February 19: Liquor Store Privatization

By on Feb 19, 2013 with Comments 17

In January, Gov. Tom Corbett unveiled his plan to privatize the state liquor store system, directing the licensing proceeds to a $1 Billion dollar education block grant program.  Wendell Young IV, President of the United Food and Commercial Workers Local 1776, and Charlie Gerow, representing the Coalition to End the Liquor Monopoly, were our guests.

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  • Mike Ridinger Pdlk

    I own a beer distributor….small business….this plan will put us out of business….we can’t compete with walmart

  • Foreceptus

    Why does this Governor insist on killing the golden goose on so many revenue sources. All of our state taxes are going to go up if we loose all the revenue streams the State currently has. Lottery, State liquor stores and PA Turnpike. I believe the Commonwealth of Pennsylvania will loose funds and private investors will get rich. 

  • Melissa

    It’s time for Pennsylvania to move into the modern age and have wine and liquor, which are consumer products after all, sold by the private sector instead of the state.  When I have a few friends or family over I want to be able to stop once to buy food and beer or wine instead of making a separate stop.  It works beautifully in Califoirnia in Arizona.  There are specialty liqueurrs I used to buy in New York that are not available in PA.  I am always limited here one way or the other.  Why should this state monopolize the profits of a consumer product?

    • robert

      maybe its time to move out of pa

  • Jnorth069

    Charlie Gerow, you say Pennsylvanians want privatization? Not one caller said they support that arguement. Where are you getting these facts?

    • Albert Brooks

       Could be that every scientific poll ever taken on the subject shows the majority of citizens wants the PLCB out of retail.

  • http://profile.yahoo.com/3UBF32FA6MEBBLQOJQXYDKFTYI NotCrazi4U

    I say it’s time that the PA governor stops messing with the systems that are working and start targeting the ones’ that don’t, such as the Mental Health hospitals that need way more funding, better doctors, and a better system of treating the mentally ill. He needs to quit lining his future pockets and those of his “buddies” and get down to leading the state.  If he can’t do that, then he should resign.  He could target his energies into improving our rural roads, make our state an information highway and treasure trove by improving wifi access to areas that have little or none.  There are so many things this man could address, but he would rather do away with good jobs, good health, and good anything at all.  Time for him to resign and take his little mouthpiece, Mr. Gerow with him.  I think its very interesting that I did not hear ONE single caller that wanted or who knew of ANYONE who was for privitization of the state liquor stores. 

  • Whudak

    I applaud this bold initiative and the Governor’s sensitivity for the mom and pops. Unleash the power innovation! Our independent beer distributors will be fine… they will complete the same way they compete now with their inventory. Adding liquor they will have access to so many more possibilities and those that will be delivering to our taverns and restaurants will be able to compete against the big boys…. I can’t wait to see who will compete for my Scotch business!

  • Jberts22

    My question is are current owners of beer distributors going to have to pay new higher license fees for the same license they’ve had? If they will be required to pay as much as the big box stores there is no way the mom and pop family owned places will be able to compete! I think current holders should be grandfathered in with old rates and big box stores pay the higher rates because they can afford it. Instead of privatizing and killing thousands of jobs and small businesses lets just change how beer, wine, and spirits is operated. Lets let beer distributors have the option of selling beer in a variety of quantities and wine especially from local winery’s. As for liquor lets move the liquor into the grocery stores in some fashion because let’s face it, most people buy pop, fruit, and other mixes that go with the liquor they want to purchase and this would make things easier on everyone.

  • http://profile.yahoo.com/WJM7XEFA5SBYY2FLLHQ4KTBYGA John

    If charlie gerow is the best that coalition can come up with, I would say to our to state store workers not to worry. What a f#%kin liar.

  • nys visiter

    Why can’t I buy a 24 oz beer or six pack in PA? I’m in your beautiful state every other week and have to buy at least 24 beers at a time. I stopped at a beer place today and the smallest amount of beer I could buy was a 36 pack. My only other option for having 2 beers would be to DRIVE to a restraunt and DRIVE back to my hotel.

    • Jnorth069

      You can buy six packs or 40′s in a bar.

  • Rendosbeer

    We also are owners of a Beer Distributor, local small business., and apparently this Governor has issued a death warrant on us, our licenses will be worthless, and the only people that will be able to afford to bid on the auctions and purchase these governor issued licenses will be the big box companies and franchises.  If it is not broken, leave it alone!  Gerow needs to go.  I really hope the pennsylvanians will get involved and raise there voices!  I see they have a sight for those people that are for the privatization, where is the sight for the people against privatization, against liquor privatization, lottery privatization, and the suggested changes on our whole way of life as we know it. To what, so that the richest businesses and people can run our country!?

  • smurren

    Ask Mr. Gerow if he is going to like when his property tax goes through the roof when the state Treasury has to make up the $80 million per year from gross profits transferred from the sale of wine and spirits.  The Treasury will not operate without this money, and we as property owners will take the boot to the head!  And 3500 people out of decent, family supporting jobs?  What is this administration thinking

  • Will Acker

    First thing Wendell says is spin.  Funny he didn’t mention that the “profit” was $25 million less then last year.

  • Mike Birkos

    HB 790 – County Bleed, Windfalls & Pitfalls

    HB 790 calls for the number of new liquor stores, county by
    county, to match the current number of LCB stores or beer distributors,
    whichever is greater.   You would think that solves the problem of liquor
    access in rural Pennsylvania, except for one detail.  The 40 rural counties only earn 10.8% of the
    state’s LCB revenue.  The other 89.2% of
    our cash flow originates in the 27 urban counties.

    To earn $224,000,000, HB 790 demands that you collect an
    average of $186,666 for each of the 1,200 licenses.  Your best chance of seeing this figure is in
    the five counties that contain Pittsburgh and Philadelphia, as they earn 49.5%
    of the LCB’s revenue.

    If you accept proportionately less for a rural license than
    a city license, the rural stores will be able to charge that much less for
    their wares than the city stores – hence the county bleed.   And the $224,000,000 evaporates.

    But will the private sector even bid $186,666 for a wine and
    spirits license in Pennsylvania?   They
    may not, because license fees appear to be a lot cheaper all around us.

    Ohio /annual retail carry-out license – $376.

    New York City/3 years – $4,098.

    New York everywhere else/3 years – $1,536.

    New Jersey, ABC Class C/ annual plenary retail – $125 -
    $2,500, depending on municipality.

    Maryland, Class A/annual off-premise consumption,
    beer/wine/liquor, including Sunday – $880.

    West Virginia, Class B/annual off- premise consumption -
    $2,000.

    No other state ever earned anywhere near HB 790’s projected $899
    million when they privatized wholesale and retail elements of their liquor
    sales.   And this figure is conspicuously less than the
    $1 billion trumpeted by the governor just last week, which was substantially lower
    than the $1.6 billion quoted since 2011, which was way down from the $2 billion
    originally estimated in 2010.

    The best windfall score of any state was Washington in 2012.  They only earned $180 million for both
    wholesale and retail.

    Another pitfall is retail pricing.   After 35 years in the private sector, I say
    with a certainty that if you maintain the current tax structure, and somebody
    pays $186,666 for a license – prices will erupt.   After paying $186,666 up front, plus
    inventory, plus facilities, plus staffing – prices in the new stores cannot
    remain comparable to our LCB stores, as the LCB stores did not have that formidable
    up-front cost.

    Even with license fees comparable to surrounding states, our
    retail prices will most likely increase. 
    The LCB stores had the pricing advantage of being stocked by what was the
    largest buyer/retailer of wine and spirits on Earth.  In Washington, the small retailers cannot
    price compete with the big guys, as they lack wholesale volume buying power.  This is why many of them are going or have
    gone out of business.

    I respectfully suggest modernization.  Much easier and everybody wins.  This “complete divestiture” thing is fraught
    with financial peril.  No way can the
    state or consumers win with HB 790.

  • http://www.facebook.com/people/Albert-Brooks/100000517005331 Albert Brooks

    Mr. Birkos is missing a few things in his letter, first is the word “initial”  How much would you pay to get in on the ground floor of this business knowing that once you are in you would have the jump on almost everybody else?  The second thing he is missing is size.  There are two licenses based on store size. You won’t put a Total Wine in Potter county so “county bleed” will be limited to the convenience factor more then a price factor.

    Liquor licenses for bars and restaurants routinely go for $175,000 in the Lehigh Valley and  $250,000 in and around Harrisburg but are food and drinks more expensive there then elsewhere?

    Mr. Birkos price comparison means little because all of those places have more licenses per population then what PA is going to allow and he doesn’t list the on going cost of the license just the start-up cost.

    While it is true that no other state has earned so much as what PA is thinking no other state is as large as PA.  Washington was the largest state to convert to a privatized system and they only got $180 million is the cry from people against privatization.  Pennsylvania is 3.5 times the population of Washington and is limiting the amount of licenses making them more valuable then what Washington State did. Also PA had a higher rate of consumption then Washington did so we buy more to start with – both beer and alcohol, (Figures aren’t available for WA post privatization.)

    Then there is the ~$200 million in inventory which will be sold too that Mr. Birkos doesn’t mention.

    Lastly, the money, while nice isn’t that important. The total PLCB contribution to the budget is 3/10ths of one percent. Anything collected will be more then the state has now and will move the government closer to the core functions of what it should be doing – licensing and regulation.

    Privatization IS Modernization.