Wine Privatization Would Hurt State Revenues and the Public Health

Date of Press Release: 
June 9, 2014

Today, a “wine privatization proposal” may be considered by the Pennsylvania Senate’s Appropriations Committee. According to reports, the plan would liberalize retail wine and beer sales, leaving in place state control of wholesale wine and spirits distribution and retail spirits distribution.

Keystone Research Center Executive Director, Dr. Stephen Herzenberg, released the following statement:

“The wine privatization proposal that lawmakers may consider today would hurt state revenues and damage public health – what’s to like about that? Instead of embracing this misguided approach, lawmakers should modernize distribution of wine and spirits within the existing system.

The most careful recent study of the fiscal and social effects of privatizing the distribution and sale of alcohol, by University of Michigan Research Scientist Roland Zullo and co-authors, found that:[1]

  • States that control the wholesale and retail distribution of alcohol had per capita revenues from alcohol distribution about 90 percent higher than fully privatized (license) states.
  • State ownership of retail reduces alcohol-related social harm. State control over retail is associated with lower crime rates for aggravated assaults, fraud, domestic abuse, and vandalism; and with 7.3 to 9.2 percent lower alcohol-related vehicular fatalities.

The Zullo et al., study accords with the nation’s top task force of public health experts, which recommended in April 2011 against further privatization by states of retail alcohol distribution. Task Force member Professor Karen Glanz, director of Penn’s Center for Health Behavioral Research, said that ‘retail alcohol privatization increases the risk of excessive consumption of alcohol and its associated consequences. A large body of research has also found negative social impacts from privatization of alcohol distribution.’

The Zullo et al. conclusions also corroborate KRC’s own finding that privatization of alcohol distribution in Pennsylvania would led to 58 more traffic deaths annually.[2]

If Pennsylvania wants to raise, not lower, revenues from wine and spirits sales – without social harm – it should modernize the existing state stores. Research shows that some states which control the distribution of alcohol manage to achieve nearly three times as much revenue per capita as license states.”

The Keystone Research Center is an independent, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania and U.S. economy. Learn more at http://keystoneresearch.org.




[1] Roland Zullo, Xi (Belinda) Bi, and Yu (Sean) Xiaohan, and Zehra Siddiqui, The Fiscal and Social Effects of State Alcohol Control Systems, Institute for Research on Labor, Employment, and the Economy, University of Michigan, Ann Arbor, MI., online at http://irlee.umich.edu/Publications/Docs/FiscalAndSocialEffectsOfStateAlcoholControlSystems.pdf

[2] Mark Price and Stephen Herzenberg, The Road Less Traveled: States That More Tightly Control the Sale and Distribution of Alcohol Have Lower Alcohol-Related Fatalities, Keystone Research Center, Harrisburg, PA, May 15, 2012, online at http://keystoneresearch.org/publications/research/road-less-traveled