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When the Pennsylvania Liquor Code was amended recently to allow distributors to sell growlers, some savvy individuals realized that the boundaries could be pushed, and other types of ready-to-consume beverages may be able to fit within the parameters of what beer distributors may now sell in a “growler”. One of the biggest trends in the beer distributor business has been the sale of alcoholic slushies. When this first started, there was much discussion and debate as to whether the liquor code actually permitted this practice and what position the Pennsylvania Liquor Control Board would take regarding the practice. Fortunately, within the last couple of months, the General Counsel’s office for the PLCB has issued some additional guidance which clarifies that under the right circumstances, a beer distributor may sell slushies for off-premises consumption.

The PLCB in its most recent guidance has acknowledged that the Liquor Code broadly defines what is considered to be a “refillable growler”, and any refillable container that can be resealed would generally meet the definition. In the context of the sale of these slushies, most distributors have been placing them in refillable plastic cups which have a lid which must be removed before the beverage can be consumed, or if the lid has a hole for a straw or a place to drink, a sticker or other seal is placed over that so that the container is completely enclosed.
Continue Reading Alcoholic Slushies – New Opportunity for Beer Distributors

It was announced on Wednesday that one of the more popular craft breweries in the country, Wicked Weed Brewing out of Ashville, North Carolina, was acquired by Anheuser-Busch, the world’s largest producer of beer.  Interestingly (but not surprising if you follow the craft beer industry) the announcement was met with significant backlash from the craft beer community.  The acquisition garnered significant criticism on Twitter, with many accusing Wicked Weed of “selling out.” The deal even generated a statement from the North Carolina’s Craft Brewers Guild, saying that they were “disheartened” by the announcement.  In another example, when Elysian Brewing Company out of Seattle announced its sale to Anheuser-Busch in 2015, the owner reported that customers were buying beers and dumping them onto the floor in protest of the sale!

Why are craft brewers treated so differently in the business world than other startups?  Why are they accused of “selling out” when in other industries, startup companies are celebrated and their founders turned into celebrities when they successfully sell off their company for millions (or hundreds of millions) of dollars?

The answer is not so simple and there seems to be reasonable arguments that can be made on both sides of the issue (beyond just pouring out a perfectly good beer).  Customers and craft beer enthusiasts often express concern that the takeover by a large, international corporate giant is going to impact the quality of the beer.  In some cases, this seems to be a justifiable concern.  The article from Thrillist cites a number of examples including Goose Island and Ballast Point where, after the acquisition, the original ownership left, recipes were changed, and in one case, a coveted batch of beer had to be recalled because of a non-toxic bacteria that infected the beer required its recall.  These issues were all blamed on the takeover and many people swore off drinking these beers as a result.
Continue Reading Double (IPA) Standard for Craft Breweries?

Spring is here… flowers are blooming, lawn mowers are returning to use, the weather is warming, and Pennsylvania lawmakers are furiously trying to fill a huge budget gap.  The budget deficit that lawmakers are tasked with addressing has been reported to be nearly $3 billion dollars.  With a budget deficit that large, it makes sense that all options are on the table.  If you’ve been following the news surrounding the budget, you have probably heard about proposals to legalize marijuana, tax the extraction of Marcellus Shale natural gas, increase the cigarette tax, close prisons, and further cut spending programs.  All of these are relatively new ideas and approaches to reduce the huge shortfall that currently exists.  One idea, however seems to come up every year when it’s time to balance the budget… liquor reform.  And this year is no different.

On Tuesday, the state House passed a liquor reform package designed to further modernize the system of alcohol sales in the state.  The package consisted of four (4) major components.  The first is a “free the wine” bill that seeks to permit grocery stores to sell wine, without the need to have seating and pretend to be a restaurant.  It would also allow grocery stores to purchase wine directly from private wholesalers and wineries, circumventing the Pennsylvania Liquor Control Board.  The second measure would do something similar, but for the benefit of all licensees, not just grocery stores.  This proposal, contained in House Bill 1075, would remove wine completely from the PLCB and allow private wholesalers to sell directly to licensees.
Continue Reading Changes to Pennsylvania Liquor Law Part of Budget Negotiations

Have you picked up a six-pack or refilled your growler lately?  As of this week you have a new option in Pennsylvania.  Act 166 was passed in the fall and went into effect on Tuesday, January 17, 2017.  It allows beer distributors to offer six-packs, individual bottles and cans, and even growlers for sale.

This legislation came in large part because the beer distributors were left out of much of the liquor reform that occurred earlier this summer with the passage of Act 39.  In that bill, which has generated much attention, restaurant licensees were given the ability to sell wine to-go, provided they obtain the appropriate permit, and breweries, distilleries, and wineries in PA were given the ability to sell other Pennsylvania-produced products, even if they had not manufactured it themselves.  Those were some rather sweeping changes to the Liquor Code that benefitted those industries but beer distributors were left out.

Opportunities for beer distributors came in Act 166, which they claim will better allow them to compete with the various bottle shops, grocery stores, and other establishments which sell smaller quantities of beer.  It was not that long ago that the PLCB changed its position and allowed beer distributors to sell 12-packs, but this legislation adds even more options for distributors and consumers. 
Continue Reading More Liquor Code Changes – Six-Packs, Individual Bottles & Cans, Growlers now Available at PA Beer Distributors

The Pennsylvania Liquor Control Board yesterday released the results of the restaurant liquor license auction which it conducted and where 40 restaurant licenses were available for sale statewide.  As many predicted, the price for liquor licenses was driven significantly higher than historical prices due in large part to grocery stores and convenience stores now being permitted to operate using a restaurant liquor license to sell alcohol.  As reported by LNP and Central Penn Business Journal, the auction generated significant interest, although the vast majority of the bids and nearly all of the successful bidders were large corporations such as grocery stores, convenience stores, or developers.  While the auction was seen as a way to fix the problem currently in the liquor license market in many counties where few licenses are available, the structure of the auction in large part prevents most independent restaurateurs from having a reasonable opportunity to compete for these licenses.  In creating this auction process, the legislature (knowingly or not) created a system where payment for the license has to be received from the high bidder within two weeks of the close of the auction.  In other words, the winning bidder has to be able to pay a significant amount of money to the PLCB immediately after being told they were the high bidder and before they have even received the license or are anywhere close to putting it to use.  This is contrary to the model that most liquor license transactions use, and has never been the practice of the PLCB prior to this auction.
Continue Reading Liquor License Auction Update

On Monday, the Pennsylvania State Senate approved amendments to House Bill 1196 which the legislature has identified as a “fix” to the recent and expansive liquor reform law known as “Act 39”.  There has been much written about Act 39 and its expansion of the liquor laws; however, one organization or group of businesses that felt they were left out of that reform was the malt beverage distributors in Pennsylvania.

The Senate, in an attempt to address some of the concerns of the distributors in Pennsylvania, have now approved a bill which would allow distributors to sell beer in any quantity, to include by the single bottle, can, or even by the refillable growler.  While none of this can be done for on-premises consumption, it nonetheless allows beer distributors to compete with restaurants who sell beer to-go, grocery stores, convenience stores, and anyone else that is able to sell beer in smaller quantities.  For years, beer distributors were forced to sell beer by the case only, or in whatever form of “original packaging” was made by the manufacturer of the product.  Last year, the Pennsylvania Liquor Control Board reversed its long-standing position and agreed to permit beer distributors to sell its products in packaging which contain no less than 12 bottles or cans.  This was seen as significant reform for the distributors at the time and most, if not all, now carry significant quantities of 12-packs.
Continue Reading House Bill 1196 – Bottles and Growlers Available at Beer Distributors?

The Pennsylvania Liquor Control Board released some big news yesterday.  The much anticipated auction of Restaurant Liquor Licenses is slated to take place at the end of October.  The PLCB issued a press release on Sept 13th announcing that 40 restaurant liquor licenses are going to be auctioned in this first round and inviting bids for those licenses.  For Lancaster County, 2 licenses will be available via this auction.  While this appears to be great news and may provide some much needed restaurant licenses to the market, the news is not without its problems.  Initially, from the language contained the PLCB’s release, it appears that a condition of the auction is the successful bidder will have to post the full amount of the purchase price within 2 weeks of being notified they were the highest bidder.  If licenses sell for anything close to the current market value, that could mean a successful bidder would have to pay in cash or other available funds upwards of $300,000.  That probably eliminates most true restaurateurs from the process and opens the door for large chain restaurants, grocery stores, and convenience stores to buy these licenses.
Continue Reading Pennsylvania Liquor Licenses on the Auction Block