Photo Credit: Find. Eat. Drink.

Photo Credit: Find. Eat. Drink.

By Wine Broker Jason Malumed

Whenever friends come to Philadelphia for the first time, usually their remarks are something along the lines of, “Wow, the restaurant scene here is amazing!” And shortly thereafter, I tend to hear, “but, damn, why is wine is so expensive?” or, “what’s the deal with all these BYOB restaurants with no corkage fee?” Well, the two are interconnected.

State Controlled
Pennsylvania is one of 18 remaining states considered “control states” meaning the sale of alcohol is the job of the state. These 18 states all have various degrees of control on which wine, spirits, and in some cases beer, consumers can buy and at what price. Aside from maybe Utah, Pennsylvania has some of the strictest booze laws in the country.

There are no privately run wine and spirits stores in Pennsylvania. Instead, all 600 of the wine stores across the state are under the control of the Pennsylvania Liquor Control Board, or PLCB. In order for a wine to be on the shelf here, one of the state’s wine buyers will have to give their stamp of approval. Because the state is running a wine monopoly, you might run into prices on the shelf that are a bit higher than other parts of the country, but if you know what you are looking for, there are also some great deals to be had.

Where To Buy
The staff of these stores are state employees, meaning many of them don’t have deep wine knowledge. My best advice is to stick to the stores called either “Premium Collection” or “Fine Wine & Good Spirits” (12th Street & Chestnut or 21st Street & Market in Philly, or the Ardmore store in the suburbs, for example). These stores generally have the best selection and usually a dedicated wine specialist.

Restaurant Pricing
If this sounds weird or inconvenient for consumers, it is actually far worse for restaurant operators. Since all wine and spirits sales need to be handled by the PLCB, restaurant wine buyers are required to buy their wine at retail prices. Unlike wine and spirits buyers in most other states, wholesale pricing simply does not exist here. Wine distributors in other parts of the country can sell and ship directly to restaurants. In Pennsylvania, before it reaches the restaurant it has to be touched by the PLCB, who will add onto their standard markup and then re-sell it, adding an extra tier of markups.

Since I sell wine both in New Jersey and Pennsylvania, let me give you a real world example of how this can affect restaurant customers. Let’s say I sell a bottle of wine for $12 in both states. In New Jersey, the restaurant can buy that wine directly from me, paying just $12 (no sales tax is charged because this is a wholesale transaction). In Pennsylvania, the same bottle of wine first passes through the PLCB’s markup formula, meaning it will end up at $18.07. On top of that, because restaurants are buying this wine at retail, they have to pay 8% sales tax on this wine, meaning their cost is now $19.51. As a wine broker, I make the same amount ($12) in either case, but because the PLCB takes their cut ($7.51 per bottle, or ~62.6% in this example) the final cost for the restaurant is dramatically different.

Now, let’s say both the restaurant in New Jersey and the restaurant in Pennsylvania put that same wine on their wine list at a standard 3x markup. In New Jersey that bottle would be $36 on the list, but in Pennsylvania, it is now roughly $60. That’s a big difference. When that wine is sold to the customer, the restaurant again has to charge them tax (10% this time), so the consumer effectively gets double taxed. And that’s how a $12 wine becomes $66 in Pennsylvania.

Delivery of the wine is another difference in Pennsylvania. In New Jersey I deliver the wine directly to the restaurant’s door, restaurants in Pennsylvania don’t have this luxury. The PLCB handles all transactions involving wine and spirits, which forces the restaurant to choose a state store where they want their wine delivered. Once the wine arrives, the restaurant has to go to the store themselves to pick it up.

On top of this, where I can extend credit terms (up to 30 days to pay, typically) to restaurants in New Jersey, in Pennsylvania the restaurant either pays the full amount for that wine upfront, or they don’t get any of it. If it sits in the store for more than 10 days, the store will cancel the order and send it back to the distributor.

Philadelphia has become one of the BYOB capitals of the country as result of all the weirdness associated with wine and spirits laws. Restaurant liquor licenses can be difficult, prohibitively expensive, or impossible to buy because the PLCB restricts the number of licenses based on a county’s population. When you combine that with having to buy all your alcohol at retail plus pricing, many restaurant operators throw in the towel and choose the BYOB route. Some of the top chefs in Philadelphia will often start by opening small restaurants that allow customers to bring in whatever wine they want and charge them no corkage fee. For people visiting Philly, this is a great opportunity to break out that special bottle you have been saving and bring it to a top restaurant.

Where To Drink
If you enjoy ordering wine off of a restaurant’s list, where a sommelier has carefully chosen the selections with the restaurant’s food and point of view in mind, I’d say be sure to consult the F.E.D. guide first. There are many places, such as, Petruce, Vedge, Townsend, and The Fat Ham that are committed to introducing Philadelphia’s diners to cool wines, and not charge them an arm and a leg for it. Because wine is still so important to them, they are willing to make less of a markup on these bottles in order to try and keep pricing as competitive as possible. And those are the types of places I am happy to buy wine from and support, even if it is a bit more expensive.

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