Welcome back Lew!

Tomorrow signals the return of Lew to the world of blog writing on  'Why The PLCB Should Be Abolished'. I'd like to thank him for allowing me to hold down the fort, so to speak, while he was off doing some other things.

I'm sure that I'm looking forward as much as the rest of you to his views on the prohibition relic we call the PLCB. I'll still be contributing but the reins will firmly be in Lew's hands once again.

Welcome back!

PLCB Provides Value? Don't Bet On It

The Wine Spectator put out their list of the top 100 value wines broken down into 6 categories.  You can see the lists here. Who wants to guess how well the PLCB at selecting those wines?

Read on.

Now I didn't check all 100 but took the top five of each category and went from there.  Even with the PLCB's new and improved search function I checked most of them multiple times to be sure but that doesn't mean one or two were entered in some weird way that only the PLCB can understand. I will say this, only a few were above the suggested retail price.

1. Light White

• 1 in stock,  Don't get too excited the one in stock is in less than 20% of the stores
• 2 available SLO
• didn't stock 2

2. Rich White

• 1 in stock (at 5% of the stores) 
• didn't stock 4

3. Elegant Reds

• 1 in stock
• 1 maybe in stock but the PLCB didn't list the vintage
• 1 available SLO
• 2 not in stock

4. Big Red

• 1 maybe in stock but again, the PLCB didn't list the vintage
• 4 not in stock

5. Rose

• 1 in stock
• 4 not in stock

6. Sparkling

• 2 in stock!
• 3 not in stock

Remember that in PA not in stock means your are never going to see it not that they happen to be out at the moment.

Extrapolate that out and our State Controlled Monopoly with all that buying power and supposedly well trained (but under certified) buyers would have managed to stock maybe 25%, might be able to get an additional 10% and for 65% of the wines listed missed the boat completely.

If you hurry there is still time to get these well rated value wines......out of state.

Have a great New Years!

State Line = State of Mind

Not too far south of the Mason-Dixon Line is an odd little Pennsylvania-like anomaly within Maryland: the Montgomery County Department of Liquor Control. It's the last municipal control county in the U.S. They actually go the PLCB one better (one worse?): they have a monopoly on spirits, wine and beer sales, wholesale and retail off-premise. But like the PLCB, they are being called out for not serving the customers well and there are calls to privatize the system.

The funny thing is, the calls are from the DEMOCRATIC leadership of the state.  Specifically Maryland Comptroller Peter Franchot (D), whose office is in charge of liquor regulation for the state. Unlike the Democrats here in PA who would never say  something like “The county’s monopoly is bad for consumers, bad for small businesses and for our local economy” about the PLCB, the Comptroller is not only saying that, but saying it out loud and producing these anti-control broadsheets:

Clearly Franchot is not a student of Wolfonomics. He even has put out a report detailing exactly how and why privatization is better.

Of course the Union (who else?) opposes any talk of privatization saying that privatization would not create real competition.
"Under Maryland state law, two wholesalers may not distribute the same product in the same market at the same time. There is always one approved, designated wholesale distributor in a given market for each brand or product. Private liquor will have its own liquor monopoly."

So there won't be competition when Smirnoff is in direct competition with the other 40 brands of vodka in their price range? Somebody needs to go back to school and take some Econ classes. Competition will hold except at the very ends of the bell curve where there is no suitable substitute for the product you want: like a 60 year old bottle of Glenfiddich Scotch or a half-liter bottle of MD 20/20. That's true for the majority of states and countries, and is considered the norm so it really isn't pertinent to the privatization argument.

Of course, this ignores the indisputable fact that there is NO COMPETITION at all, be it real or fake, in Montgomery County now.

We here at the blog wish you the best of luck, Mr.Franchot! May you show our legislature the way to satisfying the consumer and ridding us of the archaic system now in place.

The Night Before Budget

'Twas the night before Christmas when all through the House,
Not a creature was stirring, not even an LCB mouse.
[They are closed, you know]

The bills were all stacked on the desks with great care,
In hopes that a budget soon would be there.

The Governor was snuggled all warm in his bed,
With spending and taxes happy dreams in his head.

With Dems in his pocket and no stop gap,
He'd just settled his brain for a short winter’s nap.

Just a friendly sheep here, yup. 

When out in the state arose such a clatter,
He jumped from his bed to see what was the matter.

Away to the window he flew in a flash,
Tore open the shutters and threw up the sash.

The moon on the breast of the new fallen snow,
Gave a luster of spotlights on The Framework below.

When what to his wondering eyes should appear:
The Republican Caucus, all filled with cheer.

Their majority strong, "No new taxes!" their cry,
More rapid than eagles their proposals did fly.

They whistled and shouted and called out their names:
"Now Liquor, Now Smoking, Now New Instant Games!

On Driller, On Business, On Fracking and more!
On Pensions, On Teachers, School Spending galore!

To the top of the Capitol, the top of the wall,
Now vote on them! vote on them! vote on them all!"

And up to the housetop the Caucus they flew,
With a balanced budget and some new spending too.

But then in a twinkling we all heard on the air,
The whining and threats of The Wolf from his lair.

"My budget's holistic, you must understand,
Includes taxes and spending there for everyman.

It’s a bundle of taxes I’ll fling on your back,
(With a promise that later you might get some slack)."

His eyes how they twinkled, his dimples so merry
(His cheeks were like roses, his nose like a cherry),

When he spoke of the taxes all lined in a row,
The beard on his chin just quivered, just so.

But he held his spending plan tight to his breast —
Special interests to pay back; ignore all the rest.

A wink of his eye and a twist of his head,
Soon gave us to know we had all to dread;

He turned off the mic and went straight to his work;
Headed down to the halls where the lobbyists lurk.

First on his list was the State Liquor Store,
He must keep it open, privatization no more!

He tells us the free market would surely raise prices,
And monopoly's best for this most tasty of vices.

"I won’t give the people what they've wanted for years;
It’s much more important to keep state store cashiers!"

It was a long night, as The Wolf clawed and fought,
And schemed to keep progress remaining at naught.

But I heard him exclaim as he went back to bed,
“Happy Christmas to all. My budget's not dead!”

One of our stores is missing

We can get pretty used to the incompetence of the PLCB: storing wine in uncooled trailers in the summer, recruiting the robot army of wine kiosks, even not knowing how to add or subtract (like this example from this week). 

Time to break out of the pattern: now they lost an entire store. Don't believe me? Check their latest Retail Year in Review and try to find Store #6709. Here's the address.

THE CROSSROADS SHOPPING CTR
351 LOUCKS RD, STE F2
YORK, PA, 17404-1740

But it isn't listed any longer. The Retail Year in Review is the PLCB's way of patting themselves on the back by telling us what a great job they do selling products (with the help of a police-enforced monopoly) in a state where they regulate their only competition — beer — and have their own judges and branch of the State Police to enforce it. Record sales every year!! Well, DUH!

Seems nuts that they lost a whole store, though. Maybe they "re-branded it," or it moved, or they did that "store-in-a-store" thing and no one's noticed it's there yet, or they closed it for an entire year to 'remodel' (which has been known to happen, ask the people in Mountaintop). But it's even news to the people working there. Give them a call at 717-843-5800 and ask them yourself. 'Are you there? Because the Retail Year in Review says you're not.' Typical lack of  PLCB coordination has the store locater thinking they are still around.

Crossroads would be #152 if, you know, the PLCB knew what it was doing.

This isn't one of those 3-day-a-week stores, either, but one in the top 25% in the state. It did $4.5 million last year...and they just left it out. A few million here or there in reporting, accuracy, who cares, we do our own thing and if you don't like it...you can't go anywhere else. 

Nobody noticed why the numbers didn't add up until The York Daily Record did a story about sales growth in York County and asked why the total from the stores didn't match the total for the county. The PLCB was not able to explain the discrepancy. It took me about 20 minutes to figure it out and I don't have an accounting department or a $66 million computer system.

 

Some retailers tell you to pay less and expect more. With the PLCB we learn to do the opposite.

Privatize. Before more stores disappear!

How to lie like Wendell Young IV

We like to take UFCW Local 1776 president-for-life Wendell W. "The Haircut" Young IV to task for bending, breaking, and shattering the truth about booze sales in Pennsylvania. He's out in the public again as the budget impasse comes down to the close and Senator McIlhinney's Great Step Sideways "modernization" plan for the State Stores is in play. Windy Wendy is spreading the same old manure about changes to the State Store System: any change is bad, we need these jobs, private companies are evil. 

As a public service, we will now present actual statements by Mr. Young, showing the different types of lying and some of the nuances of the same. 

Never gonna happen is it?

The Flat-out Lie 
One of Wendell's favorite type of lie, the flat-out lie is best used in press releases or other forms of communication where the liar can't be questioned with any immediacy. This type of lie is best used to impress or intimidate by showing the supposed knowledge of the liar.

For example, you can find this lie on the union's website "...the PFM found that privatization will cost more than $1.4 billion in transition costs over five years,”

As one of Mr. Young's favorite lies. He has said this numerous times in numerous places, but saying it over and over doesn't make it true. The PFM report  on page 186 lists the Operating and Transition costs as $1.4 billion. Mr. young always seems to forget the Operating part, the costs that are incurred by simply running the stores while they're open. The normal costs of operation, not costs incurred by any kind of transition.

And on page 180 of the report it shows how much just those operational costs are. Remember: these are costs that would be incurred just to keep the state stores running anyway.

From this you can see that keeping the state stores would cost well over $2B over the same time period since there would be no reduction in Operational expenditures over time. (Take the first entry and multiply it by 5.) That's actually likely to be on the low side: current expenses are $470 Million per year and going up.

The Lie of Time Passed

Another favorite lie for Mr. Young is to "forget" that one, two, five, or ten years have passed since he came up with whatever statistic he is talking about, but he still presents that old and often outdated information as current.

In this example, eight years after this CDC report was current (the CDC doesn't even have it up on their website anymore), the UFCW Local 1776 webpage still says that in 2007, PA had the lowest death rate in the country associated with alcohol consumption. They are actually correct about this....for 2007.  By 2009 Pennsylvania's rate had increased over 25% (Page 87 in the report) and by 2012 had gone up even more (Table 19, Page 78), resulting in a rate 30.8% higher than the 2007 figures Mr. Young likes to use. If you imply that the union-run, state liquor stores are responsible for the low rate, then aren't they also equally responsible for the higher rate? 

Just to make things worse for Wendell, of the states with lower rates than PA for the past seven years, two of them are New Jersey and Maryland. (Damn those free privately-run states right on our border...that so many Pennsylvanians use.)

The Lie by Omission
Another favorite used to make statements sound better without telling the whole truth.  We'll start out small with this. "Pa. has Wine and Spirits stores in every one of the state's 67 counties; West Virginia had state run stores in every county; with private companies in charge, five counties now have no stores."

The implication is that some people in West Virginia have to go unreasonable distances to find a liquor store. The truth is that NOBODY in West Virginia has to drive as far as some residents of PA. Why? West Virginia is a much smaller state with much smaller counties. It only makes sense...unless you are a union boss.

Wendell likes to talk about West Virginia and Iowa a lot. Mostly he will tell you about how they lost so much money on privatization, using statistics from the Iowa Alcohol Beverage Division and West Virginia Alcohol Beverage Control Administration.

Only total revenue did not decrease in Iowa. Reading the same PFM report linked above, it was reported for Iowa that: "Privatization was deemed successful from a revenue standpoint, with profits increasing by $125 million over the first 11 years of privatization compared to estimates under State control of the stores. At the time of the 10-year review, the conclusion was that most of the increase in profits was the result of eliminating the state stores and the costs associated with them. " (Page 111)

Oh, and Iowa now has over 1000 outlets with a quarter of our population, and still has less DUI and binge drinking across the board.

How much did West Virginia save when they didn't have state stores to maintain, with salaries and pensions? What about the auction fees for licenses (over $60 million)?. Then there are the business taxes that are now paid which weren't before. I don't see any of that in Mr. Young's calculations.

You know what else he doesn't say?  For eight years, West Virginia state stores and private stores were in direct competition in wine...and the state was losing. If state run stores are better, how could that be? 

You want more? How about the 5,000 family sustaining jobs you hear him talk about being lost to privatization all of the time? Here is another example, and another from 2 years ago.  What he doesn't tell you is that the PLCB says that over 45% of their workforce is classified either part-time or seasonal (page 43). Hardly "family sustaining," and it's not 5,000, either.

So if you hear Mr Young say anything about privatization, it is time to fire up your google-fu and check to see how badly he is lying about it this time.

Privatization is Modernization.

Private Retail, Private Wholesale.

All We Want Is Normal.

Contact your Representative NOW

Do not let Senator McIlhinny and his Big Step Sideways liquor plan become what we will have to live with for decades to come. Make no mistake: if this goes through, there will be no further change to Pennsylvania's liquor and wine sales for years. We'd be much better off staying with the system as it is today for another year and fixing it properly than taking this Frankenstein plan that Senator McIlhinney has been pushing for the past three years. Ask yourself: where did this plan that no one really wants come from? Why is he so sure this is the way to do things? And the most important question: cui bono? Who benefits? 

Write your Representative today and remind them that REAL privatization is what we want. Below is the letter I wrote to my Representative; feel free to use it or change it as you wish.

Dear Representative xxxxxxxxxxx,

I urge you and your colleagues, with the utmost vigor, to reject the half-baked plan of Senator McIlhinny. He has been an obstructionist to the privatization movement for years and continues in that role now.  The citizens want privatization: private stores, selling to private individuals and businesses, while buying whatever they want from private wholesalers. Anything less means a continuation of the gross ineptitude, graft and malaise that is the current PLCB.

The selling of retail products is not part of government, the regulation of those products is. A simple concept that needs to be adhered to.

Sincerely,

xxxxxxxxxxx

Our Goal Is To Be Better Than Utah

The PLCB put out their Fiscal and  Retail Year In Review booklets the other day. Nice to see that they have a goal, and I quote:

"Be recognized as the best-in-class wine and spirits retailer, distributor and regulator in the United States."

Which means that they want to be better than Utah...the only other state (or company) that retails, distributes, and regulates wine and spirits.

They might have to try harder to beat Utah...

The Annual report starts off with listing the Board Members and Directors including my fav, Faith Deihl, who hasn't worked their for a few months now. Don't want to confuse the public by being accurate, after all. It then goes into the whiny phase saying that if the government didn't make them account for all their liabilities, they would have made lots more money. Sorta like you saying your budget is fine until you have to pay your mortgage.

They continue saying how sales went up 4.2%, but what would have been the net (if they didn't have to account for all the stuff they have been ignoring for decades) only went up 2.5%  In other words, even without the accounting changes, expenses went up faster than sales...again.

Continuing to obfuscate reality they almost brag about having 134 different PA wines. However, there are more than 200 PA wineries with well over different 1100 wines and the vast majority of PA wineries aren't carried by the PLCB. The truth has gotta hurt. They also didn't mention why the Department of Drug and Alcohol Programs received 48% less this year, with funding dropping to $1.7 million to educate and prevent problem alcohol use.

The total number of stores went down by one to 603, but since those little One-Stop Shops went up by three, that means four real stores closed. But after 35 years the One Stop Shops hit their highest level ever - eighteen! The PLCB calls that a success.

Another point they don't seem to want to bring up is that Service & Demeanor inquiries went up by 8.4% in just one year. No breakdown this year if they were good or bad. Privatization must be having some effect since salaried employee turnover is up 7% along with intermittent clerk turnover also up 7% to almost 40% now. Finally, the PLCB itself shows that over 45% (an increase over last year) of  their entire workforce are classified as part time or seasonal (page 43), which are hardly "family sustaining" jobs.

Something else they don't say is that while the PLCB offers employees four wine courses, none are recognized by any established certifying agency. Sorta like getting a degree from an unaccredited online school. There still isn't a Sommelier in the entire wine selection process, which one would think should be a requirement when selecting wines for the entire state.  As I pointed out in another post, the PLCB now has 80 "wine specialists" for 603 stores, while Total Wine averages 5 PER STORE. Oh, PLCB, you got a ways to go to be best at anything.

While they try to explain it away, the single most important thing in the entire annual report is:

• Lower operating income of $111.5 million represents a compound annual growth rate (CAGR) of 1.8 percent since fiscal year 2010-11. Operating income has been adversely affected by dramatic increases in benefits costs in excess of sales growth, specifically in the following categories: pension (up 105.6 percent), workers compensation (up 520.6 percent!) and retiree healthcare (up 29.6 percent).
This isn't going to go away either.

Of course, the Retail Year in Review is mostly useless since it only describes what sales are in a police-enforced monopoly where the unqualified select what is allowed to be sold, so that certainly biases what sales would be compared the free market.