Tuesday, June 28, 2016

The Most Important Letters at the PLCB Are Not "U" or "I"

The most important letters at the PLCB are C...Y...A. That's right; the agency runs on Cover Your Ass. Have a look.

In the Winter/Spring issue of the PLCB propaganda magazine "Taste," they had, on the cover, featured a drink called the Aviation, which requires creme de violette. It is a crucial ingredient in the cocktail, a necessity. But the PLCB didn't sell creme de violette at the time, except as a "special liquor order" (the aptly-named SLO) with a minimum order of six bottles. It sure seemed like they were telling anybody who wanted to make the drink featured on the cover of their own magazine -- who didn't want to spend $100 on a six-bottle SLO -- to go out of state to buy the proper ingredients. Of course, after having that pointed out, the PLCB approved creme de violette 2 months later. I'm not sure if it is really on the shelf yet, and how long will it be before they decide it isn't meeting their Five Year Plan of Sales and de-list it...again?

This isn't the first time the PLCB has put drinks in their rag that you can't make if you're stuck shopping at the State Stores, and I'm sure it won't be the last, either. ..again.

Get it while you can...or go out of state...again
Of course the most famous incident of CYA in the PLCB was when they tried to hide the whole wine kiosk fiasco as documented here. Nothing like trying to destroy evidence to inspire confidence in a public organization. Then there was the whole TableLeaf (and others) house brand disaster, and again, somehow all the paperwork on who instituted the idea, who initially approved it and why - all of that has disappeared.

We can go back to the big Oracle upgrade that went more than 200% over budget ($25.8M to $66.6M) because the PLCB couldn't read and understand the contract they signed. The Auditor General had a great time with that one, stating, "This raises questions about the PLCB's ability to adequately contract for information technology solutions." And that wasn't even the first time that was brought up by the AG. That earlier report is no longer on line at the AG website but I have a copy if you want to read it.

In fact, just reading all of the AG audit reports show a history of CYA. Remember the smile training that the husband of a senior PLCB official "won"? While the AG did say it was legal -- barely -- that didn't stop the PLCB from authorizing a second year as if to rub it in. Strangely enough, customer complaints increased.
We're happy to get you anything you want (if that has been authorized by people who know nothing about the liquor industry)!
"Each board member evaluates each license application on its own merits, thoughtfully deliberating over each decision and voting as he deems appropriate," says Elizabeth Brassel, Mistress Of Propaganda PLCB. Except when the Democratic Governor asks the Democratic Chairman to change his vote, like just happened when the Board "Freed The Six-Pack"....in a whole nine stores. That's about 1,416,667 people per "freed" store. I hope they hired extra cashiers.
Lining up for them freed six-packs; thanks, Wolfman!


Tuesday, June 21, 2016

Success and Failure

Quiz time boys and girls!  We are going to look at how to do things, and how to do things right. A tale of two (or more) control states. Record your answers and see how you did (some questions have more than one correct answer, but here's a tip: Pennsylvania is never the winning choice).

1.) This control state never had the FBI investigate their senior management in the last 20 years.
Pennsylvania did, and the investigation is ongoing.

2.) This state didn't have have senior management plead guilty to graft
Pennsylvania did.

3.) Pennsylvania spent $4 million (with an out-of-state marketing firm) to rename the State Stores. (Again!)
This state didn't.

4.) This state has people specifically travel to it for great booze prices.
Pennsylvania has people specifically leave it for great booze prices.

5.) This state " aggressively pursues a strategy that provides you with the best possible value."
Pennsylvania? Too lazy to try (and proud of it!).

6.) This state sells a 1.75L bottle of Jack Daniel's regularly for the same price Pennsylvania advertises as a "sale price." (And their sale price is $12 less than Pennsylvania's regular price!)

7.) Pennsylvania has the most liquor border bleed per capita in the U.S.
This state has the most reverse booze border bleed per capita in the U.S.

8.) This state won an award for being innovative in liquor and wine ordering (in control states).
Pennsylvania came in third...over a year later.

9.) Pennsylvania has one liquor store for every 21,000 residents.
This state has 20% more stores per capita.

10.) This state has 2 stores over 20,000 square feet in retail space, and a third that is over 33,000 square feet is being built.
Pennsylvania has one store in the entire state over 15,000 square feet. (And is a much, much larger state, with just under ten times the population of the other state.)

11.) The full time employees of this state generate 3 times the sales of the full time employees of Pennsylvania's State Store System.
The PLCB ended the last fiscal year almost $240 million in the hole.

Did you write down your answers? Let's see how you did!

1.) You could pick any other control state except North Carolina.
2.) Yup, any other control state except North Carolina.
3.) Any other control state.
4.) New Hampshire is famously New England's liquor store of choice.
5.) New Hampshire again.
6.) New Hampshire (as of 6/20/2016 PA regular price is $46.95, sale price $42.95. New Hampshire regular price is $42.99 and their sale price is $34.99. If you buy six, it's almost worth the trip!)
7.) Pennsylvania loses a huge amount of revenue to border bleed, while New Hampshire, with a population of about 12% of the Commonwealth, sells over 250% as much wine and spirits per capita (it ain't consumption, either: they have a slightly lower DUI rate). Over half of New Hampshire Liquor and Wine Outlet customers are from out of state.
8.) New Hampshire: innovative, Pennsylvania: wine kiosks and cost overruns.
9.) New Hampshire (1,350,000 residents / 79 stores) v. Pennsylvania (12.750,000 residents / 605 stores): not even close, New Hampshire wins again!
10.) New Hampshire: getting the picture?
11.) New Hampshire wins again: $647,000,000 in sales with only 305 full time employees = $2,131,000 per employee (right, over 2 million per employee). Pennsylvania? With $2,340,000,000 in sales and a bloated 3,100 full time employees, that's only $755,000 per employee. Sad.

Which state is a success and which is a failure? See, it's not even about Pennsylvania being a control state, it's about Pennsylvania being a lousy control state! If the Pennsylvania State Stores ran as well as the New Hampshire Liquor and Wine Outlets (er...and the taxes were similarly reasonable), this blog would never have started.

When you can't even do wrong right...time to give up. Privatize, because you will never "modernize" to the same level as New Hampshire. (Mostly because by the time the PLCB got there, New Hampshire would be 30 years ahead again.)

Monday, June 13, 2016

What happens when you "Free the Market" ?

When you don't have a police enforced state monopoly that needs to be "loosened up" for the Democratic convention you have this:

While not a real ad from Total Wine it is the reality of the difference between PA and the freedoms enjoyed by most states. The PLCB is why we can't have this. The PLCB is why we don't have the selection other places enjoy. The PLCB is why we will never have the convenience wanted by the majority of the citizens. Do you really think that being able to buy 4 bottles from a bar (since 95% of the licensed prerequisite places are bars) is the same as having 2400 real liquor stores?  And the PLCB is why we will never have the service found in stores that specialize where the owners livelihood depends on the customer coming back not because they have nowhere else they can go but because they want too.

In real stores the customer is king, not the clerks. Privatize.

Tuesday, June 7, 2016

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.

Monday, June 6, 2016

There are lies, damn lies, and...Governor Wolf

We're still seeing a lot of talk about how Governor Wolf is behind "freeing the six-pack," when honestly, all he did was send a politically opportune letter. Here's how the Governor spun "supporting" what was going to happen anyway into propaganda for the masses, taken directly from the Governor's blog: a closer look at the claims. 
I’m hearing a lot about how Pennsylvania “Freed the Six-Pack.” What does that mean?
"Last week, following Governor’s Wolf’s request, the Pennsylvania Liquor Control Board approved nine licenses allowing gas stations to sell beer. These approvals freed the six-pack for certain gas stations with appropriate accommodations that can now to sell six-packs of beer."

Reality - The Board had already approved licenses for places that also sold fuel, which is what let to the current case in front of the State Supreme Court. There was no reason to think the Board wouldn't approve other licenses that met their requirements. In fact, if they didn't, they would likely be taken to court just like when they tried to stop grocery stores from selling beer in "cafes" in 2010.

Why is this such a big deal?
"'Freeing the six-pack' will make the commonwealth more inviting for consumers and businesses by improving customer service and convenience for Pennsylvanians. Here’s what Governor Wolf has to say about it."

Reality - With the quota system in place (one R license per 3,000 people per county), those licenses had to come from somewhere. Robbing Peter to pay Paul doesn't change the total access or number of places to buy. While you may be able to buy beer at a couple of gas stations, there are fewer places to have a beer with your meal (unless you really want to have lunch at a gas station "cafe," you poor thing), and any new places that open will be more expensive.
Stop right there! There will be no wine or liquor convenience while I'm Governor!
What exactly happened at the May 25 PLCB public meeting when these licenses were approved?
"At the regularly scheduled May 25 Board meeting, nine license applications from businesses that also sell gasoline were considered, eight of which had been held at prior meetings because they did not achieve the required two votes for either approval or denial. Now that the Board is at its full complement of three members, a number of licensing applications that have been awaiting Board action for months may be considered again.
"After careful consideration of various factors – including Commonwealth Court precedent upholding the granting of liquor licenses to convenience stores and grocery stores with alcohol sales locations separate from fuel sales operations – the Board unanimously voted to approve these nine license applications."

Reality - The PLCB first decided to allow beer sales at a convenience store location that also sells fuel on July 14, 2014, This decision was upheld by the Commonwealth Court on  July 31, 2015. By that time, the PLCB had approved more licenses for grocery and convenience stores that also sold fuel on the property.
It was Board Chairman Tim Holden (appointed as chairman by Wolf) who was voting against approval of further licensees when the board was down to just two members (after Joseph E. "Skip" Brion left on Nov, 19, 2015), supposedly because he wanted to see what the State Supreme Court would do with case of the appealed Commonwealth Court decision. However, the Supreme Court didn't agree to take up the case until Feb 18, 2016. That left a three month period between Brion leaving and the Supreme Court agreeing to take up the case where Holden voted against further licenses. Think about it: the 'no' votes could not have been for the reason he stated. Since it only takes two votes by the board for approval, and he had approved other licenses previously for properties that sold fuel — what changed?
May 25th 2016 was the first time the Board had three members since November the previous year. The Governor had sent his letter to the board asking them to "free the six-pack" (which really meant just chaining it up somewhere else), and suddenly Chairman Holden decides he can't wait for the Supreme Court decision, because it may take too long!

Will there be more licenses like this approved?
"Governor Wolf has requested that the PLCB approve similar subsequent applications that otherwise meet PLCB standards. The PLCB Board members have indicated that while each license application is reviewed and evaluated on its own merits, they, too are supportive of additional consumer convenience and growing Pennsylvania commerce."

Reality - "Licenses like this" are the only licenses available; there is nothing special or different about them.  Having a gas station buy an "R" or "E" license takes that license away from a bar or restaurant. It doesn't change convenience at all since the number of locations hasn't changed, and it is questionable if it grows employment, since a restaurant usually has more employees than a gas station.

How soon can these businesses start selling beer?
"As soon as each license is administratively finished up and issued to the licensee, that business can start selling beer. This could happen in as little as a day or two following Board approval."

Reality - Or it can take months, like the seven months it took to make the decision on some of these licenses, even after all the administrative work was finished and waiting.

How do additional gas stations get approval for selling beer to go?
"A number of different PLCB license types allow for sales of beer, including restaurant, eating place and distributor licenses. Each license type has different qualifications and grants different license privileges."

Reality - Because of the current system, every license that gets approved for this use is taken out of the pool of licenses that could be available for bars, restaurants, distributors that can effect a downtown revitalization and community growth. I don't hear too much about a convenience store or gas station doing that. This makes it more expensive for small businesses to get a license and thus leads to higher prices needed to pay off the license which means higher prices for you the consumer and possibly a need to sell more alcohol to make up the increased cost. Also, there just aren't that many licenses available right now, and until there are...no more gas station beer.

Conclusion - The Governor didn't free the six-pack, as there was and is no increase in availability. He also didn't do anything to make the system better, as pointed out by Lew Bryson in his excellent piece. He did use this to deflect privatization because people do tend to think of beer, wine, and spirits together, even though that hasn't been the case in this state for over 80 years. The six-pack is not freed, it is just now allowed to be chained to a different owner, still a slave to the absurdity of the PLCB and their "interpretations" and regulations. If the Governor wanted to really free the six-pack, he would be proposing legislation and not interpretation. Do you see that happening? No, and you don't see the Legislature doing anything either.

Abolish the PLCB; rewrite the code!

Wednesday, June 1, 2016

How the PLCB Sells the High End: Badly

All throughout the Pennsylvania State Store System there are pockets of unwanted, unsold products that costs thousands of dollars. They aren't sold because some cube rat in Harrisburg estimated the market wrong, they were sent to some place that doesn't have the demographics to support luxury or niche products (or the sales savvy to match them to the appropriate buyers), or most likely the PLCB didn't have a clue on pricing and thought that since they were the only seller that people would pay three times as much to get these collector level bottles.

Case in point: The case of Chateau Ausone 2003 sitting at Store #3625 in Lancaster County, located midway between the sprawling metropolis of Columbia and Lancaster itself. Just across the street from the Sunoco and  walking distance from the Dutch Apple Dinner Theater (I'm not making this up). Average housing price is $210,000, about 10% more than the U.S. average. Not the place you would expect to find a $36,000 case of wine.  That's right: $3,000 per bottle, plus 6% sales tax. The Amish must be living large.

While Store #3625 is a "Premium Collection" store, one has to wonder why these bottles aren't in Center City Philadelphia, or someplace in Chester County, or even on-line (where the PLCB usually puts booze it doesn't understand), or at least someplace that they could be stored properly. But they're sitting out in the land of scrapple and shoo-fly pies, getting older.

You might be saying to yourself, "Well, it's expensive, sure, but maybe they got a good deal on that case." Nope, not even close. You can go east across the border and save $1,005 PER BOTTLE! Hell, you could pay someone $500 to go get it for you, and still save money! Or drive into New York and get it yourself: you'll pay even more in taxes, but you'll still save a hefty $1,775 PER BOTTLE. As I reported back in February, the PLCB doesn't even attempt to get the best prices; they sure blew it in this case.

People who buy $3,000 bottles of wine don't generally get to the point where they can buy $3,000 bottles of wine by wasting money at the PLCB. Think about it: for the cost of a nice dinner and a night in the city, you could spend a few hundred extra and get TWO bottles in New York. Or you could visit the Dutch Apple and cap off your day by spending far too much at the State Store for one bottle. The PLCB counts on us being stupid. Stupid enough to keep putting up with this. (Stupid enough to not leave the state and break the law, but that's another story.)

Then there are the eleven bottles of Chateau la Mission Haut Brion Rouge 2010 ($1,197 a pop), sitting at one and one store only in Sewickley. It does look like they managed to sell one, so maybe it is a long term thing...except the PLCB doesn't do long term things. If it doesn't sell, it will go on sale and then go on clearance. Even then it won't be as good a price as the under-$600 per bottle (delivered!) you can find in other states. The PLCB probably won't make a dime on those bottles, but that's okay: they don't have to. Being a state-owned monopoly means never having to make a profit.

So on what do we blame things like this? Overly ambitions (or easily swayed) wine buyers? Untrained sellers? Overpriced products? Why not just wrap it all up and say: the State Store System.

Privatization is the only real Modernization. We deserve it.