The Gift That Keeps On Taking

Giving and getting booze as a gift in Pennsylvania is no easy feat.

Given the police-enforced monopoly that is Pennsylvania's wine and spirits marketplace, you might expect that there are laws to fence off all possible ways around those restrictions; for instance, no "gifts" of booze (that are then surreptitiously reciprocated with cash). But if you thought there was a one bottle or a case exception for honest gifts, you would be wrong. You still have to give the state its cut, even on a gift.

And you know who is responsible to pay the fees, taxes, and unknown markup on that bottle? Not the person giving, but the person receiving. A good friend of the blog recently quizzed the PLCB about all the steps necessary to give some hard to find, not available in PA no way no how, honest to goodness collectible booze to a PA resident. Here's what they learned.

As a rule it is generally unlawful for anyone, other than the PLCB or the holder of an importer’s license or a direct wine shipper license (or a sacramental wine license), to "import" any liquor (including wine) into Pennsylvania. 47 P.S. §§ 4-491(8), (11).

No problem, you think, I'm not bringing it in, someone else did and gave it to me. Ah, but it is also generally unlawful for anyone, other than a manufacturer, the PLCB, the holder of a sacramental wine license, or the holder of an importer license, to possess or transport any liquor or alcohol within the Commonwealth that was not lawfully acquired from the PLCB, a PLCB-licensed limited winery, a PLCB-licensed distillery, a PLCB-licensed limited distillery, a PLCB-licensed direct wine shipper, or a PLCB-licensed retailer holding a wine expanded permit. 47 P.S. §§ 4-415, 4-488, 4-491(2), 5-505.2, 5-505.4.

OK, so how do you LEGALLY get that bottle into the state so you can give it to somebody? Short answer: you can't. In a moment of supreme bureaucratic idiocy it was decided that the recipient has to do all the work. Why?  All I can come up with is that the PLCB can't screw an out of state person like they can screw a PA resident.


So if you go ahead and just illegally give that bottle to somebody in PA? Here's what they have to do, if they want to legally keep it and not just flush it down the toilet and deny all knowledge when the BLCE comes busting in.

BLCE!! HAND OVER THE GRAPPA! NOW!!

First, they have to know exactly what you are giving them...ahead of time (which kinda ruins any surprise if that was your intent). Then they have to fill out an application for importation and an application for the payment of tax on the liquor to be filed with the PLCB’s Bureau of Product Selection by the intended gift recipient (i.e., the person importing the liquor). (40 Pa. Code§ 9.51.) No word on how long it takes to get that information (because nobody in their right mind has ever done it).

Once it has been decided by the Bureau of Product Selection what fees and markup and service charge (remember that this is a SERVICE to allow you to bypass the incompetents in Harrisburg) to apply, you then have to contact the Department Of  Revenue, because the state taxes on the liquor would be levied by the Department of Revenue, and they have to determine the amount of taxes that would be owed on the gift, if any. If they're confused by this, tell them the PLCB sent you.

(By this time, you may be wondering: if Revenue is collecting the taxes, and the BLCE is doing the enforcement...if we got rid of the State Stores, what would we need the PLCB for? Good question.)

If you want to try and figure out approximately what the fees are yourself, before committing to this mindstorm of bureaucracy - be prepared to wait. It took two weeks to drag the info out of the Bureau of Product selection. They finally sent a reference to 40 Pa. Code § 9.52. Why did that take fourteen days? Probably because nobody in organizational memory had ever been asked the question before. You know...because an ordinary citizen would just give their friend the bottle of booze and be done with it. 

Once that is done, hopefully before you are too old to enjoy your gift, you have to go back to the PLCB’s Bureau of Product Selection and turn in your application for importation and an application for the payment of tax on the liquor (which Revenue gave you). Now even though you have paid the tax, the fees, the markup, and the service charge, the Board can still say no because they have monopoly power and there is no legal recourse for you to appeal to if they are feeling a little bitchy that day.

Think you are done? Of course not! Your friend can't just drive across the border with with his gift. Horrors! The world will come to an end. No, the State has to maintain CONTROL by having you hire a Transporter for Hire Class A or Class C licensee to bring it to your residence. Yeah, really. And by the time this is all over, you'll want to remember to tell your friend to please never bring you another gift.

By the way, if you decide you don't like the gift and want to sell it -- because it is, after all, your legal property -- then just turn it in to any State Store and they will take care of it for you. "But what about the money?" you ask? Don't worry, it won't cost you a penny! Really. You don't get any proceeds from the sale...but your conscience will be clear knowing you didn't break the law. I'm not sure what happens if you sell a bottle when you are out of state but I'd bet the PLCB has some way to screw you if you do that too.

More Pennsylvanians than this buy or drink bootleg booze every day

Suppose this just was too much and the giver decides to say screw it, it is too much trouble for my buddy to go through, I'll just bring him some beer. Guess what? There are NO EXCEPTIONS for beer at all. No jump through the hoops while you kiss our ass paperwork hurdles, no forms to fill out, no taxes to pay. It is illegal, period, to bring beer into the state.

Don't believe me? Here is what the PLCB has to say about it: "The importation of malt or brewed beverages is governed by different sections of the Liquor Code, 47 P.S. §§ 4-431, 4-492(8), and no exception currently exists that would allow for the importation of gift malt or brewed beverages outside the otherwise authorized channels of distribution."

So I urge you to put on that mask, and join the tens of thousands of Pennsylvanians who say, 'Up Yours, PLCB!' every day, and bring that cheaper beer, nicer wine, and better liquor in over the border in as much quantity as youu need as often as you want. Be an outlaw, be a Hero for Freedom of Choice. Perhaps I'll see you on the border.

Privatize.

Smuggler's Blues from Michael Dewey on Vimeo.

PLCB buying power is a joke.

Well, it it that time of year again when the Buffalo Trace Antique Collection (BTAC) goes up for lottery. So how does PA fare as one of the largest buyers in the country? Worse than most control states and certainly worst than Total Wine.  Need proof?

Last year PA got an allotment of 165 bottles of George T Stagg, the most popular of bourbons in the BTAC, out of a release of 9.120 This year the total bottling of GTS is almost 29,000 more bottles and PA is getting.....you guessed it, 165 again. Maybe that is just an outlier you say. OK, let's looks at Thomas Handy Rye. PA got 408 bottles for the entire state out of a run of 11,944. This year they are getting 407 from a run of  14,021.

2017 BTAC, although the PLCB says it it 2016, but they are idiots.

Want to try another? Sazerac Rye stayed the same too even though production went up and W.L Weller also stayed the same even though production was up 42% over last year. Yeah I've got the numbers for them too if you really need them. 

So even if the allotments were just divided up by states and foreign sales PA got the short end of the stick by A LOT, It is even worse if you looked at it by a population allocation and we owe it all to the glorious leaders at the PLCB. They should hire some North Koreans, at least they have experience in allocating resources while screwing the public.


Now if you are like me you're thinking that this is what they get for trying to play hardball over purchase prices. We, the citizens and consumers, not only have to pay above list price to the ass-backward PLCB but their newly increased "buying power" gets us LESS of the products we want. Name another business that works like that? You can't - and if one did exist they wouldn't be in business because their competition would make sure they didn't survive.

So just let me say that you guys are doing a bang up job. The more stupid and incompetent things you keep dreaming up to do means the sooner we can be rid of you for good.

PRIVATIZE.

PLCB Stupid Inventory part 100

After five years of saying and showing the PLCB that they were screwing up the listings for their #1 selling "bourbon" — as Chairman Tim Holden likes to call it — the PLCB has almost managed to get their listings for Jack Daniel's Tennessee Whiskey correct. Although in typical fashion they have managed to get the most expensive hard to get JD wrong.

A bit hard to read but NO Jack Daniel's products are a blended whiskey as defined by the US Government.

The 2016 Laphroaig Cairdeas bottling confused them enough that they don't know what specific type of spirit it is, so they left it blank. Guys, it says "single malt Stotch" right there!

Then there is Jim Beam's Eight Star Blended Whiskey (#504228) which the PLCB thinks is also eight years old for some reason - maybe their lack of product knowledge?  And what about Kinahans Irish Whiskey Blended 10 Year Old  (#559929) which is stuck in with the blended whiskies. Now I know you are going to say that the bottle says "blended whiskey" right on it, but foreign whiskey does not follow same the rules as American blended whiskey. Jameson's and Bushmills are blended whiskey too, unless you get one of the Single Malt versions. It should be under the Irish Whiskey section along with all the other Irish. Again, anybody who had any real knowledge of liquor would know this.

Of course, the PLCB has the normal (for them) inability to read product labels. It is just so much trouble to get things right and hey, you can't go anywhere else so what does it matter.

If you don't like using the FWAGS website never fear they screwed it up on the flat file webpage too, calling this a blended whiskey and getting the proof wrong.

And for the last one today there is Whistle Pig 12 year old Old World Whiskey (#559250) which says "Straight Rye Whiskey" right on the label but that doesn't stop the incompetents in Harrisburg from putting it in the blended whiskey section. Here's a tip for you, "Straight" in whiskey means it is a distinctly different product from blended whiskey in US law. But if you are wandering around making up your own interpretations, I guess it can mean anything you want.

There are only 53 records in the WHISKEY (BLENDED) section and I found 5 that were wrong just by looking without really checking into them all so there may be more. So if we apply that ~ 10% error rate across the PLCB catalog there are over 1,000 wrong entries. Way to run like a business guys!  If we could we'd fire the lot of you for incompetence.

Privatize.

Lies My Liquor Control Board Told Me

A nowhere near complete list of the bullshit the PLCB has fed and is still feeding the public.

1. Prior to Act 39, we couldn't negotiate prices.

There was and is nothing in the liquor code that prevented negotiating prices. In fact, all the Chairman's Selections prices are negotiated and have been since inception. In April of 2016, Elizabeth  Brassell, the Board's director of communications said as much: "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." Yet we've been told that this is a new power, granted by Act 39.

2. "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." Chairman Tim Holden.

And as we've said all along, "flexible pricing" means "higher pricing." Today will see the increase of prices on 422 items; prices that are going up because the PLCB alone wants them to go up.

3. "Because of cooperative and collaborative negotiations, we hope to reduce prices on dozens of items in the near future." Chairman Holden again, on October 28, 2016

Here it is over 10 months later and of the top ten selling spirits and top ten selling wines the only thing that has gone down in price are pints of Nikolai vodka....by 30 cents.  This can only mean one of two things. Either the PLCB failed to get any price decrease on the items they have the most leverage on; or the PLCB kept all the reductions in purchase price they did negotiate and put the screws to us, the consumers. The truth is, we don't know, because the PLCB refuses to release this information. So much for us being the "shareholders" in this state-owned "business."

4. The PLCB and the vendors view pricing information as proprietary. At least that is the reason given for no longer showing purchase and shelf prices on the board meeting minutes and why the PLCB refuses to let consumers know what 422 items are that went up in price.

Yet the PLCB listed pricing information for decades. Act 39 and 166 did not make that same information proprietary nor did they say that the public should no longer have access to that information.

5. Wine Kiosks - "This was not a faulty fiscal decision," PLCB Chairman Aug 17, 2011

Yes it was and so was trying to cover it up.

6. Under oath in front of the House Appropriations Committee in April this year, Board Member Micheal Negra said that the loss of 'the shackles' that had been on the PLCB with regard to product pricing "would deliver better revenues for the commonwealth and better product prices and availability for consumers."

Raising prices on 422 items does not provide better availability or prices for consumers. That's a no-brainer. Higher prices are not better prices. And availability? With under 620 stores in a state this size? Don't even talk about availability.

7. The PLCB operates at no cost to the citizens

We pay for everything with higher prices, less selection, inconvenience, pension debt, few stores, inept management at all levels, nepotism, graft, incompetence, anti-consumer practices and unqualified Boards just to name a few. You might as well try to tell us that the Legislature operates at no cost to the citizens.

8. In 1934 the PLCB said that stores would be located at "convenient places to serve the public."

Wow, that's a whopper that they've never gotten over. From a high of 756 stores, we now have shrunk to 604. To reach the national average -- the average -- the total would have to be 1,800. Having 200% less stores than average is not convenient.

9. We are going to run like a business.

A business is successful when it is run by people with experience in the industry, innovates, provides goods at a better price than it's competitors. Provides better service or other services than its competitors do and is convenient for the consumer. The PLCB does none of these well or at all.

"The PLCB is a cash cow!"

10. The PLCB is a cash cow.

The PLCB is $240 million in debt, had negative assets for three of the last seven fiscal years, and by their own admission saved $110 million every year for the past 4 years (through The Wonder Of Bailment!) but has nothing to show for it, limits jobs and job creation due to monopoly practices, spends more on advertising than education, and still only contributes about 0.3 percent of the total state budget.




Tell me again why we need the PLCB? We don't and never have, they do nothing for the state and only exist as a poorly run jobs program. Privatize.

So I Went to the Pretty New State Store...

I went to one of the new State Stores. You know the ones, with a new color palette that supposedly offers a warm, welcoming atmosphere for consumers to browse the limited selection. I wandered over to what they call the focal point of the store; a new table, where customers can find staff to answer questions or provide recommendations. Just what I was looking for. 

I waited for somebody to come over to the table.
And waited for somebody to come over to the table.
And waited for somebody to come over to the table.

Did I mention that the table was the focal point of the store?

Looks kinda empty

Ah, a wine person! They wandered over and asked if they could help.
I said, I don't know. I have some questions.
"So what are you looking for?"

Answers.
"I'll do my best, what's the first thing on your list?"

Can you name one thing that has decreased in price in the past few months?
"Sure, pints of Nikolai vodka. We have a guy that comes in everyday, well, actually we have a few,  and is so pleased that happened.  Probably our happiest customer."

Anything go up that you noticed?
"A few here and there but when the wave of 400+ hits next month I'm sure I'll see a bunch of them"

Since this store was remodeled in the same location, did any increase in products on the shelf come with the remodel?
"Oh no, with the wider aisles, this table stuck in the middle and the plants and all there are less things in the store now then there was before."
Style over substance eh?
"I can't say."
So how long were you closed for the remodel?
"About 3 months."
Doesn't that seem like a long time to be closed? Didn't the Dollar Store close for like 16 days when they remodeled?
"The Dollar Store isn't run by the PLCB."

So is this 'modernization' thing working out, or should the Legislature have gone for more privatization?
"We aren't allowed to talk about privatization"
You aren't allowed to have an opinion?
"We can have an opinion, we just aren't allowed to talk about it."
So, the powers that be in Harrisburg don't have enough faith in you workers to offer a reasonable explanation why State Stores should still exist.
"Could be but I can't talk about it."

Can I ask if you belong to the union or just pay fair share?
"I just pay fair share, most of the people in this store just pay fair share. We have too, not like there is a choice."
So how long have you been here?
"I started as a Seasonal 6 years ago, worked part time while I was in school."
Do you think of this as a career after all that time?
"No way, I'm going to an online school for my Masters. Once I have that and a job lined up where I don't have to wear an apron, I'll let somebody else take this spot."
Maybe then you can talk to me about privatization.
"Yeah, maybe then, ha ha."

I can't talk about Privatization, the PLCB doesn't trust me.

What do you say when people tell you they bought ...whatever for less in Maryland, Delaware, New Jersey, Florida or wherever?
"I'm sure it is true sometimes but those chain stores or Mom & Pops don't have to have a store in Nowheresville, PA like we do. We have to support that somehow"
Why? Don't you think a grocery store would carry the basics if they could?
"You're talking about privatization again, so I can't comment."

The conversation above is semi-fictional. It didn't happen with just one clerk, but every question and answer did happen with multiple clerks over the past six months. I wish I could get managers to answer as truthfully as some of their workers, but they drink the Kool-Aid every day, and won't stand for it.

PLCB Math

So here we are, about to be screwed again by the PLCB. What is it this time? More nepotism? More corruption? No, this time it's just plain monopoly gorilla tactics (yeah, gorilla, not guerrilla). They wanted to force a private business to lower their margin so the PLCB could raise theirs.

Once again, they're just playing at being a business. A real business increases profits when it reduces costs through innovation or consolidation, they change benefits, they leverage productivity, they control operating costs. The PLCB does none of that; well or even at all.

For every dollar the PLCB spends buying booze, they make just over $1.45 selling it. (PLCB Financial Report 2015-16), but that isn't enough apparently. How can that be? Back in 2013 when Bailment was put in place -- that "nifty little system" that was going to make such a big difference -- the PLCB saved enough to no longer need a tax and interest free loan of $110 million from the state to start up their operation every year.  So where did that $110 million saved per year for the past 4 years go?  It isn't zero sum as some PLCB supporters suggest. 

For instance, if you start the year in debt by $100 million, and over the course of the year you make $500 million, your net is $400 million for the year. If you have no debt to begin with, then your net is the full $500 million. The PLCB no longer has that debt every year and so should be making $110 million more every year. Are they? Not according to their own financial reports.

In 2012, the PLCB contribution to the general fund was $80 million. In 2014, with bailment in full swing...it was $80 million. Maybe they spent it on improving the stores? Nope, store operations only went up $25 million over the two year period - still missing over $195 million. ($110 million times 2 years minus $25 million) Maybe they paid down some of the non-reported (at the time) pension debt. Hard to say, but if they did then they didn't continue it in 2015-16 when they had to report pension debt. That only went down just over half a million on almost $240 million of debt - a 400+ year payback plan.

Now we have "flexible pricing," which is of course all about "our need inside this building." Since none of the top 10 sellers of wine or spirits went down in price (except pints of Nikolai Vodka, which decreased a whopping 30 cents, and let's not talk about what a whopping display of hypocrisy it is for the PA Liquor Control Board to lower the price on The Drunkard's Friend), one can only assume that the PLCB kept all the negotiated differences of the most popular items. Now the question arises: how much more do they have to squeeze us by the balls to make the projected income increase of $165 million (or $137 million, depending on who you believe)? Raising the prices on 424 items isn't going to do that. Keeping all the $2.1 million in Jack Daniel's profit — as I'm sure they are doing or anticipating doing — still leaves a long way to go. 

By the PLCB's own admission of saving $110 million a year from bailment, and $165 million from price gouging the consumer, my math says that even with paying $195 million to the general fund, the pension debt should decrease by at least $50 million, and if you count that $110 million from the 4 previous years, there shouldn't be any pension debt.

Of course, that would assume the PLCB is an efficient, well run business organization with knowledgeable leadership and people who take initiative. None of which is true. It is a political pig sty stocked with innumerable incompetents that have no real business experience and run like a old boys club, hoovering up the hard-earned dollars of the citizens while giving almost nothing worthwhile in return.

So much for the Chairman's statement of:"...we can both generate additional revenue and achieve more competitive retail prices through cost reductions, rather than broad price increases." As a businessman, let me clue you in, Tim. You NEVER achieve more competitive prices by raising the price for consumers. The idea is to gain competitive advantage over other places selling the same or suitable substitute items. I'm betting you don't have a friggin' clue what that means.

Speaking of the Chairman, he was so proud saying that the PLCB didn't initiate any price increases during the period of 02/14 to 10/16. Well, guess what? They don't have to. ANY price increase gives the PLCB more money no matter who initiates it. I bet the suppliers never initiated 424 price increases all at once, though, did they, Tim? If you listen to the fearmongers at the UFCW and their lapdog bureaucrats in Harrisburg, we are told that there are 20,000 products available from the PLCB!! Yet Ol' Chairman Timmy is complaining that suppliers tried to increase prices on about 4% of them over two and a half years! Da noive o' dose guys!

You gotta ask why the $110 million from bailment PLUS the $137-165 million from screwing the public with "variable pricing" PLUS the $80-100 million or so they have been contributing the last 7 years or so doesn't total up to at least $337 Million being turned into the state ABOVE the taxes collected. Just what black hole of incompetence is it disappearing into? The answer is that it is all a lie. While they might make something more than before, the state, the General Fund, we the citizens are never going to see it. The PLCB needs it to keep their ship of mismanagement and incompetence afloat. They always have said that the PLCB will make more, not that the state or the consumer or the citizens would ever benefit from it.

It's OUR money; not yours.

What we need now is another border bleed study next year to see what damage has been done by these idiots. My money is that real border bleed is over $500 million by then, if it isn't there already.

Now more than ever we need to be rid of the PLCB.

Privatize, now.

"Given our need inside this building..."

Pennsylvania Liquor Control Board member Mike Negra may have inadvertently told the truth (he'll probably be fined for that). Quoted in a story about the PLCB's recently announced price hikes that ran in several state newspapers, Negra let it slip that the PLCB's main mission is the survival of the PLCB, its jobs, stores, and cushy bureaucratic positions. How else are you supposed to interpret this quote?

"Given our need inside this building and throughout our agency due to rising costs of employee benefits and so forth, a lot of that is out of our hands, we felt it was something we needed to do," said board member Mike Negra. "That's what is behind it."

Any PLCB bureaucrat

You see that, right? "Given our need inside this building..." None of the usual window dressing and self-sacrificing bullshit about how the PLCB does so much for the state. Nothing about the General Fund, nothing about the state's financial crisis, nothing about the State Police, nothing about actual alcoholism prevention (what about the children???), and certainly nothing about you, you poor shlub. No, the prices are going up because the bureaucracy needs to fund their ever-increasing operating costs. 

We told you, over and over, that "flexible pricing" would mean "higher pricing." We take no joy in being right, we just wish someone would have listened.

Now can you finally call your rep and tell them it's time to privatize this mess? All of it?

Big PLCB Price Hike May Be Coming!

The PLCB is playing hardball with their suppliers, and it looks like part of the process is threats in the media. Check this out from a recent story at KDKA's CBS Pittsburgh site titled "Prices Of Best-Selling Wines & Spirits To Rise."

The PLCB’s Elizabeth Brassell says the suppliers have been told the price for their product is going to go up on the shelf, “unless our suppliers of those products offer us lower acquisition cost to avoid the retail price increases.”
Brassell says the price increases affect “the best-selling 150 brands of spirits and best-selling 150 brands of wine.” In other words, probably your favorites.

You know what we have to say about that, right? Welcome to Flexible Pricing...we told you so! You know why it's going to affect the 150 best sellers? Because those are the only PLCB products covered by Flexible Pricing! Everything else is still under the mandated markup. 

Here's what the PLCB thinks is going to happen. The PLCB is going to hammer the producers in negotiations! They'll balk at lowering prices, because they know the PLCB isn't going to lower the price on the shelf (because they promised to make a LOT off of this), the PLCB will make this childish "don't make us raise prices!" bid in the press, figuring the producers will lower prices, and then they can say "look, your prices stayed the same, we are HEROES!!" while sucking off all the difference to cover their spiraling operating costs and hold off privatization for another legislative cycle...and the producers will call their bluff, and give 'em nothing.

And the PLCB will just have to raise prices and look like the inexperienced amateurs they are, we'll get screwed, border bleed will explode, and maybe, maybe we'll finally tell our representatives to get rid of this moldy old piece of Prohibitionist crap.

The PLCB Act .39 Special, only one made.

And here's the beauty of it all. If I were the producers... I'd be saying "Screw them. Jack the prices, blame it on them, and maybe Pennsylvania will finally wake up and get rid of these idiots. This is our chance!" Run the long game, booze folks, run the long game, and help us dump these rubes.

Because you know what I'm going to do when the prices go up at the end of August? Hop in the car and go buy booze in Delaware. Why not come along? Let's dump these rubes!

Great New Profit-maker for the PLCB!

Great news! As reported here on Philly.com, and in more detail here from the Justice Department's own website, four companies have been ordered to pay a total of $9 million in fines for their role in the unethical practices of three PLCB officials: P.J. "PJ" Stapleton, Joe "Da CEO" Conti, and James "Fall Guy" Short. It took over four years, but they're paying, and even when you're selling booze to a monopoly that doesn't care about its customers, that ain't chump change.

We were glad to see this, since we fully support telling the truth and stating facts, even if they don't necessarily make the PLCB look bad. That's not our main mission: our main mission is proving that the current system is outdated, not good for customers, and yes, naturally prone to corruption and abuses like this. We were also glad to see that our friend (no, he doesn't know it, but he is, just like Joe "Da CEO" Conti was) James "Fall Guy" Short still hasn't been sentenced almost two years after his conviction on fraud charges. Hmmmm...wonder why that is? Bet a lot of current and former PLCB employees are wondering too.

Dat's a right: Malocchio!

Anyway, the Philly.com comments gang — usually a heap of steaming crap; angry steaming crap — managed to come up with a great idea related to this! Check this out from a genius calling themselves Malocchio: "Maybe this can be a new revenue generator for them... entrap their vendors into giving gifts, then assess confiscatory fines against them... instant profit!"

Brilliant. In fact, too smart for the PLCB. It would all fall apart shortly after the gifts were received...and the employees spent them and asked for more. Hey guys! Remember the "entrapment" part? The trap's gotta spring! Guys? Guys?

End the corruption. Privatize now. Not after more "studies," not after more "hearings," not with all the states where privatization works to look at. 

PRIVATIZE NOW. In fact, right now would be a GREAT time: swap the Democrats a fracking tax for full and immediate privatization. Get what we want, balance the budget, and chances are good no one would really even notice the frack tax. Let's do this, PA Legislature, the citizens are waiting.

Pay no attention to the man behind the flexible pricing...

Back in October of last year, PLCB Chairman Tim Holden (a political appointee, with no major business experience)  put out this piece of propaganda, trying to fool us into believing that the PLCB's new "Flexible Pricing" was good for them. (We've been telling you for years it's a bad deal for consumers, but the Legislature handed it to the PLCB.)

Holden gets off to a bad start by using an example of Pennsylvania's "top selling Bourbon," Jack Daniel's. It isn't Pennsylvania's top selling Bourbon...it's Tennessee Whiskey, says so right on the label. A small strike, but the kind of product ignorance that's typical at the PLCB.

But it's what he has to say about Jack that's interesting. "In February 2016, Virginia’s price per bottle from the supplier of this product was $12.14, while Pennsylvania’s was $14.46. The retail shelf price on June 1 in both states was the same: $24.99." This just shows that the PLCB was too incompetent or lazy to negotiate better pricing for 82 years, and despite what they might claim about their new flexible pricing powers, there was nothing in the liquor code that prevented them from doing deals on pricing.

Now he gets to the flexible pricing shim-sham. "If Pennsylvania had been able to obtain Virginia’s lower price – $2.32 less per bottle – we would have achieved an additional $2.1 million in profit on that one product, based on the volume of sales in Pennsylvania. Or we could have reduced the retail price, or even a combination of the two." (emphasis added...for emphasis)

And here it is, nine months later...and Pennsylvania's #1 selling "Bourbon" hasn't changed price at all. They are keeping every penny of every negotiated price to the top ten selling wine and liquor brands, all but one: Nikolai vodka pints (the alcoholic's favorite), which have gone down 30 cents. Hey, thanks. Really appreciate it, PLCB.

It's all too clear: the PLCB (owned by YOU, they say) is screwing the citizens on a daily basis, over-charging on numerous items, especially their lottery items. A prime example is the 60% average price increase they charged for this year's Van Winkle releases, and the extra $570 they charged for the 3 bottle 'package' and the extra $860 for the 5 bottle 'package' on top of that. Or maybe the extra $100 they charged for the Buffalo Trace Antique Collection? Make no mistake, you as a consumer come in last in the PLCB's quest for survival. The Chairman even admits it "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."

"Charge what the market will bear" is a cornerstone principle of the free market, especially on "luxury items" like booze. You can see it in the beer market, for example, where craft beer prices continue to rise mainly because customers continue to pay them (so far). But those prices are kept in check by the knowledge that another retailer may sell for less and get the sale.

As a police-enforced monopoly, though, the PLCB can raise prices and the market - meaning you and me - has no other choice: we can't go to another retailer (or another state...), we have to bear it. Bet you didn't know that it was fine for a government agency to gouge you. Imagine if the Turnpike Commission had "flexible tolling." When did things change so that the government would treat you fairly and justly IF they made enough money from you?

So how will you know if the PLCB is cheating you?  You won't, because they don't have to tell you their secret pricing decisions. While they don't have any problem outing Virginia, the PLCB no longer lists the price they paid for their products. The official PLCB excuse is:

"Act 39 of 2016, which became effective in August 2016, granted the PLCB authority to negotiate product acquisition costs with suppliers for the most popular wines and spirits carried in Fine Wine & Good Spirits stores. The goal of these negotiations is twofold: to maximize revenue the PLCB generates for the commonwealth and to offer consumers fair and competitive prices. Subsequently, the PLCB removed product cost and retail price information from Board agendas and minutes in the interest of optimizing supplier negotiations. Additionally, now that the PLCB can act more like a traditional retailer with regard to pricing, it is not in our financial interest to give other alcohol retailers advance notice of our prices and sales."

But a traditional retailer has competition, not a police enforced monopoly! I'd like to know what other alcohol retailers are they talking about. Do you really think that Mondavi doesn't know what Gallo is charging, or Buffalo Trace doesn't know what Beam wholesales their bourbon for? If the PLCB knows what Virginia is paying, don't you think the distillers have a pretty good idea of what their competition is doing? I know that competition is a foreign idea to those at the top of the PLCB, but that is what keeps prices down for everything else you buy, not allowing some entity to charge whatever they want and then MAKE you pay for it.

Being the Chairman of the PLCB is the bizarro version of being Harry Truman, without the ethics or personal responsibility. "The buck passes here," is that right, Tim? Nothing is ever their fault no matter how idiotic (wine kiosks), misogynistic (date rape ads), anti-PA  business (Tableleaf et al), anti-consumer (any monopoly is anti-consumer) or just plain stupid (whatever happened to the PLCB Savor magazine, and the drink recipes that need things the PLCB doesn't sell?) Any Chairman claiming any responsibility for any of those things?  Didn't think so, and Mr. Holden is certainly not going to be the first.  

Stop being fooled.  The PLCB does not exist for the benefit of the citizens, it exists for the benefit of the PLCB. Anything to keep the pigs at the trough is what they are for and anything that resembles real business with real competition is what they are against. Starting at the top with the Chairman..

PA House Democrats keep up the scare on privatization

As the State Store System trembles from the freshening breeze of competition from the likes of Wegmans and Giant and Giant Eagle (and remember, they're still chained by the cafe rule, and wine only, and the Four-Bottle Folly, and state-regulated pricing), and new salvos of booze freedom launch from an increasingly bold House GOP caucus, the House Democrats are in full spin mode in defense of the archaic PLCB monopoly. They're trying to convince the people of Pennsylvania that it is better to have a government retail monopoly than a free market for booze, a pure case of the mindwarp that is Wolfonomics.

For example, let's comment on a press release they put out on April 24th.

"Liquor sales in PA should be about consumer convenience and small businesses, not big profits for a few huge corporations."

Pennsylvania House Democratic Caucus    April 24, 2017 | 6:01 PM

Republicans in the Pennsylvania House of Representatives are scheduled to move several liquor privatization bills this week. They all have one thing in common: Pennsylvania consumers aren't demanding any of them and the Pennsylvania Senate is unlikely to consider them.

Of course the Senate will consider them, they may not act on them all but the four bills will be consolidated into some package...unless McIlhinney kills them. What party is he affiliated with again? Is he one of your guys?  

Consumers Are Happy With Modernization! Forward!

Consumers are happy with the modernization and convenience changes made last year to Pennsylvania's liquor laws -- there is no widespread public support for comprehensive privatization for privatization's sake. 

After 82 years of nanny state idiocy why wouldn't consumers be happy about changes? But are we satisfied? Since every scientific poll of the past 40+ years shows the public doesn't want the State Store System, probably not! 

Those guys? Only in it for the money!

There are only a few groups pushing to rush forward with more liquor changes so soon after last year's consumer-friendly improvements — the chain grocery stores; big-box retailers and mega-wholesalers that want to corner the market at the expense of consumers and small, family-owned businesses; and the newspaper publishers who want to reap millions of dollars in advertising sales. 

Of course stores (except the State Stores) want to gain customers by providing what they want, where they want it, be it Walmart or a local wine store (which you may have seen in other states). Just what small family-owned liquor stores are there in Pennsylvania that the Democrats are talking about? They don't exist, and unless things change, they won't. Not because of big box stores, but because the Almighty Liquor Code doesn't allow it, and the House Democrats are just fine with that. And they're still banging away at the news media. For years the Democrats and Windy Wendy Young have been saying newspapers only back privatization (and practically every Pennsylvania newspaper does, by the way) because they will reap a small fortune due to alcohol advertising. Just where is that happening? Looking at the papers in New York City: not a one has an eighth of a sheet worth of liquor ads. Even if there were more here in Pennsylvania, it would show that stores are competing with each other for your business, which can only be good for the consumer. 

By pushing expanded alcohol sales, the state risks jeopardizing public safety in many counties and municipalities, reducing revenues for the Pennsylvania budget, and killing thousands of family-sustaining jobs in every community in the state.

Really? Yet the PLCB has been pushing to expand sales for years - why is that good but real growth bad? Of the last two places that fully privatized in the past 25 years, both have lower rates of DUI, underage DUI, DUI fatality, and underage DUI fatality than the Commonwealth currently does. In fact, four of the six border states have better records. One that doesn't is Ohio (also a control state!), the other is Delaware. Maybe it's the PLCB that is jeopardizing public safety by focusing on increasing sales instead of regulating alcohol sales and abuse. The conflict of interest is real!

Jobs? The current system is limiting jobs in favor of the monopoly. Full privatization has tripled jobs in the industry where it has happened. It has increased convenience and consumer satisfaction, because there aren't some unqualified bureaucrats deciding what the entire state is allowed to buy. 

Creating thousands more wine and liquor retailers will saturate the market in many counties and municipalities.

Just to get to the national average Pennsylvania would have to add 2,000 stores. Like any other product there can only be as many stores as the market will bear (and local zoning and ordinances will allow). Imagine local communities deciding what is best for them, not Harrisburg. 

Access to a wide variety of wine and liquor selections in well-lit, clean and safe state stores will be replaced by a limited choice of major-brand items relegated to one or two aisles in chain grocery stores and big-box retailers like Costco and Wal-Mart. 

Why would a grocery store stock the same amount of products as a stand-alone liquor store?  Compare a State Store to a liquor store. Go look at a Total Wine, a BevMo, a Super Buy Rite, a Binny's or any of the real liquor superstores and compare it to a "Premium Collection" State Store. The private stores will have more variety ACTUALLY ON THE SHELF then the PLCB stocks in their entire system. Privatization can bring a wide variety of stores, specialty stores, warehouse size stores, local stores, convenient stores instead of the same one size fits all State Store. 

Wine and liquor in Pennsylvania's state stores are priced competitively. Prices for consumers in states where wine and liquor were recently privatized have gone up, not down.

With the largest border bleed in the country, there are probably a large number of citizens who disagree that the selection, service, and prices are competitive. As far as the ONE state that has fully privatized, one can expect that an additional 27% in fees and taxes that were imposed at the time of privatization may have had an effect on prices. However, prices didn't go up 27% which shows that the free market is much more efficient than a monopoly. Besides, with the knowledge of hindsight we don't have to do things exactly the same — wrong — way. 

Combined markups and taxes in Pennsylvania for wine and liquor are comparable to and, in many cases lower than, those in privatized states.

The first true statement in this entire release, but with variable pricing causing the markup to go up, it may not be true for long. As the 2nd largest retailer of wine and spirits, the real question isn't whether your prices are competitive; it's 'Why aren't they better across the board than MD, DE or NJ?'

The bills being considered this week will substantially increase the number of businesses selling wine and liquor but provide no additional money for alcohol control or law enforcement. There are already too few officers monitoring Pennsylvania's 30,000 licensed establishment. Do we really want to add even more locations to already-saturated markets? 

Most of the additional businesses that would be selling wine and liquor are already licensed by the board and are already checked by the BLCE. While there are 30,000 licenses of various types, only 19,000 are active and the state itself is adding 1,200 to that total. Again PA is below the national average, so the idea that we are "over saturated" is disingenuous at best. 

Many Pennsylvania municipalities are already struggling with the crime and expense caused by nuisance bars. We need to find solutions to those problems before we add even more licensed locations.

As already pointed out, the state is adding more licensed locations. Three of the four current bills are not adding any locations but expanding what can be sold. Maybe if the communities didn't have to wait for the PLCB to act, they could better control what happens in their towns. 

The U.S. Centers for Disease Control and Prevention has determined that liquor privatization leads to increased excessive consumption. Pennsylvania has not examined how vastly expanding access to wine and spirits -- and oversaturating the market in several counties and municipalities -- will impact public health and safety. 

The study mentioned also had consumption increasing by over 40%, which has not happened in any state, and overall the research data has been debunked by Stats.org the premier body for statistical analysis. The CDC report was so bad that Forbes did an article about it. 

Moving toward full privatization of wine and liquor sales in Pennsylvania would replace skilled jobs that provide financial security for thousands of families with a much smaller number of minimum-wage cashier jobs that don't protect public safety, improve customer service, or support families. 

Currently State Stores are never checked for age compliance by the BLCE, but every licensed establishment is. A number of private stores selling beer and wine have 100% carding policy; the State Stores do not. Everybody that serves alcohol in a licensed establishment has to be RAMP certified; State Store clerks do not. 

Being a clerk in a liquor store is not a skilled job, but as already mentioned, employment in the industry tripled the the last places that fully privatized. Not a guarantee it will happen here but a good indicator. Keep screwing around with these "ass-backwards" measures (as Senator McIlhinney pungently put it) that only complicate the mess further, and things probably won't go as well.

This blind leap toward full privatization of wine and liquor sales comes without an examination of the public health and safety impacts, no evaluation of whether Pennsylvania consumers believe full privatization is necessary or desirable in the wake of recent consumer-friendly improvements, and with no accounting of what privatization will cost Pennsylvania workers and taxpayers. 

The citizens have never wanted the State Stores. In poll after poll, privatization or private retail has always won out. After over 40 years of the same result, do you really think the citizens will change their minds? The recent improvements simply show that full privatization is desirable. People want convenience that the PLCB can't provide. They want better pricing that the stores can't give them because they have to buy from the PLCB. They want the selection they see at stores on our borders - stores that stock more than the entire state has on the shelf.

Pennsylvania should be working to benefit and protect consumers and small businesses, not rigging the system to put one of the state's most important and lucrative assets in the pocket of a few huge corporations.

Since there are no small liquor store businesses now it seems that you are already rigging the system against them. Privatization can fix that. Who will get licenses and what type are up to you in the legislature. If you say only stores of 10,000 sq.ft., then guess what...only chains and big box stores will get licenses. If you allow specialty wine or liquor only licenses then you will see entrepreneurs opening that kind of shop or restaurant - something that PA doesn't have now.
The one size fits all thinking of the PLCB can't and shouldn't be applied. 

This isn't 1934 anymore. It's time to move forward, toward a license and regulation model that the majority of states use. Get out of retail and wholesale so the free market can do what it does best. Provide products based on the wants and needs of the consumer, not on what is allowed by the government.

Are Your Prices Variable Enough?

Just how much is the PLCB screwing us with "variable pricing"?

A good question, and one that the PLCB doesn't really want to answer. There is no sunshine at PLCB HQ; their mission is to hide as much as possible, keeping as much information away from the citizens as they can. And why? It's not like they have any competition to worry about, no business secrets to keep: no one else is in their business, they've made sure of that. They do it for one reason: to keep the owners — that's you, and I, and the Legislature — ignorant of what they're really doing; of how they're desperately shuffling prices and margins around to try to look "profitable."

Would the wine kiosks have passed if the citizens, if the press, knew about them, knew that the PLCB had been advised against implementing them...by their own people? Would Joe "Da CEO" Conti been brought back after having been found to have committed ethics violations if the citizens knew, and could do something about it?*(Correction: please see below.)  Maybe anti-competitive branding and placement wouldn't have taken place with citizen involvement. But that all did happen, mainly because the PLCB kept it all hidden away and secret, to the point of having records destroyed, to the point of appearing to have had secretive off-book meetings to make decisions that are supposed to be discussed in public.

Now they don't want you to know how much of a shaft you are getting on variable pricing, the one thing they wanted more than anything else from "modernization." Remember, the PLCB said that they couldn't negotiate prices for 82 years, even though there was nothing in the Almighty Liquor Code that prevented it, and then they said that they did negotiate on some things, but not most. ACT 39 changed that, and supposedly allowed the PLCB to do something they could have been doing all along...only now the game is rigged to benefit the PLCB and not the consumer. That sounds fair.

In the PLCB meeting minutes, you used to be able to see what new products were going to show up, and the cost for those products. Not anymore. The PLCB doesn't want you to know what they are paying and what they are going to charge,  because it will raise questions about why the consumer isn't seeing benefit from "variable pricing." They don't want you to know that they are making an extra $1.16 for every bottle of Jack Daniel's sold while you see no change** on the shelf.

Now, a real retailer wouldn't tell you this either. But the PLCB isn't a real business; they have a police-enforced monopoly to ensure their market share! A real business doesn't tell you this stuff, but their competition keeps them honest, and you can be sure that they're passing along savings to you; if they don't the competition will.

But the State Store System has no reason to benefit the consumer by lowering prices in order to increase market share or maintain their customer base. They don't have to worry about that, and there's nothing in the Almighty Liquor Code that says they do. Remember the founding principle of the PLCB, as stated by Governor Gifford Pinchot himself: “to discourage the purchase of alcoholic beverages by making it as inconvenient and expensive as possible.”

So what does the PLCB tell us about the effects of variable pricing? The Chairman said that they will not raise prices across the board, but with having to dip into reserves to pay more into the general fund, and trying to prevent privatization by making it look like they contribute more than a piddling amount to the state (not including the taxes, which would still be collected in a private system!), and having to pay off $260 million in pension debt...what do you think they are going to do? Keep their sinking ship afloat in any way they can, or benefit the consumer?

Last year the PLCB charged an average of 45.36% above cost for every product sold.  For the first eight months of this year it has risen to 45.46%, and I guarantee that will continue to climb as time goes on. If you remember, the Democrat's modernization plans said that the PLCB will make an extra $75-100 million because of this alone. That would mean they'll have to raise the charge above cost to over 60% — such a deal!

The choice comes down to this. Do we want to continue to have limited selection, limited convenience, Harrisburg bureaucrats selecting the booze for the entire state, and anti-consumer pricing? Or do we want the freedom of choice that the private market brings?

Privatize - all of it. Retail and wholesale. Why wait one variably-priced month longer?



*Correction: Conti was ruled to have violated the state's ethics code about a year after he was brought back as an 'emergency consultant' and paid about $67,000 more of your booze dollars. Our error, which we own up to...unlike Joe The Ethics Violator, who is currently on the faculty of the Fels Institute of Government, and a lobbyist with Triad Strategies. Great places for a known ethics violator.

** Since the PLCB hides all of their purchase information now, the $1.16 is just my best guess, but it is an educated guess...and it is most likely more.

Reality check: how is "modernization" working out?

The end of February marked eight months gone of the fiscal year, and just under seven months of Act 39's "modernization" of the state's police-enforced monopoly on wine and liquor sales, changes that Governor Wolf trumpeted as "historic."

So things are booming for the State Stores now, right? Well...not exactly.

Remember how bailment was going to cut inventory costs and save the citizens all sorts of money? It may have but it didn't last. Inventory cost went up over 10% so far this year and has now gone up over 46% since bailment was implemented in 2012. It will certainly pass pre-bailment amounts next year with a modest 3% increase. For the same period of time, the inflation rate went up 6.2%. (2012 Inventory $175,902,668; 2017 Inventory (so far) $257,285,382; Pre-bailment inventory $265,816,891)

Still, with all that inventory they must be making more money right? Sorry! Total Operating Income is down almost 5% year to date, while total assets squeaked out a gain of 4.2%. Meanwhile, Total Liabilities jumped almost 16%, from $803.7 million to 930.5 million. (And you know who has to cover that; you and me, the taxpayers.) Total debt is up almost $50 million more than at this time last year; $264,454,330 or about $26 million in additional debt than at the end of last fiscal year. To be fair, the PLCB statement has numerous notations about 'See Note X, Table Y', but they don't provide what those notes are. Are they valid reasons, or just lame excuses? The public doesn't know, and the PLCB clearly doesn't think we need to; it's kind of like their selection, if they don't have it, we don't need it.

The Never-Ending PLCB Story!

The PLCB is selling more product while making less money. In desperation, they're dipping into reserves to make a big payment to try and fend off  privatization, blowing smoke as thick as possible so you don't notice that they're going even further in the hole with liabilities approaching a Billion dollars...all the while remaining as incompetent as ever.

The benefits of modernization? I'm not seeing any evidence of that extra $137 million the Governor said they would make, and I'm willing to bet I won't, with only four months left in the fiscal year.

How many reasons do you need to get rid of this broken system and replace it with one that works for the consumer?

April Inventory Idiocy

I'm a Scotch guy, and I know a fair amount about it. Although they have a statewide monopoly on selling it, the PLCB doesn't...and I'm going to pick on them for that.  How incompetent/stupid/'we don't care' are they this month? Let's take a look.

I'll start off with Glenmorangie single malt Scotch whisky. The PLCB lists 25 bottlings of Glenmo on their website between on-line, in-store, SLO, and of course, "out of stock." So how many do you think you could actually get?

Well, there are nine out of stock, some of which we will never ever see again; inventory padding, really, just like the Jack Daniel's examples I pointed out here. So that leaves sixteen...right? Not exactly. The PLCB likes to double count the exact same item that they have on the shelf...and what they can supposedly only get by SLO.

Here are two examples. First, the Quinta Ruban:

It would seem that cutting and pasting the picture is beyond the ability of the people who do the inventory, and why is the price different? And before you even ask; no, there's only one expression of Quinta Ruban.
 
Next! The Nectar D'Or [a favorite of Lew's ...but not bought from the PLCB!]:

They still can't figure out how to post the exact same picture in two different places, but at least the price is the same this time!

So now we are down to fourteen. Whoops! One is supposedly "Coming Soon," so we're down to thirteen. Now how many do you think you can actually get?

Well, two are listed as "On-Line Exclusive," which may or may not mean you can find one or two in a store. (The PLCB has made that mistake more than a few times.) Are they really there? Looking at the inventory listed in the current Product Catalog, they aren't listed at all, but other out of stock online exclusives are — like the Glenmorangie Signet which the Product Catalog says is available,  but SLO and the FWAGS website says it isn't. So which is it?

Then there is the 18 year old New World which FWAGS says is out of stock but the Catalog says is available. Do these people have any idea what they're doing?

We really don't know HOW many of these are actually available. Who can say, since the inventory, like the rest of the PLCB, is entirely screwed up.

Why do we continue to put up with this incompetently-run "business" which can only make a "profit" with a police-enforced monopoly and by gouging the people they are supposed to serve with artificially high costs and variable pricing?

End the insanity, Tell your Representative to support HB 1075 and get the state out of this mess and back to what is considered normal by the vast majority of the states.