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ALCOHOL OUTLOOK: The end of small-business beer sellers?

Distributors worry, but potential competitor says there's room for all

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If lawmakers backing Gov. Tom Corbett get their way, a Pennsylvania resident's trip to the “state store” would be no more.

Wine and spirit sales in the commonwealth would be the purview of a network of private retailers after decades under state control.

But these stores might not be the only business model to go away, some fear.

The shape of Corbett's alcohol reform measure looks like it could be lights out for Pennsylvania's retail beer distributors, said Mark Tanczos, president of the Philadelphia-based Malt Beverage Distributors Association of Pennsylvania.

The current rules for holding a retail distributing license in Pennsylvania say the business can have only one location, Tanczos said.

It makes distributors inherently small businesses, so there seems no way distributors could compete for expensive license augments to do more than sell beer by the case and stay viable in the market, he said.

Even the licenses they hold today could be devalued by flooding the market with so many potentially new points of sale, Tanczos said.

Under the governor's proposal, there would be no limits on the availability of licenses for big-box stores, grocers, convenience stores and other existing retailers could buy to sell beer and, in some cases, wine.

But licenses already in existence that have set numbers available, such as for distributors or bars, would remain the same, said Eric Shirk, a spokesman for the governor.

In addition, the number of wine and liquor sales licenses that would be up for auction would be capped at 1,200, he said.

But any distributor could pay to enhance its license to sell in quantities smaller than cases and offer wine — just not liquor — if it did not get a wine and liquor sale license.

Changes are needed in the alcohol sales industry in Pennsylvania, but the association is asking its members to contact their local lawmakers in opposition to the governor's proposal, he said.

If Total Wine & More, for example, gets its shot in the Pennsylvania market, it won't be looking to just step up to the auction block for wine and spirit sales licenses, said Edward Cooper, the company's vice president of public affairs.

Its model is as a one-stop shop for beer, wine and liquor. It'll want to buy beer distributor licenses along with what's needed for wine and spirit sales, Cooper said.

But Cooper said he doesn't see outside competition wiping out Pennsylvania's retail distributors. They are the established private sellers in their markets, which gives them a business advantage.

Some will assuredly decide to sell their licenses, which — with players like Total Wine & More in the market — could fetch high prices, Cooper said.

But it's also an opportunity for the ones who stay in the game to grow by taking on wine and spirit sales themselves. No business in the free market stays the same forever, Cooper said.

Total Wine & More started with one location and one sales license, growing since 1991 to what it is today, he said.

If reforms are passed and signed, Total Wine & More envisions Pennsylvania could become its largest state for retail locations, Cooper said.

Today, Florida is the largest, with 21 of the company's 89 total locations, he said.

Brent Burkey

Brent Burkey

Brent Burkey covers York County, agribusiness, energy and environment, and workforce issues. Have a tip or question for him? Email him at brentb@cpbj.com. Follow him on Twitter, @brentburkey.

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