Theodore C. Speliotis
State representative, Danvers Democrat
In almost every aisle of nearly every store in our country, shoppers are provided the opportunity to purchase an item on sale or buy a similar name brand at a higher cost. Even in the smallest convenience store, there are always choices provided the consumer. The sale of alcohol in Massachusetts is no different. At the end of almost every aisle is a sale item to entice the shopper to buy that brand. Usually, the following week or month a competitor is given the same opportunity to build its market share through discounting a product.
In an attempt to protect the small Massachusetts-owned package stores that operate across the Commonwealth, the Legislature has long prohibited the sellers from discounting the product below the invoice cost. A bill I have introduced in the Legislature, House Bill 345, would not lift this restriction. What it would do is allow any retailer, large or small, to offer coupons to its consumers. One may ask, why offer the coupons when the store can simply discount the product — as long as it does not fall below the list price? The answer is quite simple: Coupons would allow owners to increase their base of customers by introducing more people to their stores and products through advertising.
The package store industry has opposed this legislation, apparently believing that allowing the offering of coupons would make their ability to compete with the larger stores more difficult. I cannot disagree more. The larger chains and stores over the last few years have drastically increased their advertising budgets and visibility, while smaller package stores have been unable to match their efforts.
Coupons are a much more cost-effective tool to raise the profile of these smaller stores and to expand their base. Historically, the smallest pizza parlor, take-out Chinese restaurant, and small diner have mailed or offered coupons to their customers. This is a tried and proven method for small store owners to build a larger and more loyal customer base. I am hoping we pass this legislation and allow package stores that same vehicle to attract customers.
Robert A. Mellion
Easton resident, executive director of the Massachusetts Package Stores Association
It is illegal in Massachusetts to sell alcohol beverages below invoice cost or use coupons and loyalty programs that attract customers. The basis for these restrictions is provided within the state law, M.G.L. 138:25C, which is derived from pre-Prohibition commercial abuses. This mandate is intentional, historically established, and supported by legal precedence.
The classic study published in 1933, “Toward Liquor Control,” by R.B. Fosdick and A.L. Scott, demonstrates how corporate producers increased profit margins before Prohibition by linking their products to the distribution chain. It details a practice known as “tied house,” in which retailers saturated the marketplace. To maximize profits, these outlets encouraged heavy consumption through promotions and low pricing. Promotions included advertising, loyalty programs, gambling, and prostitution to attract customers. The social consequences highlighted in the study included poverty, widespread alcoholism, and reduced worker productivity.
After Prohibition ended, a legal alcohol market was reestablished. The new system provided the states with the responsibility for regulating alcohol individually. In Massachusetts, the alcohol regulatory system is built on control practices that balance consumer demand and commercial interests against public safety concerns. The primary public safety objective is preventing the return of predatory corporate conduct that encourages the reintroduction of cheap alcohol. A return of monopolies is another concern.
M.G.L. 138:25C was recently upheld by the Massachusetts Supreme Judicial Court. The decision held that the Alcohol Beverages Control Commission’s interpretation of its regulations was both reasonable and in accordance with its mandate to uphold public safety. The high court’s decision should be the end of the argument, but it is not.
This legislative session, several bills attacking or nullifying longstanding mandates against cheap alcohol have been reintroduced. Several large out-of-state corporate interests are pushing for these bills. An example is the bill allowing for coupons, which is strongly supported by nationally known out-of-state retailers.
Alcohol is a controlled substance. Sound regulation has strengthened the alcohol industry’s ability to account for its products and responsibly provide them to consumers. It also prevents access of alcohol to those who are underage or should otherwise not be served or sold alcohol. Consequently, the ban against cheap alcohol needs to be maintained.
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As told to Globe correspondent John Laidler. To suggest a topic, please contact email@example.com.