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Issue Date: Vol. 51, No. 10, October 2011, Posted On: 9/23/2011

PA Pulls Plug On Wine Vending

Emily Jed
Pennsylvania Liquor Control Board, Simple Brands LLC, wine vending machine, wine vender, vending machine, vending, automatic retailing, wine kiosk, Wegmans, Wal-Mart

HARRISBURG, PA -- Pennsylvania's Liquor Control Board has officially ended its one-year wine-vending experiment. The agency ordered on Sept. 22 that the remaining 21 wine vending machines in supermarkets across the state be shut down and removed within 30 days.

The move follows a financial dispute with Simple Brands LLC (Conshohocken, PA), the company that owns the machines. The LCB says Simple Brands owes the state nearly $1 million for expenses incurred during the setup the kiosk program. The LCB notified Simple Brands in early August that it had 45 days to pay the agency its outstanding debt before it would force the venders to be shut down.

Simple Brands disputed the charge. It has accused the agency of incurring unnecessary expenses and billing them to Simple Brands. An attorney representing Simple Brands contends that the LCB did not live up to its side of the contract, which included placing the kiosks in 100 supermarkets. Meanwhile, less than three dozen were in operation at the height of the program. Simple Brands is now seeking $81 million in damages.

Pennsylvania is the first state to experiment with automated wine kiosks, which require the customer to scan his or her driver's license and pass a Breathalyzer test before enabling the purchase. But the program, which launched in the summer of 2010, faced problems early on.

The LCB was forced to shut the venders down months after their launch because of mechanical problems. Simple Brands quickly addressed the issues and the machines went back online. Problems persisted for the Wegmans supermarket chain, which announced that it was pulling out of the program this summer, blaming frequent malfunctions and customer complaints. Wal-Mart soon followed by canceling an agreement to install 23 state-controlled wine-vending machines in some Pennsylvania stores, citing mechanical concerns.

Pennsylvania auditor general Jack Wagner last month released an audit of the LCB's kiosk program that suggests the machines never lived up to the goal of making it more convenient for customers to buy wine. The report also claims the machines did not deliver on the promise of making money for the LCB and state government.

His audit concluded that, as of this summer, the LCB spent more to operate the kiosks than it generated in revenue, resulting in an operating shortfall of about $1.1 million.

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