Pennsylvanians may have to pay a steeper price for wine and liquor later this month as the state battles with liquor suppliers over costs.
In a July 20 letter, the Pennsylvania Liquor Control Board informed their 450 suppliers that they had one week to cut what they charge the state for bottles of alcohol.
If suppliers don’t comply, the state says it would be forced to pass along a roughly $1 per bottle price increase to customers. The price jump would hit a majority of products.
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The PLCB stands by its demand to suppliers, referencing Act 39 of 2016, which permitted the agency to seek cost reductions instead of price increases.
The state agency says they're making the changes to increase revenue and maintain competitive prices for customers.
The move is not sitting well with local tourism agencies, however. The Pennsylvania Restaurant & Lodging Association (PRLA) described the move as a “shakedown” and referred the agency’s tactics as “strong-arming.”
“A consumer price increase in a system which averages higher prices than surrounding states will likely lead to even more 'border bleed,' an issue that the PLCB said flexible pricing would help them combat,” argued John Longstreet, the President and CEO of the PRLA.
Prior to Act 39, the PLCB said it was restricted on how it could price products. In a May 10th hearing Tim Holden, Chairman of the PLCB called the rigid structure "inefficient" and went on to add it restricted revenue opportunities for the commonwealth.
“We will persuade those suppliers who have yet to enter into negotiation that it is in their best interests to find common ground before they begin to lose market share in Pennsylvania,” he asserted in the hearing.
The PRLA says that negotiation strategy is ultimately going to hurt suppliers and consumers.
“So far, we have seen the PLCB flex their monopolistic muscles by picking and choosing provisions from Act 39 that would increase their profits rather than pass on cost-savings to consumers or licensees.”
A liquor control board hearing on the issue is scheduled for Wednesday. Any price increases could go into effect as early as August 28.