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What is the implication for Beer Distributors in Pa if they allow grocery stores and Pharmacies to sell beer?

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Jun 1, 2017
Kevin Blank
........................................
PA
Premium Broker

John,

First lets talk about the current licenses. There are the master distributors and they supply the retail distributors, bars, restaurants, etc. They only sell by the pallet.

The retail distributors are only allowed to sell by the case. They can choose to sell to restaurants, bars, etc as well. They can typically get contracts for the beers that the establishment doesn't sell enough of to buy by the pallet.

Then there are the restaurants, bars, and what people call 6-pack stores. Most 6-pack stores are essentially restaurants because by law they have to allow buyers to drink on the premise so it only makes sense to be a bar or restaurant and make money with food as well.

What is being proposed is to allow grocery stores and pharmacies to sell 6-packs. To do this, they must have separate access to the 6-pack section (no direct route from grocery store to beer store). They must have separate registers, so they will have to pay for their groceries and then buy their beer next door. They must have a place to allow the customers to drink on the premise. This is why Sheetz lost their license after the PA Supreme Court ruling.

Now for the real estate. In order to put in what is essentially a separate store, the location will need to have the space to do it because I can't imagine Giant Eagle or someone making the grocery store smaller to allow room for the beer. To me, this would mean that they would have to have ample space outside to build on and still have enough parking. Not every existing store will be able to do this. Now with that said, I am sure any future stores will make sure they have the space.

They will be selling 6 packs and the cost to the customer is much higher. If a current distributor has regular customers that drink by the case, they are not going to start to buying by the six pack because it will cost them fortune. Now, they may go and buy six packs to try out some new beers because buying by the case is too much in case they don't like it. If they like it, they may start buying it by the case. The retail distributors may lose customers that come infrequently just to have beer in the fridge in case someone stops by.

I personally believe that if grocery stores can sell six packs without all the contingencies, then the LCB should let the retail distributors sell by the six pack as well to keep it fair.

All in all, it may have a little effect but I don't see it closing them down. We like our beer and we like it fresh so depending on how much we drink is how we will decide where to buy.

Hope that helps. I may be slightly bias because I have a couple of distributors listed for sale.

Aug 11, 2009
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Franchise Advisory Group
PA

John, Liquor sales in Pa are run the by state and are not sold in grocery stores and Pharmacies. You would have to buy a beer license and they do have a separate license for beer distributors. I will tell you that it is very difficult for beer distributors to survive in this state, because of price limitations.

Apr 6, 2009
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The BAF Group LLC
MD

The key is not where they are selling beer at the retail level, but what does the law say about where the retailers - regardless of who they may be - are able or forced to buy their inventory? If the market is opened to more stores, that could be a boon to the wholesalers and distributors...unless stores like Safeway can buy it directly from the brewery and ship it in their own trucks to the individual retail locations. If the State allows that to happen, then you (as the distributor) may have a problem, because it can reduce the sales of the independent liquor stores. And if you are selling to independent liquor stores, obviously your sales will erode, as well.

Apr 2, 2009

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