Is Pennsylvania better off WITH the case law?

My buddy -- and frequent STAG commenter -- Sam Komlenic sent the following as a response to my post on Pennsylvania's initiative to get rid of the case law; he's against it. Hear him out, he's got some interesting angles, interesting enough that I thought it would work better as a post than as a comment. I don't buy much of what he says, though: I'm going to insert my responses in the text, and then we invite you to join in.


OK, I've done my research; here goes. Those who have been paying attention know that some retail entities have been doing yeoman's work to get beer put into their establishments here in PA. The Sheetz convenience store chain and Wegman's grocery have both purchased PLCB "E" retail licenses (I think I've got that right, if not, my bad). These permit the sale of beer on-premise in restaurant-oriented operations.

Sheetz, in their huge Altoona location, is now selling six packs only, prohibiting on-premise consumption entirely, pending a PA Supreme Court ruling on the issue. Wegman's. in their State College location, applied for transfer of a license, purportedly to offer the "convenience" of on-premise beer sales as an option to customers in the restaurant area of the store. This has not yet happened, and I'll bet they're waiting for the court's ruling.

Neither of these entities really wants to assume the liability involved in on-premise consumption, as evidenced by Sheetz's intentional and blatant disregard for the parameters of the license they were granted, even though their initial intent was to provide customers the option of a beer with their hoagie (on-premise, to get the license, then let the court decide). They want to sell six packs, and six packs only, out the door.

I don't really see this as an issue. There are plenty of similar licenses already being used this way in the state's "bottleshops." People assume that there is a special license for places like this, my former state legislator did, he told me they had a "deli license": there isn't such a thing. They've simply bought a tavern license and made it a store policy that you can't drink on-premises, a way to make the state's laws allow a sixpack shop. It's an expensive way to do it in some areas -- these licenses aren't cheap -- but it's hardly new or particularly underhanded.

Now, take this a step further. Once distributors are granted the luxury of selling six packs, what's to prevent Wegman's, or Sheetz, or Weis, or any other retail entity to purchase a distributor's license? Keep in mind that there are somewhere in the neighborhood of 2,000 distributor licenses in PA, many (most?) of which are not massive operations mastering the brands of large brewing companies. Many (most?) are small, mom and pop "D" distributors with little or no influence in the market, buying all of their beer from master distributors in their territory, and whose licenses would immediately be worth more than their entire business, property included.

As I understand it -- as you said, if I'm wrong, my bad -- D distributors are very limited in the items they can sell besides beer -- snacks, beer glasses and books/magazines, lottery tickets, soft drinks, and smokes, I think -- precisely to prevent grocery stores from 'back-dooring' their way in like this. If the grocery store went to the extent of setting up a separate corporation to buy the license, and put a beer distributor right next door with their name over the door...well, the state already encourages the co-positioning of distributors and State Stores.

One more step: what's to prevent the grocery/convenience chains from buying the more influential "ID" licenses, which permit importation of beer from out of state? This could potentially make Wegman's the master distributor for A-B, Miller, or whatever in your county(ies). Also note that it is not hard to convert any "D" license to an "ID" simply by applying for the change.

Why is a grocery store buying that ID any more threatening than a large and growing wholesaler buying it up? If one wholesaler had A-B for the whole state, would that be different than if Wegman's bought it?

I'll accept this legislation with one small and seemingly insignificant change that will NEVER happen: that it strictly prohibit sales of beer in grocery/convenience stores. That simple. It protects the distributor network as we know it without allowing the transfer of licenses surreptitiously, which has already begun to occur. It would also fulfill the intent of the law that is now being presented: to allow distributors ONLY to enjoy this privilege. These guys are already knocking on the door, the legislature is in their pocket, and they have the funds to beat this horse until they get what they want, and I don't want what they do.

You won't see that, you're right, but why not go whole hog: let's go to a package store system. Break up the damned State Store system and make ONE type of license to sell beer, wine, liquor and all alcohol off-premise, in any amounts, without artificial restraint. Put reasonable limits on the number of licenses per capita per county if you feel you have to -- and they will -- but give these guys a chance. I'd love to see a package store system in PA.

My craft distributor told me that if this law is passed, he will move toward selling by the six and twelve pack only. Space is a major issue, margins are another.

Is that all bad? If he doesn't offer case discounts, someone will. It's his business, Sam.

Let's also look at draft availability. Supermarkets in states that permit their selling beer, in my experience, place very little import on a good selection of kegs. If the distributor system diminishes significantly, where will you go for a good selection of halves, quarters, and sixtels? Pennsylvania may currently be the most draft-friendly state in the Union. Don't expect that to continue.

That's assuming that this will lead inevitably to supermarket sales. As I said above, I don't buy that premise, so I'm not overly concerned about this prospect.

For now, I stand by my initial observation, that this legislation is a back door avenue for grocery store sales in Pennsylvania, nothing more. Once this occurs, the majors will gain exponential influence in the market, which is WHAT THEY WANT.

Also keep in mind that PA is one of the only (perhaps THE only) states where distribution is granted in very small chunks, one (or a few) county(ies) at a time. The big guys HATE this! Many states have one or two distributors for the whole state. It's easier, more convenient (there's that word again), and more profitable for them. This legislation could easily begin the dismantling of that landscape, as well.

Many craft and import brands have granted rights to the whole state to one wholesaler...because it's easier and more convenient. Distribution rights CAN be granted in very small chunks; they aren't always, it's up to the producer and wholesaler. Most other states work the same way...but their wholesalers have consolidated and merged. Pennsylvania is a big, populous state, with a long history of geographic division: we've got chunks of population separated by a lot of open land. That's got more to do with it than laws.

Having been in beer sales in the past, it was my experience that even under the present regulations, when a new bottle shop was being opened, the distributors with clout called the shots. They would lay out the cooler placements for the retailer, to the point of minimizing or excluding the placement of minor brands they did not themselves represent. They buy equipment for the licensee, flaunting existing regulations. They get the tap placements they want. They control it to whatever extent they can. Think this will change for the better with even greater freedom?

This is all too true. I'd love to see more PLCB enforcement of these regulations, instead of looking for domestic animals on premises and registration of brands.

Call me a cynic (I am), but this whole thing is designed to look beneficial to the beer consumer, when in fact, it is only and entirely about convenience(!) and corporate influence, not selection and diversity for the consumer.

Be careful what you wish for...you might get it!

I'm fully behind that statement. We don't know what this law will eventually come out to, what all the effects will be: no one does. But I still don't see it leading directly or indirectly to supermarket sales.

Call for discussion!