This will only hurt a little bit, we're just flexible pricing.

On January 1st, the PLCB raised the price of 341 bottles of Booker's Bourbon from $59 to $99.99, a 66% increase. Bottles that they already had in stock on the shelves across the state. Bottles that they had already bought and paid for at a lower price. This was in anticipation of the published March or April price increase by Jim Beam on NEW product.

However, Beam didn't increase the price to $99.99 due to consumer pressure and outrage, They decided that an increase to $69.99 would be enough at the moment, and changed their minds before the actual price increase took effect. So how come the PLCB price went to $99.99 anyway? (Update: the PLCB has belatedly lowered the price to $69.99...but you are still paying more for bottles they bought at a lower price.)

The PLCB excuse was that they raised the price for Booker’s to $99.99 on January 1 “at the request of the vendor,” according to PLCB spokesman Shawn Kelly. I'd like to see that in writing. Remember: Beam gets no benefit from an immediate price increase, so what the PLCB is saying is that Beam told them, 'Hey, fine. Screw your citizens by raising the price across the board, limiting sales and competitive pricing of our product so you can make more money in your little monopoly.'

There are two factors at work here, a desperate desire to maximize 'profit,' and lack of any consumer protection and overwatch. The PLCB used to brag about how they controlled price increases, saying that industry instituted more increases then they had, but now increases are seen as a way to make more money for the state by gouging the consumer.

How does that work? Say Bottle "A" sold on the shelf for $25 before "Flexible Pricing;" the PLCB paid about $14.50 for it before all the taxes, fees, markups and rounding they add. Now, with "flexible pricing," the bureaucrats decide to negotiate to try and save themselves some of that money. (Negotiating is something they could have been doing all along when it would have benefited the consumer, but they chose not to. But now it benefits the PLCB, so full speed ahead, boys!)

Back to the example. The PLCB knows that another state's monopoly system only pays around $12.30 for the same bottle. They've known for decades that other states pay less, and decided not to do anything about it. There was a conscious decision that having a lower price yet selling more product to increase overall sales was not something the PLCB wanted to do. Too much work selling that extra amount of product for that sales increase, apparently. Yet, keeping the same price, selling the same amount, and gouging the consumer by not passing any savings along when producers offered deals was decided to be perfectly acceptable.

The PLCB now manages to get $1.50 shaved off of the wholesale price. To make sure that the same amount of taxes are collected, they increase the markup from what used to be a standard 30% to nearly 47% to reach the same point to apply the 18% Johnstown Flood Tax. The consumer sees NONE of the price reduction from the agency's "buying power." The state doesn't collect any more taxes, but the PLCB gets to say they are making more money, and they cover their ballooning operating expenses for another few years. Remember: the amount the state gets by having the PLCB in the middle is less than they would get if taxes were raised by the same amount. The cost to the consumer is the same. In other words, we get to pay more to keep the PLCB jobs program afloat.

Here's another example of the "benefit" of flexible pricing: sale items. The PLCB itself doesn't put anything on sale, other than closeouts (of items they can't be bothered to sell), and out of season items ,like the Christmas gift packs that are on sale now. Everything else that you see a sale tag on is a reduction from the producer. Formerly, the PLCB had to pass on those reductions to the consumer; that was the law (and a good law to keep a monopoly in check). What they can do now is "recapture" some of that savings that was supposed to go to you, the consumer, through the magic of "flexible pricing."

Here's how that works. Suppose a distillery offers a $5.00 off special to the PLCB. Used to be that the PLCB approved the sale, printed up sale tags, and the citizens got to pay closer to what some other places charge. But under the new "modernization" law, "flexible pricing" allows the PLCB to decide that they don't want the citizens to have $5.00 off, that $3.00 off is good enough ("Good enough" should be their agency-wide motto), so they take the full $5.00 discount from the producer, print up sale tags for $3.00 off, and they keep the other $2.00 - such a deal! Doesn't that make you feel good about "modernization"? Don't you wonder what rat hole your two bucks is going down?

PLCB apologists will point out that private business can and does do the same thing. Sure, they can, but there is one thing that keeps that in check: competition from other businesses. If you decide to keep that extra $2.00, but your competition down the street (remember, private liquor sales means a "alcohol on every street corner") doesn't, and guess who will have more sales? But pass on some of that wholesale price reduction to your customers, and who will have more repeat business?

This is the heart of it. The total lack of competition in Pennsylvania is why we pay more, why we have less convenience, why we have less selection, and why we don't have the same protection from price gouging the free market provides. Don't like what the State Store System has, at the price they charge? Screw you, you have no choice. But if you're in a free state, and you don't like what Bob's Liquor has at the price they charge? You can just go somewhere else where the selection or prices are better.

This lack of choice will always make the citizens serve the needs of the PLCB  instead of them serving the needs of the citizens.

The Dam's Breaking!

Hot news out of Harrisburg: a bill loosening rules on wine sales has passed both houses of the General Assembly (passed by the Senate back in December; the House Rules Committee brought it up, passed it, and sent it to the floor all this morning, and the House passed it early this afternoon) and is on its way to the Governor's desk. The bill -- a creation of Senator McIlhinney's -- does not eliminate the State Stores or the wholesale monopoly, but it does allow licensees to sell up to four bottles of wine for takeaway, including of course the licensees that are supermarkets and gas stations. The bill passed with bipartisan support in both the committee and the full House (two Democratic Senators voted for it in December).

Stealth bill, zooming under the UFCW radar!

Governor Wolf released a statement on the bill's prognosis:

"Today the House concurred with the Senate on historic liquor modernization legislation that provides greater customer convenience to the people of Pennsylvania. As I have always said, my goal is to modernize the sale of liquor and beer in Pennsylvania to ensure convenience and satisfaction for customers. Once the bill reaches my desk, I will conduct a final review of the legislation to ensure it meets my goals of enhancing the customer experience, increasing much-needed revenue to help balance our budget, and bringing our wine and spirits system into the 21st century."

So...maybe, maybe not, but it's going to be hard for him to veto a bill that passed with significant Democratic support that doesn't actually privatize the State Stores or the wholesale system. What it does do is potentially take a LOT of sales away from the State Stores, and UFCW Local 1776's Wendell W. "President For Life" Young IV knows it. "This is the first step to killing the Pennsylvania Liquor Control Board and the Republicans know it," Young said.

It's a wobbly step, a baby step, and a head-shakingly stupid step that recapitulates the useless mistake of the case law...but it is a step. The State Stores will be in deep crap from competition, and things will get worse, especially as people want more convenience. They're going to be irked that they still have to go to the stinky old State Store to buy liquor; they're going to be irked by the stupid four-bottle rule; and they're going to be angry and confused that they can't buy booze at every supermarket and gas station. And that's what's going to break the dam. Finally. The end may be in sight.

Privatize, don't modernize.

Almost but not quite

In a surprise move, what can only be called a New Year's Miracle, after over 80 years the Pennsylvania Liquor Control Board has almost learned how to spell Jack Daniel's across its entire inventory, and they almost know what kind of liquor Jack Daniel's is for every entry. 

I've written about the PLCB's lack of inventory skills pertaining to JD quite a few times. I even sent them an email listing every mistake they made, and over the past few years they have slowly fixed most of the mistakes. Why slowly? Who knows, it takes just as much effort to call up the database entry on one listing as it does on all listings of Jack. Then it is just a simple matter of seeing if all are spelled the same, and — just a reminder, because it is the PLCB — correctly. It's Jack Daniel's.

I'm the PLCB. I order it, warehouse it, ship it, stock it, inventory it, and sell it. You expect me to know how to spell it too?

I would think that having a correct inventory would be a fairly important thing, I know it is in my business, especially for my #1 selling item.  However, this is the PLCB we are talking about and they don't seem to think so. If I can ever get them to get all of the Jack Daniel's products spelled correctly I'll start working on getting them all classified correctly. They've had a problem with that for years too.  There is no Jack Daniel's that is a blended whiskey as somebody in the PLCB thinks there is and has thought for well over a year now - just for an example. If I get that accomplished, I've still got years to go: they have hundreds of other mistakes I can use later.

Just one of the many examples of why the PLCB will never be a business, never run like a business, and never satisfy the consumer like a business.

THEY DON'T CARE

It isn't just in inventory, it is in every facet of the organization. Inventory is just something that every citizen can see and track and laugh at their incompetence on a daily basis.

They don't care what you want. Just think about how the PLCB was (and still mostly is) before the privatization push of the past few years 

They don't care what the community wants, as seen by examples in numerous communities, Lock Haven being a prime example. Or how about the YEAR it took to put in a new store in Mountaintop in the same shopping center as the old one. Or the fact that the PLCB can and does force a store into a dry community.

They certainly don't care about convenience. Closing over 20% of the state stores proves that.

They don't care about the consumer. Not having a single highly certified person selecting product for the entire state proves that. Not only don't they have a Sommelier in the PLCB to help select wines, they never have had one unless you counted a part time consultant (and she doesn't work for them anymore).

Privatization fixes all of that, increases employment, allows entrepreneurs to come up with new and inventive products, sales and marketing. Provides what the consumer wants, because if they don't, there is always a competitor who will.  Removes the unqualified from deciding what the ENTIRE STATE is allowed to buy, and increases convenience and selection.  

The PLCB can do none of these things.  Painting a turd pastel colors, putting baskets around it and changing the name to "Excretion" does not change the way the turd got there to begin with. Such is the problem with the PLCB.

Privatization is the REAL modernization.

So how's Wendell doing?

On August 25th, UFCW 1776 "President For Life" Wendell W. Young IV sent a letter to the Morning Call. Go read it, I'll wait.

Got it? I felt it called for a response. The Morning Call doesn't allow people to respond at length to letters, so I thought I'd post my entire response here. Have a look.

Wendell "Say Anything" Young

Wendell is talking; Wendell is spinning

The PFM report says Operational and Transition costs; the operational costs are the normal expenses of keeping the stores open, no different from every day, and they pay those whether they're closing down or not. This Operational part is almost $1.2 billion. The same report also shows that keeping the state stores will cost over $2.4 billion. But none of that matters, since the report was done in response to a privatization proposal from almost 3 years ago that is no longer in play. So the $408 million that Wendell mentioned doesn't apply either, because current proposals have different income structures. He knows this, but he won't tell you the truth.

The PFM report also called privatization in Iowa a success. Iowa reported more revenue after getting the state out of retail. Of course, Iowa has twice as many stores as PA now with less than half the population, and a lower binge drinking and DUI rate too. Yes, liquor prices in Washington went up; we know that, but we also know why. The legislature added 27% in new fees. Privatization didn't cause prices to go up. Politicians did.

Again the PFM report's unemployment estimates are meaningless, because they aren't for the current plan. What isn't worthless is the fact that every place that has privatized some or all of their liquor system has increased employment.  The province of Alberta fully privatized, and tripled employment in the industry so did Washington State. What Mr. Young doesn't tell you is the PLCB prevents those increases here. Maybe they would be union jobs, maybe they wouldn't; I guess that depends on how convincing an organizer Mr. Young is.

A quick look at the numbers — real numbers, not guesses — will tell you that after almost 40 years since the "store in a store" concept was proposed and 35 years since it was implemented, it has been a failure. The program never got more than 16 grocery stores to agree, out of the thousands in the state, to put a State Store within their walls. That number is now down to 15. "Modernization" is not going to suddenly change that.

By the way, ask Mr. Young where the extra "modernization" money is going to come from. The answer is your pockets. Ask him what states have agreed to "buy in" with PA as the modernization plan he touts suggests? (Not one.) While you're at it, ask him about how Sunday sales will have to increase by over $350 million alone to make the modernization goal. "Modernization" means "get Pennsylvanians to buy a LOT MORE BOOZE!!!" So much for "control."

So if Wendell's all wet, what should we do? We are the owners of this system, this "valuable asset," as Wendell keeps saying. Well, in every scientific poll taken over the past 40 years, "the owners" have said we want to be rid of the State Store System. We not only have the right to sell it, but the want and desire to sell it. It isn't his call.

Privatization will bring competition and contrary to Wolfonomics, competition causes lower prices and increased convenience like the State Stores can never provide. Privatization will bring overall increased employment: warehouse jobs, delivery jobs, retail and manager jobs. Privatization brings choice to the consumer. Private store managers stock based on their knowledge and what the consumer wants, not what some bureaucrat in Harrisburg tells them to stock.

But we've got to do it right. Worried about higher prices, or "big box" stores taking over, a new monopoly to replace the old? Learn from other states: don't raise taxes, limit total license ownership to 3 to 5 stores, so nobody can corner the market. Worried about tax collections? Collect the taxes at the wholesale level like is already done for beer. Concerned that license costs will make it too hard for small stores to open? Base license costs on size, or sales volume, so a small 1,000 sq.ft. wine boutique can open down the road from a 30,000 sq.ft. superstore. After all, we don't have either in PA now. Make more licenses available at more reasonable prices, too.

Governor Wolf wants booze in grocery stores? So do the rest of us; allow it! We can become a reciprocal state for wine shipping instead of the Eastern Bloc Control model that is being proposed. Give us a normal system, and we will buy in Pennsylvania instead of running to New Jersey, Delaware, or Maryland, because we'll have those big stores, with big selections, and they'll be convenient.

Privatization solves the problems. The PLCB can't.

Painting Pennsylvania's liquor jail cell nice bright colors, putting up new drapes, and calling it "modernization" will not change the way the system works. Privatization will.

Yes I am a proud privateer. I'm a citizen who sees how backward, graft-filled, nepotism-plagued, anti-small business and anti-consumer, inconvenient, and incompetent our system is.

END IT, DON'T MEND IT.

After 80 years they still can't do inventory

Back in November when their latest annual report was released, the PLCB touted that they had updated their website. I guess reporting bad info more inaccurately is an improvement to them.

Here are just some of the things I found this week.

Laphroaig 25 #36279  - Listed as an "On Line Exclusive!!!" which is true, as long as you don't count the ones sitting on the shelf in Allegheny county.  Plus, you don't want to take advantage of the "restructured the website search engine" they've been bragging about by searching for Laphroaig 25 instead of Laphroaig Single Malt Scotch 25...because if you do, you won't find it.

Buffalo Trace White Dog #30570 - Also listed as an On Line Exclusive, but depending where you look one PLCB website says it isn't available and the the other one says it is. One listing won't find it if you look for Buffalo Trace White Dog and the other one will.

Laphroaig Cairdeas 2014 Edition #36485 - Another one that is listed as not available in the product catalog but is on the website.

Is not the On Line store listed as a store in the annual report?  If the PLCB product catalog says "There were NO Locations found for your selected search ..." and they claim "Store inventory is accurate as of the close of the previous business day", this pretty much shows the brick-and-mortar left hand hasn't a clue what the online right hand is doing. I guess judging by the overall lack of large retail or even alcohol industry experience in the PLCB we, the citizens, should not expect a well-run organization who can keep track of what products are available for sale or not.

Maybe they need to hire an outside consultant for a few million like last time, rename the stores again, and switch the apron colors. Maybe Governor-elect Wolf  can take the executives, after they sign another pledge not to take gifts (since the first one didn't seem to work), and make them wear old Nixon buttons. You know, the ones that said "I Am Not A Crook." That should show the public they are "modernizing" and perhaps save them for a few more months.

We deserve better. If your Representative or Senator doesn't think so, ask them why. Then hit them with some of the stuff you've learned here...and ask them again.

Privatization IS Modernization!

PLCB SMACKDOWN

 

It must be their incredible buying power because the difference in taxes doesn't account for the difference in price. Maybe the PLCB can rename a store in response.

Liquor revenue vs. other revenue

More in the continuing saga of why can’t Johnny read -- or do math?


The Union in the guise of a former clerk and current business manager will tell you that “No state has ever realized equal revenue after they privatized, period.” (except Washington State, but I’ll get to that shortly). They cite the decline in Iowa and the contract in Maine as prime examples.

Let’s look at those in real terms. Iowa got out of the retail wine business on July 1 1985, the wholesale wine business on July 1, 1986 and the retail liquor business on March 1, 1987. UFCW Local 1776 president Wendell W. Young IV in sworn testimony stated that, “In just three years, after wine was privatized, revenues dropped by $20 million annually. Revenue dropped by $4 million in Year One; by $12 million in Year II and, finally, by $20 million in the third year of private control.”

What he said is true but there is more behind the numbers that isn’t told. On July 1, 1986 — the same day that retail wine sales were privatized — a 15% licensee tax was repealed. On March 1, 1987 — the first day that private retail liquor sales were allowed — Iowa lowered the wholesale mark up by 12% in order to help the newly established private liquor store businesses. There were 221 state liquor stores, and at the end of the four month transition period, there were 256 private stores; within the year the number rose to 430.

In fact, as reported back in 1997 on the 10^th anniversary of Iowa’s privatization, “Keeping the wholesale liquor business and selling the retail end proved to be fiscally sound. State officials estimate their treasury is $95 million richer than it would have been had Iowa retained its state stores.” And “Between annual license fees and the wholesale markup, the state now makes almost $15 million a year more than it would have, had it stayed in the retail business.” Not exactly the disaster that Mr. Young said in his testimony.

So who do you want to believe that Iowa is better or worse off, Wendell Young, who has an obvious bias, or the State of Iowa itself?

As for Maine, they contracted out their liquor distribution. They knew ahead of time exactly what they would get and what it would cost. Ten years later that contract is ending and Maine is looking to do another 2 contracts instead of just one. This time they want one for distribution and one for marketing and advertising. Obviously, Maine thinks this is the better way to go instead of running the whole show themselves and having all of those salary, retirement and medical costs.

Now for Washington. Collected revenue is up, over any year during state control; up 23% for the last fiscal year. That will go down some when one of the newly imposed fees decreases from 10 to 5% but is still going to be above anything the state stores brought in according to the Washington State Department of Revenue.  So much for the UFCW business manager’s quote about no state ever realizing equal revenue.

Lastly there is Ohio. The union doesn’t like to talk about Ohio since they sold their wholesale operation for $1.5 BILLION. While it is a strange combination of public/private partnership, the Jobs Ohio non-profit that controls the wholesale operation is a private entity. They can go bankrupt with no cost to the state, and anything they make goes to Ohio job creation. The state has no jurisdiction over their books or the management.

Now Ohio might be a special case but when Wendell Young or any other representative says that nobody would pay X amount for PA’s system or that no place made money after privatizing – they are simply lying. Every place in the U.S. (or Canada) that has privatized some or all of their liquor system has also seen an increase in employment, and while that isn’t “liquor revenue,” it is better than what we have here.

The takeaway is simple: if you’re a Pennsylvania legislator, revenue should not be a factor when you’re considering liquor/wine privatization. As far as that goes, neither should employment. Privatization will, based on previous experience, most likely increase revenues, and almost certainly increase employment — if you do it right. In this case, “right” is not giving in to compromise. Do a Washington State — shut everything state-owned down in a matter of six months to a year — but don’t raise taxes. Watch border bleed decrease, employment increase, and voter satisfaction go right off the charts.

Privatization IS Modernization. Accept nothing less.

40 years of…….……nothing.

As you read this I want to remind you that A. Democrats have been in power 21 of the past 40 years and B. Shapp was a Democrat.

This story from 1973 illustrates that after 40 years the Union and PLCB have done almost nothing for the consumer. Let’s take the points one by one.

1.       The union proposed more stores, particularly self-service ones. Self-service stores like we have now were introduced in January of 1969 and 34 years later, or 30 years after this article was written, the last counter store finally closed. There were 750 stores in 1973 - we have 600 now. I would call that a double failure. (For those of you not old enough to remember, Pennsylvania had “Counter Stores” exclusively for the first 35 years after Repeal. You walked up to a front counter, marked a printed list of what you wanted or wrote down the code number, and gave it to the clerk, who then went into the back to get it for you. The last one closed in FY 2003-04.)

2.       Permit credit cards. While the union may have proposed this it was customers, particularly licensees that brought about this change in 1987 - 14 years later and at least 15 if not 20 years after other business of this size did. Certainly a failure at the time.

3.       Provide home delivery for large orders.  I would think that businesses would like delivery too since they place larger orders than most residents but notice how they weren’t mentioned.  A continuation of the PLCB “don’t rock the boat or we’ll screw you” policy still in effect today. In any case there is still no delivery. Another failure.

4.       Adjust markup on items.  You thought this was thought up recently didn’t you? 40 years later still nothing.  I’d call that a failure too.

5.       The union report claims that prices are no higher than in New Jersey.  Sound familiar? After 40 years the citizens still think New Jersey prices are better – mainly because it is true and the over $300 million in border bleed and the building of the outlet stores prove it.*

The fear-mongering hasn’t changed at all. Prices will go up if we raise taxes they say in the last paragraph.  Well DUH.  Don’t raise taxes, increase convenience and sales will go up and revenue will go up, border bleed will go down and everybody, especially the citizens, will be much happier that they don’t have to deal with the state store system. At least the union didn’t come up with “Privatization killed my daddy” in 1973 like they did this year although it was Wendell Young’s father in charge of the union back then.  Some things never change.

(*) For more information on outlet stores read this article

This quote is from the PLCB about the history of the PLCB. "June 3, 2003 - The PLCB opens its first PA Wine & Spirits outlet stores in Gettysburg (now closed), Hermitage and Franklin Mills. The stores, aimed at preventing customers from going out of state to buy alcohol, offer a large selection of products at discounted prices."  

Of course, this begs the question that if PA prices, selection, and service are better than surrounding states as the PLCB and Union claim…….why do we have to prevent people from going out of state?  The parenthetical information is mine.

Do you really want them in charge of "modernization" with a record like this?

Privatization IS modernization. Accept nothing less.

Just to remind you what the Senate is protecting you from...

Thanks to the gutless chumps in the state Senate who couldn't pass a privatization bill (because it would interfere with their campaign cash nom-noms), we don't have to worry about this happening in Pennsylvania!

"Total Wine and More is set to open its sixth Washington state location in Olympia on July 18. The 21,000-square-foot space will stock more than 8,000 wines, 3,000 spirits and 2,500 beers, including 1,500 Washington wines, 80 spirits distilled in Washington or Oregon and 550 beers from the Pacific Northwest region. The outpost will also feature a “Brewery District” beer-tasting bar and growler station, offering 12 rotating taps of local craft brews. Total Wine and More’s seventh Washington store is slated to open in Spokane later this year."

Just imagine if we had passed a similar privatization law in Pennsylvania (without the stupidly greedy tax increase Washingtonians got stuck with, of course). We'd be faced with greater choices, lower prices, more jobs, and diminished border bleed within a year. Thank God the Senate is a spineless special-interest pool that can't bring itself to be a body that reflects the will of the people!

The Election's Over, It's Time To Get Back To Work

The PLCB clerks have a "Save the PLCB" page on Facebook -- can't blame them, but they're standing in the way of progress toward modernity -- and this was just posted early this morning:

"Back to the subject the time to promote modernization is today! New reps need our input! Modernization is the way we move forward! Write, call, visit your Reps new and old. Strike while the iron is hot!"

We need to meet this. PLEASE reach out to your legislators (almost all of them were re-elected, so don't delay: HIT IT NOW) today and congratulate them, and let them know that you're counting on them to come up with and support a solid plan for privatization, NOT "modernization."  

Privatization IS modernization: that needs to be our slogan. The thing is...the PLCB's "modernization" plans are untested, their execution on modernization in the past has been problematic at best (the wine kiosks are only the most visible failure), and really...why would you go to an agency that has so many issues with customer service and central command-itis for ideas on how to "modernize"? 

Privatization IS modernization. There's nothing untested about private retail, it's not only how most other states (and countries) sell booze, it's how Pennsylvania supplies food, clothing, books, housewares, fuel, electronics...everything else people buy. Total Wine knows how to sell booze, Joe Canal's knows how to sell booze, almost every drugstore in Maryland knows how to sell it: it's not rocket science, and it's definitely NOT so dangerous that the state has to do it. 

It's also not really about revenue: the taxes will continue to come in, and all the Legislature will have to come up with is less than $100 million out of a $27 billion annual budget. I think there are some cuts in the Harrisburg establishment that could neatly cover that...and it's well worth it to stop treating Pennsylvanians like children. Besides, border bleed will go down significantly and we'll actually get MORE tax revenue. 

Privatization makes more sense than "modernizing" a system that most Pennsylvanians would really rather do without. Solve it all, simply, and you'll actually create jobs. Sure, the jobs of the PLCB will be largely lost, but they'll be replaced by jobs in the private liquor stores. 

Write your legislators. Today. Tell them you want privatization, not modernization.