Friday, October 9, 2015

Three months and no financials?

It's over three months after their fiscal year ended, and the PLCB has still not managed to figure out how to report their financials. By comparison, the Department Of Revenue, an agency more than ten times the size with millions of accounts has somehow managed to get an unaudited year end totals  out which is all we are asking for. And they did it the day after the fiscal year ended!

I think I know what the problem might be and offer this suggestion.

BRIBES are an expense.

KICKBACKS are an asset

There. That should help speed things along. No charge for the service.

Monday, October 5, 2015

The PLCB enters the lottery business

Well, it is getting to be that time of year when the PLCB decides what the "most fair" way is to divvy up limited bottles. Last year it was Stacy Kriedeman saying that selling the products online is the most fair method. This year we get Board Chairman Tim Holden presenting a new "most fair," saying "In order to ensure that all consumers interested in a particular high-demand product have a fair chance to purchase the product, we have developed a lottery system for our most limited products.” 

Doesn't that mean people haven't had a fair chance in the past? Maybe it just means that the contractor they hired to do this gets to be the fall guy if it tanks. and then PLCB can claim it wasn't their fault. Just like the Oracle roll out disaster; they don't have the expertise to do it in-house without screwing it up. (I wrote about what I thought the system should look like at the end of last July. They didn't take all my advice so we'll see what happens.)

But is this new most fair method...even fair at all? There are the questions of legality about selling only to a PA resident. The state already restrains trade for their own citizens -- the police-enforced monopoly prohibits us from buying booze anywhere but in Pennsylvania -- but can they restrain trade to non-Pennsylvania citizens? Does or does it not violate Federal statute and will somebody invest enough to find out?  Can they have two systems, in which they allow non-residents to buy alcohol on their website, but refuse to sell these limited items to them at the same time?  What about the military personnel who can maintain the state as their residence but obviously don't have all their bills sent here. State-sponsored discrimination of the very people who are defending the state and country? How cool is that, PLCB?

The only way you will get this set in PA
 is if you copy this picture

Then there are people who own property and pay taxes to PA but don't live here. Is this another benefit of paying your taxes to support a government agency that couldn't care less about you? (I don't want to hear that crap about no tax dollars are used to run the PLCB. As long as the taxpayers are on the hook for over $600 million in pension and medical debt, as long as we have no choice on where to buy our booze, ALL PLCB money is taxpayer money.)

So on the 13th we get to see the first shakedown of the new system, when 24 bottles of some Buffalo Trace Experimental bottles are offered in two lotteries of 12 each (25% of which — 3 bottles of each! — is reserved for a separate licensee lottery). I'm sure the demand level will be close to what the Antique Collection or Pappy frenzy is and will be a real test of their system.

Of course, don't expect to get a flight of the full set of Pappy releases, or a complete BTAC collection. That's impossible in the "most fair" world of the PLCB. 

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!)