This article is one of a series on privatizing wine and spirits sales in Pennsylvania. The full list of articles may be found on the Privatization Index Page.
One of the mantras of the pro-privatization crowd is that a privatized system would expand product selection in Pennsylvania. I made clear in an earlier post that I believe the wholesale fees imposed by HB11 work against diversity of selection, but the question remains: How does the product range in our state stores compare to unrestricted private markets?
Top figures at the PLCB have publicly stated that they believe the selection in their stores to be comparable to what is found in license states. In a January New York Times article, CEO Joe Conti said that his Premium Collection stores are "as good as you would find anywhere in the country." PLCB Chairman PJ Stapleton testified to the House Appropriations Committee in March, "We're very proud of the fact that [...] there's great product selection in Pennsylvania."
In general, the PLCB tends to compare itself to private liquor stores in other states as if it were just another retailer in a competitive market. This is a tacit acknowledgement of what residents in border areas perceive it as. Viewed from this perspective, the PLCB is a well-established, experienced retailer with a solid mass-market selection, generally reasonable prices, and attractive deals on some products that even draw in shoppers from out of state.
Of course, the PLCB is not "just another retailer." To those of us who live far from the state border, not to mention Pennsylvanians who wish to avoid breaking the law, it is the entire wine and spirits market. No other retailer can step in to serve consumers whose needs the PLCB leaves unfulfilled.
Given our statutory prohibition against choosing between competing retailers to shop at, the only reasonable evaluation of our available product range would be to select a sizable geographic region in a license state and put our state stores up against the combined selection of every private retailer in that region.
I don't have a list of all products available from all retailers in, say, South Jersey, but I do have distilled spirit price lists from a handful of specialty outlets across the country. Although these are a poor proxy for a comprehensive regional product list, they are sufficient to answer our original question.
A break-down of these price lists, with supplemental bottle sizes and gift packs removed, is as follows:
This is a snapshot as of June 30th, so the recent delistings aren't taken into account. Items from the PLCB online store are excluded in fairness to the other vendors, whose listings reflect items available on a store shelf for immediate purchase.
Looking at the numbers, it is fairly clear that criticisms of Pennsylvania's spirits selection are well-founded. Astor Wines & Spirits, a Manhattan retailer with as much retail floor space as one of our Premium Collection stores, stocks a variety of spirits half again greater than what is available across our entire state. Under a larger roof, The Party Source near Cincinnati carries a selection 2.5 times the size of ours. The 24-store Binny's chain in Chicago outdoes everyone with an enormous range of more than 2500 different spirits.
For enthusiasts who focus on certain categories, the discrepancy is even greater. There are only 37 bottlings of single-malt scotch in Pennsylvania, compared with well over 100 at every other retailer and an awe-inspiring 571 options (really!) at Binny's. Cognac drinkers must contend with a mere 22 selections, rather than 50+. Niche categories such as grappa and absinthe suffer further still.
The product management team at the PLCB is well aware of their standing in comparison to private stores, and about 18 months ago they began building a specialty spirits program focused around the online store as well as 32 designated specialty spirits stores which carry an expanded range of products. (Regular readers are aware that I've provided input to this program from the beginning.) In the course of 12 months, the in-store portfolio brought in about 70 new products and the online store nearly tripled its spirits selection.
Given enough time, can the PLCB reach the in-store product selection offered by the private retailers above? It doesn't seem likely, due to the PLCB's long-standing political obligation to make its products available to all populated areas of the state in a non-discriminatory fashion. The PLCB would need to expend more than $10 million on inventory and expanded retail floor space in dozens of locations around the state to stock product that, by and large, will simply collect dust for years.
Lacking a legislative mandate to relax this doctrine of equal treatment, our most likely path to a vastly expanded product range is through mail order. The PLCB's online store is making a sincere effort to pump up its selection, and it is possible that a change in state law may permit the shipping of spirits to Pennsylvanians from out-of-state private retailers.
On the other hand, if the legislature forges ahead with HB11, it is my sincere hope that the bill is amended to reduce wholesaler license fees to more reasonable levels. Only if that happens will privatization have a chance of bringing improvement to our product selection.
One of the mantras of the pro-privatization crowd is that a privatized system would expand product selection in Pennsylvania. I made clear in an earlier post that I believe the wholesale fees imposed by HB11 work against diversity of selection, but the question remains: How does the product range in our state stores compare to unrestricted private markets?
Top figures at the PLCB have publicly stated that they believe the selection in their stores to be comparable to what is found in license states. In a January New York Times article, CEO Joe Conti said that his Premium Collection stores are "as good as you would find anywhere in the country." PLCB Chairman PJ Stapleton testified to the House Appropriations Committee in March, "We're very proud of the fact that [...] there's great product selection in Pennsylvania."
In general, the PLCB tends to compare itself to private liquor stores in other states as if it were just another retailer in a competitive market. This is a tacit acknowledgement of what residents in border areas perceive it as. Viewed from this perspective, the PLCB is a well-established, experienced retailer with a solid mass-market selection, generally reasonable prices, and attractive deals on some products that even draw in shoppers from out of state.
Of course, the PLCB is not "just another retailer." To those of us who live far from the state border, not to mention Pennsylvanians who wish to avoid breaking the law, it is the entire wine and spirits market. No other retailer can step in to serve consumers whose needs the PLCB leaves unfulfilled.
Given our statutory prohibition against choosing between competing retailers to shop at, the only reasonable evaluation of our available product range would be to select a sizable geographic region in a license state and put our state stores up against the combined selection of every private retailer in that region.
I don't have a list of all products available from all retailers in, say, South Jersey, but I do have distilled spirit price lists from a handful of specialty outlets across the country. Although these are a poor proxy for a comprehensive regional product list, they are sufficient to answer our original question.
A break-down of these price lists, with supplemental bottle sizes and gift packs removed, is as follows:
| PLCB | Astor W&S | Bevmo! (HQ store) | The Party Source | Binny's | |
| Absinthe | 2 | 17 | 12 | 11 | 18 |
| American Whiskey | 19 | 20 | 20 | 37 | 51 |
| Aquavit | 1 | 4 | 2 | 3 | 3 |
| Armagnac | 2 | 19 | 7 | 4 | 89 |
| Bourbon | 39 | 69 | 81 | 126 | 112 |
| Brandy | 14 | 23 | 40 | 36 | 51 |
| Brandy - Flavored | 5 | 3 | 12 | 17 | 11 |
| Cachaça | 3 | 9 | 8 | 7 | 9 |
| Calvados | 3 | 14 | 6 | 6 | 29 |
| Canadian Whisky | 19 | 5 | 19 | 30 | 28 |
| Cognac | 22 | 47 | 52 | 67 | 192 |
| Eaux de Vie | 10 | 25 | 26 | 30 | 48 |
| Gin | 27 | 54 | 51 | 51 | 54 |
| Grappa | 8 | 21 | 19 | 22 | 36 |
| Irish Whiskey | 17 | 29 | 30 | 30 | 41 |
| Liqueurs - Amari/Bitters | 9 | 21 | 10 | 14 | 17 |
| Liqueurs - Cream | 14 | 11 | 31 | 37 | 29 |
| Liqueurs - Fruit | 48 | 76 | 112 | 138 | 147 |
| Liqueurs - Herbal | 11 | 16 | 15 | 21 | 23 |
| Liqueurs - Nut | 9 | 10 | 14 | 23 | 18 |
| Liqueurs - Other | 48 | 52 | 82 | 120 | 109 |
| Liqueurs - Pastis/Anise | 11 | 19 | 18 | 21 | 27 |
| Mezcal/Other Agave | 2 | 28 | 7 | 13 | 28 |
| Other Whiskey | 1 | 10 | 6 | 8 | 17 |
| Pisco | 1 | 9 | 6 | 5 | 13 |
| Rum | 36 | 91 | 68 | 97 | 126 |
| Rum - Flavored | 46 | 22 | 51 | 78 | 50 |
| Rye Whiskey | 5 | 19 | 13 | 12 | 25 |
| Scotch - Blends | 28 | 37 | 59 | 58 | 79 |
| Scotch - Single Malt | 37 | 156 | 132 | 237 | 571 |
| Shochu/Soju | 3 | 31 | 3 | 11 | 1 |
| Tequila | 66 | 82 | 196 | 149 | 189 |
| Vodka | 61 | 83 | 104 | 113 | 104 |
| Vodka/Gin - Flavored | 118 | 66 | 138 | 233 | 149 |
| Whiskey - Flavored | 6 | 3 | 8 | 19 | 13 |
| Whiskey - Unaged | 3 | 17 | 5 | 17 | 23 |
| Total | 754 | 1218 | 1463 | 1901 | 2530 |
This is a snapshot as of June 30th, so the recent delistings aren't taken into account. Items from the PLCB online store are excluded in fairness to the other vendors, whose listings reflect items available on a store shelf for immediate purchase.
Looking at the numbers, it is fairly clear that criticisms of Pennsylvania's spirits selection are well-founded. Astor Wines & Spirits, a Manhattan retailer with as much retail floor space as one of our Premium Collection stores, stocks a variety of spirits half again greater than what is available across our entire state. Under a larger roof, The Party Source near Cincinnati carries a selection 2.5 times the size of ours. The 24-store Binny's chain in Chicago outdoes everyone with an enormous range of more than 2500 different spirits.
For enthusiasts who focus on certain categories, the discrepancy is even greater. There are only 37 bottlings of single-malt scotch in Pennsylvania, compared with well over 100 at every other retailer and an awe-inspiring 571 options (really!) at Binny's. Cognac drinkers must contend with a mere 22 selections, rather than 50+. Niche categories such as grappa and absinthe suffer further still.
The product management team at the PLCB is well aware of their standing in comparison to private stores, and about 18 months ago they began building a specialty spirits program focused around the online store as well as 32 designated specialty spirits stores which carry an expanded range of products. (Regular readers are aware that I've provided input to this program from the beginning.) In the course of 12 months, the in-store portfolio brought in about 70 new products and the online store nearly tripled its spirits selection.
Given enough time, can the PLCB reach the in-store product selection offered by the private retailers above? It doesn't seem likely, due to the PLCB's long-standing political obligation to make its products available to all populated areas of the state in a non-discriminatory fashion. The PLCB would need to expend more than $10 million on inventory and expanded retail floor space in dozens of locations around the state to stock product that, by and large, will simply collect dust for years.
Lacking a legislative mandate to relax this doctrine of equal treatment, our most likely path to a vastly expanded product range is through mail order. The PLCB's online store is making a sincere effort to pump up its selection, and it is possible that a change in state law may permit the shipping of spirits to Pennsylvanians from out-of-state private retailers.
On the other hand, if the legislature forges ahead with HB11, it is my sincere hope that the bill is amended to reduce wholesaler license fees to more reasonable levels. Only if that happens will privatization have a chance of bringing improvement to our product selection.
I really didn't need a chart to know that the spirits selection was pretty bad but it is good to shove down the throat of those who still think that the PLCB is doing a pretty good job.
I'm a bit surprised by this post - it misses one huge and glaring problem with the selection debate. You even hit on it in your choice of retailers, but gloss over it. Specifically:
Astor: NYC
BevMo: California
Binny's: Chicago
Never shopped Party Source, so I can't comment on its situation like I can the above three. Those spirits retailers cover large populations and are considered the best in their areas. They are that good because their local markets create enough demand for the products.
For a cold dose of market reality, take a look at where PA's MSAs rank in the country:
http://en.wikipedia.org/wiki/Table_of_United_States_Metropolitan_Statistical_Areas
Philly is, as most people know, #5 on that list between Dallas and Houston. If a private retailer were to set up shop here, a good comparison would be Spec's in Houston.
Next on the list is Pittsburgh, between Denver and Portland. For the latter, I've been to Pearl and you can use that as a comparison. I've also been to a few stores in Denver but their selection isn't online but comparable to Pearl's.
Then waaay down on the list #64 is Allentown. I have to admit I haven't shopped the markets around the size of Allentown, so I'll go with the next largest one: Omaha. The largest store in Omaha doesn't even carry half of the categories you listed. Of the categories it does carry, you're pretty much looking at Diageo and Pernod's mass market brands with a smattering of locally produced items. Which there aren't a lot of.
So the sad dose of reality is that privatization only helps the selection in one city: Philly. Everyone else will suffer because the markets aren't large enough to carry the diversity people think will exist in a private market.
Hi Brian,
Party Source is considered to be the premier spirits retailer in the Cincinnati area, so it fits in the same category as the other retailers. Spec's in Houston and Argonaut in Denver would have been great additions to the table, but I don't have their data imported and categorized yet, so I couldn't include them. They do, however, have similarly-sized product selections to the other retailers in the table.
I agree that the PLCB offers a better selection to the less-populated areas of the state than a private market might, but as someone who lives in Pittsburgh, I don't much care. Should the cities be forced to suffer with a small-town selection of products because it's somehow more "fair"?
In fact, I'll be making this same argument to the House Liquor Control Committee tomorrow: the only way for the PLCB to compete with private retailers on selection is to eliminate the political mandate that all areas of the state are treated equally. Unless that is done, Pittsburgh and Philadelphia residents will never have as good a selection as a private market would offer.
For all those that claim the state stores (and the SLO/ PLCB online ordering) have good variety and compete with surrounding states, let's try something:
Allow PA residents to do online orders from anyone and also go over the border to buy alcohol.
Let's see what sales do in PA. If the state system is so dang good, I suppose we'll see no drop in sales?
I've always known that the bourbon/rye selection in PA stunk compared to other places I visit, but it pales in comparison to the selection of good scotch.
I continue to be amazed that the scotch fans in PA aren't wielding pitchforks and torches on the capitol steps about the absolute dearth of single malt options in the Keystone.
Where the hell are these guys in this debate?
You tell me, Sam. Why was I the only person testifying at today's HLCC hearing that said a single negative thing about the PLCB? I'm one of the best friends the PLCB has in the enthusiast community, and nobody was more critical of them than me!
What, is everyone else too busy drinking?
I'm having a hard time wrapping my head around all these proposals for privatization. What I'm getting is that even though the state will no longer sell alcohol through state stores, they will still control selection? Or will control the distributors that the private stores buy from? If this is true, what will we really be accomplishing? And how will I get my hands on stuff the state still won't have?
Under HB11 the state would divest itself of its wholesale and retail monopolies. Anybody could start a wine and spirits wholesale company, but they would have to pay the state a massive fee for every product they added to their portfolio. Once that fee was paid, that wholesaler would have a monopoly on that product forever, unless they voluntarily transferred the rights to that product to another wholesaler.
HB11 does not change any of the laws that currently prohibit you from bringing products into the state. In fact, it's likely that those laws will be enforced more frequently, at the request of Pennsylvania retailers who don't want to lose businesses to liquor stores in other states.
That's sort of the impression I was getting from all this, but I wasn't sure who paid who for what. So really, it seems all that will happen is the state will pass their monopoly on to a few private companies that will then be a new monopoly. Sad. I suppose this just goes to show how ineffective PA government can be at coming up with good solutions to problems.
The problem here is that the folks who wrote the bill didn't do it because they couldn't sleep nights worrying about Pa. consumers lack of selection. The law firm Eckert, Seamans,Cherin and Mellot,involved in crafting HB11, represented the Malt Beverage Distributors Association last year in an effort to stop berr from being sold in grocery stores with restaurants. The common thread here is protecting/setting up a strong wholesale system. Nathan is correct in assuming that if this bill passes direct shipping will never happen. A better bill would keep the PLCB and allow direct shipping of any item not currently available. This would keep great shelf selection in rural areas and the ability to get products that are unavailable even at Binny's! How powerful is the wholesale lobby? Here is a link that answers that.
http://www.specialtywineretailers.org/TowardLiquorDomination.pdf
A better bill would keep the PLCB and allow direct shipping of any item not currently available.
A better bill wouldn't keep the PLCB. A better bill would fix the wholesaler issues, get rid of the state-controlled stores and wholesaling, AND allow direct shipping.
You threaten us with wholesaler domination in a state where there is ONE wholesaler, John (a wholesaler that, for instance, carries less than 1/10th the number of single malts that Binny's does, so I'm not really worried that Binny's can't get Jacquin's Vodka Royale). That doesn't even make sense. You've quoted this report elsewhere; it doesn't scare people who live under PLCB domination already.
I agree with Lew. The PLCB IS the problem. Keeping any vestige of it in a consumer-friendly 21st century retail landscape makes no sense.
If government domination of the liquor business is the answer, why aren't privatized states considering the advantages of state control?