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How Does a Wine Monopoly Lose Money? (Answer: When it is run by the Government)
Reason ^ | 09/05/2011 | Jacob Sullum

Posted on 09/05/2011 3:04:22 PM PDT by SeekAndFind

In a report issued today, Pennsylvania Auditor General Jack Wagner says the state liquor control board's wine vending machines, a wonderful illustration of what happens when a government monopoly tries to act more like a business, are operating at a loss, costing taxpayers more than $1 million since they were introduced a year ago. "We think the wine kiosk program has failed," Wagner said at a press conference, "and it needs dramatic, radical changes if the program is going to continue to exist." His report attributes the failure largely to mechanical problems that caused an embarrassing month-long shutdown of the machines right in the middle of last year's Christmas season. "Despite shutting the kiosks down for over a month to repair them after nearly 1,000 errors occurred," the report says, "the Liquor Control Board and the kiosk vendor lost credibility and customer confidence when malfunctions continued after the kiosks reopened."

When they are working, the kiosks dispense a limited selection of wines at limited locations and times (not on Sunday, of course!) to customers who present ID, look into a camera monitored by a state employee, breathe into a blood-alcohol meter, and swipe a credit card. The Pennsylvania Liquor Control Board (PLCB) originally expected to have 100 kiosks in grocery stores throughout the state, each selling 30 to 50 bottles a day. But only 32 machines were ever up and running at one time, and only 15 manged to hit the bottom end of that sales target. In June the Wegmans supermarket chain withdrew from the kiosk program, bringing the total number of machines down to 22. Here is how the company explained its decision:

Customers want the convenience of purchasing wine in a supermarket, but found the choice too limited in the kiosk. Also, our customers rely upon the knowledgeable, personalized service our employees provide every day, something an automated kiosk just cannot provide. In the end, the kiosks just did not fit well with our store environment.

A week ago Walmart announced that it had decided not to install 23 planned kiosks. Presumably Wegmans and Walmart had second thoughts at least partly because they want shoppers to feel like valued customers instead of suspected criminals forced to take a sobriety test. A July 2008 memo (PDF) from the committee assigned to evaluate bids for the kiosk contract warned:

The proposed process for purchasing products via the kiosk machine is cumbersome and may meet with public criticism for not being "user-friendly." Specific areas of concern include 1) public angst over blood-alcohol level scanning, 2) excessive credit card "hold" amounts and 3) general distrust over having to register with the government to use the kiosk machine.

The committee also worried that the lone bidder, Simple Brands (I shit you not) of Conshohocken, was vague about the fees it might be charging, did not respond to repeated requests for information, and "continued to change its business plan 'on the fly' as the Committee has broached operational issues and concerns." The committee recommended that the PLCB reject the bid. But the PLCB, determined to fend off calls for privatization (which Gov. Tom Corbett and House Majority Leader Mike Turzai support) by showing how businesslike and customer-oriented it can be, hired Simple Brands anyway. The Philadelphia Inuirer reports the PLCB "is currently locked in a nasty legal dispute with the Conshohocken-based contractor, leading to the very real—and very likely—possibility that the kiosk program will end." The PLCB says the company owes the state the money it has lost so far; the company disagrees. Wagner urges the PLCB to "take immediate steps to terminate the kiosk contract unless the kiosk operations can be modified to meet the originally stated objectives of providing greater customer convenience, reaching into underserved areas, minimizing Board costs, and increasing Board profitability."

Jay Ostrich, director of public affairs for the Commonwealth Foundation, sees the kiosk program, which was supposed to demonstrate that the PLCB can adapt to the demands of consumers, as Exhibit A in the case for privatization:

The taxpayers and consumers of Pennsylvania have rejected a program that the PLCB has been trying to shove down the throats of those parties. This is really a symptom of a much greater illness in that the PLCB has continued to try to mimic private enterprise and has been a complete failure at doing so.

You have to give the PLCB credit for this much: It has shown that, with the aid of modern technology, the government can lose money while selling a highly popular product over which it has a monopoly.

More on Pennsylvania's wine kiosks here. More on liquor privatization here.



TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Government
KEYWORDS: monopoly; wine

1 posted on 09/05/2011 3:04:25 PM PDT by SeekAndFind
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To: SeekAndFind

My folks lived in Pennsylvania for 40 years. I’ve never seen a more dysfunctional system for selling alcohol anywhere in the nation. It is appalling the the liquor distributors have such a stranglehold on Harrisburg.

This kiosk program is sheer lunacy. Another perfect example of government stupidity at work.

Another example disproving Obama’s absolutely stupid statement about car companies not knowing how their markets behave and government knowing better (ie, that they shouldn’t make trucks and SUVs, but rather EVs).

Just how does the country manage to keep electing such rotten governments?


2 posted on 09/05/2011 3:11:00 PM PDT by ProtectOurFreedom
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To: SeekAndFind

This sounds like something out of Scrappleface....or Atlas Shrugged.


3 posted on 09/05/2011 3:13:24 PM PDT by penelopesire (TIME FOR A SPECIAL PROSECUTOR!)
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To: SeekAndFind

Looks like he’s getting ready to barf into the meter. Wouldn’t take much to put one of those out of commission.

I’d take the risk of selling wine to winos any day over this sort of money wasting silliness. Even lefty Illinois, where Rats and RINOs are king, does it right, it’s all private here.


4 posted on 09/05/2011 3:13:39 PM PDT by HiTech RedNeck (There's gonna be a Redneck Revolution! (See my freep page) [rednecks come in many colors])
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To: SeekAndFind
...the kiosks dispense a limited selection of wines at limited locations and times (not on Sunday, of course!) to customers who present ID, look into a camera monitored by a state employee, breathe into a blood-alcohol meter, and swipe a credit card.

They forgot to get a stool sample as well!

5 posted on 09/05/2011 3:16:08 PM PDT by Erik Latranyi
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To: SeekAndFind
From the article:
When they are working, the kiosks dispense a limited selection of wines at limited locations and times (not on Sunday, of course!) to customers who present ID, look into a camera monitored by a state employee, breathe into a blood-alcohol meter, and swipe a credit card.
What, not a full set of finger prints, a retina scan and urinalysis?

Geez, who though anyone would buy anything from a machine like that. I never need a bottle of wine enough to go through that.

And the whole "breathe into a blood alcohol meter" thing? Ewwwww!

6 posted on 09/05/2011 3:23:14 PM PDT by cc2k ( If having an "R" makes you conservative, does walking into a barn make you a horse's (_*_)?)
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To: ProtectOurFreedom

You can’t buy a 6 pack in that state.
You have to buy a case from a state approved beverage distribution center.


7 posted on 09/05/2011 3:23:14 PM PDT by mylife (OPINIONS ~ $ 1.00 HALFBAKED ~ 50c)
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To: SeekAndFind

Today I learned that there are Orwellian wine vending machines.

Whodathunk that idea would fail?


8 posted on 09/05/2011 3:24:25 PM PDT by Winstons Julia (when liberals rant, it's called free speech; when conservatives vent, it's called hate speech.)
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To: SeekAndFind
Sounds like their mistake was they didn't take it far enough...

They should outlaw all other liquor stores, ban the sale of all fruits and vegetables that might be used for fermentation, then erect a 30-ft. fence around the state to form a captive market.

I know it sounds like Gulag, but it's really Utopia...

9 posted on 09/05/2011 3:28:52 PM PDT by ZOOKER ( Exploring the fine line between cynicism and outright depression)
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To: ProtectOurFreedom
Just how does the country manage to keep electing such rotten governments?
It was not an accident. More than half the folks voting selected him to lead our country. About half of them still think he is doing a good job and in the recent TX poll show him leading over ALL GOP candidates.

Fools
10 posted on 09/05/2011 3:29:51 PM PDT by JSteff ((((It was ALL about SCOTUS. Most forget about that and HAVE DOOMED us for a generation or more.))))
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To: mylife

You can’t buy a 6 pack from the State Stores but you can buy one from your local convenience store. For about %20 more than neighboring NJ, where I buy mine while visiting, which is a pretty serious crime here in PA.


11 posted on 09/05/2011 3:34:24 PM PDT by free me (Sarah Palin 2012 - GAME ON!!)
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To: Erik Latranyi

“They forgot to get a stool sample as well!”

Well,,, you have to pass it, before you know what’s in it!

“His report attributes the failure largely to mechanical problems “

Kinda like the stamp vending machines in my post office? Gone, due to constant malfunctions. What did that cost we taxpayers?

Here in Ohio, our selections are very limited. The little package store on Anna Maria Island, Florida, had 80 different kinds of Rum! I was in Heaven! Here in Ohio, You’re lucky if you can find a store that sells two of the many Rums that Mt. Gay makes.


12 posted on 09/05/2011 3:40:59 PM PDT by Dr. Bogus Pachysandra ( Ya can't pick up a turd by the clean end!)
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To: ProtectOurFreedom
I’ve never seen a more dysfunctional system for selling alcohol anywhere in the nation.

Now remember, the PLCB has morphed into a government entity to support a union. That is all the PLCB really does. Customer service is the last thing on their menu, if at all.

No Sunday sales, no later evening sales, reduced or nonexistent holiday sales. A large majority of the employees are down right condescending, often out right nasty.
13 posted on 09/05/2011 3:42:43 PM PDT by JSteff ((((It was ALL about SCOTUS. Most forget about that and HAVE DOOMED us for a generation or more.))))
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To: cc2k
And the whole "breathe into a blood alcohol meter" thing?

Worse, it tongues you back to get a saliva sample, and gather cell for a DNA records check!
14 posted on 09/05/2011 3:45:29 PM PDT by JSteff ((((It was ALL about SCOTUS. Most forget about that and HAVE DOOMED us for a generation or more.))))
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To: ZOOKER
I know it sounds like Gulag, but it's really Utopia...
That already exists and it's name is the state of Pennsylvania.



15 posted on 09/05/2011 3:48:59 PM PDT by JSteff ((((It was ALL about SCOTUS. Most forget about that and HAVE DOOMED us for a generation or more.))))
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To: SeekAndFind

If you purchase beer in a PA distributorship or beer store, you’re forced to purchase a full case (24 bottles) even if you don’t want that much beer. It makes no sense and, once again, distorts the relationship between buyer and seller. What’s the reason for this?


16 posted on 09/05/2011 3:53:18 PM PDT by Smber (The smallest minority is the individual. Get the government off my back.)
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To: free me

I haven’t been to Pa in a while.


17 posted on 09/05/2011 3:59:08 PM PDT by mylife (OPINIONS ~ $ 1.00 HALFBAKED ~ 50c)
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"We think the wine kiosk program has failed," Wagner said at a press conference, "and it needs dramatic, radical changes if the program is going to continue to exist."

NOTE WELL PENNSYLVANIA: Pennsylvanian Taxpayers are about to be suckered Chicago style by Obama and friends.

The entire batch of machines will suddenly disappear and then reappear at far more profitable locations under different ownership by an Obama friend within a couple of months. The new "owner" will have purchased the entire batch of machines for the total miracle price of $100.00.

18 posted on 09/05/2011 3:59:47 PM PDT by pyx (Rule#1.The LEFT lies.Rule#2.See Rule#1. IF THE LEFT CONTROLS THE LANGUAGE, IT CONTROLS THE ARGUMENT.)
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To: mylife

It’s as bad as you remembered, from a booze standpoint. I was just adding a little more info.


19 posted on 09/05/2011 4:04:47 PM PDT by free me (Sarah Palin 2012 - GAME ON!!)
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To: pyx
Under new ownership, the vending machines will of course, will be exempt and unencumbered by any of the former restrictions and ... ahem ... "TESTS" that were conducted.
20 posted on 09/05/2011 4:04:57 PM PDT by pyx (Rule#1.The LEFT lies.Rule#2.See Rule#1. IF THE LEFT CONTROLS THE LANGUAGE, IT CONTROLS THE ARGUMENT.)
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To: SeekAndFind

Getting carded is barely tolerable. This is insane.

The nanny state discovered the subtle way to power: regulate an intermediary with whom none have an argument and who will consent to anything to operate. Very effective; even going as far as a breathalyzer based wine vending machine only inspires neglect, not tea-tossing revolution.


21 posted on 09/05/2011 4:22:14 PM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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To: SeekAndFind
Next: The government takes over restaurants and diners.


22 posted on 09/05/2011 4:26:53 PM PDT by Iron Munro (Muslims who advocate, support, or carry out Jihad give the other 1% a bad name)
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To: mylife

I used to go with my Dad to “Lou’s Beverage” in Downingtown all the time to get beer. It was a real dump warehouse like building...not even a regular retail showroom. Just a warehouse stacked with beer. A few years ago they changed the law so you can get six packs to go from restaurants. Georgio’s is a local hoagie and steak joint that has a good selection of beer to go by the six pack including the local Liberty Ale.


23 posted on 09/05/2011 4:35:32 PM PDT by ProtectOurFreedom
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To: JSteff

I always thought the licensed distributor’s had such political influence (ie, bribes) in Harrisburg that the state wouldn’t liberalize their liquor laws. I didn’t think it had much to do with unions.


24 posted on 09/05/2011 4:37:20 PM PDT by ProtectOurFreedom
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To: SeekAndFind
When they are working, the kiosks dispense a limited selection of wines at limited locations and times (not on Sunday, of course!) to customers who present ID, look into a camera monitored by a state employee, breathe into a blood-alcohol meter, and swipe a credit card.

What about the liver function tests? What about the psych evaluation? Doesn't the State of Pennsylvania care about its subjects?

25 posted on 09/05/2011 4:43:16 PM PDT by TChad
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To: ProtectOurFreedom

People get the government they deserve.


26 posted on 09/05/2011 4:44:48 PM PDT by discostu (keep on keeping on)
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To: ProtectOurFreedom

They are involved. If not why their attendance at all meetings? (hint, it is not because they are good citizens)


27 posted on 09/05/2011 5:09:49 PM PDT by JSteff ((((It was ALL about SCOTUS. Most forget about that and HAVE DOOMED us for a generation or more.))))
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To: SeekAndFind

Wait till they start making the stuff! The mind shudders.


28 posted on 09/05/2011 5:23:14 PM PDT by count-your-change (You don't have be brilliant, not being stupid is enough.)
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To: Dr. Bogus Pachysandra
Here in Ohio, our selections are very limited. The little package store on Anna Maria Island, Florida, had 80 different kinds of Rum! I was in Heaven! Here in Ohio, You’re lucky if you can find a store that sells two of the many Rums that Mt. Gay makes.

We defeated The Soviet Union. Now, bit by bit, we're becoming the United Socialist States...

29 posted on 09/05/2011 5:45:09 PM PDT by Grizzled Bear (No More RINOs!!! Laz for President!)
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To: Dr. Bogus Pachysandra

Does Ohio still sell booze only in state owned stores?

Wow I remember that from 40 yrs ago.

Here in Indiana we get it from WalMart.


30 posted on 09/05/2011 5:51:47 PM PDT by nascarnation
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To: Grizzled Bear

I am still perplexed by the old Blue Laws and weird distributorships (like McCain’s wife in AZ) and how in places like Virginia, you have to buy overpriced liquor (not wine or beer) at an ABC Store...or in South Carolina, you have to buy booze at a Red Dot store in mini-bottles.

These monopolies make the cost of all alcohol go up tremendously, I remember once when we had a party in college, we drove from Boston up to New Hampshire and saved about 25% on the cost of the alcohol, including gas money to and fro.

This kiosk deal reeks of a Government-connected buddy of a politician and a bunch of union goons making a mint on an illogical machine.


31 posted on 09/05/2011 10:19:33 PM PDT by wac3rd (Somewhere in Hell, Ted Kennedy snickers....)
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