Friday, March 13, 2015

Oh no! More failed PLCB math

Yahoo! Modernization will make so much money!
The Governor seems to think that if putting new "Modernization" brand lipstick on the PLCB pig will improve things, smearing it all over the pig will make things even better.

Really, Tom? Better for whom is the question. Certainly not the citizens, who will now have to cover any shortfalls in bond payments if there is a glitch in the revenue stream.  Remember that PLCB Operating Income went down 8 of the last 15 years on a year to year basis, even though every year had "record sales."

The plan is for the PLCB to make an additional $185 million more than they do now in only two and a half years, with all sorts of unproven ideas. We've talked about them before, but they're worth revisiting...for the Governor's benefit.

Oh. Well, maybe not, but still...
The "consortium" buying arrangement with other states is one of those. Does that sound like something that's going to be quick to come together: state legislatures getting together to pass the exact same law on something that will potentially limit their "sovereignty"? So far there has been no word from any of these other states that they would want to join with PA, nor has anything been presented to explain how our 1930's-thinking PLCB would get around the laws and contracts already in place in those other yet-to-be-named states. Not to mention...the other states aren't interested in buying wine with us; they're only "controlling" spirits, so how much are we going to "save" on this boondoggle?

Then there is the pie in the sky idea about shipping product bought at the State Stores to people in other states (which we can only believe is about screwing PA citizens out of our Pappy Van Winkle allocation, once the margins are unleashed). You know how well that goes over in reverse, if you try that in PA; call the BLCE! Do you think New York would take more kindly to it? They're going after their own stores for shipping out of state! I can't come up with a single reason any state would agree. They may now turn a blind eye to their citizens bringing in wine from elsewhere, but that isn't the same as a state-sponsored evasion of their liquor excise tax, which is what the "modernization" folks are really proposing here.

Wait...What? That shit don't make any kind of sense.
Then there are the perennially-failing One Stop Shops, the "store-in-store" idea. This program has been authorized for over 40 years and in place since 1981. How many businesses actually want a State Store in their store after 34 years of trying? Fifteen, by my count. The wine kiosks did better than that! Another PLCB success story that will somehow magically change with a good coating of "modernization."

Last year the state stores had an unspent tax collection margin ("profit") of 6.62% before kicking in for the BLCE's budget, or about $148.6 million on sales of $2.24 billion. How much will sales have to increase to get to the $333.6 million Wolf needs? The answer newspapers are finding is huge: at over $5 billion, and that still isn't enough: it doesn't take into account the inevitable increase in the State Store System's operating expenses. The Stores' Operations and Supervision expenses went up by 8.75% just in the last year, even though only nine stores were added. How many stores would be needed to reach $5 Billion in sales, even if all the other schemes worked out? How much would all the extra workers add to the already over $600 million in PLCB pension debt? And exactly how much booze is Wolf planning to force down our throats? Who knows...and the "modernization" folks aren't saying.

Even to reach the minimum expected "profit" increase of $46 million on expanded Sunday sales would require selling $700 million more annually on Sundays, or over 33% of the entire year's sales on a day that is, let's see, 14.3% of the week - something no other retailer does. To get to the upper estimated figure of $69 million in additional profit from Sunday sales, they would have to sell over $1 Billion more worth of product just on Sundays. Get on down to the State Store, Reverend, they got some serious "modernization" going on. It's a miracle!

Tell Costa to get a bucket...I think I'm gonna be sick.
The PLCB can and has taken two years to outfit one store. The transfer to "Fine Wine and Good Spirits" is on a 50 year schedule now. Why will the PLCB not be as incompetent as it always has been under any state-run plan?

With the PLCB now responsible for paying off the pension debt bond the Governor proposes, any shortfall will result in higher prices. They have no choice: there is nowhere else to get it (unless the State Stores start selling recreational weed, as some control-crazed supporters suggest). It will be this generation's version of the Johnstown Flood Tax...only the Flood Tax will still be with us, 18% on every single bottle, plus bottle fees, plus the "adjustable margin," plus sales tax (that's going up as well, of course). Hello, New Jersey! Hi there, Delaware!

During the last round of normalization hearings, one of the key points made against the idea was that according to a CDC "task force" report, the end of control would bring a 40% increase in alcohol consumption, bringing the end of civilization as we know it to the Commonwealth. Yet the same Control Crazies are lining up behind a "modernization" plan that requires consumption to increase at least 100% — to DOUBLE — to reach the numbers they need. Every argument about safety, external costs, health, and control goes out the window when it comes down to the brass tacks of keeping these unpopular, unwanted, unbelievable retail fossils. This is Control in its naked, ugly truth: it's really about keeping union jobs, and union campaign contributions.

Tell your Representatives and Senators to reject this insanity and to bring Pennsylvania as close to what is normal for the majority of the other states as we can get. We deserve it. God knows we've waited long enough. Tell the Governor, too. He's clearly confused.


Anonymous said...

Confused or just south of ignorant and west of brainwashed?

Lew Bryson said...

I don't think the man's ignorant, and I don't think he's brainwashed. I think he may have been given some questionable advice.

Albert Brooks said...

Lew is nicer than I am. I think the Union flat out lied to him by vastly over inflating what more lipstick could or would do to the PLCB pig.

Anonymous said...

If this Wolf in sheep's clothing really wants to "modernize" anything, he has a LONG list of items to be fixed. Let me give my top ten:

1. open new stores in the 30,000 square foot range, so that eventually those that are approximately 10,000 square feet are the smallest, not the largest

2. do some very basic repairs to the stores that really have been needed for years at a lot of the stores, and in the process of repairs, clean the stores (many are filthy)

3. hire younger employees (no offense to older people, but a lot of the employees are older men) to be more with the times, and ban the hijab as acceptable in the dress code (I have seen female employees dressed this way at Philly stores)

4. make an effort to open stores in close proximity to supermarkets as much as possible

5. add public restrooms to most if not all stores (except perhaps those where thieves, bums, etc might loiter and perhaps drink the store's items in, unpaid)

6. only open stores in locations with good visibility and with an abundance of parking

7. give each different style of PLCB store a distinct name, to prevent a customer perhaps looking for a true "premium collection" store with a luxury cooler from stumbling on a store with only a carpeted section for more luxurious items, for example

8. give all stores the same hours on Sundays as they have on Saturdays, except for either rural stores that do minimal business, and wholesale stores, that have banking hours

9. give all supermarkets the right to sell sixpacks of beer, without making them get a cafe license

10. fix the store locator on the website so that it returns stores IN ORDER based on proximity to the user's location

Are any of these unreasonable to ask? It really could be bad if privatization happens before all these points are addressed, because why should private enterprise be expected to do a better job of anything than the PLCB if all their lives, these people were used to the state monopoly's traditions? I know competition makes businesses try harder to satisfy the public, but in this case, will a private store really need to do much to impress the public, except perhaps have better prices than a past state store?

Albert Brooks said...

Some good ideas, of course private stores already do much of them without the government telling them to do so.

1.The PLCB really can't do larger stores since they don't have the product to fill them. A 30K sqft store in the private world claims 8,000 wines in stock. Not bottles like the PLCB seems to do but actual different skus. 4,000 spirits and then there are 1,000 or so beers. Not gonna happen in PA under the state system.


3. The current system is civil service and hires all the wrong people according to those who want modernization. I'm not sure if changing that will allow for younger unskilled workers.

4. It is a priority now they say.

5. All the new stores have public restrooms. The change over to FW&GS stores is on a 50 year schedule so you might have to hold it awhile.

6. That parking requirement means no stores in cities you know.

7. Agreed

8. While the PLCB can set hours for all stores Mon-Sat it is the legislature that has to approve increased Sunday hours and store openings. Although the PLCB is already breaking the law by having more stores open on Sunday than they are legally allowed.

9. Legislative change again, not the PLCB

10. I'g go even farther and get somebody who can figure out ALL their computer customer service problems. Store location, inventory, searches, spelling, listing standards....all those things private businesses seem to have figured out.

Anonymous said...

Just received an add with beer- wine-liquor prices from total wine shop in the state of Delaware some of the prices for cases and 12-packs were less than what the beer distributors and bars can buy them for.
I worked for a large wholesaler in Philadelphia for many years so i am not blowing a lot of smoke when I say I am taking orders from my neighbors In Montgomery county its Easter and Paddys day.
So some Monday or Tuesday hang out in Delaware and see the unmarked white vans stocking up and then making their deliveries to distributors and shit hole beer delis all over Philadelphia not to mention all the neighbor guys taking orders from their friends and buying in Delaware.
Some would argue that the beer business is doing well compared to the blood letting the last five years,Pennsylvania and the state are bleeding money you have groups of people who work and sleep in their business just to make a dime on a buck.
The beer wholesalers could care less their pay day will always be their I even if they are playing fantasy football beer business they know and the breweries know less is more.

Cheers Pumpkin Head

Albert Brooks said...

I lived within walking distance of the old Pennsauken Liquor Mart in the 60's and saw the trucks with PA plates all the time. We tried to boost things when they went in to get another cart load. (Degenerate that I was back then)

I'm not sure I agree about the PA beer distributors always making money. There were over 1800 at one time and now it is 1072 active licenses. Those 250 grocery stores with "R" licenses are killing them and that number isn't going to get smaller.

I'll be making a trip on Wednesday myself with a list of orders from the good people of PA. It might only be $1100-1200 but it is $1100-1200 the PLCB isn't going to get.