Monday, March 2, 2015

What's So Modern About "Modernization"?

The main alternatives to liquor normalization*, as proposed by HB466, are doing nothing...and "modernization." The Senate GOP got their chance at "doing nothing" two years ago when they torpedoed the House's last normalization bill. Now the other one's getting an outing; but just how modern is "modernization"? Let's find out:

The Democrats are in a full court press against liquor normalization, from Governor Wolf -- "I will veto the bill if it reaches my desk in its current form." -- to Representative Costa -- who puts his faith in the Governor's veto and one nebulous "modernization" plan -- down to little Democrat wanna-be Gene DiGirolamo, the Republican representative from lower Bucks County, who's been pathetically peddling his own "modernization" bill for two years, with no serious takers.

It's too little too late for the House: HB466 swiftly passed with a 114-87 vote on party lines (with four spineless Republicans deserting their party). The Democrats and their union foot-soldiers see the writing on the wall, the writing that says "30-20 Republican Senate majority," and they're nervous. They're talking tough, but they're relying completely on two things at this point: the past (and unexplained) reluctance of Senator Chuck McIlhinney (R-Bucks) to let a normalization bill out of his Law and Justice Committee, and the Governor's stated readiness to veto a bill..."in its current form" (emphasis added to a word that gives him some wiggle room).

If the governor full-out vetoes a passed bill, the Republicans on their own don't have the votes for an override, and they won't get any Democrats to go with them. That just won't happen. So it's possible the Governor offers a deal to get what he wants, and part of that deal may involve either open debate of the "modernization plan, wherever that may go, or incorporation of some of the modernization ideas into a watered-down normalization bill.

That begs the question: what do the Democrats (and little Gene) mean by "modernization"?

As you might expect from the crew backing the State Store System, it's a retro kind of "modernization." Here's what the plans offer.

Sunday sales -- Expand Sunday sales to all State Stores, and extend the Sunday closing time from 5:00 to 10:00 although the majority of stores close at 9:00 other days. Hmmm, let's what? First, there are already over 150 stores open on Sunday, and they're in the most heavily populated areas, so not a huge impact. Second, and just to be petty: does this include the stores in places like Snow Shoe, and Clymer, and Knox that are only open three days a week now? The sad thing about this? It's the most directly consumer-friendly part of the whole "modernization" proposal.

Direct shipment of wine -- Kinda depends on what you mean. Do you mean that wineries and importers would be able to ship directly to you? Or directly to the State Store of your choice? (Wow, so convenient!) Because it depends on which Democrat you talk to. And keep in mind that they want the wineries to pay a hefty fee and do a ton of paperwork to support it and to tell them who bought what and how much; there's a limit of 9 liters/12 bottles a year (one case and you're done). Then you'll have to pay shipping, and...this really only affects a small number of high-end wine buyers. This one sounds good, but it's going to be bait-and-switch.

Wine and beer sales in grocery stores; cafe licenses and "store-in-store" -- A proposal to expand wine sales to grocery stores that have bought an R license to sell beer (with the stipulations that they must open a 30 seat cafe and ring up the booze separately from any food purchases...and limits on how many bottles they can sell at one time). This is not modernization, it's something the stores thought up, and are paying through the nose for because the state won't adjust the Almighty Liquor Code to allow it to happen without buying up an expensive bar license. (No one's said whether regular taverns will be able to sell wine, either.) If they DO expand the Code to allow wine sales by the bottle, they will make sure that the price isn't competitive with the State Stores. Count on that.
Then there's the bright idea to expand the "store-in-store" program, which puts a State Store under the same roof as the grocery store. Well, hooray. Fact is, "store-in-store" has been available since 1981, and since the big co-location push began in 2003 most supermarkets just aren't interested (read the sad story here). Bringing it up only sounds new because very few Pennsylvanians have ever seen one of these sorry things, or realized that it was particularly convenient when they did; after all, it's just a State Store that has a door that opens into a supermarket. Then there's DiGirolamo's idea, which is to put a free-standing 400 square foot "mini-State Store" with a limited selection of wine in grocery stores. It sounds like a wine kiosk, only there's always a clerk there, not just when it breaks down...well, okay, you're right, that was pretty much always. This isn't modernization, this isn't even a new idea. It's an old idea that already hasn't worked.

Extended hours -- First they tell us when private stores come in, people can buy booze at all hours of the night, and that leads to crime. Now they tell us they want to stay open later. You figure it out.

Sen. Costa illustrates how much prices could be increased
(or maybe he's ordering a Subway foot-long)
Price flexibility -- This is beautiful. Currently, the State Stores work on a regulated markup: every price is set to go up by 30% of the wholesale price (plus taxes and fees). They want to change this to allow the State Stores to set the margins as they see fit, "up or down," on different products. Given that the System's operating costs just keep increasing as a percentage of total revenue, how long will it be before all the margins are going up? (Keep in mind, increasing the overall margin was suggested to the Board as a way to "counter higher expenses" just last year by the PLCB's finance director.) Consumer-friendly? This is PLCB-friendly, it does nothing for you.

"Upgraded procurement guidelines" -- What does this even mean? Do you think it will be good for you? Do you think it's modern?

Personnel hiring outside the Civil Service system -- Yeah, that's modernization: the Civil Service rules are the only thing keeping the PLCB from being a complete patronage pit. They say they need it to hire people who know wines and spirits and promote people for product knowledge (then on another day, they'll insist that all of their employees are already wine experts and highly trained).

Increased licensing fees -- Charge bars and restaurants and beer distributors more to sell booze on the license they already have; charge them more to sell six-packs, charge them more to be open on Sunday, charge them more to sell both wine and beer. This isn't any kind of 'modernization,' this is charging everyone more for drinks in order to cover the PLCB's steadily increasing operating expenses.

Customer loyalty programs -- Because everyone has been asking for coupons and a PLCB "shoppers card." Haven't you asked for that? Isn't that modern?

Expedited review of leases -- Right. So they can move the stores around more without any input from the local community. More top-down Soviet-style planned economy crap. That's not "modern," that's 1950s-era thinking.

Enter into a buying consortium with other control states -- To lower prices. Really? If they get this and the price flexibility, they'll pay less to producers, they'll charge us the same amount as before or more, and -- you got it -- their operating costs will keep going up. And will selection improve? Never.

Self-service lottery ticket sales in State Stores -- This isn't "modernization." This is simply taking lottery sales and fees away from actual businesses, supermarkets and convenience stores. Next they'll want to sell snacks and cigarettes. The State Store bureaucracy apparently just doesn't like independent businesses. (They don't really like you, either; State Store employees refer to you as a "chronic alcohol user." Did you know that?)

That's it? That's "modernization"? Yup. Does it address the real concerns? No. There is:
  • Nothing about more stores than the current bizarrely low number of about 610, when the average for a state our size and population would be, at the least, over 2,400 (but those increased operating costs mean more stores would utterly bankrupt the system)
  • nothing about better selection in the stores (because they don't even know how to sell what they already have)
  • nothing about taking down the insulting police-enforced monopoly that makes buying a bottle of wine in New Jersey a crime (there's been talk recently, sure, but the Legislature's been talking about getting rid of the case law for over 20 years)
  • nothing about delivery to licensees (did you know that? Bars and restaurants have to go to the PLCB to pick up their booze, because the state agency can't be bothered to deliver it. Good thing, probably, because the increased operating costs would be huge! Forget the fact that private beer wholesalers somehow manage to do it...)
  • nothing about breaking the case law (because they don't want to upset the beer business, which has been such a friend to them by killing normalization in 2012 UPDATE: Senator Brewster's latest modernization plan DOES contain language about lowering the case limit. You'll have to buy his whole bill to get it...)
  • nothing about allowing any supermarket to sell wine and beer (without buying a scarce tavern license and adding a "cafe", something small family-owned stores simply can't afford to do)
  • nothing about beer sales at convenience stores, drug stores, gas stations (that's so scary)
  • nothing about how to even get this crappy system up to the level of New Hampshire's control stores
  • nothing about fixing our crappy booze tax system (which currently makes cheap booze cheaper and expensive booze more so; just the thing to "control" consumption)
  • nothing about improving service, which continues to elude them; at least, it does in all the stores we've gone into recently.
Nothing, in short, of any real value to the consumer. Modernization is a lie, a shiny glittering lie, just like a fishing lure, and the hook hidden inside is that it's an excuse to keep this creaking relic alive for ten more years without threat of normalization while we 'give modernization a chance to work.' But it won't. They don't even know what's really wrong with this horrible mistake of a retail system, which is why they can't fix it. They want to "modernize" it? They've had 80 years! How many more chances do they deserve? Governor Wolf says he's a businessman? MAKE IT A BUSINESS, many private businesses. It's not even radical; it's normal, just look at any and everything else you buy.

Normalization is modernization. Accept no substitutes.

*We're considering a change here. Changing the state's current monopoly on wholesale/retail liquor and wine sales is something both liberals and conservatives are in favor of, but calling it "privatization" gives its opponents a wedge to split off liberals who don't like the idea of privatizing more legitimate functions of government, like roads, schools, prisons. We'd use 'modernization,' but... We're going to try the word "normalization," given the fact that selling wine and liquor in privately-owned stores IS normal in the majority of the U.S. (yes, even in most of the "control states") and the world. We offer this idea for the supporters of real change to use.


Geno Washington said...

I am amazed to see the "smells like bullshit" photo again today, because it just so happens I meant to add an update to your last post (a few months back) that had that photo. You complained about the PLCB putting their new Lebanon store in a shopping center with a Kmart and no supermarket, despite the "Convenience 2020" goals of locating by supermarkets.

As it turns out, the Kmart in Lebanon is scheduled to close later this year, and Giant is to relocate to its space. There also are plans (not yet approved by government) for the Weis in town to move to the former Sears (sister chain of Kmart) in Lenanon that already closed.

Lew Bryson said...

Hey, 'Geno'? You ever think of starting a commercial real estate blog?

Albert Brooks said...

The Lebanon post was June of last year not a few months back. Until I see proof otherwise I'm not even gonna think that the PLCB knew anything over 18 months back - like the Kmart would close and a Giant move in. Raccoons have better building planning than the PLCB.

Geno Washington said...

I can't support a privatization bandwagon until I can sleep knowing the 1951 PA Liquor Code (signed into law by John S Fine) will be dismantled first. And I am really, really hoping people don't protest chain stores selling alcohol in their communities before that can even happen...

Anyway, I am NOT knowledgeable at all about retail real estate, but I study trends that might be of interest to the community that is. Think of me as the voice of the consumer, which stands up against the voice of big business, while also standing up against the PLCB and their assault on reason. I would love to see privatization happen, but not if it means going to a beer distributor for spirits (and I think all supermarkets should be able to sell whatever alcohol they want, whether or not they have a "cafe" license). So again... I think rewriting the code needs to happen before the state stores are dumped.

Anonymous said...

I'd love to have a liquor store move in next to my beer store.

Albert Brooks said...

The PLCB has had 82 years to try and make that happen. How's that working for ya?

Anonymous said...

One with the Chairman selections.

laprofesora952 said...

I was pleased to find your blog quite by accident recently. I am in the Pittsburgh area and we've been having a run-in with the PLCB. I'm part of a wine tasting group at a local community center that has been meeting for almost 20 years until one of the board members inadvertently "outed" us to the PLCB. Now we have to jump through all sorts of hoops just to drink wine in the basement of an old school. This absurdity alone is enough to show how outdated and ridiculous the PLCB is. I've long since given up hope that it will ever change in my lifetime. Oh and yes, I am a proud wine smuggler (I prefer "smuggler" to "bootlegger").

Anonymous said...

The PLCB is fine as is.

Lew Bryson said...

Ah hahahahaha! That's hilarious! I just spent the day touring New Jersey liquor stores for a story I'm working on, and the much larger selection (and beer, and cigars, and cheese, and gift items) made me envious and angry. The PLCB is inadequate at best.

Anonymous said...

So you think other people spend their days "touring liquor stores"? Hm. I guess everyone needs a hobby.

Lew Bryson said...

No, but I believe I did say I was doing it for my job, something plenty of people also do. They're liquor, wine, and beers salespeople; I'm a writer.

Reading comprehension: it works, try it.