Prohibition (or the continuous effect of post-prohibition) is still alive and kicking in Pennsylvania and especially with Governor Tom Wolf at the helm. Governor Wolf vetoed House Bill 466 because as it says on his website “In the most recent case of another state that pursued the outright privatization of liquor sales, consumers saw higher prices and less selection.” I am not so sure this governor or even a governor is completely concerned about wine, beer and spirits pricing for their citizens. And I am not sure any governor cares about their public have a lesser selection. Living in California where private off-premise establishments have demonstrated a considerable assortment in that if you don’t find what you are seeking at one retailer might be available at another. And California is not the only US state to have privately run stores where competition is thriving and is the norm. Competition is quite effective in keeping pricing down and selection optimized. State run stores quite often only feature larger producers–bowing only slightly to smaller producers to show a fuller assortment but truly don’t have the interest or call to reach to a larger set of smaller producers.
I remember one memorable meal I had in Philadelphia only a couple of years ago. I wanted to sit down and enjoy a nice lunch but when I asked for a glass of wine I was pointed to go to that corner and order from the state run store. So going over to the state run store to order a 375 ml bottle there was very little choice–I could only order by the bottle not by the glass. I didn’t want a whole bottle 750 ml so my choice was drastically limited and the awkwardness of simultaneously ordering my food and then stepping away from my table to get my wine was something I contemplated giving up and chalking it up to ‘only in Pennsylvania’.
Looking at Governor Tom Wolf’s statement I looked at Washington state because that is his reference point; when Washington privatized liquor sales it also took a sharp northerly turn as it relates to liquor taxes (some of the highest in the US and Washington has traditionally always has had a very high general sales tax). But I looked at one particular product which shows two things–great variability in pricing across each of the fifty states but also shows great competitive forces especially during holiday times. Veuve Clicquot both a darling and demon for the off-premise community–easy(ier) to sell than most Champagnes (often sells itself whereas another brand perhaps lesser known takes a greater effort to hand sell) a demon because the competitive forces especially during holiday time drag margins way down–sometimes to low single digits. Pricing for Cliquot at state run stores in Pennsylvania that I saw on their website is $49.99 and in Arizona at Total Wine is $41.97 (same size) some 16% percent cheaper in Arizona.
Governor Wolf also mentions “It makes bad business sense for the Commonwealth and consumers to sell off an asset, especially before maximizing its value” Does this mean expansion of Pennsylvania’s chain of stores? Drive higher margins? Creating operational efficiencies and/or increasing share of market pie for liquor sales in Pennsylvania? There is very little clarity to this statement–it would nice to know what Wolf means by this. Ultimately, Governor Wolf has $526 million reasons (2014 net profit from the Commonwealth’s wine and spirits retail empire) to never privatize liquor in Pennsyvlania. While the legislature agreed to privatization Wolf did not. I am not sure there will be a time in the future that everything aligns for this this to ever happen in the Commonwealth. There is only a great disincentive to privatize and Pennsylvania does not have the willpower to kick the bottle.
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