Beer delivery issues reflect a distributor monopoly problem in Pennsylvania

By Anthony Hennen | The Center Square

HARRISBURG, PA – Some Pennsylvania taverns and bars are frustrated with supply chain problems limiting beer deliveries, but a deeper problem remains with state law that grants a delivery monopoly to beer distributors.

Due to staffing shortages and fuel costs, some distributors have limited deliveries, according to a press release from the Pennsylvania Licensed Beverage and Tavern Association, an industry group representing small taverns, bars, and licensed restaurants.

That has caused storage difficulties for business owners who lack the space for bigger orders to manage supplies without running dry. Nor can owners pick up supplies on their own or go beyond a wholesaler’s territory to purchase supplies, thanks to state law that prohibits such action.

“By law, bar owners can only receive beer delivered from retail and importing distributors and can’t pick it up themselves,” said Chuck Moran, executive director of the PLBTA. “While licensed bars, taverns and clubs can purchase liquors at a state store and personally deliver the supply to their bar or tavern, current law does not allow them to pick up and personally deliver malt beverages to their own establishment.”

For those deliveries, they must contract with distributors, who are licensed by the Pennsylvania Liquor Control Board. Pennsylvania is not unique in that requirement: every state except Washington reserves beer delivery to the realm of licensed distributors.

That distributor monopoly on delivering alcohol drives up prices.

“Taxpayers are getting ripped off every single time they buy alcohol because of this mandatory middleman in 49 out of the 50 states,” said Baylen Linnekin, a senior fellow with the Reason Foundation and a food law and policy expert.

Washington state repealed their distributor requirement in 2011.

“Many Washington state breweries and others (distilleries, etc.) still use distributors, most of them in fact, but the fact that it’s not mandatory … has changed the power dynamic in a way that benefits both the brewers and distillers – and vintners – and consumers or taxpayers,” Linnekin said. “And frankly, the sellers as well.”

The negative consequences of state regulations had been apparent but were amplified by the pandemic.

“We raised red flags three years ago before the pandemic that there were developing situations as a result of the expansion of locations being allowed to sell malt beverages,” Moran said. “My members are at the end of the delivery vine. And, compared to larger players including grocery and convenience stores that are now selling malt beverages, they don’t have buying power to command timely deliveries. My members need a business solution to this problem.”

The PLBTA would like to see state action allowing bars and restaurants to pick up an emergency supply of beer between delivery dates, but it’s not clear that the liquor control board will grant the request.

That leaves those businesses in a bind.

“Clearly the existing system isn’t working when a distributor can say ‘We’re changing our delivery schedule,’ (and) somehow means that half the state is going to be either awash in alcohol or not have enough of it, then that system is obviously holding taverns and groceries and others hostage,” Linnekin said. “That’s not fair, it’s not benefiting anyone except those distributors.”