Wednesday, August 31, 2011

"Just give me something"

I was talking to a licensee (that's PLCB-speak for a bar owner) the other day about this whole thing. What do you guys think about the movements towards privatization, I asked her.*

"What kind of chances do you think it has?" she asked in response. "Is this really going to happen?" I said that I'd heard G. Terry Madonna, the Pennsylvania politics maven at Franklin & Marshall College (full disclosure: I am a proud F&M grad, class of 1981, and if you have high school age children, you should consider this excellent college.) discussing it; his opinion was that it was the best shot we'd had at privatization since Repeal...and he gave it a 40% shot. That was back in the spring, though, and things had moved forward since then; insiders tell me that the votes are there in the House, and the Senate's swinging our way (and there may yet be some action from a Marcellus Shale tax deal; a 'you vote for my bill, I'll vote for yours' kinda thing). So again, I said...what do the licensees think about this?

"I'll tell you," he* said, and paused. "The Tavern Owners don't know what to do. You know, it would be great; in other states, the Absolut rep would come to you and say, 'I got a deal on this week; you buy two cases, I give you this price,' and I could say, well, what can you give me if I buy four cases, and he'd say...ooookay, and he'd give me another price, and then, then I could pass that on to the customers, do a special that week." And, I said, not only that, they'd deliver it to you. "Right!" they both* said, beaming.

"But you know," he* continued, and got right in my face: "The prices we have to pay are crazy. We don't get a good discount. And the beer sales thing? [meaning the six-pack sale monopoly taverns currently have] We know the beer stores are going to get into wine and liquor sales if this goes private; they've got the money, they're already set up. We're going to lose a lot of takeout sales [we'd already guessed that wine and spirits in the distributors would mean sixpack sales there as well], I know that, but no one's putting anything for us in the privatization [bill]. Just give me something! Ease up some of the regulations, cut back on the fees; just give me something."

Why don't you say something, I asked. They* shook their heads, and she* said, "We don't know if it's going through." The implication was clear: no one wants to piss off the PLCB by being openly pro-privatization...and then face the bureaucrats if it fails.

My advice to the 'privateers' (as Hereditary Union President For Life Wendell W. Young IV has wittily tagged the pro-privatization forces): give them something. Put something in the bill that acknowledges licensees are getting a raw deal; level the playing field by putting no exclusivity on suppliers -- let licensees buy from whatever source they want -- or take off that ridiculous 'happy hour' restriction, or let all bars sell packaged goods (to-go wine, liquor, and beer) and don't tell them how they have to do it. You'll get a powerful ally...and be a giant step closer to getting privatization.

*Might have been a woman, might have been a guy, might have been a husband and wife; might have been around here, might have been up in Clinton County where I was vacationing...I ain't saying, for obvious reasons.


Mike said...

I always wondered why the restaurant and bar owners weren't more vocal in the fight against the PLCB. I laugh when I see the owners of local restaurants at my state store waiting on line to buy their huge orders with the rest of us. In a private state you know the stores would deliver and would offer big discounts to get the volume business. Imagine the discounts a guy like Steve Starr could get in exchange for being his exclusive supplier.

Anonymous said...

I'm not sure that I buy this. How will abolishing the State Store monopoly effect take out beer sales? One doesn't really have to do with the other. As far as what's being talked about in congress, beer stores (distributors) will still have to sell cases not six packs. If most bars just priced competitively their togo beer sales would probably increase even with the change.

As the above poster and the start of your post illustrate this should actually make the life of a bar owner easier (there's something). It drives me crazy that everytime there is a push for any change in the current system the distributor (who I expect to chime soon) and tavern association end up bogging everything down with this "give me something" attitude. Add this to the push back we are getting from the labor unions and it just seems more and more unlikely that this will happen.


Lew Bryson said...

It's likely that beer distributors will be able to bid on retail booze licenses, making them de facto "all alcohol" stores, and it's pretty much a given that a sixpack bill is going to pass pretty soon; if not as part of privatization, soon thereafter. Remember, the privatization bill is still in flux.

The bar owner is either going to lose sales outright, or they won't have that margin anymore (sure, it's big, but they'd be fools not to charge what the market will bear), so they're going to lose revenue. They might as well ask for something; if they don't ask, it's a cinch they won't get anything. And if the Tavern Owners come in solidly FOR privatization...that's a really good ally. That's a lot more people/jobs/votes than the union.

The distributors will want sixpack sales and the option to get a wine/spirits retail license in exchange for their support, and I've got no problem with that. Give it to 'em. Problem solved.

Nathan said...

HB11 requires wholesalers to charge the same price to all customers, so it wouldn't be legal for the Absolut rep to cut licensees special deals unless they were going to offer that same deal to everyone. This isn't unusual; many other license states prohibit discriminatory pricing by wholesalers.

Of course, deals like that between bars and booze brands will happen anyway, under the table, just like they do in other license states, and just like they already do in PA.

Lew Bryson said...

Damn, that is in there? Why, if you know? Force of habit?

Nathan said...

It's been a standard feature of three-tier systems since 1934, along with a prohibition against retailers selling product below cost. Together those requirements effectively set statewide minimum prices on alcohol products, with an eye toward preventing some of the anti-competitive, pro-overconsumption practices that were common in the industry prior to Prohibition.