PLCB Numbers, PLCB lies: the truth about Bailment

A little over six years ago, the PLCB put in place a system called Bailment. Bailment is a common regimen in the business world...which is probably why the PLCB took 80 years to get there.

Bailment is a pretty simple idea; for instance, when you "give" your car to your mechanic with the implicit understanding that there's only a change of possession, not ownership. The mechanic holds your car until the work is done, and it's understood that the car never changes ownership; you don't have to stand there with your hand on the car to maintain your ownership of it.

In the case of the PLCB, bailment is a little more complicated, but not that much. The way it used to be, a wholesaler would deliver product to the PLCB warehouses, and they'd submit a bill immediately. Under bailment, the product is delivered to the warehouse, but the PLCB doesn't take ownership of it until it is subsequently taken from the warehouse for delivery to the stores. At that point, the wholesaler submits the bill, and PLCB will pay them. Well, not right then, that's not how business works, after all. Everyone works on "net 30," where you have 30 days to pay. The PLCB, of course, pays on "net 90." Because they're a monopoly, so there.

Bailment was touted as a big money-saver for the PLCB, a major 'get' the agency wanted legislative permission to use. It would reduce the PLCB's actual inventory costs, which would seem likely. But it would also allow the PLCB to skip the need for their annual $110,000,000 tax-free, interest-free loan from the General Fund at the start of every year, so they could buy product and have something to sell in the stores. Isn't that the way every business works? Borrow money from Mama to buy stock, and then pay her back...interest-free?

Well...the PLCB did stop taking the loan. Which you would think meant that they should have had some extra money to turn into the General Fund, you know, that big "contribution" that the Legislature tells them they're going to make. Yeah, that didn't happen. The amount after bailment was the same as the amount before bailment - $80,000,000.

We don't care -- it ain't OUR money, it's YOUR money.

The big talkers from the clerks' union say that there wouldn't be any increase just because the loan wasn't needed, because that money was used to buy the startup inventory. Let's look at that in round numbers to make it easier to follow.

Say I (as the PLCB) borrow...$100 million to buy inventory. In the course of the year, I make $500 million selling that booze to unhappy Pennsylvania citizens (unhappy because they have to buy from me!) before expenses. I then have to pay back the $100 million, which leaves me with $400 million to pay my other bills. But because of The Wonder Of Bailment!!!, I didn't spend as much just to have things sitting in my warehouse, so I didn't need that $100 million loan...which means I have the full $500 million before expenses. That money is now mine to spend on other things...like increasing the amount turned into the General Fund.

But that didn't happen, nor is that money accounted for in store remodels, in fact, there are fewer stores now than there were then. It's not accounted for in increased education, increased money to enforcement, or buying new LCBee costumes. So where did it go? 

Well...about the same time, the PLCB was putting in a new Oracle computer system. Unfortunately, just like the system they installed before, they didn't do a very good job (the Auditor General said so; both times). The cost overrun was about $40,000,000 (although it was spread out over a few years). Inventory expenses went up over $20,000,000 the first year, even though Bailment was supposed to reduce inventory costs and keep them low. Store, warehouse, and transportation costs went up $25,000,000. Stores' operations and supervision expenses went up $25,000.000  Overall, for the first two years of bailment, PLCB Operating expenses went up over $82,000,000! While both years had "record sales" (so knock-down easy to do in a monopoly that we wonder why they keep saying it), the PLCB had record expenses to go with them and pretty soon...the $100 million was gone.

So...all that money bailment was going to save through reduction in inventory costs? Last year, inventory was about 2.5% shy of pre-Bailment levels. One gets the feeling that the PLCB uses the Servpro motto - "Like it never happened."

After seeing what a bang-up job the PLCB did with our money here, maybe we'll check into how well variable pricing is screwing the citizens, and why we aren't seeing that extra $185 million that wonderful plan was supposed to bring in. We have a sneaking suspicion that the words "rising operations costs" are involved...

UFCW gives up

After getting some real blowback by killing off a representative family in a series of cringe-inducing commercials, the State Store clerks' union, the UFCW, has decided that they no longer need to try and protect us with half-baked lies on their UFCW PA Wine and Spirits Council website. Not willing to openly admit defeat, they quietly let the sun set on their "proof" of the evils of privatization, and scuttled away into night.

So what does this mean for privatization?  Not much, since almost everything on the website had already been disproven. The UFCW still tells the clerks (I mean, surely no one else is bothering to look, right?) to "Learn more on UFCW PA's Wine and Spirits Council Website." I guess now that they can't squeeze dollars out of people who don't want to be involved with the union through "fair share," they must be trying to save their pennies like this.

Meanwhile, in another example of normal operating incompetence, the PLCBoard admitted under oath at the House Appropriations Committee hearing in February that they didn't have a clue about the costs of CRM (Customer Relationship Management) when they were pitching it to the legislature. That pretty much means that they read about it somewhere, thought it was a great idea, and never did even the minimal amount of research into it. At least this time they didn't hire some consultants to tell them it was expensive to do correctly. We'll be seeing the typical PLCB half-assed slow roll-out as they try to figure it out. Sounds like a plan....a PLCB plan to me.

Lastly, the PLCB hasn't gotten back to us about the number of industry-recognized wine specialists they have. It has only been three weeks, so we weren't expecting much...and that is exactly what we got.

Privatize.

PLCB - 85 Years to Get It Moving in the Right Direction and They Still Fail

Those of us who have put up with the restricted system of alcohol access in Pennsylvania would expect to see some results from the 85 years of the state's social experiment. The results are in, but no one's talking about them (except us), because the PLCB fails miserably. Using data from the National Institute on Alcohol Abuse and Alcoholism, Newsweek ranked the states by their alcohol use.

So far it ain't working.  Look at the states on our border:

1. New York - Lower consumption than Pennsylvania
2. New Jersey  - Lower consumption than Pennsylvania
3. Ohio - Lower consumption than Pennsylvania
4. West Virginia - Lower consumption than Pennsylvania
5. Maryland - Lower consumption than Pennsylvania

If you don't succeed, quit after failing 80+ times.

Only Delaware has a higher consumption rate than Pennsylvania! But that's not really fair, because these rates are based on sales, not actually tallying people's drinks, and we know that a significant portion of sales in Delaware are from Pennsylvania residents in search of better prices, selection, and service. Those superstores on the border with Pennsylvania aren't there at random.

Is this the PLCB's fault? It has to be: there is no alcohol that isn't under their control. They are responsible for how beer is sold, they just don't do it directly, exactly the same as the alcohol regulators in other states work. Even their report on underage binge drinking shows they aren't doing what they are supposed to be doing. Pennsylvania's rate is worse than the national average, and not getting any better.

The State Stores are never checked for underage sales - yea!

Maybe the DUI and DUI fatalities make up for it.  No, you don't want to go there. You'll just be disappointed again; more proof that the Pennsylvania system isn't working.

If they're not "controlling" drinking, what is the PLCB doing? Surprise! They are a jobs program ingrained deep into state government, protected by politicians dependent on union money and votes. It has nothing to do anymore with protecting the public, nothing to do with enforcement of the border (what, 3 arrests last year? Wow...), nothing to do with service, and certainly nothing to do with treating the public fairly.

No, the only thing the PLCB is interested in is squeezing the citizens for more money. Prices increase when better deals are brokered, in the name of "variable pricing," which was sold to us as a way to lower prices of popular brands. No! It's a way to make more money, but not for the State, it's to cover their ever-increasing operations costs!  What other business decreases their number of stores by 25%...yet has more employees?

They don't even know their own name! Are they Wine & Spirits Shoppes? Pennsylvania Wine & Spirits ? Fine Wine & Good Spirits? We paid $3 million for the Fine & Good, you'd think they would want to use that everywhere. Might as well have saved that money -- our money -- and stuck with what most people call them even without a sign - State Stores.

PLCB Sales

PLCB Liabilities

The people in charge have no experience in the business. Prices are raised arbitrarily -- everything is done arbitrarily! -- and customer service is unimportant, because they have no legal competition. They've had record sales almost every year, but they're deeper in debt than anytime in their history...and it doesn't matter, because in the end, the taxpayers are really the ones responsible for that debt.

We, the citizens, deserve better. We are not safer, we are not better served, and we are not satisfied.

PRIVATIZE NOW.

And the winner is...Everybody but Pennsylvania.

Nice to know that the second largest wine retailer in the U.S. (at the moment) only influences a captive monopoly citizenry and nothing else.

Yeah, the PLCB keeps talking "world-class" and walking "second rate." That's certainly the impression you get from Infowine.com's annual list of the top 100 influencers in wine: not one PLCB employee is among them. Numerous other people in retailers like K&L (California) Total Wine (soon to be the #2 retailer ahead of the PLCB) and Costco (currently #1) made the cut. The list includes Masters of Wine (none in the PLCB - ever), winners of  the James Beard Foundation medal for the nation’s outstanding wine and spirits professional (none in the PLCB - ever), Members of the Guild of Sommeliers (none in the PLCB - ever) and innovators from across the country (none in the PLCB - ever...and no, the wine kiosks don't count).

I was part of the Livestock, Dairy,
and Poultry subcommittee. Of course
I'm qualified to be in charge of liquor!

No, Pewnnsylvania gets brainstorms like "A consortium of control states all buying from the PLCB", Wine Kiosks (never forget!!), using buying power to raise prices instead of lower them, and hiring a probation officer to run the whole operation. Just what are those free states thinking with their convenience, selection, and real certified professionals working to expand the boundaries in wine? Fools. They could be selling their customers wine that didn't make the cut in the real world like the PLCB does, and positioning it as some sort of benefit.

Just more examples of how the PLCB can never lead, never bring the citizens of the Commonwealth the same standard that the majority of people in the US enjoy. Just because mediocrity is well lit does not make it what the people want or deserve. People need government to regulate the safety of products, to make sure they aren't abused by things beyond their control, and to insure clean water and air.

They don't need government to decide what wine they're allowed to buy.

Privatize.

100 Days and Counting -- Oh, Will You Look At That!

As I write this, former PLCB member Michael Newsome has been off the PLCB board for 100 days. But...his resumé is still on the PLCB website. It must be so hard having to find a page (on your own site) and push the Delete button. Until they delete it, you can see it here. If they finally got to it, here is a snip showing it was still up as of 12:37 March 18, 2019.

I got tired of waiting, so I sent them an email, just a little nudge (sent it this afternoon, March 18). I wonder if they realize that Mr. Newsome isn't coming back. When you can't even keep track of one of the top three guys running your agency, how well do you think they are doing with inventory, product choice, or other personnel?

It's said that if you take care of the little things. the big things take care of themselves. If you can't take care of either...you can always work for the PLCB.

Well, it turns out that poking them with a stick works. After posting about this on our Facebook page and sending them an email, they finally decided to remove the information — without any explanation about why it took so long. They did say that the "hidden page" had been removed, but guys...it wasn't hidden, you'd just removed the link. Pretty much the same way it went the last time I poked them about a Web screw-up. I should be getting some of that Joe Conti emergency consultant money!

The PLCB has over $1.6 Billion in liabilities.....and wants to stay that way.

When your business has low debt, good cash flow, a decent profit margin, and service better than the competitors, you can expect somebody might want to buy it, so they can get the benefit of all those good things. And if you're in debt up to our eyes, have crappy management, legendarily bad customer service, your business doesn't look too good to the outside world, no matter how much demand there is for your product.

Yeah, we're talking about the PLCB. After 20+ years of "record profits," somehow they are more in debt now, than at any time in their history. Over $1.6 Billion in liabilities and a total position of $1.1 Billion in liabilities exceeding assets.

Why would any business want to be in that position? They wouldn't, unless they wanted to look like a bad investment to the outside world. If the PLCB was a real money making venture run by at least semi-competent people, then the private sector would have more interest because they know that:

1. They can run a consumer industry far better than any bureaucrat.  
2. They are inherently more efficient. 
3. They wouldn't be saddled with over a billion dollars in debt right off the bat.

YEAH! My business model sucks!

But the PLCB doesn't really care how much or what kind of debt they have. There is no mandate that says they need to be current, no benefit for being efficient, no propaganda value in saying "Look, we decreased our debt!" instead of "We gave 30 million more to the General Fund!" Although this year the amount they "gave" to the General Fund actually decreased $30 million, but you aren't hearing them say anything about that.

Why aren't they worried about their debt? The PLCB has a backup plan and it is called the taxpayers. They can't default - we cover it. Have to pay out more than you take in? No problem, we got it. Can't raise those variable prices fast enough to keep up with rising admin costs? Just give less to the General Fund, the taxpayers will make up the difference!

Remember when the PLCB tried to leech itself onto the state debt with a bond against future earnings? (Don't worry: we do.) Make yourself as unattractive as possible by hanging a 20 year debt obligation to your nose, and the people in favor of privatization (i.e., the majority of the adult population) have one less tool to work with.

Giant leech.  Like the PLCB but more useful.

I'd ask you to stay alert for any hint of debt reduction from the PLCB. With all this money coming in from ACT 39 and variable pricing, it shouldn't be long before you'll hear it every day. That's right, and I have a bridge for sale too...

Privatize.

Jack Daniel's is what's wrong with the PLCB's "catalog"

I've been writing about this for years, and still the PLCB can't quite get the listings for their #1 selling whiskey correct. Just imagine the lack of effort they put into less important items! Or, more likely, probably nothing is considered important and they screw up everything equally.

I like writing about the PLCB's historic inability to get their inventory correct. If I ever need an illustrative example of how incompetent they are, I know I can rely on good old Jack. He never fails me.

And talk about non-responsive! After eight years of pointing out how incredibly stupid the PLCB is with just this one product, you would think they would tire of being beaten up and fix the situation. How many clerks, managers, directors and senior executives have passed through the PLCB in eight years?  All of them learning how to do things wrong, from the people before them who did it wrong, because that is how they learned it from generations of iron-assed bureaucrats, passed on like a broken piece of PLCB DNA.

I work for the PLCB!

Why do I bring this up? Because there are more Jack Daniel's mistakes.

This time we have one listing in the "bourbon" section. Hey, plenty of people argue that Jack can be considered a bourbon, so that isn't bad right off. Only the company doesn't think so, and labels it as "Tennessee whiskey." More importantly -- when you're searching for it -- all the other correct PLCB entries list it as "whiskey." There is the continuing error (going on a couple of years now) of one item listed as a "blended whiskey"  but Jack Daniel doesn't make a "blended whiskey." The confusion Jack Daniel's new rye creates in the PLCB is comical. One entry is correctly under "straight rye," and the other is not.

As they say, this ain't rocket surgery. The sad thing is, an error rate of almost 7% on just one brand family is pretty good when compared to how they've been doing...until you compare it to the inventory accuracy of all but the most poorly run of businesses. People would be fired for years of error rates that high; hell, they'd be shown the door for a few months of it. This is the poster child for "You had one job..."

But that is what you get when they don't have to care. Hang around, get seniority, get a 2% raise, salt away that pension, and wait for your 30.  Confucius said: "It matters not how slowly you go, as long as you do not stop" and it seems the PLCB has taken it to heart.  They certainly aren't moving very fast and they aren't stopping to fix the problem.

I suppose they may finally get this right, and I'll have to find another go to subject. I'll miss it, though. There are dozens of errors in the bourbon and rye categories, but nothing so consistent, so reliable, as how the PLCB manages to screw up JD.

Sounds like the PLCB to me.