A recent clarification to Pennsylvania law restricting the kinds of beer packages distributors can sell has industry stakeholders split on how it will impact marketplace competition.
The Pennsylvania Liquor Control Board recently determined that beer distributors can sell 12-packs of beer, reversing Prohibition-era regulations that have long forced them to sell beer exclusively by the case or keg.
The advisory clarifies existing law to say that distributors can sell containers of at least 128 ounces to the public. The ruling came on the heels of a lawsuit put forth by Rivertowne Brewing, Save-Mor Beer & Pop Warehouse and Pistella Beer Distributors to try to force a regulatory ruling.
The idea is to make craft beer more accessible to consumers by decreasing the required pack size, or what some retailing experts call the “consumer commitment.”
“I really see it being better for Pennsylvania craft brewers that people can now sample their $40 case for $19.99,” said Frank Pistella, general manager of Pistella Beer.
But some Pennsylvania-grown brewers are skeptical of how helpful it will be and worry the new interpretation of the rule will actually serve to better favor out-of-state global beer companies with more resources at their disposal. In other words, they fear the 18-pack.
Dave Casinelli, COO at Yuengling, told Brewbound the problem is not with the 12-packs, but rather with the open-ended possibility of freeing up a lane to market for other packages between 12-packs and a typical case that most small brewers don’t have the resources to compete with.
“Unfortunately, the way this opinion was written, they redefined the essence of what a case is,” he said. “Not by allowing a 12-pack, but they gave great latitude… to allow well beyond 12-packs – [15-packs or 18-packs], which you know are dominated by the large breweries.”
Casinelli also serves as the treasurer of the Brewers of Pennsylvania, which released its own statement on the matter, calling the PLCB’s ruling “a blow to the craft brewing industry.”
Ted Zeller, an attorney with Norris, McLaughlin & Marcus, provides general counsel to both Yuengling and the Brewers of Pennsylvania. He told Brewbound the ruling will advance the cause of but a small minority of the state’s craft brewers.
“Only about 10 percent of Pennsylvania breweries actually make a 12-pack, so really it’s not going to advance the consumer interest in terms of Pennsylvania brewery access,” he said. “In addition, what it does is it actually frees up for 15- and 18-packs, where they’ve never been in the state before and there’s no Pennsylvania brewery that, for beer, makes an 18 pack.”
The fear is that companies that do will now be able to flood the market in Pennsylvania with these “predatory packs” faster than the state’s brewers can react. Casinelli reiterated they support the distributors who want to sell 12-packs, but wishes the path was forged legislatively rather than through a bureaucratic agency.
Not all brewers oppose the ruling, however. Rivertowne Brewing of Export, Penn. first sought an opinion on the matter in July, 2014 (and took part in a lawsuit filed when the agency initially deferred on ruling). The company is pleased to be able to offer 12-packs to customers.
“We’re just trying to give customers what they want. We’ve had interest in it before and that’s kind of why we pursued it the way we did,” said Rob Bolte, the company’s ‘beer traffic controller.’
Bolte added Rivertowne isn’t worried about the proliferation of 18-packs or other “predatory” offerings but is rather optimistic the availability of 12-packs will bring new consumers to his brand.
“Instead of buying a case at 50 bucks, if you can buy a 12-pack at 20, 25 you might be able to turn a couple more people onto craft,” he added.
Pistella, of Pistella Beer, agreed and said he doesn’t think the 18-pack will cause as a big a splash as others believe.
“I have 8,000 square feet dedicated to beer. Is one more package going to make a difference?” he said.