Even more wine incompetence

I've been told that using only the top 10 of the Wine Spectator list is too selective, and if the number of wines checked was a larger sample, the PLCB would do better. I agree: as we get closer to mediocrity, the PLCB should do better because that is where their strength lies.

But how much better? Not that much; in fact, not at all.  Have a look at the next 20 wines in the Wine Spectator top 100 list. With three times as many top wines to have been selected by the PLCB's "experts," they only get two more on the State Store shelves, and three by SLO special order only.

(This is broken down by In Stock (Y/N), How Many Stores Carrying, Item Name)

Yes	3%	Hamilton Russell Chardonnay Hemel-en-Aarde Valley
No		Abadia Retuerta Selección Especial Sardon de Duero
No		Reynvaan Syrah Walla Walla Valley In The Rocks
No		Carlisle Zinfandel Russian River Valley Montafi Ranch
No		M. Marengo Barolo Bricco delle Viole
No		Château Coutet Barsac
Yes	3%	Merry Edwards Sauvignon Blanc Russian River Valley
No	SLO	Condado de Haza Ribera del Duero
No		Arcanum Toscana Il Fauno
No		Turley Zinfandel Paso Robles Ueberroth Vineyard
No		Sparkman Cabernet Sauvignon Columbia Valley Holler
No		Cune Rioja Gran Reserva
No	SLO	Mocali Brunello di Montalcino
No	SLO	DuMOL Syrah Russian River Valley
No		Villa Pillo Toscana Borgoforte
No		Bodegas y Viñedos Maurodos Toro San Román
No		Matthews Claret Columbia Valley
No		Domaine Carneros Brut Carneros Ultra
No		Tenuta di Trinoro Toscana Le Cupole
No		Mollydooker Shiraz McLaren Vale Carnival of Love

This state agency will never have the knowledge or will to select exceptional wine except by accident. They will never have the passion that their customers do and so will never be able to satisfy them. It seems that the monkeys are winning; listen to those typewriters...

Privatize.

Springfield and Philly. What a difference not having the PLCB makes!

Springfield Mo., "the queen city of the Ozarks." Population 167,000 with an MSA (Metropolitan Statistical Area) of a whopping 450,000. 
Philadelphia, "the city of brotherly love" (and those who buy their booze across borders). Population 1,526,000 with an MSA of 6 million.

Why am I comparing these two places? They both have a whiskey festival, although technically the one in PA is called the Whiskey and Fine Spirits Festival. "Fine Spirits" apparently includes things like Smirnoff Sorbet Light Peach and Ole Smoky Moonshine Hunch Punch, according to the masters of the mundane in Harrisburg.

So what do you get for your VIP dollars in PA? A chance to taste 304 spirits (really only 292, because some are listed twice!) of which about half (151) are something I would call whiskey or whisky. In Springfield you get  at least 200 whiskies and none are called Hunch Punch. You can look for yourself. Here is Philly, and here is Springfield. Not even close, which just shows the sad state that the PLCB is in. If a magazine can sponsor and put together a pretty good whiskey festival in a town the size of Springfield, but the 3rd largest retailer of spirits has to scrape the bottom of the barrel and still falls short, that speaks volumes about how well the PLCB serves the citizens, and what the industry thinks of our backwards system. Yes, I know the Philly Festival is sponsored by a magazine too but they can't do it without the expressed approval and participation of the PLCB.

Look at all the spirits PA doesn't carry. Must be 100 of them -- but they all are available in the free market. Of course, a number of things at the Philly Festival aren't available in PA either, which means if you really want some, you'll have to break the law to get it. All courtesy of the PLCB, who approved all of this. Even the highlights mentioned by the PLCB are laughable. There are only three, and two are for items you can't get. 

I especially like that Stranahan's Colorado Whiskey will be offered for tasting. It isn't carried at all by the PLCB, so the entire state is missing out on some pretty good whiskey. You can't get it if you did like it anyway. I guess they think the drive to State Line Liquors in MD is close enough. Which brings up the question: why even have this at the festival if the PLCB doesn't carry it? If you have no chance of buying some of the things they are offering, what's the point? It really does show how limiting and ignorant the people in Harrisburg are.

Face it, the PLCB is the reason why we can't even have a half-assed whiskey festival. People that do real festivals laugh at the PLCB and us the same way we laugh at somebody trying to buy a six pack at a distributor. You know that is the way it should be done, but somehow in PA it is never done right.

If you want to go to one of these things, plan a trip.  There are numerous festivals in the US, far better than the PLCB ones in Philly and Pittsburgh, plus you have a chance to actually buy the products you taste and give your money to somebody that cares about the consumer.  DC, New York, Boston Vegas, Nashville, LA, Bardstown, Atlanta, and more  As a consumer you deserve the best, so why support the worst?  The Free Market is the only real Modernization.

Modernization wouldn't do what the consumer wants -- Part II

Today we are going to look at some other parts of so called “modernization;” increasing the licensee discount from 10 to 18% and variable pricing.  Notice that there is nothing mentioned for the consumer, even though they spend 2.8 times as much as licensees. Why?  Because licensees contribute larger sums than regular people, and since they don’t complain too much, you don’t have to pay as much attention as you do to what the citizens want. Pretty much saying, “to hell with standard practice, no case discounts for you!”

Based on last year’s PLCB sales numbers to licensees, an additional 8% discount would come to around $24,250,000. Where does that money come from?  It isn’t taxes since they are added in before the discount. Everything else stays the same since the discount doesn’t affect inventory or salaries or other costs...so it has to come from what the PLCB calls "profit" (what we know to be taxes that they just hadn’t happened to spend yet). Let’s look how that $24 million ties into the big scheme of things. To do that we have to do some math.

The PLCB had “profits” of $128,356,057.00 after the transfer to the PA State Police, but before the General Fund transfer. I'll be rounding the numbers from here on so they may not match exactly.
According to the PLCB talking heads “modernization” will increase this amount by $75-125 million depending on who you listen to.  Since there is a 66% difference between those two numbers, I’m not sure how accurate their guesswork is. In any case, let's use $100 million and add to that the $24 million that has to be made up from the proposed additional discount for the licensees to bring it to almost as much as they make now. The new total for operating income after PSP transfer is $252.4 million. Add to that number $387.6 million in operating expenses and you get $640 million in gross revenue from sales needed if this happened this year. 

But it didn’t happen this year so let us estimate what next year might look like.  I’ll say that sales will increase 5% to $2.28 billion which means that Sales Tax and Local Taxes will be about $135.8 million leaving $2.14 billion.  From that the 18% liquor tax ($327.2 million) will come out giving us $1.82 billion as sales net of taxes.  Historically cost of goods sold is about 69.5% so I’ll use that. COGS would be $1.26 billion leaving us with $554 4 million

However we needed $640 million leaving us $85.6 million short and I’m being generous since I didn’t put in any increase for expenses. Now the PLCB just can’t raise prices of X number of products by $85 million and call it even.  They have to raise prices enough so that after all expenses and taxes come out they have $85 million extra left over. Remember they had to sell almost $2.2 billion last year to get $128 million, so working off of that, they need to sell $3.8 billion worth of product to get to $252 million and we know that isn’t going to happen. They could raise the markup 65% or they could reduce costs by closing 25% of the stores and I don’t see that happening either. So they have to get the money from somewhere and “Variable Pricing” is one of the places they say it will come from. Not all of it but certainly a large portion.

Just what is the PLCB version of variable pricing?  Unlike a pure model the PLCB has to keep the prices the same state wide instead of regionally, by neighborhood or even by store. Also, unlike other variable pricing models of commodities, the consumer has no negotiating power other than to drive to New Jersey (which they probably should have done to begin with). Think Airline tickets if you need another example of variable pricing.  The price changes by demand, time of day, competition and other factors so while you may pay $200 for that round trip to Orlando, the next person could pay more or less.  

Now I don’t give the PLCB credit for being able to change pricing in real time as the airlines do.  They don’t have a good history with computerized things. The intent is the same though.  Lower prices on slow moving items to get them out or move a specific volume of items, and stores may strategically raise prices on more popular or high demand items when possible to increase profits.  A good overview is here. Something the PLCB should pay attention to: “When variable pricing can be tied to differences in costs of doing business, different prices can be justified; otherwise, brands run the risk of being seen to be opportunistic and unfair, likely damaging their reputations.”

I don't have any idea how many or how much prices will have to go up to get near that magical $85 million extra (and I don't think Senator Ferlo really does either), but it isn’t a small amount, considering that the PLCB only clears an average of 92 cents per bottle and it would have to go up to $1.80 per bottle if applied evenly and we know it isn't going to be applied evenly. Maybe some other things will reduce that or maybe not.  I’ll look further into some other “modernization” statements in another installment.

Privatization IS Modernization, accept nothing less.

Modernization wouldn't do what the consumer wants

We've been told that what the State Stores, the PLCB, and the whole police-enforced monopoly really needs is a good dose of "modernization." No need to dismantle this freak of nature; just "modernize" it!

Hey, how about some perks?

Let's look at one part of “modernization,” Direct Wine Shipping, and see what is being offered compared to what Pennsylvania citizens really want. Representative Costa said recently that direct shipping would be, and I quote, a “perk” for consumers. Why after all this time do the politicians and PLCB even care about direct wine shipping? Is it because they suddenly thought it would be good for consumers? No, it is because the Supreme Court Of The United States told them they had to allow all wineries, in-state and out, the same freedom in shipping. That was the Granholm decision, almost NINE YEARS ago, and our legislature still can’t comply. Strictly speaking, in my opinion, the failure of the legislature pretty much means it is currently legal to have wine shipped to your door since the section of the PA liquor code imposing restriction was deemed illegal and therefore unenforceable.

Representative Costa, 8 years later, decided he wants to support direct wine shipping and the bill he co-sponsored (HB 121) lists a fair amount of requirements to allow that in PA. Here are some of them.

(1) File an application with the board.
(2) Pay a one hundred dollar ($100) registration fee.
(3) Provide to the board a true copy of the applicant's current alcoholic beverage license issued by the board or another state, if applicable.
(4) Provide documentation to the board which evidences that the applicant has obtained a sales tax license from the Department of Revenue.
(5) Provide the board with any other information that the board deems necessary and appropriate.

Now that doesn’t seem too bad. But read on.

(6) Each month, the board shall publish on the Internet a list of all classes, varieties and brands of wine available for sale in the Pennsylvania Liquor Stores (Apparently all that money on rebranding was wasted, just like we said; if your own pet legislator can't even remember it, what's the point?). A person holding a direct shipper license may ship only those classes, varieties and brands of wine not included on the list at the time an Internet order is placed.
(7) Not ship more than nine liters per month on the Internet order of any person in this Commonwealth
(8) On a quarterly basis, pay to the Department of Revenue all taxes due on sales to residents of this Commonwealth
(9) Report to the board each year the total of wine shipped [into] to residents of this Commonwealth in the preceding calendar year.
(10) Permit the board, the enforcement bureau or the Secretary of Revenue, or their designated representatives, to perform an audit of the [out-of-State] direct wine shipper's records upon request.
(11) Annually renew its license by paying a renewal fee established by the board. (Unknown amount at the time of publication)
(12) A direct shipper may ship wine on the [Internet] order of a resident into this Commonwealth provided that the wine is shipped to a Pennsylvania Liquor Store selected by the resident.

So what we get is "direct shipping" to a State Store, not directly to the customer, and on top of that they want to track what and how much you buy. PA's own little spy network. That is not what the citizens want, no matter how the good representative tries to spin it.

That leads to situations like Arthur David Goldman accused of illegally selling wines not available in PA, providing the goods and services that the PLCB either couldn’t wouldn’t or was too incompetent to provide. Why? Because there hasn’t been any resolution in Pennsylvania of the Granholm decision. If people were able to direct ship then there wouldn’t be the market for somebody to fill with wines not available in the PA system.

How about we do reciprocal shipping, the same way other goods are done within the framework of interstate commerce? We don’t charge unnecessary fees or taxes to out of state wineries whose states don’t charge us any unnecessary fees or taxes. In-state wineries would benefit from increased sales, consumers would benefit because more out of state wineries would decide to ship to PA since they wouldn’t have to go through all the mickey mouse steps that Mr. Costa wants and after all this time PA would finally be in compliance with the Granholm decision.

Direct wine shipping is about 2% of total wine sales except here in PA where it is about nil. Privatizing and removing the PLCB from the equation results in a system that truly benefits the consumer.

We don’t want “perks.” We don’t want crumbs offered by poor half-hearted measures designed to placate and not really improve. We want and deserve better then what is being offered. Read HB 121 for yourself and decide if this is really the direct shipping you want or if a free and private system would do a better job.

Privatization IS Modernization – Accept nothing less.

Breaking The Law: the tale of the tape

Yesterday I went Out Of Control. I broke the law by driving to New Jersey and — deliberately and with intent — bought twelve bottles of table wine, mostly Italian and California reds, with a few whites, at Joe Canal's in Lawrenceville. They were not mass market wines; nor were they “fine wines.” I picked the bottles out on my own, based on price, reviews, and “shelf talkers” written by individual clerks whose tastes I’ve learned to trust. The bottles were also mostly offered on special through Canal's Bottle Club: a free membership, like a shopper's card. I had no shopping list going in, just looking for wine for dinners over the next month or so.

In all honesty, I was just buying wine; I had no ulterior motive, no agenda. We were out of table wine, and I was close to Jersey, so I went. But last night, after everyone else went to bed, I got curious about just what the price differences were. So I scanned the bottles with the PLCB's -- admittedly -- fairly nifty Android barcode app, and here’s what I got. The Canal’s price is first…followed by the posted price from the PLCB’s database, where available.

2010 Zenato Valpolicella Superiore — $10.96 — $13.99
2011 Rancho Zabaco Dancing Bull Zinfandel — $7.34 — $9.99 (“sale price”)
2012 Frenzy Sauvignon Blanc — $8.29 — $10.29
2012 Box O 'Birds Sauvignon Blanc — $10.96 — $18.39*
2011 Feudi del Duca Montepulciano d'Abruzzo — $8.66 — NA
2010 Varner Wine Foxglove Chardonnay — $13.49 — NA
2010 Ravenswood Winery Vintners Blend Cabernet Sauvignon — $9.44 — $11.99
2012 Sileni Estate Cellar Selection Sauvignon Blanc — $9.99 — $13.39
2011 Ravenswood Winery Vintners Blend Old Vine Zinfandel — $8.01 — NA
2010 Penfolds Koonunga Hill Shiraz - Cabernet Sauvignon — $9.99 — $9.99 (“sale price”)
2011 Poggio Anima Samael Montepulciano d'Abruzzo — $11.99 — $15.79
2011 Di Majo Norante Sangiovese Terre degli Osci IGT — $7.96 — NA

In summation: PLCB did not list four of the wines. Of the eight wines that were available in the PLCB system AND at Joe Canal’s in Lawrenceville, NJ, all but one was more expensive at the PLCB, at an average of a little over $2.50 per bottle. ONE wine was the same price at both Canal’s and in the PLCB system. And of course, none of the wines were cheaper in PA.


Adding up what I saved (and throwing the PLCB a bone by using the Canal's price for the four wines they didn't carry), and figuring in the PA sales tax (6%) vs. the NJ sales tax (7%)...I saved a total of $27.35. Add in the $2.34 I saved by filling my tank in NJ on the way back, and subtract the cost of fuel for the 40 mile round trip (just a hair over $5), and I saved a nifty $24.61 on the trip. Cha-Ching! I'd have saved money even if I had to pay the $2 toll across the Burlington Bristol bridge! (I used the free crossing on I-95; it's closer.) As it was, this more than covered breakfast for Nora and I; hell, I could have bought a second bottle of Dancing Bull and STILL been ahead.

What's this prove? Nothing, really, because as I've always said, privatization is NOT about the price. But it does show up the bullshit that the PLCB and "Windy" Wendell Young and their ilk spread about the PLCB have "on average" lower prices than New Jersey: out of 8 identical wines, the PLCB didn't beat Canal's price ONCE. So much for that vaunted "buying power." It also shows that the PLCB's claims about their "huge" selection...are crap, when out of a randomly selected dozen wines (they were, but I realize you don't have to trust me), at a store about ten miles from the PA border, the PLCB only lists (which is not, as we all know, the same as "stocks") eight.
 
Lies, lies, lies. We cannot let them control the terms or the facts of this debate. Just because we know the lies they tell, doesn't mean everyone else does. For instance, PLCB partisans have recently been claiming "$2 billion in revenue" for the stores in website comments and letters to the editor. Well, sure...gross revenue. But after it's gone through their amazing overhead, it comes out to the puny profit we all know about. We need to make them tell the truth. When you see bullshit, call bullshit.

And if you can, screw 'em: buy out of state. There are obviously good reasons to.

Oh, and if the BLCE is reading this? Just kidding. I didn't really buy these wines, I just went and window-shopped. I love the police-enforced monopoly and would never do anything to undermine it. I love you. As far as you know.

*This is actually the price for the 2011 vintage, the 2012 was not available. But the 2011, 2010, and 2009 vintages were all listed, and all at this same price...so I feel fairly honest putting it up there.
 

Why can't I get Pikesville Rye?

I break the law on occasion. I like Pikesville Rye whiskey, and in the summer, I drink it with lots of ice, ginger ale, and a big squeeze of lemon. It's refreshing and tasty. But...Pennsylvania doesn't sell it, doesn't even offer it on special order. So I hang my head, and duck across the border to Maryland and head into almost any liquor store and pick some up. It's common. I've bought it in drug stores (oh, God, the freedom...). And you know, look: if PA wants the tax, give me a way to pay it, and I will. The stuff is so darned cheap, I wouldn't mind, not really.

So I was pretty psyched when I was in Philly last week and saw Pikesville on the backbar of two bars within a block of each other! Cool, it's finally been 'listed' and I can get some legally. Only...when I got back home and checked their product search page...I still can't. Apparently Pikesville -- cheap, common as dirt Pikesville Rye -- is only available to licensees. You and me? We can't even order it. Because someone in Harrisburg apparently decided that we just didn't need to buy that whiskey. (Okay, maybe not -- see the comments -- but the effect is apparently the same.)

I know this is a little thing, but it's so indicative of one of the major problems with the whole system: a complete lack of options. I'd love to go down the road and try another store, but that's either pointless, or if 'down the road' is across the state line, it's illegal.

Privatization can't come soon enough.