State Stores age like a rancid wine

Posted: February 28, 2013

The Pennsylvania House and Senate Appropriations Committees met this week to address modernizing everyone's favorite monopoly, the state Liquor Control Board.

Right there, you've got your first problem.

Pennsylvania, the land time forgot, doesn't do change.

The board was founded at the end of Prohibition to, as Gov. Gifford Pinchot declared, "discourage the purchase of alcoholic beverages by making it as inconvenient and expensive as possible," a promise we can agree it has made good on to this day.

We have the "temporary" 18 percent Johnstown Flood Tax that dates to 1936. That tax is in addition to a bottle handling fee, 6 percent sales tax, and 30 percent markup on every bottle. You need a drink to feel even semi-miserable for shopping here instead of New Jersey and Delaware, where parking lots are filled with cars sporting Pennsylvania plates. Not that we speak from personal experience.

Our State Stores don't date to the Depression, but many do depressing exceptionally well, replicating the decor and lighting of the Graterford Prison waiting area, and with a staff that has equal expertise in wine. OK, some are nice, but not, alas, in our neighborhood.

The current debate is between modernization and privatization, the latter backed by Gov. Corbett. More than 60 percent of Pennsylvanians also support that move. But good luck with that. As you may recall, Gov. Dick Thornburgh tried selling the hooch emporiums in the 1980s, and Gov. Tom Ridge failed a decade later, which brings us back to Pennsylvania's problem with change.

The LCB, the nation's largest liquor control system, employs almost 4,500 workers and produces $100 million net profit. Many legislators view this as a good deal. The governor believes licenses and inventory can be sold for $1 billion, generating revenue to fund public schools and early childhood and school safety programs in what has been dubbed Booze for Books, or Shots for Tots. But that's all beside the point, since the governor's bill is pretty much dead in the Senate.

The LCB is "a stunning, puzzling paradox," as Rep. Madeleine Dean (D., Montgomery) noted, working to "control" liquor sales while strenuously trying to boost revenue for the commonwealth. It's like binge eating while wearing Spanx.

If the LCB were a private business, well, it wouldn't be the LCB.

Many city locations don't have convenient parking, inhibiting large purchases, and few are located near grocery stores. It can take three stops to make a vodka tonic. Hours are limited on Sunday, the second busiest day for sales.

Instead of three members, the board currently has two, including Chairman Joseph "Skip" Brion, who admitted Tuesday, "I do not believe we should be in the wholesale or retail liquor business." In a move worthy of Philadelphia's failed DROP program, Joe Conti, "a bartender by birth," retired from his nearly $157,000-a-year job as the board's CEO early this month to be hired back as a consultant at $80.16 an hour.

Several initiatives have failed. A highly promoted wine kiosk business went flat. A courtesy-training program was awarded to a manager's spouse. Hardly mattered. At most stores, the courtesy didn't take.

The LCB also launched its private label, Tableleaf. Why? Said board member Robert Marcus, "There was a glut of really good juice out in California." At this point, Rep. Jim Christiana (R., Beaver) asked why Tableleaf didn't sell Pennsylvania wine. I wrote in my notes, "Doesn't the LCB have enough issues?"

But, apparently not.

"These problems magnify why the PLCB should not be in the business," former Board Chair Jonathan Newman, a national wine broker, told me. "It's insulting to Pennsylvanians to operate a maternalistic system that treats adults like children with fairly cookie-cutter stores, and uniform availability of products and service."

Instead, the system turns "law-abiding customers into scofflaws," Newman said.

I had no idea what he was talking about. He estimated that our region loses from 25 percent to 30 percent of sales to "border bleed."

To recap, it appears we are no closer to privatization or modernizing into, say, the 1980s. But on the plus side, we can all raise a glass to celebrate the LCB's 80th birthday.


Contact Karen Heller

at 215-854-2586 or kheller@phillynews.com, or follow on Twitter at @kheller.

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