Under the guise of “modernizing” state beer laws, Harrisburg lobbyists engaged in some old-fashioned legislative greasing this week.
They came up with an amendment in the Sunday-beer-sales bill that would give British booze giant Diageo Guinness, Johnny Walker, Smirnoff) a huge cash windfall while denying the same savings to the state’s small brewers.
The amendment rewrites Pennsylvania’s arcane liquor law to allow third-party repackaging of beer cases.
Currently, state beer regs say that only a brewery is permitted to package beer. That’s no big deal when your assembly line is producing zillions of identical cans of Lite.
But what if you want to market cases with, say, four flavors of beer? Even 21st-century robots can’t handle the task of mixing and matching. Microbreweries, like Yards and Victory, do it by hand.
When Diageo, which produces Smirnoff Ice at a plant near Allentown, wanted to do it, the company found the labor costs too steep.
Normally, a big company would turn to a third-party repackager to handle the job. Using cheap manual labor, these companies repackage products into those impossible-to-open blister packs you see on the shelves of big-box stores like Costco.
To do the same with beer, Diageo would need to change the law.
State Rep. David Steil, R-Bucks, obliged.
Tucked into the Sunday- sales bill is an amendment that, for the first time, would permit another company to repackage malt beverages.
Steil said he backed the amendment because the owners of Diageo’s repackaging company live in his district. “They’re going to be forced to go out of state without the amendment,” Steil said.
Fair enough, but two provisions raised some eyebrows.
One limited the third-party repacking to breweries that produce a minimum of 15,000 barrels a year. That means the state’s microbreweries – the very companies that depend on the sale of variety cases – would be denied the same cost savings.
Steil promised yesterday that restriction would be eliminated.
The other provision no doubt thrills out-of-state brewers like Coors and Anheuser-Busch. To “preserve” the so-called three-tier system of beer distribution (breweries must move their product to an intermediary wholesaler before it reaches the retail level), repackaged beer must be returned to the brewery before it’s sent to a wholesaler.
That’s no problem for Diageo – its warehouse is nearby the repackager.
But that’s a helluva hurdle if you have to return your repackaged beer to St. Louis.