Action on the PLCB blog

I know, I know: I don't have Part II on the PLCB hearings up yet. But I do have several new posts up on the PLCB blog, including this one on Stapletonstein's Monster (or, The Wine Kiosk That Refused To Die!) and this one on how the upcoming PA Supreme Court decision on the incredibly controversial (!!!!) 'beer in supermarkets' issue is really a no-win for beer distributors because of bad strategy. There's also a new poll...that's just slightly tongue-in-cheek.

More bad arguments for keeping PA's beer out of grocery stores

In all the excitement over the PLCB/BLCE raids in Philly in the past five days, there's been very little comment on an opinion piece that ran in the Inquirer yesterday. It's by Ed Klunk, the vice president of the Malt Beverage Distributors Association, and we've seen pieces like this before.

Here's some of his argument (the best parts, really, though they're not much):

Each beer distributorship in Pennsylvania is individually owned and allowed to operate out of only one location, so there's no opportunity to monopolize malt-beverage sales. But the grocery and convenience stores that are seeking to act as distributors are not subject to the same limitations, which raises the prospect of unfair competition.

Actually that is unfair, and lifting the limits on distributors won't wholly make it fair. You can't expect them to suddenly come up with the cash to open five more stores. And grocery stores can sell anything they want, making them a more attractive stop than a place that sells beer, snacks, and lottery tickets. But the next argument is bogus.

Because grocery and convenience stores sell a wide variety of items, they would have the ability to sell selected beverages below cost, essentially undercutting any beer distributor in the area. We have seen Wal-Mart do the same with other goods, undercutting neighborhood retailers.
Wal-Mart does so partly by negotiating lower wholesale prices using its bulk purchasing power. But the company has also shut out the competition through "loss leader" pricing, willingly selling some items below cost so it can bring in customers and build market share.

That's just downright deceptive (which is not to say "lying." There, I didn't say it), because Pennsylvania law forbids selling beer for less than cost. Not to mention, Klunk only ever refers to these stores as "Wal-Mart," because he knows there's bad feeling about Wal-Mart. Wal-Mart, of course, doesn't currently sell beer in Pennsylvania. He doesn't say anything about Wegmans selling beer, because people love Wegmans. Hah? "Deceptive." In fact, some say "Downright deceptive." *

How about this howler:

Grocery and convenience-store chains argue that allowing them to sell beer will improve access and convenience for customers. That's a weak argument when you consider that beer is available for carryout or on-site consumption at approximately 1,200 distributors and 14,000 carry-outs, bars, and restaurants in Pennsylvania. 

Did he say "That's a weak argument"? Yes, yours is, Ed! Selling beer by the bottle, sixer, or 12-pack DOES improve access and convenience for customers, especially when it's right where they buy their groceries! That's such a slam-dunk argument, I don't know why you brought it up. Are you trying to scare weak-minded people into thinking there are too many retail beer outlets? Sorry.

But he saves his worst for last:

The current system also deters illegal sales to minors. It does so by limiting beer sales to licensed locations that are highly dependent on alcohol sales. If a grocery or convenience store is cited for underage sales, it may have to padlock the beer coolers for a week or a month. But it can keep selling other stuff and stay in business.
Cite a beer distributorship or a neighborhood bar, meanwhile, and it has to close its doors while its license is suspended. The financial penalty is severe.

Ed, Ed, Ed... Wegmans does 100% carding. I'm 51, and I get carded at Wegmans, every time. Do you card everyone at your store? (Ed Klunk also owns Thorndale Beverage, a beer distributor in Thorndale, PA.) I strongly doubt it. But don't worry. You can always drop a dime on Wegmans for selling unregistered brands; seems likely that everyone in the State is. Have you checked your stock against The List lately? (The phone number for the BLCE anonymous tipline is 800-ISQUEAL, kids!)

Okay, kidding aside, this is a lousy piece. Klunk really should have focused on that first argument and made the whole piece out of that. Like the case law or not (and apparently most of you don't), the state's distributors have worked under the often ridiculous strictures of The Almighty Liquor Code. Tons of paperwork, needle-nosed inspections, and they too, suffer from the case law. I worked beer retail in PA for a while in the early 1990s: throwing cases is a long day, and the customer always wants the case on the bottom of the stack. I remember one distributor telling me with heart-felt emotion how he'd really love to have a nicer store -- "with carpet, and wood shelves" -- but with the case law, they're stuck with concrete floors and pallet-jacks.

Is it a monopoly? Sure. Would they like to protect it? Of course. But to toss them aside like used Kleenex isn't fair either. We need to rewrite the Liquor Code to allow these guys a fair shake. Here's one plan: give them a free upgrade to an "all-alcohol" license when the state stores are privatized. Then they could be real liquor stores, with everything from beer to tequila, and the grocery stores would just have beer. Mmmmm....package store.

But if the MBDA and Krunk and our buddy Dave Shipula just keep fighting this without trying to compromise, they're going to wind up out in the cold. They need to see this coming, gear up, and go to Harrisburg to get the best deal they can. Not this kind of stuff.


*It was me, at the beginning of the paragraph. I wouldn't want to deceive you.