Wednesday, July 6, 2011

PLCB toots own horn, shows amazing knowledge of market

Just got this off my daily email from Shanken News Daily:
After Record Year, PLCB Chairman Says Premiumization Will Be Key To Further Gains
Following yesterday’s announcement of a 4% sales increase to $1.96 billion in the year through June at the Pennsylvania Liquor Control Board (PLCB), chairman Patrick “P.J.” Stapleton III told Shanken News Daily that future growth will depend on consumer trading-up patterns. “In the past year, most of the growth came from the premium to budget level,” Stapleton said, adding that he hasn’t seen much premiumization in recent months. Still, the new fiscal year has started off strongly. “The first weekend of July was very encouraging,” he said. “On a same-store comparison with last year, we were up 8.3%. So there are signs that we’ll have another very good year, but the extent of that will depend on consumer buying patterns and whether they’re willing to trade up.”
Pennsylvania overtook Michigan as the top spirits control state in calendar 2010 and remains by far the largest control market for wine, which accounts for around half of its dollar sales. The PLCB’s Chairman’s Selection premium wine program—up 19% to over $50 million in the fiscal year—is growing in popularity. Chairman’s Selection wines range from $8 to over $100—with wines normally selling for $20-$50 often discounted to between $10-$15 within the program. Stapleton said the $10-$15 range continues to be the sweet spot for wine market growth in the Keystone State. He added that the PLCB has abandoned plans to extend its supermarket wine kiosk program into spirits, acknowledging that the kiosk initiative has had a “rocky road” so far.
Let's parse this. The PLCB is making much of their 4% sales increase and record "contribution" to the State's General Fund. Of course they are, they know they're in deep crap, and "revenue" is like shiny bits of glass and tasty pieces of bacon and chocolate to legislators: irresistible. This ignores that the State Store System has the humiliating advantage of the Police-Enforced Monopoly to force us to buy whatever they put out there, and also ignores that PA's liquor and wine taxes are bizarrely high (have a good look at that report; we'll be talking about that soon, too).

Then, "premiumization"? Jeez, PJ, are you behind the freakin' curve again, or what? Premiumization's only been the biggest news in spirits for the past ten years, y'know? Once again, the PLCB is wickedly late to the game.

Hey, here's a thought: given that the PLCB doesn't seem to know squat about selling, maybe the sales are at a record because inflation continues to drive up prices, the monopoly is still firmly in place, and the economy has recovered somewhat in PA (and alcohol was not severely affected by the recession to begin with)? Hmmm? Show me what the PLCB has done -- other than the brilliant kiosk program -- to earn any kind of praise for what largely looks like an act of nature, and I'll consider it. Face it, PJ: Pennsylvanians buy from the State Store System because they have to. They have no other choice. If you can't make money at that, you might as well practice law.

1 comment:

Anonymous said...

I wonder how much of the $500 million is from taxes and how much is from the PLCB's "record profits."

In 2009 the PLCB contributed $125 million in profits to the state treasury. In 2010, with higher revenues, only $105 million. If Conti's policy of 'higher revenues = less profits' continues we should expect a profit transfer of less than $100 million this year.