By Reps. Mike Reese (R-Westmoreland/Somerset) and Brian Ellis (R-Butler)
This editorial is not going to be about expanding consumer choice.
Or about adults being able to purchase a bottle of spirits or even a six-pack of beer while doing their grocery shopping.
These are worthwhile points when considering state government’s monopoly on liquor sales. But this editorial is about the jacking up of liquor prices by the Pennsylvania Liquor Control Board (PLCB).
As many as 450 bottles of wine and spirits will be priced $1 higher by the end of August, according to a letter authored by the board and sent to suppliers. It suggests that wholesalers adjust their prices but falls way short of promising to lower or even freeze retail costs, if wholesalers comply.
Retailers and wholesalers should negotiate with each other. After all, that is only a small part of the production and supply chain that makes up America’s consumer market on just about every product we purchase.
This was the rationale behind a portion of Act 39 of 2016, which erased a 30 percent markup requirement in Pennsylvania’s liquor laws. The PLCB, which sought the change, argued that the required markup prevented the board from leveraging purchasing power to negotiate cheaper prices paid by them to then lower consumer costs.
What the board left out of its argument was that their go-to negotiation tactic was to announce that they will simply raise prices on 450 of the best-selling bottles but may consider otherwise if vendors go along to get along.
But if vendors play hardball, and it appears that many of them are, consumers will pay the inflated costs.
Regarding any other commodity, when shop owners and their suppliers negotiate with each other, it is generally to the consumer’s advantage. But that is because business owners know how high they can raise their prices before their customers will shop elsewhere. Wholesalers know that if their prices are not competitive, they’ll lose shelf space at that store.
But where are wine and spirits consumers to shop when only one retailer has a monopoly on every bottle sold in Pennsylvania?
Suddenly, 450 reasons why Pennsylvania should not be in the booze business turns to just one -- the lack of competition. And make no mistake, competition is the strongest factor in keeping prices in check. Furthermore, when that one retailer who is protected by an archaic set of laws attempts to leverage a better price, they’re not negotiating – they’re extorting.
The Legislature has made historic attempts to divest Harrisburg from the liquor business. One of those attempts even made it to Gov. Tom Wolf’s desk in 2015 but was soon vetoed. This left like-minded House members, working on behalf of the majority of Pennsylvania residents who agree, to chip away at the PLCB’s monopoly.
We drafted two separate bills with this in mind. They are House Bill 438
and House Bill 1033
, both of which passed in the House earlier this year. The first proposes that businesses who hold a restaurant liquor license, including some grocery stores, be able to sell up to three bottles of spirits per transaction. The second would allow beer distributors to expand their current license and sell wine and spirits in addition to their current products.
The benefits of these bills are two-fold. First, these products would be more accessible to Pennsylvanians who have clearly communicated that they wish to be treated like adults and purchase wine and spirits from privately owned businesses. Second, for the first time in recent history, the PLCB would have competitors.
We call on our colleagues in the Pennsylvania Senate to consider and pass these two important bills. They are consumer- and business- driven. They are consistent with the mission of reforming Pennsylvania’s antiquated liquor laws. And they are long overdue.
Representative Mike Reese
Pennsylvania House of Representatives
Media Contact: Raymond Smith
Representative Brian Ellis
Pennsylvania House of Representatives
Media Contact: Krisinda Corbin