Philadelphia Wine-open wine “boutiques” within gourmet food shops

The Pennsylvania Liquor Control Board’s proposal to open wine “boutiques” within gourmet food shops is facing a backlash from Center City restaurant owners. Restaurateurs fear the LCB is going to get into the food business, forcing restaurants to compete against the entity that regulates them and enforces actions against them. (more frim the Philadelphia Business Journal)

“It’s a regulation issue; it raises a lot of conflict issues,” said Jonathan Myerow, an owner of Tria, which has two Center City locations.

But the LCB insists it is not getting into the restaurant business. Joe Conti, CEO of the LCB, adds that the plan is in the exploratory phase. In a statement prepared in response to Philadelphia Business Journal questions, Conti said the state is focused on a retail concept in which a limited number of high-end wines will be “hand-sold” to customers of gourmet food shops.

“As part of its plan to evolve into a customer-focused specialty retailer, the Liquor Control Board is exploring the idea of having wine boutiques as sublets from high-end gourmet food shops in Pennsylvania communities including Philadelphia,” Conti said.

“While we understand the concern, we have a business responsibility to explore new opportunities. The board believes the wine boutiques at high-end, gourmet food shops will help the board meet its responsibility and, ultimately, generate revenue that benefits its shareholders — the taxpayers of Pennsylvania.”

The LCB, which is chaired by Patrick J. Stapleton III, operates 620 Wine & Spirits stores, with sales of $1.7 billion in 2007-08. Of that figure, $428 million in taxes and profits went into the state’s general fund.

The LCB claims to be the nation’s largest purchaser of wine and spirits, in turn allowing it to pass discounts on to customers.

Its position as the sole provider of wines sold in Pennsylvania restaurants has long been a subject of criticism by restaurateurs, who commonly refer to it as a monopoly.

Restaurant owners were angered in March, when the Web site for Philadelphia Magazine, Phillymag.com, reported a planned collaboration between the LCB and Chef Jose Garces (owner of Amada, Tinto, Distrito). At the time, it was reported that Garces planned to open a small shop at 11th and Locust offering cheese and dessert, with an in-store wine shop.

In the two months since, the issue has come to a boil. But LCB spokesman Nick Hays said the LCB has not yet approved any agreement with a restaurateur and talks are ongoing. A spokeswoman for Garces, Clare Pelino, acknowledged Garces’ interest but said he is declining further comment.

Nonetheless, the initial report stirred the competitive fires among restaurant owners.

A Web site for a group calling itself PA Restaurants for Fair Competition (www.pa-rfc.org) listed 52 restaurants that would oppose the state’s involvement in a food operation. Among those who have opposed the plan are Bistro St. Tropez, Bridgid’s, Caribou Cafe, Chloe, Dock Street Brewery, Gayle, Jake’s, James, London Grill, Monk’s Cafe, Patou, Oceanaire Seafood Room and the Prime Rib.

Restaurants that serve specialty wines say they would be at a disadvantage competing against the LCB’s business partner, given that the operator would not have to adhere to that state liquor code.

Joe Beckham, owner of Alfa gastro-pub and Walnut Room nightclub in Center City, has not said publicly where he stands on the issue. But he wondered aloud how a regulator with monopoly selling power would operate in one of the most competitive industries, the prepared-food business.