Liquor Control Board leaves bad taste in critics' mouths with in-house wine

The fifth best-selling chardonnay on state wine and spirits store shelves is owned by the Pennsylvania Liquor Control Board.

The LCB developed and trademarked TableLeaf wines — emblazoned with a giant T on bottles — and the brand hit stores in March 2011. Since then, the wines became popular with customers, said Joe Conti, the agency's CEO.

TableLeaf chardonnay, for example, sold nearly 17,000 cases of 1.5-liter bottles in its first year, the fifth-most of 19 brands of chardonnays the LCB sells, according to LCB data. Top-selling Woodbridge chardonnay sold about 30,000 cases in that period.

Seven TableLeaf varieties sell in 750-milliliter and 1.5-liter bottles for $7 to $15 each.

“Usually it takes years, if not decades, to create a brand,” Conti said. “It appears by the success of TableLeaf there is a demand for that price of product that perhaps exceeds the brand names (available).”

Yet, with nearly 700 varieties in 750-milliliter bottles in the price range and more than 250 similarly priced wines in the larger size, critics question the need for an in-house brand.

“If you have a monopoly, you don't need an in-house brand,” said Frank Gamrat, an economist with the Allegheny Institute for Public Policy in Castle Shannon. “Why are they venturing out into production? That's not their job. Their job is to control the sale of wine or liquor, not to make or promote their own brand.”

Some critics say it's wrong to spend public money to compete in the private sector.

“It's inexcusable, in my estimation, that the government spent taxpayer money to brand and market products in direct competition with private industry,” said Jay Ostrich, spokesman for the Harrisburg-based Commonwealth Foundation.

“Should the people who are running the show, from a regulatory standpoint, should they be engaged in making business decisions that, if it doesn't work out, what are the repercussions for them?” asked state Rep. Thomas Quigley, R-Montgomery County.

Quigley questioned Conti about the brand this year during a state House Appropriations Committee hearing. Conti maintains strong sales justify the need for another “value-priced” wine.

“If we're already half the sales of the national sales leader in one year, the criticism doesn't hold water,” Conti said.

The LCB “is doing something right” if TableLeaf sells at half the cases of a well-known national brand, said Audrey Guskey, an associate professor of marketing at Duquesne University's Palumbo Donahue School of Business.

At some high-end wine and spirits stores, the LCB displays TableLeaf prominently at the ends of aisles at eye level. Placement and packaging are important, Guskey said.

“Labels and placement on the shelves, and name and brand recognition, are all extremely important for any type of product — but I'd say in particular for wine,” she said.

Those in the wine industry are hesitant to criticize the LCB or comment about the brand because vintners depend on the agency to stock their products.

“I know this does upset a number of our members, and I know other members of ours who don't see this as a big problem,” said Cary Greene, chief operating officer and general counsel for WineAmerica, a national trade association for wineries.

“Obviously, we want to make sure our members are able to compete fairly in every market they're in and that they're able to sell their products. That said, we work closely with the PLCB, and they do sell a lot of our products. It's a complicated situation.”

Bob Mazza, owner of Mazza Vineyards near Erie, said it was “kind of a surprise to us” when the LCB debuted its wine.

“It would be wonderful for a Pennsylvania producer to play in that arena,” said Mazza, whose wines sell in state stores. “But I don't get real excited about it. That's not the arena we're in, in terms of low-price wines.

“We're trying to produce regional-identity wines. That's a much better approach for a small- to medium-sized producer in any state.”

Utah and Pennsylvania are the only states that control the sale of liquor and wine at wholesale and retail levels. Six states sell wine in state-run retail stores.

Vickie Ashby, a spokeswoman for the Utah Department of Alcoholic Beverage Control, said the agency has no in-house brand of wine and never discussed creating one.

Steve Schmidt, senior vice president of the National Alcohol Beverage Control Association, which represents states that control the sale or distribution of alcohol, said he knows of no other state with its brand of wine.

LCB officials initially intended to use “TableLeaf” to rename the agency's stores TableLeaf Fine Wine & Good Spirits. But then-Gov. Ed Rendell rejected the idea because he thought the change would be too dramatic for consumers, Conti said.

Around the same time, Conti said, the wine-making market experienced a surplus of grape juice. The glut drove down prices, creating “unprecedented opportunity for the agency to consider its own product,” he said.

The LCB decided to use the TableLeaf name, which focus groups said evoked images of family celebrations that require adding a leaf to the dining room table, he said.

LCB spokeswoman Stacey Witalec said she could not break out the cost of trademarking the wine because the work was part of a larger contract.

The agency selected Bronco Wine Co. in California to blend, bottle and label TableLeaf wines because it is one of the largest producers in the state and has a good reputation, Conti said. Its wines pleased the palates of tasters who included the LCB's wine educator, director of marketing, Chairman's Selection buyer and an outside sommelier, he said.

Kari Andren is a staff writer for Trib Total Media. She can be reached at 724-850-2856 or kandren@tribweb.com.