The thirteenth edition of StateWays’ Control States Executive Forum is anything but unlucky. Following two years of downsizing, uncertainty and challenging economies, the jurisdictions that make up the control states are more optimistic in 2011. Many have turned the corner and are experiencing record growth after years of slowing sales.
Despite reduced budgets and threats of privatization across the country, the agencies continue to fulfill their missions. State officials continue to promote responsibility, embrace technology, expand their departments’ role in education and compliance, and publicize new initiatives.
Thank you again to the control state commissioners, chairpersons, administrators, and other officials who provided an update on their jurisdiction’s progress. These comments provide colleagues and industry watchers invaluable information about the health of the industry, and a roadmap for moving forward together.
Director, Idaho State Liquor Division
Greetings from the Gem State!
The Idaho State Liquor Division (ISLD) saw the retirement of Deputy Director for Procurement and Distribution, Bill Applegate, in May 2011 after 35 years of service to the people of Idaho. We were fortunate to find a terrific replacement in Howard Wasserstein. Howard comes to us with experience in the spirits business, having spent more than two decades with Seagram Wine & Spirits, as well as holding an on-premise liquor license in Idaho for his Melting Pot restaurant.
The ISLD ended FY2011 with record sales and distributions to our good causes. Sales were up over 5 percent, case shipments were up 3 percent, and profits were up over 8 percent. We’ve turned the corner with consumers beginning to trade up to popular and premium brands. The ISLD was able to return a record $50.1 million in distributions in addition to a one-time $8 million transfer to the people of Idaho.
The Office of Performance Evaluations (OPE) completed a comprehensive report on our operations that identified a number of recommendations for division improvement, all of which had been unearthed in our in-house strategic planning. Privatization was analyzed in detail, the legislature determined the ISLD was well-managed as a control state enterprise, and the issue was dismissed (for the time being).
During the 2011 legislative session we requested and received approval for additional spending authority to enhance hours of operation in our state stores. In a nod to better customer service, many stores will be open later on selected days and Sunday hours have been augmented or new service added as a new sales day in many counties where Sunday sales are permitted.
New initiatives have been implemented or are ready to be deployed:
Idaho’s listing process has been streamlined with the addition of a monthly Quick List process that allows us to be nimble in meeting the market with new product innovation.
Transactions are now being tracked by gender and basket size for every store down to the time of day and day of week.
A new supplier representative portion of our website has been launched allowing reps to monitor progress of new listing sales of new brands.
A new online bar ordering process is being developed to improve service to our licensee customers.
The ISLD is currently testing a merchandising experiment at one of our stores in cooperation with Diageo. New concepts center on innovation and cocktail pods, a gifting section, power brands, and in-store signage in an effort to make our stores more shopper friendly.
New POS and security systems are being deployed in all state stores this fiscal year. The effort will free up equipment for us to offer in-store kiosks with new product information, drink recipes, and social responsibility messages.
The ISLD partnered with Pernod Ricard on a statewide television campaign promoting social responsibility and the prevention of underage drinking. Thanks to David Jackson at PR!
The ISLD continues to refine our focus on responsibly delivering the highest level of customer service to the people of Idaho.
Administrator, Iowa Alcoholic Beverages Division
Spring may be the season of change and new birth, but at the Iowa Alcoholic Beverages Division the entire year has been filled with changes and new things. New customers, laws, technologies and records have been keeping the IABD staff very busy.
During the 2011 session of the Iowa General Assembly, the legislature, authorized the issuance of class “E” liquor licenses to businesses where gasoline is sold. A class “E” license allows commercial establishments to sell spirits for off-premises consumption in original, unopened containers. Prior to this legislation, gas stations were required to have a separate, enclosed room with its own cash register in order to obtain a license to sell spirits. An independent and higher fee schedule was established as well. Over 100 convenience stores and gas stations have already been licensed and the IABD expects a total of 200 new licensees within the first year.
The IABD closed out Fiscal Year 2011 by setting two new major records. The agency sold over $220 million in spirits, breaking the previous year’s record by over $10 million. In addition to revenue from spirits profits, funds generated by excise taxes on wine and beer, license fees and civil penalties translated into a general fund transfer of over $106 million for the first time in a single fiscal year. The majority of this money will be used as general funding to be appropriated by the legislature for a variety of state programs. Additional funds are earmarked for substance abuse, city and county programs. The remaining funds will be used for Iowa native wine and beer promotion.
The 2011 Iowa legislative session made many changes that impact the IABD and liquor licensees. A new law clearly defines how and when a licensed retailer can deliver alcoholic beverages to customers. Unopened containers of alcohol for personal use may be delivered seven days a week, until 10:00 PM. Both the individual making the delivery and the person receiving the product must be at least 21 years old. Proof of the recipient’s identity and age, as well as their signature, are a condition of delivery.
The IABD has been mandated to implement a statewide alcohol compliance employee training program. The online training will inform participants about state and federal laws regarding the sale of alcoholic beverages. Participants must pass a final test to receive a certificate of completion. To encourage retailers to require their employees to enroll in the training, lawmakers included an affirmative defense incentive, which may be used once in a four-year period to avoid civil prosecution if a sale-to-minor violation occurs in their establishment.
The legislature modified the definition of high alcohol content beer to prohibit the addition of caffeine and other stimulants, effectively banning high-proof alcoholic energy drinks in Iowa. Wine manufacturers may now enter into alternating proprietorship arrangements, subject to federal approval and the provisions of Iowa law. Additionally, lawmakers removed the exception to open records laws from IABD’s sales data.
As I mentioned above, the legislature also removed some restrictions from convenience stores selling spirits and set a fee structure for these licensees. Additional legislation made the code easier to understand by removing obsolete provisions and consolidating definitions into one section.
The IABD is developing mobile tags to direct users to supplemental and related content on IowaABD.com. Tags are scanned by smart phone users to access mobile content. These will be used as a quick way to access essential information like pricing and delivery schedules when customers are on the go.
Also new this summer is Robocom, a warehouse management system. In the very near future, we will have full implementation of the system and licensees will begin to see the benefits. The system will enable customers to place regular and special orders through a web-based store, create order templates and view monthly specials, which will allow businesses greater control in inventory, customer choice and savings.
This past year has brought many changes to the Iowa Alcoholic Beverages Division and the alcohol industry in the state. The staff has been very busy with new customers, new laws, new technology and setting new records. We are looking forward to many more new things to come in 2012.
Acting Director, Maine Bureau of Alcoholic Beverages and Lottery Operations
The Maine Bureau of Alcoholic Beverages works in cooperation with its wholesale liquor distributor and more than 400 privately owned agency liquor stores across the state. The Bureau works daily with the Department of Public Safety on issues of enforcement and advertising. We also collaborate with the Maine Attorney General’s Office to evaluate our distilled spirits listing process, initiate programs to further educate the public on the issues of furnishing alcohol to minors and more generally, the challenges of illegal consumption on college campuses.
YTD case sales in Maine are up 3.6 percent while total sales are up 4.5 percent. The top 20 products currently account for 20 percent of overall sales (down from 27 percent last year). Allens Coffee Brandy continues to be our number one selling product, and represents 10 percent of overall sales (down from 13 percent). Canadian whiskeys and spiced rums continue to be highly popular in the Maine market.
The Bureau was successful in negotiating with the Department of Public Safety to establish a six month pilot program to allow for distilled spirits to be marketed anywhere beer and wine are marketed as long as a local store manager approves the location. This is a departure from the current restriction that distilled spirits must be placed in a predetermined and confined area while beer and wine can be marketed almost anywhere in an agency store. This change supports evidenced based research that suggests that alcohol is alcohol and polices that treat beer, wine and distilled spirits the same when it comes to tastings, sampling and product placement on the floor allow for greater consistency for consumers, ease of administration for regulators and enhanced marketing and predictability for industry. The pilot, which began in July, runs till January 15, 2012. The pilot will then be evaluated and hopefully installed as a permanent change in how the state chooses to market its alcohol beverage products.
Another goal for the legislative session was to give the Bureau the authority to collect on-premise purchasing data. Previously, on-premise licensees were required to report liquor purchases to the Department of Public Safety; however, a process for this data collection had not been put into place due to limited administrative resources in that department. This has been an area where Maine’s data has not been available to industry for analysis or planning. With this change, the Bureau will now be working toward a process that will make that data available in the very near future.
We are very pleased to announce that our Online Seller Server Training will be launching this September. Legislation now allows the Department of Public Safety to consider seller/server training as a condition of licensure, and the need for a more accessible training options are in high demand from business owners across our state. It is our collective goal to ensure all sellers/servers have the training they need to reduce the irresponsible sale or use of alcohol beverages. An online, readily accessible and user friendly resource will tremendously help obtain that goal.
Maine continues its mission to effectively regulate the beverage alcohol industry, ensure responsible business practices and create a favorable economic climate while prohibiting sales to minors.
Chairperson, Michigan Liquor Control Commission
The Michigan Liquor Control Commission (MLCC) prides itself on being a high performance agency excelling in economic development, revenue generation and public safety. Holding a license to sell alcoholic beverages can be considered an important component of being competitive and profitable within the hospitality industry.
The biggest development for the MLCC this past year has been the newest appointments to the Commission. Nida Samona and Patrick Gagliardi’s terms ended in June 2011. New Chairman Andrew J. Deloney and Commissioner Teri L. Quimby joined Commissioner Donald Weatherspoon as Administrative Commissioners for the MLCC. Deloney comes to the MLCC from the Michigan Restaurant Association and knows first-hand what it is like to work with the MLCC on a daily basis. Chairman Deloney has set a goal of reducing complexity by simplifying and streamlining the licensing process.
Other developments this past year include the passage of P.A. 213 of 2010, which allows the sale of alcoholic beverages on Sunday mornings. The new act moves up the legal hours of sale of beer, wine and spirits, unless prohibited by local government, from 12 noon to 7 a.m. The MLCC Licensing Division worked hard at pushing out over 5,600 Sunday morning permits since going into effect December 2010.
Also passing through the legislature, was P.A. 20 of 2011 which created a new catering permit. This permit may be issued by the MLCC to both on and off premise licensees and allows the sale and delivery of beer, wine and spirits in the original sealed containers for off premise consumption at private events. The law also requires the permit holder to serve the alcoholic beverages at the event and successfully complete the MLCC approved service training program.
Another big virtual step for the MLCC is that as of July 1, 2011 all retail licensees must order their distilled spirits through the State of Michigan’s online ordering system. Although, in the beginning there was push back from licensees, the online system proves to be working effectively.
The future holds great promise for increased efficiencies and customer service here in Michigan. The amount of information available on our website has grown in depth and range in the areas of license and permits status check, product availability, sales totals and online ordering. We are excited to begin new programs like alcohol education, underage prevention, and communication efforts giving our agency a “business minded, customer driven” feeling.
J. Ed Morgan
Commissioner of Revenue
The economy has begun to turn around in Mississippi, although tenuously. Back-to-back disasters—-the oil spill on the Gulf Coast last summer and the flooding from the Mississippi River this spring—-have delayed the recovery process. The reduction in tourism on the coast and the closings of many casinos on the river reduced beverage alcohol revenue. Even so, total sales grew by $6 million to $263 million and total cases sold increased by 2.6 percent or 72,375 cases. Over $92 million was contributed to the General Fund. Even though the sales trend toward value brands continues, the premium and ultra premium products are making a comeback.
The Department of Revenue, of which the Mississippi ABC is a part, reported revenue collections to be higher than expected to close the 2011 fiscal year with $62 million in the bank. The state collected 2.2 percent more revenue than the previous year resulting in collections exceeding the estimate. Mississippi economists predict continued growth as we recover from the recession and other disruptions.
Mail-outs and paper documents continue to be reduced as we are getting accustomed to doing more with less. Requisitions for special orders and bailment invoices are sent electronically. Customers see their daily orders on line, and internet usage for ordering has increased to about 85 percent. All pricing information is on line as well. New scanners were acquired for the conveyor system as well as software upgrades thanks to bond funding approved by the legislature. We were also able to replace some aging equipment in the warehouse.
The Bureau of Enforcement ended FY2011 with 21 sworn personnel, down from its normal staffing of 26. Three new Enforcement Agents were recently hired. Despite manpower shortages, enforcement personnel had a busy year. Five-hundred citations were issued to minors in possession of alcohol with 90 of those getting a “bonus” citation for use of fraudulent identification. Forty-five adults were charged with furnishing alcohol to minors. Twenty-five persons were arrested for selling or “bootlegging” alcohol without a license. With almost half of Mississippi’s counties still “dry” for alcohol, enforcement personnel made 95 arrests for possession and transportation in these areas. While moonshine whiskey production numbers have declined, personnel seized and destroyed 4 illicit distilleries and 950 gallons of mash.
The Permit Department reported ending FY2011 with 1,885 active permits. 320 permits were issued to new businesses, and 274 were not renewed. A total of 414 temporary permits were issued in conjunction with transfers of ownership or temporary events for businesses and non-profit organizations. Thirty-eight businesses faced administrative sanctions ranging from fines, suspensions, and in severe cases, revocation.
On a positive note, the Governor signed House Bill 504 into effect on July 1, 2011. This “Social Host” Law makes it unlawful for adults to knowingly allow minors to possess and consume alcoholic beverages at private residences or events. Violation of this statute carries a $1000 fine or 90 days imprisonment.
Administrator, Liquor Control Division, Montana Department of Revenue
February 2011 marked the end to a long and extensive renovation project at the Montana liquor warehouse. The department initiated this project with three outcomes in mind: we wanted to improve energy conservation, we wanted to streamline work flow and utilize space more efficiently through a better layout, and we wanted to accommodate future growth in liquor sales.
In order to bolster energy conservation, the department implemented several measures. Our greatest improvement is the redesign of our warehouse shipping and receiving area. Prior to the project, large receiving doors were opened to allow freight trailers to enter and exit the facility. Montana often has bitter cold temperatures during the winter, and maintaining a consistently comfortable temperature inside the facility was impossible. The department redesigned this area and moved the shipping and receiving functions to the outer parameters of the building, much like a modern day facility. Our new design also features a new staging area where we house an automated shrink-wrap machine; this is located where the freight trailers had previously parked inside the facility.
Some of the other conservation measures the department implemented included replacing unit heaters throughout the warehouse and upgrading the facility’s HVAC system with higher efficiency modules.
The department focused on reducing the pick path and time required to search for product in order to streamline work flow. Aisles have been rearranged within the facility to keep product located as close to the outbound staging area as possible. Product has been relocated based on performance while at the same time keeping similar sized boxes near each other for better pallet building. All product picking is now done from the ground level. The department also established a new bottle pick area that is more ergonomically designed. These subtle changes have increased warehouse safety and have contributed to an uptake in productivity.
Prior to the project, the department was aware that workspace would soon become constricted. The facility, which is just under 100,000 square feet, was virtually being used to capacity. In order to avoid crowding, the department installed several new rows of racking to maximize cubic space. This allowed product to be positioned in a more uniform manner and help streamline the work flow. Most importantly, it freed up several square feet within the facility to allow for growth in the future.
The Montana liquor warehouse was built in the late 1970s and has had no major improvements until this renovation project. This fact and the Governor’s initiative to reduce energy consumption in state government were the primary catalysts for conducting the work.
The warehouse ships product to 97 agency liquor stores throughout the state. The department’s fiscal year ended on June 30, with case sales exceeding 680,000. This represents a 3.42 percent increase from the previous fiscal year.
Montgomery County, MD
Director, Department of Liquor Control
The year that ended on June 30, 2011, was a relatively successful one for the Montgomery County Department of Liquor Control: in fact, more successful than we had any reasonable expectations of achieving. The 2011 Fiscal Year (July 1, 2010 through June 30, 2011) was a year of “adapting to the new reality.” That new reality is the long-term, systemic reorganization of government operations and expenditures — that is playing out in various degrees across the United States – in response to fundamental changes in the public revenue stream. In Montgomery County, this new reality has most directly impacted us in the areas of employment and wage & benefit conditions.
Although DLC is not tax-supported and operates as an “enterprise fund,” we still had to deal with the realities of hiring freezes and service cuts. This year marked the third consecutive year of no salary or wage increases. FY11 also brought us mandatory employee furloughs for the first time. Our current fiscal year is bringing permanent structural reductions to employee benefits in the areas of retirement and health insurance coverage. In this environment we have had to plan for closing lower-performing retail stores, deferring the opening of new retail stores, and maintaining service to a growing customer base with a shrinking workforce. It has not been easy.
In spite of these challenges, we had a productive year on a number of fronts. Our year-end financials revealed that our total gross sales grew by a robust 5.63 percent over FY10 as we had $240,200,184 in sales. This resulted from an increase in wholesale sales to licensees of 4.47 percent for a total of $126,567,568. Our retail stores continued to exhibit strong growth with an annual increase of 6.95 percent for a total of $113,632,616 in total cash register retail sales to the public. This robust revenue growth was matched with outstanding targeted management of inventory and operational expense levels. DLC was able to end the year with a gross profit margin of 28.30 percent (our goal is 28 percent). These surprisingly strong figures in a weak economy were not merely gratifying – they allowed us to make our targeted revenue transfers to the Montgomery County General Fund. DLC transferred a total of $26,208,170 in net profit to the General Fund.
In addition, we paid $4,583,250 in debt service from our net profits for the Montgomery County Department of Liquor Control Revenue Bonds. These bonds were issued by Montgomery County over the last two years to benefit specific County-wide capital projects, and are unrelated to the County’s own General Obligation and Capital Improvement Project bonds. These bonds (approximately $80 Million have been sold) are a new revenue source for the County and are backed exclusively by the operations of DLC. The result is that between unrestricted General Fund transfers and bond debt service payments, DLC contributed over $30 Million to Montgomery County this past year.
While adjusting to the “new reality” and increasing our contributions to the County General Fund, we were also able to achieve a few notable operational accomplishments during the course of the year. We successfully procured and deployed a new Pont-of-Sale system for our DLC retail stores. The new POS system includes hardware and software, and the process involved a number of initiatives to integrate technology across our Department, improve efficiency in stores and create a more satisfying shopping experience for our customers. The success of this POS system installation was covered in the July/August edition of StateWays.
This past year also saw the introduction of Sunday sales in DLC retail stores. Beginning in November 2010 (in time to capture the holiday shopping rush) we opened our retail store from Noon to 6:00 PM on Sundays.
Chairman, North Carolina Alcoholic Beverage Control Commission
This year marks my second anniversary as chairman of the North Carolina ABC Commission, having been appointed to the position by Gov. Bev Perdue in October 2009.
In North Carolina, the question of privatization occupied policymakers during much of the last fiscal year. The Governor directed the ABC Commission to implement a third-party study in the fall of 2010, and in January 2011 she determined not to move forward with the idea of selling the state’s retail liquor sales system. The outside financial analysis forecast that a large, one-time cash infusion would require a proliferation of retail outlets; under scenarios with more limited retail liquor outlets, the financial benefit to the state also would be limited, the financial analysis found. As Gov. Perdue said in making her announcement not to pursue privatization, “the juice is not worth the squeeze.”
In addition to overseeing the privatization research, during the last year the NC ABC Commission directed and implemented the legislative reform enacted and signed into law in the summer of 2010.
The new law focuses on increasing the authority of the state ABC Commission and of the municipalities and counties that appoint the members of the state’s nearly 170 local ABC boards. The boards’ more than 400 retail stores are the only places that liquor is sold in North Carolina.
As a part of the reform legislation since January, the Commission has presented 22 classes attended by more than 800 ABC board members, general managers and finance officers. Topics covered included ethics and uniform budgeting and financial controls.
Regulation and Revenue
Public health, public safety and commercial regulation make up the three areas of focus for the Commission.
During the fiscal year, the Commission issued ten summary suspensions of permits held by clubs whose locations were the sites of fatalities or severe injuries due to violence at the sites.
In the fall, the Commission worked with distillers to remove 190-proof alcohol from the shelves of North Carolina ABC stores. Commission action also facilitated the removal of high alcohol energy drinks from the shelves of the state’s private retailers after federal regulators announced that the beverages were not proven safe.
Revenues from the sale of liquor for FY 2011 were $747 million, up from the $726.7 million generated in FY 2010.
During FY 2011, the NC ABC Commission received 10,375 applications, issued 9,862 ABC permits and received $16.3 million in fees, all up from FY 2010.
Training of sellers and servers in FY 2011 was 7,987, also up from FY 2010.
Customer Service Research
The 2010 reform legislation defines the local ABC boards’ missions as being: “to serve their localities responsibly by controlling the sale of spirituous liquor and promoting customer-friendly, modern and efficient stores.”
To establish a benchmark for customer service, the state ABC Commission is planning a statewide customer satisfaction survey to be conducted by a state university partner in the fall of 2011.
Warehouse Capacity/Increasing Efficiency
North Carolina’s 200,000-square-foot, state-owned warehouse has been at capacity for some time. In the spring, the Commission approved a lease for an additional facility, doubling the Commission’s total warehouse floor space to 400,000 square feet.
The new leased space is a 200,000-square-foot bulk storage warehouse for top-selling items. It will allow the Commission to increase allocated space requirements for all items, reducing the potential for out-of-stocks and allowing increased selection beyond the 1,700 products currently listed. New shipments began in August.
I look forward to the work ahead. We will focus on increased service to our retail stores, measuring customer satisfaction and continuing to generate needed revenues for our state and local governments.
Chairperson, Oregon Liquor Control Commission
As the newly appointed Chair of the Oregon Liquor Control Commission, I am excited to share with you some of our accomplishments over this past year.
In times of a troubled economy, it is more important than ever to find ways to encourage the growth and support of Oregon businesses. Our licensing team took action to reduce the time it takes to license a business in the Portland metro area (which represents 50 percent of the licensing work in the state). By implementing best practices, the licensing team effectively reduced the average amount of staff processing time in half from 67 days to 32 days. This gets businesses up and running quicker, hiring employees and contributing back to our local economy. In addition to annual liquor licenses, the OLCC also issues over 5,000 special event licenses a year. That number is growing by 300-500 each year.
Looking ahead to future growth in commerce, the commission saw an opportunity for improvement by expanding the hours for alcohol sales in airports. Oregon has a great reputation for our craft brews and artisan wines. Increasing the hours that airports can sell alcohol promotes Oregon-made products so tourists can easily take a bottle home to share their Oregon experience with friends. The new hours include early morning peak times for travelers, which also boosts sales for the small businesses that operate within the airports.
I am proud to report that in the area of social responsibility, the Oregon Liquor Control Commission brought home the Best Practices award in Health and Safety from the National Conference of State Liquor Administrators. The award was for It’s Your Call, a video directed at educating servers and the public about over-service and impaired driving. The video features tips to help alcohol servers better recognize early signs of alcohol impairment. It’s Your Call was produced by the OLCC in partnership with the Oregon Department of Transportation (ODOT).
The OLCC also received special recognition in the same category for the video, Wasted. Wasted is a testimonial by the students, family and friends whose lives were profoundly affected by the death of an Oregon teen who was a passenger in a car with a drunk driver. Wasted recently received an Emmy nomination in the Public/Current/Community Affairs Feature Segment category from the Northwest Chapter of the National Academy of Television Arts and Sciences. This video was also produced in partnership with ODOT. The holiday public service announcement, How to Throw a Party was also nominated for a regional Emmy award in 2011. All OLCC videos can be found on our YouTube page.
I look forward to my first year as Chair as being one of sustained growth and efficiency, increased focus on public safety and social responsibility, and continued positive relationships with our community partners.
Patrick J. Stapleton
Chairman, Pennsylvania Liquor Control Board
Despite a very challenging economic climate, the Pennsylvania Liquor Control Board (PLCB) continued its impressive growth in 2010-2011, again setting another sales record. Our agency sales topped $1.9 billion, a 4 percent increase over last year. As a result of our increased revenue, the agency was able to transfer nearly $500 million to Pennsylvania’s General Fund, bringing benefits to all Pennsylvania families through much-needed funding for social services, transportation and law enforcement.
The PLCB is in the midst of a transformation and we believe our renewed focus on ensuring superior customer service and value played an important role in our growth. Last year, we opened several new prototype stores, which provide a more open, friendly and consumer-oriented environment. Additionally, we developed an educational guide to help navigate our extensive and varied wine collection. We launched our new e-commerce site, www.FineWineAndGoodSpirits.com, which offers information on more than 30,000 products and gives consumers the opportunity to purchase products not available in our stores. And finally, in an effort to reach our digitally-minded customers, we began a social media campaign, focusing on Facebook and Twitter, to promote our brand and engage our consumers.
As part of our transformation into a world-class retailer, the agency is in the process of installing a new point of sale system in each of our more than 600 stores. The new equipment will ensure we have the most efficient sales and returns possible for our consumers. The system allows us to scan receipts for returns, allows consumers to see prices as they ring up and provides the ability to do multiple minor challenges during one transaction. It will also hold all the transaction information from each of our stores in one central database, which will enable us to analyze it to better serve our consumers’ needs.
While our retail side flourishes, we remain committed to regulating our more than 18,000 licensees, promoting responsible consumption and educating our customers and the general public. By returning more than $4.5 million dollars in licensing fees annually, the PLCB continues to reinvest in local communities all across the commonwealth.
Through our Bureau of Alcohol Education, the agency distributed nearly $1 million in grants to prevent underage consumption. To broaden the reach of our message, we are also developing a statewide advertising campaign targeting people 21-29 years old; those old enough to drink but those who don’t always do so responsibly. We are also working on a campaign developed in part by teenagers for parents and their peers to be utilized at the local level to generate thought and discussion among families about the role alcohol plays in their lives. We believe in the power of our message and hope it resonates with the public and our consumers.
Recently, a bill was announced which would privatize our control state system. Clearly, to privatize or not is an important policy decision which will be decided by the legislature and governor. We continue to act as a resource to the policymakers to make sure they have all the information they need to act on this important matter. However, it does not alter our mission. As we look forward, we continue to focus on providing consumers with the most convenient shopping experience we can in the most efficient way possible. We anticipate the best is yet to come.
Chair, Vermont Department of Liquor Control
Issues facing Vermont in the next year include a long awaited ERP/POS project, evaluation of the current liquor tax structure and markup, further enhancements to our current on line training program, expanding marketing initiatives, and finally, prioritizing expenditures for the upcoming FY13 budget process.
The 2011 Legislative Session adjourned May 5. Here are some highlights of legislation passed.
H287: Permits art galleries and bookstores to get a permit to conduct an event where malt and vinous beverages can be served by the glass to the public with local approval. Permit holders is subject to all the provision of Title 7. A $15 fee is required to receive the permit.
H6: Clarifies current law that Liquor Investigators have the same powers and immunities as other law enforcement.
H436: Allows for a lower tax rate for Vermont Spirits Manufacturers who are making direct retail sales through their fourth class license, and special events.
The legislature has appropriated monies to allow DLC to start replacing our antiquated office system and point of sale systems in agency liquor stores. DLC’s retail systems are based on ancient legacy technology that is increasingly difficult to maintain. In both our central office system and the retail cash registers (POS), we are using old hardware that is increasingly hard or impossible to maintain, repair, and replace, and ancient software that is incompatible with other vendors and business partners, incapable of working with today’s Internet services, unable to provide analyses and access to data, and un-compliant with modern security, audit, and best practices requirements. Our office system is almost thirty years old, while POS is more than fifteen years old. Both are developed in obsolete programming languages for obsolete hardware, and neither the software nor the hardware can be purchased now.
DLC has had a long term strategic plan to systematically replace these systems with modern, off-the-shelf software, and has already made great strides towards doing so with projects focusing on the financial and warehousing aspects of the system. Implementing a modern ERP and POS system, similar to those used by other liquor control boards and retail operations worldwide, will allow DLC to be free of its dependence on ancient technology that can’t be maintained. The department has chosen a vendor and the contract process is underway.
DLC is experiencing its 15th straight year of growth in sales dollars. In Fiscal year 2011, sales reached $61,500,000; this represents a 3.1 percent ($1.85 million) increase over FY2010 figures.
Licensing & Enforcement:
The Enforcement Division continues to be busy with alcohol and tobacco compliance testing, along with licensee inspections. Undercover investigations have kept the division busy as it focuses on over serving of patrons.
Alcohol and Tobacco Education continues to be a very important part of DLC’s mission. The department is now offering an on-line certification program for both on and off premise licensees and their employees. The seed money for the program came through a grant education funded by NABCA. The statutory requirements can be now met by paying a $25 fee and completing the course on line. We also provide in person seminars to thousands of license holders and their employees this past year. Combining that with monthly alcohol and tobacco compliance testing, the statistics continue to improve, with more than 90 percent alcohol and tobacco compliance for those who attend DLC seminars. Education and Enforcement are making a difference in denying youth access to alcohol and tobacco products.
The Commissioner of Liquor Control and members of his staff recently attended an all day strategic planning meeting. The goal was to take the department’s current strategic plan and align it with Vermont Governor Peter Shumlin’s vision and goals for state government. Out of that process would result in a framework for a strategic plan for all state government. Strategic Planning is a base for continuous achievement and improvement, statewide accountability, shared vision, values and priorities, clear long term organizational direction, shared decision making framework, and consistent on target messages to stakeholders. A final state plan will be delivered to the Governor in December and he will in turn report to the Legislature in January 2012.
J. Neal Insley
Chairman, Virginia Department of Alcoholic Beverage Control
Fiscal year 2011 marked another record year for the Virginia Department of Alcoholic Beverage Control (ABC)’s Wholesale/Retail Division. This year ended with $692.9 million in gross sales, 0.4 percent above the projected $690 million and $17.3 million more than last fiscal year. ABC transferred a record $121 million in profits. Sunday store sales are up 9.6 percent or $1.8 million when compared to last year.
Restaurants seem to be making a rebound, as sales to mixed beverage licensees rose 2.9 percent in Fiscal year 2011. It is the first increase in distilled spirits sales to licensees since 2008. Sales to restaurants went from a 2.5 percent decline last year to a 2.9 percent increase this year, creating new confidence in the economic situation in Virginia.
ABC’s Bureau of Law Enforcement is committed to working with licensees on compliance training to reduce sales of alcohol to underage persons and compliance rates for licensees remain at 90 percent. Sales associates approximate 2.2 million ID challenges per year, contributing to ABC store compliance rates remaining at an impressive 98 percent.
Governor Bob McDonnell signed a bill on May 2 that makes it a felony to assault a special agent of the ABC Bureau of Law Enforcement. The ABC Agents Association had advocated for agents to be afforded the same protection under the law as other Virginia law enforcement officers. The bill passed the House and Senate unanimously earlier in the year.
ABC agents participated in Operation Rolling Thunder, a public safety initiative created by Secretary of Public Safety Marla Graff Decker targeting violent crime. ABC partnered with local police departments and other public safety agencies in joint operations in the cities of Richmond and Newport News. The results of these operations were impressive, with 262 persons arrested on approximately 360 charges.
The Bureau of Law Enforcement is monitoring activities on Facebook, and ads on eBay and Craigslist. Using social media as investigative tools, ABC agents were able to seize stills, moonshine, marijuana and firearms as well as charge suspects with felonies for illegal manufacturing of alcohol and more.
Launching and maintaining a successful social media program this year increased the agency’s interactive communications. ABC’s Facebook has more than 1,000 fans, Twitter more than 1,000 followers and ABC’s YouTube features PSAs, training videos, alcohol education videos and more.
Education initiatives this year included the 25th Annual College Conference with more than 200 students in attendance and the Youth Alcohol and Drug Abuse Prevention Project (YADAPP) with nearly 500 high school students and adult educators. The Alcohol and Aging Awareness Group (AAAG) continues to provide solutions to substance misuse problems facing older Americans.
All 333 ABC stores received state-of-the-art point of sale (POS) systems and equipment this fiscal year. The new POS system allows customers to select debit, commercial credit, ABC Gift Card or cash as payment options. The new registers provide cutting edge technology for employees with features such as infrared touch screens with much larger viewing areas and receipt printers that are twice as fast as before. Implementation of this new system has placed ABC in the forefront of current POS technology and customer service.
ABC remains committed to the public safety of Virginia’s citizens, providing alcohol education for people of all ages; excellent customer service at each retail location; and generating a consistent source of revenue for some of the commonwealth’s most important programs.
Chair, Washington State Liquor Control Board
The Washington State Liquor Control Board (WSLCB) is facing challenging but exciting times. The agency is implementing several high-profile and innovative projects in our business enterprise while simultaneously facing ballot measures and legislation that seek to dismantle the state system.
As is the case across the country, Washington State faced another difficult budget cycle. The state budget closed a $5.1 billion shortfall, after bridging a $12 billion shortfall over the last three years. To address the shortfall without raising taxes, lawmakers made deep cuts throughout state government, including the WSCLB.
In November, voters turned down two citizen’s initiatives that would have privatized liquor sales and dismantled elements of the three-tier system.
The outcome indicated that voters were satisfied with the existing system and did not agree with the business interests driving the measures. The initiatives would have had a negative impact to public safety due to an increased number of alcohol outlets and a loss of liquor sales revenue to the state and local communities.
A new business-driven initiative to privatize liquor sales has gathered enough valid signatures to make the November 2011 ballot.
Survey and Customer Convenience
At the Governor’s request, in December the WSLCB conducted a survey to ask citizens their impressions of the current system as well as gauge their interest in several convenience-related ideas.
Overall, survey results showed high marks for retail stores and their employees. While the largest percentage of those surveyed said the system was working well, there was also support for WSLCB-proposed convenience ideas. Many of the ideas were adopted by the 2011 Legislature, including:
Standardized State Store Hours: Instead of varying hours, state liquor stores are now open 10 a.m. to 9 p.m. Monday through Thursday and 10 a.m. to 10 p.m. Friday and Saturday.
New liquor stores: The WSLCB will open six contract stores and two state stores.
Two High-Volume Premier Stores: These stores will be larger than typical stores and offer a standard selection plus unique and expanded premium products. The first store will open this summer in West Seattle.
Online Ordering and Delivery. The agency will explore the potential for allowing licensees to place their orders online for pickup at the store as well as contracting with a third party for delivering to licensees.
Outsourcing the WSLCB Distribution Center
The WSLCB distributes liquor and wine to liquor stores through a highly-automated distribution center in Seattle. The 2011 Legislature passed a bill that calls for the state to conduct a competitive bidding process to determine if a private company can provide liquor store distribution services at a lower cost to the state than the current operation.
Spirits Sampling in Liquor Stores
Beginning September 1, thirty state and contract liquor stores will participate in a year-long spirits sampling pilot authorized by the Legislature. Stores can offer one sampling event per week and only sponsors can serve samples.
In conclusion, these are truly interesting times. Despite the distraction that the ballot measure places on our employees, the agency overall is excited to implement the new and innovative initiatives expected of us.
Commissioner, West Virginia Alcoholic Beverage Control Administration
The West Virginia Alcohol Beverage Control Administration (WVABCA) continued the upward trend of strong sales for fiscal year 2011. When the year ended on June 30th, sales totaled $84,921,114.00, up 5.5 percent over fiscal year 2010. Nearly $85 million in wholesale sales accounted for 669,408 cases shipped; this is up 33,164 cases from last year.
The ten-year rebidding process for retail liquor stores added 13 new licenses, giving West Virginia a total of 178 privately owned stores.
The Distribution Center and the main office continue to modernize the process of receiving, filling and shipping orders. All retail liquor stores now place orders on-line, promoting greater accuracy and more user-friendliness. Both stores and the general public can view all products and listings on the WVABCA’s website. The Distribution Center will undergo additional changes in the future. As part of a five-year plan to maintain the flow of inventory through power outages and severe weather, additional infrastructure will be installed. This continuous improvement enables the WVABCA to better serve their suppliers, vendors and citizens of West Virginia by ensuring efficiency and compliance with state laws. The modernization of operations and the continued sales growth resulted in $15,195,350.00 transferred to the General Revenue Fund in fiscal year 2011 by the WVABCA.
Another exciting change for the WVABCA is work related to the relocation of their main office to the City Center West building in downtown Charleston. In preparation for this move, the WVABCA is storing documents electronically, in an effort to reduce storage space and allow easier access to these documents. The move will be complete by early 2012. WVABCA is also updating its licensing system and phone system. Currently, the WVABCA’s licensing system uses seven separate legacy systems, but the adoption of eLicensing will soon retire these antiquated methods and reduce costs and promote efficiency.
Unveiled to the public in November 2010, the DUI Simulator is an educational initiative that has become wildly popular at high schools, colleges and events across the state. The purchase of this Simulator was the result of a $90,000.00 endowment from State Farm Insurance and a grant from the Governor’s Highway Safety Program (GHSP), which continues to provide funding for this program and reduce the operational cost to the WVABCA. Student participants experience the difficulties drivers encounter at various blood alcohol content (BAC) levels. A touch screen kiosk collects statistical information from the students to demonstrate the very real dangers of driving under the influence, DUI simulator evaluation reports and other studies conducted throughout the year. Each visit also includes a classroom lecture.
The West Virginia Alcohol Beverage Control Administration had an extremely productive year. We look forward to moving to our new location, modernizing our systems, and achieving new levels of success in the coming years.
Wyoming Department of Revenue
The Wyoming Liquor Division (WLD) contributed a record high of $12,759,110 to the State’s General Fund in FY 2011, continuing a decade-long growth in profits generated from excise taxes, liquor and wine sales.
During FY 2011 a total of 834,894 cases were sold. This is a 2.59 percent increase over FY 2010 sales. The FY 2011 dollar amount of cases sold was $86,230,481, equaling a 3.5 percent increase from FY 2010. Fortunately these sales trends indicate that the Liquor/Wine industry in Wyoming continues to be very healthy despite a nationwide recession.
Liquor Division Warehouse and IT Department
The WLD’s new 145,000 square foot warehouse facility is under construction and on schedule to open in February, 2012. The Division is busy planning the very complex move and hopes to limit the amount of operational down time to a few days. A new RightFax system, which gives the option to email or fax orders with the same ease and efficiency, will be ready by the time the WLD moves to its new location.
The new facility is significantly larger and conveniently located near Interstate 80, east of Cheyenne. The office structure will have approximately 15,000 square feet of newly constructed offices for Division staff. The warehouse is approximately 145,000 square feet and has 17 dock doors and significantly more space for parking and receiving trucks. The additional warehouse space will allow for separate receiving and shipping areas, additional square footage for more “push back racking,” a separate split case-conveyor picking line, and a “pick-to-voice” paperless computerized pick ticket system. The new office building will house a 50 seat multi-purpose conference room to be used for staff training, industry rep meetings and TIPS training. It is anticipated that this multi-purpose room will be used by other Divisions of the Department of Revenue as well.
The Regulatory Section of the Wyoming Liquor Division has three main functions, enforcement of Wyoming’s alcohol beverage control laws, review of all liquor licensing and serve as a resource to the local licensing authorities and education which can be anything from alcohol server training to the training of city and county clerks and their staffs in licensing and alcohol law.
In FY11 the regulatory agents completed over 2600 on-site unannounced inspections which resulted in a 12 percent increase over FY2010. The compliance rate for FY2011 inspections was 95.8 percent which is a slight decrease from FY2010. The small decrease was mainly due to administrative errors which were corrected at the time of inspection. The Liquor Division once again partnered with the Wyoming State Liquor Association in providing alcohol server training utilizing the TIPS program. This collaboration trained 2051 students in FY2011 which is well over the goal of 1750 students trained per year. Regulatory agents reviewed over 1300 retail liquor license applications that were eventually issued or renewed by local licensing authorities. In addition the division’s agents also reviewed and processed well over 850 applications that included direct shippers, industry representatives, malt beverage wholesalers, manufacturers and charter transportation.
The wine direct ship program is administered by the regulatory staff. In FY2011, 5182 invoices were processed which is a slight decrease from FY2010, however the dollar amount of total invoices processed increased by a little over 4 percent.
In the upcoming year the Wyoming Liquor Division looks forward to the expansion of its facilities and the corresponding improvement of service to our shareholders.