Sunday, October 4, 2015

The difference between the PLCB and freedom

Pennsylvania State Store 1945, an historic mistake

Barrel House Liquors built 1945, possibly an historic landmark

Monday, September 28, 2015

Who can answer this?

As reported by numerous papers...

If, as Governor Wolf is suddenly proposing, leasing the State Store System to a private management firm "is a way to make the liquor stores more profitable and provide better service to consumers"...can the Governor answer the following seemingly obvious questions about this latest example of Wolfonomics?

Wouldn't a fully private system provide even better service to consumers?

Wouldn't a private system that puts wine and liquor INTO grocery stores -- on the shelves -- be even better than a system that puts it somewhere in the vicinity of grocery stores?

Wouldn't a private system that allows for different levels of service -- small neighborhood stores, wine or whiskey specialty stores, huge discount mega-stores -- be even better than only one that provides only one level of service, for every store, in the entire state? (Keep in mind: it would still be illegal to go across the border.)

Wouldn't a private system that stocks more items than the entire State Store System stocks (and actually has them, instead of just listing them online) now be even better for consumers?

Wouldn't a private system that at least triples employment (as shown by the experience in Washington State and Alberta, which both fully privatized their monopoly systems) be even better for the state and the citizens that are employed than a system that limits employment and doesn't allow any small businesses?

Wouldn't a private system that triples or quadruples convenience (as measured by number of stores) be even better for the consumer than one that will still limit convenience to fewer stores than there were 40 years ago?

Wouldn't a private system where many suppliers try to bring their product to market be even better than one person or department selecting for the entire state? (In case you missed it, this is what happens when one person has that police-enforced monopoly power.)

Wouldn't a private system be even more responsive to consumers needs and wants, since the individual stores would have to compete for your business, rather than you still having no other choice than the monopoly State Store System...whatever the new name they slap on it is?

Wouldn't life just be far better if Pennsylvania had a normal liquor retail market without the state being involved in retail and wholesale at all?

You bet it would.

Tuesday, September 22, 2015

Could Border Bleed Actually be $500 million?

Everybody thinks that border bleed — Pennsylvanians going "out of control" to buy booze in other states, spurning the State Store System...which is illegal — only happens on the southeastern border of the state*, when in reality it occurs across all of Pennsylvania's borders and for a number of reasons.

Why do Pennsylvanians break the law just to buy booze? Why, for everything from spur of the moment decisions to deliberate shopping for lower prices, more convenience, different products not carried by the state stores, or just plain better service that a non-monopoly store can never provide. A private store depends on pleasing their customers; a monopoly store knows you have nowhere else you can legally go.
Back in 2004 a study prepared for the Pennsylvania Food Merchants Association (long-time foes of the state liquor monopoly for perfectly self-interested reasons: they'd like to sell wine and spirits themselves, like stores in other states) determined that 29.4 percent of the Commonwealth's consumption of wine comes from cross-border sales, as well as 20.8 percent of distilled spirits. Has much changed since then?

Let's extrapolate, shall we? In 2004, there were about 640 state stores. Now we have 605, so convenience certainly didn't increase. 29.4% of wine sales would have been $248,460,768.80 in 2014 (Can't use current numbers, because over 11 weeks after the end of the fiscal year the PLCB still hasn't released them). 20.8% of spirits would result in $243,569,926.08, for a grand total of  $492,030,694.88.  Not quite $500 million, but then I'm using numbers from two years ago. I'll bet it would be over the threshold if the PLCB ever decides to let us know how they did last year.

In 2010, a study that was made by the Wine and Spirits Wholesalers of America, they found that 23.6% of wine sales were done out of state or just over $200 million for wine alone. Using the current ratio of wine to spirit spending that would mean $276 million spent for spirits or a total of $476 million in total border bleed (within 3.25% of the extrapolated 2004 numbers). Close enough for PLCB work, as they say.

The PLCB Neiman report of 2011 had it over $230 million and that was for just 8 of 67 counties and didn't sample any Maryland sales at all. As I pointed out in my report in February, that number is certainly well above $300 million now. Do the other 59 counties spend $150 million out of state? I can't prove it using just the Neiman report, but the other studies indicate they probably do.

Has anything changed since 2010-11? Is the economy more like 2004, or even better now?  Have gas prices come down somewhat? Do people travel more? Of course, the answer to all those questions is yes. The Neiman report showed that even during the recession people that shopped both PA and out of state stores spent more money out of state than in state in those counties and at almost all levels, but especially higher levels, than they spent at state stores. And they did it for the same reasons they always did:

Travel out of state for a broader selection and better price (Neiman report pg 28)

Go out of state to get better prices and stock up on personal supply (Neiman report pg 36)

Recapturing some of that $500 million potential through privatization means more jobs, more taxes collected, more businesses, more selection, more choice, and more benefit for the citizens by not having government interfere with retail. Painting your PA liquor jail cell and extending visiting hours (or selling the jail to some outside firm, Gov. Wolf's latest dim idea) might be better than what you have now but it isn't the same as being a customer in a free market.

Don't "modernize" it or lease it, and don't leave it as it is: NORMALIZE IT. 

*This is probably because Philadelphia-area citizens are so blatant about it; we just don't care at all.

Saturday, September 19, 2015

Wiretaps - The most fun you can have with the PLCB

Wiretaps are a wonderful thing.  How I envision the FBI caught the PLCB Marketing Director and who knows how many more. 

MD = Marketing Director
S = Salesman

S: Uh,,,,hello.  Is this the marketing director of the PLCB?

MD: It is, how may I help you?

S: Well, I've got some wines I'd like to talk to you about.

MD: What type of wines?

S: These are pretty good wines that I'm sure you'd like if you tried them.

MD: Sir, there are forms to fill out and deposits to be made.

S: I understand that but if YOU were to try them then I think we could reach an agreement.

MD: I'm not against giving new businesses a chance.  Do you golf?

S: Not well

MD: I'm sure we could meet up on the course to discuss your wines and then sample them after a round or two.

S: That would be great!

MD: I know of a nice little course down in South Carolina that I have been to before. Would that be OK?

S: Ahh....Sure, they have some great courses down there.

MD: Have your driver pick me up at 8 Thursday next week and I can leave from Philly, First Class of course.

S: Of course. We'll have a car and room waiting for you too.

MD: Can I bring a guest? My boss might want to come.

S: I think we can handle that.

There will be some expenses too I'm sure.

S: No Doubt, Will a thousand or two cover it?

MD: Two should cover them.

S: We'll settle that up on the course then.

MD: Good, I'm sure that the PLCB will welcome your addition to our inventory as soon as I get back. Oh, and I'll need a couple of cases to stock our "Tasting Room" with so the Board and other Directors can try it too.

S: Just let me know when.

Bursts of laughter are then heard on the tape presumably from the agents involved.

Corruption causes prices to be higher then they would be otherwise.  So if you don't see prices going down at the local state store - guess what.......


Friday, September 18, 2015

Governor Wolf proposes liquor privatization compromise


Governor Wolf has proposed an historic liquor privatization compromise with Republicans. Patterned after Governor Corbett's extremely successful Lottery Privatization scheme, Wolf's proposal includes:
  • Keeping the PLCB wholesale and retail monopoly in place
  • Keeping and expanding the State Store System as a state jobs program
  • Increasing the number of State Store System workers
  • Keeping the same conflict of interest of the government selling and regulating alcohol
  • Keeping a single person or department who selects what the entire state is allowed to buy.
  • Adding another layer of fully-funded bureaucracy to the liquor system
  • Trading a state-controlled monopoly for another state-controlled monopoly (with a different name)
  • Dangling the possibility that this could someday maybe possibly somehow a long way off lead to wine at supermarkets and beer in convenience some manner
  • Other yet to be named and explained items

Some Republican leadership said they would have to study the proposal to figure out exactly what, if anything, this would change, or if the Governor was pulling another joke on them, like his trying to raise taxes by $4.7 Billion this year. Others simply refused to believe that this was a compromise and flatly rejected the notion as they should.

Stay tuned to this blog for further developments!

(Please note: we've added a new tag: "You've Got To Be Kidding." If Governor Wolf continues on his current path, it's going to see a lot of use; watch for it!)

Thursday, September 17, 2015

Ex-PLCB official pleads guilty to taking kickbacks, bribes

Was There any Doubt?

"Ex-PLCB official pleads guilty to taking kickbacks, bribes"

Now...Who's Next? 

FBI continues investigation

Will it be Joe Da CEO? His Pal PJ? Will we actually see some legislators caught up in this? 

Stay tuned...the Grand Jury will return.

(Edited to add FBI link.)

Friday, September 11, 2015

Still waiting on the PLCB and their computers

Here is is 2 months and almost 2 weeks after the close of the fiscal year and still nothing from the wizards in Harrisburg about how well they did or didn't do. Maybe covering their butts from Federal charges is taking up their time....who knows?
But you know what really hurts? Other control states already have their numbers in. Let's look at New Hampshire and see how they did. With a population of only 1,327,000 they somehow sold $652,000,000 in wine and spirits (or just over $484 for every man, woman, and child in the state) and at prices that are usually lower than our State Stores. Pennsylvania has a population of  12.8 million and sold $2,240,563,426 worth of wine and spirits. or $175 per person (2014 numbers because, you know, we're still waiting...).

The expected response from our fine Liquor Corruption Board workers is that New Hampshire residents are all "chronic alcohol users,"  because that's what they always say when confronted with anything that shows the state stores up, be it better selection, more sales, better staff...whatever. Let me put forth a different theory. People go to New Hampshire to buy liquor; and they leave Pennsylvania to buy liquor. New Hampshire makes shopping worth the trip by having better prices, better stores, and a larger selection than nearby competition. The majority of that competition is in Massachusetts, right on the border and the largest state in New England; they also have substantially higher booze taxes than New Hampshire...which has none.

What does PA have? Certainly New York has more people, and higher sales taxes with liquor taxes being pretty close, but we don't see that influx to make any real change in the Corruption Board bottom line. Ohio and West Virginia are control states too, so not much difference there. Most of Maryland is a free state with higher sales tax, lower liquor excise tax and higher beer tax than PA but still draws people across the border because competition drives prices down.

Delaware, as we all know, has no sales tax so that makes them less expensive right off the bat. But they also have stores with far greater selection than anything in PA to draw people in too.

New Jersey has a higher sales tax but a lower liquor tax. Mostly people go because of the selection and prices, again due to competition. The large stores across the river -- Joe Canal's, Total Wine, Moore Brothers, Roger Wilco, etc. -- are not there because of people living in New Jersey. They are there because of the people from PA who find better price selection and service even if they have to pay a toll to get there.

$300 million leaves the state every year and it isn't going down.
Border bleed is real and large and Governor Wolf's proposal to raise the sales tax here is not going to help reduce it, Putting in baskets and changing the name of the state stores is not going to help reduce it, "modernizing" is not going to reduce it, thinking about raising the markup when private stores think about cutting costs is not going to reduce it, and having one store for every 21,000 residents is not going to reduce border bleed either.

Privatization will.