Death By a Thousand Cuts: it's working!

Thousand cuts, baby. That's how I like my hoagies.

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

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

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

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

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

Calendar Year	Customer Type	Unit Sales	% Change From Prior Year
2015	Non-Licensee	67,034,168	N/A
2015	Licensee	13,331,217	N/A
2015	Total	80,365,385	N/A
2016	Non-Licensee	68,507,884	2.20%
2016	Licensee	15,282,492	14.60%
2016	Total	83,790,376	4.30%
2017	Non-Licensee	65,797,156	-4.00%
2017	Licensee	21,377,505	39.90%
2017	Total	87,174,661	4.00%
2018	Non-Licensee	63,333,698	-3.70%
2018	Licensee	25,099,208	17.40%
2018	Total	88,432,906	1.40%

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

Calendar Year	Customer Type	Dollar Sales	% Change From Prior Year
2015	Non-Licensee	$835,985,290	N/A
2015	Licensee	$138,374,473	N/A
2015	Total	$974,359,763	N/A
2016	Non-Licensee	$862,634,339	3.20%
2016	Licensee	$160,312,440	15.90%
2016	Total	$1,022,946,780	5.00%
2017	Non-Licensee	$827,676,034	-4.10%
2017	Licensee	$225,796,242	40.80%
2017	Total	$1,053,472,276	3.00%
2018	Non-Licensee	$812,080,965	-1.90%
2018	Licensee	$266,808,655	18.20%
2018	Total	$1,078,889,620	2.40%

Private stores = more state revenue, more jobs

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

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

Privatize. 

Wendell Young still lies and I can prove it Part 3

Trust me; it's all true, even the lies.

On the 25th of June, UFCW Local 1776 President-For-Life Wendell W. Young IV sent out another press release. In this new bit of fallacy, he again says that 5,000 PLCB jobs are at stake. Wendell, Wendell, Wendell...he's lying again!

To start with there aren't 5,000 PLCB employees, according the State. But don't take my word for it; unlike Wendell, I can back it up. Just click here,  then pick Employees and then Employee Count by Agency. Could it be that Wendell is talking about some no-show jobs somewhere where people get paid but aren't really there? No, wait, we're talking about the PLCB; that's kind of a given. Even if there were 5,000 jobs at the PLCB, they wouldn't ALL be at stake, because there would still be the stuff a normal state liquor agency does: regulation and licensing and possibly audits of liquor stores, and something that isn't done in PA today....age checks in liquor stores. Maybe the Bureau of Liquor Control Enforcement (currently an embarrassing arm of the State Police) would even go back into the PLCB, since there wouldn't be the conflict of interest that caused them to be created in the first place.

Mr. Young goes on to talk about the PFM report from October of 2011; an evaluation of privatization that was drawn up on a completely different plan, but that little fact doesn't stop him. He goes into turbo-spin mode, his second favorite thing to do after lying talking (and getting haircuts). 'The Governor's own report says it will cost $1.4 Billion to wind down the PLCB over 4 years,' he cries. At least that isn't a lie -- the report did say that -- but he also doesn't tell you that it will cost over $2 Billion to keep the PLCB running for those same 4 years, using the same PFM numbers. How does he keep from getting dizzy?

Mr. Young commented on Rep. Gene DiGirolamo's plan that would create more stores inside of or adjacent to grocery stores; and allowing for more flexibility in pricing. All well and good except the PLCB has had the power to put stores in grocery stores or near grocery stores...

FOR AT LEAST 40 FRICKIN' YEARS!! 

Guess what?  The grocery stores don't want 'em, anymore than they wanted the Incredible Robot Army of Wine Kiosks, or else there would likely be more than 16 in the entire state 33 years after the first store in a store was done. I'm not even sure the PLCB really wants to do it, since the requirements for the new Washington County store lists 33 pages of what the DGS/PLCB wants...but has not one line about locating near a grocery store (although it does specify what floor polish is to be used before the PLCB moves in).

Then Wendell blabbers about 'alternative pricing strategies' to 'modernize' the State Stores. Been there, muffed that! Almost 30 years ago, in 1985, the PLCB was tasked with developing alternative pricing strategies that fit within the liquor code. This was done but never implemented, and here we are in 2014, hearing that as part of "modernization," they want to develop alternate pricing strategies. What the hell have they been doing for the past 29 years? If my business was this incompetent, I would be working in a liquor store, not wanting to buy a liquor store.

You keep talking, Wendell, and I'll keep writing.  Deal?

Crunch Time -- A Bill is in Debate

I don't have time to explain why I've been silent here for over six months -- a lot of it was work, and some of it was that I did a lot of talking on Facebook, which I now realize was wasted -- but that's not important right now. What is important is that HB 11, a privatization bill, is being debated in the Pennsylvania House today. Debate began last night, and continues this morning. That's exciting, but...the bill needs a LOT of work.

I've got some suggestions. Oddly enough, I got into an email discussion with Jon Geeting, who's involved with the Keystone Politics blog, "Pennsylvania's source for liberal political news and commentary." Jon's an example of why this is not your typical privatization battle, which usually lines up as liberal vs. conservative, free marketer vs. union supporter. Jon recognizes that the system we have is not as it should be, and while we don't see eye-to-eye on the taxes -- though we're not 180 degrees opposed -- we agree on a lot about the state's dysfunctional liquor code.

As I said, we got into a discussion recently, and came to six points that we agreed on, and think should be in any Pennsylvania booze privatization bill. Note that there is nothing in here about the actual end of the State Stores -- except that point 1 covers that effectively; they won't survive the competition -- or the union, because that's up to the legislators. Jon posted them yesterday at Keystone Politics, and I realized that it was time to blow off the cobwebs here and get back in the game. Here are the six points. They're somewhat controversial...in Pennsylvania. In other states, they're ho-hum standard.

1. Let supermarkets sell beer, wine and liquor, effective immediately. -- In Portugal, they sell bottles of whiskey in coffee shops; you can buy beer in supermarkets in most of the states that border PA, you can buy champagne at convenience stores in Virginia...and yet, no one's rioting in the streets. What's the big deal?

2. Charge a flat fee to any business that wants to sell booze – no cap on licenses. -- Pennsylvania's licensing system is broken, it makes no sense for the state, and the artificial limits on licenses penalize areas that are experiencing growth. Liquor licenses sell for upward of $300,000 in some counties...and the State sees only a puny annual fee from that. Get smarter: charge what a license is worth, and charge it every year.

3. Tax volume, not value. -- Pennsylvania's hated Johnstown Flood Emergency Tax is not going away; the State gets revenue from that tax, and booze taxes are an unfortunate reality. But most other states have a gallonage tax, that is placed equally on wine and spirits by the "proof gallon," a measure of volume of alcohol, rather than the way Pennsylvania does it, which is by a percentage of the price. What Pennsylvania's tax does -- unintended consequences -- is make blotto booze (cheap wine, cheap vodka) even cheaper, while making better booze even more expensive. If we're taxing alcohol for some health or moral reason, the gallonage tax is more honest; if it's just about raising revenue...well, why not put an excise tax on everything and share the pain?

4. Allow Pennsylvanians to buy wine, spirits, or beer in other states, or through the mail/Internet from anywhere, without penalty. -- End the police-enforced monopoly. This is pretty simple. The only reason this unAmerican, anti-federal "stop you at the borders" law is even allowed is because of an overactive interpretation of the 21st Amendment. After all, I'm allowed to buy gas, food, books, clothing, whatever I want in New Jersey or Ohio; why not booze? We're American adults; we deserve to be treated that way.

5. Allow any authorized retailer to sell beer in any volume they desire, without fake restrictions. -- End the case law. Now. End all artificial restrictions on how little beer someone can buy in a single purchase, as well as how much. The case law and its tavern corollary, the "two sixpack" law, make no sense. They are there as a favor to business, not for any kind of health reason, and certainly not for the Pennsylvania consumer. Or the Pennsylvania voter. The Legislature has fiddled around for years over this simple change. Shut up and do it.

6. Open up the wholesale market to more competition. -- More wholesalers means more competition, which means better prices and service. Charging $100 million for a wholesaler license is not a way to get more wholesalers. End state-required exclusivity contracts for products; if a wholesaler and producer/importer want to enter into an exclusivity contract, that's up to them and their lawyers, but the State has no interest in mandating it. Another law that was written by the industry...and it's about time we got laws written for the consumers.

These six points will make me no friends in the industry. They completely upset the apple cart, and may ruin long-established family businesses. But they will create new businesses, and the solid family businesses will thrive and succeed...as long as big businesses, chain retailers, aren't allowed to write this privatization bill.

We get one shot at this. Get in touch with your Representative now, today! Tell them you want a better privatization bill. You want a fair privatization bill. You want them to work for you.

Bill to Abolish State Liquor Stores to be Introduced in January!

Holy crap! Can you believe it? Just saw this today, and my head exploded.

Lawmakers are introducing a new measure aimed at getting the state out of the booze business.

Senate Democrat Tim Sheldon is proposing the state privatize liquor sales. "Immediately, you would save the $53 million or so that it costs to operate state run liquor stores with state employees. This is a luxury that we can't afford in our state."
Sheldon said the system can be set up just like in other states that allow liquor sales in grocery and convenience stores.
The liquor control board would continue its enforcement efforts. "It could be done in a very safe, controlled way using the private sector outlets. The taxation would still be collected by the state, the regulation would be made by the state," said Sheldon.
The proposal will get its first vetting when lawmakers return to Olympia in January.

 Wait, what? Olympia? Oh, bummer. This is about privatizing the state liquor stores in Washington. Damn.

Doesn't Pennsylvania have one legislator like Tim Sheldon? No, instead, what we get are guys like Representative Neal Goodman (D-123, Schuylkill County, pictured to the left), who recently said in the Pottsville Republican-Herald when asked about the prospect for beer sales in grocery/convenience stores and gas stations: "This is something the LCB (Liquor Control Board) would have to drive. I don't think this would be something legislatively-driven. This is a debate I'm willing to have ... but it really needs to be thought out thoroughly."

See...no. That's why I really worry about the caliber of legislator in this state. This is not something the LCB "would have to drive." The PLCB has already done a lot towards allowing this kind of thing; they've granted licenses in a surprisingly liberal manner to Wegmans, Giant Eagle, Sheetz, and others. This is one area where I've got nothing but praise for the PLCB. They've been ready for years, and they're pretty clear about it:

The Pennsylvania Liquor Control Board said groceries and convenience stores could have offered beer decades ago.

"The market changed. The law has not," said Nick Hays, a spokesman for the PLCB."The Pennsylvania liquor code does not address whether supermarkets may or may not sell alcohol. It doesn't permit them; it doesn't not permit them."

Hays is right: it's the code. Which, Representative Goodman's limited knowledge -- or deliberate obfuscation -- to the contrary, is something that has to be changed by the Legislature.

There's no need to bury it in a committee for thinking it out thoroughly, either (like they did with that "sixpack law" we were supposed to get two years ago). We've thought it out thoroughly, time and time again, and then nothing gets done. Which has nothing to do with the "thought out thoroughly" part, except the bits that deal with the political calculus. Your legislators want to please you, but mostly they don't want to piss off industry groups like the tavern owners or the beer wholesalers. The whole purpose of this blog is to change that equation.
 
Readers...if you're an interested citizen, write your legislator. It's easy, go do it (type your ZIP code in the box, and you'll get e-mail contact to Da Gov and your state legislators). If you're a reporter, please, please, please, take my ideas, take my passion, steal it with no attribution, but use it. Hammer at this ridiculous system, at the convoluted crap of The Almighty Liquor Code, at the entrenched stalinist edifice of the State Store System, at the arrogant monopolist attitude of Joe "CEO" Conti, at the wasteful and questionable spending on the Courtesy Contract and the Great Table Leaf Re-Branding.
 
Because the time is as ripe as it has ever been. Yuengling COO Dave Casinelli nailed it recently: "Ultimately, the consumers will speak," he said. "There's a groundswell out there. Both sides are kind of a stand-off right now." Damn straight. Why should Washington have all the fun?

Is this great? Or is it pathetic?

A little over a week ago, on May 3rd, I walked into the Wegmans in Downingtown, PA, on my way back from the Sly Fox Goat Races. I bought some cheese, some fruit, milk, dishwasher detergent, and something else...can't remember...

Oh, right. Beer.

I went into a supermarket in Pennsylvania and bought a bottle of Brooklyn Local One (Yes, I know, I should have bought Victory, or at least a Pennsylvania beer, but I just wanted a Local One. Sue me). I got one bottle, paid for it, and walked out, thinking "Look at me, I just bought a bottle of beer in a supermarket in Pennsylvania! The new world has dawned, we are free!"

Big deal. I still don't understand why this is, or was, such a cause for alarm and celebration. It's nothing new. I bought single beers at the Ashton Market in Upper Darby over 10 years ago! The store had about 400 different beers, and I did a two-page beer newsletter for them. It was a small grocery store with a deli counter in the back that did take-out sandwiches, but it wasn't a restaurant: it was a grocery store.

Look, kudos to the PLCB (yes, I really did say that, give me a second to explain): they got this right. When Wegmans and Sheetz applied for their licenses and laid out how they were going to sell take-out beer in their stores, the PLCB approved it. Because it was legal. As they love to point out, they just enforce the Almighty Liquor Code. It wasn't the PLCB that was holding us up. It was the conservative nature of Pennsylvania politics (and retail; you notice that Wegmans is an out-of-state company), a lack of imagination, and the Pennsylvania Malt Beverage Distributors Association, who sued to keep those licenses from being granted.

But that is just about over, appeals exhausted (and a lot of good beer money wasted on lawyers who should have advised their clients better). Which will only mean that now you can buy beer in large grocery stores. That have spent wads of money to buy a restaurant license.

Beer is groceries. See my previous post (which applies every bit as much to beer as it does to wine and spirits): why does this stuff even need to be so heavily regulated? Lighten up. This is not about control. This is about entrenched interests, it's about business. Why not make it about the consumer -- the voter, the taxpayer -- once in a while?