February 15, 2017
The privately owned liquor store.
In Pennsylvania, it's a concept akin to the mythical El Dorado. Lawmakers have worked for decades to privatize the state-run stores to no avail. Last year, the Legislature expanded wine sales to grocery stores as part of sweeping reforms under Act 39, but the state stores remain.
One Pittsburgh entrepreneur, however, may succeed where so many failed although he won't own the store or any of its merchandise.
"This isn't just some kid slinging moonshine," said Christian Simmons, 34, whose Pennsylvania Libations is working through the state permitting process. "This is a well-run, well-groomed business."
Assuming the Liquor Control Board signs off on the plan, Simmons' first store would open in Pittsburgh's bustling Strip District. He's currently renovating a leased storefront with an eye toward a soft open in March.
Simmons' business plan works within the confines of current state law, meaning that it's by definition a complex one. The closest comparison, he explained, is a consignment shop for alcohol.
"I've always been kind of defiant in life and I always look at things the other way," he said, of his effort to work within the state's labyrinthine liquor code.
Distilleries and wineries are already allowed to open up to five satellite locations in addition to their primary facility. They can also hire third parties, who are often paid by commission, to assist with marketing and sales.
Under Simmons' plan, manufacturers would designate Pennsylvania Libations as one of their satellite locations. The store, then, would sell their products on their behalf and earn a commission from the proceeds. It would also offer tastings for customers to sample products from across the state.
"I'm not buying or selling," Simmons said. "It's their product and I'm just the manager managing their satellite location."
So is all this legal?
The devil is always in the details but, at first blush, it is.
Elizabeth Brassell, a PLCB spokeswoman, said two or more limited wineries or distilleries are allowed collaborate on a single satellite location. As long as they use separate cash registers and storage spaces, and follow certain rules governing interior connections, distillery and winery satellite locations can also be situated inside the same building.
"At this point, it's a little premature for us to discuss what would or wouldn't be allowed," Brassell cautioned. "All we can do is look at the applications in front of us."
Simmons cited a December 2015 advisory issued by the PLCB's legal office that gave a preliminary thumbs-up to such a plan.
Since then, he's been working to iron out the details. Pennsylvania Libations would follow the PLCB's guidelines for separating liquor and wine sales, for example. Simmons said his employees have gone through a careful vetting process, as did the owners of the storefront that will be used for Pennsylvania's first private liquor store. Part of the process, he said, was ensuring that the owner was not in any way connected to a current liquor license.
"Transparency is key here," he said. "I know what I'm doing is very touchy."
Now, more than ever, Pennsylvania's liquor system is in flux.
Last year's Act 39 brought sweeping changes in how alcohol is distributed across the state. In addition to an expansion of wine sales, it also brought expanded hours at state stores. More recently, beer distributors were permitted to sell six-packs.
Brassell said the PLCB received the first two applications, one from a distillery and another from a winery, to use Pennsylvania Libations as a satellite location. Each manufacturer would have to submit a separate application in order to be sold there, she said. The manager of such a joint satellite location--in this case, probably Simmons--would also be subject to board approval.
"No authority has been granted so far but everything would eventually have to be considered by the board," she said.
Simmons said he expects to eventually stock about 100 spirits from 20 different distilleries, about 45 wines from three different wineries and several varieties of cider and mead. All of them will be from local Pennsylvania businesses. Assuming the PLCB approves the applications, the manufacturers themselves would sublease space for their products in the store.
"Once we're approved on [the first two] applications, we'll submit all the others we have signed and ready to go," he said. "Hopefully, because we went through the other steps, they'll go quicker and smoother."
One of the manufacturers that signed onto Simmons' plan is the Bellefonte-based Big Spring Spirits, a distillery that makes a variety of gins, rums, vodkas and whiskeys.
Kevin Lloyd, one of Big Spring's owners, said Simmons started out as a salesperson for the company, helping it sell spirits to about 50 bars and restaurants in western Pennsylvania.
"When he mentioned this idea of the store, I was very enthusiastic about it based on his character and the location," Lloyd said. "He came up with space right on Penn Avenue in the Strip District--maybe the highest traffic area in the city."
Like many Pennsylvania manufacturers, building brand recognition has been a persistent challenge for Big Spring. The distillery's products are stocked in about 30 state-run liquor stores, Lloyd said, but in order to expand it must prove there's enough demand for its products.
"It's a chicken-and-egg problem because we want to reach more people and be in as many state stores as possible," he said. "However, to get in there, you need to demonstrate consumer demand."
The state stores, he said, are like any other retailer.
"For a retail outlet to give up shelf space, they want to make sure that product's moving," he said. "I have to demonstrate sales and, the way to do that, is word of mouth from people asking for products at those stores."
Having a showcase in Simmons' store, Lloyd said, will help the distillery expand into a busy market and, hopefully, increase its name recognition.
Simmons came to Pennsylvania's liquor business fairly recently.
He was introduced to craft beer while working at Deschutes Brewery's pub in Oregon. Before launching his own Four Seasons Brewing Company in 2011, in the Westmoreland County brewing mecca of Latrobe, he worked on highway construction.
"I cut concrete -- asphalt, bridge decks, barriers, buildings, whatever," he said. "If it needed a wet saw, I was cutting it."
Simmons said his goal with Pennsylvania Libations is not to replace, or even compete with, the state-run stores. Many of the products he's lined up can't be found in state stores or, as is the case with Big Spring, are being sold as specialty items in a relatively small number of state stores.
"There was something like $3 billion in sales in the state system last year," he said. "I'm not even going to touch one-hundredth of a percent of that."
Simmons' example, however, could spur others to follow his lead.
Brassell said the PLCB previously approved a joint satellite location shared by multiple wineries in Harrisburg's Strawberry Square. That operation reportedly didn't last long.
"There is nothing stopping anyone from proposing a license application to us," she said. "We are willing to consider any ideas under the liquor code. Whether or not the board will approve a specific application, we can't venture a guess."
Assuming the permitting process goes smoothly, Simmons said he plans to open the Pittsburgh store as soon as possible. From there, a second location in Philadelphia may follow by the end of this year and a third in State College in 2018.
He understands that his proposal will likely inspire competition but he said his existing relationships selling many of the state's local distilleries and wineries to bars and restaurants will give him an edge.
"It's old school," he said. "I'm here to build relationships and build them strong."