Not the Chairman's Selection

[MarketStEl]

Article in today's Philadelphia Inquirer

HARRISBURG - With nearly $1.7 billion in sales, 4,500 employees and 643 stores, the government-controlled monopoly of wine and liquor is a mega enterprise. Now, for the first time, it has a CEO.

Former Sen. Joe Conti will start Monday as chief executive of the Pennsylvania Liquor Control Board - a $150,000-a-year job approved yesterday over the pointed objections of its chairman.

"I firmly believe this was a bad idea. I believe in good government," said Jonathan Newman, who criticized the Rendell administration for rushing the high-priced appointment without public scrutiny or a nationwide search.

Newman was outnumbered as the two other LCB members, P.J. Stapleton and Thomas Goldsmith, voted to hire Conti, a Republican who represented Bucks County in the House and Senate.

Leaving aside the "Is this position really necessary?" question (though you're welcome to answer it later if you wish) and the transparent political payoff underlying this new post, what effect might this have on the Chairman's Selection program? The article makes clear that while Gov. Rendell cannot remove Newman from the three-member PLCB, he serves as chairman at the Governor's pleasure. I assume that Newman has the backing of his fellow board members in pursuing this program, but it probably wouldn't have happened if Newman weren't a bona fide oenophile, and there's always the danger that anyone who succeeds him as chairman may not have the same appreciation or understanding of wine. (To be fair to the new CEO, he does seem to have an understanding of the hospitality industry, at least: he ran his family's Italian restaurants for many years both before and during his years in Harrisburg.)

Still, something about this strikes me as unseemly too. How about you?

[matthewj]

let us put aside no likes the politics of this situation, but I believe that ED Rendell could have picked anyone to be the CEO of the LCB, but he assigned a republican who is in favor of loosening up the archaic laws of PA. HE has restuarant Business experience, this is good.

[wkl]

how do you know he is in favor of loosening the laws?

[matthewj]

I grew up in his redgion, and he always had on the adgenda to loosen up the laws, update them and make then more applicable to restaurants. Since he himself was in the busiiness he can feel our pain.

Also Thinking about it Ed is going to need both parties suport when the Casinos come to town. Liquor is going to be a big isssue.

[bigboss]

While I do often enjoy the benefits of the Chairman's Selection program, I acknowledge the fact that it is an appeasement for tolerating the monopoly pricing and taxes on every other thing I buy in the store. I almost laugh out loud when I go home to D.C. and see what the same bottles cost down there. If Rendell is in fact interested in any sort of liquor law reform, with particular respect to licensing, we should be open-minded. Maybe having a CEO with an AGENDA (matt sp.) would be good for the REGION (matt sp.).

[wkl]

this quote is from the inquirer's follow up article:

"The former legislator said he opposed attempts to privatize liquor sales in his years in Harrisburg and still believes it's not needed. He plans to devote his first few weeks to what he called "a listening tour" to learn the finer points of the state-run system. He wasn't even sure if the job came with a car."

sounds like nothing much is going to change.

[mike volker]

I'll bet they can figure out a way to get car lease payments as unvouchered expenses.

Best,

Mike

[wkl]

sandy, to answer your question, "what effect might this have on the Chairman's Selection program?" who knows?

perhaps the program will continue, but mr conti surely will be trying to increase profitability and make up for the 10 million loss in profit.

if anything, the plcb needs to make sure the misleading promotion of the whitehall lane wine doesn't happen again.

[Rich Pawlak]

The method and manner of this appointment is very troubling. They don't call Rendell "Fast Eddie" for nothing. I just never figured him to be so disrespectful to a guy who's made great strides in improvemnt of the system. I'd like to know what's REALLY behind this sudden, unartful, classless appointment.

Article in today's Philadelphia Inquirer

HARRISBURG - With nearly $1.7 billion in sales, 4,500 employees and 643 stores, the government-controlled monopoly of wine and liquor is a mega enterprise. Now, for the first time, it has a CEO.

Former Sen. Joe Conti will start Monday as chief executive of the Pennsylvania Liquor Control Board - a $150,000-a-year job approved yesterday over the pointed objections of its chairman.

"I firmly believe this was a bad idea. I believe in good government," said Jonathan Newman, who criticized the Rendell administration for rushing the high-priced appointment without public scrutiny or a nationwide search.

Newman was outnumbered as the two other LCB members, P.J. Stapleton and Thomas Goldsmith, voted to hire Conti, a Republican who represented Bucks County in the House and Senate.

Leaving aside the "Is this position really necessary?" question (though you're welcome to answer it later if you wish) and the transparent political payoff underlying this new post, what effect might this have on the Chairman's Selection program? The article makes clear that while Gov. Rendell cannot remove Newman from the three-member PLCB, he serves as chairman at the Governor's pleasure. I assume that Newman has the backing of his fellow board members in pursuing this program, but it probably wouldn't have happened if Newman weren't a bona fide oenophile, and there's always the danger that anyone who succeeds him as chairman may not have the same appreciation or understanding of wine. (To be fair to the new CEO, he does seem to have an understanding of the hospitality industry, at least: he ran his family's Italian restaurants for many years both before and during his years in Harrisburg.)

Still, something about this strikes me as unseemly too. How about you?

←

[MarketStEl]

sandy, to answer your question, "what effect might this have on the Chairman's Selection program?" who knows?

perhaps the program will continue, but mr conti surely will be trying to increase profitability and make up for the 10 million loss in profit.

if anything, the plcb needs to make sure the misleading promotion of the whitehall lane wine doesn't happen again.

←

Re: "mak[ing] up the 10 million loss in profit": Conti could do that simply by asking his former colleagues in the General Assembly to rescind the increased wholesale discount to restaurants and bars they enacted into law last year, but as that's a net benefit for the restaurateurs and tavernkeepers, that's not likely to happen -- and remember, Conti's a restaurant guy.

But here's a novel idea: What about instituting a similar program to the "Chairman's Selections" for distilled spirits? We have this huge purchasing power, right? Largest wholesale buyer of spirits in the country, right? We should be able to negotiate some deals on spirits that match those on wine. I guarantee you they'd be coming in from New Jersey and Maryland for these too.

What's the trick? Make less on each item but make up the per-item difference on volume? I think this usually works when others try it.

[MarketStEl]

The method and manner of this appointment is very troubling.  They don't call Rendell "Fast Eddie" for nothing.  I just never figured him to be so disrespectful to a guy who's made great strides in improvemnt of the system.  I'd like to know what's REALLY behind this sudden, unartful, classless appointment.

←

So do we all.

Off-topic warning: The deal reminds me once again about what's wrong with Pennsylvania's (and Philadelphia's) political culture.

As with JCPenney, "It's all inside."

[Mummer]

The drinking issue is, indeed, a complex one.

Everybody in the industry trumpets the politically correct and legally expedient advice: DRINK RESPONSIBLY!

Except the bottom line is based on how many cases of liquor/wine/beer the manufacturers, distributors and retailers (PA in this case) can move. Of cours they want to sell more.

And this also extends to the bars and restaurants. They'd love for you to drink too many very profitable $12 pours or outrageously marked-up bottles, except that people become dangerous when they drink too much. And that can bite the sellers on the ass!

As for Conti's appointment, as long as the state's in the liquor business, politics will be there. This ugly maneuver can't be surprising.

[herbacidal]

But here's a novel idea:  What about instituting a similar program to the "Chairman's Selections" for distilled spirits?  We have this huge purchasing power, right? Largest wholesale buyer of spirits in the country, right?  We should be able to negotiate some deals on spirits that match those on wine.  I guarantee you they'd be coming in from New Jersey and Maryland for these too.

What's the trick?  Make less on each item but make up the per-item difference on volume?  I think this usually works when others try it.

←

Isn't that already there?

Aren't the big bottle displays of Stoli, Bacardi??, and other liquors cheaper than what's available in neighboring states?

[jmbrightman]

um, no. not compared to the areas of South Jersey I visit. PA may have some loss leaders in the state stores, but on the whole, no contest. Also, many Jersey stores break open the gift packs after the holidays and sell the bar utensils, glasses, etc. for a buck or so in January and February. I guess PA just sits on the stock until the next year?

[wkl]

maryland has very good pricing on liqour, wine and beer. many delawareans cross the border routinely to stock up. there are often busses in front of state line liquors in elkton, full of people stocking up.

across the board, pa can't compete on price or selection with maryland.

why would there need to be chairman selections for spirits? if the purchasing power already lowers prices, shouldn't that already be reflected in the price? why would slapping "chairmans selection" on the bottle make the price any different?

[MarketStEl]

maryland has very good pricing on liqour, wine and beer. many delawareans cross the border routinely to stock up. there are often busses in front of state line liquors in elkton, full of people stocking up.

across the board, pa can't compete on price or selection with maryland.

why would there need to be chairman selections for spirits? if the purchasing power already lowers prices, shouldn't that already be reflected in the price? why would slapping "chairmans selection" on the bottle make the price any different?

←

Inasmuch as distilled spirits are less differentiated than wine, even after many successful efforts to increase differentiation among products in categories like vodka, where the taste isn't really that much different from brand to brand (I mean, c'mon, vodka by definition is not supposed to have a characteristic taste or scent), you're probably right, but a bunch of factors unique to Pennsylvania prevent this from working according to theory.

One of them is the special taxes that are now rolled into the shelf price, the most infamous being the Johnstown Flood Tax.

Another may have something to do with the PLCB's status as a cash cow for Harrisburg. Reducing the margins on the products it sells, I suspect the CW in Harrisburg goes, would reduce the state's take. (I guess they haven't heard about making it up in volume.)

There are probably others you or others could name.

[marinade]

Isn't that already there?

Aren't the big bottle displays of Stoli, Bacardi??, and other liquors cheaper than what's available in neighboring states?

Herb, I think that depends on the spirit. For example single barrel (premium)bourbons that I have priced in Louisville-KY, State Line in Elkton, and PLCB differ only by a few bucks in the $40.00 and above range (include some $30.00 to $40.00 while we're at it.) The massed produced stuff may have a greater pricing range, but that I haven’t checked.

When I'm in Louisville I hit one of their bourbon tasting bars to try before I buy. Before I run over to the local Party Mart I go online to the PLCB catalog and price it out. More often than not it's there and sometimes cheaper than Kentucky. However some of the very small batches and special releases never make it up here.

But with keeping with the thread, this appointment seems political. From what I heard the Rendell appointed CEO is being paid more than Newman. Helluva way to thank someone.

Jim

[Mano]

But with keeping with the thread, this appointment seems political.

Jim

←

I concur.

What I'm about to post is based on second hand information from people I know, but who also have known Newman for quite some time, and some who know Conti.

Chairman Newman, by most all accounts, is a savy businessman who has a pretty big ego and who has the ability to rub the right people the wrong way. He's also revolutionized the PCLB system in positive ways. (FWIW, I've asked many different State Store clerks what they think of him and the responses have been glowing). Conti has a pretty big ego and is also a savy businessman who tends to stroke the same people the right way.

Rendell, IMO is a good governor and is generally a pragmatist. One doesn't get to be governor of PA without a pretty big ego. However, he's shot himself in the foot more than once because of his emotional reactiveness.

In this matter, some time ago Newman made it clear to Rendell that HE wanted the CEO position, but reportedly, the two tended to clash. Rendell's appointment of Conti is his answer to the Chairman. It's no different than the internal political maneuverings of any big corporation.

Edited December 20, 2006 by Holly Moore (log)