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Lawmakers express sour grapes over LCB in-house label

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Wednesday, Feb. 27, 2013, 12:01 a.m.
 

HARRISBURG — State Liquor Control Board officials were pressed for answers by lawmakers during budget hearings on Tuesday about how and why the agency developed eight controversial in-house brands of wine and spirits.

Testifying before the House Appropriations Committee, LCB board member Robert Marcus staunchly defended the program that began with TableLeaf wines and grew to encompass seven brands of wine and a brand of vodka.

State Rep. Seth Grove, R-Lancaster County, asked LCB officials how the in-house brands were developed and whether it is the role of government to develop products that compete against the private sector.

“We have the legal ability to do it. We did it. We're proud of it,” Marcus said, adding that the products have been well-received by the public.

But people inside and outside the agency have contradicted Marcus' story to lawmakers about how the brands came to fruition.

“It is disconcerting a member of the board would reiterate something shown to be not wholly accurate,” said Steve Miskin, spokesman for the House Republicans.

Marcus testified the agency retained rights to the name TableLeaf from a failed effort to rename state wine and spirits stores.

He said several years ago, when the wine-making market experienced a glut of high-quality grape juice in California, “a number of people” approached the agency about selling a private-label wine.

At that point, the agency solicited samples from those in the wine industry who might potentially produce the in-house wine, he said.

“It grew from there,” Marcus said. “It wasn't a big deal.”

The story is similar to one former LCB chief executive Joe Conti told the same state House committee last year, which later was contradicted by LCB Marketing Director Jim Short.

“We've expected the former CEO to be factually challenged because he is every time he testifies,” Miskin said on Tuesday on behalf of the House GOP.

Through a spokeswoman, Short said last fall that companies did not approach the LCB.

Instead, he said, he was the one who approached vendors to find one to handle the in-house wine.

Short said he shopped the wine around to two distributors, but one declined and the other required an order larger than the LCB wanted.

Short said he then contacted Majestic Wine and Spirits, a Wayne-based broker representing Bronco Wine Co. of California, which now supplies the wine for six of the seven in-house wine brands, including TableLeaf.

Marcus refused to comment after the meeting about why he offered a story that others in the agency have already disputed.

LCB Chairman Joseph “Skip” Brion has said he doesn't believe the LCB needs its own labels to compete with industry brands.

Brion told lawmakers Tuesday the private-label products are one area of several where he and Marcus disagree.

Brion said those disagreements are one reason he hopes Gov. Tom Corbett will nominate and the state Senate will confirm a board member to fill the vacancy on the three-member board.

Conti, on hand to testify under an “emergency” contract with the agency to continue working after retiring earlier this month, said the 36 private labels have generated $15 million in sales since they first hit store shelves in March 2011.

Marcus told the committee “everybody knew about” the private-label program because “it was done in an open manner at the time.”

But interviews and board meeting records indicate the in-house brands were developed in relative secrecy.

Brion has said he did not learn of the full extent of the program until several months into his board term and even voted in favor of new in-house wines without realizing it because private-label products were grouped with hundreds of others the board approved.

Many people the LCB said were involved in the creation of the brands have said they had no knowledge of the program or role in its development.

State Rep. Jim Christiana, R-Beaver County, questioned LCB officials as to why they spent hundreds of thousands of dollars to advertise and promote the private-label wines, produced in California, when “vineyards here in Pennsylvania have to jump through hoops to get on store shelves.”

Marcus said advertising expenses have been relatively “minimal” and that the agency is working with state wineries to put as many as 10 of their wines in up to 10 state stores.

LCB records show the agency spent nearly a half-million dollars — about 10 percent of its advertising budget — last fiscal year on its private-label brands.

Kari Andren is a staff writer for Trib Total Media. She can be reached at 724-850-2856 or kandren@tribweb.com

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