Monday, August 19, 2019

The Difference is What They Steal From You

I did a short post on this for the "Abolish the PLCB -- Rewrite the Code!" Facebook group. If you missed it there (and you really should join), this is the full version.

I'm about to go out shopping for my Labor Day get-together (planning ahead, as the PLCB minions always nag about). Phone in hand, I'm checking prices, just on the rare case that the PLCB put something I want on clearance. Because that's the only way they ever beat Total Wine's pricing. No surprises: no clearance deals, and nothing I wanted was on sale, or the difference might have been greater.

I usually go to New Jersey, but the Total Wine in Towson, Maryland was closer, and even with the so-called "Free State" (what bitter irony) charging a 9% sales tax on alcohol it worked out to about the same total cost as New Jersey, but with less driving time. This is a big store at 30,000 sq.ft. A true Superstore unlike anything in Pennsylvania. They also sell beer — like any real liquor store would — and as a bonus (for me, at least), they sell cigars, too. If Total Wine has a variable pricing scheme, it at least appears to favor the consumer with lower prices, and not just the owners. Competition will do that.
Here's the Pennsylvania version of variable pricing at work. Jack Daniel's is the largest selling American whiskey nationwide, and in both Pennsylvania and Maryland. If you compare the prices on big brands like that, keep this in mind: every dollar difference is what the PLCB is stealing from you with variable pricing. You know that Total Wine isn't losing money. They're set to overtake the PLCB in total sales shortly, so they must be doing something right, even though they have to deal with competition and not the easy ride of a police enforced monopoly.

Dare to compare:

Kendall Jackson Chardonnay Vintner's Reserve California PLCB $15.99, Total $9.97 - $6.02

Maker's Mark Straight Bourbon Whisky 1.75L PLCB $59.99, Total $44.99 - $15.00

Kim Crawford Sauvignon Blanc Marlborough PLCB $11.89, Total $10.97 - $0.92

Apothic Red PLCB $12.99, Total $7.97 - $5.02!

Tito's Handmade Vodka 80 Proof 1.75L PLCB $34.99, Total $28.99 - $6.00

Jack Daniel's Old No 7 Black Label 1.75L PLCB $46.99, Total $39.99 - $7.00

These are common choices, big sellers. Nothing out of the ordinary or esoteric to skew the results. It does show how badly we are being treated, how badly the PLCB is managed, how badly variable pricing is being abused...and how much the PLCB lied to get it. We told you this would happen. And here it is, in black and white.

End the charade. Privatize.

Friday, August 9, 2019

What could Tennessee Wine and Spirits Retailers Association v. Thomas mean to Pennsylvania?

I am not a lawyer, and some or all of my thoughts could be right or wrong, so maybe this post should be filed under wishful thinking, but...there seems to be a crack in the control wall. It's from the hammer blow struck by the Supreme Court's decision in Tennessee Wine and Spirits Retailers Association v. Thomas, handed down on June 26. Take a look with me and see what you think. 

The future of the PLCB?

The facts of the case:
To sell liquor in Tennessee, you need a license from the Tennessee Alcoholic Beverage Commission (TABC). That's pretty normal...in states where private liquor stores are allowed. But there was a catch in Tennessee. Under Tennessee Code, to get a license, you must have been a resident of the state for two years. There was a ten year residency required to renew a license, so don't plan on leaving. And yes, the same requirements were there for corporations.

The case stems from two license applications that did not meet the residency requirement. The TABC was planning to approve their applications anyway...until the Tennessee Wine and Spirits Retailers Association informed TABC that if they did, they planned to sue. (You know...to protect their competitive advantage.) The TABC preemptively went to court to determine the constitutionality of the requirement. The district court ruled that it violated the dormant Commerce Clause of the U.S. Constitution (Been saying that about the PLCB for years! -- Lew). The Sixth Circuit affirmed, and it was off to the Supremes, because the Association wasn't giving up on their anti-competitive lawsuit. 

Cracking the wall around the 21st Amendment
The Supremes Say: 

In a 7-2 decision (Justices Gorsuch and Thomas dissenting), the court found that: Under the dormant Commerce Clause, notwithstanding the Twenty-First Amendment, a state may not regulate liquor sales by granting licenses only to individuals or entities that have met state residency requirements.

The 21st Amendment has long been held to allow states free rein on writing laws controlling the sale of alcohol within their borders. Section 2 of the Twenty-First Amendment states: “The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”

But a number of Supreme Court decisions since the 1990s -- 44 Liquormart, Granholm, etc. -- have been chipping away at the absolute nature of such control. Tennessee Wine and Spirits takes that quite a step further. The Court’s Commerce Clause jurisprudence holds that “a state law that discriminates against out-of-state goods or nonresident economic actors can be sustained only on a showing that it is narrowly tailored to ‘advance a legitimate local purpose.’” Tennessee’s residency requirement clearly favors residents over nonresidents, hard to justify as a "legitimate local purpose" in the face of the Commerce Clause.

That's just what the Supreme Court found. The Court noted that at the time the Eighteenth Amendment (nationwide prohibition) was ratified, it had already been established that the Commerce Clause prevented states from discriminating against the citizens and products of other states. Against this backdrop, when the Twenty-First Amendment was ratified, “the Commerce Clause did not permit the States to impose protectionist measures clothed as police-power regulations.” Thus, while § 2 of the Amendment gives states latitude with respect to the regulation of alcohol, it does not allow them to violate the nondiscrimination principle.

(A discrimination, maybe, against every citizen and entity who would like to sell alcohol in competition with the state's police-enforced monopoly?)

The Court concluded that protectionism is not a legitimate local purpose and that the residency requirement “has at best a highly attenuated relationship to public health or safety.”

My Opinion
Our state law does discriminate against out-of-state citizens and out-of-state economic actors. It also imposes police powers to maintain and enforce protectionist measures. Read the beginning of the Liquor Code Section 104(a):"This act shall be deemed an exercise of the police power of the Commonwealth for the protection of the public welfare, health, peace and morals of the people of the Commonwealth and to prohibit forever the open saloon, and all of the provisions of this act shall be liberally construed for the accomplishment of this purpose."

In the above decision, the Supreme Court held that "Protectionism is not a legitimate local purpose" and stresses the REGULATORY authority, not monopoly authority of the state. But does that make Pennsylvania's Almighty Liquor Code invalid? That just might be the next question the Court will have to decide. How much does the 21st Amendment give the states the right to impose protectionist, monopoly, discriminatory measures, instead of regulation that allows the intent of the Commerce Clause? How much does it matter if the state allows private retailers or only state store sales?

As I said, I'm not a lawyer. But it does make me think of what might be coming down the road at some point. I think that Costco and Total Wine teaming up will have the resources to get it done and none too soon for me.

Privatize.

Monday, July 29, 2019

Carlisle AlcoAutoFest! Drive Yourself To Drink!

The Pennsylvania Department of Transportation (PENNDOT) in conjunction with the Pennsylvania Liquor Control Board (PLCB) are proud to bring you the first Carlisle AlcoAutofest! Due to the special relationship the PLCB has with PENNDOT, you will be able to drive to the Festival even in cars not sold or ever sold in Pennsylvania!(*1) Cars made before 1933 get in free!

Numerous vendors will be providing samples of drinks you can only "win" (the chance to purchase at variable pricing) by lottery in Pennsylvania. The PLCB will have two on-site stores selling the same things you can buy in every state store at prices only slightly to obscenely above list price. Taste the latest bottlings of Jim Beam White, Jack Daniel's Black, Smirnoff, Captain Morgan, and many other standard brands (that all cost less in Maryland, only 42 miles away) straight from the well-known PLCB overstock trailers sitting in the sun behind the fenced-in area near the porta-potties! It will be an experience you won't find anywhere else in the country!
It's only 5 days. How hot can it get?
PENNDOT will have convenient mandatory breathalyzer stops all along the main drag and at all exit points. They'll be using the same technology as the Wine Kiosks - Amazing, and fun! Safety is  always the PLCB's number one concern (the safety of PLCB jobs, that is). The PLCB's number two concern is money, "profits" (hoho, what a funny joke), so for the first time, the BLCE will be working with the Department of Revenue to collect taxes on bottles "won" by happy participants.(*2)

At checkpoint, show ID, face camera and blow
See your government in action and your tax dollars at work! Take a virtual tour of the PLCB luxury tasting room. Learn how people with minimal qualifications decide what the entire state will be allowed to buy. See how knowing about Livestock, Dairy, and Poultry can get you an executive position with the PLCB! Visit the Career Desk and find out how a career with the PLCB is right for you. None of that product knowledge or RAMP training required, like in the private sector.

If you're in a grumpy mood, the PLCB has just the thing. Take a seat in the Courtesy Training tent (supplied by a real company owned by the real husband of a real PLCB regional manager...which really was nepotism!), and see how PLCB clerks deal with stress like JFK did during the Cuban Missile Crisis (*3)! Ask the PLCB staff why bottles favored by alcoholics are cheaper in Pennsylvania. You'll be amazed at the answer they give.


Souvenirs will be available in the PENNDOT tent. Just take a number and have a seat while you decide what commemorative item your Aunt Martha really wants. Maybe she'd like the "You've got a friend at AlcoAutoFest" plate (shown above in classic Pennsylvania license plate blue and gold), or the "10 Bootleggers per Year" BLCE flag. (I like the "After 85 years only $1,000,000,000 in Debt" picture frame myself.)

See you there!

(*1) You just have to prove that all PA taxes were paid the year of importation into the state.
(*2) Taxes based on what the PLCB would have charged if they had any product, not on list price.
(*3) That was a real lesson in the original Courtesy Training contract.
The Carlisle AlcoAutoFest is not a real event. But it's about dumb enough for the PLCB to try it. 

Monday, July 22, 2019

Don't We Deserve a Better Board?

If we have to play by the PLCB rules...could we at least get a better set of players?

Back in 2015 in the Annual Report (page 2), the vision of the PLCB was stated as: "Be recognized as the best-in-class wine and spirits retailer, distributor and regulator in the United States."

Which meant that they wanted to be better than Utah, the only other wine and spirits retailer, distributor, and regulator in the United States. Not a high bar, considering Utah is practically an anti-alcohol theocracy. Four years later, how are they doing? Let's start at the top and go from there.

The Pennsylvania Liquor Control Board has three members, none of which over the past 85 years has any previous knowledge of the liquor industry or about running a 2 billion dollar enterprise.

We have a Chairman who has no experience with even a million dollar business, let along something the size of the PLCB. He did make it to Congress, and served on the Livestock, Dairy, and Poultry subcommittee, and Transportation and Infrastructure committee, before the citizens decided that he wasn't doing the job they wanted and voted him out. Since there isn't much call for somebody who's chummy with with politicians, and knows a little about Livestock, Dairy & Poultry, the PLCB was a perfect place to put somebody who was owed a couple of favors.

Governor Corbett appointed Republican benefactor Mike Negra to the board. Mr. Negra does have a history of being involved in multiple successful businesses, so at least he has a concept of what is going on, but no actual hands on with the liquor business, or anything the size of the PLCB.

Lastly we have the newest member and first woman ever to serve on the board, Mary IsenhourAlthough you wouldn't know it by looking at the PLCB website. Here it is, over a MONTH after her confirmation, and the PLCB still hasn't decided if she rates being included with the other board members. (Let's see how long it takes for them to include her once this is published.)*

Keeping the public informed through transparency is sadly not the way the PLCB works.  Remember that it took over 100 days before they removed Michael Newsome, and that was only after I poked them with a stick again. Newsome might still be there if I hadn't said anything.

What are Isenhour's qualifications? She was Gov. Wolf's Chief of Staff and a campaign aide. Her business experience is like the others, desperately lacking in knowledge and size. She replaced Michael Newsome, who was Gov. Wolf's CFO in the furniture business -- can't get more qualified to sell liquor than that...or can we?

Remember how we were comparing the PLCB to Utah's State Store System of Stores? So how does the Utah DABC stack up? They have a seven member board that's appointed, but there is also an advisory board of seven members...who must come from defined specific areas of expertise. The Governor can't just willy nilly pick his favorite dog walker to sit on the Advisory Board. Utah specifies that the advisory board members are selected from the following areas of expertise.

Retail Alcohol Industry — Wholesaler Industry — Manufacturing Industry — Restaurant Industry — Utah Substance Use and Mental Health Advisory Council — Alcohol or Drug Related Enforcement — Division of Substance Abuse and Mental Health — Alcohol or Drug Abuse Prevention and Education
The Utah version of a Superstore
Another view. Pretty nice, right? 
It is almost certain that since this system was adopted every Utah DABC Advisory member is far more qualified than any that have ever been appointed to the PLCB. This doesn't mean that Utah hasn't had their share of people of limited competence on the Liquor Board. The Governor selects the seven members of the Liquor Board, so it can be and likely is as full of hacks and cronies as Pennsylvania. The difference is that the Utah board can't go off the rails making arbitrary decisions without an adult from the Advisory Board watching them. No deciding that 12 packs are cases, no robot wine armies, no variably price screwing the citizens, and no being over a Billion in debt. Oh, and they have had women on the Boards for years already.


End the PLCB jobs program - PRIVATIZE


*True to form it only took the PLCB 42 days to finally put up a picture.  Not quite as bad as the 102 days it took to take down the board member she replaced.

Wednesday, June 26, 2019

The PLCB. A failure of an idea and the beginning of a fiefdom.

Sometime in December of 1933, then Pennsylvania Governor Gifford Pinchot sat down to write an editorial piece for the Rotarian magazine [you can read it, starting in page 12*]. He laid out his reasons for "The Pennsylvania Plan," his reasons why he felt that the government had to restrict alcohol for the citizens, because they couldn't control themselves. Let's look at the points he made in The Pennsylvania Plan, and see if Pennsylvania needed them then...and if we have any need of them now.

Pinchot said that Pennsylvania's liquor control legislation is dependent on five cardinal points.

  1. The saloon must not be allowed to come back.
  2. Liquor must be kept entirely out of Politics.
  3. Judges must not be forced into Liquor politics.
  4. Liquor must not be sold without restraint.
  5. Bootlegging must be made unprofitable.

Ardent environmentalist; ardent prohibitionist
After a quick look, you might conclude that all of his points have failed except #4. (We do our own bootlegging these days, thanks to the big liquor stores on the New Jersey, Delaware, and Maryland borders.) However, during the 85 years since Repeal, the meaning of the language in some of the points has changed.

Take point #1: saloons pre-Prohibition were in a large part controlled by the brewers. Prices were kept low, so demand was high. There were enticements like free food or snacks for those buying beer, which is why you see strangely detailed happy hour laws about how much food can be given away, and what kind. Bars were "tied" to the brewer that backed them; the only way you could get a Miller instead of a Bud, for instance, was to go to another bar. The corruption this caused, both in business and in politics from the free-flowing graft money produced, was one of the big drivers for Prohibition. 

That all changed with the three tier system in place in Pennsylvania (and most of the United States) today. That created three defined "tiers:" producer/brewer, wholesaler, and retailer, and forbid owners of one tier from owning businesses in the other two. No "tied houses." So did the saloon come back? Yes, but not in the same way, and that hasn't been all bad for the consumer. We'll call this point a draw.

In point #2, Pinchot was talking about patronage, the "spoils system," in which state jobs were handed out as political favors. He's already planning the huge jobs program of the State Store System of Stores. Point #2 meant that employees would be selected based on skills testing instead of loyalty testing; who they knew and the favors they could do. This was mostly true for the rank and file store workers, not so much for the managers, and not at all for the Board who have all been political hacks, cronies, and lawyerly hangers-on since day one.

He also thought that this new system would keep politicians from buying votes with booze, and thus fall under the control of distilleries and brewers. Did that work? Hard to say, because how people drank changed during the Depression. More drank at home after Repeal, because they could buy at a local store instead of having to go out to a speakeasy or club. This all changed again once the stores were unionized. Now the money flowed from union coffers into politician's pockets to buy votes to keep this archaic system alive. Although the jobs are still subject to civil service rules -- despite recent efforts to change this, under the guise of "improvement" -- overall this has failed.

Money, money, money, moooooney...
Point #3 is keeping the dollars, booze and votes away from judges and their decisions. Now we have judges working for the the PLCB...well, mostly 'working.'  I wonder what Gifford would say about that. This has worked, but largely because judges working on booze have been ring-fenced, as the British say.

Point #4 was probably true for the first 70 years of the State Store System of Stores -- ah, fond memories of the completely customer-unfriendly counter stores! -- but no longer. When the board that was put in place to control drinking is now advertising, having sales, sponsoring fests of various kinds, even trying to sell booze by robot! -- you can say that the restraint is limited at best.

Point 5 is pretty much irrelevant. As we said, bootlegging went from criminal enterprise to an everyday crime cheerfully "committed" by private citizens. Governor Pinchot thought that the state would be able to sell alcohol for less than the bootleggers, and they mostly did. But the power of the police-enforced monopoly and pure greed kept them from selling wine and spirits for less than the border states, which made them complicit in making criminals of everyday citizens.

Governor Pinchot was a leader in the Dry movement and was a teetotaler himself.  He really thought that his plan would have "support of the vast majority of the citizens of Pennsylvania."  But he never actually let the people decide, and as we all know, there has never been a single scientific poll that showed the citizens to be in favor of the State Store System of Stores.

Looking back to what was envisioned by Pinchot, you can see how corrupt the plan became over time. Millions of dollars were "...to be made available to school districts to help schools that were in danger of being closed." Even if we sucked out every penny possible from the PLCB now, it would only be about $90 for every taxpayer** this year. That's certainly not a rate the PLCB could keep up, and not really enough to notice in my almost $5,000 tax bill. Pinchot also suggested that if an item wasn't available the system "would have to get it." Still failing at that one 85 years later. And don't forget: there were THREE TIMES as many licenses available back then as now. Where did we go so wrong, Gifford? A commonwealth turns its thirsty eyes to you.


Unfortunately, not everything he proposed went...wrong. The Governor said that "Whisky will be sold by civil service employees with exactly the same amount of salesmanship as is displayed by an automatic postage stamp vending machine." Sure enough, that is exactly what we have in almost every transaction! He also said that there will be no artificial stimulation of the demand for liquor. No PLCB sponsoring a flower show trying to get women to drink, no staying open longer for hunting season, no bottle signings by third rate celebrities.

As a naturalist, Gifford Pinchot was probably second only to Teddy Roosevelt in public service. (He was the first professional forester in America.) His main fault was that he never actually wanted to know what the citizens thought of his Pennsylvania Plan, because he thought he knew what was best for the masses.

And that is the thing about the PLCB and the Almighty Liquor Code that has changed the least.



*If you get the chance, read the "Regulated Licenses, Retail Plan" by Frank J. Loesch on page 14.

** 10.1 M adults, 68.6% are homeowners, ~90% of them pay some property tax

Thursday, June 20, 2019

Revisiting some numbers that you won't see the PLCB publish

I first posted Numbers, Numbers, Numbers (some State Store numbers that are always missing in the PLCB's annual report) three years ago. It might be good to have a second look to see if there was any improvement at the PLCB.  The original findings are (in parentheses).

1) The average amount of non-tax revenue returned to the state per unit (single bottle or box) of wine or liquor - $1.25 (73 cents) Beware: this is based on the so-called "profit" turned in to the General Fund, which has little to do with actual profit. It's simply the amount asked for by the administration. We know that reserves were dipped into for 2018, so this number is skewed even more than it normally would be.

2) Not counting the actual cost of the item, what the PLCB spends to put one item on the shelf - $2.91 ($3.06)

3) What PA spends to put an item on the shelf, including the average cost of the item - $10.78 ($11.40)

4) What it costs with taxes included to put one average item on the shelf - $14.48 ($15.21)
Note: While it looks like items 2,3, and 4 are an improvement...this is due to the huge numbers around just 3 items: Fireball 50 ml (+750,000 unitls) and Tito's 50 ml (+175,000 units) and Tito's liter (+380,000 units). When you increase mini sales by over 900,000 units, it skews the average cost and tax per unit. 
  
5) Average real estate rental cost per store (2018) - $1663 a week ($1432)

6) Industry average profit margin 8.1%; PLCB 2018 profit margin 8.9% (6%) The majority of this increase is due to the auction of the "Zombie" liquor licenses, not because of actual retail sales.

7) PLCB effective markup, not counting any taxes - 46.7% (45.36%)
This is because of variable pricing. Now that almost all items fall under that, expect this to rise even more next year.

8) State and federal government workers' average benefits as percentage of salary - 36.4%.
PLCB benefits as percentage of salary - 85-104% (as stated by Board members during the Appropriations hearings in the Senate).

9) Percent of sales actually checked for proof of age - Unknown. 
The PLCB did not include any information about carding in this year's summary. It is still probably under 2% as it has been in years past.

10) Retail Wine Specialists as a percentage of PLCB workers: 2.2%  (1.7%) - Only a gain of 20 in three years. Retail Wine Specialist as a percentage of Total Wine store employees - ~20%


Sources

1. - $185M returned to General Fund plus $30.5M for BLCE plus $5.5M for Alcohol Awareness programs plus $2.5M for Drug & Alcohol programs divided by 178.9 million unit sales. We were told "Modernization" will increase profits by $180M. Is anyone surprised that we're not seeing anything close to that? (Keep in mind that the $185 million is a very flexible number, mostly representing what the Legislature requires from the PLCB, whether it's actually "profit" or not.)
2. - Operating expenses (not counting the cost of wine and spirits) of $520M, divided by units sold. The lower this number, the more efficient the organization is.
3. - Operating Expenses plus Cost Of Goods Sold (COGS) = $1.928B divided by units sold 178.9M.
4. - Gross sales ($2.59B) divided by total units sold. $3.47 in tax for every bottle or box sold is the average of sales and Johnstown Flood Tax; more expensive bottles can be much more.
5. - Rental expense for all operating leases $52.2M divided by 604 stores. Of course, this cost will increase as the PLCB tries to move into higher traffic areas.
6. - IBISWorld, May 2013, Operating Income divided by Sales Net of Taxes. With increased pension costs, workers comp, salary, and benefits increasing, this won't improve any time soon.
7. - COGS divided by gross profit. This fat markup of 46.7% still isn't going to be enough to cover increasing operating costs as the PLCB had to go into reserves again to pay the $185M requested by Gov. Wolf
8. - US Dept Of Labor - Bureau of Labor Statistics, 2016 PA Senate Appropriations hearing.
9. - No information about carding is mentioned in this year's documents. You have slightly better than 98% chance of not being carded (compared to a 0.0% chance at private stores like Wegmans), and since the State Stores are never checked by police for underage compliance...how effective are they?
10. - 4999 (2/15/2019) divided by 111 (www.pennwatch) There appear to be no Spirits Specialists in the PLCB.
11. - Over 5000 employees and 800+ Wine Specialists (Total Wine wiki ). The PLCB has ONE retail wine specialist for every 5.4 stores, Total has SIX at each store.

Monday, June 3, 2019

Just Imagine...

Imagine that the Commonwealth controlled meat sales like they do with wine. Crazy, sure, but the State Store System of Stores doesn't make sense either. Just go with it. Along with the butchers who came in every day and cut the steaks and chops and ground the burger, there was this one guy, The Meat Master, who got to select special meats from all over that you couldn't normally find in Pennsylvania, mainly because the Meat Control Board didn't know what they were. You know, like the guy at the PLCB who picks the Chairman's Selections.

This Meat Master, he must really know his meat, right? He should be able to tell Choice from Wagyu with just one chew, have a couple of years as a certified master butcher, so he knows first hand all the different cuts of meat available: beef, pork, poultry, game, sausage and charcuterie. He's the Meat Master, you'd want to be sure he knows what he's doing so that the citizens of Pennsylvania get the absolute best meat possible.

Yeah, except the real Meat Master has only read about meat. He's eaten lots of burgers and pork chops, and even had some fine hand-cut Delmonico steaks. But he never actually had to prove his ability by being able to differentiate different cuts and grades of meat by taste. On top of that, his certification test to identify different cuts was all home study and he never actually did any work in a kitchen or butcher shop. He has the lowest possible certification as a butcher, but he's never so much as boned a chicken.

You've probably guessed; this is about wines at the the PLCB, not meat at the Meat Control Board. The new head of the Chairman's Selection, Josh Hull, is a Certified Specialist of Wine. It sounds pretty fancy, but what does it actually mean?  A CSW is the lowest certification provided by The Society Of Wine Educators (SWE), the bottom rung of one of the four main wine certification organizations. 

The CSW certification has no official class time required to sit for an exam. It is entirely an independent study program. After passing an exam, the credentials are appended to an individual’s name, which is appealing for those aiming to make themselves more marketable in the wine and spirits industry. It's...about one step above being a mail-order preacher. It is better than the in-house PLCB certification, but that ain't saying much.

If you think that this guy is the standard that the rest of the wine world is striving to achieve, that pretty much sums up what a lot of the problems are at the PLCB. Delusion seems to be at or near the top of the list. My waiter the last time I was in DC * had better credentials than the guy selecting Chairman's Selection wines. How do I know this? He had his pin on for completion of the introductory Sommeliers course.

For some of the top wine programs it takes years of study, multiple exams, hands on tasting, and having to prove your expertise. The Institute
of Masters of Wine "seeks to educate those on the leading edge of the wine world." That pretty much explains why there are none in the PLCB. We wouldn't want that for Pennsylvania would we?

The reality is that the Chairman's Selection Program often buys wine that didn't sell when faced with free market competition. Consumers - en masse - already decided that there are or were better wines available at those particular price points. 
That isn't to say they are bad wines, just not popular
 
What do you do when you have a product that doesn't sell?  You put it on sale, perhaps try to offer it in other places that wouldn't normally carry it like...The Dollar Store. Or Pennsylvania. If this stuff was so good, why didn't the super-duper wine selectors at the PLCB select it in the first place?

The PLCB should have hired an already highly certified and qualified person who could then train up their platoon of wine buyers and wine specialists past the "PLCB standards" to industry recognized standards, thereby improving the consumer experience. Remember us? The consumers? 


Pennsylvania is a dumping ground for wine the rest of the country didn't want. Shouldn't we at least have somebody who is the absolute best picking out the gems from the dregs?




*Bourbon Steak at the Four Seasons - highly recommended especially if somebody else is paying for it. BTW, they have 3 Sommeliers on staff, the PLCB has none.

Monday, May 13, 2019

How Long Does It Take?

Two weeks ago I posted about how the PLCB inventory accuracy rate is getting worse. As I mentioned then, I wrote them an email with the link to the story, explained what their mistakes were, and gave them the official government regulations that explain how to determine what spirits should be called. If I gave them any more help, I would have to fix the inventory myself.

Anyone with moderate typing skills could make these corrections in about three minutes. Two weeks should surely be enough time, even with supervisory oversight. Let's see how that worked out.

PLCB - third-rate data entry.
1. 510608 Berkshire Mountain Distillers Bourbon Whiskey - This one is pretty easy. If it's a bourbon, it's not a blend: it's a bourbon.
NOT FIXED: The PLCB still calls it a bourbon, but still categorizes it as a blend.

2. 153 Brixton Bourbon Whiskey Mash Destroyer - I could almost forgive this one, because it's a 'blend' of bourbon and rum; where do you put that? But they couldn't even get the name right! It isn't Brixton Bourbon Mash Destroyer, it's Brixton Mash Destroyer. Why do they constantly add words that aren't there? Put this in SPECIALTIES, but it's not BLENDED WHISKEY.
FIXED: While still in the Blended whiskey section they did fix the name and changed the description enough to show that at least an effort was made.

3. 31328 Clyde May's Bourbon Mash Whiskey - There is no Clyde May's "Bourbon Mash Whiskey." The Clyde May brand has a Straight Bourbon -- which is a bourbon -- and a "Alabama-style Whiskey" -- which is bourbon with apple added, which makes it SPECIALTIES -US, or WHISKEY...
FIXED: Amazingly, the PLCB not only corrected the description but put it in the correct category too.

4. 608012 Crater Lake Rye Reserve- Again, not blended. It's RYE. Pretty simple. Who's making mistakes this simple and stupid? Sorry/not sorry: there's no other way to describe that.
NOT FIXED: The PLCB didn't do anything.


5. 559141 George Dickel Whiskey Single Barrel - Reading comprehension and product knowledge required; no wonder the PLCB got it wrong.  If it is single barrel, what are you blending it with? Imagination? There should be a TENNESSEE WHISKEY category. Most other Tennessees are in WHISKEY, which is such a catch-all it's all but worthless.
TOSS UP: They didn't fix it...but they didn't keep the listing either. The item has disappeared.

6. 528555 Hooker's House Organic Rye Whiskey - There is no record of a "Hooker's House Organic Rye Whiskey" on the Internet...except connected to this mistaken PLCB record. Again, why are you adding words that aren't even there? In any case: RYE, not a blend. Okay?
NOT FIXED. Is two weeks just not enough time? This was one of the easy ones!

7. 34278 Jack Daniel's Sinatra Select Tennessee Whiskey 90 Proof - Given their track record, is anyone really surprised that there's a Jack Daniel's bottling on this list? I've been mentioning this particular one for a few years now. Jack Daniel doesn't make blended whiskey, but that doesn't stop the PLCB from getting it wrong for the past 3 years.
NOT FIXED: Was there any doubt the PLCB would continue to screw up this entry? It is part of their DNA to have at least one Jack Daniel's product wrong.

8. 504228 Jim Beam Eight Star Kentucky Whiskey 8 Year Old - They almost got this one right: it is a blend! But as I mentioned over a year ago...it is not 8 years old. Where is that on this very simple label? Nowhere that I can see.
FIXED!
I wonder who had to read the label and make the command decision that it doesn't say 8 years old.

9. 446 Wigle Phil's Shadow Rye Whiskey Finished in Maple Syrup Barrels - Not a blend. Again, at the very least, a RYE.
NOT FIXED: Not one of the three ryes on the list were fixed. Does Rye confuse the PLCB?


It's ONLY been two weeks!
Pretty weak track record. Two weeks, ten whole work days, and only three entries fixed, four if you want to be generous. I guess none of the managers are the "hands on" type, and not very good motivators. Typical PLCB.

There are undoubtedly THOUSANDS of bad entries in the PLCB inventory; I haven't even looked at the wines. If they can't fix even half of a small sub-group when given all the information...imagine how badly they are doing when they have to find out and correct these things through their own means.


This access to 'all the wine and spirits in the entire system' is supposedly one of the advantages of the State Store System of Stores. You don't have to chase supply and price through hundreds of individual stores, like in those terribly disorganized "free" states. If the database is so badly disorganized that you can't find what you're looking for...where's the advantage?

There is none. Privatize now.

Monday, April 29, 2019

They only fix it if you poke them with a stick

Eighteen months ago I wrote in "PLCB Stupid Inventory Part 100" how five out of only 53 items in the "Blended Whiskey" category of their product database were...in the wrong category, about a 10% error rate. If you got 10% of your job wrong every day, would you still have that job? Would your boss who accepted that rate of failure have his job?

That's when I wrote that post; I started poking them with a stick.


So 18 months later...the PLCB error rate in Blended Whiskey is now over 13.8%. Way to go, guys. The PLCB has two ways to look up things. The so-called flat file inventory that I use here, which has everything in one place, or the slower, seemingly less accurate one on the FWAGS website, which is just as bad, in its own way. The flat file inventory also allows you to look up things by type, which is what I'm doing below.

Tell you what. I'm feeling generous today, so I'm going to list a few items that they can't seem to figure out and tell them why they're marked wrong. I'll even send them the list. But you know...I'm pretty sure the next time I check, they'll still be wrong, and there will be new things wrong too. But maybe they'll learn. Maybe.

All the federal regulations that pertain to whiskey classification can be found online in the Electronic Code OF Federal Regulations. That's how you know what kind of whiskey you have, and how it's going to be labeled. Maybe somebody in the PLCB has read it, but I have my doubts.

Most of these won't even require a reading of the regs. They're pretty simple. Let's have a look at what's wrong with these entries in the Blended Whiskey category.

Now this is bourbon!
1. 510608 Berkshire Mountain Distillers Bourbon Whiskey - This one is pretty easy. If it's a bourbon, it's not a blend: it's a bourbon.

2. 153 Brixton Bourbon Whiskey Mash Destroyer - I could almost forgive this one, because it's a 'blend' of bourbon and rum; where do you put that? 

But they couldn't even get the name right! It isn't Brixton Bourbon Mash Destroyer, it's Brixton Mash Destroyer. Why do they constantly add words that aren't there? Put this in SPECIALTIES, but it's not BLENDED WHISKEY.

3. 31328 Clyde May's Bourbon Mash Whiskey - There is no Clyde May's "Bourbon Mash Whiskey." The Clyde May brand has a Straight Bourbon -- which is a bourbon -- and a "Alabama-style Whiskey" -- which is bourbon with apple added, which makes it SPECIALTIES -US, or WHISKEY...

Which leads you to ask: why does this database have a LIGHT WHISKEY category that has no entries, but no WHISKEY (FLAVORED) category...in 2019? 

4. 608012 Crater Lake Rye Reserve- Again, not blended. It's RYE. Pretty simple. Who's making mistakes this simple and stupid? Sorry/not sorry: there's no other way to describe that.

5. 559141 George Dickel Whiskey Single Barrel - Reading comprehension and product knowledge required; no wonder the PLCB got it wrong.  If it is single barrel, what are you blending it with? Imagination? There should be a TENNESSEE WHISKEY category. Most other Tennessees are in WHISKEY, which is such a catch-all it's all but worthless


6. 528555 Hooker's House Organic Rye Whiskey - There is no record of a "Hooker's House Organic Rye Whiskey" on the Internet...except connected to this mistaken PLCB record. Again, why are you adding words that aren't even there? In any case: RYE, not a blend. Okay?

7. 34278 Jack Daniel's Sinatra Select Tennessee Whiskey 90 Proof - Given their track record, is anyone really surprised that there's a Jack Daniel's bottling on this list? I've been mentioning this particular one for a few years now. JD doesn't make blended whiskey, but that doesn't stop the PLCB from getting it wrong for the past 3 years.

8. 504228 Jim Beam Eight Star Kentucky Whiskey 8 Year Old - They almost got this one right: it is a blend! But as I mentioned over a year ago...it is not 8 years old. Where is that on this very simple label? Nowhere that I can see.

9. 446 Wigle Phil's Shadow Rye Whiskey Finished in Maple Syrup Barrels - Not a blend. Again, at the very least, a RYE. 


I bet the answer is down here - I've looked nowhere else!
So there you have it, PLCB. The gauntlet is tossed. Clean 'em up. Oh, and don't fall back on the old excuse that you are told by your suppliers what these are. Just read the freakin' label, and copy it into the database without editorial additions. Easy-peasy. Get it done, or I'll have to get that stick out again. 

Tuesday, April 23, 2019

A Look Back At The Wine Kiosks

We have a guest post today. A member of our Facebook group -- Abolish the PLCB -- Rewrite the Code! -- Wende Phifer Mate, wrote a remembrance of the wine kiosks. It was so good, we decided to run it here (with permission, of course).

Great moments in PLCB history. 

Did anyone ever try to purchase wine from one these kiosks? I lamented the passing of them because they provoked more laughter than most comedians do.
Among the highlights:

  • The instructions - not bad if you had an hour to kill.
  • The ID checker - you had to put your drivers license into a slot, then look into a camera in order to pass on to the next test. Hard to do with a straight face.
  • The breathalyzer - yes, you had to breathe into a weird tube before the machine would allow you to proceed. It did not always register that it had been breathed into until you were about to pass out from trying.
  • Choosing your wine - you had to wade though the whole list of available wines on the touchscreen. There was no other way to make a selection. Needless to say, it took some people FOR...EV...ER to get through this part. 
  • The delivery system - It was like those candy machines that push the item forward until it drops. Has there ever been a more stupid idea! I watched one of my bottles crash to the floor inside the machine before it got to the collection window. I read later that this was a very common occurrence.
  • The bags - Plastic bottle bags were provided but three that I pulled out had slits in the bottom. Bottle goes in, bottle goes right out the bottom. (That's another sale!)
In short, they worked just as you'd expect they would, coming from the masterminds running the PLCB.


We miss them too, Wende, but like some of Joe "Da CEO" Conti's best moments, they are a gift that keeps on giving. Whenever the PLCB starts to seem reasonable, just remember: they're only one brain-fart away from another great idea like the Wine Robot Army. That's why we say:

Privatize.

Monday, April 22, 2019

As required by law......

There are numerous "newswires" available; the majority of them just reprint press releases from businesses. So and so got promoted, Corporation XYZ broke ground for a new building, that sort of stuff.

But in the insecure world of the PLCB, where every single scrap of good news is treated like a cure for cancer, we get crap like this, telling us that the PLCB gave back license fees to municipalities. That's a press release essentially saying "The PLCB is going to follow the law." It even says, right in the release, "As required by law." Imagine if the Department of Corrections put out press releases saying, "As required by law, inmates were released at the end of their sentence." Or if PennDot decided to let us all know, "As required by law, plow drivers will follow traffic signals."

Maybe the PLCB is trying to make up for all the news that's being reported by independent journalists about graft, nepotism, back door deals, lack of ethics, destroying evidence, shoddy record keeping, wine kiosks, Water Heater Joe, overcharging and variably screwing the citizens. I can think of better ways to do it, though. Here's one example for businesses to follow:
Can you imagine the PLCB actually doing this?
Now I'm all for transparency in Government. That's another reason I don't like the PLCB: they are the least transparent of any state organization. Want to find out how much the Department of Education paid for a chair? You can actually look at the bids, see who won, and what the bid was for those chairs. But if you want to find out how much the PLCB paid for that case of vodka...it's suddenly become proprietary information. It wasn't before Act 39, and there is nothing in Act 39 that makes it proprietary; the PLCB just decided it was so. They say this is so Company A doesn't know what Company B is paying, and that makes negotiations fair.

That would be true in the open market...but not in a government-owned and operated monopoly. You see, it doesn't matter if either one of those companies know what the PLCB is paying them - they have nowhere else to go if they want to sell in Pennsylvania. Each product is a game of chicken between the PLCB and the supplier. The PLCB says, we'll only pay this much or we won't carry it, and the supplier says no, you'll  pay this much or you won't carry it.

So who blinks first? The PLCB, because they won't be providing what the consumer wants (even more so than now), or the supplier, who might lose overall sales? Add to that the knowledge that both sides know what a suitable substitute* would cost the PLCB, and you have price competition. The PLCB doesn't know if the price they paid for that substitute is equal to or above what the supplier they're currently negotiating with is willing to take and the supplier doesn't know if the price they are offering is above or below what the PLCB is willing to take. Of course, all that requires work and if done fairly, would benefit the consumer and so is antithetical to the PLCB way of doing things.

Remember: the Board members ultimately make the decisions about what you get to buy. They are political cronies with no experience in the liquor business; almost every one has been a lawyer with political connections. And you don't have any say in who they are. These aren't elected positions, and they aren't hires, subject to the civil service regulations. The one good thing you can say is that they aren't full time employees, so they can't screw things up 24/7.
The lack of qualified people on the Board is mostly the fault of the Governor - all of them since 1934. They could appoint people with industry experience...but they don't. Instead, they use the PLCB to pay back supporters, cronies, contributors, any non-qualified person they can find. And the legislature rubber-stamps them, which makes them culpable, too.

We need to change the system to something that works for the people. A system that allows freedom of choice, allows convenience, allows competition, and allows government to focus on regulation. We need privatization


*A suitable substitute is something that satisfies the consumers desire for a product or type of product. For example, Nikolai would be a suitable substitute for Vladimir vodka on the low end, and Ciroc for Grey Goose on the higher end.

Monday, April 15, 2019

Chalmers Selection Event Wine, For all your PLCB events!

HARRISBURG, Pa., April 14, 2019 /PRNewswireless/  

The Pennsylvania Liquor Control Board Fine Wine and Good Spirits State-Owned Monopoly Retail Stores Of Distinction is proud to announce exclusive Pennsylvania rights to the new Chalmers Reserve Event Wine. Presenting a bottle of Chalmers Reserve Event Wine to Chairman Tim Holden (represented for the event by a cardboard cut-out figure), Director of Wines (Other) Sue Broomhall stated, "Everybody at the PLCB knows that the better the commercial, the better the wine. One bottle of Chalmers and your party will certainly get started."

"So true!" shouted a group of non-certified wine specialists from the PLCB's luxurious tasting room. 

"And Pennsylvania consumers won't even have to pay the $1 a bottle cost mentioned in the commercial" Ms. Broomhall continued. "With the flexible pricing authorization of Act 39 allowing us to negotiate prices and markup, we are proud to bring this to Pennsylvania for only $14.99 a bottle!"

For further information on this and other exciting items soon to be seen at the State Store System of Stores, or maybe at the return of the Wine Kiosks®, please contact your local store. They'll be glad to provide whatever they decide you need. 



Thursday, April 11, 2019

Death By a Thousand Cuts: it's working!

Thousand cuts, baby. That's how I like my hoagies.
Seven years ago, when UFCW 1776 President (For Life) Wendell W. "Windy Wendy" Young IV was faced with the reality of wine sales being allowed at grocery stores (and the possibility of wine sales at beer distributors, but the beer distributors bobbled that), he predicted that it would mean the end of the State Store System. "Young says allowing wine to be sold by private sector would take away business from state stores and be the 'death by a thousand cuts' to the state store system."

Such drama! And then it went through, and Wendy didn't say nothing more about it. In fact, The Haircut That Walks Like A Man hasn't had much to say since Act 39 went through in 2016, probably because he figured flexible pricing was going to be such a bonanza for covering the constant rise of operating costs that his job was done. 

But that "thousand cuts" call is coming back to haunt him...because it looks like he was right

Last week, I asked the PLCB for wine sales figures from the past three years for the State Stores, private sales, and overall sales. It's an interesting picture. I had to break it up to fit it into the format of the blog; here's a comparison by unit sales, the number of bottles sold. "Non-licensee" is the State Store sales; "Licensee" is sales through licensed private retailers: bars, restaurants, resorts, and grocery/convenience stores (that includes by-the-drink sales, which you would assume are relatively steady year-on-year).

2015 is prior to the shift to bottle sales at the licensees; 2016 was a partial year, and 2017 is the first full year of such sales. Notice the huge jump that year: 39.9% rise in licensee sales, followed by a 17.4% rise in 2018. Look at the 2015 numbers vs. the 2018 numbers: they almost doubled in three years. Meanwhile, the State Stores were sucking wind: a 4% drop in 2017, a 3.7% drop in 2018.

Calendar YearCustomer TypeUnit Sales% Change From Prior Year
2015Non-Licensee67,034,168N/A
2015Licensee13,331,217N/A
2015Total80,365,385N/A
2016Non-Licensee68,507,8842.20%
2016Licensee15,282,49214.60%
2016Total83,790,3764.30%
2017Non-Licensee65,797,156-4.00%
2017Licensee21,377,50539.90%
2017Total87,174,6614.00%
2018Non-Licensee63,333,698-3.70%
2018Licensee25,099,20817.40%
2018Total88,432,9061.40%

How about dollar sales? Looks about the same, though the licensee dollar sales actually grew a bit more than volume sales did, each year...which means the State Stores are moving more bulk tanker stuff, and the private stores are skimming some of the higher-ticket sales. A thousand cuts, indeed. 

Calendar YearCustomer TypeDollar Sales% Change From Prior Year
2015Non-Licensee$835,985,290N/A
2015Licensee$138,374,473N/A
2015Total$974,359,763N/A
2016Non-Licensee$862,634,3393.20%
2016Licensee$160,312,44015.90%
2016Total$1,022,946,7805.00%
2017Non-Licensee$827,676,034-4.10%
2017Licensee$225,796,24240.80%
2017Total$1,053,472,2763.00%
2018Non-Licensee$812,080,965-1.90%
2018Licensee$266,808,65518.20%
2018Total$1,078,889,6202.40%
Private stores = more state revenue, more jobs

Overall sales are still growing, which is going in the PLCB's pockets because they're still effectively the monopoly wholesaler, but look at how much they grew when people could buy in private stores! Imagine if we went crazy and allowed private liquor sales as well! We'd be rolling in the (Johnstown Flood Emergency) tax revenue; increased sales would clearly eliminate any need for a Washington-style tax increase. Oh, and the PLCB press secretary, Shawn Kelley, happened to mention that they "understand from anecdotal reports from the Pennsylvania Winery Association [that Pennsylvania wine sales] have grown significantly since grocery and convenience stores started selling wine." I'll just bet they have. 

No need to go on; the numbers speak for themselves. I never thought we'd say this, but...Wendell was right. It's not all that shocking, or that brilliant a prediction, though. Give the people a choice, and they'll walk away from the State Stores. Give us the choice on spirits, too, and see how long it is before State Stores start withering and dying on the vine...so to speak.

Privatize.