The analysis, created by Pennsylvania company, S.E. Koontz Software, Inc., found that consumers paid an average of 7.6% more for spirits since the implementation of flexible pricing. Similarly, the markup on the largest wine brands increased by 14 percent, with consumers paying an average of 10.3% more for those wines.
“As a Pennsylvania consumer, I was angry when going through the data,” said Scott Koontz, owner and lead database programmer from S.E. Koontz Software, Inc. “The consumer almost always lost when it came to pricing. In fact, I found it hard to find a scenario where the consumer came out on top.”
This news comes after Governor Tom Wolf’s decision to close all Fine Wine & Good Spirits. On Monday, a limited number of stores were opened for curbside delivery, but many consumers struggled to get orders placed. This, coupled with sporadic online availability, has failed to meet demand, and the PLCB is planning yet another price increase in August.
S.E. Koontz Software, Inc. was engaged by DISCUS, American Distilled Spirits Alliance (ADSA) and Wine Institute to investigate what impact variable markup pricing has had on consumer prices.
“The data speaks for itself,” said Chris Swonger, DISCUS president and CEO. “Since flexible pricing, the PLCB has consistently increased the markup on distilled spirits, and shoppers are paying the price. Now, a new price increase is in the works despite the negative impacts of COVID-19, and there is nothing the legislature can do to rein in the PLCB. Consumers will be forced to foot the bill for the governor’s decision to shut down spirits stores in the commonwealth – a move that cost the state approximately $16 million in revenue each week.”
“In 2019 ADSA testified twice before the Pennsylvania legislature to flag problems with flexible pricing. Both times we noted that the PLCB was increasing consumer prices, and both times the PLCB denied this claim despite ADSA having evidence of unjust price increases,” said Matt Dogali, president of ADSA. “Now, with this independent analysis, it is irrefutable: Pennsylvania consumers are paying more for distilled spirits because the PLCB is misusing its flexible pricing authority.”
The increases in shelf prices for consumers for both wine and spirits in Pennsylvania occurred even though spirits prices have gone down, and wine prices have increased by less than 1 percent in the same time frame nationally.