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PLCB actions likely to lead to higher prices for consumers

FOR IMMEDIATE RELEASE

PLCB actions likely to lead to higher prices for consumers

Harrisburg, Pa. (July 27, 2017)—In their latest move to increase profits, the Pennsylvania Liquor Control Board (PLCB) essentially sent a shakedown letter to suppliers demanding lower acquisition costs with significant ramifications for the supplier, and ultimately the consumer.

While the PLCB generates billions in sales, its returns to the general fund are paltry, and because of high operating costs, they are unable to meet the states budgetary request without dipping into reserves. Rather than streamline their operations like any private-sector entity would, the PLCB, instead, sent a shakedown letter to suppliers on July 20 demanding lower acquisition costs on an additional 450 listings. PLCB already strong-armed lower acquisitions costs on 700 products as recently as May.

The July 20 letter gave suppliers one week to lower their acquisition prices or see the shelf price of their product increase, on average by $1, on August 28. Consumers would see prices of these products increase.

“A consumer price increase in a system which averages higher prices than surrounding states will likely lead to even more 'border bleed,' an issue that the PLCB said flexible pricing would help them combat,” said John Longstreet, President & CEO of the Pennsylvania Restaurant & Lodging Association.

Prior to Act 39, the PLCB had to have a flat markup on all products, they can now adjust the markup on their top selling products. Those adjustments have overwhelmingly led to price increases. Pennsylvania has a state-owned wine and spirits monopoly meaning consumers and licensees must pay the price the PLCB sets.

We have heard repeatedly from the PLCB, most recently at a May 10 legislative hearing, that flexible pricing as outlined by Act 39 would not lead to increased prices for consumers or licensees. We were assured that flexible pricing would permit the PLCB to negotiate better pricing from suppliers, as well as provide discounts on slow-moving products in the state-run stores.

So far, we have seen the PLCB flex their monopolistic muscles by picking and choosing provisions from Act 39 that would increase their profits rather than pass on cost-savings to consumers or licensees. The Legislature gave the PLCB this broad authority, it is time for the Legislature to represent their constituents and rein the state monopoly in—or privatize a system that continues to grow bigger internally on the backs of consumers.

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About the Pennsylvania Restaurant & Lodging Association
The Pennsylvania Restaurant & Lodging Association strives to promote, protect, and improve the hospitality and tourism industries in the Commonwealth of Pennsylvania. PRLA conveys the unified voice of these industries to the Commonwealth’s citizenry and elected officials. Its members play an integral role in the economic growth of the Commonwealth, with the hospitality industry supporting more than 680,000 jobs and projecting more than $55 billion in sales in 2017. Pennsylvania’s tourism industry generates $39.2 billion annually in visitor spending.


Media Contact: Stephanie Otterson
Director of Communications
Pennsylvania Restaurant & Lodging Association
(717) 963-8369 | sotterson@prla.org