Mark it on your calendar: Oct. 1 is the day that Philly’s incredible wine culture starts to die.
That’s because on that date, your favorite restaurants will have an even harder time getting your preferred wines from the Pennsylvania Liquor Control Board (PLCB).
The change has been about a year in the making, but it made headlines only last week, when the PLCB announced a new rule that requires restaurants to jump through even more convoluted hoops to put wine in your glass.
In August 2016, Gov. Wolf signed Act 39, a law he called “historic,” that famously allowed grocery stores to sell bottles of wine. Also part of Act 39, the markup the PLCB was allowed to charge on special liquor orders was dramatically reduced. Though this might sound good in theory, it entails some seriously scary implications.
Most every restaurant in Pennsylvania — especially in cities like Philly and Pittsburgh — creates its wine programs through these special orders. But from the PLCB’s perspective, special-order wines are dead weight on their already sinking ship. Historically, such orders account for only around 4 percent of the PLCB’s total sales each year, yet processing and implementing them costs the agency a lot in terms of overhead.
Because profitability on special-order items was slashed so dramatically by Act 39, the PLCB is now trying to cut costs on that program any way it can. Under the new rules, restaurants must pay for special orders before distributors are even allowed to ship. That means it might take five or six days from the time the restaurant pays for an order for it to even arrive at the store — and then it could be a day or two more before the restaurant is able to send someone to the store, pick it up, bring it back, and serve it so it can make money. For restaurants, many of which are already running on thin margins on wine because of the PLCB’s arcane pricing, this new rule could cause big financial problems.
I’ve sold wine in many other markets, and I’ve never heard of anyhing like this. In other states, cash-on-delivery sales are what happen to restaurants who don’t pay their bills on time. In Pennsylvania, it’s even worse than COD; it’s CBD — cash before delivery.
By forcing this change on special-order wines, the PLCB is trying to make restaurants use whatever wine is already on the shelves in its stores because that is more profitable. That would effectively kill most of the wine programs at Philly’s best restaurants.
I already know of one wine distributor that’s pulling out of Pennsylvania because it can’t afford to comply with these new changes. Distributors are seeing that it’s really not worth selling in Pennsylvania anymore because it’s too much of a headache. The PLCB forces restaurants to prepay for their wine, yet the PLCB still pays its vendors with net 60-day terms. It hardly seems fair.
New restaurants will also be discouraged from opening here. It was just announced that Jean-Georges Vongerichten is opening a restaurant in Philadelphia. Do you think he wants to be limited to serving his guests whatever the PLCB feels like stocking?
All of this hurts choice for consumers. Imagine going to a restaurant for a fancy meal and your only red-wine choices are Yellow Tail merlot, Yellow Tail cabernet, and Yellow Tail malbec.
This is bad news for Philadelphia, where the wine culture has really evolved into something incredible over the last few years despite the hardships the PLCB places on us all.
A lot of distributors and restaurants are afraid there will be backlash if they question the PLCB’s authority. I’m a willing to take the risk, because I believe this is important — not just to my business and the business of the restaurants I work with, but to the culture of Philadelphia as one of America’s great wine-drinking cities.
Jason Malumed is a partner in MFW, an importer and distributor of wine.