AN ACT CONCERNING THE LIQUOR CONTROL ACT AND COSTS OF ACQUISITION.

File No.:	284
Bill No.:	HB-5559
PH Date:	2/28/2006
Action/Date:	JF-3/14/06
Reference Change:	Floor

To amend to Liquor Control Act to allow discounted alcoholic liquor prices to be passed on to the consumer.

DISCUS supported the efforts of HB-5559, “…which would give Connecticut package store owners the ability to pass along their savings from quantity purchases to the consumer and to sell and price our products based on their acquisition price instead of the minimum bottle price currently in place. Retailers often purchase distilled spirits in single case quantities from the wholesalers who may offer lower per bottle prices as an incentive to the retailer. Despite receiving these discounts, which is an accepted industry practice, retailers are unable to pass along their savings to the consumer. This restriction prevents price competition among retailers, artificially inflates prices and ultimately hurts the consumer. By removing the minimum pricing requirement, retailers will be free to adjust prices based on the discounts they receive…” Oral and written testimony.

Mr. Luppino attempted to clarify the purpose of the bill, which “…is to allow retailers to sell at a price that is more reflective of their true cost if they choose to do so…It does not allow sales at or below cost…does not allow for quantity discounts…”

He stated the bill speaks directly to split-case and full-case purchases. The bill makes it voluntary for retailers “…to pass currently provided discounts on to consumers if they choose to do so…It encourages manufacturers…and wholesalers in the state, to offer competitive pricing to retailers and consumers on competitive sets of products,”

Finally, he says “…We're trying to…preserve the three-tier system…we want the three-tier system to thrive in this state like other states.” Oral testimony.

“The WSWC is opposed to this proposition to redefine the costs of acquisition.

1. …this proposal will place many small ('mom and pop') and medium sized package stores at a competitive disadvantage to large package stores. There are many items which a package store may purchase in less than full case quantities. That package store will have to pay the posted bottle price for the item purchased. The large package store down the street who purchases the same item by the case, under current law, can not sell below the posted bottle price, the same price that the small package store can sell at. Under this proposal, however, the large package store would be able to sell at a lower price than the smaller package store.

2. …if suppliers wish to lower the posted bottle price, they can do so under current law. All they have to do is lower there [their] posted bottle price to the wholesaler, who in turn can lower their posted bottle price to the retailer, which is available to both large and small stores.

3. …There will be no simple way to determine what was the retailer's cost for the item that is sitting on the shelf.

4. …the requirement to round up price to the next '$0.99' will devastate the sale of smaller sizes which might be forced to increase prices as much as 72%.”

5. Mr Berdon says in his oral testimony “…prices are currently regulated and monitored by the Department of Consumer Protection.”

Opposed HB-5559 because it would, “enact changes that would make our Small Business lives in CT even more difficult for us than they already are.” Written testimony.

CPSA stated that this bill is “…probably one of the most self-destructive bills…to the Package Store Associations…Wholesalers of the wine and spirit…the beer wholesalers.”

In his opinion the bill would probably put 200-250 stores out of business. “This bill has every earmark to destruction of Connecticut's liquor industry.” Oral testimony.

1. Pit the large stores and the chain stores against the small stores.

2. Lead to predatory pricing.

3. Lead to the loss of stores and jobs.

4. Result in loss of profitability to the small business owners in the state.

5. Lead to high-risk sales as stores become less profitable.

6. Sacrifice brands in the marketplace as the single bottle purchases…will go away.

7. Result in consumer selection being lost especially in beer.

8. Result in lost revenues for profitability; sales and corporate business taxes; and jobs.

Mr. Mazzaraff did not believe that the current system needed repair. He was particularly distressed about pricing competition with grocery stores and loss of profit. Oral testimony.

	Brie Johnston	3/21/06
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