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 only 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.

14 comments:

Rick Maberry said...

Right On !!!

Anonymous said...

I've read people who park in front of Home Depot in Claymont and make a purchase at Total Wine are immune from parking lot stings. That center is relatively small, but I get the feeling Home Depot sued to stop stings from happening on their immediate property...

Lew Bryson said...

Cecil County (Maryland) sheriffs used to run off the BLCE agents who would set up looking for PA folks buying at Maryland liquor stores. God bless 'em.

Albert Brooks said...

Since people who stop for liquor also sometimes shop for other things store owners found it to their benefit to call the Maryland State Police and have the suspicious BLCE cars ticketed for loitering.

Anonymous said...

Anyone know where I can find some stats about the number of people actually arrested or fined for bringing liquor from out of state into PA? I find lots of articles warning people of possible fines or arrests, but no news of anyone actually being fined or arrested.

I have a theory that PA is not enforcing the law because they think that based on recent Supreme Court decisions regarding the 21st amendment that the law might be found unconstitutional and don't want to create a plaintiff.

I'm not talking about restaurants or bars who get busted for selling non-PLCB liquor, just regular folks getting fined for personal consumption.

Lew Bryson said...

You should be able to get that information directly from the BLCE.

Your theory is interesting. I'm pretty sure the BLCE doesn't enforce except a few cases every now and then (there were a couple last year around Memorial Day) because every time they do there is a wave of bad publicity and public outcry.

Albert Brooks said...

Besides one blurb in a newspaper story about how the number used to be over 200 I have never seen any comprehensive stats on border arrests. If you come up with something be sure to let us know!

Anonymous said...

Is this a libertarian blog?

Lew Bryson said...

Not particularly,no. Why?

Anonymous said...

Some articles it links to have a libertarian slant.

Lew Bryson said...

Given the topic of the blog, that's likely. However, privatization of the Pennsylvania liquor monopoly is a proposal that has broad support across liberal, progressive, conservative, and libertarian constituencies.

Albert Brooks said...

Are you basing your comment on the blog overall or this particular piece? There are three links in this piece and none link to traditional articles. Two link to other blog posts I've made and one links to the Neiman report.

While I don't consider myself Libertarian anyone who is for the free market over government control would have to have tenants that match Libertarianism at least in a very broad sense. As Lew said we have support across the spectrum of political beliefs with the possible exception of Socialists.

Anonymous said...

I was talking about the blog overall. Also, what's the difference between liberals and progressives?

Lew Bryson said...

Spelling.

We're not going to wander off-topic on this. That's the end of this digression.