State Senator: Make It Easier For Mid-Sized Grocers To Sell Beer

By Andrew Staub | PA Independent

A new proposal would give mid-sized grocery stores an easier path to selling beer in Pennsylvania, but the ripple effect it would have on other purveyors of malt beverages could generate enough opposition to skunk it.

The plan is simple enough: State Sen. David Argall, R-Schuylkill, wants to lift the requirement that grocery stores with a footprint of 8,000 to 55,000 square feet must set up a restaurant within their walls to sell beer.

“They just don’t have that kind of extra space,” Argall said, explaining he wants to level the playing field for smaller outlets that compete against larger superstores.

Grocery stores don’t have a specific liquor license tailored to their business model. Instead, they must obtain restaurant liquor licenses — or “R” licenses — to sell beer.

To comply with current state law, supermarkets must cordon off at least 400 square feet for a restaurant that seats at least 30 people. Beer transactions must occur at a separate cash register in that area, commonly called beer cafés.

That might not be difficult for a chain such as Wegmans, which has long placed restaurants in stores that can exceed 100,000 square feet. But for Redner’s Warehouse Markets, a smaller employee-owned grocery chain based in Reading, plopping a beer café into its typical 50,000-square-foot space might not be as feasible.

Besides, Redner’s isn’t in the restaurant business, said Jason Hopp, the company’s vice president and general counsel.

“Our goal in life is to be grocers and peddle apples and sell good quality fruits, vegetables and fresh-cut meat,” Hopp said, “but if our competitors are selling beer, then we need to strongly consider doing that also, but in a way that is fair and reasonable to the mid-sized grocer.”

Yet, as straightforward as Argall’s idea sounds, nothing about changing the way Pennsylvania sells booze is simple, evident by the protracted legislative battle to privatize state-owned wine and liquor stores.

Though it’s already run by the private sector, Pennsylvania’s beer industry is controlled by various interest groups — all of which want to protect their economic investments and struggle to agree on how booze should be sold. Beer sales in grocery and convenience stores have been a particularly touchy subject, with legal battles fought over both.

Beer distributors, who have the sole right to sell beer by the case, have long feared inventory-rich grocery stores siphoning away customers. The restaurant industry has fretted over supermarkets scooping up a limited number of liquor licenses, therefore blocking upstart restaurateurs from opening new foodie hot-spots.

“And that’s not a good thing,” said John Longstreet, president and CEO of the Pennsylvania Restaurant and Lodging Association. “Restaurants are always the beginning of any economic development effort.”

The PRLA, Longstreet said, wants rules applied uniformly to everyone. That wouldn’t happen under Argall’s plan, so the association would naturally oppose it, Longstreet said.

Tom Mehaffie, president of the Malt Beverage Distributors Association of Pennsylvania, said Thursday he didn’t know about Argall’s proposal. It’s unlikely the association would support it, though, given it has mounted unsuccessful legal challenges to stop Wegmans and Sheetz convenience stores from selling takeout beer.

In court documents, the Pennsylvania Liquor Control Board has maintained it’s had the authority to approve interior connections between a licensed premise and another business for more than 50 years. In the past, the PLCB has even issued restaurant liquor licenses to places such as Boscov’s, a department store.

Grocery stores’ interest in selling suds has increased in recent years. The PLCB has approved more than 260 grocery and convenience stores to sell beer since 2001, bringing about the age of the beer café.

While Wegmans has established true restaurants in their stores, other grocers have relied on hot dog rollers and prepackaged sandwiches to comply with the law, Hopp said. Redner’s doesn’t want to resort to “legal fiction” to sell beer, he said.

Even Argall has noticed some beer cafés don’t exactly draw a lunch crowd.

“I’ve never seen anyone sitting in one of those seats, but that’s still the law,” Argall said.

David McCorkle, president and CEO of the Pennsylvania Food Merchants Association, a trade group for grocers and convenience stores, said it has no formal position on Argall’s yet-to-be-introduced bill.

In his personal opinion, McCorkle said creating a restaurant inside a grocery store is less of an issue than the scarcity and cost of a restaurant liquor license — upward of $400,000 in some counties, he said.

Mammoth supermarkets have the means to purchase them. Smaller outfits could be priced out of the market.

Longstreet believes Pennsylvania should create a separate liquor license category for grocery stores. The PLCB has suggested the same, but various iterations of liquor privatization legislation have skirted past such a change.

That has left smaller grocers such as Redner’s looking for an easier way into the game, even if they still have to rely on a restaurant liquor license.

Corner bars and sandwich shops across the state already sell beer, and there has been no mass chaos, Hopp said. Redner’s can sell booze responsibly, he said, by using employees older than 21 trained in processing alcohol transactions.

“It’s not like we’re putting beer next to the Fruit Loops,” Hopp said.