November, 2004
Are We Ready for the Packie?
Most New Englanders I know refer to liquor stores as "packies:"
package stores. That’s not because you buy stuff there to "get a
package," an old euphemism for getting a drunk on, but because you
bought "packaged goods" there, booze in a bottle as opposed to
booze by the drink at a tavern. Packies sell only to go, not for
on-premise consumption. Packies sell beer, wine, and spirits (though
there are exceptions), lottery tickets, smokes, and whisky
magazines.
I liked the packie. When I lived in New England, there was one
three doors from my apartment, and we never went dry. There were three
or four that I went to regularly, including one near Farmington that I
went to darned near religiously, and one in Hartford that carried Orval
and Old Peculier, a special treat. Of course, Connecticut also had beer
in the supermarkets, but I rarely bought it there.
Why would I? The hours were the same (at 8:00 the packie closed,
and the supermarket pulled a big curtain down over the beer selection on
the shelves), the prices were close, and the supermarket never had
anywhere near the selection. Not to mention that no one at the
supermarket knew the first thing about beer.
I know there are exceptions. I’ve lived in California, and
there are supermarkets there with great beer selections. I bought my
first Anchor OSA in a California supermarket, back in 1987. I’ve seen
good selections in upstate New York and Virginia. Supermarkets can do a
decent job.
But when it comes to serious beverage selection, give me a
specialist every time. As I used to argue, where do you want to buy
beer? A place where they sell nothing but booze, day in and day
out? Or from a place where the guy stocking the beer may be wrapping
pork chops tomorrow and was maybe doing inventory on the disposable
diaper shelves last week?
Why do I bring this up? The three-tier system, as I’ve said
elsewhere, is under serious legal assault, and doesn’t look like it’s
going to survive. That’s going to bring about direct
brewer-to-supermarket sales in the states where supermarket sales are
legal…and that will put pressure on non-supermarket sale states to go
that way. I can’t see such sales becoming federally mandated or
enforced by court decision – the 21st Amendment is pretty clear on
that, and interstate commerce is not threatened – but believe it: the
pressure will be there.
Resist it. I don’t like the idea of supermarket sales at all,
don’t want to see beer in the convenience stores, don’t want wine in
the drugstore, don’t want pints of whiskey in the gas station. That
may sound out of character, may sound like the kind of stupid booze law
I’ve been against before, and maybe it’s time to hit the crazy
link at the top of the page. After all, wouldn’t it be great to be
able to go to a nice supermarket, a Wegman’s or a Whole Foods or a
Trader Joe’s, and get everything you need for a weekend: clams,
fresh chicken, specialty bread, choice produce, a couple bottles of
wine, the Cointreau you need for that special dessert, and a
whole mess of good beer?
Okay, maybe it would be great. Maybe it would be really cool for
everyone in the Philadelphia five-county area to be able to drive to a
place like that within 30 minutes and do your party shopping. But what
about the poor boogers out in Reading, and Easton, and Wilkes-Barre, and
Erie? I know they have decent beer distributors now, but what’s
going to happen to those places when the supermarkets skim off all their
volume sales?
Don’t lose me now, because I’m going to talk biz for a little.
If supermarkets get direct sales from producers, here’s what’s going
to happen. Say you’re Anheuser-Busch. You’ve got a choice
between continuing to deal with a bunch of wholesalers, who often get
rambunctious and often sell beer other than yours…or you can dump
the wholesalers and use your wonderful transport network to send
beer directly to the supermarkets’ warehouses. You’ll probably still
have over 85% of your off-premise business, with one customer instead of
five or six, and you’re going almost direct to the beer-drinkers.
Your wholesalers? They’re drying up and blowing away, because
they just lost all the Bud sales they used to make to the supers, plus
the beer stores they supply are hurting because the huge supers are
underpricing them with the great deals they’re getting from you
because they’re not paying the wholesalers’ markups any more. Pretty
soon you’ll be able to move in, buy them out, and use their
fancy refrigerated warehouses to deliver even more cheap beer to the
supermarkets.
Who’s happy with this? Well, Joe Six-pack is happy,
because now he gets cheap Bud Light at the Piggly-Wiggly. Mrs.
Papacappi down at the Piggly-Wiggly is happy, because she’s
getting a really great price on Bud Light, which lets her run it as a
loss leader to get Joe in the store to sell him over-priced deli meats,
and she’s finally getting slotting fees from her beer shelves, which
is going to make this a great year for her. Mich Budman,
the A-B rep, is happy, because he’s got so many fewer calls to make,
even though he’s still making sales like he used to.
Who’s screwed? Let’s see…Jim Grottenbier, the local
small brewer, is bumming. He’s been effectively shut out of the
supermarkets because he can’t afford the slotting fees (and even if he
could, Mrs. Papacappi doesn’t really want his stuff in there any more:
she’s making so much money off her new slotting fees that Jim’s
beer is just going to screw up her accounting; besides, Budman bought up
so much space there’s not really much left for Jim’s beer). Serena
Haulenbeeren’s wholesale business is croaking, so she’s grabbing
craft and import brands left and right (even though she doesn’t have a
clue on how to sell anything that does under a pallet a week on the
floor). Walt Bythecase (it’s an old English name, "bith-cass"),
the retail guy, isn’t selling much Bud any more, or Miller, or Coors,
or Corona, or Heineken…and while there wasn’t a lot of excitement to
selling those beers, they sure did pay the bills.
Oh, right: and you. You get screwed. Because Walt’s
going to go out of business, and Serena’s brand-flailing is going to
put a lot of micros out of your area, and Jim’s beer is going to be a
lot harder to find. If you think Mrs. Papacappi is going to be selling a
lot of micros, you’re a fool. Supermarkets sell a lot of high-end
foods, it’s true, but beer’s bulky, it doesn’t have a margin like
wine does (and if Mrs. Papacappi can sell wine, she’s going to use as
much space as she can for the high-margin, low volume stuff), and it not
only needs refrigeration, it’s light-sensitive. Supermarkets like the
sure thing. There will be exceptions, like Trader Joe’s, and Wegman’s,
and so on, but unless you live in a major city or its suburbs, you are
looking at mail-order.
At least, that’s my best guess. Me, I’d just as soon see the
packie. My ideal situation starts with the State Store system broken up
completely, a necessary first step in Pennsylvania, Virginia, and the
remaining control states. Pennsylvania’s current thaw under Chairman
Newman is dictatorship with a human face: even if you can get
better wine, it’s still a state-run business. Why? That's
downright Stalinist, sonny. I’d like to see them replaced by
privately-owned package stores selling all kinds of booze with a
generous licensing policy: booze superstores.
Want more? I’d like to see the current tavern licensing system
thoroughly revamped to allow more licenses that are more strictly
policed for public nuisance. It is my firm belief that more licenses
will improve the character of bars, rather than erode it. And I’d like
to be able to buy beer in any quantity I want, any day of the week, with
samples…at the packie. Hell, people think there’s a
"deli license" in Pennsylvania (my own state rep thought so)
that allows a place to sell beer and sandwiches and deli stuff…make it
easier to get a tavern license, and that’s what you’ve got.
Sounds great to me. Only problem is…it doesn’t work. How do
you allow delis and packies and bars and restaurants to sell booze, but
come up with a real legal test that excludes chain supermarkets? I have
one idea, but it’s anathema to me: do the same as Maryland’s brewpub
law, and limit the number of outlets that can be owned by one group.
Works, but exactly why should it be that way? I can’t think of any
solid legal reason, just the personal one that I want it to be that
way. But only in this case; I wouldn’t want a law like that
keeping Iron Hill from building the new brewpub in Phoenixville that
Jack Curtin keeps talking about. Maybe a law that limits the number of
retail licenses except in the case of brewpubs?
Is it time to click on the crazy link up at the top of the page?
Maybe. It’s sure a lesson on how to write bad law. And it’s time
to get to my real point: no one knows what’s going to happen in the
next ten years in the booze business. Wholesale and retail is going
to change completely, and it’s going to revolve around midnight laws
that are real "sausage grinders," laws made by ignorant
legislators influenced by well-financed lobbyists, laws that will have
unintended consequences. And I almost guarantee that these laws will not
be friendly to the small brewer and small importer...or you.
You need to get involved. We all need to get involved. How? I’m
not sure at this point, but I’m working on it. I need to find a good
booze lawyer. When this starts going down, it’s going to be the most
important changes to booze law since Repeal, and speaking as a
Pennsylvanian…I’d kinda like to see them get it right this time.
More to come.
