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PA board OKs higher liquor, wine prices for first time in 18 months

By   /   January 11, 2012  /   No Comments

Privatization advocates say 'let market decide, not government agency'
By Stacy Brown | PA Independent
HARRISBURG — A bottle of Hennessy Cognac Paradis, a top-shelf champagne, will cost $200 more, or $599.99, in Pennsylvania beginning next month.

By comparison, Dom Perignon, another top-shelf champagne, which now retails at $139.99, will be $5 more.

And, for those with less regal champagne tastes, Moet Chandon Nectar Imperial Rose will increase by $4 to $53.99.

These increases resulted from the Pennsylvania Liquor Control Board's approval of vendor-requested price hikes on more than 300 products.

"We couldn't continue to turn down the vendors’ requests for price increases, because we would risk losing the opportunity to carry (their) products," board member P.J. Stapleton said Wednesday, adding that vendors are allowed to request price increases four times a year.

“Consumers will now have to decide what they want to buy," he said.

The price hikes, which begin Feb. 1, are the first in 18 months after the board put in place a moratorium on vendor increases because of the Great Recession

The increases are expected to generate about $5 million in state revenue, including about $2 million in sales taxes, said Joe Conti, CEO of the Pennsylvania Liquor Control Board, or PLCB.

State stores typically offer some 4,400 products, and the statewide system sells about 30,000 different types of wines and liquor, according to the PLCB.

Most of the announced increases are $1 with some as low as 20 cents.

For example, wines, such as Barefoot Cellars pinot grigio, shiraz and zinfandel, will increase from $12.99 to $13.99 per bottle. Captain Morgan private-stock spiced rum will go from $21.99 to $22.99, and Bacardi light rum will increase from $15.99 to $17.99.

Jameson's 12-year-old Irish whiskey will jump $5 per bottle to $44.99, while a bottle of Southern Comfort will increase 50 cents to $19.99.

Additionally, lesser known beverages will see price increases. Funky Llama Malbec, a domestic wine, will retail $1 more to $7.99; Sailor Jerry Spiced Rum will jump $1 to $31.99; and Skinny Girl Margarita will go from $13.99 to $14.99 per bottle.

For a complete list of increases, click here.

"I struggled with (raising prices), but we at least need to work with the vendors to make sure the product stays on the shelf," said PLCB Chairman Joseph Brion.

Citing Philadelphia-based Jacquin's Distillery, Stapleton said the board also had to consider how the increases would affect producers.

“They can’t continue to sell product at the prices that they’re now selling it,” Stapleton said. “They have not taken a price increase for, what?  Four years now?  And they’re asking for 50 cents a bottle.  And if we don’t allow that to happen, they basically go out of business, so there’s a ripple effect to the things we do here.”

Messages left for the various state vendors were not returned.

While the PLCB said the increases are needed to keep pace with industry pricing, one critic said the price hikes should be monitored by the marketplace.

"There may be a good argument that prices need to be raised.  But unlike prices anywhere else in America, that argument is actually being made to a government-appointed board, rather than left to the market," said Nathan Benefield, director of policy analysis for the Commonwealth Foundation, an independent conservative think tank here that is calling for an end to the state liquor store system.

"A private company raising prices would face potential competition from other, lower-priced retailers," Benefield said.  "As a government monopoly, the PLCB is making pricing decisions for the entire state. It is just the latest example of why government in the booze business is a lose business."

Brion said he doubted the price increases would have garnered any attention if a private company was doing it.

Still, the higher prices are further examples of a tone-deaf, out-of-control government agency that could care less who is picking up the tab, said Jay Ostrich, communications director for the Commonwealth Foundation.

"Millions of dollars poured down the drain in PLCB waste and abuse isn’t paid for in a vacuum, it is passed along to consumers and taxpayers through higher prices and taxes," Ostrich said. "It should leave no doubt why Pennsylvanians are declaring last call for government-sold alcohol.”

A message left for House Majority Leader Mike Turzai, R-Allegheny, who supports privatization, was not returned.

Privatization, which also has been backed by Gov. Tom Corbett and other lawmakers, would eliminate the PLCB's role in the wines and spirits business.

Some legislative proposals include letting the private sector operate the liquor stores and Turzai's plan to sell the 625 state liquor stores, replacing them with about 1,200 retail licenses auctioned to the highest bidder.

Turzai's plan would leave the PLCB in charge of alcohol enforcement and education.

Brion said the PLCB was doing what every other business would do when costs increase.

"If the stores were privatized, and the owners of those particular stores made the decision to increase prices, no one would be in this room," he said.