Wine Boutiques in Pennsylvania?

      As part of its plan to evolve into a customer-focused specialty retailer, the Pennsylvania Liquor Control Board (“LCB”) is investigating the idea of wine “boutiques.”  These boutiques would operate as sublets from high-end gourmet food shops in select Pennsylvania communities.  The LCB is proposing to partner with top quality restaurateurs to open these wine-only boutique shops. They are exploring establishments to partner with that have at least 2,000 square feet of space, in which the wine boutique sublet would be about 600 square feet of that space. Several hundred labels would be featured, many of which would not be readily available in the state stores.  The current plan is to have the boutiques sell wine at the same price as in the state stores.  Bottles sold within the boutiques, therefore, would likely be sold at prices much lower than found at neighboring restaurants.  A pilot program is being proposed for center city Philadelphia, and if successful the LCB would like to open eight to 10 boutique stores in various locations state-wide including possible retail locations in West Chester and Doylestown.

Apparently the LCB has been in advanced negotiations with such recognized chef/owners as Mark Vetri (Vetri, Osteria) and Jose Garces (Amada, Distritto, Chifa) for the possible Philadelphia location(s).

Gourmet food shops selling wine are commonplace in many parts of the country.  While foodies and oenophiles relish the thought of wine boutiques, area restaurateurs have not been so receptive to the idea.  Local restaurant owners fear the LCB is going to get into the food business, forcing them to compete against the very entity that regulates and enforces actions against them.  Many area restaurateurs claim the ramifications of such a venture could be devastating to their businesses.

Pennsylvania restaurants with liquor licenses must purchase all the alcohol (including wine) sold within their premises from State Stores.  The LCB operates 620 State Stores and claims to be the nation’s largest purchaser of wine and spirits.  The LCB asserts that its buying power allows it to pass discounts on to customers including licensees.  Indeed, licensees are entitled to a discount from the retail price, however, restaurant owners are concerned that wine sold in the boutiques will be available at a lower cost than what they are able sell wine, thus giving the LCB a potentially unfair advantage.   Others worry that bring your own bottle (“BYOB”) restaurants could face a big hit, since many guests patronize liquor stores just prior to their visit.   If BYOB customers stop at a boutique prior to their visit, they may be inclined to remain in the boutique rather than continue on to the BYOB. 

The LCB insists it is not getting into the restaurant business.  They maintain that the Commonwealth is focused on a retail concept in which a limited number of high-end wines will be sold to customers of the gourmet food shops.   The LCB maintains that the wine boutiques at high-end, gourmet food shops will help it meet its responsibility and, ultimately, generate revenue that benefits its shareholders, who are after all the taxpayers of Pennsylvania.  Perhaps the most important aspect of the concept is that the Boutiques would permit the LCB to experiment with unusual and rare wines in an effort to broaden its selections in the State Stores, which have long been criticized for their limited selections.

We will keep you posted as developments occur. 
 J.K. Butera


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