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MBDA Testifies at Senate Law and Justice Committee Hearing

May 14, 2013

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Expanding Beer Sales Will Cost Jobs & Businesses

State's beer distributors warn of negative consequences of HB 790

Pennsylvania's beer distributors today warned members of the PA Senate's Law and Justice Committee that current efforts to expand beer sales in House Bill 790, the so-called Liquor Privatization bill, will result in the closure of hundreds of businesses and the loss of thousands of good paying jobs. Consumers will also suffer less selection and higher prices, according to the Malt Beverage Distributors Association (MBDA).

Testifying today before the Pennsylvania Senate's Law and Justice Committee, MBDA said the effort to reform the state's liquor system has instead become a takeover of the beer market by large corporate interests: "This initiative has now mutated into an attempt to have grocery and convenience stores conquer the off-premises (for take-out) beer market in PA, which will crush our livelihoods and that of our 12,000+ employees," said MBDA President Mark Tanczos.

Written testimony released by the Pennsylvania Food Merchants Association does not dispute this position that jobs will be lost nor does it contend that grocery and convenience stores will employ additional personnel to make up for the lost opportunities.

Tanczos also noted that "beer may be available in more locations under this bill, but there will actually be less selection, higher prices and, in the final analysis, less real 'convenience' for consumers. Most beer distributors offer thousands of brands, while grocery and convenience stores will only focus on the 20% of national brands that comprise 80% of all beer sales."

Tanczos added that "beer distributors are already a privatized industry comprised of specialty retailers. We feel strongly that specialty retailers provide the best balance between cost-effective enforcement and convenience. We sell beer well, and safely, because our livelihoods depend upon our being responsible - this is not the case for grocery, convenience and big box stores."

MBDA's testimony was augmented by an independent study provided by Consult Solutions, which noted that 'the proposed legislation contains many provisions that will harm beer distributors. They will suffer from increased competition from grocery stores, convenience stores and gas stations. The net effect will likely be that some independent distributors would go out of business, either because they would be purchased by well-capitalized chains, or would realize diminished sales from new competition.'

Consult's study also noted that 'the benefits of selling wine and spirits is going to be negligible because of the increased number of outlets selling alcohol, thereby decreasing the profit margins for everyone involved in retail sales. The market for beer isn't increasing, meaning the existing market will instead be divided up among nearly triple the current number or retail outlets offering beer sales.'

Also testifying on MBDA's behalf was alcohol policy expert Pam Erickson, President and CEO of Public Action Management, and the former director of the Oregon Liquor Control Commission. Erickson's two main points were that "selling beer is not the same as selling bread, and that selling alcohol in a limited number of specialty retailers provides the greatest protection for public health and safety."

Erickson added that the "drive for expansion is actually very limited, in that surveys indicate only around 30% of the public are regular drinkers - a percentage that is actually less than the number of non-drinkers in the state(33%). It is unlikely that most Pennsylvania citizens would benefit from any increased convenience because they drink rarely or not at all."

MBDA Release 

MBDA Testimony 

Public Action Management Testimony 

Econsult Summary

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