1 1 COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES 2 HOUSE LIQUOR CONTROL COMMITTEE 3 PHOENIXVILLE BOROUGH HALL 4 351 BRIDGE STREET PHOENIXVILLE, PA 19460 5 WEDNESDAY, APRIL 4, 2018 6 1:00 P.M.
7 PUBLIC HEARING - UPDATE ON ACT 39 AND ACT 166 OF 2016 IMPACT ON CRAFT BREWERIES AND CRAFT DISTILLERIES 8
9 BEFORE: HONORABLE ADAM HARRIS, MAJORITY CHAIRMAN HONORABLE WARREN KAMPF 10 HONORABLE CRAIG STAATS HONORABLE MIKE TOBASH 11 HONORABLE JEFF WHEELAND HONORABLE PAUL COSTA, MINORITY CHAIRMAN 12 HONORABLE FRANK BURNS
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SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 2 1 COMMITTEE STAFF PRESENT: 2 MICHAEL BIACCHI EXECUTIVE DIRECTOR, REPUBLICAN CAUCUS 3 LYNN BENKA-DAVIES 4 EXECUTIVE DIRECTOR, DEMOCRATIC CAUCUS BRITTNEY RODAS 5 RESEARCH ANALYST
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SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 3 1 I N D E X
2 OPENING REMARKS By Chairman Harris 4 3 By Chairman Costa 4 - 5
4 DISCUSSION AMONG PARTIES 5 - 8
5 PRESENTATION By Christian Lampe 8 - 15 6 QUESTIONS 15 - 20 7 PRESENTATION 8 By Mark Sofio 20 - 25
9 QUESTIONS 25 - 32
10 PRESENTATION By Robert Cassell 33 - 38 11 By Jared Atkins 38 - 39
12 QUESTIONS 39 - 54
13 Presentation By Attorney Jean Krack 54 - 59 14 QUESTIONS 59 - 68 15 PRESENTATION 16 By Jessica Capistrant 68 - 72
17 QUESTIONS 72 - 79
18 CONCLUDING REMARKS By Chairman Harris 80 19
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SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 4 1 P R O C E E D I N G S ------2 CHAIRMAN HARRIS: On this beautiful
3 sunny day, thank you all for taking the time to come to
4 the hearing. It's going to give you an update on Act
5 39 and some of the changes we made, but also just a
6 general opportunity to get feedback from those in the
7 industry.
8 What we've been doing, is it working?
9 Is it not working? Should we still be tweaking things?
10 Is it time to maybe put the brakes on for a little bit?
11 So we're very excited to hear from all
12 of you. And on behalf of myself and my Co-Chair and
13 Representative Kampf, who invited us today, we want to
14 say thank you.
15 With that, I'll turn it over to Chairman
16 Costa for a few remarks. Then we'll have the members
17 and the staff introduce themselves.
18 CHAIRMAN COSTA: Thank you, Chairman
19 Harris.
20 I'm looking forward to hear - a lot of
21 times we make - lot of times we make decisions on how
22 we should do things -. Am I okay now?
23 Sorry about that. That was the wrong
24 mic. You know, we make decisions, and it's good to get
25 the feedback on how those decisions actually impacted
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 5 1 the business, not just our side, but also your side.
2 So we're anxious to hear what you all have to say. So
3 thank you for letting us be here.
4 CHAIRMAN HARRIS: Okay. Thank you.
5 And if I could just have a friendly
6 reminder? If everyone could put their phones - either
7 turn it off or on silent as we move forward or submerge
8 it in water. That will also keep it quiet, I've
9 figured out.
10 And we'll just start all the way to my
11 right. If we can just have all the members and staff
12 introduce themselves?
13 MS. RODAS: Hi. I'm Brittney. I work
14 for Representative Costa.
15 REPRESENTATIVE STAATS: Good afternoon,
16 everyone. I'm Craig Staats, representing the 145th
17 District in Bucks County.
18 REPRESENTATIVE BURNS: And I'm
19 Representative Frank Burns. I represent the 72nd
20 District in Cambria County.
21 REPRESENTATIVE WHEELAND: Good
22 afternoon, everyone. I'm Jeff Wheeland, 83rd District,
23 Williamsport. We're just about ready to open up
24 another small brewery, New Trail Brewery, in
25 Williamsport.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 6 1 And a little bit of my history. I was a
2 former beer wholesaler and then beer retailer in my
3 previous life.
4 So again, I'm looking forward to the
5 testimony and I appreciate everyone participating.
6 REPRESENTATIVE KAMPF: So I'm Warren
7 Kampf. I'm actually the State Rep for this area.
8 We're in the 157th District today.
9 I want to thank the Committee and the
10 Chairmen for agreeing to host it here. I'm very proud
11 of this - this excellent town that we have, the Borough
12 of Phoenixville. It's undergoing quite a
13 transformation, really, because of the town fathers and
14 mothers working very hard to make that happen over the
15 last 20 to 25 years.
16 And the latest developments with craft
17 brewing and distilling coming to the town are very
18 interesting. So me being on the Committee, it made
19 sense that I would ask the Chairmen to take a look at
20 doing it - doing it here.
21 And I would be remiss if I didn't think
22 the Borough for allowing us to host us here. And here
23 we have the Mayor. Mayor Urscheler is back there to
24 the left. Thank you very much, Mayor, for allowing us
25 to be here and have the - have the hearing in this
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 7 1 hall.
2 CHAIRMAN HARRIS: Ditto. Thank you,
3 Mayor. I did type in Phoenixville Borough Hall, and it
4 took me to a boarded-up building a few blocks away,
5 which kind of concerned me. But this is actually very
6 - a very nice setting.
7 I'm Representative Adam Harris. I
8 represent the 82nd District, so I'm in the center part
9 of the state, Juniata, Franklin and Mifflin Counties.
10 CHAIRMAN COSTA: Good afternoon again,
11 everybody.
12 My district is part of the City of
13 Pittsburgh and its eastern suburbs in Allegheny County.
14 And I, again, look forward to hearing what you all have
15 to say.
16 MS. BENKA-DAVIES: Hi. I'm Lynn
17 Benka-Davies. I'm with - I'm with Representative Paul
18 Costa, as the Executive Director for the Liquor Control
19 Committee.
20 MR. BIACCHI: Mike Biacchi, House Liquor
21 Control Committee for Rep Harris.
22 CHAIRMAN HARRIS: Okay.
23 Well, I guess we're all ready to get
24 started.
25 So first off we have the panel of the
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 8 1 Brewers of Pennsylvania. If we could just have you
2 each introduce yourself and then you can begin with
3 your written testimony at your leisure.
4 ATTORNEY ZELLER: May it please the
5 House Liquor Committee, Attorney Ted Zeller. I'm
6 General Counsel to the Brewers of Pennsylvania and
7 counsel to - actually, to several of the breweries in
8 this great Town of Phoenixville.
9 You're absolutely right, it's kind of
10 been a hotbed for craft beer. And I think it's serving
11 the town well.
12 MR. LAMPE: I want to thank you for
13 asking us to come here today. I'm Chris Lampe,
14 President of the Brewers of Pennsylvania, as well as
15 co-owner of - of Weyerbacher Brewing Company in Easton,
16 Pennsylvania.
17 MR. SOFIO: I'm just tickled to be here.
18 Thank you for having me. I'm Mark Sofio, with Crowded
19 Castle Brewing Company, one of the new breweries here
20 in Phoenixville. And we're happy to be here and happy
21 to share our story and insights with you.
22 MR. LAMPE: So I'm going to start
23 without any further ado. As I said, I'm the President
24 of the Brewers of Pennsylvania, as well as part owner
25 of Weyerbacher Brewing Company.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 9 1 Brewers of Pennsylvania is a nonprofit
2 organization which is comprised of and supports
3 Pennsylvania breweries which believe in the nobility of
4 brewing and hold dear the great traditions and history
5 of Pennsylvania brewing.
6 BOP members employ an estimated 10,000
7 employees, earning $296 million in wages and generating
8 $1.1 billion in direct economic benefits to communities
9 throughout the Commonwealth.
10 Despite these numbers, we believe the
11 Pennsylvania brewing industry can grow more further -
12 through further analysis of recent legislative changes
13 and further promotion of the brewing industry in the
14 Commonwealth.
15 The BOP has approximately 170 members
16 throughout the Commonwealth. And once again, thanks to
17 the House Liquor Committee for this opportunity to
18 testify today.
19 While Acts 39 and 166 did change the
20 legislative landscape in which we must operate, there
21 was a regulatory change in 2015 which created the
22 ability of breweries to operate taprooms at their
23 facilities. This was a groundbreaking event, which
24 allowed breweries to promote their own products at
25 their own facilities and gave breweries the opportunity
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 10 1 to differentiate their products from what is becoming a
2 crowded field of offerings.
3 The number of breweries in the United
4 States has grown from a couple of hundred breweries in
5 the late 1980s to just over 6,000 presently. I think
6 the ability to differentiate our products at taprooms
7 allows us to sell more beer throughout the industry -
8 through our industry partners at the wholesale level.
9 And I can speak to that from my own
10 taproom, which opened - when that regulation changed in
11 2015, we were actually giving away our beer and - for
12 free. And we went from - we went from sales in our
13 taproom, which was just a visitor center at that point,
14 of just over $500,000 to the following year sales of
15 $1.2 million. So it was a huge - it was a huge benefit
16 for just my brewery alone and many other breweries
17 throughout the state.
18 Acts 39 and 166 made historic changes to
19 the Pennsylvania Liquor Control - Liquor Code and
20 provided for such things as wine sales to go for
21 grocery and convenience stores, less restrictions on
22 convenience stores which also sell liquid fuels
23 obtaining liquor licenses. And permitting Pennsylvania
24 manufacturers, including breweries, the ability to
25 secure exposition permits and farmer's market permits.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 11 1 It also created a malt - excuse me, it
2 also created a Pennsylvania Malt Beverage Promotion
3 Board. And the Brewers of Pennsylvania submitted a
4 project proposal and grant application to the Board
5 last year entitled, Retail Impact of Acts 166 and 39 of
6 2016 on Malt and Brewed Beverage Sales. I'll refer to
7 it as the Project from here on out.
8 The Project focused on five primary
9 areas of research, precipitated by the changes of Acts
10 166 and 39 as follows. Number one, what are the
11 effects of the new legislation on malt and brewed
12 beverages sales within the Commonwealth? What is the
13 impact of Wine Expanded Permits have had on malt and
14 brewed beverages sales within the Commonwealth?
15 What effects have Wine Expanded Permits
16 have on floor space in retail outlets in the
17 Commonwealth? What is the effect of new retail
18 privileges at manufacturing locations - excuse me, what
19 effect that new retail privileges at manufacturing
20 locations have had on beer sales. And finally, number
21 five, are manufacturers able to adequately access
22 distribution channels from - for malt beverages to new
23 entrances to the marketplace created by the new
24 legislation?
25 We propose that a well-known consulting
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 12 1 form conduct the Project. And we received a letter of
2 support from our national association, referred to as
3 the Brewers Association, for the Project, and an
4 endorsement of Bump Williams Consulting, the
5 third-party consultant which we suggested conduct the
6 Project.
7 As you may know, I am also a member of
8 that Malt Beverage Promotion Board. And unfortunately,
9 the Project was rejected by the Board.
10 I should also note that, because I am
11 the President of the BOP and a member of that Board, I
12 recused myself from that vote on the Malt Beverage
13 Promotion Board.
14 While I'm here to test - today to
15 testify pursuant to your invitation concerning the
16 effects of Acts 39 and 166, please excuse my and the
17 BOP's ignorance of a better assessment of this new
18 legislation, since we didn't have the Project to pass.
19 We did propose a survey to our brewers
20 and are happy to share the results. However, we
21 believe that such - a project such as the one proposed
22 by the Brewers of Pennsylvania may be a more
23 appropriate assessment of the effects of the new Acts.
24 The members of the Brewers of
25 Pennsylvania that responded to our survey indicated
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 13 1 that only about 14 percent of their current sales, on
2 average, were for other Pennsylvania wine or spirts,
3 which breweries can sell under the new Acts. This is a
4 strong indicator that the focus of breweries' taproom
5 remains their own products. Approximately 90 percent
6 of the members that responded enjoyed the benefits of
7 exposition permits or farmer's markets permits and they
8 believe it did increase their overall profitability as
9 well.
10 More members believe the fact that
11 convenience stores can sell beer would not positively
12 affect their sales. I believe that this is because
13 many small brewers do not have the opportunity to gain
14 shelf space in smaller convenience stores which are
15 typically dominated by larger brewers. W.
16 E must always keep in mind that ABI and
17 MillerCoors dominate the market and sell more than 80
18 percent of the beer produced within the United States.
19 My - my brewery is very small in comparison and we do
20 have a difficult time obtaining shelf space in
21 convenience stores. One of our larger members, D.G.
22 Yuengling & Son, Incorporated, even struggles to
23 compete with the likes of ABI and MillerCoors.
24 While many of our breweries are growing,
25 almost 20 percent - almost 20 percent reported that
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 14 1 their distribution to other retailers was negatively
2 affected in the year 2017. As evidence of the small
3 nature of many of our members, 50 percent of them
4 reported that the $700 license surcharge fee negatively
5 affected their operations by at least a moderate
6 amount.
7 As mentioned above, the Malt Beverage
8 Promotion Board was created by the Act - the new Acts,
9 but it rejected our Project request that would go
10 beyond what I am able to relate to you today. It did,
11 however, grant the BOP funding for a brewery locator
12 application.
13 Again, I would like to thank the
14 Committee for the opportunity to be here today. The
15 Brewers of Pennsylvania believe there is still more
16 work to do when it comes to analyzing the effects of
17 the new Acts and to increase opportunities for the
18 brewing industry to grow in the Commonwealth.
19 We still hear too many stories from our
20 members that they can be handcuffed by perpetual
21 agreements and case minimums for delivery to retailers.
22 And I can offer a person - personal anecdote on that
23 one. I have just - and I know some of you have heard
24 this before, but I have a bar marginally within walking
25 distance of where I live that happens to be on the
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 15 1 wrong side of Berks County for the wholesalers that I
2 happen to work with there. And they refuse to - they
3 refuse to take the beer to the beer. So I can't
4 actually have my own beer at a bar that was close to
5 me. So what I actually ended up doing instead was
6 self-deliver to them.
7 But the interesting part about
8 self-delivery, as far as that's concerned, I still have
9 to run - I still have to run everything through the
10 wholesaler that I use for that area. Which means that,
11 even though I have delivered the product myself, they
12 get their cut anyway. So that's one of the hamstrings
13 that we can run into.
14 In any case, we remain open to working
15 with the Committee on solutions. And I'm happy to take
16 questions if you have them at this time.
17 CHAIRMAN HARRIS: Wonderful. Thank you
18 very much.
19 And thank you for mentioning the
20 surcharge. I did want to note, there are some
21 representatives from the VFW and the Legion. If you
22 could raise your hands.
23 There's similarly reporting problems
24 with the $700 surcharge, especially for the smaller
25 clubs. And I know we got to talk in the hallway a
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 16 1 little bit, and some of the other did, but we'd like to
2 ask all the members before you leave today if you could
3 take a few minutes just to hear their concerns going
4 forward.
5 Chairman Costa?
6 CHAIRMAN COSTA: No questions.
7 CHAIRMAN HARRIS: Any questions from the
8 members? Yes, Representative - Representative
9 Wheeland.
10 REPRESENTATIVE WHEELAND: Thank you
11 again for your testimony.
12 And you had mentioned increased
13 opportunities. Approximately once a month the UPS
14 driver comes to my door and I have to sign for the
15 three bottles of wine that my lovely bride gets
16 delivered.
17 And my question is, for these, you know,
18 small brewers, would internet sales be something that -
19 that you'd be interested in discussing further with the
20 Committee.
21 MR. LAMPE: With franchise laws,
22 alternative methods of distribution to the consumers
23 are very welcome. We actually look at them.
24 And in fact, as of right now, under the
25 law, as long as a brewery has named a wholesaler a
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 17 1 primary - the exclusive territorial rights - and you
2 being in the wholesale business, you know exactly what
3 it is -. They can actually conduct sales as long as
4 they deliver it to that consumer or use a third-party
5 shipper like UPS or something like that. They can do
6 it now, already.
7 And some of them are thinking about
8 actually starting to take more advantage of it, because
9 it's a recent phenomenon.
10 CHAIRMAN HARRIS: Representative Kampf?
11 REPRESENTATIVE KAMPF: Mr. Lampe, you
12 indicated the - just the sale of other products in -
13 you know, in your members' establishments and taprooms.
14 Was it 17 percent of them reported that
15 they were - they were selling wine or spirits from
16 another source?
17 MR. LAMPE: Product mix. Fourteen (14)
18 percent -
19 REPRESENTATIVE KAMPF: Fourteen (14)
20 percent.
21 MR. LAMPE: - product - product mix. So
22 essentially less than 15 percent of sales within the
23 taproom is something other than the product that the
24 manufacturer makes.
25 REPRESENTATIVE KAMPF: And then you -
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 18 1 you indicated right after that another statistic,
2 whether it was 9 percent or 90, I didn't quite catch
3 that.
4 MR. LAMPE: Ninety (90) percent of the
5 members responded that they enjoyed that exposition
6 permits and/or farmer's markets permits.
7 REPRESENTATIVE KAMPF: Okay.
8 So for the benefit of the folks in the
9 audience and people watching, this is - this is the
10 right of your members to several times a year go to a
11 farmer's market or Taste of Phoenixville, for
12 example, -?
13 MR. LAMPE: And sell product at those,
14 yes.
15 REPRESENTATIVE KAMPF: Okay.
16 And 90 percent of your constituents or
17 your members are using that in one form or another?
18 MR. LAMPE: What I - what I will say
19 there is that 90 percent of the members that reported
20 back.
21 REPRESENTATIVE KAMPF: Okay. Okay.
22 And just your own personal experience or
23 talking with folks, what is the value of that - that
24 particular -?
25 MR. LAMPE: It's a - it's an increase
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 19 1 for me - I'll speak to my brewery. We have used two
2 farmers' markets over the course of 2017. It increased
3 exposure for us.
4 Amazingly enough, my business has been
5 in business for 23 years now. And in the Easton area
6 there are still people that have no idea that we exist
7 in Easton. You know, we're 17,000 barrels a year and
8 have existed for 23 years. You'd think there would be
9 more people that understand that we are there.
10 So that just makes - you know, using the
11 farmer's markets for that gets us greater exposure for
12 the business itself as well - as well as some sales.
13 CHAIRMAN HARRIS: Any other members have
14 questions?
15 I have a few. I was curious. I didn't
16 realize that your proposal to the Beer Board was
17 rejected. Was that a close vote or was it - was it a
18 financial issue or -?
19 MR. LAMPE: I - actually, because I
20 recused myself, I can't - I can't really speak to it.
21 I'm not sure what the machinations were -
22 CHAIRMAN HARRIS: Okay.
23 MR. LAMPE: - behind it.
24 CHAIRMAN HARRIS: We'll - we'll do some
25 digging and figure out what that vote was.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 20 1 MR. LAMPE: I do know it wasn't a
2 financial issue, because I think there's still money on
3 the table enough to still come up with a proposal?
4 REPRESENTATIVE KAMPF: The Malt Beverage
5 Promotion Board gave - recommended to the PLCB just
6 over $700,000 worth of grants, so - of the million or
7 so from 2017.
8 CHAIRMAN HARRIS: If you don't mind, I'd
9 like to turn our attention to Mark. If you wouldn't
10 maybe mind just telling us a little bit about your
11 experience was like starting a brewery.
12 Are you here in Phoenixville?
13 MR. SOFIO: Absolutely.
14 CHAIRMAN HARRIS: Okay.
15 If you could just tell us sort of the
16 good and the bad. You know, what was maybe easy, what
17 was more difficult, the problems that you came across
18 as you started your operation.
19 MR. SOFIO: Sure.
20 First of all, I just want to say thank
21 you for having it here. Thank you to the Borough of
22 Phoenixville, the Brewers Association of Pennsylvania.
23 They have laid the groundwork that make what we do
24 possible.
25 In fact, before 2015 we had - we were a
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 21 1 group of home brewers who thought that maybe we
2 shouldn't share our beer, as most home brewers do. And
3 so we decided to investigate it. And after years - a
4 couple years of investigating, well, let's look into
5 it. And at that time, the taproom wasn't a part of the
6 ability for breweries, and so you were looking at just
7 a straight distribution model, which changes
8 everything. You have to have a bigger space, a bigger
9 brew system morphed slightly in a warehouse.
10 Now, if Weyerbacher considers themselves
11 a small brewery, I don't know what word to use for what
12 we are. But when the laws changed in 2015, we actually
13 done contract brewing before that to experiment with
14 that. So became very familiar with the - the
15 three-tiered system and how that works and all the -
16 the regulations and rules around that.
17 But when 2015 - when the - when the laws
18 changed, we decided, hey, this is - this is a whole new
19 game for us. It allows us - a couple other things we
20 always kind of wanted was a destination brewery,
21 someplace that people would come to that was a - you
22 know, when you go to the wineries, you know, they have
23 a beautiful place to drink beautiful wine.
24 And so many of the breweries at that
25 time were basically warehouses with tasting rooms on
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 22 1 them. And while it was fun to go there, it didn't have
2 that same kind of feel that the wine people had.
3 So in 2015, when that changed, that
4 allowed us to come to Phoenixville on a fluke - it's a
5 bit of a haircut story. But we came to Phoenixville
6 and had the opportunity not only to put ourselves right
7 in the midst of a historic community and a great place
8 to do business, but also to create what we think is
9 kind of a beautiful space for people to come in and
10 experience our product.
11 So we think that that's also a big part
12 of how we can identify our - differentiate ourselves,
13 is, you know, you have five - basically five breweries
14 in Phoenixville represented. And each one has a
15 different vibe, if you will, to it, which kind of
16 meshes up with what their twist and take on beer is.
17 So it gives the consumer an opportunity to see the
18 differentiation between the breweries.
19 So we came to Phoenixville. We found
20 this location and we completely gutted it. We found
21 the original wall from 1913, which we've retained back
22 in the brewery, and we built upon that. And
23 Phoenixville is a tremendously, gloriously historic
24 town. So it's kind of fun for us to say that we're
25 building on the past to do something new today.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 23 1 And so we have a - we have a
2 seven-and-a-half barrel brewery system, which is
3 probably more than their test barrel system. And we
4 have a taproom that sits about 85 people.
5 CHAIRMAN HARRIS: Even - even Miller,
6 Coors and - and Budweiser started small. There's
7 always room to grow.
8 MR. SOFIO: Yes. Yes. We have about 85
9 seats and - I will say to the comments about the wine
10 and the spirits, it might be just Phoenixville itself,
11 but we have - I think our numbers are higher, but
12 that's maybe because there's a distillery in town.
13 But we have really appreciated, grown
14 and had a wonderful time networking with the different
15 wineries and the different distilleries. And so we
16 actually have become - I always think of it as the
17 Pennsylvania product moment. I get to tell their
18 stories. I get to tell the story of Dad's Hat down in
19 Bristol, of you know, Paradox Winery up in - in - way
20 up in Chester County.
21 But we - you know, if - so - and they
22 know us and they tell our story. So it's been an
23 opportunity for us to kind of begin to think about
24 maybe ways we can work together on that.
25 So I - I don't know that that was really
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 24 1 the intention of it, but from the business side it has
2 made us much more competitive. In the sense that we
3 are able to offer drinks that - that's -. We have
4 people come in and their significant others or friends
5 don't drink beer and they really don't like wine and
6 cider's too tart for them. And, you know, do you have
7 - is there - do you sell cocktails? And so we've been
8 able to -. It's not like our primary thing, but it's
9 what - what your friends come in that allow you to come
10 into the brewery.
11 So we found that to be very helpful,
12 both in promoting ourselves but also in bringing people
13 in to have that ability to do that, to meet the needs
14 of people. Because people come in - beer drinks are a
15 community, right, and we usually come in in groups.
16 And so not everybody's he same.
17 We've been - we will be open a year in
18 May 26th coming up. So we - we are really brand new.
19 I think that the legislation that - that Act 39 has
20 been wonderful. It's opened a lot of doors for us, a
21 lot of conversations.
22 It's made - it's actually made what we
23 do possible and feasible and economically-viable. So
24 I'm just really grateful for all the work that this
25 committee has done, for all the work the Brewers
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 25 1 Association has done.
2 And they do a great job educating
3 people. I mean, I went to their - their symposium, and
4 it was marvelous. It was so helpful. I think one of
5 the challenges for small breweries like us is we don't
6 have a lot of people to throw a lot of different tasks
7 at, so we can go to some place like their symposium and
8 just take in a whole lot of information about the laws,
9 about what's right.
10 I remember that people were talking
11 about overtime, you know, that was the big issue. So
12 I'm very grateful for them, that they're - they
13 continue to be supportive. But I have nothing but
14 thanks and praise for you guys for - for the work
15 you've done and deep appreciation, which is why I'm
16 tickled to be here, because if you hadn't done that, I
17 wouldn't be here.
18 CHAIRMAN HARRIS: And I'm just curious,
19 at this point are you strictly self-distributing your
20 beer?
21 MR. SOFIO: Currently, we are
22 self-distributing. We are in talks with a distributor
23 who does small brands to get us -. We're finding that
24 that's important for a variety of reasons, particularly
25 just to move beer, so that we can turn over beer. As
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 26 1 well as - as we grow in developing our styles and the
2 kinds of beer, to be able to experiment that way.
3 CHAIRMAN HARRIS: Chairman Costa?
4 That's what happens when you have two
5 Penguins fans -.
6 CHAIRMAN COSTA: Yeah, I was going to
7 ask about that self-distribution also. But thank you
8 for the comments.
9 It's not very often that we get praised
10 for things that we do. We usually get criticized.
11 It's good to hear. Thank you.
12 But if I can go back to Chris. You do
13 have at least one ID or do you have multiple?
14 MR. LAMPE: I have one ID.
15 CHAIRMAN COSTA: So can you go into
16 again about crossing the county line or, if it isn't a
17 boundary, was the county line, is that the issue that a
18 beer distributor -?
19 MR. LAMPE: It is purely - with my
20 distributor - with that distributor, it is purely that
21 he just doesn't -. It's one bar at the complete
22 opposite end of the county and - and he doesn't want to
23 spend the time to deliver, you know, a couple of kegs
24 here and there to that bar.
25 CHAIRMAN COSTA: So is that - if you
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 27 1 wanted to, would that be a reason to get out of your
2 contract?
3 MR. LAMPE: Generally, that is a pretty
4 good distributor. I don't think we'd look to get out
5 of the contract. I think there are other ways around
6 that, you know, with - with - also case minimums are
7 another issue that comes up there, I believe.
8 I know that Victory has had issues with
9 a winery that is very close to their new facility. And
10 to get their beer distributed to that winery is almost
11 impossible, because they only want one or two cases,
12 and the distributor won't - has a case minimum for
13 dealing with that.
14 And I think - I think, you know, we've
15 talked about some possible legislative fixes to that,
16 which would just simply be if you have a case minimum,
17 then we can go distribute it ourselves and not have to
18 run it through the distributor.
19 CHAIRMAN COSTA: Okay. All right.
20 Thank you. Go ahead.
21 MR. LAMPE: If I may give feedback on
22 one thing that Mark said. I - a quick story about a
23 bar - a bar owner that I spoke with years and years ago
24 up in New York City. He - he was - it was a craft beer
25 bar called the Stone Pony. And he had a couple real
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 28 1 interesting business models with it.
2 He focused specifically on craft beer,
3 excepting he carried Bud Light. And I looked at him -
4 it was almost ten years ago. I looked at him and said
5 why - you know, you're focused all on craft beer. Why
6 - why would you carry the Bud Light?
7 He looked at - he looked at me and said
8 I do two things with it. I charge more for it, number
9 one. And number two, if there are three businessmen
10 that want to go out to lunch, two of them like craft
11 beer and one of them isn't into it at all, I just lost
12 three customers.
13 So having - having the ability to add in
14 a little bit of wine and a little bit of spirits into
15 each and every taproom does exactly the same thing.
16 That is if there are three people and one person isn't
17 into beer, we lost three customers. But doing it that
18 way -.
19 ATTORNEY ZELLER: I will tell you, too,
20 that I also represent some distillers and wineries who
21 have taprooms and all of them after those Acts saw
22 immediate uptakes in sales of 25 percent or so just
23 because you have the ability to offer that little bit
24 of variety.
25 The - the - you know, the two couples
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 29 1 going out to dinner, where the one insists on having a
2 glass of wine or a spirit, something like that, then
3 they can go to that facility. I've seen it across the
4 industry. I think that is a very positive thing.
5 And I still think, though, what's
6 important is that all of those manufacturers are
7 maintaining their goals of really promoting their own
8 products. That in a place like Phoenixville, where
9 your pot mix might be a little bit higher because of
10 the partnerships, don't think it really invades the
11 equity that other license holders have in their - in
12 their licenses, because it's just a way of almost
13 promoting their own brand. And hopefully they go to
14 that fine restaurant and ask for that brand, and
15 everybody wins.
16 CHAIRMAN HARRIS: Representative Kampf?
17 REPRESENTATIVE KAMPF: Mark, I asked
18 this of Mr. Lampe. What about the Taste of
19 Phoenixville and those sorts of events, do you utilize
20 that at all or -?
21 MR. SOFIO: Yes.
22 REPRESENTATIVE KAMPF: And has that been
23 useful for you?
24 MR. SOFIO: Yeah. I think, as was
25 pointed out, it's really a lot of marketing and getting
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 30 1 - getting people to know who you are. But we go to all
2 of them.
3 I think it's - as a brewer, it helps us
4 to be in contact with what people are drinking and what
5 they like. And sometimes you get ideas, but it is
6 something advantageous for us, for marketing purposes.
7 REPRESENTATIVE KAMPF: Okay.
8 And I know a couple of years ago we put
9 a tax credit in for the purchase of equipment. Has
10 that been utilized at all or -?
11 MR. SOFIO: We have plans to.
12 ATTORNEY ZELLER: Yeah, it just started.
13 The program just started. We are just seeing the first
14 returns filed, because it wasn't funded for a while,
15 and then they have to write the procedures on it.
16 As with many tax credit legislations,
17 one-half of the pass, it takes a year or two actually
18 to get up and running. So we just started on that.
19 REPRESENTATIVE KAMPF: One last thing.
20 Mark's here, but there - there are several others.
21 Conshohocken Brewing has just opened up a place, Stable
22 12, Sly Fox, Root Down. Then of course we have a local
23 distiller, Bluebird. So there's a - and a wine tasting
24 room. So there's an incredible mix within really a
25 block and a half or two blocks from where we're
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 31 1 sitting.
2 Has - has that been a catalyst? Has
3 that been a challenge? Can you talk about that?
4 MR. SOFIO: Yeah.
5 When we first leased the property, the -
6 someone posted on a website, great, one more brewery.
7 And - but what's happened is that since Root Down has
8 gone in and Conshohocken has come in, what we find is
9 it actually works as a catalyst. There's a bigger
10 geographic area from which we can draw people. And so
11 in the summertime and festival times it's very big.
12 We found even - even - even in everyday
13 kind of weekend experiences, you know, people will come
14 in. Like if you're from the area of West Chester,
15 there's Levante Brewery in West Chester. People in
16 West Chester love Levante with depths that I haven't
17 yet experienced with our guests.
18 But they will come - and they will come
19 to Phoenixville because in that three-block radius
20 there's - they have five breweries, three wineries and
21 a distillery that they can walk up and down and pick
22 and choose and taste and visit. So we found it to be
23 really a positive thing.
24 I - you know, as far as the brewers go,
25 I think we all kind of get along. I have great respect
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 32 1 for all of them. Like I said, everybody's got their
2 own little take on beer. And I think that actually
3 helps people to understand the differences in the - in
4 the breweries themselves.
5 It's not just beer. Stable 12 has their
6 take on it. Root Down has their take on it.
7 Conshohocken, Iron Hill, they all have their takes on
8 it. And Crowded Castle does as well. So I think it's
9 a great thing for us. So I feel very good about it.
10 CHAIRMAN HARRIS: And we have been
11 joined by Representative Tobash. Representative
12 Tobash, if you'd like to give an introduction.
13 He's been very actively involved in a
14 lot of beer and liquor issues. If you'd just like to
15 give a brief synopsis of where you're from. You have a
16 small brewery in your district, I believe.
17 REPRESENTATIVE TOBASH: I like to see my
18 friends here, Mr. Zeller. Nice to see you gentlemen
19 today. Sorry I'm running a little bit late. I
20 appreciate coming here to Phoenixville. Wow, what a
21 great small town. I noticed all the microbreweries and
22 pubs and everything on the way in here, and I think
23 you're building something that's really great.
24 We've got a Craft Brewers Caucus right
25 now, and we're working consistent with your mission to
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 33 1 grow Pennsylvania's manufacturing and tourist sector,
2 which you guys do all so well. I think one of my
3 friends up in Pottsville, I think it was Dave
4 Casinelli, actually - he coined the phrase and he said
5 we should make Pennsylvania the - the Napa Valley of
6 beer. So we're using that and we're working for you.
7 So we appreciate having this hearing
8 here, but I am from the 125th District, which includes
9 Schuylkill County and the home of Yuengling beer. So
10 happy to be here today and happy to hear the testimony.
11 Thank you, Mr. Chairman.
12 CHAIRMAN HARRIS: Okay.
13 Seeing no other questions, I just want
14 to say to you on behalf of the entire committee thank
15 you very much for your testimony. I think we might run
16 into a few of you a little bit later, but thank you
17 very much.
18 ATTORNEY ZELLER: Thank you. Thank you.
19 CHAIRMAN HARRIS: Next up we have a
20 panel from the Pennsylvania Distillers Guild.
21 Good afternoon, gentlemen. The floor is
22 yours whenever you're ready.
23 MR. CASSELL: Good afternoon, Chairman
24 Harris, Chairman Costa, and distinguished members of
25 the House Liquor Control Committee.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 34 1 I'm grateful for the time and
2 opportunity you have granted me to discuss the effects
3 of Act 39 and other issues that pertain to the
4 Pennsylvania Craft Distilleries. The exact scheduling
5 of today I find to be serendipitous, as it was seven
6 years ago on this very date, April 4th, 2011, that I
7 testified before the House Liquor Committee on House
8 Bill 242. Mr. Costa, I see you smiling.
9 This was a piece of legislation that
10 later became the Limited Distillery License. At that
11 time Pennsylvania had the highest licensing fee for a
12 micro distillery in the United States, with no
13 distillery having the ability to sell product to
14 tourists visiting their facilities.
15 Today, the Commonwealth of Pennsylvania
16 is touted as having some of the best legislation as it
17 pertains to the industry. When I previously sat before
18 you, I promised that allowing this barrier to entry to
19 become modernized and competitive within the nation's
20 landscape, that we would create jobs.
21 I am proud to say that we have gone from
22 3 to 82 distilleries in that time. The Commonwealth is
23 ranked sixth nationally in number of distilleries
24 within the state and ranked fifth nationally in growth,
25 with 34.7 percent growth from the previous year in
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 35 1 number of craft distilleries.
2 The trend of craft distilling has also
3 triggered a growth in full-time employee jobs within
4 the sector by 50 percent, from 2014 to 2017.
5 Approximately 66 percent of these jobs are created from
6 the production facility and tasting room staff.
7 Statistically, a craft distillery gets
8 34 percent of their total sales from direct to consumer
9 activity through their tasting rooms, et cetera.
10 In terms of quality, Pennsylvania was
11 the state that garnered the most medals from the
12 American Craft Spirits Association annual competition
13 for the second year in a row. Pennsylvania distillers
14 received 44 medals for their products that came from 11
15 different distilleries. For the record, that is 14
16 more medals than second place State of New York.
17 Pennsylvania's proud heritage of
18 distilling and its symbiotic ties to the rich
19 agriculture is having unprecedented resurgence, and
20 able to do so on the back of the modernization this
21 committee put forth seven years ago.
22 Today I'm here to talk about the
23 modernization as a result of Governor Wolf's signing of
24 Act 39 on June 8th, 2016. The Bill changed more than
25 35 sections of the Liquor Code and added a number of
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 36 1 new sections.
2 Within this legislation, there were a
3 number of positive things for limited distilleries.
4 Like the wineries, we are also now allowed to apply for
5 permits to participate in farmers' markets and other
6 expositions.
7 Representative Costa, we actually used
8 these exposition permits at the ACSA Conference that
9 was held in Pittsburgh, in your district, this spring.
10 Act 39 allowed Pennsylvania alcohol
11 producers to cross promote and sell each other's
12 products in our respective licensed facilities. We're
13 all in this together and happy to promote our fellow
14 Pennsylvania manufactured products.
15 While the state has continued to make
16 great strides, there are a few areas we would like to
17 see addressed in future legislation or policy. As
18 limited distilleries, we would like to see a parity
19 with the Wine and Beer Marketing and Promotions Boards
20 that were created.
21 Speaking for myself, as a Pennsylvania
22 distiller and small business owner using the existing
23 PLCB system, I have gained intimate knowledge on its
24 functions. I believe small investments of
25 administrative personnel in both the Department of
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 37 1 Licensing as well - as well as category management will
2 improve the working relationship with the Board that a
3 craft distiller as well as any spirit supplier faces.
4 To give you an example, Category Manager
5 that controls the spirits and the PLCB, that single
6 buyer controls $1.1 billion worth of sales, has no
7 administrative support and manually enters the UPC
8 codes of every single item that come into the system.
9 That is an enormous weight and an administrative hamper
10 on being able to have continued listing periods
11 throughout the year.
12 When I first started my - my original
13 distillery in 2005, we could go in for a listing about
14 every other month. Now it's once a year, at best.
15 While the modernization has been
16 fantastic and created a positive impact with the state,
17 there has not been the minor investment into supporting
18 the already overstretched personnel in these
19 departments, so that the intents can be fully realized,
20 monetized and regulated.
21 Flexible pricing enabled the state to
22 renegotiate with suppliers and greatens its margins,
23 but the allocation of personnel to perform this task
24 was not added and the result has been painfully long
25 turnaround times on new item submissions.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 38 1 Continually I have found the members of
2 the House Liquor Committee to be open to discussions on
3 modernization of our code that makes sense in today's
4 world. As legislators, I applaud the work you have
5 done and look forward to continuing our working
6 relationship to address the next steps.
7 I thank the Committee for its time and
8 consideration today and happily - happily take any
9 questions you might have.
10 CHAIRMAN HARRIS: Wonderful.
11 Thank you very much, Rob.
12 Jared, do you want to just give us a
13 little background on your business and how things have
14 been going on your end?
15 MR. ATKINS: Sure.
16 I appreciate you guys for having me
17 today. So I'm a local business as well.
18 Is this on?
19 Thank you very much. My name's Jared
20 Atkins. I'm from Bluebird Distillery right here in the
21 block in Phoenixville.
22 So we started about three years ago.
23 Renovated an old building in town here with my father.
24 And then we opened the doors three years ago as a
25 tasting room and a full-production facility.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 39 1 So we operate as a tasting room on the
2 block here and have regular hours where patrons can
3 come in, try our spirits, have a cocktail. And then we
4 also sell and distribute through Pennsylvania,
5 Illinois, New Jersey and Delaware now. So we do
6 utilize a distribution system through PLCB warehouses
7 and then also we do a small amount of
8 self-distributing.
9 And as we've gotten larger, it's been
10 nice for us to kind of lean on the PLCB aspect of it to
11 be able to distribute to the stores, as it's tough to
12 keep up when it's a small business of hand-to-hand
13 deliveries. It has been a great benefit from growing
14 our business to the point where we can actually start
15 going to stores and utilizing some of the state's
16 attributes.
17 CHAIRMAN HARRIS: Thank you very much.
18 Questions from members? Chairman Costa?
19 CHAIRMAN COSTA: Thank you, Chairman.
20 Robert, I'm glad you brought up the
21 Marketing and Promotion Board. Actually, I - and Adam
22 is one of the co-sponsors to create that. We worked
23 very closely with Wigle Whiskey, and I'm sure you know
24 Mark, but hopefully I can convince the Chairman when we
25 go back into session.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 40 1 MR. CASSELL: It certainly did not go
2 unnoticed, Representative Costa, and we thank you very
3 much.
4 CHAIRMAN HARRIS: So the feedback you
5 gave was very interesting and very helpful. I know we
6 have been pushing the LCB about having a more
7 modernized e-commerce system for everyone who uses the
8 system. And I know they've been very receptive to that
9 idea. But it obviously is a - there's a cost issue and
10 they're trying to figure that out.
11 Just curious, what are - I mean, we were
12 talking earlier about the surcharge fees. Do you pay
13 the $700 surcharge as well or, as a limited distillery,
14 what fees are you actually paying to the Commonwealth.
15 MR. CASSELL: I guess my question would
16 be more on I'm not sure which fees I'm not paying.
17 CHAIRMAN HARRIS: So there are quite a
18 few.
19 MR. CASSELL: Yeah. I mean, you
20 mentioned about the e-commerce system. That's another
21 area I think is interesting, is the Category Manager
22 that handles that at the PLCB I believe has grown that
23 business from 48 million to nearly 500 million in the
24 last 16 months. Again, same situation as the other
25 person who does the 1.1 billion in sales, all manual
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 41 1 data entry with no administrative support.
2 CHAIRMAN HARRIS: Representative Kampf?
3 REPRESENTATIVE KAMPF: Guys, I have a
4 couple of questions.
5 Robert, maybe you mentioned it and I
6 missed it. What - what percentage on the shelves in
7 State Stores are there in craft distillers from
8 Pennsylvania or what's going out their doors from your
9 members?
10 MR. CASSELL: I think that the Board
11 themselves has been great to delineate a section of
12 select stores for PA-made products. That's the part
13 that I think is great. But you know, going back to
14 some of my other points about things, you know, not
15 reaching a full level of execution, you know, you can
16 go into some stores where you'll find a PA-made wine
17 and spirits sitting over in the Italian wine section.
18 Now, statistically, the consumer who
19 goes in to buy distilled spirits in the State of
20 Pennsylvania stores spends roughly 49 seconds from the
21 time they walk in the door until their buying decision.
22 In a 49-second period that means that
23 we're asking the consumer to look on the opposite side
24 of the store from what it is they're actually shopping
25 for to find the small Pennsylvania-made section. So
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 42 1 those are areas where I saw the intent was good, but
2 there - they need some other resources to better
3 execute the system they have at hand.
4 You know, I think that the State of
5 Oregon recently put out some statistics about a sizable
6 number of both SCUs and now percentage of the state's
7 gross revenue that's coming from supporting its
8 in-state spirits manufacturers.
9 REPRESENTATIVE KAMPF: And do you - do
10 you have or did you mention what our statistics are on
11 Pennsylvania-made or distilled spirits going out their
12 doors?
13 MR. CASSELL: So I actually did have it.
14 It was my intent to put it in there today. But
15 interestingly enough, certain sections or listing
16 categories within the state, unlike the regular listing
17 channel, are not made publicly and easily available.
18 So that includes even my own products.
19 REPRESENTATIVE KAMPF: Okay.
20 And Jared, I had a couple of questions
21 for you very quickly. One, you mentioned the front of
22 the house in your facility, the bar. Is - is that a
23 big part of your business? How does it help you?
24 MR. ATKINS: Sure.
25 And I'll touch on that first and then
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 43 1 I'll actually go back and talk about some of the
2 Pennsylvania - inside the Liquor Stores -.
3 So thankfully for us, we started at a
4 time, three years ago, where it was already - we were
5 already able to actually be able to serve patrons at
6 our - at our tasting room, per se, to actually make
7 cocktails, make drinks, and be able to serve them some
8 of our spirits.
9 What that did for us is give us a huge
10 leap of having income in our pocket, allowing our
11 business to actually succeed. So with that - if we
12 didn't have that, it would have been nearly impossible
13 to be able to go through the Pennsylvania Liquor
14 Control Board chain. And I'll talk about that in a
15 second, why.
16 So that gave us money directly. We
17 opened our doors. We had an instant kind of local
18 crowd from Phoenixville, which is fantastic, but we
19 were able to actually make money right away.
20 And with that money I was able to hire
21 personnel. I was able to help - get a distiller, free
22 myself up to actually go out there and start making
23 sales.
24 To this point, we're starting to sell
25 much more volume throughout different states, but in
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 44 1 the case - that covers close to about 75 percent of our
2 profit, which is huge. And that's supporting a staff
3 of 10 to 14. And with seven full-time people now as
4 well, all because we didn't have a location to begin
5 with.
6 Again, with our self-distribution and
7 new products, we're able to come up with new products
8 and actually offer them directly to customers right
9 there instead of waiting for the chains for
10 Pennsylvania's State Stores.
11 And then I'll touch real quick about
12 what Rob was just saying. So some of our problems or
13 some of our kind of story when we went into the State
14 Stores was we put in for the original ten stores
15 program, which is fantastic -. And Pennsylvania came
16 up with this aspect that craft distilleries without
17 going through the hustle and bustle of putting in twice
18 a year, you can put in for ten stores and get up to ten
19 products in ten stores. Fantastic. We picked our
20 stores. They're local ones.
21 So all ready for a set. The only
22 problem we ran into was, first of all, it took 11
23 months for those products even to get into stores from
24 the date of actually putting in.
25 The second problem is that, once we hit
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 45 1 those ten stores and we started selling, well, there's
2 no plan of how you get above ten stores. So with a
3 growing business that we're putting a lot of money
4 into, obviously ten stores can't really support a
5 growing business. So we have - we're past that. We're
6 up to now about 120 stores within the state.
7 But I've kind of championed a lot of
8 this PA section over the last year and a half mostly
9 due to problems that I've dealt with. And been very
10 vocal and visiting the Liquor Control Board and working
11 with Ron Murphy on trying to get this resolved.
12 So the Liquor Control Board put in this
13 fantastic Pennsylvania section. It would showcase
14 Pennsylvania products and get us attention.
15 As Rob stated, in every single store it
16 is 98 percent in the wine section, which is in the left
17 side of the store. And the spirits tend to be on the
18 right side of the store.
19 With that, the general sales through
20 there - somebody goes in their respective category and
21 picks out a product and chooses, not really thinking
22 that or knowing the Pennsylvania corner is around
23 there.
24 Now, the second huge problem we're
25 having now with that is that all Pennsylvania
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 46 1 distilleries will go in and the majority of the time
2 our products have not been plan-o-grammed for the
3 actual stores and they are only put in the PA section.
4 So imagine going into a store and
5 saying, hey, we got to go over here. Great. But then
6 somebody can't find our products on the shelf, and they
7 go to grab another product.
8 So I spent over a year working through
9 that and actually bringing letters from Ron Murphy and
10 - giving it to the managers, which 90 percent of the
11 time was a huge problem and was taking -. They were
12 pretty upset if I was giving them a letter that they
13 had to actually put a product - it took maybe four or
14 five times following up on every single store to get
15 the product list on the respective shelf. I'd go back
16 there three months later and all the products are back
17 in the actual Pennsylvania section.
18 So that's where we are this day. And
19 thankfully, we're in Pennsylvania and I can
20 self-police. It's getting a little tougher now that
21 we're in a hundred stores. But our majority still all
22 go to the stores.
23 Every store's different. Some are
24 fantastic, but the majority of the stores will move
25 those and put them back in the Pennsylvania stores.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 47 1 Even after all this now, they're back in the
2 Pennsylvania section. So directly this affects us from
3 then getting our totals from the - looking for more
4 stores.
5 Like I say, we're not selling in that
6 many stores, and every store that I had to go into to
7 actually on what we're selling, there's always a - a
8 section of products on display or it's put in the
9 Pennsylvania section. So this isn't going to work.
10 It's just a lot of the policing of the system and a bit
11 burdensome on small businesses. Sorry if I was very
12 longwinded.
13 CHAIRMAN HARRIS: No.
14 Representative Kampf, did you have a
15 second?
16 Oh, Representative Burns?
17 REPRESENTATIVE BURNS: Thank you for
18 testifying today.
19 I wanted to talk about if an
20 entrepreneur was looking to open a distillery, what's
21 the time frame? What's the minimum investment? And
22 what advice would you offer them?
23 MR. CASSELL: The time frame on that
24 from the time you're actually planning until like total
25 project fruition, I think like most new entrants to the
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 48 1 category, there's always hurdles that come up that I
2 think are similar to any startup business.
3 In general, you know, the licensing
4 turnaround can be a little long for what it is. And
5 quite honestly, most of the time they spend their
6 entire time looking at a little bit more archaic stuff
7 that's readily available in electronic form. Timelines
8 on that I'd say could very anywhere from people as
9 short as six months to a year and a half.
10 Investment levels of that, I've seen
11 everything from as small as operations in other
12 districts, maybe as low as a half a million all in
13 upwards of - there was one recently of three or four
14 million.
15 REPRESENTATIVE BURNS: Thank you.
16 MR. ATKINS: For myself - for myself it
17 was found that that a year and a half for us totally to
18 permitting took about six months or so to have all the
19 checks and revisits gone over. And then we put in
20 probably three-quarters of a million to a million
21 dollars to start.
22 And then our business actually was - the
23 first year expenses - thankfully, we had the tasting
24 room to offload those expenses. But then just running
25 the press, grading the barrels and such for operating
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 49 1 costs, that was the big thing for us the first year,
2 additional amount of money.
3 CHAIRMAN HARRIS: Excellent. Thank you.
4 Representative Kampf?
5 REPRESENTATIVE KAMPF: Jared, the - I
6 think, as I understand the Act, you're - you're
7 permitted to have some of your products in, say, a
8 taproom or other locations that you don't own. Do you
9 - do you do that? Is that useful?
10 MR. ATKINS: Yes, so - especially with
11 some of the other breweries and wineries here. We have
12 a great community.
13 I actually am able to crisscross
14 promotions. So the wineries and the breweries well,
15 they offer now -. Conshohocken's really taken hold of
16 doing some of our whiskeys, but they're able to offer
17 beer and a small amount of cocktails or something just
18 for the person that's not really into beer.
19 And then also we're able to bring back
20 and actually now we have a small Kegerator that have
21 four taps on. And it's not a huge part of our
22 business. But as the Brewers Guild said earlier, it
23 does make a big different when that third person comes
24 in and they're not looking for spirits and it is an
25 option. Or that person that had a spirit or two just
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 50 1 wants to relax for a little bit and have a glass of
2 beer, we'll be able to offer other local products.
3 With that parity, the only thing I
4 forgot to mention earlier, so we have great parity
5 between the facilities and wineries and breweries. But
6 the other thing that Rob and I have been talking about
7 a lot and had brought up is just kind of even more
8 parity between that, mainly the source of hours.
9 All the hours kind of differ between
10 brewers and distillers, but our main thing is that we
11 have to close every single night at 11:00 p.m. And
12 generally, it's varied up to Friday and Saturday we're
13 - the local breweries in town and the wineries are
14 allowed to open until 12:00 a.m.
15 So just that actual hour of time I've
16 put into actually - it would be a full employee's
17 salary I'd be able to pay just with, you know, two more
18 hours a week, open up on Fridays and Saturday nights
19 and just. It's always hard to have to close down and
20 then kind of watch the crowd go somewhere else.
21 CHAIRMAN HARRIS: Chairman Costa?
22 CHAIRMAN COSTA: Thank you.
23 You got me by the 11 o'clock rule. I
24 wasn't aware of that, why you're treated differently.
25 But my question is, do either one of you
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 51 1 use satellite locations?
2 MR. CASSELL: Yes, I currently do. I
3 have a satellite location in Old City Philadelphia.
4 CHAIRMAN COSTA: And you're limited by
5 statute, right, you can only have five?
6 MR. CASSELL: Five, yeah. I have one -
7 I have one in Philadelphia and I'm doing a second one
8 right now in Old City Philadelphia as well.
9 CHAIRMAN COSTA: Are you familiar with a
10 company named Pennsylvania Libations that's in
11 Pittsburgh?
12 MR. CASSELL: Yes.
13 CHAIRMAN COSTA: If you're not, why
14 haven't you taken advantage of that?
15 MR. CASSELL: I've chosen not to.
16 CHAIRMAN COSTA: Okay.
17 MR. ATKINS: Same here. I've dealt with
18 it and chose not to, so -.
19 CHAIRMAN COSTA: I don't mean to get
20 into your business strategy, but is it a regional thing
21 or just that you're not comfortable with someone
22 else -?
23 MR. ATKINS: For me it was contracts.
24 CHAIRMAN HARRIS: Okay.
25 MR. ATKINS: The same way I would look
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 52 1 at a contract of any of the wholesalers through the
2 rest of the United States.
3 MR. CASSELL: Similar for myself. Being
4 that I'd like to distribute myself or go through a
5 distributor in the Pittsburgh area, I didn't want to
6 tie myself down to that certain individual.
7 CHAIRMAN COSTA: Just so some of the
8 members of the audience understand, distillers are
9 allowed to have up to five satellite locations. And
10 there's a gentleman in Pittsburgh by the name of
11 Christian Simmons who is pretty creative.
12 He's combined several different
13 distillers to be their satellite locations. So he
14 sells all Pennsylvania products, which is a pretty cool
15 concept that he figured out. And he's being legit.
16 But I didn't know if there were other businesses in
17 this area that do the same thing.
18 MR. CASSELL: Well, one of the things
19 that we spoke about - about the - one of our long-term
20 initiatives of the Pennsylvania Distillers Guild is to
21 actually have a Distillers Guild retail shop using a
22 similar model and licenses at the airports.
23 There's currently House - House Spirits
24 in Portland, Oregon, actually has a nice retail shop
25 that they currently do. And we've talked about doing
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 53 1 something similar, but combining all of our resources
2 to give a full kind of taste of Pennsylvania at the
3 airport.
4 CHAIRMAN HARRIS: Thank you, gentlemen.
5 Thank you, Mr. Chairman.
6 All right. Seeing no other questions, I
7 will follow up with just one more. Are either or both
8 of you sourcing your ingredients locally from PA?
9 MR. CASSELL: Yes. Yeah, Bucks County,
10 Delaware County, Lancaster County. I think I got a
11 batch of rye from Schuylkill last year.
12 MR. ATKINS: I do a mix. Some I got
13 from Lancaster and Bucks County, and I pulled some
14 other grains from the Midwest, so -.
15 CHAIRMAN HARRIS: Wonderful. That's
16 great to hear.
17 And for the members' information, we are
18 trying to get a tour this summer to go down and see
19 Rob's operation. So you can check your email and get
20 back to us with your availability, and we'll try to
21 make it down to Philadelphia this summer.
22 MR. CASSELL: You know, one other thing
23 I'd like to - Representative Harris, you talked about
24 brands. Again, a long-term initiative of the guild,
25 being distillers, you know, distilled spirits are made
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 54 1 from a vast array of raw materials.
2 And being the rich agricultural state
3 that Pennsylvania is, one of the long-term initiatives
4 of the Pennsylvania Distillers Guild Agricultural
5 Subcommittee is to work with various farmers around the
6 state to be able to find a way over the next ten years
7 to make every single style of distilled spirit having
8 an ingredient option being able to grow in the State of
9 Pennsylvania.
10 And the reason that's such a long-term
11 initiative is not only scaling up what you learn from a
12 grain perspective, but something as simple juniper
13 berries in gin, you have to plant that bush. It takes
14 you roughly three years to be able to get a quality
15 berry off of the bush. So it's a long-term objective
16 for us to continue this move and the symbiotic
17 relationship with the others in the state.
18 CHAIRMAN HARRIS: Excellent. Well,
19 thank you very much for your feedback. We appreciate
20 your participation.
21 And next up we have the Phoenixville
22 Borough Manager, Jean Krack. Good afternoon, Jean.
23 MR. KRACK: How are you?
24 CHAIRMAN HARRIS: Very good. How about
25 yourself?
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 55 1 MR. KRACK: Doing good.
2 CHAIRMAN HARRIS: We were all commenting
3 this is a beautiful borough building. This is really
4 well done, very nice. Thank you very much for allowing
5 us to come.
6 The floor is yours. You can begin
7 whenever you're ready.
8 MR. KRACK: So the format for this is -?
9 CHAIRMAN HARRIS: If you'd like, we can
10 just open it to questions or if you - if you have any
11 sort of formal testimony. If not, we can just go
12 straight to -.
13 MR. KRACK: I don't really have formal.
14 I'm more - more than happy to answer a lot of questions
15 that I think you have.
16 CHAIRMAN HARRIS: Sure.
17 So if you don't mind me asking, how long
18 have you been the Borough Manager?
19 MR. KRACK: Ten years.
20 CHAIRMAN HARRIS: Ten years. So just
21 tell me a little bit about the transformation you've
22 seen from ten years ago, how many breweries, how many
23 there were here in Phoenixville, what kind of growth it
24 has meant to the area.
25 MR. KRACK: Well, I will tell you that
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 56 1 since 2004, that's when the resurgence really took
2 place here in the borough. There was just a couple of
3 restaurants and a couple of what - I guess you would
4 call them a bar versus a brewery. So there reall
5 wasn't a lot of places to go to, but the borough went
6 through a process of - it started with the streetscape,
7 starting with the cleanup of the town, what have you.
8 And at that point people started saying, you know,
9 there's something going on here, but it's not quite
10 sure exactly what it was.
11 Cleanliness of the community I think was
12 the very first thing that really made us - the borough
13 take off. And by about 2008 we had established the
14 streetscapes model that made it look a lot better than
15 what it was.
16 Because this was a steel town, and a
17 steel town with very narrow streets and what have you,
18 with one linear street for establishments. So it's not
19 your typical place that you would think of that would
20 have growth, such as a West Chester or a Norristown, a
21 county seat, as an example.
22 So we focused our energies on the
23 limited play side of things versus the work side of
24 things. To make this place, and it felt very
25 comfortable, we redid our comprehensive plan, redid our
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 57 1 zoning, made it worthwhile for the development
2 community to come to the borough.
3 We invested in the borough ourselves.
4 We built this building to - to anchor one end of the
5 town versus the other end of the town. And what began
6 to happen is people said, well, can we do a fair, if
7 you will, a First Friday type of thing? We went down
8 that road of working with organizations to create that
9 festive atmosphere for the - for the community.
10 That festival orientation allowed a
11 couple of the establishments to exercise the option, I
12 guess, to go out into the sidewalk or out into the
13 street with the license, however that works. That was
14 sort of the genesis of what we currently have, that
15 feeling of this is a great place to come to and enjoy
16 yourself.
17 Well, that population began to ask the
18 question, well, how can we live here? So changing the
19 dynamics of our subdivisional - development process and
20 the like, lowering our fees, as an example, for
21 development fees. Developers will tell you they never
22 see that. You lower your water, hookup fees and your
23 sewer fees. It began to be the place where folks would
24 be interested in doing the type of development that we
25 had.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 58 1 With that development came the housing.
2 And with that housing came the folks who wanted
3 something else to occur.
4 What really set off the borough I think
5 at that point in time was the - the Iron Hill had come
6 in, which was the first brewery product. And then a
7 little while later Stable 12 came in. Crowded Castle
8 came in. Conshohocken came in. Bluebird came in.
9 Black Walnut came in. The Barrel came in. Taste came
10 in.
11 And all of those folks had to have some
12 sort of a license. Well, they were able to do that
13 because I believe the LCB changed or relaxed its rules,
14 if you will, to allow that to happen.
15 What we saw was interesting, that
16 they're not against each other. They work together.
17 There's a - there's a unique relationship that - like
18 restaurants in a restaurant row, these establishments
19 are not threatened by each other.
20 And the fact that the laws were changed
21 to allow that to happen has benefited this community to
22 the point that, since 2004, we've increased our
23 assessed valuation by $200 million, about a 25-percent
24 increase. And our population, well over 3,000, with
25 another 2,000 residential units being - being planned.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 59 1 I literally just came up from a meeting
2 for a plan for 551 units right outside this building on
3 the other side of the creek. That's all adjacent to
4 the downtown.
5 And so it's a synergistic relationship
6 between the people being able to come home from work,
7 park their cars, live and walk to these establishments.
8 It's what these - that's what everybody's looking for
9 here.
10 So off of that we also have a community
11 that is - that works with giving outside licenses. You
12 know, there's only so many licenses in the borough. So
13 if something is not available, we're allowed to go
14 entertain the idea from another establishment to bring
15 one in from somewhere else in the county.
16 And to my knowledge, in the time I've
17 been here, I think we've done seven of them. That's -
18 I think that's pretty unique. I don't know the rules,
19 all our averages, but I think that's rather unique for
20 a community this size.
21 So I think that's the background. I'm
22 more than happy now to, you know, really answer
23 questions on the things that I just said.
24 CHAIRMAN HARRIS: Representative Kampf?
25 REPRESENTATIVE KAMPF: You know, you've
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 60 1 described it obviously from personal experience. Just
2 - as you say, there's a proposal right outside these
3 walls for 500 new units.
4 For a very long time, as a number of
5 people in this room know, including yourself, none of
6 that was happening. And so I just, for my colleagues,
7 I cannot emphasize - we are here in Southeastern
8 Pennsylvania. There is a lot of development,
9 typically. There is a lot of economic activity,
10 typically.
11 But for a very long time this community
12 was not enjoying that and that was not occurring. The
13 closure of the steel and manufacturing facilities left
14 a vacuum that for decades that was unfilled. So the -
15 the things that the manager just described are very,
16 very exciting to any person who has had a long-term
17 connection to this community.
18 And to me, Iron Hill and Stable 12 and a
19 number of these other places are kind of a new phase or
20 piece from the blossoming of the community. So I'm - I
21 have noticed that and I'm - that's why I was talking
22 with the Chairman about having a hearing down here.
23 Jean, I guess my only question is have
24 you -?
25 CHAIRMAN HARRIS: He's being humble.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 61 1 When he says talked to me about it, he's been asking me
2 consistently for eight straight months to please come
3 see what's going on.
4 REPRESENTATIVE KAMPF: You know, is
5 there - is there some future for this that you see, how
6 it may further unfold? Have there been some growing
7 pains?
8 Anything we might be able to work on
9 that you've heard that perhaps the distiller or the
10 tasting rooms maybe wouldn't tell us that you can?
11 MR. KRACK: I don't think so. I think,
12 you know, we don't have very many places to go at this
13 - at this juncture in our downtown. Our downtown is
14 what it is.
15 It's literally two-and-a-half streets
16 wide. It's Bridge Street and it's Church Street, with
17 a little bit of Main and Gay Street. And that's really
18 it.
19 And we're surrounded by residential and
20 soon to be surrounded by more residential. So I think
21 what - what we have - is there room for more, a little
22 bit? But I think we're - we're reaching the pinnacle
23 of our commercial growth.
24 We just recommended Sedona Taphouse to
25 come - to bring in a license from outside. I don't
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 62 1 know where it's at, at this juncture, but we're really
2 filling in the void. And that's really - I mean,
3 that's where we were at.
4 So as it relates to our - if we have
5 systemic problems, it's transportation, the roads are
6 what the roads are. And parking. That is - I hear
7 more about parking than I do anything else. And we're
8 trying to work on that from a - from the developer's
9 side.
10 But short of that, you know, I've
11 testified before, along with the police chief, I mean,
12 we're in here - a borough manager or a municipal
13 manager and a police chief to tell a Judge in a
14 courthouse that these things are really good for this
15 borough. Usually we're - we're the ones starting to
16 say get somebody out because they're a bad actor.
17 That's not the case here.
18 We - from my understanding of all the
19 reports that I've read, we're going to have our
20 miniscule issues, but the thing that really -. The
21 minor types of things that we have are atypical of any
22 kind of establishment, but does not - we don't have the
23 typical communities that are around us, and I won't
24 name the names of the communities.
25 You know what they are. They have a lot
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 63 1 more crime. And I'm very fortunate as the manager.
2 And I think our Chief is very fortunate, that we don't
3 have that kind of crime. I mean, it occurs, but it's
4 not typical. And I think that's what important. That
5 goes back to keeping the place clean and healthy, and I
6 think we do a pretty good job of doing that.
7 CHAIRMAN HARRIS: Representative Tobash.
8 REPRESENTATIVE TOBASH: So thank you for
9 your testimony. This is a little bit off point on a
10 liquor hearing. It's a revitalization segment here.
11 It's really kind of important to me.
12 We've - so the City of Pottsville is
13 undergoing right now the very beginning of what you did
14 and started in 2004, according to your testimony here.
15 I was in Jim Thorpe on Monday evening to
16 take a look at what they did. I was in Lititz
17 yesterday to take a look at what they did.
18 And I was in a revitalization meeting
19 this morning. And I'm intrigued. You know,
20 Representative Kampf has been a cheerleader for this
21 community.
22 He's told me on several occasions, you
23 got to come down here and see what's going on. And I
24 can only imagine how proud you are of the community and
25 the work that you guys have done here.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 64 1 But what do you think? In 2004, what
2 was the catalyst for you guys to kind of start to
3 interact together and move in this direction?
4 MR. KRACK: Prior to that, there was a
5 program that Chester County put together, two programs.
6 One was they supported a - kind of like a sherrod
7 that's a word that was used a lot back in those days,
8 of three major - or four major communities. It was - I
9 believe it was Oxford, Kennett Square, Coatesville and
10 here.
11 And that - it was a group out of New
12 York that came to look at those - these communities,
13 those communities, to kind of help take it to the next
14 step, Coatesville and here, both steel towns, and then
15 we had a form - a variant of the other two communities,
16 and how to turn those - turn those around and what
17 would do that.
18 That also sort of piggybacked with the
19 program that the county put together that I've not seen
20 anywhere around here, and that is they put a bond that
21 - I believe it was a $50 million bond, that half of the
22 money would go to support infrastructure improvements
23 in the 16 urban centers of the 73 that are in Chester
24 County.
25 And the other half of that fund would go
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 65 1 to the variant agrarian side, to nurture the buying of
2 property in that way. So not investing in
3 infrastructure, in the agrarian parts of the county and
4 in - in fact, using those dollars to put into the
5 infrastructure here, we've garnered a lot - I think
6 we're the largest community of receiving those funds.
7 And we invested that in water and sewer
8 infrastructure, to encourage that development. And
9 then on our side took a very hard look at our
10 permitting process, our water and sewer connection
11 fees, because water and sewer are a department here.
12 It's not an authority. So we have a lot of autonomy to
13 do those kinds of things.
14 We put that into the package and then
15 put a LERTA on the available land to jump start that.
16 The first two projects used the LERTA, and we saw the
17 synergy that was going on with those projects and
18 stopped the LERTA after that.
19 So we didn't want it to carry on in
20 perpetuity. We don't need it. We - the development
21 that is in a parking lot across the street would have
22 been eligible for LERTA. They know it's gone and
23 they're still coming here.
24 And that's - I think that's part of what
25 - how we get this, is we took all the avenues we could.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 66 1 Some people had to go on a comp plan, zoning, all that.
2 REPRESENTATIVE TOBASH: $200 million in
3 increased assessed property values is amazing.
4 The two biggest impediments that you had
5 over that period of time, the two things you - two
6 roadblocks that you had to overcome to get to this
7 spot?
8 MR. KRACK: I think it was leadership on
9 a political level. I think the leadership got the
10 message that was being sent. And then the leadership
11 gave me and my staff the ability to introduce these
12 things and then supported us moving forward.
13 This building was intended to be built
14 in 2006. And they - the support just wasn't there. We
15 showed them that this was the right thing to do. And
16 in 2014 we moved into this building.
17 That's the kind of support you need.
18 You need it from all eight members of your Council. In
19 our case, all eight members of Council and the Mayor
20 helping to push the police department to do the things
21 that we're suggesting that they do to support the
22 things that we're accomplishing. It's a three-legged
23 stool, for sure.
24 REPRESENTATIVE TOBASH: So we put - our
25 Business Association has got a lot of members right now
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 67 1 in Pottsville that they collected $30,000 to fund a
2 study, revitalization study. We want to roll it out
3 next Wednesday, actually, seven o'clock in Pottsville.
4 You're invited. Please come. Come and show us, tell
5 us more about what you've done.
6 Thank you.
7 MR. KRACK: Thank you.
8 CHAIRMAN HARRIS: Thank you,
9 Representative Tobash.
10 That's interesting. I didn't realize
11 until you geographically described it how small this
12 borough is. What is your population?
13 MR. KRACK: We are 17,300 now. And with
14 2,000 residential units coming onboard, if we did a
15 50-percent multiple, we're going to be over 20,000 in
16 the next three to five years.
17 CHAIRMAN HARRIS: Your job's going to be
18 a little more difficult.
19 MR. KRACK: It is.
20 CHAIRMAN HARRIS: Any other questions
21 from the members?
22 MR. KRACK: I had brown here when I
23 started.
24 CHAIRMAN HARRIS: Well, this has just
25 been great. My only regret is I wish I would have seen
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 68 1 Phoenixville 10 or 15 years ago because now it just
2 seems like the norm for those of us that are here for
3 the first time.
4 Congratulations. It's a great story.
5 MR. KRACK: Well, thank you.
6 CHAIRMAN HARRIS: Thank you.
7 Okay. Next up we have, from the
8 Regional Chamber of Commerce, Jessica Capistrant.
9 REPRESENTATIVE KAMPF: Mr. Chairman, we
10 might need to take a break.
11 CHAIRMAN HARRIS: Yes.
12 REPRESENTATIVE KAMPF: She didn't start
13 until 2:30. She's not yet arrived.
14 CHAIRMAN HARRIS: That's no problem.
15 Let's just take a break and do a reconvene at 2:30.
16 ---
17 (WHEREUPON, A SHORT BREAK WAS TAKEN.)
18 ---
19 CHAIRMAN HARRIS: Okay.
20 Our last panelist this afternoon is from
21 the Regional Chamber of Commerce. I'd like to welcome
22 Jessica, and the floor is yours.
23 MS. CAPISTRANT: Thank you. Good
24 afternoon. To the Liquor Control Committee, we
25 sincerely appreciate the opportunity to testify on the
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 69 1 successes seen within the additions of breweries,
2 distilleries and wineries installed.
3 As I mentioned, my name is Jessica
4 Capistrant. I'm the President and CEO of Phoenixville
5 Regional Chamber of Commerce.
6 I'd like to give a bit of background on
7 the Chamber, to provide this Committee with a better
8 understanding of our place within the Phoenixville
9 community.
10 Our organization will celebrate its 90th
11 anniversary next year. And in those years, the Chamber
12 has evolved a number of times to serve the community in
13 different ways. In my seven years with the Chamber, we
14 have focused on offering many member events, as well as
15 becoming highly involved in the community events.
16 In 2017, the Chamber organized nearly
17 100 events for our members and our community. And just
18 last week, the chamber hosted its annual awards dinner,
19 which honored three of the breweries you likely heard
20 from today, including Crowded Castle, Conshohocken
21 Brewing and Root Down Brewing Company, for their
22 aesthetic improvements, their interest in community
23 affairs and their impact on our regional economy.
24 We feel that collaborating with others
25 give us all a chance to get creative. And one of our
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 70 1 most treasured partnerships is with Phoenixville First,
2 a local cooperative of leaders that focuses on a more
3 comprehensive marketing program for the borough.
4 Phoenixville First houses the First Friday and the food
5 truck programs as well as the Summer Music Series.
6 The Phoenixville community has changed
7 and grown in a number of ways. We have witnessed an
8 increase in our population as well as in the number of
9 our businesses. The vacancy range in our downtown is
10 now under eight percent in storefronts, as we continue
11 to garner a diverse and cultural surge in
12 owner-occupied businesses. There has also been an
13 increase in the number of business owners that own
14 their building or are working towards ownership at this
15 time.
16 When discussing these new businesses, we
17 must recognize that, partly thanks to this committee,
18 Phoenixville is bearing witness to the influx of craft
19 alcohol establishments. Craft alcohol has proven
20 itself as an industry and draws folks of diverse
21 backgrounds together. Craft alcohol has also shown to
22 bring higher-income residents and visitors and larger
23 disposable incomes.
24 There have also been several
25 partnerships within the Phoenixville business
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 71 1 community, including a stout or bourbon-infused
2 handmade marshmallow you can find at Bridge Street
3 Chocolates, and finding local bottles or brews on top -
4 or on tap, rather, at restaurants and bars. And of
5 course, with the Phlight of the Phoenix, which is a
6 crawl through our craft scene.
7 Creating craft alcohol to the extent
8 that our breweries, distilleries and wineries have
9 requires major investments in equipment, in space, in
10 staffing and more. Those in Phoenixville have taken
11 many creative approaches to ensure that their patrons
12 have a great experience. And as you may have heard
13 today, or prior to today, Phoenixville now hosts the
14 number one spot in the state and number ten nationally
15 for craft alcohol businesses per capita.
16 As we know, Phoenixville's foundry
17 produced steel that supports structures around the
18 world. And now we can take pride in the job creation
19 found in craft alcohol as well as pride in something
20 that is made in Phoenixville.
21 The Chamber embraces this idea and has
22 spoken with a number of the businesses on creating
23 tours and informational website. This type of
24 development reenergized the downtown and can certainly
25 benefit the businesses around it as we incorporate the
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 72 1 tourism side of this industry.
2 We very much appreciate the efforts of
3 this committee to improve the legislative environment
4 for those in the production and sale of craft alcohol.
5 And we'll gladly work alongside you in efforts to
6 continue to grow a positive response that has added to
7 our community.
8 Thank you.
9 CHAIRMAN HARRIS: Thank you very much.
10 Questions from the members? Chairman
11 Costa?
12 CHAIRMAN COSTA: Thank you.
13 I'd like to know a little bit more about
14 the Phlight of the Phoenix. Can you tell us about
15 that?
16 MS. CAPISTRANT: Who doesn't? There's
17 guys in here today, too, that can tell you much more of
18 the - within the ownership of those businesses.
19 A couple years ago those who were
20 established in the community, which included Bluebird
21 and Stable 12, who aren't here today, partnered with
22 the wineries and any other breweries, et cetera, that
23 offered a craft scene.
24 And so they put an event together where
25 you would visit each location for a certain amount of
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 73 1 time. At the end of completing it, you get a stamp at
2 each location and you get a T-shirt at the end.
3 CHAIRMAN COSTA: Just like a passport?
4 MS. CAPISTRANT: Yes.
5 CHAIRMAN COSTA: Okay.
6 MS. CAPISTRANT: Uh-huh (yes). Yeah.
7 CHAIRMAN HARRIS: Representative Kampf?
8 REPRESENTATIVE KAMPF: So Jessica, there
9 are some new apartments that have been built in the
10 borough, right on Bridge Street and then over - sets
11 off from West Main. Can you talk about that? Is that
12 connected at all with this development of craft
13 alcohol?
14 MS. CAPISTRANT: I think so. I think
15 those types of development really do complement each
16 other and work together. So of course, the hope is
17 when you create a business, that those folks living in
18 those communities will, in fact, support them. Right.
19 So I do think we see that.
20 I know both communities have worked to
21 put together their own sort of nights out at these
22 different breweries throughout the community. And I
23 know, for example, the tool development that is along
24 Main Street, they actually have a tap inside the
25 clubhouse, which they have only been using local
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 74 1 breweries to fill that tap for social events that they
2 put on.
3 And there does tend to be a big push to
4 support local within those apartment developments. And
5 I think that seeing that much development, of course,
6 makes it much more attractive for people to turn the
7 key and say, yes, I'm going to start a business. We're
8 going to make this very large investment.
9 REPRESENTATIVE KAMPF: Just two other
10 things. Do you have any sense of why craft alcohol
11 happened to blossom here?
12 And then are there developments down the
13 road that you see perhaps happening related to it? And
14 when I say developments, I don't mean buildings, I just
15 mean things that might happen, events or whatever.
16 MS. CAPISTRANT: Absolutely.
17 I think - okay. So to address the - the
18 first part of that question, I think, of course,
19 legislatively, it of course comes all the way down to
20 the borough level. There has to be a sense of openness
21 there to drive this into town.
22 And I think that the borough, from any
23 feedback I've received, has been extremely cooperative
24 with wanting to see these, you know, businesses invest.
25 And again, many - a few of which have worked to
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 75 1 purchase their buildings or, you know, are considering
2 that for the future, which is, again, another major
3 investment and I think says a lot about the community
4 and also getting with local leadership to say, okay,
5 we're going to continue to support this.
6 I also think that, you know, not being
7 met with opposition from organizations like the Chamber
8 or, again, a municipality to say this isn't something
9 that we want in town, you know, that didn't happen at
10 any point on that level. And we've just continued to
11 push and say, you know, this sort of development should
12 be embraced.
13 If everybody just comes here and opens
14 up shop and nobody's working together and there's no
15 plan to, again - for example, the Phlight of the
16 Phoenix event, that helps to create a tie between all
17 of them. The Chamber certainly wants to help. And I
18 know that even in a county Visitors Bureau level,
19 they're interested in, you know, creating a brewery
20 culture in the county.
21 I see us as the figurehead for that. So
22 I think sort of all the stars are aligning. And
23 because so many people find Phoenixville interesting
24 for so many different reasons, it just creates that
25 environment that, you know, makes it an easier
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 76 1 decision.
2 CHAIRMAN HARRIS: In your experience -
3 how long have you been at the Chamber, if you don't
4 mind me asking?
5 MS. CAPISTRANT: Sure. Seven years.
6 CHAIRMAN HARRIS: Seven years.
7 Is there any friction points between the
8 businesses and any form of government? I know like in
9 the Capitol city of Harrisburg there's issues with bar
10 and restaurant owners and parking. The parking
11 enforcement got much more aggressive.
12 It went until 7:00 p.m. and it kind of
13 affected their business. In other areas of the state
14 we hear about high water or sewer. You know, it's kind
15 of - sometimes there's regional problems. Is there
16 anything that you feel is impeding future growth?
17 MS. CAPISTRANT: I think, to use your
18 point, I'm sure everyone in this room would say parking
19 is a challenge, particularly Thursday, Friday and
20 Saturday nights.
21 I think that, you know, from the
22 Chamber's standpoint, which again, you know, we hear
23 about these sorts of things a little more often because
24 we do have a good relationship with our municipality,
25 there have been efforts. There have been - there has
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 77 1 been a parking study performed to find out exactly what
2 our shortages are and - which, of course, are all
3 things needed in order to apply for any sort of funding
4 through a bank, bonding, et cetera.
5 And I do think that the municipality is
6 making efforts towards that as well as bringing a
7 wayfinding for parking. But I do think that there's -
8 all of us wish that there was more parking,
9 particularly for those three days of the week.
10 I also will say that when I arrived
11 about seven years ago, that was just at a point that
12 they were starting to enforce parking. So ten years
13 ago businesses will complaining that cars were sitting
14 in front of their location for ten days at a clip and,
15 you know, folks could get in to park in front of them
16 or anywhere near them.
17 So it's a double-edged sword. And we're
18 sort of, you know, almost a victim of our own success
19 with the parking problem. But I do think - and we
20 encourage businesses to continue to chime in on what
21 exact issues they're having and when and so we can come
22 up with maybe some more creative partnerships.
23 CHAIRMAN HARRIS: Representative Staats?
24 REPRESENTATIVE STAATS: Thank you,
25 Chairman Harris. And thank you, Jessica, for joining
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 78 1 us today.
2 Being from Bucks County, I'm familiar
3 with the area. I have not been in Phoenixville since
4 the '90s, so it was certainly an eye-opener.
5 MS. CAPISTRANT: Thanks for coming.
6 REPRESENTATIVE STAATS: Certainly an
7 eye-opener when I drove through town today. But I
8 heard a couple things today about the influx of the
9 craft beer establishments, okay, alcohol
10 establishments, that you're drawing from a larger
11 demographic, expanded demographic.
12 MS. CAPISTRANT: Yes.
13 REPRESENTATIVE STAATS: Have you
14 identified where they're coming from?
15 MS. CAPISTRANT: Sure, which I'll be
16 honest, is mostly from feedback that we get from
17 restaurants, breweries, wineries, distilleries,
18 et cetera, and those who actually communicate with the
19 Chamber.
20 We do receive actually phone calls or
21 messages through our social media about people coming
22 into town. And it used to be right that you'd only
23 ever hear from people if they were upset about
24 something, but we actually have gotten a lot of
25 positive feedback.
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 79 1 It seems that within the county we're
2 getting individuals from West Chester. There's
3 definitely a surge of people coming from that area.
4 Wilmington, Delaware as well. Parts of Delaware
5 County, like through Valley Forge, Oaks and Delaware
6 County, Wayne.
7 And while we don't have major
8 transportation to host people most commonly from the
9 city, we - we do have people moving from the city. So
10 those who may still have friends or family that lives
11 in the City of Philadelphia do certainly come out here
12 for the urban/suburban experience.
13 REPRESENTATIVE STAATS: Thank you for
14 that.
15 I think we heard today that there's
16 about a population of 17,000 in Phoenixville.
17 MS. CAPISTRANT: Yes.
18 REPRESENTATIVE STAATS: Any idea of how
19 many food and beverage establishments you have?
20 MS. CAPISTRANT: Yeah. So pretty much
21 within the downtown there are about 55 to 60 businesses
22 at this point in time. In terms of restaurant and bar,
23 that's going to be about 60 percent of that number. We
24 do - as many people will notice, we do have a number of
25 places to eat. So that does tend to take up the
SARGENT'S COURT REPORTING SERVICE, INC. (814) 536-8908 80 1 majority of downtown.
2 REPRESENTATIVE STAATS: Very impressive.
3 Well done.
4 CHAIRMAN HARRIS: It is very impressive.
5 Thank you very much for your testimony.
6 And with that, we will wrap up the
7 public hearing. Thank you to the members and for
8 everyone that came to testify, and the meeting (sic) is
9 adjourned.
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11 HEARING CONCLUDED AT 2:46 P.M.
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