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Fayette liquor store leads Pennsylvania in losses

| Sunday, Jan. 29, 2012

The small, red brick building with sky-blue shutters and an ornately framed entrance in Point Marion looks more like a country cottage than a state wine and spirits store.

Perched on a bend in Route 119 opposite an abandoned gas station and next to an unassuming pizza joint, the Fayette County store posted the worst performance of more than 600 stores statewide.

Open just three days a week, sales numbers show the store — with just 3,557 transactions and losses of more than $22,240 a year — is more of a community service to the town's 1,160 residents than a profitable enterprise for the state.

Statewide, 47 state stores ended the 2010-11 fiscal year in the red, and nearly a quarter of those were in a 10-county area of Southwestern Pennsylvania. With a state-run liquor system, unprofitable stores are buoyed by moneymakers such as the Penn Circle South store in Pittsburgh that made a nearly $2 million profit last year.

As state lawmakers debate privatization, some wonder who would bid on liquor licenses in areas with unprofitable stores, forcing residents to drive long distances, possibly across state lines, to purchase wine and spirits.

It happened in West Virginia, where liquor licenses are rebid every 10 years based on demographic and population shifts, said Gig Robinson, spokesman for the state's Alcohol Beverage Control Administration.

"We actually have some areas that don't have a retail liquor license. People didn't bid for it," Robinson said.

"That is one of my biggest concerns -- that the rural areas would be left out of the fray. ... We still have to serve people," said state Rep. Tim Mahoney, D-South Union.

Rep. Jeff Pyle, R-Ford City, said he worries some rural areas in Armstrong County "are going to get squeezed out" if the state allows open bidding.

"I'm not saying we need something on every street corner, but it's not fair to ... expect (people from rural areas) to drive into Pittsburgh for a bottle of wine," Pyle said. "On the other hand ... I don't think the state should be in the liquor-selling business."

Ralph Strimel, 75, a Point Marion volunteer firefighter for more than 50 years, believes his town will lose its liquor store if the system is privatized.

The store, minutes from the West Virginia border, is a far cry from some of the spacious, upscale outlets elsewhere with colorful displays, select wines decoratively arranged in barrels and wine accessories lining the walls.

In Point Marion, a worn display labeled "Information Center" is empty, save for one corkscrew and a re-corker for sale. Shelves curve around the perimeter of the small store and a short center aisle holds best-sellers such as glass jugs of Carlo Rossi wine.

Some want the store open more often.

Amanda Russo, 21, of Point Marion said she doesn't have a car, but can walk to the state store. With a bottle of Jacquin rum in hand, she and a friend said they visit the store every day it's open.

Charles Lynn, 53, remembers when the store was open five days a week in the 1970s. He said he worries he'll have to drive 30 to 50 minutes roundtrip to Uniontown or Masontown for his favorite Nikolai vodka.

But Jay Sukits, assistant professor of business at the University of Pittsburgh, said rural areas might lose free-standing liquor stores but could gain access in other stores.

"It could be a convenience store, a small Giant Eagle ... where the business model is such that people...would still be buying food, so rather than having all this overhead in a free-standing liquor store, you combine those products," Sukits said. "It gives (customers) more convenience, one-stop shopping."

Sukits said that's what would happen under free enterprise.

"In any other business when you have a situation like that, what tends to appear invariably is consolidation," he said.

There's no doubt the market will dictate what happens to wine and spirts sales in rural areas, but the market will sort itself out, said Joe DiSarro, chairman of the political science department at Washington & Jefferson College.

"The market has a way of providing for the distribution of goods far better than any governmental organization," said DiSarro, a proponent of privatizing liquor sales. "I've never heard of a liquor store going bankrupt. I've never seen, 'Closed for lack of business.' "

Observers say how liquor privatization legislation is crafted could make the difference in who bids on licenses and how those outlets spread across the state. A proposal by state House Majority Leader Mike Turzai, R-Bradford Woods, to fully privatize wholesale and retail liquor sales stumbled in the state House last year.

Turzai did not respond to requests for comment.

Turzai's plan was amended by a House panel to maintain state stores but also create "enhanced distributor" licenses for beer distributors and others to sell beer and wine.

Gov. Tom Corbett, a private system advocate, says the amended plan is not privatization. It's unclear whether that plan will advance or be amended further.

"If you're from a rural community, you're going to be concerned about access. If you're from downtown Pittsburgh ... you know regardless of what happens, you're going to have stores," said state Rep. Jaret Gibbons, D-Ellwood City. He noted that " we want access but we also want revenue. It's going to be difficult to get both the revenue and the access to the consumer and the consumer-friendly model."

DiSarro said lawmakers may need to take baby steps toward privatization because of complex competing interests from labor unions, free-market advocates, groups concerned with expanding access and others.

"You cannot take on all those interests at once," DiSarro said.

"They don't want to alienate the unions completely and the unions will fight hard to keep the state monopoly," he said. "I think they will take half a loaf ... and compromise with a variety of interests here and provide the consumers with (more choice)."

Additional Information:

Performance rankings

The following is a list of the most- and least-profitable Wine & Spirits stores in Southwestern Pennsylvania (Allegheny, Armstrong, Beaver, Butler, Fayette, Greene, Indiana, Somerset, Washington and Westmoreland counties).

Least profitable

Penn Street, Point Marion: -$22,444

Brownsville Avenue, Brownsville: -$19,138

South Main Street, Washington: -$18,958

Market Square, Meyersdale: -$16,286

Ohio Street, Boswell: -$9,003

Fifth Street, Avonmore: -$6,266

Pittsburgh Road, Perryopolis: -$3,747

Main Street, Irwin: -$2,829

North Warren Avenue, Apollo: -$1,544

Ben Franklin South, White Township: -$198

Most profitable

Penn Circle South, Shadyside: $1,925,456

Liberty Avenue, Strip District: $1,769,375

Freeport Road, Lincoln-Lemington: $1,356,846

Oxford Drive, Bethel Park: $1,356,133

Route 19, Cranberry Township: $1,335,440

Oak Spring Road, South Strabane Township: $1,145,825

Wharton Street, South Side, Pittsburgh: $808,396

McIntyre Square Drive, McCandless: $780,061

Washington Road, Peters Township: $681,086

Cochran Road, Scott Township: $678,671

Source: Pennsylvania Liquor Control Board

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