PLCB: Mining Its Own Business?

Posted on by Jeff Kralik

tableleaf-cabernetOver the last few months, there has been quite a bit of press about the Pennsylvania Liquor Control Board producing their own wine brand, called TableLeaf (see herehere or here). In brief, the PLCB has invested some money to directly compete with mass-produced wines such as Yellow Tail and Woodbridge. People seem to be upset that the PLCB is getting into the wine making business (though they aren’t really making the wines themselves; they have hired some real winemakers to do it). I despise the PLCB as much (probably more) than the next guy, but I do not understand all the hubbub: they are not forcing anybody to buy it, it is not the only choice in the store, and after all, they are a monopoly.

After reading all of the articles, the arguments against this program boil down to a few key points:

  1. The PLCB should not be in the wine making business because they are in the wine selling business.
  2. There are already a number of wines in that price range, so there is no need for another.
  3. It is wrong to use government funds to compete in the private sector.
  4. People in charge of creating the regulations for the sale of wine should not also be promoting their own brand.
  5. It is not fair to other wineries trying to compete.
  6. It competes with PA wineries.

I address each of these individually below, but most of them come down to two salient points: the PLCB is a monopoly and it is acting like, um, a monopoly and people are buying the schlock.

The PLCB should not be in the wine making business because they are in the wine selling business.

This one is a little bit of a non sequitur for me–just because an entity partakes in one activity, does that preclude them from all other activities no matter how (dis)similar? I don’t get that argument–there are numerous companies that have multiple product lines or interests (e.g., Mitsubishi, General Electric, Amazon all come to mind). We just bought a new car and we got financing through the dealer–that seems like a bit of a conflict given the problems surrounding the housing market, but nonetheless. I really think this is a non-argument—after all: the PLCB is a monopoly….

There are already a number of wines in that price range, so there is no need for another.

tableleaf-chardonnayThis is actually one of the arguments that can’t be answered by the definition of monopoly. All you market economists out there know that the market should determine whether there are too many wines in a given price range and will adjust accordingly–apparently, sales of TableLeaf are good, so this argument loses all credibility.

It is wrong to use government funds to compete in the private sector.

Do people clamor for higher prices? Let’s assume that people buy TableLeaf because it is either better wine, cheaper, or both. The competitors can either chose to compete on quality, price, or both. In each case, the consumer wins.  Of course, the competitors could chose to leave the market if they can’t compete on quality or price–but that does not appear to be happening.

People in charge of creating the regulations for the sale of wine should not also be promoting their own brand.

This argument actually holds some water for me.  For years, the French government had little desire to advertise the negative health aspects of smoking since they were making a boat-load of cash (through taxes) on the sale of the product.  It was not until they realized that the costs to the national health care system were going through the roof that they took on a more anti-smoking stance. But you can’t have it both ways–you can’t argue that you want more freedom and choice at the same time that you argue that the Commonwealth should regulate the sale of alcohol more.

It is not fair to other wineries trying to compete and It competes with PA wineries.

Of course it is not fair–the PLCB is a monopoly! But, the state is not excluding competitors, it is actually creating more competition.  Most economists would agree that when competition increases, the consumer benefits (at least in the short term). As for the PA wine part, really? Samuel Johnson stated that “patriotism is the last refuge of a scoundrel.” There are no doubt countless scoundrels at the PLCB (and that has been rather well documented), but do people really care about the poor little PA wineries or are they just grasping at straws to try and get rid of the PLCB? Um, the latter. Besides, show me a PA wine you can get for $8.

Look, I get it. People (including me) want to see the PLCB go down in a ball of flames. It seems, however, that the brand is profitable—which is perhaps the biggest shock, since the bozos running the PLCB are, well, bozos. For people who actually drink Yellow Tail and Woodbridge (I assume they are out there, but I certainly do not know any), one more option, no matter how insipid, may actually be a good thing.

The entire point of this post was not to defend the PLCB. (I would never do that!) In fact, I would argue that this only further strengthens the call for privatization, since the PLCB is introducing some badly needed competition to the marketplace.

tableleaf pinot grigio labelNo, the initial point of this article was to try the wine and see if it was as horrible as I imagined it would be. There are several different varieties of TableLeaf, and initially I was going to try a few, but then I came to my senses since I was actually going to fork over my own cash for this endeavor. I settled on the Chardonnay.

Problem.

I could not find it anywhere within 20 miles of my Philadelphia home. After essentially defending the PLCB above, the fact that the entire organization should be blown to bits came rushing back to the fore.  I eventually settled on a bottle of Pinot Grigio—a variety that I usually find rather insipid so I knew I was going to have to work hard to keep an open mind.

2010 TableLeaf Pinot Grigio: $8. Not much at all to the nose, but a bit of honeydew melon. Sweet on the palate with the melon faint, but noticeable. There is an odd chalkiness on the mid-palate and really no finish to speak of.  This is not the worst wine I have had all year, but that may be its only positive77-79 points.

As I was researching for this article, I came across this:

The [PLCB] selected Bronco Wine Co. in California to blend, bottle and label TableLeaf wines because it is one of the largest producers in the state and has a good reputation, [PLCB CEO Joe] Conti said. Its wines pleased the palates of tasters who included the LCB’s wine educator, director of marketing, Chairman’s Selection buyer and an outside sommelier, he said.

If their palates were pleased with this wine, they should all be fired—or forced to drink it, since you sure as heck shouldn’t.

Share on TwitterPin it on Pinterest+1Share via email

Categories: PLCB

avatar

About Jeff Kralik

Jeff, who also blogs as The Drunken Cyclist, is a longtime wine lover who tries not to take it all that seriously - though his cellar would argue otherwise. He's a Cat 3 cyclist, a husband, and a father of two great (most of the time) boys. He has lived in France and led bike tours though Champagne, The Loire and Burgundy, and thus has particular affinity for wines of those regions. Jeff also loves to visit his his in-laws, who happen to live in Northern California.

View all posts by Jeff Kralik →

7 Responses to PLCB: Mining Its Own Business?

  1. The largest and most problematic gap in this argument, IMO, is the part about competing with PA wineries. I can’t claim to know every angle but it’s my assumption that the PLCB carries, at best, a minority of the “legit” wineries in the state (meaning the non-weekend/garage operations). For sake of example, they carry the 2010 Blair Pinot Noir at ONE store – the flagship Chestnut Street outlet in Philly. It’s not available anywhere else in the entire state. But their brands are likely everywhere – including non-premium shops.

  2. avatar Mike Madaio says:

    For me, what it really comes down to is whether the PLCB should be run like a private business or not. Places like Total Wine and Trader Joe’s have their own private/exclusive labels, and nobody is making a big deal out of that. When it comes to taxpayer money, however, it seems to give people more pause about what the PLCB should be doing. I suppose, as taxpayers, that if they are investing our money wisely and making profit that will improve our government in some way (haha), then we should be happy. On the other hand, sometimes it is hard not to wonder why my taxes are going towards building a “Fine Wine and Good Spirits” Pinterest page.

    • avatar Jeff Kralik says:

      I agree. I was not even all that upset when Conti and Stapleton (or was it Culry and Moe?) were caught getting junkets from the distributors since that is what happens in the private sector. If you do not want state employees acting like private employees, then the state should not be involved in a private sector business (that is the argument). As for TL, if it makes money (and that money is funneled back into state services) then I am all for it. If it is yet another case of the PLCB acting like a bunch of complete morons (kiosks anyone?) then it is reprehensible. They claim it makes money–which should be verified/researched. As for the Pinterest page….

  3. avatar Jeff Kralik says:

    But I do not think the TL brand is ‘competing’ with PA wines (here I go in the unenviable task of defending the devil), unless you are talking about limited shelf space being taken up by TL instead of PA wines (but I don’t think you are). I went to the Blair website and while I have no idea if their wines would compete on quality with TL (though given the low bar, it would not be tough), they do not compete on price. Should the PLCB be in the business of promoting PA wines? I would say without hesitation: hell no. If the stooges at the PLCB deem that PA wines are/are not worthy of being on the shelves for whatever reason, that is their decision (my whole argument is based on the premiss that the PLCB has at least a modicum of wine knowledge and even more business sense–I know, I know). The PA Chamber of Commerce (or some such entity) should be working at promoting PA wines.

  4. You’re right about price points. Blair and TableLeaf (what a weird name) aren’t on the same level. And Blair is doing good things with PN, BTW. This boils down to quality – as you point out – and shelf space is an issue. You can bring in $8 dreck – and your point about $8 PA wine is well taken (but show me any quality bottle at that range…t’ain’t easy) – but you’re boxing out another opportunity for quality and assortment. How many of us wish we could find more labels in-store in PA? I do. So it ends up being about better choices; and yes, people are grasping at issues to smear the agency they love to hate.

  5. avatar Albert Brooks says:

    One of the anti-competition things I see is that the PLCB brands are given preferential placement almost all the time. In my local stores they are always on the endcap on display, or on the top shelf while they are anything but “top shelf” products. I’m sure if the idiots running the PLCB could figure out how NOT to sell other brands they would give that a try too.

  6. avatar Diane says:

    Lookmat how many of the PA wine products are in the chilled cabinet. They far outnumber any other brand or type. If that’s not stacking the deck I don’t know what is.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>