Wednesday, March 21, 2018

Not Quite 10 Years Ago...

It's not quite ten years since I started this blog with this post. It was on April 22, 2008, and I should probably do the 10th anniversary post next month,'s snowing like mad out there right now, and I'm not going to be able to go do brewery visits like I planned, so I'm doing it now. What's a month?

Ten years ago things were pretty bad; they were worse than they are today. The State Stores were not under any kind of real scrutiny, they didn't have a useful website, and there hadn't been a serious push for privatization in 20 years. Beer was sold at distributors -- by the case and keg only -- or at taverns -- only 2 sixers at a time, and at a stiff markup -- and that was it...except for the occasional weird exception. The Legislature was in a long period of inactivity on the Almighty Liquor Code. And I was losing my mind after seeing how booze was sold all over the country.

So I started this blog...and things changed. I don't take any credit for this. Much like the success of my other crusade, the Session Beer Project, I don't feel that I caused any change. I just had a very sensitive ear to the ground, and caught the rumors and mumblings before almost anyone else did. At the most, I may have suggested lines of inquiry to reporters (who picked up on the blog fairly early; as did a suspicious number of IP addresses in downtown Harrisburg), and if that worked, well, that's always been the main aim and hoped-for audience of the blog. (A big hat-tip and thanks to my co-writer, the pseudonymous Albert Brooks, who picked up the pen while I was sidelined for over two years and has done a GREAT job feeding facts to that audience.)

What happened in the past ten years? Here's the dumb stuff.

  • The PLCB spent $3.6 million on public image, advertising, and store layout, paid to a California-based marketing firm. They come up with a new name for the State Stores: "Table Leaf." In a rare rush of smarts, the PLCB realized that's idiotic (though they did keep an option on it; see below), and decided to go with the basic stupid rename: Fine Wine and Good Spirits Store. Governor Rendell was furious...and the PLCB blatantly didn't care. Your money wasted: it's a monopoly (a police-enforced monopoly, as we would point out many times), there's no need for marketing.
  • The aptly-named Special Liquor Order (and they call it SLO, you can't make this up) system broke down again, and again, and again...
  • The PLCB so badly screwed up their new inventory system in 2011 that store managers over-ordered so much wine that they had to store almost 100,000 cases of it in tractor-trailers...un-air conditioned trailers, in the summer. Renting the trailers and hiring security guards cost about $500,000. (Numbers are from an Auditor General report.) Good job, morons!
  • Around 20 State Stores closed. A bunch more were moved for arbitrary reasons without input from local communities. And of course, we revealed that ten counties in Pennsylvania have only ONE State Store. There are ten others with only two.
  • The Courtesy Contract. The PLCB spent $173,820 on training State Store System clerks "how to greet someone, where to stand, and how to read a customer's cues." And the company doing the training belonged to a PLCB regional manager's spouse. Real nice. 
  • We saw several ethics investigations of the PLCB (one of which struck paydirt) and several harshly worded audits. The marketing director was found guilty of fraud...back in 2015, and he still has not been sentenced. Speculation is that he is cooperating in further federal investigations. Conti must be spooked. 
  • We saw again and again that the PLCB often actively made it harder for licensees and wholesalers and brewers to sell beer. You know...their only competition in the booze biz. Not bad, when you make the rules. This included the harassment of three Philly bars and a major Philly beer wholesaler for selling "unregistered" beer, carried out by the BLCE and supported by the PLCB (and their soon-to-be-exposed flawed database). After armed raids, seizures of beer, disruption of private (beer) business, and a full-blown legislative hearing...the result was a warning letter. Harassment, and they should have been sued. 
  • The Saga of Joe "Da CEO" Conti, from his disappearance, to his greatest failure, to his ignominious end, to his unlikely (and lucrative) return. We miss his shenanigans; his constantly wrong-footed instincts were the best thing that ever happened to privatization. 
  • The Wine Kiosks. Nothing more need be said. Possibly their biggest failure in the last 40 years, and that's saying something. 
  • Table Leaf: the brand. As mentioned above, they'd already (over)paid for this branding, so they used it for a house brand of wine. And then they decided to wield it as a weapon against their biggest suppliers...and Pennsylvania wineries. Who brought it to the Legislature's attention, and that was the end of another PLCB fiasco.
  • Privatization was repeatedly brought up by the House, and squashed in the Senate, mainly thanks to the efforts of Senator Chuck McIlhinney.
  • But in all the past ten years, the very worst thing that happened was that the Legislature let the PLCB have the one thing that they never should have: so-called "flexible pricing." This is the idea that the PLCB should not be forced to use the same set mark-up on every item; when they got a deal, they could pass it on (which is bullshit: they could always have done that). What it really means is that they charge more; we told you that for years, and golly, it was true. We're stuck with it, too.
    Ah, the wine kiosk. The Best Worst Thing.
Wow. I know I'm missing stuff, but those are the big ones. Yet somehow, these ding-dongs are still in business, still the sole wholesaler of wine and spirits in the state despite continual screw-ups.

Meanwhile, we did get some things, although almost all of them were mixed blessings. 
All right, break it up!
  • The case law is finally gone! That was one of the big ones. We no longer have to buy an entire case of beer at the distributor. That'd be great, except we still can only buy a 12-pack at bars and grocery stores (more on that shortly), then walk out the door and walk back in and buy another...What kind of bullshit is that?
  • We can buy beer and wine in grocery stores and convenience stores!! HOT DAMN! Whoa there, hoss. We can buy beer and wine in places that hold a restaurant license; that's always been true, but now these stores can buy those licenses (for as much as $500,000!), and put in a 'cafe' that seats at least 30, and sell sixpacks. About 450-odd stores have done so, out of the thousands in the state. So don't wet yourself with glee. And remember: a 12-pack of beer, or four bottles of wine, and it's out the door you go
  • Direct wine shipment (and beer...but not liquor) is now a thing. That's a big deal for a small number of people. 
  • The PLCB had to start telling the truth about their financials; specifically, their deep pension debt. And just like that, they were no longer making money, net of taxes. They still are paying money into the General Fund, because they have to, but they're doing it out of reserve assets. The day of reckoning is coming. 
  • We got some really cool stuff: Pennsylvania booze producers can cross-sell their products. A winery can sell PA-produced beer, cider, spirits, mead...and, what, kvass, I guess? Any of that. And they can have satellite stores off their main production premises, which can also sell those other products, which has led to Pennsylvania Libations, the first privately-owned liquor store in Pennsylvania in almost 100 years. And that's cool. 
  • About a thousand (I think) liquor licenses were blown out of escrow and auctioned off. Mostly picked up by grocery stores. So that's kind of good, but...all those grocery stores buying bar licenses is making the price of a license go up, a lot in some places, and that's putting the squeeze on indie mom-and-pop bars and groceries. This is going to give us a lot more chain groceries and chain restaurants, and that, my friends, ain't optimal
That's all I can think of right now. There have been some other side effects. One, the PLCB is running scared, and the selection is about as good as it's been in a while. (You're a fool if you think that will continue if the privatization talk dies down, so let's keep 'em scared.) Two, the BLCE has been scared to do any enforcement of the monopoly, so we can buy out of state with impunity. Three, people have a lower opinion of the PLCB these days after the corruption charges, and that's good. Four, McIlhinney's retiring, and maybe we can get someone who really gets it in there.
OTOH...The GOP has, overall, been a huge friend to privatization of the PLCB in the past 40 years, despite numerous missteps. The unpopularity of the Trump administration may lead to a loss of the solid GOP majority in the General Assembly. Overall, that's how things go, but for this issue? If the Democrats gain a majority, or cut the GOP majority, you can kiss further progress good-bye. Because the Dems have made it crystal-clear that they are opposed to any further privatization of the State Store System. We'll just have to wait and see.

Overall, though? Good progress at the 10-year mark. We got rid of the case law, and the PLCB's sales are suffering from the wine sales at groceries. This is what union boss Wendell W. "Windy Wendy" Young IV referred to as "the death of a thousand cuts." Here's hoping he's right about that, and that "flexible pricing" doesn't bleed us to death in the meantime.

I feel for you folks who are far from a border. If Philly were where State College is, away from the liquor stores of Jersey and Delaware, the PLCB would have been long gone. Let's keep the pressure on.