President’s Message

Beer Distributors See New Enemy On Our Doorstep.

 

President’s Message

By Frank Pistella

 

Fact vs Fiction

“Our membership believes strongly in the principle of maximizing consumer choice”.

Alex Baloga, Pa Food Merchants, 1/24/22, under oath, before House Liquor Committee. 

The factNot true.  While good for our distributors, when Act 39 passed,

giving grocers wine, they reduced “choice” substituting box wine for beer. 

Now they seek to renege on their deal to create safe registers labeling the 2016 law “antiquated”. 

So much for having agreed to these provisions in the law less than a decade ago!

Since 2010 our world has changed – our greatest threat is the Pennsylvania Food Merchant.

These multimillion-dollar businesses advocate the elimination of the 192-ounce maximum which will destroy our decades-old market niche and dissolve our investments.

As in the past, they will again seek to create the “G” license eliminating both seating and the “on-premises sale” requirement.  After that, they will advocate changes in the law that will give them carte blanche authority to operate unrestricted in all wholesale and retail operations dealing directly with welcoming manufacturers.

We saw this at the January hearing before the House Liquor Committee.  The subject, HB 2272 (Rep. Natalie Mihalek, R-Allegheny), was a proposal for a constitutional amendment to make liquor sales at state wholesale and retail stores unconstitutional, and thus illegal.  The Food Merchants used its time to criticize the current system as it relates to the sale of beer – not the sale of wine and spirits!

Distributors provide consumers with convenient access to the entire gamut of malt or brewed beverages.  Beer distributors created this marketplace; they compete primarily with other beer distributors to sustain it as the most robust market possible for each geographic area in our state.  And beer distributors do this with a fair profit margin – far below the sky-high margins that were once enjoyed by the six-pack or pizza shop.

Seeing those high margins at six-pack shops for a price inelastic product like beer, Food Merchants coveted these sales, sued, and lobbied regulators hard in order to boost their net profits.  Now they want to destroy our market niche by eliminating the 192-ounce maximum. We stand between them and their goal of small inventories (less choice) and higher margins.  It’s profit and not a choice they want to provide.

Food Merchants, of course, will not be happy until they get it all:

  • Elimination of the 192-ounce maximum.
  • Sales at any register without serious concern for minors and intoxicated persons.
  • The “G” license, as sought in prior years, is unencumbered with the costs and overhead that go with doing business as an R licensee.
  • Unfettered access to wholesale markets and manufacturers.

The Good News

There is good news!  As your president, it is my honor to see us as guardians of this marketplace and we are seeing growth among our members.  Just this week, reviewing an application for membership, I became aware of the construction of a brand-new beer store designed to anchor a small shopping plaza in Central Pennsylvania.  This is a terrific investment by a family that purchased a failed license about a half dozen years ago and is now expanding in a mall dominated by a grocer. I see others throughout PA making substantial capital investments and expanding their businesses. Way to go!

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Malt Beverage Distributors Association of Pennsylvania
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