Monday, September 17, 2018

At the PLCB, ALL money is TAX money

Well, the good 'ol PLCB got their annual report out, and proudly lists the following as "Contributions to state and local governments" totaling $749.6 million for last fiscal year:

• $371.5 million in liquor tax
• $146 million in state sales tax
• $185.1 million in cash transfers

Of course, the first number is the Johnstown Flood Tax, which was raised twice since the flood in question, the second time about 30 years after the flood. Still, at least they call it a tax. Same with sales tax. That's what passes for honesty in Harrisburg.

It is the last one that the whole PLCB rides on, the reason they still exist: $185 million in "cash transfers," or what they like to call "profit." They don't want to call it tax revenue, but that is exactly what it is, a tax. Webster's defines a tax as: A charge usually of money imposed by authority on persons or property for public purposes. Don't like that one?  This is even more specific: A compulsory contribution to state revenue, levied by the government.

When a government entity -- the PLCB -- is levying a compulsory charge -- which is anything above break-even on their monopoly retail operations -- to increase revenue - it is a tax.

They do that so the codified taxes -- the Johnstown and the sales taxes -- pretty much remain the same. And as we've pointed out many times, they have a police-enforced monopoly and their own pet judiciary system that allows them to do pretty much whatever they want anyway.

No matter what they say, this is not a service to the citizens, nor is it a business. Successful businesses do not have record sales and still go further in debt. The PLCB is well over $1 BILLION in the red...and it isn't going down, it is going up. Businesses do not lie to their shareholders (and they keep saying...that's us!) about plans that have no hope in reaching the levels they promise.

Remember all the money bailment was supposed to save: $100 million. And opening more Sunday stores: $22 million! Opening.remodeled/new stores faster: $25 million. Variable pricing: $75 million. That all totals up to an "extra" $222 million, ON TOP of what they were turning in previously. Wow, dolla dolla bills, y'all!

Have any of these things happened?  Maybe bailment? Probably not since after the first time the PLCB didn't have to take out a $110 million loan that money was never seen again.  No increase in capital spending, no increase in pension contributions, no increase in "profit," and no explanation where it might have gone. Uhhhh...gee, guys, what happened to all that extra money?

The only thing that has consistently gone up is how much red ink the PLCB uses. For real businesses, record sales does not equal record debt for too many years in a row, but the PLCB keeps on with lies to the public about how much of a benefit they are. That's right, lies because if you read the underage drinking report, look at alcohol related DUI and fatalities both underage and legal age. Look at consumption which according to the National Institute of Health spirts consumption - the thing the PLCB is directly responsible for - went up 56% in the past 20 years. We're barely in the middle nationwide. Look at binge drinking and we are 43rd best out of 51; dropping eight places in the past four years. Worse than all the surrounding states, worse than all the free states on our borders, worse than most of the entire United States. "Control" isn't really effective. All it is.... is annoying and expensive.

The PLCB does not control anything, they still exist only to provide a jobs program for the people that work at the PLCB. They aren't even good at what they do. At the last reporting -- well over a year ago, since the PLCB not only doesn't have to report these numbers, they make it a point not to -- 81% of the items they "negotiated" lower costs on had ZERO benefit for the consumer. As a betting man, I'll take every dime you have saying that percentage has gone up and they are screwing the citizens even more.

What they supposedly contribute is meaningless when compared to what they owe, the limited selection and poor service compared to other billion dollar stores, the universally bad reputation they have had over 80 years and the outright proven malfeasance of the leadership are just some of the ways you can see what we have to put up with in Pennsylvania compared to free states.

Maybe this has really been the plan since privatization efforts started in earnest. Run things so poorly, manage so ineptly, lead so incompetently and be so financially inadequate that it will cost far more for the state to bail them out to be able to rid ourselves of this outdated jobs program than to keep them. 

Naw...they ain't that smart...are they?

Tuesday, May 1, 2018

Great Minds, Great Quotes...and the PLCB

Apply great wisdom to the situation of the PLCB...and you realize how badly this has all turned out.

"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery." - Winston Churchill 
     What organization does that sound like?

“The only real mistake is the one from which we learn nothing.” - Henry Ford

“Failure isn’t fatal, but failure to change might be.” - John Wooden

“Don’t bury your failures, let them inspire you.” - Robert Kiyosaki

“It’s fine to celebrate success, but it is more important to heed the lessons of failure.” - Bill Gates
"It certainly wasn't a failure." 
- Joe Conti, about the failed wine kiosk program.

“Success is stumbling from failure to failure with no loss of enthusiasm.” - Winston Churchill
     Then the PLCB must be an immeasurable success; 
that's all they ever do!

"Failure is simply the opportunity to begin again, this time more intelligently." - Henry Ford
     "Intelligently" being the key word here. Of course, you have to have a Board that has some intelligence for this to work.

"Honesty is the fastest way to prevent a mistake from turning into a failure." - James Altucher
destroying evidence are probably not what he's talking about.

"You have to be able to accept failure to get better." - LeBron James
Joe Conti, again: "It certainly wasn't a failure." Yeah, Joe: it was.

"Complacency breeds failure. Only the paranoid survive." - Andy Grove
Isn't that right, Charlie "40 Years At The PLCB" Mooney?

"Inability to make decisions is one of the principal reasons executives fail. Deficiency in decision-making ranks much higher than lack of specific knowledge or technical know-how as an indicator of leadership failure." - John C. Maxwell
And when you have all of the above -- plus $1.9 billion in liabilities -- 
you have the PLCB.

Tragedy in life normally comes with betrayal and compromise, and trading on your integrity and not having dignity in life. That's really where failure comes. Tom Cochrane
Read more at:

"Failure is not a single, cataclysmic event. You don't fail overnight. Instead, failure is a few errors in judgement, repeated every day." - Jim Rohn

"If you can't admit a failure, you're not an entrepreneur. You are not a good business person. There's nothing brilliant about what you are doing." - Mark Cuban
Failure comes only when we forget our ideals and objectives and principles. Jawaharlal Nehru
Read more at:
One more time: "It certainly wasn't a failure."
Honesty is the fastest way to prevent a mistake from turning into a failure. James Altucher
Read more at:

There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at:
There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at:
There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at:
There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at:
There are no secrets to success. It is the result of preparation, hard work, and learning from failure. Colin Powell
Read more at:

Monday, April 30, 2018

We Regret The Error...

We make mistakes, too. 

On April 25th, we put up a post titled "Proof the PLCB is screwing us - in their own words." It was almost all about how the PLCB said it had gotten cost reductions on "almost seven hundred items" through 'flexible pricing.' We cackled with glee, and noted that Act 39 limited flexible pricing (changing of the mark-up) on only the 150 best selling wines and 150 best-selling spirits: they were either lying, or breaking the law.

Only...we got an email from PLCB Director of Policy & Communications Elizabeth Brassell, who pointed out that Act 85 (signed into law about a month after Act 39) amended that 150 "items" to "brands and product types." So instead of the best-selling Jack Daniel's 750ml as one item, Jack Daniel's would be one brand or product type, so they could negotiate the price (and raise the price to us...) on the 750, the 1.75, the liter, the 375, the 50, and any gift packs. Multiply that by the 300 best selling wine and spirits brands...and you easily have "almost seven hundred items."

We regret the error. Albert wrote the post, Lew edited it, we share the responsibility. We've always said the Almighty Liquor Code is arbitrarily, willfully complex; we got caught by it.

Our apologies to you, our readers (of which Elizabeth Brassell is obviously one). We'll try to do better in the future. In the meantime, we'll remind you that in a proper private system, the main thing affecting the margin would be competition on price for your purchases. You see how that works in other states.

Wednesday, April 25, 2018

Proof the PLCB is screwing us - in their own words.

Please see the "We regret the error" post of April 30 for clarification.

The last post showed how even the most basic of business math escapes the political appointees that run our anti-consumer, police-enforced, cronyistic, unqualified, graft-tainted, incompetent (I can keep going) monopoly liquor control system. But even basic math — like you learned in 2nd grade — escapes them. Check this out: they can't even count!
No fair! You said there wouldn't be any more math!
This is taken straight from the law that made recent substantial changes to The Almighty Liquor Code, including "flexible pricing" (the law is commonly referred to as ACT 39):
"The board may price its best-selling items and limited purchase items in a manner that maximizes the return on the sale of those items."  
This is the flexible screwing pricing we have been talking about. We added the emphasis, and you'll see why shortly. ACT 39 then further defines what "best selling" means.
"Best-selling items" shall mean the one hundred fifty (150) most sold product identification numbers of wine and the one hundred fifty (150) most sold product identification numbers of liquor as measured by the total number of units sold on a six month basis calculated every January 1 and July 1." (Again, emphasis added.)
So using what you learned in 2nd grade, there are a total of 300 items that can change price, 150 wine and 150 liquor. Everything else is still under the 30% markup rules as before; that hasn't changed. If the price to the PLCB goes up, your price on the shelf goes up; and if a price goes down your price goes down. Pretty simple: 150 wines + 150 spirits = 300 items affected by "flexible the "limited purchase items."

Now let's look at testimony given by the board at a joint legislative hearing about how Act 39 is working out...because the legislators had a lot of questions about "flexible pricing." (You can read the transcript here)
"This rigid markup structure was inefficient, resulting in missed opportunities for the commonwealth to realize additional revenue and for licensees and retail customers of the PLCB to share in cost savings."  
Share in cost savings, eh? That's important. We'll get back to that.

Reading further in the testimony of the board we find this:
"...pricing flexibility has resulted in a reduction of product acquisition costs for almost seven hundred products, retail prices decreases for more than one hundred and twenty products and retail price increases of a hundred twenty-five products." 
Okay. The law states clearly that there the PLCB could change the standard markup on 300 of the best-selling products. Of that 300, prices went up on 125 of them, leaving a maximum of 175 prices that could be reduced or unchanged. Of that 175, approximately 120 went down, leaving about 55 unchanged, or at least in an unknown status. That's all that are allowed to be changed under the law. However, the board said that costs went down for 700 items: 700 minus the 120 items that were lowered in price...means 580 items didn't get reduced.

The Chairman said "Immediately after the effective date of Act 39, we began using the flexibility we were afforded in pricing our limited purchase items, including luxury products sold in our Premium Collection stores, Chairman's Selection, and Chairman's Advantage products, Wine Club items, and products in our e-commerce portfolio. We have always been able to negotiate with our suppliers to obtain great values on these products, but with Act 39, we  have been able to price each item as appropriately based on our supply and anticipated demand and current marketplace conditions."

Math - The PLCB way

Those 580 items that didn't get reduced couldn't be any of the things the Chairman mentioned here, because he said they already had negotiating power over their costs, and ACT 39 didn't change that. What it did change was the mark-up, the price they could charge us on the shelf. Did they charge more? No, only 125 items went up in price. Did they charge less? Not according to their testimony.

Figure it out. By process of elimination, the 580 items that they are now paying less for aren't in the top 150 wine or spirits, and aren't in the group of items that the board said they could already negotiate on. That means they have to be regular items that should fall under the 30% markup rule, which means one of two things. Either the price for the consumer had to go down, which didn't happen according to the testimony, or the Chairman is lying about something. Of course, there is the third option: he has no idea what he's talking about, or he's inflating the numbers to make the system look good in general (which is probably just habitual at the PLCB). Not really all that reassuring either.

Will we ever know? Probably not, since no one on the legislative side of the table seems to want to ask the right questions. Why do we put up with this continued malfeasance that is being perpetrated on the citizens and consumers?

Privatize and end this BS.

Thursday, April 19, 2018

The PLCB doesn't know business; just ask them

The PLCB plays at being a business, but they really don't know what they're doing. We've told you that many times. If you don't believe us, you can just listen to them. They'll make it pretty clear.

The PLCB -- the actual three member board, plus the so-called "executive director" Charles "Not a CEO, Nope, No Sir" Mooney -- testified in front of a joint meeting of the House Of Representatives Liquor Control Committee and Senate Law and Justice Committee about the effects of Act 39...especially about flexible pricing (you can read the whole transcript here). It's a big deal, these meetings and the change Act 39 brings, and the Board has to be ready for the legislators' questions.

And of course...they weren't. Apparently, they weren't really ready for flexible pricing, either, despite having asked for it for years. 

Let's start with the Chairman. Here's what he told the legislators when they started drilling him about why they hadn't simply negotiated lower prices to begin with; you know, with the huge "buying power" we always heard about. As we told you all along, the "buying power" bullshit was just that: bullshit. They never used it.

Holden: "If we would have sought lower product costs from suppliers, it would have resulted in reduced Commonwealth revenue due to the required application of a flat percentage markup and taxes." On face value, that would seem to make sense. Lower wholesale prices, run to a set mark-up formula to the shelf, means "reduced Commonwealth revenue," sure. Of course, it also means lower prices for us. You know, the citizens. But if it means the revenues are maximized, well, okay. After all, you can't make more money by lowering prices. 

But there ARE real businesses that make a profit doing exactly that. You may have heard of them: Walmart. Target. Aldi. Total Wine & Spirits. All of these real businesses, run by real business people, regularly make tons of money by cutting prices. It's established practice: lower your gross margin, so you make less money on each item; but at the same time the lower prices mean more sales, so you make more money overall. The PLCB doesn't get it; guess it's too much work. ("So many boxes to lift!")

They didn't need "flexible pricing," they could have been doing this all along. It's simple. For every item on the shelf, there is a price that will result in the maximum revenue. Higher, and sales decrease; lower, and total profit decreases. That price point is affected by things like competition, or price-matching, or sales, but the PLCB doesn't do any of those; they certainly don't have any significant legal competition. (And no, the PLCB does not have sales, at least, not in the usual sense: if the producers drop a price, the PLCB passes it through as is, and their slice of the pie remains exactly the same. They never cut prices, except on their ill-advised "clearance sales." Thanks, guys.)
Of course I'm lying. I don't know any of this math stuff.

But here's the thing that boggles the mind. Even under "flexible pricing," where they have to negotiate each price of the top 150 wine and spirits items, they STILL aren't using this business tool. So while they are screwing the suppliers and consumers, it certainly isn't as satisfying as it should be for either of us. 

No, the PLCB wants to really ream us. "...brands that are not within the statutory definition of best selling wines and spirits continue to be governed by the proportional pricing requirement of the liquor code. For a future legislative consideration, we respectfully recommend that the same pricing flexibility be extended on all products sold by the PLCB." 

And there it is. It's not enough that they raise prices on the majority of the best-selling items, they want to do that to everything. Keep in mind that there is no institutional pricing oversight by the legislature (only these hearings where the legislators gets to chide the Board about prices, and the Board gets to say 'oh, yeah, guess so, whatever') and as always, nobody with any experience in the industry is leading this parade of monkeys down the path.

ore bumbling ensued as the hearing went on. The Chairman: "We made some mistakes at the initial supplier meetings. We asked suppliers for significant reductions to their product costs to increase our margin. But we failed to take a few things into consideration. We miscalculated the reaction of some of the largest suppliers of our best selling brands, who refused to come to the table at all." Imagine that. You said, 'Hey, we want to pay less for these brands everyone wants,' and companies that deal with sharpened pencils every day said 'That's nice. No.' After all, they sell the same products in neighboring states...that don't have the PLCB.

And once again, we suffer for the mistakes of ignorance, just as we have done for the past 83 years. While the Chairman was being the mouthpiece for this failure, it fully lies on Charlie Mooney. After 40 years in the PLCB, Mooney might know about graft, nepotism, bribes: it's apparently the way the PLCB runs. But it looks like he had no idea how the actual liquor industry (or any industry for that matter) worked.
So after blundering around for nine months, and hiring two specialists to help them figure out how to do this, and -- once again! -- paying an outside consulting firm to gather data, that all eventually led to this statement: "... pricing flexibility has resulted in a reduction of product acquisition costs for almost seven hundred products, retail prices decreases for more than one hundred and twenty products and retail price increases of a hundred twenty-five products."

Let me put that in English for you - they saved money on 580 products and you didn't see a dime of it. They raised prices on more items than they reduced prices, and of the top 10 selling liquor or wine items you saw a reduction on only one: a pint bottle of cheap vodka. Remember those top 10 items are the ones they should have the most leverage on, due to sales volume. They screwed us again. Of course they did.

SENATOR MCILHINNEY: "... the state citizens own this system, and they should be able to get some, any benefit by having a good deal when they go to the liquor store."
MR. HOLDEN: "Absolutely",
Except they aren't. We aren't. Weren't the legislators paying attention? We got NO benefit on 81% of the products that the PLCB paid a lower price for. They said so themselves.

Charlie Mooney also came up with: "Senator, we -- I am confident, without all the data in front of me, that, overall, consumer prices have decreased." Well Charlie, without having all the data in front of me, I call BULLSHIT. Especially after you raised prices on 422 items just because you had crap negotiating skills and didn't get what you wanted.

Maybe they should rename it the PLCB principle.

Remember that the PLCB has over $1.7 BILLION in liabilities, they are a drag on the economy of the state and stifle a free market where large and small businesses do not exist because of their continued presence in the marketplace. They do nothing for the citizens, unless you happen to be one that works there. Even Russia has free market liquor stores. Pennsylvania doesn't.

Wednesday, March 21, 2018

Not Quite 10 Years Ago...

It's not quite ten years since I started this blog with this post. It was on April 22, 2008, and I should probably do the 10th anniversary post next month,'s snowing like mad out there right now, and I'm not going to be able to go do brewery visits like I planned, so I'm doing it now. What's a month?

Ten years ago things were pretty bad; they were worse than they are today. The State Stores were not under any kind of real scrutiny, they didn't have a useful website, and there hadn't been a serious push for privatization in 20 years. Beer was sold at distributors -- by the case and keg only -- or at taverns -- only 2 sixers at a time, and at a stiff markup -- and that was it...except for the occasional weird exception. The Legislature was in a long period of inactivity on the Almighty Liquor Code. And I was losing my mind after seeing how booze was sold all over the country.

So I started this blog...and things changed. I don't take any credit for this. Much like the success of my other crusade, the Session Beer Project, I don't feel that I caused any change. I just had a very sensitive ear to the ground, and caught the rumors and mumblings before almost anyone else did. At the most, I may have suggested lines of inquiry to reporters (who picked up on the blog fairly early; as did a suspicious number of IP addresses in downtown Harrisburg), and if that worked, well, that's always been the main aim and hoped-for audience of the blog. (A big hat-tip and thanks to my co-writer, the pseudonymous Albert Brooks, who picked up the pen while I was sidelined for over two years and has done a GREAT job feeding facts to that audience.)

What happened in the past ten years? Here's the dumb stuff.

  • The PLCB spent $3.6 million on public image, advertising, and store layout, paid to a California-based marketing firm. They come up with a new name for the State Stores: "Table Leaf." In a rare rush of smarts, the PLCB realized that's idiotic (though they did keep an option on it; see below), and decided to go with the basic stupid rename: Fine Wine and Good Spirits Store. Governor Rendell was furious...and the PLCB blatantly didn't care. Your money wasted: it's a monopoly (a police-enforced monopoly, as we would point out many times), there's no need for marketing.
  • The aptly-named Special Liquor Order (and they call it SLO, you can't make this up) system broke down again, and again, and again...
  • The PLCB so badly screwed up their new inventory system in 2011 that store managers over-ordered so much wine that they had to store almost 100,000 cases of it in tractor-trailers...un-air conditioned trailers, in the summer. Renting the trailers and hiring security guards cost about $500,000. (Numbers are from an Auditor General report.) Good job, morons!
  • Around 20 State Stores closed. A bunch more were moved for arbitrary reasons without input from local communities. And of course, we revealed that ten counties in Pennsylvania have only ONE State Store. There are ten others with only two.
  • The Courtesy Contract. The PLCB spent $173,820 on training State Store System clerks "how to greet someone, where to stand, and how to read a customer's cues." And the company doing the training belonged to a PLCB regional manager's spouse. Real nice. 
  • We saw several ethics investigations of the PLCB (one of which struck paydirt) and several harshly worded audits. The marketing director was found guilty of fraud...back in 2015, and he still has not been sentenced. Speculation is that he is cooperating in further federal investigations. Conti must be spooked. 
  • We saw again and again that the PLCB often actively made it harder for licensees and wholesalers and brewers to sell beer. You know...their only competition in the booze biz. Not bad, when you make the rules. This included the harassment of three Philly bars and a major Philly beer wholesaler for selling "unregistered" beer, carried out by the BLCE and supported by the PLCB (and their soon-to-be-exposed flawed database). After armed raids, seizures of beer, disruption of private (beer) business, and a full-blown legislative hearing...the result was a warning letter. Harassment, and they should have been sued. 
  • The Saga of Joe "Da CEO" Conti, from his disappearance, to his greatest failure, to his ignominious end, to his unlikely (and lucrative) return. We miss his shenanigans; his constantly wrong-footed instincts were the best thing that ever happened to privatization. 
  • The Wine Kiosks. Nothing more need be said. Possibly their biggest failure in the last 40 years, and that's saying something. 
  • Table Leaf: the brand. As mentioned above, they'd already (over)paid for this branding, so they used it for a house brand of wine. And then they decided to wield it as a weapon against their biggest suppliers...and Pennsylvania wineries. Who brought it to the Legislature's attention, and that was the end of another PLCB fiasco.
  • Privatization was repeatedly brought up by the House, and squashed in the Senate, mainly thanks to the efforts of Senator Chuck McIlhinney.
  • But in all the past ten years, the very worst thing that happened was that the Legislature let the PLCB have the one thing that they never should have: so-called "flexible pricing." This is the idea that the PLCB should not be forced to use the same set mark-up on every item; when they got a deal, they could pass it on (which is bullshit: they could always have done that). What it really means is that they charge more; we told you that for years, and golly, it was true. We're stuck with it, too.
    Ah, the wine kiosk. The Best Worst Thing.
Wow. I know I'm missing stuff, but those are the big ones. Yet somehow, these ding-dongs are still in business, still the sole wholesaler of wine and spirits in the state despite continual screw-ups.

Meanwhile, we did get some things, although almost all of them were mixed blessings. 
All right, break it up!
  • The case law is finally gone! That was one of the big ones. We no longer have to buy an entire case of beer at the distributor. That'd be great, except we still can only buy a 12-pack at bars and grocery stores (more on that shortly), then walk out the door and walk back in and buy another...What kind of bullshit is that?
  • We can buy beer and wine in grocery stores and convenience stores!! HOT DAMN! Whoa there, hoss. We can buy beer and wine in places that hold a restaurant license; that's always been true, but now these stores can buy those licenses (for as much as $500,000!), and put in a 'cafe' that seats at least 30, and sell sixpacks. About 450-odd stores have done so, out of the thousands in the state. So don't wet yourself with glee. And remember: a 12-pack of beer, or four bottles of wine, and it's out the door you go
  • Direct wine shipment (and beer...but not liquor) is now a thing. That's a big deal for a small number of people. 
  • The PLCB had to start telling the truth about their financials; specifically, their deep pension debt. And just like that, they were no longer making money, net of taxes. They still are paying money into the General Fund, because they have to, but they're doing it out of reserve assets. The day of reckoning is coming. 
  • We got some really cool stuff: Pennsylvania booze producers can cross-sell their products. A winery can sell PA-produced beer, cider, spirits, mead...and, what, kvass, I guess? Any of that. And they can have satellite stores off their main production premises, which can also sell those other products, which has led to Pennsylvania Libations, the first privately-owned liquor store in Pennsylvania in almost 100 years. And that's cool. 
  • About a thousand (I think) liquor licenses were blown out of escrow and auctioned off. Mostly picked up by grocery stores. So that's kind of good, but...all those grocery stores buying bar licenses is making the price of a license go up, a lot in some places, and that's putting the squeeze on indie mom-and-pop bars and groceries. This is going to give us a lot more chain groceries and chain restaurants, and that, my friends, ain't optimal
That's all I can think of right now. There have been some other side effects. One, the PLCB is running scared, and the selection is about as good as it's been in a while. (You're a fool if you think that will continue if the privatization talk dies down, so let's keep 'em scared.) Two, the BLCE has been scared to do any enforcement of the monopoly, so we can buy out of state with impunity. Three, people have a lower opinion of the PLCB these days after the corruption charges, and that's good. Four, McIlhinney's retiring, and maybe we can get someone who really gets it in there.
OTOH...The GOP has, overall, been a huge friend to privatization of the PLCB in the past 40 years, despite numerous missteps. The unpopularity of the Trump administration may lead to a loss of the solid GOP majority in the General Assembly. Overall, that's how things go, but for this issue? If the Democrats gain a majority, or cut the GOP majority, you can kiss further progress good-bye. Because the Dems have made it crystal-clear that they are opposed to any further privatization of the State Store System. We'll just have to wait and see.

Overall, though? Good progress at the 10-year mark. We got rid of the case law, and the PLCB's sales are suffering from the wine sales at groceries. This is what union boss Wendell W. "Windy Wendy" Young IV referred to as "the death of a thousand cuts." Here's hoping he's right about that, and that "flexible pricing" doesn't bleed us to death in the meantime.

I feel for you folks who are far from a border. If Philly were where State College is, away from the liquor stores of Jersey and Delaware, the PLCB would have been long gone. Let's keep the pressure on.

Wednesday, February 7, 2018

Don't Let Them Fool You

The PLCB just put out their latest Retail Year In Review, patting themselves on the back — again — about how great the State Stores are doing! Yahoo! It's all here! Just don't look too closely at the numbers!

Because if you do look closely, peek under the gloss and sparkles, you can see just how crappy a job they are doing. Let's start with the record sales. Let's see: police controlled monopoly, citizens can't go anywhere else, rising prices, increased population... It would probably take a real marketing genius to have record sales under those conditions. And take a look at those record sales in the hottest market category - American Whiskey: the PLCB's growth there is less than the national average increase in sales. Not just a little less, it is about 30% less. Imagine how much more in taxes would be collected if Pennsylvania was able to match the strongest national trend in booze sales for just that one category.

The PLCB is over $1 BILLION in debt
Of course, our old friend Jack Daniel's isn't forgotten; after years of us saying that it isn't a bourbon, the PLCB in their normal bout of incompetency gets it half right. On page 32, table 19 of the report there is Jack Daniel's Gentleman Jack sitting in the number 10 spot for "bourbon." At least they didn't have JD #7 listed 3 times like they did last year (page 30, Table 19). It is hard to say if they left it out because it isn't bourbon or they just screwed the table up.

To prove they are keeping up with the "modern lifestyle," a whole one tenth of one percent (0.11%) of sales came from the Internet, which is really pathetic in this day and age for a retail company. Pathetic is the key word when talking about the PLCB's technology track record. Can you say "wine kiosk"?

Then there is the problem of saying things to make yourself look good, even when the numbers that you provide don't always match up with reality.  For most of us this is called lying, for the PLCB it's called "how we do business." Let's look at those "increased sales".  First we have the sales for 2015-2016 from the Retail Year In Review.  On page 4 it lists total sales of $2,303,405,801. On page 5 it lists sales by month and transaction; it doesn't total them up, but have no fear, I did it for you.

Notice that the total is about $23.5 million different. The PLCB doesn't say why, and apparently we don't deserve an explanation.

The next table is for the year 2016-17. Again, the monthly sales in total don't match the total listed by the PLCB on page 4 of the current Retail Year In Review ($2,443,725,791). Only this time, it is $76.5 million that has disappeared. Remember, as the owners of this mess this is our money, and I'd like to know where that $76.5 million is.

Here you'll see that the number of transactions was fairly flat, increasing only by 0.91%, while sales dollars went up 3.8%. What this tells us is that the citizens bought 1% more often, but it cost them 3.8% more each time, well above the inflation rate of 2.1%

Retail alcohol is one of the few major sales items where the individual product is elastic (in economic terms, this means that a small change in price can mean a large change in sales), because there are so many suitable substitutes. If your favorite vodka goes up, you can easily find another at a price you are more comfortable paying. The industry as a whole, though, is inelastic, meaning that people are going to pay for some form of the product no matter what the price changes to. The PLCB knows this (probably because they hired somebody to explain it to them), so they will increase prices and not have it affect overall sales that much, if at all. They are doing that right now, through the old variable pricing trick they foisted upon the public (and the gullible Legislature).

So now that you have real numbers in front of you, you have to ask where the PLCB came up with an "average statewide increase of 6.10%", when the numbers they give us don't match? What numbers are we supposed to believe Table 4 or Table 5? And why should be believe anything the PLCB tells us, given their history of anti-consumer behavior, their predisposition to screwing us? Why aren't they capable of making the sales numbers match on their own damn report? As far as that goes, why, in this age of almost instant information access does it take them six months to put this report out? Find another $2 billion business that takes that long...go ahead, I'll wait.

Face it, the PLCB does NOTHING for the citizens except cost them more in the long run. Remember: they are a BILLION dollars in debt and it isn't getting any smaller.