A state liquor store front in Harrisburg (Capital-Star photo by Elizabeth Hardison).
(*This story was updated at 5:02 p.m. on Thursday, 1/12/23 with additional comment from the Pennsylvania Liquor Control Board. It was updated at 3:28 a.m. on Friday 1/13/23 to update attribution to a PLCB spokesperson.)
An industry trade group is pushing back against a 4% price hike on wine and liquor set to go into effect on Sunday at Pennsylvania’s state-owned liquor stores, arguing that regulators haven’t given producers enough time to plan for the jump.
The Pennsylvania Liquor Control Board announced last month that it was raising the prices on more than 3,500 products at the state stores, saying the hike, the first since 2019, would help the oversight agency offset rising operating costs.
“Since the Board voted to delegate pricing authority to the Executive Director and/or designees dating back to 2016, this was not a decision requiring an additional formal board vote. Regardless, it was a decision discussed among and unanimously supported by all three Board members,” the agency said in a statement provided to the Capital-Star.
“As an aside, despite facing numerous pandemic- and inflation-related cost increases for several years, the PLCB has resisted raising Fine Wine & Good Spirits retail prices since 2019, beyond passing along vendor cost increases,” the agency said in its statement.
In a Thursday statement, the Distilled Spirits Council of the United States, which represents spirits producers, said the “last-minute push” by the outgoing Wolf administration “will have implications not only for spirits producers, but for the Pennsylvania hospitality industry and its consumers.
“These decisions should be part of a larger discussion with impacted stakeholders, yet this across-the-board increase was done without any consultation or collaboration,” Andy Deloney, the council’s senior vice president and head of State Public Policy, said in a statement. “We are extremely disappointed in the process by which this increase was determined and hope the PLCB will adjust future plans to include consideration of the partners most heavily impacted by their unilateral decision-making.”
State lawmakers with oversight of liquor-related issues similarly pushed back against the planned price hike.
“The proposed price increase is not the result of increased production cost on the supplier side, but in actuality, is an arbitrary decision by your executives to impose an additional 4% tax on these popular products, bringing the total tax to nearly 30%,” Senate Law & Justice Committee Chairperson Mike Regan, R-Cumberland, wrote in a Jan. 10 letter to PLCB Chairperson Tim Holden.
“I am very troubled by the lack of transparency and timing of the announcement. Not only has the board granted full discretion to staff with no board approval required, but the Wolf administration also ends on January 17th, 2023,” Regan continued. “Imposing a last-minute, additional liquor tax on Pennsylvania consumers, in the waning hours of an administration undermines the public’s faith in government and is bad public policy.”
Speaking to WGAL-TV, the PLCB spokesperson Elizabeth Brassell disputed Regan’s claim that the price hike was a last-minute decision.
“It was something that we discussed late in December. We didn’t finalize the plan until earlier this month, identifying exactly what items were going to be subject to the increase. We did provide as much advance notice as we could to both our suppliers and to licensees,” Brassell said.
In its statement, the spirits council argued that the oversight agency, which has a monopoly on wine and liquor sales in the commonwealth, has a more than healthy bottom line, rendering the price hike unnecessary.
“In fiscal year 2021-22, the PLCB achieved total sales of $3.02 billion (including liquor and sales taxes), reflecting a $109.9 million or 3.8% increase over the prior year and marking gross wine and spirits sales over $3 billion for the first time in PLCB history,” Deloney wrote, citing the agency’s annual report.” Net income for the year totaled a record $330.9 million, $66 million or 24.9% higher than fiscal year 2020-21.
“Pennsylvania consumers have long traveled to bordering states with more favorable markets for spirits products,” Deloney continued. “Increasing prices only exacerbates cross-border sales and continues to drive consumers elsewhere.”
The trade group’s criticism is “is surprising at best, disingenuous at worst. Every single one of the 14 DISCUS Director Members from which the PLCB buys product increased costs and retail prices within the last two years without PLCB input,” the PLCB’s Holden said in a statement. “Also, since the January price increases were announced, a number of DISCUS members have approached the PLCB about additional cost increases, disappointed that they didn’t get a ‘cut’ of the planned PLCB increases.”
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