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.

PLCB Numbers, PLCB lies: the truth about Bailment

A little over six years ago, the PLCB put in place a system called Bailment. Bailment is a common regimen in the business world...which is probably why the PLCB took 80 years to get there.

Bailment is a pretty simple idea; for instance, when you "give" your car to your mechanic with the implicit understanding that there's only a change of possession, not ownership. The mechanic holds your car until the work is done, and it's understood that the car never changes ownership; you don't have to stand there with your hand on the car to maintain your ownership of it.

In the case of the PLCB, bailment is a little more complicated, but not that much. The way it used to be, a wholesaler would deliver product to the PLCB warehouses, and they'd submit a bill immediately. Under bailment, the product is delivered to the warehouse, but the PLCB doesn't take ownership of it until it is subsequently taken from the warehouse for delivery to the stores. At that point, the wholesaler submits the bill, and PLCB will pay them. Well, not right then, that's not how business works, after all. Everyone works on "net 30," where you have 30 days to pay. The PLCB, of course, pays on "net 90." Because they're a monopoly, so there.

Bailment was touted as a big money-saver for the PLCB, a major 'get' the agency wanted legislative permission to use. It would reduce the PLCB's actual inventory costs, which would seem likely. But it would also allow the PLCB to skip the need for their annual $110,000,000 tax-free, interest-free loan from the General Fund at the start of every year, so they could buy product and have something to sell in the stores. Isn't that the way every business works? Borrow money from Mama to buy stock, and then pay her back...interest-free?

Well...the PLCB did stop taking the loan. Which you would think meant that they should have had some extra money to turn into the General Fund, you know, that big "contribution" that the Legislature tells them they're going to make. Yeah, that didn't happen. The amount after bailment was the same as the amount before bailment - $80,000,000.

We don't care -- it ain't OUR money, it's YOUR money.

The big talkers from the clerks' union say that there wouldn't be any increase just because the loan wasn't needed, because that money was used to buy the startup inventory. Let's look at that in round numbers to make it easier to follow.

Say I (as the PLCB) borrow...$100 million to buy inventory. In the course of the year, I make $500 million selling that booze to unhappy Pennsylvania citizens (unhappy because they have to buy from me!) before expenses. I then have to pay back the $100 million, which leaves me with $400 million to pay my other bills. But because of The Wonder Of Bailment!!!, I didn't spend as much just to have things sitting in my warehouse, so I didn't need that $100 million loan...which means I have the full $500 million before expenses. That money is now mine to spend on other things...like increasing the amount turned into the General Fund.

But that didn't happen, nor is that money accounted for in store remodels, in fact, there are fewer stores now than there were then. It's not accounted for in increased education, increased money to enforcement, or buying new LCBee costumes. So where did it go? 

Well...about the same time, the PLCB was putting in a new Oracle computer system. Unfortunately, just like the system they installed before, they didn't do a very good job (the Auditor General said so; both times). The cost overrun was about $40,000,000 (although it was spread out over a few years). Inventory expenses went up over $20,000,000 the first year, even though Bailment was supposed to reduce inventory costs and keep them low. Store, warehouse, and transportation costs went up $25,000,000. Stores' operations and supervision expenses went up $25,000.000  Overall, for the first two years of bailment, PLCB Operating expenses went up over $82,000,000! While both years had "record sales" (so knock-down easy to do in a monopoly that we wonder why they keep saying it), the PLCB had record expenses to go with them and pretty soon...the $100 million was gone.

So...all that money bailment was going to save through reduction in inventory costs? Last year, inventory was about 2.5% shy of pre-Bailment levels. One gets the feeling that the PLCB uses the Servpro motto - "Like it never happened."

After seeing what a bang-up job the PLCB did with our money here, maybe we'll check into how well variable pricing is screwing the citizens, and why we aren't seeing that extra $185 million that wonderful plan was supposed to bring in. We have a sneaking suspicion that the words "rising operations costs" are involved...

Lies My Liquor Control Board Told Me

A nowhere near complete list of the bullshit the PLCB has fed and is still feeding the public.

1. Prior to Act 39, we couldn't negotiate prices.

There was and is nothing in the liquor code that prevented negotiating prices. In fact, all the Chairman's Selections prices are negotiated and have been since inception. In April of 2016, Elizabeth  Brassell, the Board's director of communications said as much: "You are correct that the Liquor Code does not indicate that prices can’t be negotiated or that the PLCB has any obligation to use manufacturers’ suggested retail prices. In fact, as you suggest, the PLCB’s buying power, as well as its discretion to list and delist products, allows for some price negotiation with vendors." Yet we've been told that this is a new power, granted by Act 39.

2. "And, as we’ve said all along, prices will increase for some items, when the supplier and PLCB agree that the market can bear the increase." Chairman Tim Holden.

And as we've said all along, "flexible pricing" means "higher pricing." Today will see the increase of prices on 422 items; prices that are going up because the PLCB alone wants them to go up.

3. "Because of cooperative and collaborative negotiations, we hope to reduce prices on dozens of items in the near future." Chairman Holden again, on October 28, 2016

Here it is over 10 months later and of the top ten selling spirits and top ten selling wines the only thing that has gone down in price are pints of Nikolai vodka....by 30 cents.  This can only mean one of two things. Either the PLCB failed to get any price decrease on the items they have the most leverage on; or the PLCB kept all the reductions in purchase price they did negotiate and put the screws to us, the consumers. The truth is, we don't know, because the PLCB refuses to release this information. So much for us being the "shareholders" in this state-owned "business."

4. The PLCB and the vendors view pricing information as proprietary. At least that is the reason given for no longer showing purchase and shelf prices on the board meeting minutes and why the PLCB refuses to let consumers know what 422 items are that went up in price.

Yet the PLCB listed pricing information for decades. Act 39 and 166 did not make that same information proprietary nor did they say that the public should no longer have access to that information.

5. Wine Kiosks - "This was not a faulty fiscal decision," PLCB Chairman Aug 17, 2011

Yes it was and so was trying to cover it up.

6. Under oath in front of the House Appropriations Committee in April this year, Board Member Micheal Negra said that the loss of 'the shackles' that had been on the PLCB with regard to product pricing "would deliver better revenues for the commonwealth and better product prices and availability for consumers."

Raising prices on 422 items does not provide better availability or prices for consumers. That's a no-brainer. Higher prices are not better prices. And availability? With under 620 stores in a state this size? Don't even talk about availability.

7. The PLCB operates at no cost to the citizens

We pay for everything with higher prices, less selection, inconvenience, pension debt, few stores, inept management at all levels, nepotism, graft, incompetence, anti-consumer practices and unqualified Boards just to name a few. You might as well try to tell us that the Legislature operates at no cost to the citizens.

8. In 1934 the PLCB said that stores would be located at "convenient places to serve the public."

Wow, that's a whopper that they've never gotten over. From a high of 756 stores, we now have shrunk to 604. To reach the national average -- the average -- the total would have to be 1,800. Having 200% less stores than average is not convenient.

9. We are going to run like a business.

A business is successful when it is run by people with experience in the industry, innovates, provides goods at a better price than it's competitors. Provides better service or other services than its competitors do and is convenient for the consumer. The PLCB does none of these well or at all.

"The PLCB is a cash cow!"

10. The PLCB is a cash cow.

The PLCB is $240 million in debt, had negative assets for three of the last seven fiscal years, and by their own admission saved $110 million every year for the past 4 years (through The Wonder Of Bailment!) but has nothing to show for it, limits jobs and job creation due to monopoly practices, spends more on advertising than education, and still only contributes about 0.3 percent of the total state budget.




Tell me again why we need the PLCB? We don't and never have, they do nothing for the state and only exist as a poorly run jobs program. Privatize.

The Madness Just Won't Stop

Some random thoughts.

A little bit of turmoil at the top of the PLCB financial empire? First August Hehemann was let go on November 10, 2014 after saying the PLCB needed to raise prices to offset the continued growth of expenses...in other words, for telling the truth. His replacement,  Oren Bachman, barely makes 15 months and now they are looking for his replacement. Of course, the fiscal year ends in about 50 days, so you have to wonder how long it will take to spin the financials this year with a new guy (or not) there. It took 125 days last year.

One of the better comments about privatizing the PLCB in the past few months: "How seriously can we take the argument that unnecessary government jobs should not be eliminated...because then there will be fewer unnecessary government jobs?"

The PLCB, moving at a speed unheard of in real business, only took 5 years and 10 days to approve a new store in Renovo. Of course, it isn't open yet, and might take who knows how long to actually open, but it made the list.  The new store at 167 Seventh St. is a whopping 327 feet from where the old store was at 536 Erie Ave. This beats the old record of taking over a year to move the Mountain Top Store 50 feet. I wonder if the blogs of last year and this year helped move them along, and if it did how many more years would it have taken otherwise? "Convenience is our middle name.  PLCB convenience that is, we don't give a crap about the consumer" could be the motto of the state stores.

Crap!  I'll never finish modernizing like this!

Canada is again showing how much more progressive they are in some things. A recent court case tossed out provincial restrictions on the purchase and transfer of beer, wine, and liquor from one province to another. It could potentially change the entire Canadian system of trade between the provinces. This is something that Pennsylvania (and U.S. constitutional courts) should look closely at.

Why was it good to have a restaurant or bar license for every 1,000 people in your Grandfather's day, one for every 2,000 people in your Father's day, but not now when it is one for every 3,000 people? What has changed? The PLCB of course, not the citizens' desire to have a drink with their food or to go out. Why is it up to them and not local government to decide what is best for their local citizens?

The PLCB serves no useful purpose in retail, it does not provide better selection, it does not provide better service, and it does not provide the convenience the citizens want. It cannot even be proved definitively that it provides more revenue to the Commonwealth than a competitive private system would. It only provides jobs to the PLCB.

While I wait (and I've been waiting a very long time) for someone to come up with a quote about why a government monopoly on a retail good is something worthwhile, I'll leave you with this:

"Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience."   - C.S. Lewis



PRIVATIZE.

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 can there be "public ownership" when the public has no say?

The continuing fiasco in Clinton County.

How the PLCB looks at the citizens

At their April 8th meeting, the PLCB decided to move the State Store which has been at 137 Main Street in Lock Haven for decades to a shopping center outside of town. They didn't ask anybody in local government, or any local businesses or any of the citizens...you know, those people who supposedly they work for. This has led to the Lock Haven City Council, along with Rep. Mike Hanna, the Clinton County commissioners, and Downtown Lock Haven Inc. having to fight the PLCB over who knows what is better for the community - the people that live and work there or the bureaucrats in Harrisburg.

Clinton County used to have two liquor stores, one in Lock Haven and one in Renovo. Two stores to service 900 square miles of Clinton County, until the Renovo store closed five years ago. Fear not, citizens! The PLCB has said they are "actively looking"  for a replacement spot in Renovo! So far, they've been actively looking four years, and counting. As one citizen said "If the Commonwealth of Pennsylvania wants to run the liquor business in this state, then it's the Commonwealth's responsibility to provide convenient locations for citizens to shop for liquor..."

I'm going to do my civic duty and let the PLCB know that there is an 8,100 sq. ft. property with 40 spots for parking at 112 St. Clair Street and Third St, Renovo, for lease. It was already a retail business and has a loading dock.  Explain to the citizens why you can't use it and why after all this time you haven't found out about it already.

Looking for 4 years, eh? FOUND IT!

Apparently the 75 mile round trip to the nearest state store from the outlaying areas of Clinton county fits the PLCB definition of "convenient"  Modernization won't fix that problem in Clinton county, or in Adams, Cameron, Fulton, Juniata, Mifflin, Montour, Perry, Snyder, Sullivan and Wyoming - other counties with just one store.

One of the cries of the people who for one reason or another want to keep this backward system is that in West Virginia some counties don't even have one store anymore. While that may be true, nobody in West Virginia has to drive as far as some people in Pennsylvania do - NOBODY.

The PLCB is obligated to serve all citizens of Pennsylvania. and the PLCB has failed the citizens of western Clinton County in this respect and continues to fail citizens across the state. Ask the people in Mountaintop if they were satisfied that it took two years to move a store 50 feet. Ask the citizens of Chester, a town of 45,000, if they are satisfied with their one state store. Ask the people that spend hundreds of millions out of state if they are satisfied, and ask the citizens who have consistently shown over four decades in every scientific poll that they want what most of the country thinks is a normal system over a state run system.

For 80 years the PLCB has only been concerned with itself, deciding what people should be allowed to buy, where to put stores, how many stores to have (there were over 750 at one point, there are 605 now), and when they should be open: like some overbearing, deaf deity bestowing its grace upon the unwashed masses.

The masses are getting sick and tired of it. Sick of a system that should have been done away with decades ago, sick of being told what they will be allowed to purchase by largely unknowing and incompetent overseers, sick of not having the convenience they see in other states, sick of the case law, sick of "interpretation," sick of graft and corruption, and sick of being treated like children.

The Pinchot legacy is alive and well in Pennsylvania - To make the purchase of alcohol as difficult and expensive as possible.

We are not safer, we are not better served and we are not satisfied and never will be with a state run system.

END IT, DON'T MEND IT!

Can we talk, about these talking points?

Everything below is taken from the March UFCW Wine And Spirits Council talking points. This is what the State Store clerks' union is encouraging their members to use in communications with legislators and public groups to convince them that normalization of the State Stores would be a disaster. We found a few issues with their issues.

• This legislation risks the over $566 million in annual contribution from the PLCB.

Sounds terrible! Except that the PLCB has never contributed $566 million. They did collect taxes, but so did the Department of Revenue -- sales taxes, income taxes -- and they don't claim to have "contributed" $23 billion to the State.

• States that have privatized in the past, such as Iowa and West Virginia, saw dramatic decreases in revenue after they privatized their liquor systems.

But the report on privatization commissioned by Governor Corbett to study the effects of privatization based on the HB 790 plan that PFM* produced, the report that's so frequently quoted by opponents, says this: "Privatization was deemed successful (in Iowa) 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." Of course, Iowa and West Virginia only privatized retail, not wholesale, and Iowa lowered taxes too. Iowa has over 1,200 places to buy liquor now, with 25% of Pennsylvania's population. And a lower DUI fatality rate.

• PFM predicts there will be 10-­30 wholesalers who will carry a wide array of products in a private wholesale system. This is simply not true in other privatized states, due to only 1 or 2 wholesalers usually operating in private states.

Let's see how true that is. I can name over a dozen wholesale distributors in Washington State in only two years since they privatized. 1. Click 2. Columbia 3. Crown 4. King 5. Marine. 6. Pioneer 7. Stein 8. Vehrs 9. Clatsop 10. Dickerson 11. Maletis 12. Midway 13. Olympic Eagle 14. Sound 15. Tripp 16. Young's 17. Southern.
New York has at least 40 just for wine. Pennsylvania has one - the PLCB. Of course, you don't even need to guess how things will be in a privatized system in Pennsylvania, you can just look at beer. There are over thirty beer wholesalers in the Commonwealth. This one isn't even close.

• ... $1.4  billion over five years that will cost the state to transition from a public system to a private system according to the PFM report commissioned by former Governor Corbett. 

This is a lie that has been told over and over and over, to the press, to the Legislature, to the public, and it simply isn't so. The actual first heading on page 186 of the report is "Total Agency Operating and Transition Costs." So the $1.4 billion is the system's normal operating costs plus any transition costs. The operational costs are almost $1.2 billion! With a little math, you can figure out how much the cost is to keep the PLCB using the very same report. Over $2.2 Billion. How do you like me now?

• This proposal has the potential to put alcohol on every corner possible.

This is just fear mongering. HB 466, the current bill the passed the House, doesn't even get the state up to the national average for liquor stores, let alone for retail wine outlets. To hit average for 12.8 million people, we would need to have over 2400 liquor stores, and over 6,000 grocery stores selling wine.

• A peer-­reviewed study from a U.S. Centers for Disease Control Task Force recommended against any further privatization.    

While the statement itself is true, the entire study methodology and results were debunked by STATS.org. (Debunked by Forbes, too.) This study also said that privatization would lead to a 44% increase in consumption which hasn't happened in any state that privatized any or all of their liquor system. Not even close.

• Studies show that state employees have a much higher rate of carding minors than the private sector does.

Maybe, but Pennsylvania state stores are NEVER checked for compliance, except by "internal" audit. So you can't make a factual statement that it is happening here.

• The Turzai privatization proposal will lead to increased prices and decreased selection.

Somebody on the Council needs to stand in the middle of a Super Buy Rite or a Total Wines or Joe Canal's or BevMo or Binny's and say that. How selection is decreased when a store has more items on the shelf that the entire state of Pennsylvania stocks must be some kind of magic.

A real New Jersey Liquor Store; not near Philly or New York, either.

• No where in the private sector can you find that type of selection in each and every store in the state.

One size doesn't fit all and nowhere in the state can you even begin to find something like the store shown above. Not every PA State Store even has the same stock, and neither will every private store, but you'll certainly be able to find more in the private market.

• The proposal eliminates the 30% markup, yet keeps the 18% Johnstown Flood tax. This will result in dramatic price increases. 

Since the PLCB operates at an effective 45.2% markup and private business is far more efficient there seems to be some room to work with. Will everything be cheaper everywhere? No, just like one store doesn't have the cheapest price on everything. But then, the PLCB doesn't either.

• Prices have gotten so high, that Washington consumers have been driving across the border to both Oregon and Idaho.

Having lived in Washington State, I can tell you first hand: Washington had the highest liquor prices in the country before they privatized. Adding 27% in new "fees" at the time of privatization certainly didn't help. Although they did drop the fee schedule to just an extra 22% recently. Idaho has said their sales are up 7% along the border. Oregon is about the same. The total Washington yearly border bleed is less than 2 weeks of current PA border bleed, so what does that tell you?

• Those who purchased the former state liquor stores from Washington State are already out of business, as they were not able to compete with Costco, Safeway and others.

The one thing that hurt small liquor store owners in Washington was the WSLCB. It was just as bad in making decisions and rulings as the PLCB. They ruled that the small stores had to pay tax on resale product while larger distributors didn't, making the small stores products 17% more expensive for the bars and restaurants that they were selling to. That ruling has since been overturned, but it took over a year to do it. Box stores are still not the majority of sales in Washington. Small stores can compete just fine if given a level playing field. Look at New Jersey and California if you need examples.

• The Turzai proposal will lay off 5,000 Pennsylvanians who work in the Wine and Spirits stores.

Well...there aren't 5,000 people who work for the PLCB (total staff of 4,597 as of 3/15) and certainly not all of them work in the state stores (not with the bloated management structure that is in place). Nor will they all get laid off, either. There will still be a need for administration, licensing, audit and what have you. And a third of the employees in the stores are part-time.


The Wine and Spirits Council seems to believe that consumers, and more importantly, legislators, can't learn from what other states did. That we can't put in place an even better system based on real world data, and not bad reports formed from junk science, or scary commercials where family members get killed off one by one.

Private systems work: just look at how you buy everything else. We don't need State Stores or the people in them to sell a legal product. There are 27,000 licensed establishments in the state and none of them have state workers standing behind the bar, serving or managing. We aren't safer, we aren't better served, and we aren't satisfied and never will be by a state run system.


*Much of the UFCW's "scientific" support for the State Stores as a bulwark against booze-fueled lawlessness leans on a CDC "taskforce" report, largely exposed as junk science by this piece. They lean on cherry-picking out-of-context nuggets on the economics from a report on the impact of liquor privatization prepared by PFM, a Harrisburg think tank. Have a look for yourself; why trust the UFCW, why trust us?  

Why is it that....

The PLCB advertises even though they have no competition. There is no such thing as shopping for the best price; there's only the PLCB price. And of course...forget about shopping for selection. If they don't have it, you don't need it. Or want it. You may think you do...but they think better.

The PLCB limits how many bars and restaurants can serve alcohol, and while very few places are under their quota, there isn't a quota for State Stores. We are nowhere near what a normal state would have for liquor stores (and normal for wine retailers is so far away we can't even see it from here). In fact, the number of State Stores has been steadily decreasing for the past 45 years from over 750 to the current 605, and has only held steady the past two years.

The PLCB has no paper trail that lists who came up with in-house brands, who made the decision to feature them on endcaps, who decided to push them in advertising, and who said to feature them as alternatives when doing searches on the website? Do they know what they are doing at all? (Does any of it have to do with the continuing trail of ethics violations?)

The PLCB never lists any proof for the sales increases "modernization" supposedly will bring. Tell us exactly how opening another 140 stores on Sunday will generate $22 million more in operating income, or how just opening stores quicker will add $25 million more? Tell us what states will join in the booze-buying consortium being proposed? Have they even been approached about it? (Wanna bet there's no paper trail?) Tell us how the PLCB will make $75 million more if allowed to set pricing? Who will decide what the pricing will be, what will the change be based on, who will have oversight, who will look out for the consumer's interest (it never has been the folks in Harrisburg so don't expect them to suddenly start now),

The PLCB hasn't said whether a six-bottle container of 750ml bottles of Belgian Trappist brew will be a "case" too under their new "interpretation." It is over 144 ounces after all.  What about 6 bottles of beer that are only available in 700 ml bottles? Will there be a special "interpretation" for those if somebody decides to sue and the PLCB is too lazy to support their 80 years of apparently wrong "interpretation" like what happened in the latest "interpretation" that allowed 12 packs? And why can't the Legislature get off its butt and just do away with the case law entirely?

The PLCB ranks 15th worst out of 17 control states for binge drinking rates and is in the bottom half of all states, tied for 31st place. Why? Because "control states" like PA don't really control anything. The total alcohol use for control states averages higher (2.46 gallons per capita consumption in gallons, based on population age 14 and older) than the U.S. average of 2.33.

The PLCB's plans to increase sales are "good," but if the system were normalized, and a retailer wanted to increase alcohol sales...that would then be "bad?" Is private alcohol chemically different from PLCB alcohol? It's the same tax rate.

The PLCB and its pitiful handful of supporters somehow manage to overcome all of these issues, and continue to monopolize liquor and wine sales in the commonwealth. Kinda makes you wonder what keeps the Legislature from cleaning this up.

UFCW Wine & Spirits Council trying to hide from the truth.

The union that represents the State Store clerks, the UFCW, likes to use its puppet organization, the PA Wine and Spirits Council, to show all sorts of "proof" that the PLCB is doing a great job. Unfortunately for them, all of their information is either old, no longer true, or both. Let's look at some of the points they bring up. 

1. The UFCW says - The U.S. Centers for Disease Control (CDC) Task Force on Community Preventive Services announced its decision and rationale for recommending against further privatization of alcohol sales.
The real truth is - The statement is true but the science used to justify it was debunked as reported in Forbes.

2. The UFCW says - This document reports that in 2007 Pennsylvania had the lowest rate in the nation of death by alcohol-induced causes.

The real truth is - Since that point in time alcohol-induced deaths in PA have gone up 31% (page 78) and the state is not the lowest in the country. New Jersey and Maryland on our borders beat PA along with other states, even the famously booze-drenched state of Louisiana. Looks like there may be some problems with that 2007 study.

3. The UFCW says - "Control states have significantly lower rates of youth drinking and binge drinking, as well as lower rates of alcohol-impaired driving deaths, than license states.” Using a study from 2006 they go on to quote "In states with a retail monopoly over spirits or wine and spirits, an average of 14.5% fewer high school students reported drinking alcohol in the past 30 days and 16.7% fewer reported binge drinking in the past 30 days than high school students in non-monopoly states"

The real truth is - Not in Pennsylvania.  According to the PLCB's own Act 85 report (page 9) "...lifetime alcohol use was higher in Pennsylvania for the eighth grade (7.3% higher in Pennsylvania compared to the national MTF rates), 10th grade (9.4% higher in Pennsylvania compared to the nation) and 12th grade (6.0% higher in Pennsylvania)." 30 day use is shown as higher for Pennsylvania high school student too.A look at nationwide drinking rates by SAMHSA doesn't paint a rosy picture either. Binge drinking for adults places PA in a tie for 31st in the country, and of the border states, only New York  does worse -- five do better.

4. The UFCW says - "Increased availability of alcohol is generally associated with increases in consumption. States that license alcohol retailers generally have higher alcohol density, greater physical availability, longer and later hours of sale, all of which are factors that contribute to the increased availability of alcoholic beverages."

The real truth is - Wendell is trying out for the Captain Obvious role, telling us that more stores and longer hours contribute to the increased availability of alcohol. No kidding, that's why the State Stores suck! But the idea that more stores/outlets will drive higher consumption is an old policy projection that has been debunked; see the next point.

5. The UFCW says  - Using a report based on the experience in Sweden, "According to the projections, scenario 1 (just stores privatized) yields a consumption increase of 17% (1.4 litres/capita), which in turn would cause an additional 770 deaths" or "The corresponding figures for scenario 2 (stores privatized and wine in grocery stores) are a consumption increase of 37.4% (3.1 litres/capita) leading to an additional annual toll of 2000 deaths." This does not agree with another report listed further down the page that is also from Sweden that comes up with a different result..

The real truth is  - The facts do not match the projections. Washington State, for instance, didn't have a 37.4% increase in consumption or even a 17% increase when they privatized the state liquor stores recently. DUI fatalities have decreased since privatization and are below Pennsylvania's rate. The report is real, but just like the CDC report debunked above that said consumption would go up over 40%, it doesn't match any reality. More junk alcohol science.

6. The UFCW says - Using a report on wine consumption from 1968 to 1991 that came out in 1995, the conclusion is that sales increased dramatically in five states that 'privatized.' "After controlling for both nationwide and state-specific trends, we found significant increases in wine sales after privatization of 42% in Alabama, 150% in Idaho, 137% in Maine, 75% in Montana and 15% in New Hampshire. The increases in liters of pure ethanol per year in the form of wine were 621,000 in Alabama, 432,000 in Idaho, 364,000 in Maine, 363,000 in Montana and 171,000 in New Hampshire."

The real truth is - Privatization of the selling of wine did increase sales in those states: up to the level of the national average. Wine sales in general more than doubled overall in the US over the same period. In fact...Pennsylvania has seen that same proportional increase, without privatization. Yet.

We could go on, but... Let's address the real issue: control vs. regulation. There are many points that should be taken into account as guidelines, regarding store density, age carding, single serve take out, etc. but they all have to do with REGULATION, not whether the state should be the sole retailer, trying to sell and control as much product as possible.

While there are definitely significant problems associated with drinking too much, those problems are not confined to states with private alcohol sales. Despite decades of "control," and one of the lowest "alcohol outlet densities" on the planet, Pennsylvania does no better than the national average for most measures of alcohol-related harm, and is worse on some. This plainly shows the current system doesn't work very well. The majority of risks can be managed by regulation and enforcement, just as they are now in other states.

It's a simple prospect. If you don't want to be like Camden, then regulate and zone store density, as most states have done. If you want to lower DUI, then perhaps the state should concentrate on prevention and education instead of Mother's Day vodka sales.

Pennsylvanians already consume more alcohol per capita than New York, Maryland, Ohio, and West Virginia, so our vaunted "control" and current regulations, actually, our whole system doesn't seem to be working. Our system is broken, and the best and only real fix if to get the state out of selling a retail product and back to regulation like most normal states. We can't move forward dragging the dead carcass of Prohibition with us. Especially since they don't really want to come along for that ride.

The PLCB - Not taking care of the citizens again

The one liquor store in Waynesboro closed on September 13. On August 20th the PLCB was told by the lessor that the lease -- which ended on September 30th -- would not be renewed. It apparently takes the state store system seventeen days to move the equivalent contents of a largish 4,000 sq.ft. house; yet another thing they don't seem to be very good at.

That means there are four State Stores that remain open in Franklin County, which has a population of 152,000. This closing has the residents of Waynesboro driving 8 miles to Greencastle to the nearest State Store (or 15 miles to Chambersburg, a city of 20,000, which has two State Stores!) or having the choice of over fifteen different liquor stores in Hagerstown, MD, a town of 40,000...only 12 miles away. How big does a town have to be to have more than fifteen liquor stores in Pennsylvania? I'll give you a hint: there are only two cities in the whole state that have that many, they both start with "P," and the smaller one has about 306,000 people.

It's not just quantity that's better in Maryland, either. This is Long Meadow Liquors in Hagerstown. You can bet the Greencastle state store doesn't look like this.

So spacious! So well-organized! So friendly! So non-PLCB!

Fear not, Waynesboro! On January 2nd, it was announced that a new store would open...sometime.  No date given, no month even. Not that it matters to the PLCB; making citizens wait months, or even years for a store in their area is not uncommon at all. (Could be two years, like it was in Mountain Top.) Real businesses take less time to build stores than it takes the PLCB to lease and move into a current location. An ongoing PLCB FAIL. I mean, it isn't like they are a real business that has to take care of their customers or is worried about losing sales to the competition. They have no legal competition.

As you would suspect there are a number of grocery stores -- Giant, Foodland, Save-A-Lot, Martin's -- that would love to satisfy the wants of their customers by selling them wine and liquor, or at least wine. While they may not take the place of a full service liquor store, it would be far more convenient then relying on the one state store. Not every liquor store has to offer everything; not every grocery store does. Choice is always better for the consumer.

So there you have it. 2015 starting out like last year with more lipstick for the state store pig, and just like the 80 years prior, the citizens are left out again.

It's up to the Legislature and Governor Wolf to hear the needs of the citizens. Privatize and reap the benefits of the free market.

Why the PLCB's "Modernization" plan is misleading

The PLCB keeps telling us that they want to "modernize" their stores; the unions involved (the UFCW and ISSU) tell us the same thing; the Democratic legislators who dance merrily (in lockstep) to their tune put forth "modernization" proposals. But take a look at what they tell you, and wonder...if this stuff is so great...why aren't they already doing it?

What do we want? More convenience.
The PLCB Partisans offer this:

We can open more stores.
The PLCB already controls how many stores are open. There were 692 in 2000, there are 596 now. Neither the house or the senate had to vote to change that. They can open more stores any time they want to. They haven't, they've closed stores. Why? Probably because of their bulging overhead costs and mismanagement.

We can make shopping more convenient by putting more "stores in stores," State Stores in or beside grocery stores and beer distributors.
Not one of the new Fine Wine and Good Spirits Stores are "in a store" and none being built at this moment are either. Once again: if they can do it...why aren't they doing it now?

We can increase the hours.
Except for Sunday sales, which would require an act of the Legislature, the PLCB can set the hours for all stores now. If they wanted to be open 8AM-11PM, they could be. They obviously don't.


What does the Legislature want from the PLCB? More MONEY.
The PLCB Partisans offer this:

We can and have reduced costs to make more money for the state.
In the free market, reduced costs mean lower prices for the consumer; see Walmart as an example. I haven't seen it at the State Stores, have you? You come last at the PLCB.

We will turn in a record amount of money to the general fund this year.
It's juggling. Next year, when they bring inventory back up to normal, hire the 400 people that they purposely didn't hire this year to make the numbers look good and pay for new stores at a faster rate than the current 100 year completion schedule, it will go back down to historical percentages or lower. But by then the privatization scare will be over, so they don't care about next year.


What do we really want? A chance to buy in great stores like they have in other states: a choice.
The PLCB Partisans tell us: The PLCB is "a world-class shopping experience...akin to Williams-Sonoma."
 You don't become "world class" simply by saying you are "world class." You do it by working hard, exceeding expectations in selection, customer service, and meeting customers needs and wants...and then being judged "world class" by independent experts in your field. Even the ISSU, the Independent State Store Union, which represents the stores' managers, calls it "their delusional effort as a wannabe 'world class retailer'".(ISSU press release, Dec. 9, 2011)


As we saw with the wine kiosks, the PLCB knows nothing about "modernization." In fact, expecting an agency that came up with such a clunky idea as the wine kiosks to offer sound ideas on "modernization" is like asking your dog for advice on how to fix your car.

Remember, folks: Privatization IS Modernization. We don't need to "modernize" the PLCB; we need to put it out to pasture where it belongs.

Thanks to Albert Brooks for the core ideas of this post.