Sixpack Sez
Pennsylvania’s bizarro beer rules are facing a shakeup this summer. Here are a few developments that could change the way we buy beer in the Quaker state.
Sixpacks rule
Last month, a state Senate committee OK’d an amendment to permit sixpack and 12-pack sales at distributors. It’s moving slowly, but if legislators sign off on it, the bill could be on the governor’s desk in the fall.
On its face, this is a no-brainer. Why are consumers forced to purchase a full case of 24 bottles at a time? With the price of specialty cases now over $30, it’s pure idiocy.
Or is it?
There’s a worry among many in the craft beer industry that selling sixpacks at distributors is a step toward beer sales in grocery stores. And with shelf space at the Acme generally limited to national brands, they fear, say goodbye to microbrews.
I’m not buying that argument.
First, microbrews have already thrived nationwide in spite of many rules (and a competitive marketplace) that favor the big guys. Second, sixpacks encourage consumers to sample a greater variety of esoteric brands. Finally, sixpack sales at distributors will lead to lower prices.
Show me the loser here.
OK, there are the delis and taverns, which hold licenses to sell sixpacks. The new rule puts them at a competitive disadvantage, because they pay retail prices for their stock. That’s easy enough to fix: Allow taverns and delis to purchase beer at wholesale prices.
Shangy’s v. InBev
This David vs. Goliath federal lawsuit pits Shangy’s, the popular Emmaus, Pa., beer distributor against the world’s largest brewing conglomerate. At stake: regional distribution rights for Hoegaarden.
InBev accuses Shangy’s of lying about sales and wants to end its licensing agreement with the distributor.
Shangy’s argues that it was responsible for developing the popular Belgian brand in Philadelphia. If it loses Hoegaarden, its best selling brand, it would be disastrous for this family-run business, which is largely responsible for the wide variety of import brands available in Pennsylvania.
What began as a contract dispute, though, is now a potential constitutional battle. The focus is a state regulation that requires out-of-state breweries to sell their beer through a wholesaler (the middleman in the so-called “three-tier” system of distribution) before it reaches the retailer. In-state breweries are permitted to sell directly to retailers.
InBev, in a surprising development last month, charged the rule is a violation of the U.S. Constitution’s commerce clause, which prohibits states from giving a competitive edge to in-state businesses.
This argument is at the center of what may evolve into a full-scale upheaval in the entire U.S. liquor industry.
In several recent federal court decisions (especially Granholm v. Heald), judges have ruled that the commerce clause trumps the post-Prohibition rules that established the “three-tier” system. So far, the rulings have involved only wine, but experts believe it’s only a matter of time till beer distribution is scrutinized.
Among other changes, the court challenges could lead to an end to the state’s silly prohibition of mail-order beer purchases.
HB 1420
In Harrisburg, state legislators worried about Granholm aren’t waiting for the courts. In a little-noticed bill that won unanimous approval from the House, the distribution regs were re-written to eliminate the distinction between in-state and out-of-state breweries.
Under the new rules, self-distribution would be granted to all small (under 300,000 barrels a year) breweries, regardless of their location.
Yes, this is arcane stuff. But some small brewers say the ability to sell beer directly to retailers is essential. Yards Brewing, for example, battled for months in court last year to protect that right when its longtime North Philadelphia distributor attempted to transfer its license to a King of Prussia wholesaler.
Today, Yards – which carts every keg to the tavern itself – says it sells more beer than ever.
Vidalia Marketplace
While everyone’s fretting about the laws changing to permit beer sales in supermarkets guess what: It’s already happening in Montco.
The Vidalia Marketplace (561 South Broad St., Lansdale), which opened in June, is calling itself the “first grocery store in Pennsylvania to sell beer.” The 27,000-square-foot market carries a nice range of specialty beers (Dogfish Head, Russian River, Lost Abbey) along with gourmet foods.
Is this a landmark development?
Nah, the store is using a simple “E” license granted to eating places that serve liquor. Don’t be surprised if even larger grocery stores (Wegman’s) follow suit.
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