Pa. breweries, beer sellers wary of liberalization

HARRISBURG, Pa. (AP) -- Pennsylvania's breweries and beer distributors are worrying about how state lawmakers may liberalize the Depression-era system of selling beer and wine and whether they will be forced to compete for sales at a disadvantage with bigger, better-prepared rivals.

A bill passed by the state House of Representatives last week would open up the possibility of making beer distributors and supermarkets one-stop shops for beer, wine and hard liquor.

Under it, beer distributors could buy licenses to sell wine and liquor, and leftover licenses would be available to other businesses that qualify. Meanwhile, grocery stores could buy licenses to sell wine in their aisles and beer through separate restaurant-style areas with food and seating.

The bill also could eventually mean the closing of state-controlled liquor stores.

Republican Gov. Tom Corbett, a staunch advocate of privatization and smaller government, supports the bill. He is running for re-election next year and actively lobbied for the bill as a way to get government out of the business of selling wine and liquor.

But the Senate is likely to change it. On Thursday, the chairman of the Senate committee that plans to hold hearings on the House bill criticized it as lacking convenience for a number of reasons, including the requirement that beer and wine be stocked in different areas of a grocery store.

"Privatization for political reasons — simply to tout the achievement — would be wrong," Sen. Charles McIlhinney, R-Bucks, said in a statement. "Privatization done the smart way to protect taxpayers, help consumers, and actually lift up Pennsylvania's small wineries, brewers, distillers, mom-and-pop distributors and small businesses is what I support."

McIlhinney said the privatization of state stores in Washington resulted in higher prices and lower-than-promised tax collections.

Pennsylvania-based brewers worry that the proposed system would force them to compete for shelf space in beer distributorships with better-selling national beer brands, not to mention wine and liquor.

The current system of distributors helps protect smaller brewers, they say. As an example, Anheuser-Busch InBev has a 46 percent share of the U.S. market but just a 28 percent share of the Pennsylvania market, according to Suffern, N.Y.-based Beer Marketers Insights, the Pittsburgh Post-Gazette reported.

The bill "would most likely reduce the number of brands available to the consumer and make it more difficult for small regional breweries to compete," Tom Kehoe, president of Yards Brewing Co. in Philadelphia, told the Pittsburgh Post-Gazette in an email.

For their part, distributors worry that big supermarkets will undercut their beer sales and are better prepared to handle wine and liquor sales.

"There's no chance to really ramp up and get our feet under us and stabilized," Mark Tanczos, president of the Malt Beverage Distributors Association of Pennsylvania, told the Patriot-News of Harrisburg. "Other chains out there have been doing this for years. They are machines waiting to roll in and gobble us up."

Dwight Dissinger, who owns Cold Case Beer & Soda, a beer distributor a few blocks from the Capitol in Harrisburg, said he wonders how he could create shelf space to sell wine, hard liquor and six-packs of beer. He also wonders if he could afford the price of the licenses.

"At this point in time, all you can do is wait it out and see what happens," Dissinger told the Patriot-News.