A Band-Aid for Broken PLCB
A change has come to Pennsylvania’s state-controlled liquor monopoly that will improve the customer experience, according to the PLCB. Are we finally going to get liquor privatization after eight decades? No. According to the Times-Tribune:
Companies that sell liquor and wine to the LCB like Diageo, a British-based liquor supplier, now retain ownership of that liquor while it’s stored at the warehouse. The LCB takes ownership of the inventory when it ships from the warehouse, a departure from past practice where the agency owned the liquor while in the warehouse.
The new arrangement is said to improve costs and efficiencies because companies now have the ability to ensure high in-stock levels at state stores, which will lead to more sales. But this improvement is like putting a Band-Aid on a broken leg.
If you have been following our work on the PLCB, you’d be rightly skeptical of inventory system improvements. The PLCB has already had its fair share of inventory problems. Not long ago, they poured $66 million in taxpayer money—nearly two-and-a-half times the estimated cost—into a “state of the art” inventory system that failed to allocate adequate product levels, causing widespread shortages at retail outlets.
Regardless, a simple inventory improvement doesn’t change the fact that the current system still cannot adequately serve the business community or consumers. The PLCB doesn’t deliver to restaurants, bars and taverns. And it contracts with private companies for warehousing and even delivery to their own state stores. One of those companies is Kane Warehouse, Inc., owned by the husband of Attorney General Kathleen Kane, which received more than $12 million in payments from the PLCB last year. And the PLCB’s economies of scale, which are greatly exaggerated, have not been effective at holding down prices, as compared to other states.
PLCB officials announced, “The goal of the distribution system is to get the right product to the right store at the right time so customer needs are satisfied.” If that is truly the goal of the PLCB, then privatization is the real solution. Entrepreneurs—not a mismanaged government agency—can better serve consumers in their communities.