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. 

3 comments:

Unknown said...

Step by step, inch by inch....

Lew Bryson said...

And you know... there's an even more convincing relationship in there. Unit sales by licensees in 2018 were up by about 12 million; State Store sales were only down by about 4 million. Sales in private stores show an overall increase, not just cannibalization. That means -- wait for it -- private wine sales MADE MORE OVERALL TAX REVENUE HAPPEN. Just like we said they would.

Albert Brooks said...

It is more than just taxes from sales. Under privatization more people are employed meaning more income taxes, business taxes are collected that the PLCB doesn't pay, less pension debt since there are no more state liquor store workers sucking at the public teat, more selection, real specialists to help not unrecognized state in house specialists, greater satisfaction since some political hack won't be deciding what the entire state is allowed to have and vastly more convenience that the state could ever do. A total of far more benefit to the citizens and the state than a bloated poorly run jobs program like the PLCB.