Last Call: Alcohol Suppliers Fined Millions in Pennsylvania; Total Wine Scores a Win in Massachusetts

Four Alcohol Suppliers Fined for Inducements to Pennsylvania Liquor Control Board

In a deal to avoid potential criminal prosecution, four alcoholic beverage companies have agreed to pay more than $9 million in penalties after their employees provided cash, all-expenses-paid trips, tickets to sporting events and shows and other items of value to members of the Pennsylvania Liquor Control Board (LCB), according to the Pittsburgh Tribune Review.

Southern Glazer’s Wine and Spirits of Pennsylvania (formerly Southern Wine and Spirits of Pennsylvania, LLC, and wholly owned by Southern Glazer’s Wine and Spirits) has agreed to pay a $5 million penalty for its employees’ role in the activities. White Rock Distilleries and Breakthru Beverage Pennsylvania (which formerly operated as Capital Wine & Spirits) will each pay $2 million in fines. Pio Imports, meanwhile, will pay $200,000 for its role.

In the addition to the fines, the companies have agreed to implement compliance measures and vowed not engage in the practices in the future, according to U.S. Attorney Bruce D. Brandler of Pennsylvania’s Middle District.

“Although the history between these organizations and the Pennsylvania Liquor Control Board is clearly disturbing, it is in the interests of justice to expose this history and hold the organizations responsible,” Brandler told the Tribune. “The monetary penalties imposed on these successor organizations more than disgorges the financial benefits received and discourages future misconduct by those in the industry.”

The LCB serves as both the state’s alcoholic beverage regulatory agency as well as an operator of more than 600 wine and spirits stores statewide and the licenser of more than 20,000 alcohol producers, retailers and handlers.

According to Philly.com, a 2014 investigation by the state’s Ethics Commission determined that $23,000 in gifts had been accepted by the LCB’s former chairman; former CEO Joseph Conti; and former marketing director James H. Short Jr. All three resigned from their positions and were reportedly ordered to repay the state for the inducements.

Pennsylvania Liquor Control Board chairman Tim Holden as well as board members Mike Negra and Michael Newsome issued a joint statement saying the organization has cooperated with the federal investigation, and they expressed disappointment in “all parties involved, who violated the trust of the agency and Pennsylvanians.”

“Although we already had one of the strictest employee conduct codes in Pennsylvania state government, the unethical actions of a few cast a temporary shadow over the agency,” the statement read.

Massachusetts Retailers Win Discount Pricing Challenge

Maryland’s Total Wine & More, which has a history of challenging state alcohol laws, scored a victory in Massachusetts this week.

Suffolk Superior Court Judge Robert B. Gordon ruled Tuesday that the state’s alcohol retailers may discount booze ordered in bulk, according to the Boston Globe.

Total Wine had brought the legal challenge against the Massachusetts Alcoholic Beverages Control Commission after the state regulatory agency suspended the chain store’s liquor licenses in Everett and Natick for allegedly selling various liquors for $1 to $6 below their wholesale costs, the Globe reported.

However, Total Wine challenged the suspensions asserting that the ABCC had based its decision off initial invoices that listed the liquor at higher costs while refusing to take into account that the company receives quantity discounts from its wholesalers.

In his decision, Gordon agreed, writing that the ABCC’s interpretation of the law “bears no rational relationship to the legislative policy of prohibiting anti-competitive pricing practices.”

“There was clearly no predatory pricing carried out in this case, only a salutary effort by a retailer to pass along savings derived from volume purchasing at the wholesale level to its customers,” he wrote. “This is something the law should promote rather than punish.”

Gordon did not rule on Total Wine’s argument that pricing restrictions violate U.S. antitrust laws, preventing Massachusetts retailers from selling alcohol at below cost, the Globe reported.

The ABCC reportedly has not determined whether to file an appeal.

Dixie Brewing Returns to New Orleans

Billionaires Tom and Gayle Benson have officially acquired a majority stake in Dixie Brewing Company from Joseph and Kendra Bruno. Terms of the deal were not disclosed.

The Bensons, who own the NFL’s New Orleans Saints and NBA’s Pelicans sports franchises, had long been rumored to be interested in the Dixie brand. A video officially announcing the deal was posted to YouTube on Wednesday. A new brewery is also being planned in Orleans Parish, which still hasn’t fully recovered from 2005’s Hurricane Katrina.

Floods from that storm wrecked Dixie’s Tulane Avenue brewery, leading the Brunos to contract brew and bottle their beer in Wisconsin. However, last month the brewery transferred those operations to Blues City Brewery in Memphis, Tenn.

Brand plans include returning Dixie Beer to its original 1907 recipe, according to the video. On Thursday, the first cases of beer brewed under the new ownership began arriving at New Orleans bars and retailers, and the company plans to expand distribution statewide as well as to Mississippi, Alabama and Florida, according to the New Orleans Times-Picayune.

Site selection for the new brewery, which is expected to be constructed in the next two years, is reportedly already underway with plans to choose a location within a month.

The Brunos, who had owned and operated the company since 1985, will retain a minority stake in the business and serve as members of the brewery’s board of managers.

The company produced about 2,000 barrels of beer in each of the last two years, according to estimates by the Brewers Association.

BrewDog Announces Australia Brewery Plans

Scottish beer makers BrewDog may not have secured site yet, but the company has announced plans to build a brewery in Australia.

“This is more than a statement of intent; it is a promise,” the company announced on its website. “Just as our US Equity Punk community are now enjoying home-brewed BrewDog beer, our Australian shareholders and customers will be able to do the same.”

BrewDog has narrowed its focus to two east coast spots — Newcastle and Brisbane — and the company put out a call for suggestions in those cities.

“We love the vibe of these cities and think either would be perfect for a BrewDog brewery/brewpub,” the company added.

Recall that BrewDog named Tanisha Robinson as the managing director of its U.S. operations earlier this month as the brewery began delivering beer from its new 100,000 sq. ft. production brewery in Columbus, Ohio.

New York Law Signed Allowing Farm Distilleries to Sell the State Labeled Beer, Wine and Cider

Evening out of the state’s liquor laws, New York Gov. Andrew Cuomo signed legislation Tuesday that will allow farm distilleries to sell in-state labeled beer, wine and cider for on-premise consumption.

“This measure restores parity for New York’s burgeoning craft beverage industry and allows for new revenue streams and exposure for the great brewers, distillers, and wine and cider makers all across this great state,” Cuomo said in a press release. “As I’ve said many times, when New Yorkers buy New York-made products, everybody wins.”

Prior to the signing of the law, farm distilleries were only allowed to sell New York State-labeled spirits for on-premise consumption whereas farm breweries, wineries and cideries could each sell in-state labeled beers, wines, spirits and ciders for on-premises consumption.

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