PA to shut down failing wine kiosk program

As I reported a few weeks ago, the Pennsylvania Liquor Control Board's (PLCB's) wine kiosk experiment was not going well (Hurricanes increase wine sales, not kiosks). And now it appears the program is done.

The Philadelphia Inquirer reported yesterday that the PLCB is shutting down the wine kiosk program due to a financial dispute with Simple Brands, the Conshohocken company that provided the wine-dispensing machines to supermarkets across the state. It has been widely reported that these kiosks broke down repeatedly.

The PLCB claims it has not been reimbursed by Simple Brands for expenses totalling more than $1 million. Simple Brands claims the state agency has racked up unnecessary expenses.

The next step will probably be a lawsuit. If so, it's more bad news for Pennsylvania residents. Not only did the kiosk program end up costing the state money, but more taxpayer funds will have to be spent on attorney and court fees. Perhaps the two parties should just settle the dispute over a bottle of wine... if they can find a kiosk that works, of course.

Hurricanes increase wine sales, not kiosks

Before we get to the hurricane, let's talk about the wine kiosks...

According to a special performance audit by PA Attorney General Jack Wagner, the Liquor Control Board's wine kiosk program has fallen short of established goals. Currently there are 22 kiosks operating in supermarkets owned by Giant Eagle, Giant Food Stores, ShopRite, The Fresh Grocer and Shop 'n Save. Wegmans had several kiosks but recently ended its participation in the program, and Wal-Mart announced last week that they would not install 23 kiosks in its stores, as previously planned.

Wagner's report states the following:

• From 1/29/09 through 3/31/11, the kiosks showed net income of $206,060 with total operating costs of $1,131,375.
• 20 of the 32 kiosks that were operating during the audit period failed to meet the minimum weekly sales threshold.
• All kiosks had to be shut down in the height of last year's holiday season due to mechanical and technological malfunctions.
• 919 malfunctions were reported in a six month period last year, and 118 additional malfunctions were reported in the one-month period after the original malfunctions were repaired.

The report also suggests that the Liquor Control Board (PLCB) "take immediate steps to terminate its contract with Simple Brands LLC of Conshohocken if kiosk operations cannot be modified to meet the originally stated objectives."

Now, about the hurricane... The Philadelphia Inquirer reported yesterday that liquor store sales saw a large spike in the days leading up to Hurricane Irene. According to the PLCB, sales for the week ended Saturday (8/27) were $37 million, which is up $5 million (15%) over the same week a year earlier. Sales for Bacardi's Hurricane mix? Up 311%.

The sales increase for the two days prior to the hurricane were undoubtedly far greater than the overall weekly increase, although the PLCB only shared the weekly numbers. There are no stats currently available that quantify the aspirin intake on the following mornings.