Jonathan Newman Interview

Originally published in LifeStyle Magazine, November 2005

Since becoming Chairman of the Pennsylvania Liquor Control Board roughly three years ago, Jonathan Newman has transformed what has long been a system most wine connoisseurs have loathed, into a much more progressive, consumer friendly experience. Pennsylvanians have been dealing with an unresponsive, uncompetitive source for wine and spirits for about eighty years. While there are certainly more areas yet to address, the list of what has been accomplished during Newman’s watch is quite impressive. Responses to a few questions I asked the Chairman at a recent PLCB sponsored wine tasting in Yardley follow.

LS: “During your administration we’ve seen you create Sunday sales, outlet stores, One Stop Shopping, the Chairman’s Selection, in-store tastings, accessory sales, the opportunity to meet many accomplished winemakers and much more. Is there one program among these you feel is most important?”

JN: “There’s no one single priority. When I became Chairman three years ago I had a marketing plan with twenty initiatives, all intended to have the PLCB put the consumer first.” Newman did note an ongoing emphasis to educate the PLCB workforce is of particular interest, as well as an obligation to protect the fine wines in its inventory from temperature abuses by using temperature controlled warehousing and shipping.

LS: “I still have a few wine friends that, despite the progressive, consumer friendly changes you’ve made in such a short time, are only interested in complaining about what they perceive to be higher prices (other than those in the Chairman’s Selection program) and a poorer wine selection than our neighboring private sector competitors in New Jersey, Delaware and Maryland.”

JN: “Pennsylvania is the largest purchaser of wine in the United States and the largest purchaser of California wine in the world. While this gives us great inventory, we can’t be more price competitive because of the Johnstown tax, evidence that there is no such thing as a temporary tax. My concept is to allow flexible pricing using different profit margins, and take tighter profits when necessary to be more competitive.”

Newman balances this inability to compete on all wine prices across the board two ways. First, by creating a much more universal shopping experience for the One Stop Shopping customer when compared to shopping in Florida or California, the two most frequently sighted comparisons. In those states, they don’t sell spirits at supermarkets and often treat wine as a commodity, generally not offering a broad selection of fine wines. These states’ selections are limited to the mass market, big volume producers like Beringer, Woodbridge and Gallo, and do not include spirits. As of Spring 2005 there are now ten One Stop Shops in Pennsylvania (with more planned) where consumers can visit a PLCB store within a supermarket and enjoy a much larger selection of fine wines and spirits.

Newman’s other response to the out-of-state price battle is his Chairman’s Selection marketing program. By using Pennsylvania’s massive buying power (there are 650 stores across the state), he has purchased large volumes of fine wines at remarkably low cost and relayed these savings on to the retail level. I have regularly purchased otherwise expensive wines through this program for 25% to 50% less than prices offered outside of Pennsylvania and once saved 62% on a fine California wine. Often, the Chairman’s Selection prices are guaranteed to be the lowest in America.

Plans for redesigning store interiors to better accommodate and promote wine and spirits accessories are beginning to appear. Point-of-purchase displays placed near cash registers are now being complimented by committing valuable shelf space to accessories that are relevant to the adjacent wines and spirits on display, such as placing Champagne flutes next to the Champagnes and sparkling wines.

All these changes and presumably more yet to come may seem obvious to many marketing savvy people but remember, these are changes coming from a state government administered industry that many consumers feel was operating years behind the times for their entire lives. Mr. Newman, who I’ve heard frequently and eagerly spread the credit among his staff and the legislators responsible for making Pennsylvania’s laws more consumer friendly, is the force behind our improving LCB system. There’s no doubt private sector sales in neighboring states have their appeal, but dismissing the PLCB as a source for quality wines and spirits and as a convenient shopping experience where one can pick up a $50 bottle of Napa Cabernet Sauvignon for $19.99 along with your milk and bread, is overlooking a terrific opportunity.