As liquor privatization discussions are occurring in the Senate, some have suggested maintaining the PLCB’s wholesale monopoly while simply turning state retail stores over to private sellers. After all, Pennsylvania consumers just want the convenience of picking up a bottle of wine at the grocery store, right?
The reality is a monopoly over wholesale pricing and distribution is a monopoly over all liquor sales. Wholesale privatization is essential to securing the convenience consumers want without burdening taxpayers.
- Wholesale competition is needed to deliver better selection and lower prices. Getting government out of the wholesale business is foundational to any real privatization plan. Maintaining the PLCB’s monopoly of the wholesale function of selling wine and spirits will limit the selections and competitive pricing available to consumers. Creating a competitive wholesale system—whereby restaurants, bars, taverns, and other retail outlets have competitive wine and spirits choices—is critical for a functioning retail marketplace.
- PLCB’s wholesale monopoly can’t serve current, much less expanded, retail outlets. The PLCB has continually proven itself inadequate to the task of meeting the retail needs of restaurants and taverns. As Rep. Kurt Masser explained the PLCB’s ordering process: “I get my meat delivered to my restaurant. I get my produce delivered to my restaurant. I get my beer delivered to my restaurant. I have go pick up my liquor order. I can’t get it delivered. And if the liquor order is wrong, I have to take it back to the store and redo it.” A competitive wholesale system will better serve Pennsylvania’s small businesses.
- Wholesale privatization shifts the risk off taxpayers and consumers. When the PLCB makes a mistake, such as the $66 million “state of the art” inventory system—which failed to allocate adequate product levels, causing widespread shortages, massive hoarding by store managers and, later, to over-ordering—it is the taxpayers and retailers who have to pay. If a private wholesaler makes such a mistake, those losses cannot be shifted to consumers or taxpayers. A competitive wholesale system forces the wholesaler to pay for his own blunder.
- Moreover, the wholesale monopoly has allowed bureaucrats to jet-set on taxpayers’ dime. From 2007-2011, 14 PLCB employees visited exotic destinations such as Paris, Dubai, New Zealand, Catalonia, Barcelona, Lisbon and Argentina, often at taxpayer cost. The rest was paid by foreign governments and corporations hoping to have their products sold to a captive audience. And the PLCB outfitted a $35,000 wine tasting room, dubbed “the wine shrine,” complete with leather chairs, sofas and big-screen TVs to “educate palates” of Pennsylvania consumers.
- Wholesale privatization would end the PLCB’s conflict of interest. The PLCB is like an arsonist teaching fire prevention. On the one hand, the PLCB is marketing and advertising to increase alcohol consumption, while on the other hand it is tasked with regulating and policing it. Getting the government out of the booze business—and focused solely on the regulation of the industry—is critical for ending the conflict of interest inherent in the PLCB’s current role as both the purveyor and regulator of alcohol.
For more on liquor privatiziation, check out BoozeFacts.com.