PA Liquor Reform: Changing Laws for Changing Times
Jul 31, 2017 08:28PM
By Vanessa Orr
Governor Tom Wolf at the opening of the first Wegmans' Wine Shop.
Back in the day, if you wanted a single beer or a six-pack, you went to the bar. If you wanted a case of beer, you went to the beer distributor, and if you wanted hard spirits, you went to the liquor store. And if you wanted alcohol on a Sunday or holiday…you went without.
A lot has changed when it comes to Pennsylvania’s liquor laws, particularly in the last year. We spoke with Elizabeth Brassell, director of communications for the Pennsylvania Liquor Control Board (PLCB), to help sort it all out.
North Hills Monthly (NHM): Am I just imagining it, or have there been big changes in how beer, wine and liquor are bought and sold in Pennsylvania?
Elizabeth Brassell (EB): No, you’re right. Back in the 1930s, the Pennsylvania Liquor Control Board was created with the goal of restricting access to alcohol, but times—and social comfort levels—have changed. Our goal now with regard to responsible alcohol sales is to really put the consumer first by providing convenience, access and enhanced customer service.
NHM: How did this come about?
EB: As an administrative agency, we don’t really get into the whys and hows of the law or what made it happen; we just administer what is approved. The state’s most comprehensive liquor reform bill was completed a year ago; it was signed into law on June 26 and went into effect August 8, 2016. Three major acts substantially changed liquor laws in 2016 —Acts 39, 85 and 166.
NHM: Tell me about some of the changes.
EB: Act 39 removed operating hours’ restrictions for Fine Wine & Good Spirits stores; now we can determine our stores' hours without limitations—for example, we’ve expanded hours on Sundays and we’re open on many holidays other retailers are open. The Act also created a wine expanded permit, which means that private retailers can sell wine to go—supermarkets can now create beer and wine sections in their stores.
Act 39 also authorized the direct shipping of wine to homes; people can receive 36 cases from a winery each year, for personal consumption only. There are now nearly 1,000 direct wine shippers licensed.
NHM: Does this help or hurt local producers?
EB: There are a number of things that these acts provide to help Pennsylvania producers. Instead of just having one primary location and two satellite locations, limited distilleries can now have up to five satellite locations. Pennsylvania manufacturers are also now able to promote and cross-sell each other’s products; not only wines, but Pennsylvania distilled spirits and beer. This really opens up a lot of opportunities. In the past, we’ve heard from wineries saying that it’s great to have a wine trail, but what about the guy there looking for a beer? Or they had men who liked touring their distillery, but the women with them didn’t drink bourbon.
NHM: Speaking of beer, there have been some major changes there as well.
EB: One of most recent changes is a result of Act 166, which went into effect this past January. It changed volume restrictions on distributors. Before, beer distributors could only sell beer in 12 packs or higher. Act 166 removed those restrictions, and they can now sell as little as a single bottle. This put distributors on a more equal footing with restaurants, which were able to sell up to two six-packs to customers.
NHM: How do the laws affect cider, which seems to be gaining in popularity?
EB: The law changed the state’s definition of ciders to match the federal definition, which means that it is handled the same as beer. We are no longer selling it through our Fine Wine & Good Spirits stores; like beer, it is now available in retail outlets.
NHM: Now that these new laws are in place, don’t more people want to become involved on the selling side of things? Doesn’t that create a problem with the number of liquor licenses available?
EB: We’re definitely seeing a lot of the bigger chain retailers showing heightened interest, especially with the wine expanded permit. Act 39 also created an auction of ‘zombie’ licenses—those where the businesses have gone out of existence, or the licenses were expired or revoked. We went back to the year 2000, and there are about 1,200 licenses available that we can reinstate and auction off to potential licensees. We’ve now had our third auction, and we only release around 40 to 50 licenses at each auction. We’re taking a measured approach, because we don’t want to devalue the licenses across the state.
NHM: How is the demand?
EB: We recently auctioned off 50 licenses across 40 counties; we didn’t receive bids on five of them. Location might have been a factor; we’re trying to spread the wealth throughout the Commonwealth. I think the demand will continue to grow as the beverage landscape continues to evolve. Some of the bigger chains are aggressively purchasing licenses on the private market as well as bidding at auction; I’ve heard that some licenses are going for up to half a million dollars on the private market. At auction, the minimum bid is $25,000, which is a fraction of what a license sold privately would go for in a Philadelphia suburb. We’ve had bids as high as a half-million, and as low as $26,000.
NHM: It’s not just grocery chains getting into the action either, is it? Aren’t convenience stores also getting involved?
EB: For a while, there was the legal question of whether gas stations could get licenses, because alcohol had to be kept separate and distinct from where fuel was being sold. A challenge went all the way to the Supreme Court. Act 39 removed this provision, which opened the door for an influx of convenience stores that wanted to sell alcohol, and that were also interested in wine expanded permits.
NHM: Privatization has been talked about for years; are state-run liquor stores going away?
EB: Any change to the Fine Wine & Good Spirits retail setup would require legislation, and it’s up to the House and Senate leadership to figure out what the priorities are. There have been privatization and modernization debates back to the 1950s. There are currently 607 Fine Wine & Good Spirits stores in Pennsylvania, and we’re doing everything we can to maximize the customer experience, including adding holiday and Sunday hours. We’re now selling Pennsylvania Lottery tickets in half of our stores. We’ve rebranded our stores with a welcoming color palette, a center table that offers guides and a tasting bar, and we carry a great collection of products. You’d be hard-pressed to visit an out-of-state liquor store or chain and consistently find 5,000 products like we have in our premium stores. We’ve wholeheartedly embraced the concept of putting the customer first.
NHM: What about online sales?
EB: In addition to revitalizing our brick and mortar stores, we’re also looking at opportunities to make the online experience more robust. We’re offering more products for home delivery, and for delivery to our stores. We’ve discovered that convenience is king—we were concerned with some of the barriers might stop people—for example, you have to be home to sign for a shipment, and there are extra costs. But the products are definitely selling.
We’re also making changes to our special order program, because Act 85 removed prohibitive quantity restrictions, which opened up special orders to a broader population. For example, if someone goes into a restaurant in Pittsburgh and enjoys a bottle of wine that they can’t find in our Fine Wine & Good Spirits system, we can help facilitate the transaction between the supplier and the consumer. This fall, we’ll be expanding our online ordering system for items available through suppliers but that aren’t in our inventory. We’re looking at tens of thousands of products that we can make available. We’re taking the opportunity to improve customer service and convenience by moving into this digital space.
In addition to growing our e-commerce business, we’re also looking at a customer relationship management program; for example, something like a loyalty rewards program. We’re figuring out how to design some sort of members-only, discount-based, rewards-based program in the next year or so.
NHM: That’s a lot of changes. Do you see more coming down the pike?
EB: The changes made in the last year are considered to be the most comprehensive reform since Prohibition, and I think that things will continue to evolve in the coming years—things are definitely changing in the licensing landscape; especially with the growing interest by a new population of businesses interested in obtaining wine expanded permits and direct wine shipper permits. There’s a real shift going on. n