Monday, November 28, 2016

We're still screwed: PLCB flexible pricing is coming.

We've posted a number of  stories about how bad flexible pricing is for the people, the consumers, in Pennsylvania. It is potentially the worst thing ever to come from the police-enforced liquor monopoly.

Despite that, here are some of the "benefits" flexible pricing will bring, according to the Chairman of the PLCB Tim Holden. You probably want to take his thoughts with a grain of salt; Ol' Tim still doesn't know the difference between Jack Daniel's and bourbon, and probably doesn't care.

It seems that Tim is upset that some suppliers don't care about PLCB profits. Well, why should they?  Businesses do not exist so that the PLCB can over-charge the citizens. They exist to do as well as possible for their owners, their shareholders. To assume that a business should care about the success of an agency that depresses their sales performance is ludicrous in the extreme and just reinforces how out of touch the PLCB leadership is.
This is how PLCB flexible pricing is really going to work
Back in April, well before the passage of Act 39, Elizabeth Brassell, the PLCB director of communications, wrote to me: "You are correct that the Liquor Code does not indicate that prices can’t be negotiated or that the PLCB has any obligation to use manufacturers’ suggested retail prices. In fact, as you suggest, the PLCB’s buying power, as well as its discretion to list and delist products, allows for some price negotiation with vendors. However, any advantages obtained through volume purchases are directly reflected in the shelf price." Did they do this? Of course not, because it had no benefit to the PLCB, only the customers.

Chairman Holden tacitly admitted that saving consumers money wasn't all that important when he said: "The PLCB is driven by priorities made clear by the governor and General Assembly: (1) increase customer convenience; (2) generate additional revenue; and (3) achieve more-competitive retail pricing."  It seems that the General Assembly priority is more #3 because they, like most citizens, want to get the PLCB out of the retail and wholesale alcohol business.

Holden goes on to say:" We simply want more competitive costs from our suppliers – comparable to what other states and retailers enjoy." Except that while those other retailers pass on those cost reductions, because they want your business, the PLCB wants to keep that difference, to keep that money to bolster their bloated and failing organization.

They have no reason to pass on anything because they have no competition; there is nowhere else the consumer can legally go. Holden admits this: "We’ll also maintain the current retail price on the vast majority of products we sell, while achieving greater profit on hundreds of them. And, as we’ve said all along, prices will increase for some items, when the supplier and PLCB agree that the market can bear the increase." Of course, when there is no other choice of retailer, the market can bear a lot.

Think I'm over reacting?  Here are some new prices from the PLCB under the "flexible" system on some pretty price insensitive items they know they can bleed enthusiasts for:

Item 2015 2016      $↑     %↑
Family Reserve Rye $100 $160 $60 60.0%
P. V. Winkle 23 Year $250 $400 $150 60.0%
P. V. Winkle 20 Year $150 $250 $100 66.7%
P. V. Winkle 15 Year $80 $150 $70 87.5%
Old Rip Van Winkle 10  $50 $80 $30 60.0%
V. Winkle Special Res $60 $100 $40 66.7%

Think that is bad?  Look what happens if you are unlucky enough to win a package deal.

Thirty packages are available with three bottles each: the 20 year, 12 year, and 10 year. The price for each three-bottle package is $999.99; $570 MORE than the individual bottles. There are six packages of four bottles each: the 20 year, 15 year, 12 year, and 10 year. The price for each four-bottle package is $1,199.99: $620 MORE than the individual bottles. And four lucky Pennsylvanians will get the opportunity to buy packages that include each of the six 2016 bottlings, at price of $1,999.99. Only $860 MORE than the individual bottles. Such a deal!!

Tell us again how this is good for the consumer, Chairman Holden? 

This is just one prominent example. Is there any doubt that the PLCB is going to make that extra money by taking it out of your pocket, either surreptitiously or through outright price increases? I hope you're ready Pennsylvania, because you are about to get screwed.

Privatization is the only way to get the PLCB out of sales and into regulation, where it belongs.

All quotes from Chairman Holden are 100% real, and taken from here


Anonymous said...

MSRP on Van Winkle site Average Retail Pricing
Old Rip Van Winkle 10 Year $59.99 $559
Van Winkle Special Reserve $69.99 $681
Pappy Van Winkle 15 Year $99.99 $1,413
Pappy Van Winkle 20 Year $169.99 $2,001
Pappy Van Winkle 23 Year $269.99 $2,957
Van Winkle Family Reserve Rye $119.99 $1,453

Depending, no, preying, upon ignorance doesn't usually work well. But you keep trying anyway. Are you sure you aren't really Donald Trump?
Compared to the national average the PALCB gives consumers a unbelievably good buy.
I know Total Wines usually holds back their allotment till the product becomes very scarce, then super rapes the buyer. What's it selling for at Binnys this year?

Albert Brooks said...

Let us first start out with the prices you list aren't "national average". There are approximately 60,000 liquor stores in the US and your sample is 42 in the case of the Pappy Van Winkle 15 Year. So whom is praying upon ignorance here? Also these are self reporting which if you know anything about statistics (and clearly you don't) has it's own set of problems.

You also assume that all prices are like that when in reality you have no proof of what the "average" price is. I certainly didn't pay anywhere near those or PA "set" prices for mine.

Is there a secondary market for PVW? Sure, but the thing is in the private market you don't have to pay more than you are willing. In PA you don't have any choice to legally look or go anywhere else. The government, the people you depend on for fair and honest treatment are the ones screwing you.

Lew Bryson said...

Look, no argument: the PLCB's price on PVW is one of the best available, and the lottery system, now that they've finally got it working, is a relatively fair, if blunt-force way to portion it out there. Granted.

But that's not the point. This is about how flexible pricing is going to boost prices, and this is just the first, most obvious example. The agency put the regular mark-up on the list price for years, even when things got crazy. Then as soon as flexible pricing was allowed, they jacked the prices by 60% and more.

As for Total Wines, you don't know why they do it. I was just at a Canal's in NJ, for instance, and they had held back some stock so that they could sell it at an event for the same price as at the release. Different stores do it differently, and yeah, some of them sell it at prices roughly equivalent to the PLCB, but they don't get included in average price calculations, because they never get to the shelves: they're either sold in a similar lottery store-by-store, or they're put on a waitlist for regulars (or "bottle club" members, whatever), and those prices don't get reported. That's essentially what the PLCB is doing too: you have to go to the website and enter the lottery, you have to be a Pennsylvania citizen, etc.

Nice political touch, BTW. Pity you're barking up the wrong tree.

This could be the year; privatize!

RevGreg said...

So what happened with the lottery? They were supposed to be drawing the winners two weeks ago and no announcement has been sent out yet like usual.