Wednesday, August 31, 2016

Why the Pittsburgh Water & Sewer Authority is better than the PLCB

A few reasons why the Pittsburgh Water and Sewer Authority, a purely public agency, is better than the so-called "publicly owned" PLCB.

The PLCB Motto

1. They deliver 24/7/365.
2. You can get what they have on any holiday.
3. Nobody wants to replace them.
4. Run by people with real world experience, not political hacks.
5. Doesn't mind competition from privately-sold bottled drinks.
6. Not millions of dollars in debt.
7. Tens of thousands of places to get their product; in fact, they deliver to EVERY home.
8. They have never ran out of stock.
9. Never closes when a hurricane is 300 miles away.


10. Oh yeah, they have a Sommelier on staff and the PLCB doesn't.

Wednesday, August 24, 2016

Something to look forward to.

I don't know if you have ever watched a train wreck actually take place in front of you in real time, but it is something that you can't stop looking at. That's what it's like watching the anticipated PLCB profit projections coming from McIlhinney's Mistake, the "epic change" of a liquor bill. The big number is $149 million in increased revenue overall, but with zero dollars, none, nothing coming from the casinos that number is already down to $137 million. Of that, $25 million is going to come from Sunday sales and a whopping $75 million from "flexible pricing."

Now to get that $100 million that would mean, based on FY 2015's profit margin (1) of 5.988%, an increase in sales of about $1.67 BILLION (2). Not gonna happen.  Even if we use the exceptional FY 2014 profit margin (3) of  8.28% it would still be over $1.2 BILLION in increased sales. That ain't gonna happen either. Even if we count the increase in sales from all those places that will be allowed to sell wine it ain't gonna happen. So if the PLCB doesn't decrease expenses -- and when have they ever -- they have to increase sales. A lot.

What this means is that we may have been sold a bill of goods that is not based on any reality. Remember that no increases in staff or payroll are taken into account, at least, not that I've seen. Modernization proponents didn't say if they are or not in their proposals at the time.
PLCB Flexible Pricing model
Now dollar sales do not necessarily HAVE to go hand in hand with an increase in product sales. It follows the same trend, but isn't 1 to 1. With "flexible pricing" the PLCB can charge more for popular items and less for unpopular items in order to move stock. They could, all of a sudden, decide to play hardball and negotiate prices with vendors, which they have chosen not to do so far; see here, here and here. Only now they are going to keep the difference instead of passing it on as they had to do by law before (except they didn't do it, which kept prices higher, which cost you more, and increased sales totals for them).

If they do get lower prices, they can make more money because they will be spending less for product. Well, maybe. In the game of liquor chicken, who will blink first: the major suppliers or the retailer? Think of it this way, who gets the blame when something isn't on the shelf, no matter whose fault it is? The retailer. Who can least afford to aggravate the consumer: the PLCB, or Jim Beam? The PLCB is not dealing from a position of strength: the people want the product, they don't want the PLCB. Having new colors and plants in the store does not make up for having empty shelf space, especially when there is no benefit to the consumer because you want to keep that extra dollar.

Will all  this result in a large increase in sales and a large amount of money saved? Do cows fly? Bailment (not paying for products until they leave the warehouse) was supposed to save $100 million a year too, and that didn't happen. Now I realize that next year, when the financial numbers finally come out, it won't be for a whole year of this new fiasco and I'll have to adjust the totals based on historical values for July and the first two weeks of August, or just look at the second half of the year and extrapolate from there. No matter how you slice up the PLCB pig, you aren't going to find any bacon, only fat.

This is what happens when the PLCB increases sales over 50% in one year
Normal is what we want and there is no rest until we get it.


(1) The PLCB doesn't really make any profit, it just has left over Use Tax money it didn't waste on something. That said, FY 2015 Operating Income of  $111,520,313 divided by Sales Net of Taxes $1,862,269,904 gives you "profit margin" Note that Operating Income is before any required deductions.

(2) $100,000,000 divided by "profit margin" gives you the additional amount required to achieve the desired increase.

(3) Operating Income of $147,959,116, divided by Sales Net of Taxes: $1,786,501,686

Tuesday, August 16, 2016

What if the state ran the drugstores?

What if other things that the state regulates were done the same half-assed way they do alcohol?

For instance, how about a pharmacy? They're always telling us alcohol is a drug. Well, then, give the drugstore the PLCB treatment! No more soda, chips, greeting cards and lipstick: sorry, this is a DRUG STORE. Imagine if the "Pharmacist" only needed the same qualifications as the Beer Distributor or the State Store Manager. How would you like that? If they're all just drugs, why shouldn't the people who dispense them have the same requirements: mostly, a pulse, and some civil service points.

Flip it the other way, and imagine if a State Store Manager had to pass a state board to prove he is qualified, like a Pharmacist does. He'd have to stay current with all new products, and know that you don't put Elderflower liquor in a Greyhound (contrary to the advice you get on the FWAGS website). That he had to know the interaction of thousands of different products, and maybe have a minor in mixology and certifications in wine or spirits. So why don't they?

Why is it easier to buy a case of Nikolai than to get Tramadol, Anexsia, Humira, or even Viagra? (You gotta figure that Viagra is popular at the PLCB considering what they do to the consumer everyday.)  Is it because the PLCB really is only giving lip service to "control" and know that they really don't, really can't do a very good job of it? Maybe it is the money. Making it more difficult would cut into the meager amount that the PLCB turns in. I'm thinking that it is most likely job protection. They have this racket going and to do anything to jeopardize it would just be going against their grain.
Who does a better job of regulation? Private Pharmacies or the PLCB?
They certainly aren't working for us: 83 years for the "freedom" to buy four bottles of wine in less than 20% of all grocery stores, or to buy a sixpack at a cafe no one ever sits in. Hell, they won't even let you drink the sixpack you just bought at the cafe they have to provide. Makes sense only in the fog shrouded mind of "modernization" supporters.

You gotta ask yourself not when they will do better but IF they ever will do better. History is not on their side. Privatize and regulate like all the normal states do.

(This is day 46 with no financials yet.)

Monday, August 8, 2016

It's The Big Day! Er...isn't it?

It's August 8th, the day the "epic changes" take place in Pennsylvania booze law! So...what exactly did we get? We didn't get privatization, that's for sure; in fact, we more than likely got a reprieve in the life of the PLCB, Lets look at what people think and the reality of Act 39.

We're going to get wine in grocery stores! 
Sort of. The PLCB will start issuing licenses for that, supposedly today but odds are you won't see wine in your grocery store. Why? Because most stores won't qualify for the idiocy of separate entrances, cashiers, and 30 seat cafes, or they won't be able to afford to make those changes or to even buy a license. Less than 20% of grocery stores will.

But we still get direct wine shipping!

True, even though it took a decade for the state to comply with the U.S. Supreme Court Granholm ruling, although the PLCB could have easily issued an "opinion," like they did with 12 packs, or beer at gas stations, or having more than the legal amount of stores open on Sunday, or killing off delivery services, or any of the other things they did without legislative approval. The question is, how many wineries will pay the $250 fee? The answer is likely under 5% of wineries in the U.S. alone, and maybe 1% of all in the world.

Woo-hoo, we can drink all night at the Casino!

No. There are twelve casinos in Pennsylvania, that's true, but NONE, not one, have expressed any interest in paying the state $1,000,000 so they can serve you a cocktail between 2 AM and 6 AM. Shocking, right? 

But won't we have more places to have wine with dinner? 
True, if the mom & pop joint or single proprietor can afford the $30 grand, and they aren't in Philly, the city with the largest population and the most "E" licenses. Remember the lesson we all just learned again: All animals are equal, but some are more equal that others - just like giving special rules for the DNC. 

To explain: here's the actual listing by the PLCB:

If a municipality is "wet” for liquor (allows for the issuance or transfer of restaurant liquor licenses). Act 39 allows an eating place retail dispenser (E license) to convert its license to a restaurant liquor license (R license), without regard to the quota. The fee for such a conversion is for $30,000. However, the E license cannot be converted if there is currently a pending objection by Licensing or if the E license is located in Philadelphia.

Did you get that? No, did you? Let's find a lawyer...a drunk one.
Hey, if we like a bottle at a craft distillery, we can buy it and take it home! 
Maybe. While Act 39 permits distilleries to sell wine and malt or brewed beverages for on-premises consumption, provided that the wine and malt or brewed beverages are produced by licensed limited wineries and licensed also states that Act 39 prohibits distilleries from selling products or substantially similar products listed for sale by the PLCB, at a lower price than that charged by the PLCB  This includes sales to licensees.

So what would that be? Bourbon, Rye, Vodka, Gin, Cordials and just about everything else except for maybe White Dog and blended American Malt Whiskey. Makes perfect sense

We still have SLO for those special bottles!

Like the Craft Distillery above the answer is maybe.  The PLCB says "The PLCB is permitted to refuse to process, or prohibit the processing of, SLOs for items that are substantially similar to items that appear on its monthly price lists, or if the PLCB believes demand for the items warrants them being made available generally. The PLCB has the discretion to determine the amount and manner for which any such item will be made available." So if you are ordering a bottle of wine they can say - "We sell wine all the time and you don't need that one" Or because they are slow to catch on. "That bottle you  wanted is really popular and we'll have it in our stores in 6 months so you don't need it now" Even if it is on the SLO list THEY provide. Customer service like that is available only in PA.
The trade off is now they will cost a little less since the markup has gone from 30% to 10% if you are allowed to get it at all..

Aren't they finally going to deliver?
Not exactly. The PLCB will allow delivery, which is good if you need something next month and not next week. Here are the hoops you need to jump through. First, you have to have an importer's license or vendor's permit. Second, the PLCB has to approve of the product. Third, the item ordered must be at an "authorized place of storage." Fourth, you have to order and pay for the product in full before it is released. No credit here! Fifth, the product can then be delivered by a licensed carrier with the possibility of a delivery fee attached. Pretty easy, and definitely worth waiting for!!!!

Jeez. Can the craft Distilleries at least sell hard cider?!

Depends. If you are a holder of a Limited Distillery license, you CAN'T sell hard cider on-premise. However, if you are having a “alcoholic cider, liquor and food exposition” of Pennsylvania products either indoors or outdoors on your property - then you can. Makes perfect sense. Distillers are probably lining up for those now.

There's more, but you get the idea. McIlhinney's Mistake isn't all it's cracked up to be. That's because once again, it's what the Powers in Harrisburg will let us have, not what we -- or anyone in the industry -- wanted.  The easiest way to fix this and all the other inanity of the current and (future PLCB) system it to wipe it clean and start again.  

Privatize. It's simple...because it's really that simple.

(This is day 39 without PLCB financials)

Monday, August 1, 2016

The Case Of The Missing Wine

How stupid do the PCLBureaucrats think we are?
As stupid as they are, apparently.

On July 19th I put up a post called Insider Trading, about a missing case of $3,000 a bottle wine, and how it didn't show up on any inventory the PLCB had available to the public. The PLCB explanation was that they deleted all the codes while it was in transit being "hand carried" (because of the heat) to their Ardmore store for sale.

Really? The people who have stackouts of wine sitting the windows of their stores, in the summer sun, suddenly care about heat? Remember, these are the folks who stored wine in the summer in uncooled trailers because they couldn't control inventory.(1) The same people who have been cited by the Attorney General because the auditors: "received little response from management to demonstrate its follow up and resolution to ensure that store inventories are properly accounted for."(2) 

Deleting the codes while the wine is "hand-carried" isn't just a lie, it's a stupid, ridiculous whopper of a lie. Here's why.

1. Items are not dropped from inventory when they are transported. Not once, not ever; you lose the ability to properly account for things if you do.
2. Since the Chateau Ausone 2003 has not been on the inventory since at least June 20th (3) and probably earlier, the PLCB expects us to believe that it took 40 or more days to be "hand-carried" from wherever it was (they didn't say) to Ardmore?
3. Doesn't it seem ridiculous that an extreme luxury product was off-book, not available for sale, for at least 40 days because they were too incompetent to have a listing the public could find?

And on the subject of selling $3,000 a bottle wine... While the Ardmore store is #11 in overall sales, I would have put it in the Philly store on Chestnut Street, or West Chester: you know where the money is. Which begs the question of why it wasn't there to begin with, and why a whole case went to just one store and not split out to three or four. What retailer with 600 locations would do that? Only one: the one that doesn't have to worry about what anyone thinks and is immune from any and all decisions that a real business has to take into account.
Here it is listed on 7-30 but it isn't in the online inventory
To make things even more interesting and proving the PLCB is lying to the public, the Chateau Margaux 2000 (Code #18864, list priced at $2,499.99, on sale for $1,499.99), which was on the inventory on July 28th disappeared on July 30th...but was still listed on the FWGS website. Is it in transit too, being hand-carried by somebody on a leisurely stroll, like the Chateau Ausone? Why is it still listed on FWGS if, as the PLCB says, they remove things when they are in transit? Not even the PLCB can have it both ways.
9:30PM 7-31. Only some PLCB cube rat knows how to decipher this.

So here it is, 9AM on the first day of the big sale and after over 40 days of being hand carried the Chateau Ausone 2003 somehow did make it to the Ardmore store and the public can find it online. Of course, inventory should be able to be found online in almost real time. No such luck with the Chateau Margaux 2000. It was for sale and found just a few days ago but now it has disappeared into the bowels of PLCB incompetence. When and where it may ever be seen again who knows, certainly not the public.

Just another example of how the PLCB does not benefit the citizens. Lying, graft, nepotism, kickbacks, and who know what else?


(1) From the Auditor General report.
  • Pittsburgh: Inventory jumped from 300,000 cases to 575,000 cases in 2010, exceeding storage capacity. PLCB management decided to put 72,277 cases of excess merchandise in 57 non-temperature controlled trailers.
  • Philadelphia: Inventory reached 763,470 cases. 20,240 cases were moved to non-temperature controlled trailers.
(2) Auditor General report pg 35. Not online but I have a copy I can send if you want to see it.

(3) PLCB inventory for April 21 shows it listed, inventory for June 20th does not have it. It disappeared somewhere between those dates and didn't show up again until July 30. Again, I have copies of the inventory reports since they are not online any longer...and isn't that a surprise?