Popping their tops over state’s new beer proposals
LANCASTER – Don Henry has spent the past 40 years carrying on a family tradition.
Keith Rutt has spent the past 20 years building a business for his family.
Bob Dano has spent the past 14 years working for a comfortable retirement.
But they may soon be forced out of business.
That’s what they fear may happen if Gov. Tom Corbett’s proposal to privatize the state’s liquor system becomes the law.
Henry, Rutt and Dano own beer distributorships in Lancaster County, and say the governor’s plan would ruin all that they’ve worked for.
“Corbett is going to put the whole industry out of work,” said Rutt, owner of Wheatland Beer Distributors on Columbia Avenue. “My daughter was going to take over the business after I retire, but if they change the system ,we’re going to go under.”
The proposed changes, he said, would make it nearly impossible for his business to compete with national retailers.
Under the governor’s plan, announced last month, the licenses for 1,200 stand-alone wine and spirits stores would be auctioned off – 800 reserved for large retail stores and 400 for smaller ones.
The proposal, which is detailed in a bill set to be introduced to the Legislature this week by House Majority Leader Mike Turzai, would give grocery stores, convenience stores, pharmacies and so-called big-box stores the right to bid for licenses to sell beer or wine.
It also gives beer distributors the right to sell smaller packages of beer such as six-packs, as well as the right to buy a license for wine and liquor sales.
But for a price.
A price many say is ridiculously high and completely out of touch with what they can afford.
Under Turzai’s proposed bill, distributors could buy an enhanced license for $150,000 and an annual renewal fee of $10,000 to break up cases and sell wine.
“Who the hell has that kind of money?” Rutt said. “The majority of us are family-owned, and we can’t take that kind of hit just to stay in business.”
The “enhanced license” would cost Rutt one-third of his annual profit, and that’s before taxes, insurance, payroll and other expenses are taken out.
His daughter, LeAnn Supeck, said she doesn’t understand why beer distributors are being asked to pay so much more than other retailers.
According to a memo seeking co-sponsors for House Bill 790, grocery stores could sell six bottles of wine and two six-packs of beer per customer for a license costing $25,000 annually. Stores with annual sales of more than $2 million will pay $30,000.
Convenience stores could sell six-packs with a $10,000-a-year license. Pharmacies would be able to sell two six-packs of beer and up to six bottles of wine for $17,500 annually.
Big-box stores, such as Walmart and Costco, could sell six bottles of wine and cases of beer through a $35,000 annual license.
In the past, beer distributors have only had to compete with taverns on beer sales. Distributorships sell cases, while taverns sell six-packs up to two per customer.
But under the new system, owners say the proposed reform wouldn’t just open up the market – it would tilt things in favor of companies with deep pockets.
“The governor is trying to cut down the middle class” to benefit big businesses, said Henry, owner of the Brewer’s Outlet at Manor Shopping Center.
Dano, owner of Engleside Beverage Mart on South Prince Street, said beer distributors will be at a financial disadvantage just to purchase the enhanced license, let alone bid in the wine and spirits auction.
“I’m sure the bidding will go through the roof; I won’t be able to get one,” he said. “They will all end up going to the wealthy businesses.”
The personalized service that beer distributors can offer customers is also in jeopardy, Henry said.
“I have great customers that tell me they’ll stick with me, but if just one person decides to pick up a case at Walmart rather than here – it’s going to hurt me,” he said.
Dano said he would miss his customers, and he thinks they would miss him as well.
“We’ve been a part of this community for so long that I’ve actually been able to see my customers grow up,” the 72-year-old said, adding that after his wife, Mary, died two years ago the store has given him a reason to keep moving.
Supeck, secretary of the Malt Beverage Distributors Association of Pennsylvania, said she’s been thinking a lot lately about how she will support her family if the business dries up.
There’s a good possibility, she said, that large market stores such as Weis, Giant or Target will scoop up licenses and drop prices so low that small business owners can’t compete.
“They can afford to offer cheaper prices for a few years, just long enough to run us out of business and then they’ll put the prices way up,” she said.
Tom Derr said he has reason to worry. The owner of West Lawn Beverage and a regional director of the trade association has already gotten a taste of what’s to come.
Derr said his business, along with other beer distributors, lost some customers after Weis Markets in Wyomissing started selling beer.
“They can mix and match microbrews and specialty beers in six-packs, and we can’t,” he said. “People don’t want to spend $30 to $70 on a case of beer they don’t know if they’re going to like.”
But shopping for beer in a supermarket setting or a convenience store for that matter doesn’t sit well with Derr, whose family has operated the distributorship along Penn Avenue in West Lawn since 1951.
“Buying beer should be a friendly and warm experience, and you’re not going to find that at Sheetz or Walmart,” he said.
The family atmosphere is what keeps people coming back to Wheatland Beer, Rutt said.
And he doesn’t understand why a successful business should suddenly be faced with bankruptcy just to remain competitive.
Rutt has thought about taking out a loan to get the enhanced license, but he’s not sure he would have space to expand his business.
“There’s no room to add wine,” he said, adding that they have about 1,000 different items to offer. “With all the new beer brands, we’re stuffed with inventory.”
The best part of the license would be the ability to sell six-packs showcasing the microbrews the store has in stock. It’s something Rutt has been waiting for for a long time.
“We’ve been living by these stupid rules all this time, and now this idiot governor comes along and calls us inconvenient. We’ve never had a choice to do anything else,” Rutt said.