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Pa. beer laws are just fine

Behemoth grocery chains want to crush friendly neighborhood beer distributors.

Experience has shown that large, powerful chain stores are bad for local communities, where they force mom-and-pop shops out of business. The latest misguided push to undo Pennsylvania's beer laws could expose the malt-beverage business to similar harmful forces.

Each beer distributorship in Pennsylvania is individually owned and allowed to operate out of only one location, so there's no opportunity to monopolize malt-beverage sales. But the grocery and convenience stores that are seeking to act as distributors are not subject to the same limitations, which raises the prospect of unfair competition.

Because grocery and convenience stores sell a wide variety of items, they would have the ability to sell selected beverages below cost, essentially undercutting any beer distributor in the area. We have seen Wal-Mart do the same with other goods, undercutting neighborhood retailers.

Wal-Mart does so partly by negotiating lower wholesale prices using its bulk purchasing power. But the company has also shut out the competition through "loss leader" pricing, willingly selling some items below cost so it can bring in customers and build market share.

Because Wal-Mart stocks thousands of items, it can afford to absorb losses on a few units. The same strategy isn't an option for beer distributors, which depend on sales of one kind of good.

Grocery and convenience-store chains argue that allowing them to sell beer will improve access and convenience for customers. That's a weak argument when you consider that beer is available for carryout or on-site consumption at approximately 1,200 distributors and 14,000 carry-outs, bars, and restaurants in Pennsylvania.

The real issue for these stores is market share - bringing buyers into the store and keeping them there by stocking everything they need to buy. If it takes selling some items at a loss, and if it means crowding out small businesses and putting their employees out of work, so be it.

It's not all about you, the consumer; it's about them. If you doubt that for a minute, track down one of the many business people who used to run a neighborhood hardware store until a Wal-Mart, Home Depot, or Lowe's moved in.

In addition, given that the average beer distributorship employs seven to 10 people, thousands of jobs are at stake. Will supermarkets and convenience stores create any new jobs if they begin selling beer? Unlikely.

The current system also deters illegal sales to minors. It does so by limiting beer sales to licensed locations that are highly dependent on alcohol sales. If a grocery or convenience store is cited for underage sales, it may have to padlock the beer coolers for a week or a month. But it can keep selling other stuff and stay in business.

Cite a beer distributorship or a neighborhood bar, meanwhile, and it has to close its doors while its license is suspended. The financial penalty is severe.

When you look at all sides of the issue, you begin to understand why we've had essentially the same beer laws in Pennsylvania for more than half a century. It's not because we're old-fashioned or outdated. It's because the laws strike a careful balance that's as valid today as it was in 1933.