Thursday, June 20, 2019

Revisiting some numbers that you won't see the PLCB publish

I first posted Numbers, Numbers, Numbers (some State Store numbers that are always missing in the PLCB's annual report) three years ago. It might be good to have a second look to see if there was any improvement at the PLCB.  The original findings are (in parentheses).

1) The average amount of non-tax revenue returned to the state per unit (single bottle or box) of wine or liquor - $1.25 (73 cents) Beware: this is based on the so-called "profit" turned in to the General Fund, which has little to do with actual profit. It's simply the amount asked for by the administration. We know that reserves were dipped into for 2018, so this number is skewed even more than it normally would be.

2) Not counting the actual cost of the item, what the PLCB spends to put one item on the shelf - $2.91 ($3.06)

3) What PA spends to put an item on the shelf, including the average cost of the item - $10.78 ($11.40)

4) What it costs with taxes included to put one average item on the shelf - $14.48 ($15.21)
Note: While it looks like items 2,3, and 4 are an improvement...this is due to the huge numbers around just 3 items: Fireball 50 ml (+750,000 unitls) and Tito's 50 ml (+175,000 units) and Tito's liter (+380,000 units). When you increase mini sales by over 900,000 units, it skews the average cost and tax per unit. 
5) Average real estate rental cost per store (2018) - $1663 a week ($1432)

6) Industry average profit margin 8.1%; PLCB 2018 profit margin 8.9% (6%) The majority of this increase is due to the auction of the "Zombie" liquor licenses, not because of actual retail sales.

7) PLCB effective markup, not counting any taxes - 46.7% (45.36%)
This is because of variable pricing. Now that almost all items fall under that, expect this to rise even more next year.

8) State and federal government workers' average benefits as percentage of salary - 36.4%.
PLCB benefits as percentage of salary - 85-104% (as stated by Board members during the Appropriations hearings in the Senate).

9) Percent of sales actually checked for proof of age - Unknown. 
The PLCB did not include any information about carding in this year's summary. It is still probably under 2% as it has been in years past.

10) Retail Wine Specialists as a percentage of PLCB workers: 2.2%  (1.7%) - Only a gain of 20 in three years. Retail Wine Specialist as a percentage of Total Wine store employees - ~20%


1. - $185M returned to General Fund plus $30.5M for BLCE plus $5.5M for Alcohol Awareness programs plus $2.5M for Drug & Alcohol programs divided by 178.9 million unit sales. We were told "Modernization" will increase profits by $180M. Is anyone surprised that we're not seeing anything close to that? (Keep in mind that the $185 million is a very flexible number, mostly representing what the Legislature requires from the PLCB, whether it's actually "profit" or not.)
2. - Operating expenses (not counting the cost of wine and spirits) of $520M, divided by units sold. The lower this number, the more efficient the organization is.
3. - Operating Expenses plus Cost Of Goods Sold (COGS) = $1.928B divided by units sold 178.9M.
4. - Gross sales ($2.59B) divided by total units sold. $3.47 in tax for every bottle or box sold is the average of sales and Johnstown Flood Tax; more expensive bottles can be much more.
5. - Rental expense for all operating leases $52.2M divided by 604 stores. Of course, this cost will increase as the PLCB tries to move into higher traffic areas.
6. - IBISWorld, May 2013, Operating Income divided by Sales Net of Taxes. With increased pension costs, workers comp, salary, and benefits increasing, this won't improve any time soon.
7. - COGS divided by gross profit. This fat markup of 46.7% still isn't going to be enough to cover increasing operating costs as the PLCB had to go into reserves again to pay the $185M requested by Gov. Wolf
8. - US Dept Of Labor - Bureau of Labor Statistics, 2016 PA Senate Appropriations hearing.
9. - No information about carding is mentioned in this year's documents. You have slightly better than 98% chance of not being carded (compared to a 0.0% chance at private stores like Wegmans), and since the State Stores are never checked by police for underage effective are they?
10. - 4999 (2/15/2019) divided by 111 (www.pennwatch) There appear to be no Spirits Specialists in the PLCB.
11. - Over 5000 employees and 800+ Wine Specialists (Total Wine wiki ). The PLCB has ONE retail wine specialist for every 5.4 stores, Total has SIX at each store.


Anonymous said...

There are no spirit specialists because most people know what they want when they buy spirits. It's not the same when it comes to wine.

Lew Bryson said...

Classic PLCB response. "We know what you need;what you want is unimportant."

Anonymous said...

Yep, because you know them all so well.

Lew Bryson said...

Well, no. I don't know much at all about gin, but it's a cinch I'm not going to get any good advice on what to buy from the PLCB. I literally got more advice from a guy making cocktails out of a street vending truck than I ever got on spirits from the PLCB.
If you hadn't noticed, there's been a wave of new spirits. The PLCB has not only been slow to stock them, they're dead-set against learning anything about them, or giving any useful advice on them.
And by the way, your wine advice sucks anyway. I get better advice from the kids stocking the shelves at Canal's in Jersey than I do from the PLCB's "wine specialists." I'm sure there are exceptions...but you don't have one at every store.

Albert Brooks said...

Yews, the rest of the world is wrong and everybody should trend to the lowest possible bar to help the customer like the PLCB does. My waiter in DC had better credentials than the guy selecting Chairman's selection. How do I know this? He had his pin on for completion of the introductory Sommeliers course.

Albert Brooks said...

"There are no spirit specialists because most people know what they want when they buy spirits. It's not the same when it comes to wine."

So the people who buy for the entire state don't have to know squat about spirits because the people that they supposedly serve don't care. All of us, there is no percentage no matter how small that the PLCB needs to serve? There is the customer service we have come to expect....and you wonder why the PLCB has such a crappy reputation for the past 50 years.