohol sales in thousands of new outlets while increasing prices in many locations, reducing selection at those locations, and creating more "border bleed" by encouraging more buyers to shop in neighboring states.  It will make alcohol more accessible to minors.  In addition, many studies show that a substantial increase in alcohol outlets will put a greater strain on local law enforcement resources.

The plan is designed for big business, showing favoritism to the large companies like Wal-Mart, Costco and Rite-Aid.  Distributors have played by the rules created by the General Assembly since 1933 and not allowed to grow their businesses.  This plan removes restrictions on us, but does so in a way that our 1,200 family-owned businesses would be completely destroyed by these large out-of-state corporations.  This is like asking a horse that has been stabled and unable to train to successfully run the Kentucky Derby against the best thoroughbreds in the world.

While the plan appears to enhance our business privileges, it does so at a cost that is five times higher than the similar privileges being offered to the national big box stores.  This is not fair.

The Malt Beverage Distributors Association of Pennsylvania (MBDA) will continue to work with our state elected officials to ensure that Pennsylvania’s consumers are offered greater convenience and that beer distributors are given a fair chance to compete.

Download this press release

BY ROBERT SWIFT (HARRISBURG BUREAU CHIEF)

Published: October 25, 2012

HARRISBURG - A bill that raises maximum fines for alcohol offenses and awaits the governor's anticipated signature could generate an estimated $6 million in new annual revenue spread across Pennsylvania municipalities.

The legislation winning final approval last week would increase the maximum fines to $1,000 for underage drinking and public drunkenness.

Currently, maximum fines are $300 for public drunkenness and first-time underage drinking citations. Repeat underage offenders are subject to $500 fines.

Sen. Jake Corman, R-34, Bellefonte, sponsored the legislation to create a greater deterrent to alcohol misuse and to help municipalities meet the costs of responding to alcohol-related offenses.

Mr. Corman represents the State College area, and the legislation is sought by municipalities hosting colleges and universities. Officials in these towns report drinking violations are on the rise. The Pennsylvania Municipal League supports the bill.

"If higher fines are chosen, the municipality and taxpayers will see relief in the cost they bear, this time paid by the actual violator, rather than through increased property taxes," said Mr. Corman.

The $6 million revenue estimate comes from fiscal notes on the legislation prepared by the Senate and House Appropriations Committees.

As a starting point, the notes cite 2011 statewide statistics from the Administrative Office of Pennsylvania Courts showing 27,309 convictions for public drunkenness, of which 4,584 resulted in a maximum fine, and 13,959 convictions for underage drinking violations, of which 4,117 resulted in a maximum fine.

The estimate assumes that a similar number of convictions will receive the higher maximum $1,000 fine set by the legislation.

The committees have no potential revenue breakdown by municipality.

A related Corman bill to levy an additional fee on alcohol offenses to support prevention programs didn't win final passage before voting on bills ended for this legislative session.

Contact the writer: rswift@timesshamrock.com

Elected to his second consecutive term as President was Mark Tanczos, owner of Tanczos Beverage in Bethelehem, PA. Under Tanczos leadership the Association was able to fight back liquor privatization efforts that would have put beer distributors out of business by allowing beer sales in every grocery, chain and big box store. Tanczos also led package reform efforts, which achieved partial success with expanded Sunday sales hours for distributors and increased the number of items distributors can sell.

Also reelected to another term were Tanczos’ five other Executive Committee members, including 1st Vice President Ed Klunk, of Thorndale Beverage in Thorndale; 2nd Vice President Tom Mehaffie, of Breski Beverage in Harrisburg; 3rd Vice President Frank Pistella, of Pistella Beverage in Pittsburgh; Secretary LeAnn Supek, of Wheatland Distributors in Lancaster; and Treasurer Paul Farthing, of Chal-Brit Beverage in Chalfont.

Tanczos pledged to continue the Association’s fight to allow for greater consumer convenience in beer sales: “We understand the public’s desire for greater convenience in beer sales, and are prepared to work closely with other industry partners across the state to obtain true package reform for Pennsylvania,” said Tanczos.

To: All Members of the PA House of Representatives

From: Mark Tanczos, President, Malt Beverage Distributors Association of PA

Date: May 21, 2012

Subject: Liquor Privatization Proposal—Possible Vote

As the House of Representatives considers a floor vote on a liquor privatization amendment, The Malt Beverage Distributors’ Association (MBDA) would like to share our position on the proposed amendment provided to us in April for review. For the many reasons noted below, MBDA must oppose this amendment.

MBDA is a trade association representing the retail beer distributors in the Commonwealth. We are comprised of local, family-owned, community businesses that are only permitted to sell kegs and cases of malt and brewed beverages for off-premises consumption and a few related products in a heavily regulated environment. We have demonstrated the skill and competence to responsibly and safely sell beer products to Pennsylvania consumers for almost 80 years.

As local Pennsylvania businesses, we have almost 10,000 full and part time employees and pay annual gross salaries of about $180 million per year. You will find our names on the programs and jerseys of youth sport teams and we donate our time and resources to many other charitable and civic causes. As local business leaders, we also serve as coaches, local government officials, and volunteers for numerous other activities that give back to our communities. In the case of most of our members, these businesses represent their sole livelihood.

The current privatization proposal would provide beer distributors with the first right to purchase a Wine and Spirits license (W/S license) at set option prices factored on historic county sales. The remainder of the 1,600 licenses would then be auctioned to other retailers on a county basis. For the initial ten year period following privatization, beer distributors purchasing a W/S license would have the right to sell liquor, wine, and beer from the same licensed premises. Other W/S licensees may purchase an additional license to sell beer during this initial period, but would not be permitted to sell all three products from the same “licensed premises.” However, they will be allowed to obtain an LCB- approved interior connection for the second license, so in reality, liquor, wine, and beer will be sold within the same building

At first glance, this proposal would seem to be beneficial for beer distributors, and we appreciate the thought and effort that went into attempting to craft a privatization plan with beer distributors in mind. However, when the long-term effects of this proposal are analyzed, it becomes quite clear that the plan will have a devastating impact on the future business existence of all beer distributors.

Therefore, we oppose the amendment for the following reasons.

While beer distributors get the first right to purchase a W/S license, the remainder of the licenses will be bought at auction by big box retailers such as supermarkets and other large national chains. Some of these companies, like Giant Foods, will be headquartered in foreign countries. These are massive corporations with enormous resources. They will quickly purchase a license to sell beer (if they don’t already own one), and configure their store complexes with an approved interior connection to sell all three products under the same roof. These alcohol products will be in addition to the thousands of other products they sell. There is just no way beer distributor W/S licensees will be able to compete against these goliaths on price, location, or consumer traffic.

The “option” price established for beer distributors to buy a W/S license is also problematic. This price – hundreds of thousands of dollars in most markets – is not driven by any economic evaluation of value, but rather by the state’s need for revenue. Very few distributors will be able to afford to purchase a W/S license. Therefore, most will find themselves with an untenable dilemma – highly leveraging their assets to purchase a W/S license at an inflated price to stay in business, or stand aside and watch their business dissolve as big retailers purchase all of the required licenses to dominate the market.

Ultimately, this amendment is really intended to drive beer distributors out of the market and force them to sell their D licenses to big retailers. We are an industry of small businesses, many of which have been passed through families for generations. We have made big financial and emotional investments in these businesses, even as the law has long handcuffed us by severely limiting what we can sell, when we can sell it, and limiting the number of licenses we can own to one. This proposal will force most distributors to sell their licenses within the first two years of privatization since the value of the D licenses will decline as the initial ten year period dissipates, and other W/S licensees get full market privileges. The big retailers will certainly recognize this fact, and will do their best to minimize the value of D licenses that do become available for sale.

Quite frankly, we don’t want to be forced to exit the businesses that we love. Instead, we would like the General Assembly to work with us to change alcoholic beverage laws in a manner that allows us to better serve our customers and compete in the beer market against the ominous rising tide of grocery and convenience stores now selling beer.

From a public safety standpoint, retailers with a singular interest in the product they sell provide the greatest service and control. This is particularly true with the sale of alcohol. For example, a violation for sales to minors is devastating to a beer distributor if the license is suspended. The same scenario with a larger retailer is merely an inconvenience as they go about selling the thousands of other products offered in their stores. We believe the movement of beer sales to businesses not solely depending on the product for their existence is a bad idea for our state.

Even if we were starting with a blank slate, we believe our system should still be based on a model where retailers would have the singular interest in the sale of alcoholic beverages. Sales that come from a retailer that relies on the profits of alcohol sales to pay the bills would prevent the use of alcohol sales as a loss leader. In addition, there is no way to significantly change the current system without putting a great deal of hardship and hurt on a lot of good, hardworking people. Real lives and families are going to be gravely impacted here. That, to me anyway, does not sound like a good public policy.

We want to thank you for your attention to this letter, and we would ask that you oppose the privatization amendment if it is brought before you for a vote. If you should have any questions, or if MBDA can provide any further information about our position, please do not hesitate to contact me.

Full Pint Brewery

First up was the Full Pint Brewery in North Versailles, where owner Sean McIntyre served up samples of the small brewer’s distinctive line of hand-brewed beers.  Founded in 2009, the not-so fledgling brewery now offers 12 different brands or varieties of beer, each of which are made in small batches to preserve flavors.  Full Pint’s hospitality was very warm and the touring distributors enjoyed the samples Sean served up in their new ‘tasting’ room.

Visit Full Pint Brewery at www.fullpintbrewing.com

Church Brew Works

MBDA members are obviously some of the most well-versed beer aficionados in the state, making for a tough crowd to impress when touring small breweries. Even the most jaded distributors were left slack-jawed and awed by the impressive and historic Church Brew Works in the city’s Lawrenceville neighborhood. Driver Dave circumvented the narrow, curving streets to deliver us at the front door of the former St. John’s the Baptist Catholic church, school and convent, which had to be desanctified by a Catholic Bishop before its conversion into a highly acclaimed brewpub.

Church Brew Works graciously provided lunch for the touring MBDA-ers with a delicious buffet repast. The distinctive restaurant is well known for its culinary offerings, with lunch and dinner served seven days a week. Saturday’s visit proved the popularity of the attraction as lines of diners waited outside in a steady downpour for seating.

Church Brew Works owners undertook a painstaking reproduction and rehabilitation of the long vacant site before opening to the public in 1996. The winner of numerous local, state and national architectural, redevelopment and brewing awards, most of Saturday’s tour attendees declared Church Brew Works the most amazing venue for a brewery they had ever seen. A must-see on your next visit to Pittsburgh – www.churchbrew.com

Penn Brewing Company

The final stop of the day was the historic Penn Brewing Company in the city’s Deutschtown (German) section. Housed at the site of the former E&O Brewery, the Penn Brewing Company first began operations at the site in 1986, and today has grown to become Pittsburgh’s largest hometown brewer.

Open for lunch and dinner Mondays through Saturdays, diners sit next to the glass-enclosed main brewing area amidst a beautifully restored 19th Century brewery. Recent excavations have uncovered an extensive cave network that was once used as a cold storage area for kegs by the former E&O Brewery.

Visit the Penn Brewing Company at www.pennbrew.com

MBDA-ers who participated in Saturday’s brewery tour are still raving about the hospitality of the hosting breweries, and encourage beer lovers throughout the state to take the time to visit these unique breweries the next time they’re in Pittsburgh.

Pittsburgh, PA – Hundreds of beer distributors from across the state will gather in Pittsburgh this weekend for the 76^th annual convention of the Malt Beverage Distributors Association of Pennsylvania (MBDA).  The convention runs from Saturday, April 21 to Monday, April 23, at the Station Square Sheraton.

MBDA President Mark Tanczos said the Association is excited about coming to Pittsburgh and looks forward to enjoying the city’s many attractions: “In addition to our convention activities, members will tour area craft breweries and enjoy the city’s new gaming facilities, as well as visit other local attractions.  Pittsburgh is a dynamic, world-class convention city and we are thrilled to be here,” Tanczos noted.

Pennsylvania’s beer distributors, beer manufacturing and distribution industries, as a whole, employ over 35,000 Pennsylvanians and have an economic impact of more than $2.9 billion on the state.

Tom Mehaffie purchased the business in 1993 and, in deference to Joe’s many years of service to the community, retained the Breski name for the business.  In 1996 Tom moved the business to new and larger headquarters at 1170 Eisenhower Blvd, and in 2004 undertook an expansion project that added nearly 2,000 sq. ft. of cooler space. Today Breski Beverage occupies nearly 7,500 sq. ft. of space and has 11 employees, and has been a member of MBDA since 2002.

Tom’s business philosophy is that customer service is always  his top priority, and great customer service is what has made Breski’s one of the top distributors in the extremely competitive midstate market.  

Tom is married to the beautiful Linda, and has three Boxers, Lilly, Layla and Lexi. 

Why MBDA?

“I firmly believe that MBDA and we member distributors can make a difference with our state legislators. Whether its package reform or halting the expansion of grocery store sales, our legislators are always willing to listen to us and in many cases willing to help.  They appreciate the many contributions we make to Pennsylvania’s economy and the jobs we provide. We just have to make our voice heard, and that’s what I’ve always tried to do.”

Tom Mehaffie
Breski Beverage

Distributors and Importing Distributors

Effective immediately, distributors and importing distributors holding a Sunday sales permit may sell malt or brewed beverages to non-licensees and holders of special occasion permits on Sundays between 9:00 a.m. and 9:00 p.m. Previously, such Sunday sales were limited to the hours between 12:00 p.m. and 5:00 p.m. [47 P.S. § 4-492.1(c)].

Effective immediately, distributors and importing distributors are no longer required to collect the name, address, or any other identifying information, from private individuals who purchase malt or brewed beverages. [47 P.S. § 4-441(i)]. Licensees may wish to continue to collect such identifying information for purposes of section 495 of the Liquor Code, including the establishment of a defense to a citation for selling alcohol to a minor. [47 P.S. § 4-495].

Further, effective February 20, 2012, distributors and importing distributors may, without Board approval, sell any book, magazine or other publication related to malt or brewed beverages, and may also sell “homebrewing” equipment, ingredients or other supplies. [47 P.S. § 4-492(12)].

Responsible Alcohol Management Program Training

Effective February 20, 2012, unless successfully completed prior to appointment, a manager appointed by a restaurant, eating place retail dispenser, hotel, club, limited distillery, or distributor licensee must complete the Board’s Responsible Alcohol Management Program’s (“RAMP”) manager/owner training within one hundred eighty (180) days of the Board’s approval of the appointment. [47 P.S. § 4-471.1(g)].

Issuance of Worthless Checks

Effective February 20, 2012, a licensee which receives a worthless check from another licensee for payment of malt or brewed beverages must notify the licensee which issued the check, and the Board’s Malt Beverage Compliance Officer (“MBCO”), of the dishonored check by certified mail within five (5) days of receipt of notice of such dishonor. The MBCO will provide the offending licensee written notice that the licensee has ten (10) days from the date the notice is mailed to honor the check it issued. Pursuant to section 445(b), unless the licensee honors the check within ten (10) days of the mailing date of the notice, the MBCO will turn the matter over to the Pennsylvania State Police, Bureau of Liquor Control Enforcement. [47 P.S. §§ 4-445(b), 4-493(26), 4-496].

Licensee Record Keeping

Effective February 20, 2012, a licensee is only required to maintain, on its licensed premises, business records for the most recent six (6) months, and may only remove those records from the licensed premises for “a lawful business purpose,” and must return those records after such business has been concluded. A licensee may maintain records off the licensed premises that are between six (6) months and two (2) years old, provided that such records are returned to the licensed premises within twenty-four (24) hours of a request by the Board or the Pennsylvania State Police, Bureau of Liquor Control Enforcement. [47 P.S. § 4-493(12)].

Licensee Vehicle Lettering

Effective immediately, the lettering on licensee vehicles which are used to transport liquor or malt or brewed beverages, identifying the licensee’s name, address and license number, may be no smaller than two (2) inches in height. Previously, such lettering was required to be no smaller than four (4) inches in height. [47 P.S. §§ 4-491(12), 4-492(9)].

Public Official Interests in Licenses

Effective February 20, 2012, provisions of the Liquor Code which prohibit certain public officials, who are responsible for enforcing “penal laws,” from holding an interest in a restaurant license, hotel license, manufacturer’s license, importing distributor’s license, distributor’s license, or eating place retail dispenser’s license, are further clarified. Specifically, public officials with arrest authority, including United States attorneys, state attorneys general, district attorneys, sheriffs and police officers, and anyone who can impose a criminal sentence, including magisterial district judges and judges, are prohibited from holding such licenses, unless the proposed licensed premises are located outside the official’s jurisdiction. It is further clarified that other public officials, who do not have any arrest authority or ability to impose a criminal sentence, including members of the General Assembly, township supervisors, city councilpersons and mayors without arrest authority, may hold such licenses. [47 P.S. §§ 4-401(a), 4-437(d)].

The Pennsylvania Malt Beverage Distributors Association (MBDA) elected a new President and slate of officers for the statewide organization at their quarterly board of directors meeting held this past Sunday in suburban Harrisburg. The Association, which was founded soon after the end of prohibition, represents Pennsylvania’s 1200 beer distributors in legislative, regulatory and industry affairs.

Newly elected President, Mark Tanczos of Tanczos Beverages in Bethlehem, PA, has owned and operated his distributorship since his father Edward’s retirement in 1987. He has also served on MBDA’s Board of Directors since 2003 and has served as Vice President of the Association’s District 9, which includes all of Berks, Carbon, Lehigh, Northampton and Schuylkill Counties. 

“I am honored to have the opportunity to lead our Association during this critical point in time,” said Tanczos. The Association is keenly focused on providing consumers with greater choice and convenience through changes in the law to allow for the sale of beer in smaller quantities and the ability to sell wine and spirits. “I look forward, with the help of my association, to work towards providing Pennsylvanians with full-service package stores like those found in many surrounding states. Neighborhood beer distributors who represent 1200 small businesses in the Commonwealth are uniquely qualified to bring about this long overdue change. We have a solid track record dispensing alcohol responsibly and actively supporting the communities we serve.”

Pennsylvania’s beer distribution industry employs 36,000 residents and has an economic impact of over $2.9 billion. They also provide more than $1.1 billion in taxes, licensing fees and other state and local government revenues. “With so much at stake, we look forward to working very closely with other industry stakeholders and trade associations, our General Assembly, and the PLCB to craft legislation that is fair and equitable to our customers and our members.”

Tanczos replaces long-time MBDA president David Shipula. “Our special acknowledgements and gratitude are extended to outgoing President Dave Shipula, of Wilkes-Barre, who has faithfully served this Association as President for 14 years.

Allegheny County Republican Mike Turzai, the House majority leader, says his proposal wants to encourage the same kind of shopping options that consumers have in other states, “There are specialty shops with respect to wine or specialty shops with respect to spirits. We wanted to make sure that that flourished in the sense that there was opportunity for consumers to find a number of places to go.”  

One other option under Turzai’s proposal would allow is one-stop shopping for beer and wine and spirits. Beer distributors would be allowed to compete for the more than 1,200 retail liquor licenses that would be auctioned off under Turzai’s plan. While they could sell liquor along with beer, they would still have to sell beer by the case as they do now.  

Mark Tanczos of the Malt Beverage Distributors Association of Pennsylvania, which represents beer distributors, is cautiously optimistic about the proposal, “There’s an open door, there’s some possibilities here. At least we’re included at this point. Now, we’ll have to go from there and see what the bill actually says and see how it would affect our members.”  

And the bill may look different in its final form. While Governor Corbett supports privatization, his spokesman stops short of endorsing the proposal, saying the governor looks forward to working with lawmakers in the fall.  

From CBSPhilly

State Representative Mike Turzai
28th District, Pennsylvania House of Representatives

To move Pennsylvania out of the post-Prohibition era by allowing the private sector to sell wine and spirits, House Majority Leader Mike Turzai (R-Allegheny County) will unveil legislation to privatize wine and liquor sales in the Commonwealth.

“Should Pennsylvania be in the business of selling alcohol? Is this a core government function? I don’t think so, and the large majority of Pennsylvanians agree,” Turzai said. “The current system is antiquated and out of touch. It’s time to end the statewide monopoly and give consumers better selection and more convenience.”

Currently only two states, Pennsylvania and Utah, have complete control over wholesale and retail operations. Turzai’s legislation would privatize the wholesale and retail operations of the Pennsylvania Liquor Control Board (PLCB).

House Bill 11 will continue to generate annual revenues through a reformed tax structure, which includes elimination of the 18 percent Johnstown Flood tax and the 30 percent markup by the PLCB. These taxes and charges would be replaced with a fairer gallonage tax. The state will also receive tax revenues from the new retail and wholesale businesses that would be created.

In addition this legislation also strengthens law enforcement supervision of alcohol sales and enhances alcohol safety and awareness programs. The proposal enhances enforcement of liquor laws by providing concurrent jurisdiction for state and local police; requiring retail managers and employees to attend R.A.M.P. (Responsible Alcohol Management Program) training; mandating the use of I.D. scanners with age verification software; requiring retail operations to be maintained in a separate area dedicated to the sale of liquor and all retail store employees to be at least 21 years old; and subjecting retail licensees to “age compliance checks” to ensure against selling to minors. Licensees who fail to adhere to these standards will face heavy penalties and possible suspension or revocation of their licenses.

Under this proposal, the PLCB’s role will focus solely on regulation, enforcement and education, removing the conflict of interest that currently exists by having the same entity promote and regulate alcohol sales.

Current PLCB employees displaced by privatization will receive the following opportunites: hiring preference in other state jobs; tax credits for employers who would hire them full-time; and education grants to help retrain employees to perform other jobs.

The current monopoly system was created in 1933 by then-Gov. Gifford Pinchot, who said the PLCB’s mission was to make liquor sales “as inconvenient and expensive as possible.” Over the past few years, the PLCB has attempted to improve customer service with miserable results. In 2009, the PLCB paid $173,000 for an outside company to provide its employees with courtesy training. The organization also spent more than $4 million a year on advertising and millions of dollars on a “rebranding effort” – even though the PLCB has a monopoly on the market in Pennsylvania. Also, the wine kiosk program has fallen short of projected sales. As a result, Wegman’s has recently decided to decommission 10 wine kiosks in its Pennsylvania stores.

A June 14 Quinnipiac University statewide poll shows 69 percent of Pennsylvanians polled are in favor of selling the state liquor stores. Numerous newspapers from across the Commonwealth have also called for privatization of the PLCB.

“This is a proposal whose time has come,” Turzai said. “It’s time to put Pennsylvania in step with the rest of the country.”

State Representative Mike Turzai
28th District, Pennsylvania House of Representatives

But Payne isn’t the only one who made money from the tastings. The successful promotions meant extra tax revenue for the state of Tennessee. And that’s one of the reasons lawmakers there decided this year to allow restaurants, bars and liquor stores to offer free samples of spirits.

Across the country, Republicans swept into office in 2010 vowing to cut, not raise taxes, even “sin” taxes like those on alcohol and tobacco, which historically have tended to go up when budgets get tight. In the recession year of 2009, more than a dozen states relied on higher alcohol or cigarette taxes to help dig themselves out of budget holes. But this year, Republican governors and legislatures decided they could generate needed revenue by changing their alcohol laws and leaving the tax rates alone.

Growlers to go

Of course, legalized tasting of spirits doesn’t in itself mean more money for the state. But increased sales, particularly of high-end products, can generate quite a bit in taxes. Nationwide, state taxes on alcoholic beverage sales produced $5.5 billion in 2010, according to the most recent U.S. Census data. Alcoholic beverages are taxed at a high rate by all levels of government — more than 50 percent of the purchase price of a typical bottle of spirits goes to federal, state, or local taxes of some kind, according to the Distilled Spirits Council of the United States (DISCUS), which represents producers and marketers. DISCUS figures that alcoholic beverages bring in $41 billion a year in direct and indirect revenue for state and local governments. The group has lobbied in favor of free tasting laws.

“Policy makers at the state and local level are desperate to raise revenue without raising taxes or cutting programs,” says Ben Jenkins, vice president of government communications for DISCUS. “Modernizing dated alcohol laws is a positive way to do it.”

In addition to Tennessee, Washington State approved a bill this year that allows 30 state liquor stores to hold at least six tasting events throughout the year. The measure also allows restaurants to sell half-gallon, refillable glass jugs of tapped beer to go, known as growlers. The new law “not only will help our partnering craft beer industry, but will also spur economic growth in our industry,” says Bruce Beckett, director of government affairs for the Washington Restaurant Association. This year’s tasting laws come on top of liquor sampling bills passed in 2010 in California, Michigan, New Jersey and Virginia.

Thirst on Sundays

Another way states can get more revenue from alcohol is by extending the hours of legal sale. For the most part, that means allowing liquor stores to open (or open longer) on Sundays. This year, Georgia repealed its statewide ban on Sunday alcohol sales and will allow voters to decide whether their local communities want to offer it. Connecticut and Indiana are now the only states that still ban Sunday sales of liquor, wine and beer for consumption off-premises.

Liquor suppliers like to point out that rolling back “blue laws” controlling Sunday liquor sales is a way to help states with the bottom line. Between 2002 and 2005, 12 states liberalized their laws to permit Sunday sales. According to DISCUS, each state saw an increase in tax revenue of 5 to 7 percent. Pennsylvania, which has long had Sunday liquor sales, decided this year to expand them: It increased the number of state liquor stores allowed to open seven days a week and lengthened Sunday hours of operation.

But not every state has been willing to liberalize its liquor laws, despite the potential revenue impact. Legislation that would have allowed or expanded Sunday alcohol sales failed in Connecticut and Texas. Differences between manufacturers, distributors and retailers were part of the reason. Some privately owned corner liquor stores, often mom-and-pop operations, argued that adding hours and days to their schedule could increase the cost of doing business, making additional profits questionable. They also said that Sunday liquor sales might simply spread the same amount of business over seven days rather than six.

In Connecticut, the state Package Stores Association also opposed a Sunday sales law on the grounds that “a buy-more, drink-more policy without regard of the social, health, and public safety issues sets a dangerous precedent.” It cited potential harm to teenagers and problem drinkers. That position prevailed. Instead of allowing Sunday alcohol sales, which had the support of Governor Dannel Malloy, the legislature increased the alcohol excise tax by 20 percent as part of a sweeping tax increase package. The Sunday sales issue may resurface, however, as the state tries to close a $700 million hole in the budget that opened up after state workers rejected a benefits concession deal.

“Customers aren't asking for longer store hours,” insists Fred Marosko of the Texas Package Stores Association. He believes that DWI fatalities on Sundays would go up in the state if an expanded hours measure passed, just as he says they did in New Mexico after that state approved Sunday liquor sales. In Texas, in addition to voting down expanded Sunday sales, lawmakers rejected measures that would have allowed breweries to sell directly to consumers, and distillers to sell souvenir bottles to visitors who tour their facilities

Tennessee’s liquor tasting measure actually was part of a package aimed at luring Sierra Nevada Brewing Co. to open a brewery in East Tennessee by allowing the sale of high-alcoholic content beer. “It’s about jobs,” says state Senator Doug Overbey, who introduced the bill. In the meantime, the Jack Daniel’s distillery in Lynchburg, Tennessee, is already planning tastings because of the new state law. “This will be good for business and for consumers,” says Jeff Arnett, a Jack Daniel’s master distiller.

From Stateline.org

The changes were part of a larger effort by leaders in both chambers to agree on and ratify a series of bills sent to the Senate, said Rep. John Payne, R-Dauphin County.

House Bill 148, which proposed the liquor code changes, was introduced this year by Payne and passed the House in May.

As originally written, it would have allowed bars and restaurants more leeway in using up to 14 hours per week of drink-discount time known as happy hours.

It also would have allowed customers to carry out up to three unopened bottles of wine from a restaurant and let the holders of restaurant and catering liquor licenses supply and serve alcohol offsite at certain venues and approved events, Payne said.

The offsite catering provision and the happy hour changes survived the original House approvals and final passage, although the maximum number of 14 hours allowed in a single day was set at four, Payne said. Under current law, only two hours are allowed daily.

The carryout wine provision was killed outright, he said.

From Central Penn Business Journal

The House, in a 174-24 vote this afternoon, sent to Gov. Tom Corbett a bill that would allow bars to offer happy-hour specials up to four hours per day, not to exceed 14 hours per week. Current law limits happy hours to two hours per day.

The Senate on Tuesday unanimously approved the bill.

Proposed by Rep. John Payne, R-Dauphin, the bill also would allow restaurants with liquor licenses to serve spirits at catered functions off the premises.

A previous version of the bill already had been approved by the House, but was amended by the Senate to incorporate a requirement for the Pennsylvania Liquor Control Board to hire a compliance officer to investigate claims that licenses are selling unregistered malt beverages.

The Senate amendment also removes a two-year residency requirement for applicants for manufacturing and distribution licenses. It also creates a $250 annual permit for limited wineries to sell their products at five satellite locations and an unlimited number of farmers markets throughout the year, provided they operate at only one market at a time.

"This is one of those bills where everybody gets a little bit of something," said Kevin Joyce, past president of the Pennsylvania Restaurant Association. "Unfortunately, the one piece that I wanted most is the one that didn't make it in the final bill."

That piece would have allowed restaurant customers to buy up to three bottles of wine to take home. Mr. Joyce said that was important for his customers at The Carlton in Downtown Pittsburgh, which has 600 bottles on its wine list, most of which aren't available off the shelf in state stores.

"Hopefully, that will find its way into another bill at some point. Overall, we're gratified for the cooperative spirit that created this bill," he said. "The ability to let liquor licenses travel for catering was important to us, and it's been a goal of the taverns for a long time to be able to create a four-hour happy hour around a sporting event."

Corbett spokesman Eric Shirk said the governor is expected to sign the bill into law. The happy hour provisions become effective when he does.

From Post-Gazette.com

Your corner beer distributor would be able to sell wine and liquor if a Hershey-area lawmaker has his way. State Rep. John Payne, R-Derry Twp., said he will soon introduce a bill to allow the roughly 1,200 beer distributors statewide to apply for a free permit to carry wine and spirits.

Wholesalers would also have the option to apply for a permit to sell wine and liquor, but it would cost $50 million.

Payne’s proposal, the latest salvo in the debate over whether Pennsylvania should sell its state-owned liquor stores to private operators, would leave the state liquor stores intact.

Beer distributors are already running a parallel network and have the cold storage, the warehouse space and the knowledge of how to work with the Pennsylvania Liquor Control Board, Payne said.

If the privatization battle “is really about consumer accessibility... rather than the closed, restricted system we have now, then you would instantly have 1,200 more outlets plus a $50 million license fee for [each] wholesaler,” he said.

But it’s unclear how far the proposal might get.

State House Majority Leader Mike Turzai, R-Allegheny County, is pushing for a privatization plan soon that would eliminate state liquor stores entirely.

“Not one iota of government should be about selling booze,” said Steve Miskin, a spokesman for the House Republicans. “We’re for privatizing liquor and wine sales.”

Miskin declined to comment further on the proposal because the legislation has not been introduced.

A spokeswoman for the Liquor Control Board declined to comment until the board can see the actual bill.

Gov. Tom Corbett’s office did not return calls seeking comment for this story, but Corbett has said he favors privatization.

Another roadblock could be the state liquor store employees’ union. Wendell Young, the union head, is staunchly against all privatization efforts. He cited a recent study by the Centers for Disease Control and Prevention that warned against further privatization of alcohol sales.

“Doubling the amount of locations and putting it in the hands of the beer monopoly isn’t going to help anybody,” Young said. “Even those in favor of privatization don’t think there should be an extreme increase in locations.”

Additionally, Young said beer distributors do not have experience in selling hard liquor.

He said it’s almost impossible to get served underage or while intoxicated at a state liquor store, but that teens don’t seem to have any trouble getting their hands on beer.

Despite those in and around state government who oppose the idea, midstate beer distributors and customers seemed enthusiastically on board.

“I think in the business climate we’re in right now with the Wegmans and the supermarkets trying to sell beer, which right now is our only viable product, ... this would definitely help us survive and stay in business,” said Tom Bowman, owner of Beer Express in Lower Paxton Twp. “I think I’d be 100 percent on board.”

Bowman said supermarkets have argued in court cases that their counterparts in other states are able to sell beer. But if grocery stores want that same right, distributors should be allowed to be on par with distributors in other states that can sell all types of alcohol.

Roger Ackerman, owner of Mechanicsburg Beverage, also worries about the impact supermarket beer sales are having on smaller, independent beer distributors. He sees the proposal as a help for his business.

“We’ve been controlling beer for some 75 years in beer distributors,” Ackerman said. “The atmosphere is already in place, the people are already trained. In light of what’s happening with grocery stores ... the ability to sell wine and liquor would just enhance our operations.”

To customers, however, it’s about convenience and choice, not business.

“I think it’d be great. It’s one-stop shopping,” said Ron Groff, a Hampden Twp. resident who stopped at Silver Spring Beverage on Thursday.

Ken Bomgardner of Silver Spring Twp. said he seldom goes to a Wine & Spirits Shoppe. “It would be a lot easier to come in a beer distributor and get beer and wine instead of going to a state store [to purchase the wine],” he said.

“That would be awesome. Everybody likes choice, right?” said Doug Thompson of Mechanicsburg. He and his wife, Deb, stopped in to pick up a case of beer and to see if the store sold wine coolers. “It helps business too. ... If they would have sold wine coolers, we would have bought them.”

With the price of gasoline rising, making one stop instead of two or three would be an added benefit, said Jaratt Dill, 21, a student at Harrisburg Area Community College.

“It’s better than driving around [to stores] five or six miles apart,” Dill said. “I feel like we’re in such a restricted state.”

Payne said he and state Rep. Mark Mustio, R-Allegheny County, were brainstorming how they could change the way alcohol is sold to make it more convenient for customers and avoid the expense of creating a new distribution system.

This idea “seemed like a pretty common-sense transition,” Payne said. 

From PennLive.com

If the General Assembly disagrees with the court's ruling, the court opinion stated, "It has the prerogative to enact responsive legislation."

MBDA president, David Shipula of Wilkes-Barre, said, "The court is saying we need to ask the legislature to make clear that grocery stores cannot operate as de facto beer distributors which we believe is what they are doing."

He said the court made significant note of the difference in beer sale quantities permitted in supermarket restaurant licenses. Restaurants can sell no more than two six packs of beer at a time while distributors can sell in no less than case lots. "Most distributors would love to sell beer by the six pack as a convenience to our customers but the letter of the law is clear here. What's not so clear in practice in the case of supermarkets is what constitutes a sale of only two six packs."

"We have seen instances where the same individual buys multiple six packs on the same trip to the supermarket - purchasing them in a string of two-pack-at-a- time transactions. That shouldn't be allowed but we now see that the court has told us to take it up with the General Assembly."

The specific products under scrutiny are: Four Loko from Phusion Projects LLC; Core High Gravity HG Green, Core High Gravity HG Orange, and Lemon Lime Core Spiked from Charge Beverages Corp.; Moonshot from New Century Brewing Co., and Joose and Max from United Brands Co., Inc.

“Until the safety questions and other concerns about Four Loko are resolved, MBDA is asking its members not to sell this item,” David Shipula, MBDA President, wrote in a letter to more than 600 beer distributors.

“We hope all other licensee trade associations will carefully consider this issue and advise their members also to halt sales.”  Shipula, a Wilkes-Barre beer distributor, said the voluntary removal call was approved by the MBDA board of directors at a Sunday meeting.

“Many directors noted they pulled the item from their shelves after reading about the alleged health risks associated with it. At least one state has already stopped all sales of the product and the FDA is being asked to assess whether or not Four Loko is a safe product.” Shipula said.

The beer distributor’s action comes 10 days after the Pennsylvania Liquor Control Board sent a letter to all licensed beverage sales outlets statewide including bars and restaurants also urging a voluntary end to sales.

“MBDA has always believed in and promoted the idea that beer and all alcoholic beverages should be used only by those over the age of 21 and only in a responsible manner,” Shipula said in his letter.

The fruit-flavored drink, which combines an alcohol content of 12 percent with caffeine and other stimulants typically found in energy drinks, has been linked to a number of cases of alcohol poisoning requiring hospital treatment.

Logan Township supervisors voted Thursday to accept two proposed liquor license transfers that will introduce beer sales at Giant Eagle and pave the way to open a sports-focused restaurant. 

Pittsburgh attorney Mark Kozar, representing the owners and operators of Giant Eagle and Champs Sports Bar & Grill, said both parties are now ready to submit liquor license applications to the Pennsylvania Liquor Control Board, which has the final say.

Processing will probably take a few months at the minimum, Kozar said.

In the meantime, Giant Eagle owner/operators Bill and Marc McKillop will keep planning development of a cafe within their grocery store where patrons will be able to buy up to two beers to consume on-site with food, or to purchase a maximum of two six-packs for takeout.

The store's proposed renovations show a cafe, with indoor and outdoor seating, for 48 patrons at the Logan Town Centre location. A wall will be built around the cafe's outdoor seating to restrict access. Five to 10 employees will be hired, Kozar said.

Bill McKillop said he will enforce restrictions currently used at other Giant Eagle locations with liquor licenses. Beer purchases will be limited to two cash registers, and every buyer will be asked to show an identification card with a birth date.

"Even if you're 85, we're still going to need an ID," McKillop said.

Supervisor Jim Patterson asked about efforts to monitor on-site consumption. McKillop said the employees will go through training to address that.

"We don't want to be a bar," McKillop said. "We're a grocery store."

Cove Beverage owner Kevin Luensmann asked supervisors to reject the proposed transfer, pointing out that as a beer distributor, he is prohibited from selling grocery store items.

"In January, I'd like to be able to sell milk, bread, toilet paper and a case of beer," Luensmann said.

Township solicitor Larry Clapper suggested Luensmann appeal to state lawmakers.

Scott Lucchesi, who owns Champs Sports Bar & Grill on Atherton Street in State College, requested the liquor license transfer to open another Champs in the former Don Pablo's at 205 Charlotte Drive.

Kozar said his client is prepared to put $1.5 million into renovations and furnishings.

"The building was sitting empty for a couple of years, and the pipes froze," Lucchesi said. "Half a million of that will probably be put into the kitchen."

The facility will be staffed by 94 part-time employees, Kozar said. Plans show seating for up to 278 people inside and 72 on an outside patio.

 From the Altoona Mirror

It was an active court with the justices asking many questions of all parties. Those questions focused on whether it was sufficient that the Wegmans' Market Cafes qualify as a restaurant and whether the fact that they were part and parcel of and located within Wegmans made any difference. MBDA argued that the PLCB needed to look at the economic reality of the beer sales, which indicate that Wegmans Supermarket, not Wegmans Restaurant, is making the sales. Wegmans responded that it is within the PLCB's discretion to decide if interconnections between a supermarket and a restaurant disqualify a restaurant from holding a license to sell take-out beer. Wegmans contention is critical because, if correct, the standard of review that the Supreme Court must apply is to determine if the PLCB abused its discretion. The Supreme Court cannot simply substitute its own judgment for that of the PLCB's. However, if as MBDA contends, the issue is not one of abuse of discretion but simply whether or not the Liquor Code allows supermarkets to sell beer, which is what Wegmans Supermarket is doing, then the Supreme Court can apply its own analysis of whether or not the PLCB correctly interpreted the Liquor Code in reaching its decision to allow Wegmans to have a license.

MBDA made a very strong argument, both factual, during the multiple Wegmans hearings that stretched over two years and still continue today with regard to other supermarket chains, and legal, as to why Wegmans is not entitled to a license. We believe the Court will carefully consider all the issues raised and issue its decision by late 2010.

PLCB Legal Advisory Opinion 10-029, dated Feb. 16,2010,  states it is not permissible to place wine kiosks on distributor-licensed premises, or on areas contiguous or adjacent thereto. In support of this opinion it cites section 4-492(13) of the Liquor Code. However, distributors should consult with legal counsel to determine if their individual circumstances coincide with this opinion so as to preclude wine kiosks under all circumstances.

Read the talking points from State Sen. John Rafferty on his legislation.

“While lawmakers may be well-intentioned in their efforts they are, in reality, playing into the hands of large, big-box merchants who will reduce choice and convenience by driving thousands of locally-owned, small distributors, merchants and restaurants out of business,” said the MBDA’s David Shipula, owner of Beer Super in Wilkes-Barre.           

“This legislation, as proposed by the big supermarket chains and the interstate convenience store corporations, would allow the big box guys to acquire existing restaurant licenses and convert them to a new class of license for food merchants,” Shipula explained. “In other words, each supermarket or convenience store to sell beer, they put a small restaurant out of business.  I don’t think that’s what consumers had in mind when they signed the ‘free my beer’ petitions.”             

History and economics, Shipula said, “dictates that when volume retailers with the ability to sell products bnelow cost as ‘loss leaders,’ small businesses are driven to close their doors.  That means less choice, not more choice and convenience.  Implementing this bill will have vast unintended consequences just like WalMart drove out most of the community-owned hardware stores.”             

Shipula also noted that the petition with a reported 125,000 signatures did not include any specifics for reform of state beer laws.  “All the Sheetz petitions request was, ‘I call upon my elected state representatives to update our archaic beer laws to reflect the will of the people.’” The MBDA president noted that a similar petition drive now underway at the check out counters of beer distributorships across the state already has netted 65,000 signatures supporting a very specific change in the state’s beer laws.             

That petition, Shipula said, stated: “We, the undersigned, believe that beer distributors in Pennsylvania should, in the interest of convenience to customers, be allowed to sell beer by the six-pack. We believe that with more than 1,200 beer distributors across the commonwealth these changes in the law would bring more convenience to customers while helping to ensure that beer is kept out of the hands of minors.” “We urge our legislators to take action to help increase convenience for adults while protecting locally owned and locally operated small businesses.”   

Read the Supreme Court Brief (PDF File)

Distributors are directed to the following PLCB Regulations in Volume 40 of the Pennsylvani Code, accessed from the PLCB website: Sections 9.101 through 9.107. Those records must be maintained on the licensed premises for 2 years.

To be eligible an applicant must be a for-profit corporation, LLC, partnership, sole proprietorship or other legal entity with 100 or fewer full time employees and must be located within the state. Examples of eligible projects include HVAC and boiler upgrades, high-efficienty lighting, waste recycling systems and others.

Program guidelines and application may be downloaded at www.depweb.state.pa.us, keyword: SBAdvantage, or by mail from DEP by calling 717-783-8411.

GRANTED. The issue, as stated by Petitioner, [MBDA] is:

Did the Pennsylvania Liquor Control Board improperly apply its "interior connection" and "other business" rules so as to circumvent the fundamental Liquor Code rules establishing the venues at which beer may be sold in Pennsylvania and thereby authorize a supermarket that has a "restaurant" area within it to sell beer, primarily in six and twelve packs and primarily for take-out consumption, to its supermarket customers?

Due to having missed a filing deadline Wegmans cross-appeal was dismissed. The issue raised on cross-appeal was that of "standing" , which challenged MBDA's right to intervene in the Wegmans license applications. That issue is no longer before the Court, leaving in effect the Commonwealth Court decision that granted MBDA standing.

The Court also dismissed the King's Bench Petition MBDA filed attempting to have the appeal of theThomas' Market license by-pass Commonwealth Court and go directly to the Supreme Court. The dismissal was not unexpected as King's Bench Petitions are "extraordinary" appeals and the Supreme Court does not usually hear appeals that by-pass a lower court.

These actions indicate the Court is considering the Petitions for Allowance of Appeal MBDA filed in the Wegmans litigation and it may be an indication that we will soon know if those petitions will be heard.

(a) Allowing a retail dispenser to sell for take-out purposes only "affords [Sheetz] the benefits of a distributor license without imposing the accompanying restrictions" and allows it to "act as a distributor...yet not be burdened with the restriction of selling by the case."

(b) Allowing Sheetz to operate in that fashion would "infringe upon the market niche legislatively carved for the distributor" and would "expand the character of retail dispenser outlets to encompass commecial entities, unlike hotels, restaurants, clubs and eating places, which do not currently engage in the sale of alcohol."

(c) Any such expansion as mentioned in (b) is a policy determination for the legislature.

(d) The PLCB used a "loophole" to issue a license to Sheetz.

(e) Using such a loophole "far more commercial facilities, which were never clearly contemplated by the Legislature to sell beer through any provision of the [Liquor] Code, could be licensed to sell six-packs."

(f) The PLCB's interpretation of a retail dispenser "is contrary to the clear legislative scheme regarding beer distribution."

We await comment from the PLCB as to the effect this decision will have on other pending license protests MBDA has filed against Wegmans, Weis, Giant Eagle, Whole Foods and others. It should be noted that the law firm representing Sheetz is the same firm representing Wegmans and virtually every other supermarket in their quests for licenses to sell beer from what they call their "restaurants" but what are in truth no more than tthe beer aisle of their supermarkets.

MBDA is optimistic that this decision is a predictor of good news on the Wegmans and other supermarket cases, but we will need to be patient and await Supreme Court action on those cases. We thank each and every contributor to the Legal Defense Fund. Without your support this result could never have been achieved.

In the script she faced the threat of brain damage. In real life, the niece of ER executive producer John Wells died from alcohol poisoning. In his final program, he was making a statement about a national problem.

Underage drinking and binge drinking in particular is one of the key concerns for Pennsylvania beer distributors.

If you've ever tried to buy beer -- especially by the keg -- at one of hundreds of shops around the state operated by a member of the Malt Beverage Distributors Association of Pennsylvania, you've probably been questioned and "carded" if you look a day under 30 years of age or lack lots of well-earned skin wrinkles.

For beer distributors such as me -- and almost all of us are parents -- we wouldn't want someone else selling something potentially harmful to our kids and strive to behave in the same way toward the children of others.

The typical beer distributor won't even let a teen without adult supervision enter his or her store. And, the documentation of age can be pretty thorough.

That said, some kids still get beer elsewhere and that's a concern to all of us.

Many times, it's through a "straw buyer" - someone legally of age buys the beer and turns it over to partying teens. Most beer distributors would rather lose a sale than allow an obvious "straw purchase," especially those operating near college campuses.

And that's pretty much the way people want it.

According to the national Center for Alcohol Policy, 78 percent of the respondents in a poll last year agreed that relaxing state laws and regulations that help keep alcohol out of the hands of kids would only make underage alcohol consumption worse.

What's more, less than half of those surveyed thought it was "very difficult" for minors to purchase alcohol in their community. A clear majority, 59 percent, said they were against efforts to change the current system of alcoholic beverage laws. They agreed with the statement that beer distributors "play an important role in making sure that alcohol is sold safely and responsibly in accordance with the laws." Only 26 percent agreed with proposals that "would give consumers more choices."

More telling, 74 percent agreed with the statement: "Parents, police officers and retailers already have a difficult challenge keeping alcohol out of the hands of minors. Getting rid of rules, regulations and safeguards could make the problem worse."

How do we know the hard-line policy followed by most Pennsylvania beer distributors pays off? According to sources at the Bureau of Liquor Control Enforcement of the Pennsylvania State Police, beer distributors make up less than 10 percent of the citations issued statewide for sales to minors. Under the program, real kids using real ID cards attempt to buy alcohol. Of all the categories of Pennsylvania Liquor Control Board licenses -- restaurant, carryout, resort and distributors -- the beer distributors have the lowest rate of "non-compliance" (selling beverages to minors).

April is Alcohol Awareness Month as declared by the Substance Abuse and Mental Health Services Administration of the federal government. As president of the Malt Beverage Distributors Association of Pennsylvania, I want the state's mothers and fathers to know that our members take our responsibilities to heart. We don't sell to minors, and we urge adults to drink responsibly.

We'd like everyone in our communities to be our customers someday -- when they're of age -- and we'd like to have them around as customers for a long, long time. When beer is your only business, that's a good business practice. And, it's a good neighbor policy, too.

DAVID SHIPULA is the owner of Beer Super, a beer distributorship in Wilkes-Barre, and president of the Malt Beverage Distributors Association of Pennsylvania.

The 31 page opinion addressed two issues, namely: whether MBDA had "standing" to object to the license transfers; and the merits of the objections raised by MBDA.

"Standing" is a requirement that a party such as MBDA prove to the court's satisfaction that it and its members either have been or will be harmed by the threatened action, in this case issuing to supermarkets licenses to sell beer, as well as that it is the right party to participate in the litigation so as to protect those threatened interests. As a result of the Commonwealth Court's ruling in the Sheetz case that MBDA did have standing, the PLCB eventually dropped its objections to MBDA's participation in the Wegmans cases. Wegmans vigorously continued its argument that MBDA lacked standing, hiring experts at substantial cost to prove that D Distributors would not be harmed by Wegmans' sale of beer. Commonwealth Court found in favor of MBDA as to standing, agreeing that it has a right to participate in the Wegmans cases. Approximately 22 of the 31 pages of the opinion were devoted to standing.

The merits of MBDA's numerous objections to the transfers were covered in the remaining 9 pages. The court fairly summarized MBDA's argument when writing, "MBDA argues that the PLCB's decision, licensing space that is fundamentally an integral part of a supermarket to sell beer primarily for take-out consumption, turns these principles [restraining, not promoting, the sale of alcohol] on their head. It asserts Wegmans clearly stated its goal in seeking licensure; it wanted to "make the experience of shopping at Wegmans even better, and certainly more convenient, by selling beer in our Market Cafe restaurant." MBDA contends buying beer "at" the Market Cafe is "shopping at Wegmans", part and parcel of Wegmans' "economy of scope" marketing strategy. MBDA asserts it is the sale of beer by and at a supermarket. MBDA maintains it is only by turning a blind eye to reality that the PLCB can view this as a typical restaurant license."

Nevertheless, rather than examining these and other objections raised by MBDA in order to decide if the PLCB's actions actually made sense as part of the overall regulatory scheme embodied by Pennsylvania's Liquor Code laws, the court felt bound to defer to the discretionary decision by the PLCB to issue the licenses, limiting its review only to the questiion of whether or not the PLCB had abused its discretion in approving interconnections between a licensed and unlicensed premises. Proof of abuse of discretion is shown by an agency's "bad faith, fraud, capricious action or abuse of power", none of which the court found present in the PLCB's decision.

Because we believe and have argued that it is beyond the scope of the PLCB's authority to issue supermarkets licenses to sell beer, such action being such a fundamental change in how beer is sold in Pennsylvania that it should be addressed by the legislature and not an administrative agency, MBDA will file with the Pennsylvania Supreme Court a Petition for Allowance of appeal of the Commonwealth Court's decision. There is no automatic right of appeal. Instead ,the Supreme Court chooses cases it believes raise important public policy issues and/or that were wrongly decided. There is no guarantee that the Supreme Court will choose our case, but we think there is a good chance that it will do so. The Supreme Court has previously shown its interest in these "where and how beer is sold" questions when it chose to hear the Sheetz case. That case was argued last May and we expect a decision any time in the next three months.

Commonwealth Court sitting en banc heard arguments today from the Malt Beverage Distributors Association (MBDA) of Pennsylvania challenging the transfer of six restaurant beer sales licenses to Wegmans super markets around the state on grounds that Pennsylvania law prohibits sale of alcohol on the same premises as grocery sales.

Explaining the MBDA position are President David Shipula of Wilkes-Barre and special legal counsel Robert Hoffman of Harrisburg.

If you would like to read the brief filed by MBDA counsel, Robert Hoffman, Esq., in response to the various issues raised by Wegmans as to why not only they are entitled to these licenses but also their argument that distributors will actually benefit if Wegmans can sell beer, click here.

Commonwealth Court recognized that "...a potential consequence of the PLCB's interpretation [of the Liquor Code] is a significant transformation of the character of outlets for the sale of malt or brewed beverages, to include grocery stores, convenience stores and other commercial establishments with some small area for eating."

Some Supreme Court justices, via their questions at oral argument, suggested that they too may view the issue of convenience stores, gas stations, and grocery stores selling beer as one which should be addressed by the legislature, not by an administrative agency such as the PLCB.

MBDA has consistently taken the position that the legislature never intended to allow these outlets to sell beer, in bulk, for take-out, using "E" and "R" licenses and for the PLCB to allow them to do so is a misinterpretation of the Liquor Code. The Supreme Court has no specific time in which it must render an opinion but we remain cautiously optimistic that one will be issued before the end of the year.

By David Shipula

As a guy who's spent his entire working life running a beer distributorship, I often ask my customers, "What's good about selling beer in convenience stores?"

The answer runs something like this: "It's convenient. You can stop for gas, and get beer and cigarettes at the same time."

Now, I can't be the only person who sees a problem with making it easy to buy beer and gasoline in one convenient location. And even though I live in Luzerne County, I know that people in Philadelphia's neighborhoods already are troubled by "convenience stores" that are more than a little careless about checking IDs for underage drinking and that all too often become nuisances in otherwise peaceful residential neighborhoods.

What I don't understand is why it's not plain to everyone that it's already pretty darn convenient to buy a beer - or six or 12 or 24 - in Pennsylvania if you want to do so.

According to the U.S. Census Bureau, there are 2,400 gas stations in Pennsylvania, about 2,700 supermarkets, and 2,900 drugstores. Compare that with the 1,300 beer distributorships where Pennsylvanians can buy beer by the case and 500 "deli" licenses that allow people to buy up to two six-packs to go. Several thousand of the state's 12,000 bars and restaurants can, and do, sell beer to take out. If there is power in numbers, that's proof that we have convenience of access to beer.

This is the system set up by law, and changing the law requires an act of the General Assembly. That's the point that the Malt Beverage Distributors Association, of which I am the Pennsylvania president, seeks to uphold in the state Supreme Court in its suit against the Sheetz gasoline stores. It's also the point that we're making in our appeal of restaurant licenses granted to Wegmans supermarkets.

If there were a true groundswell of opinion favoring free and easy access to beer, don't you think the legislature would have changed the law by now? In fact, public opinion is split - although polls show that people are slightly more in favor of limiting access to beer than opening the floodgates.

The reasons are simple: Most people think that waving ice-cold six-packs in front of motorists is a bad idea. They also want the supermarket shopping experience to remain something the entire family can enjoy without giving children - from toddlers to teenagers - the idea that beer is as harmless as, say, a calorie-laden, high-fructose corn syrup-laced soft drink.

Why has the Malt Beverage Distributors Association taken up the fight to insist that everyone play by the same rules, the laws enacted by the General Assembly? Because they are the same rules that were applied to us when we bought our state licenses and undertook the privilege of selling beer in Pennsylvania.

It's a question of fair play.

BY DANIEL VICTOR AND LARA BRENCKLE
Of The Patriot-News

It took a few sips to persuade Ryan Ulrich to consider buying a case of Flying Dog's Gonzo Imperial Porter.

A case is a lot of beer, and it's not a commitment he would make without tasting a glass of it at a beer festival Sunday at the Appalachian Brewing Company in Harrisburg.

He said he planned to buy cases of his two or three favorite samples.

"I'm not going to lay down $50 without first trying the product," he said.

The beer festival was a convenient way for him to sample different varieties, he said, but six-packs would work, too.

It's consumers such as Ulrich who microbrewers say they're missing out on because of a state law that limits six-pack sales.

Beer distributors must sell by the case, and many times restaurants or bars that can sell up to two six-packs at a time don't have a wide selection.

You can find cases for a lot of local brews -- such as Harrisburg-based Troeg's or ABC -- for about $26. But because specialized varieties are often more expensive than mass-produced brews, beer connoisseurs are more likely to try new brands and varieties if they can spend less on smaller quantities, microbrewers argue.

"If you don't do draft, it's hard to get them to sample your wares," said Matt Allyn, owner of Voodoo Brewing Co. in Meadville. "If they don't sample your wares, it's hard to get them to buy a $75 case."

That problem could be solved, brewers have argued, by allowing six-pack sales in grocery and convenience stores.

It's starting to happen.

A Sheetz in Altoona was granted a license to sell beer last year. In March, Wegmans received restaurant licenses for six of its grocery stores, allowing it to serve beer and wine in the stores and to sell two six-packs to go. The chain is seeking approval for a license for its Silver Spring Twp. store.

The 465-member Pennsylvania Malt Beverage Distributors Association isn't happy. It has sued the Pennsylvania Liquor Control Board to try to block licenses for Wegmans and Sheetz.

Mike Muzic, who works at Breski Beverage in Swatara Twp., said clerks at distributorships are trained in how to sell alcoholic beverages, including how to look for signs of intoxication.

He asked: "Would you trust a high school-age convenience store clerk to not sell to drunk people or those under age?"

And Ashley Lidle, who works with Muzic, said the distributors offer a better bargain at bulk prices.

"[Consumers] are going to gain convenience and lose money," he said.

At its Silver Spring Twp. store, Wegmans is seeking a liquor license for its Market Cafe. If granted, it could sell wine and beer by the glass to be consumed on the premises.

The New York-based chain is waiting for the LCB to schedule a hearing on the matter, said company spokeswoman Jeanne Colleluori.

If the license is granted, she said, Wegmans might seek local brewers to help stock the shelves.

The grocery chain frequently works with local growers to stock produce and other products, she said. "We like to offer local flavor," Colleluori said.

Artie Tafoya, operations manager for the Appalachian Brewing Company, said he'd be open to selling ABC products at Wegmans.

"It's tougher for someone to invest in a case of our beer if they're not sure they'll love it," he said.

There are some pluses to distributorships, Tafoya said.

"At least with distributors, you're guaranteed placement," he said. "In grocery stores, it's more based on shelf space."

PRESIDENT
MALT BEVERAGE DISTRIBUTORS ASSOCIATION OF PENNSYLVANIA

WILKES-BARRE

The kiosks, a sort of a temperature-controlled vending machine capable of holding 500 bottles of wine, would be placed in grocery stores and other places, according to request on the LCB's Web site. They would offer about a dozen different types of wine.

Wendell Young IV, president of the United Food and Commercial Workers Local 1776, whose members include state store clerks, was among those briefed on the proposal. The kiosk has security identification measures such as fingerprints and biometric readings, he said. Users would have to register and purchases would have to be made with credit card, debit card or PLCB gift card.

Young anticipates the kiosks being placed in locations such as grocery stores or malls.

"You're not going to put these up at bus stops, or on a street corner, like a Coke or Pepsi vending machine," Young said.

The five-year contract proposal calls for the kiosks to be operated at no cost to the state or Liquor Control Board.

PLCB spokesman Nick Hays said he could not provide more specifics because of a "quiet period" required while proposals are submitted and evaluated. The request went out in late March and proposals must be submitted by May 8.

Vending machines selling alcoholic beverages have been in use in Japan, Singapore and some European countries, but security issues and restrictive liquor laws have made their development and use elsewhere limited, the Pittsburgh Post-Gazette reported in Sunday's paper.

It was a gamble, but today their microbrewery teems with towering stainless-steel vessels that churn and hum five days a week to create a select line of craft beers.

"We're not on the world-domination path," said John Trogner, 36, who with his brother, Chris, launched the Harrisburg-area Troegs Brewing Co. in 1997. But they do want to thrive.

Now the Trogners, like many in Pennsylvania's community of 67 beer brewers, believe they could get slammed by what is termed a "beer reform" measure winding through the legislature.

It is intended to give Pennsylvania beer lovers more choice, including the ability finally to buy a six-pack conveniently.

But the proposal has sent waves of anxiety through state beer brewers - many of them family owned microbreweries - who fear it will give an edge to out-of-state brewing giants and cut into their much smaller profits.

In-state brewers, including the Trogners, don't mind the expanded access to six-packs.

The problem for many is the proposal to allow the sale of 12- to 18-packs of beer: Smaller breweries don't have the packaging equipment to produce those sizes. It would give larger breweries an even larger price advantage.

"Who's this bill going to help? It's certainly not going to be the little guy," said Joseph Piccirilli, consultant to the Iron City Brewing Co. near Pittsburgh, one the state's larger brewers.

The beer biggies, like Anheuser-Busch and Miller Brewing Co., are pushing hard for the right to market those bigger packages in Pennsylvania. They've hired lobbyists; last year Anheuser-Busch spent about $200,000 and Miller spent $100,000, according to lobbyist disclosure forms.

Neither company responded to interview requests.

As it stands now, at distributorships, consumers can buy beer only by the case: 24 bottles, or four six-packs.

At bars or taverns, they can buy up to two six-packs at a time, often at marked-up prices.

Under the measure pushed by Sens. John C. Rafferty Jr. (R., Montgomery) and Sean Logan (D., Allegheny), beer distributors would be able to sell six-packs, 12-packs, 18-packs and any other configuration up to a case.

Restaurants and taverns - and convenience stores and supermarkets with liquor licenses - would be able to sell as many as three six-packs at a time, or any other configuration up to 18 beers.

"To me, this is all about the consumer," Rafferty said. "It's about giving people options."

Rafferty and Logan's beer-reform proposal has been floated in the Senate in the past. But the two plan to tuck it into an existing House bill over the next few weeks.

The two senators contend the measure would help in-state brewers by creating more outlets for six-pack sales. Customers now may be reluctant to try a case of their beer because if they don't like the taste, they are stuck with unwanted bottles.

In addition, the bill could earmark several million dollars in economic-development grants to help in-state breweries buy packing equipment for the new configurations.

Still, many Pennsylvania brewers aren't buying it.

The grants, distributed among the brewers, wouldn't be nearly enough to offset the price of new machinery, they say. That cost, depending on the size of the brewery, could exceed $1 million.

"There's not one microbrewer in this state that can make an 18-pack, not one," said Piccirilli, the Iron City consultant, who supports expanded access to six-packs, even 12-packs, but nothing beyond that.

Tom Kehoe, president of Yards Brewing Co. in Philadelphia, agreed that the larger-size beer packs would put a strain on in-state brewers. But he does not believe it will drown the state's craft-beer businesses.

Microbrews, Kehoe said, appeal to a different kind of beer drinker, who usually won't buy from "the big guys."

Patrick Jones, the brewer at Triumph Brewing in Philadelphia, put it this way: "Once you've tasted microbrewed beer, it's hard to go back to the other stuff."

As head of the statewide union for microbrewers, Artie Tafoya, owner of Appalachian Brewing Co. in Harrisburg, knows that many of his brewers are against the bill.

But he says he wants to do "what's best for beer."

"I'm a beer guy through and through, but I don't want anybody to feel like they're going to lose their business," he said.

Tafoya is optimistic a compromise can be reached.

"I still think there's a lot we can do to make the beer rules a lot better - for all of us," he said.

A fair chance is all that the Trogner brothers ask for.

"This is not a get-rich-quick scheme for us," John Trogner said.

"We love beer . . . and we want to continue making a living off what we love," he said.

By Angela Couloumbis

Philadelphia Inquirer

Contact staff writer Angela Couloumbis at 717-787-5934 or acouloumbis@phillynews.com.

"Most Pennsylvanians seem satisfied with the way the state store system is now. There isn't a hue and cry for privatization," said Al Neri, editor of The Insider, a statewide political newsletter.

Sen. Rob Wonderling, R-Montgomery County, is trying to sell the liquor stores, an undertaking that former GOP Govs. Dick Thornburgh and Tom Ridge couldn't accomplish. Wonderling has added twists to his bill, and he said he's optimistic about its chances.

"I know this isn't going to happen anytime soon," Wonderling said. "It's a marathon, not a sprint."

Democratic Gov. Ed Rendell thinks state stores would be better in private hands -- he also is trying to lease the turnpike to private enterprise -- but he believes it would be "unrealistic" to pursue liquor store divestiture, spokesman Chuck Ardo said.

The combination of unions representing state store workers and conservative Republicans concerned about the state having less control over alcohol sales "will forever defeat any attempt to change the current system," Ardo said.

For the foreseeable future, that political climate is unlikely to change, said Steven Peterson, a professor of politics and public affairs at Penn State University's Harrisburg campus.

"I just don't see anything that's likely to change the dynamic," he said.

"There seems to be more customer orientation" at the stores, which have Sunday sales, more availability of better wines at reasonable prices and friendlier clerks, Peterson said.

Older Pennsylvanians might recall drab stores with rude clerks. Customers once had to submit requests to clerks, who would go behind partitions to get bottles. The public was shielded from seeing most of the bottles in a system designed after Prohibition. Pennsylvania is regarded as one of the tightest "control" states in the nation.

But Wonderling isn't accepting the premise that change is impossible. His proposal would maintain some state control of liquor stores. Four hundred of the state's 600-plus liquor stores would be auctioned off, but 200 would not be sold. They would be placed under contract to private firms, but the state would retain 48 percent control.

In another attempt to rebut criticism of privatization, Wonderling said he told Mothers Against Drunk Driving to find the toughest alcohol-related enforcement measures in the nation and he would include those features in the bill.

The other proposal that distinguishes Wonderling's bill from past efforts: He would put the estimated $800 million from the sale of stores in an interest-bearing account to provide annual revenue for improving health care in Pennsylvania.

The fundamental basis for Wonderling's approach is his belief that running a liquor store monopoly isn't a core function of government.

An added benefit, he said, would be "more competitive prices and more choice in selection."

Supporters of the current system see an ongoing financial benefit to the state. The Liquor Control Board pumps about $500 million yearly into the state's General Fund. It's an argument that has helped defeat proposals to sell the state stores in the past.

"The system we have is working well. It provides money to the general fund and some control of underage drinking," said Gary Tuma, spokesman for Sen. Vincent Fumo, D-Philadelphia. "(Fumo) sees no need to change."

The most recent attempt to sell the stores was by Ridge in 1997, when both chambers of the General Assembly were controlled by Republicans (Democrats now control the House). Ridge proposed increasing the number of licenses and opening 757 private stores. His plan never got rolling in the Legislature.

Thornburgh tried in 1981 but ran into opposition from religious groups, mid-state conservatives and union backers.

Peterson said the system won't change unless there's a public outcry for it.

Brad Bumsted can be reached at bbumsted@tribweb.com or 717-787-1405.

"Let's put it out there and see what kind of response we get," said Rep. Robert Donatucci, D-Philadelphia, following a House appropriations hearing for the Pennsylvania Liquor Control Board yesterday.

The bipartisan hearing would be held jointly by the House Liquor Control Committee and the Senate Law and Justice Committee, probably after a state budget is passed.

At present, Mr. Donatucci doesn't think privatization supporters have enough votes for the bill to advance.

"I don't think it's even that close," he said. And he expects legislators first will deal with beer packaging initiatives that would allow consumers to buy six packs instead of whole cases at distributors.

Sen. Rob Wonderling, R-Montgomery, introduced the privatization bill this month, arguing that the state should not be in the liquor business. In the bill's current form, about two-thirds of the 623 state stores would be sold to the highest bidder and the remaining stores would be offered to a private equity firm. Proceeds from the sale would go toward improving health care for the state's residents.

"Even if it was viable, they would have to make some changes," said Mr. Donatucci. "When you put the facts on the table, privatizing the system in Pennsylvania is not as easy as it sounds."

At yesterday's hearing, PLCB Chairman Patrick J. Stapleton said privatization raises issues of possible social costs, including increased underage drinking, and financial implications. The PLCB last year alone returned nearly a half-billion dollars to the state treasury.

"We're not sure the numbers add up to being a plus for the commonwealth" if the system were made private, he said. He added that private retailers likely won't want to operate in remote areas of the state, forcing residents to travel long distances to purchase wine and spirits.

"I think the arguments against it [privatization] are even stronger than they were 10 years ago," when Gov. Tom Ridge tried unsuccessfully to privatize the system, he said.

Following a four-part Pittsburgh Post-Gazette series on Pennsylvania's liquor control system last month, reader responses showed widespread consumer frustration with the state store system.

But the complaint that selection is limited "is just not the case," Mr. Stapleton said yesterday, noting that the agency has 12,000 different wines in the system. "We're fighting a war of perception."

Rep. Ron Raymond, R-Delaware, agreed, saying with improvements in recent years "we have arguably the best liquor stores in the country."

That, plus the millions the system generates for the state, "makes a pretty compelling case for keeping the system the way it is," he said.

The appropriations portion of yesterday's hearing was brief, as the PLCB is one of the few state agencies that gives back money to the state each year.

Mr. Stapleton said sales had increased by "a little over 5 percent," but were below the agency's projected sales by about 1.5 percent. He attributed the missed sales goal to a general slowdown in the retail market. He said the agency is doing well when compared with neighboring states.

By Steve Twedt, Pittsburgh Post-Gazette
Steve Twedt can be reached at stwedt@post-gazette.com or 412-263-1963.

Below is a link to the brief MBDA has filed, which explains why distributors will be harmed by these transfers and why, as a matter of law, the transfers are not permissible.

View the legal brief (PDF file)

On Jan. 10, Wegmans applied to the Pennsylvania Liquor Control Board for a restaurant license that would allow it to sell up to two six packs of beer and serve beer by the glass with meals to adults eating in its café.

Francesca Chapman, deputy press secretary of the PLCB, said Wegmans must be inspected by the state before the application can be approved. And there must be a permanent 4-foot high wall separating the licensed and unlicensed parts of the store.

“Nothing is going to happen too quickly,” Chapman said.

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 Edward J. Dymek, a township supervisor, said that legally the municipality must conduct a public hearing regarding the application, which it has done.

“No one came,” Dymek said.

Barbara Kelly, township manager, noted that the few individuals who did show up for the meeting were local beer distributors concerned about competition from Wegmans.

David Shipula of Wilkes-Barre, president of the Malt Beverage Distributors Association of Pennsylvania, said the supermarket is “masquerading as a restaurant.”

The supermarket is using an existing restaurant license, in this case one from Nottingham, and transforming itself into a beverage distributorship, said Shipula, who owns Beer Super in Wilkes-Barre, not far from a Wegmans that has also applied to the PLCB.

As a beer distributor, Shipula said he is limited to what he can sell: beer, soda and snacks but not milk or other groceries. “No inducements,” he said.

Shipula said he has seen Wegmans’ plans for its Wilkes-Barre store that call for eight glass-door refrigerator cases.

“That’s not a restaurant,” Shipula said. “That’s the same as what I have. That puts us at a disadvantage and we’ve fol

lowed the rules for years.”

The township can accept or reject the application but reasons to reject it are extremely restricted, said Dymek, who was the township supervisors’ chairman in 2007. There has to be a grave concern.

Arguments that children will see beer consumption or that beer sales is not something residents want are not valid reasons to reject the application, Dymek said. The township has no recourse but to approve the application unless the applicant is involved in illegal activities, he added.

Dymek promised the township and its police will monitor the beer sales to make sure there is no drinking to excess, no vulgarity and that other shoppers are not being harassed.

Dymek said he does not anticipate a problem, noting that Wegmans is a “big operation and concerned with its image.”

In addition to East Caln and Wilkes-Barre, Wegmans has applied for restaurant licenses for its stores in Easton, Bethlehem, State College, Williamsport, Scranton and Erie, according to the PLCB. No application has been filed for Wegmans’ planned store at Uptown Worthington in East Whiteland.

David DeMascole, Wegmans’ regional beverage director for Pennsylvania, said the application process started in the commonwealth last year. The Rochester, N.Y.-based grocery chain already has beer and some other liquor sales in its stores in New York, New Jersey and Virginia.

Store personnel involved with the beer sales in Pennsylvania will go through Wegmans’ training program developed for the other states with in-store alcohol sales and be certified by the PLCB’s Responsible Alcohol Management Program, or RAMP.

RAMP training teaches employees how to serve alcohol responsibly, how to detect fake identification, to not sell alcohol to minors and visibly intoxicated patrons, and to reduce alcohol-related problems at licensee establishments.

“We’re very confident in our program,” DeMascole said.

DeMascole said there is no set date when beer will go on sale at its Pennsylvania stores.

With the restaurant license, Wegmans could also sell wine by the glass, but will be starting with only beer.

“We’re moving slow, one step at a time,” DeMascole said. “We want to do it right.”

Beer sold by the glass must be consumed in the store with a meal purchased at the store. No one will be allowed to sit in Wegmans cafe and just drink beer, DeMascole said. The case with single and six-pack beer merchandise will be in the café in a well-controlled area.

Wegmans, known for selling in-season produce from local growers, will carry that to its beer sales.

DeMascole said Wegmans is in contact with Victory Brewing in Downingtown to sell that brewer’s beer. It already uses a Victory beer in one of its soups.

The application comes at a time when the decision to issue Sheetz convenience stores a liquor license is under appeal before the Pennsylvania Supreme Court, which has yet to hear oral arguments in the case.

The PLCB conditionally issued a license in 2004 to Ohio Springs Inc., a Sheetz-related company, to sell beer and malt products.

Sheetz began to sell beer Feb. 1 but was stopped twice during the appeals process. The Malt Beverages Distributors Association of Pennsylvania sued to stop the Ohio Springs license from being granted.

Beer sales resumed Aug. 28 after the Supreme Court lifted a stay on the sales while it heard the PLCB’s appeal of a Commonwealth Court ruling.

DeMascole said Wegmans does not think the court decision will affect it.

“We don’t see this the same as Sheetz,” DeMascole said. “We see our process differently than theirs. It’s not the same situation. Our submission is within the guidelines of the law.”

By GRETCHEN METZ, Staff Writer  
DailyLocal.com
 
 

From the Altoona Mirror

Mirror Staff Writer Mark Leberfinger is at 946-7462.

After almost two hours of debate from township residents and officials, the board voted 4 to 1 to reject the market's application. Wegmans had hoped to transfer a liquor license from a Pizza Hut in Richboro to its 225-seat self-serve cafe.

Board members' concerns ranged from fears over open containers in grocery aisles, to increased access to alcohol for minors, to the safety of the market's already crowded parking lot.

“It's bad enough being in that parking lot on its own,” said Supervisor Michael Lamond Jr. “If you add alcohol to the mix, it can only get worse.”

Though one resident spoke out in favor of the idea, most public input was overwhelmingly negative.

Steve Mendenhall, who manages Thirsty's Beer on Easton Road, brought with him a petition of more than 300 signatures of area residents who opposed a Wegmans liquor license.

“If Wegmans gets a license, who's next?” Mendenhall asked. “Is Genuardi's next? Is ShopRite next? Are there going to be taps at Wawa?”

Chairman Paul Plotnik had worried most that Wegmans would one day sell hard liquor. Secretary Glenn McKay proposed limiting the market to selling beer and wine for take-out only.

“I can promise you I'd spend three years in a lawsuit if that happened,” said Mark Kozar, an attorney representing Wegmans. “(The Malt Beverage Distribution Association) would sue us, just like they sued our client Sheetz.”

MBDA of Pennsylvania has challenged each of Wegmans other Pennsylvania liquor license applications, as well as beer sales at a Sheetz convenience store in Altoona. The Sheetz case is now before the state Supreme Court.

By SARAH BAICKER The Intelligencer

“It’s apparent from quotes attributed to their Warrington store manager, Blaine Forkell, that they see most Pennsylvanians as morally and socially misguided,” said David Shipula of Wilkes-Barre, president of the Malt Beverage Distributors Association of Pennsylvania.  Local media quoted Forkell as suggesting after a Warminster Township hearing on Thursday that Pennsylvanians were in the “Dark Ages” about beer sales.

Shipula said a recent poll commissioned by MBDA showed that voters statewide were almost evenly split, against and for supermarket and convenience store sales of beer, with 48.9 percent opposed and 47.9 percent supporting.

“When you look at how strongly people feel about either position, though, you see an even wider split with 35 percent strongly opposed to selling beer where groceries and gasoline are sold, only 27 percent strongly in favor and 37 percent somewhere in between,” the Wilkes-Barre beer distributor said.

“What’s also telling is that more than 60 percent think the present system of retail distributors works pretty well and provides a wide array of consumer choices in terms of foreign and domestic beers, micro-brews, craft brews and brand names,” Shipula said.  “If anything popped up as a potentially popular improvement it would be allowing retail distributors to sell in less than case lots.  In the Philadelphia suburbs, 79 percent of those interviewed were in favor of that.”

Shipula said his group was strongly opposed to any legislation that would ease Pennsylvania’s historic ban on beer sales where groceries or gasoline are sold. “This is good public policy that has been in place for 70 years.  Of late, some chains like Wegmans on the grocery side and Sheetz on the gasoline side have been finding loopholes in the law to co-locate beer sales with groceries and gasoline, but that doesn’t make it right or good public policy.”

The survey, involving 772 Pennsylvania adults interviewed in September, was conducted for the Malt Beverage Distributors Association of Pennsylvania.

A total of 54.6 percent of those interviewed saw beer in supermarkets leading to more alcohol-related problems while an even larger percentage -- 62.7 percent -- believed that Pennsylvania's more than 1,300 existing retail malt beverage distributors "provide a sufficient selection of imported and domestic beers."

David Shipula, president of the beer distributors' group, said the consumer responses underscored two of the strengths of the current state beer sales system: wide consumer choices and strong restrictions against sales to minors.

Dr. G. Terry Madonna, President of Terry Madonna Opinion Research, noted that an even higher percentage of respondents -- 71.2 percent -- want to allow retail beer distributors to be able to sell beer in smaller quantities than the current legal purchase of a case of 24 bottles or cans.

"Statewide, people were pretty evenly split over suggestions that we expand the retail sale of beer into supermarkets and convenience stores with 48.9 percent opposed versus 47.9 percent favoring," Madonna said.

Shipula said, "The poll underscores what consumers have been telling our members all along, that the state-sanctioned system of beer sales works well with people being able to buy 12 or fewer cans or bottles for off premises consumption from some 11,000 bar and deli licensees and quantities of a case and larger from some 1,300 retail distributors. If anything, they find it strange that they can't buy less than a case from a beer specialty store."

Legislation has been proposed in Harrisburg to change several aspects of the current system ranging from allowing retail distributors to sell in less than case quantities to allowing bars and delicatessens, and by extension, supermarkets and convenience store/gas stations, to sell up to 18 cans or bottles for off premises consumption.

"People who want to change the law say they are acting on behalf of the consumers but this poll shows that the public wants a system with adequate protections -- something that we do have now," Shipula said. "The consumer also realizes that specialty stores -- and that's what beer distributors are -- tend to carry larger variety and selection of the product than general stores like supermarkets and convenience stores where shelf space is at such a premium that companies must pay 'slotting allowances' for the privilege of having the store stock their brands."

NOTE: The above represents some of the findings of a survey of 772 Pennsylvania adults conducted during September 2007. The survey was designed by Terry Madonna Opinion Research on behalf of various sponsors and the interviewing was conducted by Dynamic Marketing Research Associates of Easton, Maryland. The sample error for the total sample is plus or minus 3.5 percent. Telephone numbers for the survey were generated via random digit dialing. Respondents were selected from within each household. The final sample was weighted to correct for differential probabilities of selection and non- response.