This is the tenth straight year that StateWays has contacted top control state officials in the 19 jurisdictions and asked them to provide an overview of recent initiatives in their respective states. As we have seen in the past, several common themes emerged from the state overviews, including the fact that virtually all control state executives continued to report year-over-year sales and revenue increases, though several of them referenced the slowing economy as a damper to even greater sales growth. According to these reports, the beefing up of enforcement and education initiatives remains a driving force for combating the abuse and underage misuse of beverage alcohol products through the control states. System-wide modernization, store upgrades and new store openings also continue apace. And this year, a number of officials referred to “green,” environmentally responsible initiatives that have begun in their states.
Several states have enacted — or are in the process of enacting —new legislation, which will affect the rules and regulations of these various control states. And, as usual, there have been changes in key personnel. Overall, we hope that the following comments provide a meaningful snapshot of the activities taking place throughout the control states. Once again, we’d like to thank the various commissioners, chairpersons and administrators from the control jurisdictions who took time out from their busy schedules to respond. —Richard Brandes
Alabama Alcoholic Beverage Control Board
With the economy sputtering and energy prices continuing to rise, sales in Alabama’s ABC stores have taken a downturn. Although the stores are still making money, they are not making as much as this time last year. Revenues are expected to increase 4.6%, down from last year’s growth rate, as the weaker economy forces people to tighten their budgets for going out.
The Alabama ABC Board has experienced some major changes this past year. With the death of the Assistant Administrator, Mr. Chester Weeks, Captain John E. Richardson has been appointed to take his place. Capt. Richardson has worked for the ABC Board for over 20 years, previously as a Captain in the Enforcement Division.
With the retirement of Enforcement Director Roy Houlton in February, Jeff Rogers was appointed Chief of Enforcement. Chief Rogers brought into effect many new ideas and goals. The License section is switching to a totally automated system. The renewals are currently in a test market for online renewals in two counties and statewide within the ABC Enforcement District offices. This transition involves training, testing, and the reprogramming of renewal software. The system is functioning better than expected and we plan to have online application processing in place by the beginning of the fiscal year. The application and the renewal system will tie in together and once completed, will make an automated license package. This will move the Licensing Section to total automation. Also new to the Enforcement Division is a Mobile Command Vehicle. This vehicle is equipped with the latest law enforcement equipment to include cameras, computers, and a wireless network, along with a mobile certified breath testing instrument. The vehicle is state-of-the-art and will be used for special investigations, natural disaster response and special event activities.
The POSICS (Point of Sale/Inventory Control System) has been successfully completed and all ABC Store cash registers have been replaced with each point-of-sale system having a camera overhead. The warehouse phase, which includes wireless scanning of incoming product, wireless physical inventory process, and integration with our automated conveyor system, was completed in May 2008.The project began in September 2006.
A major shortcoming for this agency is beginning to be addressed. Disaster recovery has become prominent over the last few years. We have identified a data backup site at one of our enforcement district offices, physically distant from the central office, which will allow a quick recovery in the event the central office is destroyed or unavailable for any reason. Equipment is currently being procured and placed in the backup site and should be completed by December 2008.
Idaho State Liquor Dispensary
While enduring many of the same economic issues that have taken center-stage nationally, the Idaho State Liquor Dispensary (ISLD) continues to experience healthy growth in revenues. We are constantly working to maximize profits for the citizens of Idaho, and reduce potential social issues related to alcohol beverage consumption.
Although the state’s general population has risen to nearly 1.5 million residents, the rate of growth has slowed, resulting in less pressure on the ISLD to add new stores in an effort to satisfy consumer demand. Still, seven new stores were opened in 2007, and two more new stores are opening in the Boise and Idaho Falls Metro areas during the summer of 2008. Two smaller contract stores (one each in North and Southwest Idaho) will be transitioning to state-owned facilities this fall. These additional stores will add customer convenience and better product selection in those urban areas.
Revenue from sales finished FY08 at a still healthy 7.6% over sales of the previous 12 months (a cumulative 95% over the past 7 years), with a record $130.8 million. Net profits exceed a record $45 million, generating a valuable financial return to Idaho’s General Fund, cities and counties, and other special programs.
All this has been accomplished during a time of astronomical increases in energy costs and other operating expenses. This success is due in great part to the dedicated efforts of more than 300 employees of the Central Office and Warehouse, and 65 State liquor stores. Record sales and profits have been achieved, even as ISLD came in well under the averages nationally among all states, and NABCA member states, for per-capita consumption of alcohol.
Sunday sales continue to grow steadily in dollars as well as in the number of participating counties, with more than $3 million in revenue (double the FY07 total). The Idaho Legislature, this past session, continued the modernization of Idaho liquor laws, approving Election Day sales for the first time in 75 years.
Continued sales growth has led to an ongoing need for more warehouse space to house inventory. ISLD received approval from the Idaho Legislature to move forward with the final phase of a 3-year, $7.5 million expansion that will increase the central warehouse from 57,000 to 75,000 square feet. More importantly, this expansion will modernize the present facility with a state-of-the-art Warehouse Management System (WMS) and automated pallet storage, through the use of an Automated Storage/Retrieval System (AS/RS). The warehouse project has been under the direction of Bill Applegate, Product General Manager. The three-year project has remained on schedule and under budget due to Bill’s keen attention to detail.
All stores, particularly the far-flung legion of smaller contract stores, will benefit from an expanded Single Pack capability, through the use of a new and expanded single-pack pick module and other warehouse improvements. This will result in better product availability for consumers, giving stores the ability to bring in many more expensive or special category bottles in small quantities, where they might have been reluctant to do so with the demand of full case orders. This creates a win-win for consumers, as well as ISLD, as more product remains in bailment for longer periods of time. The goals of this project are improving efficiency, as well as effectiveness, through automation, utilizing technology to keep abreast of growth, and establishing a plan for organized growth through 2025 and beyond.
The Idaho State Liquor Dispensary, like other NABCA members, is continuing to be more active in sponsoring and supporting numerous alcohol education programs. This summer, I and Deputy Superintendent Larry Maneely helped Governor C.L. “Butch” Otter launch a campaign to educate Idahoans to the dangers of Fetal Alcohol Syndrome (FAS). Working in conjunction with members of the state legislature who championed the cause, as well as Idaho Health and Welfare Director Richard Armstrong and his staff, ISLD was able to distribute cautionary decals to each state and contract store for prominent placement on check-stands, doors and windows. The decals will alert everyone to the dangers of alcohol consumption at any level during pregnancy. Additionally, the decals were made available to the more than 4,000 on-premise licensees throughout the state for their help in sending a strong message of the fully preventable dangers involved.
ISLD also continues to support the efforts of the Idaho State Police Alcohol Beverage Control Bureau (ABC) in its attempt to curb the epidemic of underage drinking that has become such a problem nationally. Anything we can do to reduce the irresponsible sale of alcohol to underage persons is our goal. A $5,000 grant from NABCA was awarded to the Boise Police Department which hosted a mid-July, two-day Northwest Alcohol Conference. Several hundred law enforcement, health and regulatory representatives were on hand to discuss a variety of topics, and hear from a long list of informed speakers, including Idaho Attorney General Lawrence Wasden.
The Control State System continues to function well in Idaho. Policy makers and citizens have been very supportive. The Liquor Dispensary will work toward more modernization with customer services as a top priority. Possible legislation for the upcoming session may include a bill to allow in-store product sampling opportunities. These positive changes in Idaho could not have taken place without the support of ISLD employees, the Governor, legislators, NABCA, DISCUS, the Century Council and other industry related organizations.
Iowa Alcoholic Beverages Division
Despite the economic downturn, liquor sales in Iowa continue to rise. For the 12th consecutive year, Iowa set a new sales record in Fiscal Year 2008 (FY08). With wholesale sales topping $188 million — an increase of $11 million over the previous fiscal year — the Division’s transfers into the state’s general fund topped $87 million. Simply put, the Division has been earning green, but also going green.
In the past five years, the Division has seen double-digit or near double-digit increases in liquor sales. Sales this year were not up at the recent historic rate, closing at 6.38% above last fiscal year. Several explanations are offered for the slowdown.
First and foremost, beer’s gain has been liquor’s loss. While beer sales were only up 1.5%, that trend is a significant increase over several years of flat beer sales, especially given beer’s share of the market. Iowa is a beer drinking state, with the average adult consuming 37.23 gallons of beer per year, compared to 1.98 gallons of spirits and 1.69 gallons of wine.
Moreover, the Iowa Alcoholic Beverages Division has witnessed a consumer tendency in recent years to trade-up in the market. However, the numbers for FY08 suggest that the economy may be serving as an impediment to top-shelf liquor purchases.
Lastly, consumer demographics that have supported the recent wave of liquor sales, a third factor, may be starting to wane. The offspring of the baby boom generation that has been coming of legal drinking age, has reached its peak and is no longer having the full impact it once had.
While other factors obviously impact the trend, the three I’ve identified seem to be the most critical. That said, it’s hard to argue with a 6.38% annual growth rate.
It seems like everyone is “going green” these days and the State of Iowa is becoming eco-friendly as well. In February, Governor Chet Culver issued an executive order setting the groundwork for the state to become a leader in “environmental protection through increasing the use of renewable energy, alternative fuels and energy efficient technologies.”
The Division has already started on its journey to become a sustainable, environmentally friendly site. In an effort to be more efficient and reduce the Division’s carbon footprint, many changes have been made to the operation. The initiatives have ranged from replacing an outdated HVAC system and installing T5 florescent light bulbs, which use half the energy and have twice the life of the old bulbs, to adding R34 insulation to the new roof. A broad recycling program has been implemented and the Division’s fleet now uses biodiesel and E85 fuel.
During fiscal year 2008, the focus of the Iowa Alcoholic Beverages Division was on green: earning green and going green. The Division has succeeded in both areas and will continue to expand the efforts to go green and earn green in the coming years.
Maine State Liquor & Lottery Commission
The Maine Bureau of Alcoholic Beverages works in cooperation with its wholesale liquor distributor and 350 privately owned liquor stores across the state.
Sales for distilled spirits in Maine for 2008 are up 4%. Case sales are up approximately 2%. Allens Coffee Brandy continues to enjoy tremendous success as the state’s number one selling product. Grey Goose Vodka sales are up 8.4% and Jagermeister continues its steady growth with sales up approximately 7%. Canadian Whisky products have seen their sales increase by 5% on average.
Captain Morgan Spiced, Bacardi and Smirnoff are big sellers in the state but there continues to be a market for “value priced” products. Orloff Vodka, for example, which is ranked second in sales, is known as a locally distilled product that has a strong regional following.
Earlier this year, the Bureau of Alcoholic Beverages worked together with the Office of the Attorney General, the Department of Public Safety, the Office of Substance Abuse and Maine’s Higher Education Alcohol Prevention Partnership to engage college leaders in a dialogue regarding the development of environmental community-based strategies to change the social norms and expectations around underage college drinking and to permanently reduce high risk drinking by college students. The Bureau led a “call to action” meeting which was attended by more than two dozen university and college presidents. The state partners developed a “tool kit” for participants that included self-assessment tools, best practice model policies, and information about recommendations made by the Surgeon General and NIAAA’s College Drinking Task Force. State partners have committed to attending individual community meetings across the state to further support the adoption of environmental strategies to meet the “call to action” recommendations.
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.
Michigan Liquor Control Commission
While all reports regarding the economy indicate Michigan as having been hit hardest with staggering numbers for auto sales, job losses, home foreclosures, gas prices, grocery bills, utility costs, etc. — I’m here to tell you that Michigan is still open for business and thriving in many areas when it comes to being a hospitable state.
We were delighted when the National Alcohol Beverage Control Association (NABCA) announced that their Board of Director’s Meeting will be held at the Grand Hotel on Mackinac Island in September of this year.
With the bottom line on everyone’s mind when it comes to revenue and sales figures, for the current fiscal year, our off-premises licensees (SDD outlets) accounted for 79.2% or $708.9 million of total liquor sales, and on-premises licensees, such as bars, restaurants, hotels and clubs accounted for 20.7% or $185.0 million.
Recently, the Commission held one of its two annual public hearings to provide a forum for airing complaints and hearing comments with regard to the administration of the Liquor Control Code. At the hearing, topics of concern expressed by representatives of the liquor industry included items such as a request for the ability to move off-premises liquor licenses within counties; the modification of MLCC document processing procedures with regard to Server Training; liquor delivery issues; the need for training of local law enforcement in liquor law; and the need for mandatory server training for all “special license” holders operating beer tents at festivals.
From our regulation standpoint, despite the 40% cutback in our investigative staff over the past 20 years, the MLCC enforcement division wrote 60% of the 2,578 violations received in 2007, which contributed $1.1 million to Michigan’s General Fund from fines and costs. The enforcement division continues to conduct controlled buy operations, which resulted in 282 of the violations last fiscal year.
In January of this year, the MLCC and the Michigan Authorized Alcohol Distribution Agents issued a report to the Michigan Legislature stating that the state of Michigan loses $14 million annually due to the illegal importation of alcohol and outlined a series of steps that should be taken to combat the state’s loss of revenue, including:
• Increasing penalties for the illegal importation of alcohol and appropriations for law enforcement;
• Forming stronger partnerships with local law enforcement agencies to reduce the illegal importation of alcohol;
• Using available technology to detect illegally imported alcohol products;
• Enhance education and training programs for law enforcement officers and retail licensees on this topic.
Smuggling, or bootlegging, has been an issue since the days of Prohibition; however, the dangers of illegal importation have increased significantly as the hijacking for product, cash, and delivery vehicles has become a serious matter of life and death. In the past few years, several delivery drivers have been held up or shot in attempts to steal alcohol.
Enforcement surveillance teams have tracked smugglers bringing in $30,000 or more in product across state lines on a regular basis. One agent stated that smugglers were using plain cargo vans with no windows or blacked out windows to transport the alcohol in one to sometimes three trips per week. To view the report, please visit our website at www.michigan.gov/lcc.
As the end of the year approaches, we (along with everyone else in the liquor industry) will celebrate our 75th Anniversary. We continually work to improve our service to our customers by frequently reviewing rules for possible modification or rescission with the express purpose of making the processes of the agency less cumbersome and more efficacious in providing those who do business with the Commission more intelligible and direct paths to fulfilling their legitimate needs. We also continue to expand access to information and Commission records to all who have a stake or an interest in the Commission’s business through development of an improved and enhanced website.
When the Michigan Liquor Control Commission conducted a report following the first five years of operation, Governor Frank Murphy then (in 1938) stated that his one demand of the Commission was “Do a good job, efficiently and honestly — I’ll be satisfied with nothing less.” “Efficiency and Honesty” became the watchwords carried by his Commission. I believe the Honorable Frank Murphy would be proud of the very good job of the current-day staff of the Commission … I know I am.
Mississippi State Tax Commission
Alcoholic Beverage Control Division
Fiscal Year 2008 has proven to be a good year for the Mississippi ABC, although one which saw many changes. Physically (not fiscally) the state replaced the roof on our Liquor Distribution Center including the administrative offices. Due to the age and construction of the roof, we not only had to remove the roofing material, but all of the overhead ceiling in the entire warehouse. For several days we had a “sunroof” in the warehouse, as portions of the roof were removed and replaced. Luckily we experienced no weather related inventory problems (i.e. rain) during the construction.
Patsy Holeman was selected as the new ABC Director in February. Patsy has been with the Tax Commission for 26 years, most recently serving as director of Motor Vehicle Licensing. Although ABC was a totally new field for her, Patsy has come up to speed quickly. She is responsible for the operations of our warehouse, purchasing, sales, and accounting. Chief Mark Hicks continues to handle regulatory matters including law enforcement and permitting.
Fiscally, sales of spirits and wine increased by 94,485 cases in FY 2008. Although shipping costs continue to escalate, our net operating profit rose by 7.1% this year. We distributed just under $88,000,000 from the sales of alcohol beverages.
ABC Enforcement had a productive 2008. With a focus on underage drinking, our agents issued more than 546 citations statewide for minors in possession of alcohol beverages. We participated in the “Save a Teen” program during May. We received a $40,000 federal grant to work a special initiative dealing with rural area enforcement. The target of this grant was rural areas such as reservoirs and waterways where kids normally feel they are able to hide from law enforcement while consuming alcohol beverages.
Educational efforts are also important, as our Enforcement Agents disseminated over 10,000 educational brochures and posters to high schools and colleges warning about the risk of using fake identification. This was in response to statistics showing almost 25% of our minors were in possession of fake I.D.’s. We also produced a DVD for law enforcement on how to detect false identification. These DVD’s are currently being disseminated to every law enforcement agency in the state and agents are providing training to these agencies when requested. This program was approved by the Mississippi Board of Law Enforcement Officers Standards and Training so local departments can receive in-service credit for the training. We just received notification from the National Liquor Law Enforcement Association (NLLEA) that we have won the 2008 Innovative Law Enforcement Program of the Year award for this program. This Fake Identification Education and Law Enforcement Training Program was made possible by a grant from NABCA.
Liquor Control Division
Montana Department of Revenue
The Montana Department of Revenue’s Liquor Control Division has made notable progress in its operations and sales in the last twelve months. Working as a control jurisdiction, we have made significant improvements to our wholesale, customer service and educational outreach programs, while continuing to ensure that liquor is available to those adults who choose to drink responsibly.
Liquor Control Division provides beverage alcohol wholesale distribution services to 95 contracted agency stores, who service over 1,400 licensed establishments.
Fiscal Year 2008, which ended on June 30, was a very successful sales period for us. Total sales showed an increase of approximately 7% over FY 2007, with our gross sales of product reaching $98.5 million. Our volume of sales also increased, up 4% (24,000 cases) from FY 2007.
Montanans benefit from liquor sales, with nearly $29 million in liquor revenues going into the state’s general fund and local government coffers. Liquor revenues from product sales and taxes help to pay for important citizen services in the state.
In FY 2008, the division implemented some notable pieces of alcohol-related legislation passed by the 2007 Montana Legislature.
The legislation brings Montana’s liquor laws into compliance with the U.S. Constitution’s Interstate Commerce Clause. Out-of-state residents are now allowed to apply for Montana liquor licenses. In addition, wineries and breweries located outside of Montana now have the opportunity to “opt-in” and become licensed. Once licensed, they may ship limited amounts of wine and beer directly to a Montana licensed retailer.
The quota system for restaurant beer and wine (RBW) licenses was in essence doubled in most Montana cities. The division conducted 17 RBW license lotteries across the state last summer. We had 524 lottery entrants for 124 available licenses. We have received 79 complete RBW applications to date. Of those, 41 licenses have been issued and 5 applicants have been granted conditional license approval while awaiting completion of their proposed premises. The average length of time for these licenses to be processed and issued was 85 days.
With Montana liquor sales continuing to increase year after year, it is important that we help ensure consumers are using the products responsibly. The goals of our educational efforts are to promote the responsible use of alcohol beverages by adults, reduce the underage demand, prevent underage access and positively mold the norms of the community.
We have placed a direct focus on responsible alcohol sales and service training with a major revision of the Let’s Control It responsible alcohol sales and service program. The new program provides sellers and servers with the tools they need to help their establishment stay in compliance with Montana law. The new program covers refusal skills, effective server responses, techniques to evaluate a customer, identifying false identification, and secondary sales and liability issues.
The division has partnered with the liquor licensees and community partners to promote the message of controlling access to alcohol by underage youth. We are educating the public on how kids have access to alcohol along with Montana’s statistics of underage use of alcohol.
As part of our improved customer service, we have enhanced our online services. The State of Montana has implemented electronic reporting and payment for beer, wine and cider tax; provided agency liquor store access to their account to view, print invoices, coupons and make payments; provided the ability for vendors to access and manage account information; and added on-line renewals for distilled spirits vendor licenses, distilled spirits vendor representative licenses and winery importer registration.
To prepare the state for success in 2009 and years to come, we are focusing on operational effectiveness to keep up with historical 5% growth; to add years to the life of current building space and to control labor costs. By adding barcode scanning, additional racking and optimizing warehouse layout to reduce the number of steps taken by each warehouse worker, we hope to sustain labor costs with future growth.
In addition, we are working to improve energy efficiency of our building and looking at sustainable energy alternatives for the future. We are upgrading our current lighting system, starting new recycling programs for cardboard and shrink-wrap and determining how best to make cost effective capital investment and be a leading example of green business in Montana.
Montgomery County, MD
George F. Griffin
Department of Liquor Control
Montgomery County, MD
The year ahead promises to be among the most eventful in the history of the Montgomery County Department of Liquor Control. We are being challenged to perform at record levels in several areas of our organization this year — while we keep a watchful eye on the national and local economy and consider the potential impact of those economic conditions on our operations. Fortunately, we have the opportunity to build upon the many successes achieved in this past year.
Fiscal Administration and Operations
For the fiscal year that ended on June 30, 2008, we recorded total sales of $211,625,896 —an increase of 4.66% over the previous year. Our wholesale operations accounted for approximately 55% of the total ($116,234,754), while our retail stores continue to contribute a growing slice of the total pie. The $95,391,142 gross sales from our DLC owned/operated retail stores represents 45% of the total, a percentage that has steadily increased in recent years as we’ve improved the appearance and selection offered by County DLC Liquor & Wine stores. Retail gross sales increased 6% over the previous year, while wholesale receipts grew by 3.6%. This performance allowed us to transfer over $22 million to the County’s General Fund as unrestricted revenue from net profits this year. (That net profit results directly from operations and is in addition to any taxes and fees generated, which benefit the State of Maryland.)
While we just concluded a successful year, we are being challenged to create even better results during the current year. In order to achieve our targeted budget transfer in FY09, several elements of our operational/fiscal plan must fall into place. We will look to relocate under-performing stores to better locations, closely monitor our inventory levels, institute targeted price adjustments and capture some one-time savings by deferring anticipated bond payments for transportation projects that have been delayed until after this year.
In addition, however, we are hoping to increase revenue from sales by $2.4 million during this year — which will represent the largest annual increase ever. While this is ambitious, it is not unrealistic. Montgomery County has experienced annual sales increases of approximately 5% or more over the past several years, so we expect total sales to increase by at least $10 million. Our goal is to maintain a gross profit margin of 28%. If we are able to achieve that gross profit margin, and increase total sales while controlling increases in our expenses — we expect to yield an additional $2.4 million in revenue from operations this year. At this time, we are reasonably confident these results can be reached, although we are mindful of the potential negative impact the economy poses.
Enforcement, Regulatory and Education
While we are working to increase sales volume and exercise greater fiscal control of our operations, we are also significantly increasing our regulatory and enforcement activity. Last year, we implemented a reorganization that consolidated all alcohol-related government functions (licensing, inspections, enforcement, community outreach, etc.) within the Department of Liquor Control. The reorganization has been a great success, and we are now harvesting the fruits of that effort. We are: providing better service to our licensed establishments; working closer and more extensively with our Police Department; and, engaging the community to a greater degree than ever.
This higher level of activity has, predictably, generated increased work loads in all areas of our department. By significantly increasing the number of licensee inspections and compliance checks, for instance — performed in a coordinated fashion with our Police Department — we have generated more cases to be handled by our Board of License Commissioners and our staff. While we are challenged to manage this increased work load as we hold the line on expenditures and positions, we are gratified that the community is safer and better served than in years past. These additional responsibilities have allowed us to more fully meet our mission, and we are convinced more than ever that our Department as now organized is properly aligned to serve our community.
I am also proud to say that our community outreach and educational efforts continue to expand and create unique opportunities to partner with our residents and businesses. We were honored to have received a prestigious “2008 NACo Achievement Award” from the National Association of Counties for our “Latino Business Alliance” program. This business alliance effort — created by the Montgomery County DLC — is being recognized by NACo as a “Model Program” for counties and communities throughout the nation. Our “Business Alliances” serve as a community-based umbrella organization under which local business owners work with state, county and city governments to customize and implement comprehensive prevention, education and enforcement programs addressing alcohol abuse, drinking in public and related issues.
Douglas A. Fox
North Carolina Alcoholic Beverage Control Commission
The North Carolina ABC Commission, in partnership with 158 local ABC Boards operating 404 retail stores across the state, had another successful year. Sales for distilled spirits, FY ending June 30, 2008, topped $694 million, an increase over last fiscal year of 6.35%. These sales will generate revenue to the State’s General Fund and to the cities and counties where alcohol sales are allowed in excess of $250 million. During the year, 3 new cities established ABC boards while many existing boards continued to modernize and relocate outdated stores.
In January 2008, the North Carolina General Assembly convened to put final touches on the state’s budget. The Governor’s budget called for alcohol tax increases of an additional 4 cents on a can or bottle of beer, 3 cents on a standard bottle of wine and 4% increase on liquor. However when the Legislature passed the final budget in July, no alcohol tax increases were included. In May 2008, the General Assembly’s Joint Legislative Program Evaluation Oversight Committee began a study to evaluate the efficiency and effectiveness of the Local ABC Board system in N.C. and identify improvement options including privatization of the system. The objectives of this study will be to review alcohol beverage control systems used in other states and identify options for improving the effectiveness and efficiency of the North Carolina ABC System.
A House Bill from the 2005 Legislative Session that required restaurants, hotels and bars with on-premises malt beverage, on-premises unfortified wine, on-premises fortified wine and mixed beverages permits to recycle became effective January 1, 2008. These businesses must now recycle all recyclable beverage containers sold at retail for on-premises consumption. These Businesses were also required by law to submit a current plan to the Commission for the collection and recycling of the required containers during the annual permit renewal/registration process that ended in May. During this 2 month period, the Commission collected over $12 million in application fees and permit renewals, a 14% increase over the previous year.
The Commission has always encouraged ABC permitted businesses to provide Alcohol Seller/Server training to their employees to prevent underage sales and irresponsible service to adults. Effective as of January 1, 2008, the Commission took a further step and made it mandatory that all persons applying for temporary retail ABC permits provide proof of Responsible Alcohol Seller/Server training prior to obtaining a temporary ABC permit.
To help facilitate this new requirement, the Education and Training Division doubled the amount of training classes offered at the ABC Commission office complex and created an in-house responsible alcohol seller/server course for ABC applicants. In addition, field trainers have stepped up the amount of Responsible Alcohol Seller/Server classes offered throughout the state.
Ohio Division of Liquor Control
The Ohio Division of Liquor Control recently completed another record year of liquor sales. Spirituous liquor dollar sales at the state’s 440 contract liquor agencies reached $697.7 million in fiscal year 2008. This was an increase of $25 million (or 3.72%) over sales in fiscal year 2007.
The Division’s net profit for the fiscal year increased over last year to $213 million, which is 10 million more than fiscal year 2007. The Division’s profit margin also increased to 29.88%. Increased profit and better profit margins can be attributed to the efficient operations of the Division in areas such as inventory control, product selection and shelf standardization, and placement of sales outlets in areas with increasing customer demand and economic viability.
Total gallons of spirituous liquor sold in fiscal year 2008 were 10.3 million gallons, an increase of 143,424 gallons (or 1.41%) compared to fiscal year 2007.
The continued increase in liquor dollar sales can be attributed mostly to increases in product prices, consumers purchasing premium priced products, an increase in the volume of retail sales, and a rise in the level of consumption.
While retail sales have continued to increase, the Division’s wholesale sales continue to decrease. Wholesale dollar sales for fiscal year 2008 were $3.1 million or 1.28% less than in fiscal year 2007. One of the factors contributing to this decrease was the implementation of Ohio’s statewide ban on smoking in public places such as bars and restaurants.
The Division’s transfer to the state’s General Revenue Fund (GRF) for fiscal year 2008 was $167 million, which was a $32 million increase from fiscal year 2007. In addition to the GRF transfer, the Division contributed another $130.6 million in liquor sales and tax revenue to help fund a variety of state services. The Division’s total contribution for fiscal year 2008 was $297.6 million.
Philip D. Lang
Oregon Liquor Control Commission
Making sure minors aren’t gaining access to alcohol is a top priority for the Oregon Liquor Control Commission. Each year, we check about 1,600 licensed businesses to see if they are selling alcohol to minors and checking ID properly. Throughout the state, we have a 78% compliance rate and we are always looking for ways to improve it.
Earlier this year, we adopted a new type of minor posting that will accommodate venues that want to host entertainment events for both minors and adults while ensuring that minors will not be served alcohol or be exposed to a drinking environment. The new minor posting provides OLCC with more ability to enforce approved minor control plans to ensure minors are not gaining access to alcohol. It also puts in place strict controls to protect minors at entertainment events. This could include additional security, a separate area for minors or limiting the times when alcohol is served.
The OLCC received the 2008 Social Responsibility Award at the National Conference of State Liquor Administrators in Chicago. The award was for the Responsible Vendor Program, which was developed with the alcoholic beverage industry to provide a reduced sanction to responsible licensees who take positive steps in preventing the sale and service of alcohol to minors. Preliminary results from an independent study published last year suggest that sales to minors “were significantly less likely at Responsible Vendor Program outlets than at non-participating outlets.”
With the expansive growth of the industry in Oregon, the OLCC reevaluated how hundreds of Oregon licensees reported privilege tax. OLCC’s new plan includes reaching out to as many licensees as possible, accommodating the businesses with customized forms and providing on-line instructions; making the process much more user-friendly.
Following the 2007 legislative session, new legislation helped put the state of Oregon in a position of compliance with the U.S. Supreme Court’s Granholm decision regarding wine shipping. As a result, OLCC employees reached out to members of the wine industry, asking for their input on rulemaking and further expanding communication with constituents.
In the coming year, the Oregon Liquor Control Commission will continue to provide an atmosphere that is responsive and productive for our partners. With so much growth and interest in the alcohol industry, we are finding more ways to improve our communications and practices to better serve Oregonians.
Patrick "P.J." Stapleton
Pennsylvania Liquor Control Board
I’m pleased to report that fiscal 2007-2008 has been another year of record sales for the Pennsylvania Liquor Control Board, with more than $1.7 billion in wine and spirits sold.
It’s noteworthy that these increased sales occurred in the context of a shrinking economy, and while our agency itself has been in the midst of transformative change.
Employees in our Harrisburg headquarters, regional offices and 621 stores around the Commonwealth are at work on implementation of the initial waves of the PLCB’s Enterprise Resource Planning project, which is moving all of our business technologies to a new, unified system from a patchwork quilt of outdated legacy systems. These changes will allow the PLCB to operate with a state of the art business implementation model that will drive efficiencies and provide record profitability.
Making this investment in our business future has required tremendous resources and some sacrifice as a large number of our staffers, working with partners from Oracle and Deloitte, have been re-assigned to implement the new system and train their colleagues in its use. We are also helping our vendor partners to make the necessary adjustments. We are already seeing the results, such as more timely information on sales and inventory; easier access to reports and data; and improved forecasting and other marketing activities.
We are planning more changes for the PLCB’s Wine & Spirits stores that will soon be evident to our customers. The agency has enlisted the internationally recognized branding and imaging firm of Landor Associates to help us create a new and exciting brand for our retail operations as evidenced by a new look, new signage and a new name for our stores. Landor will also help create a new Web presence for our successful online store. Combined with additional customer-service training for our employees, we feel these changes will ensure the first-class retail experience we want to provide for our customers.
Shoppers continue to seek out the popular Chairman’s Selection program of specialty one-time wine purchases. Recently, we were assisted in the marketing of such wines by the PLCB’s newly formed Wine Advisory Council. For this unique public-private partnership, we enlisted several prominent restaurateurs, hoteliers and wine educators from around Pennsylvania to work with our wine-buying team to make suggestions for purchases, provide tasting notes and serve as advocates and brand ambassadors for the PLCB.
Our regulatory mission is now guided by Jerry W. Waters, Sr., our former director of licensing. He oversees the newly formed Office of Regulatory Affairs, comprising our bureaus of licensing, alcohol education and consumer relations. Alcohol Education continues to focus on preventing high-risk and underage drinking, and earlier this year we awarded grants totaling $700,000 to support prevention and enforcement initiatives in communities around Pennsylvania. Since 1999, the PLCB has awarded $3.75 million in such grants. This past fall, more than 1,500 children participated in our alcohol-awareness poster contest, offering their artistic representations of the message that underage drinking is dangerous. The contest has been a popular and educational effort for students in grades K-12 since 1992. We’re looking forward to recognizing the efforts of this year’s participants in a ceremony at the State Capitol in October.
Utah Department of Alcoholic Beverage Control
The Utah Department of Alcoholic Beverage Control is still struggling to stay out of the local and national news. The liquor commissioners are addressing a number of issues to include doing away with membership requirements in private clubs and removal of glass partitions in restaurants between customers and where liquor products are prepared and stored. They are attempting to “normalize” the state’s liquor laws to make them more consistent with other states’ laws.
The department has seen another record year in sales increases in both bottles and dollars. The department has 11 store construction projects in the works and is looking to increase the total square footage of its retail store space by 50% by the end of the calendar year 2009. The department is requesting funding for the next fiscal year to expand the present automated storage and retrieval warehouse system by 4,000 additional pallet positions along with making improvements in the transportation system from the automated warehouse.
The last year’s “NEW” staff members have settled into their work positions and I’m happy to report that the agency has never run better.
Issues facing Vermont in the next year include a new IT initiative for an online licensing and enforcement system, a legislative study on flavored malt beverages, new catering laws and regulations, and finally, prioritizing expenditures for the upcoming FY10 budget process.
Vermont Department of Liquor Control
The 2008 Legislative Session adjourned May 3. Here are some highlights of the legislation passed:
H94: Permits second class licensees to sell beer with the same alcoholic content as wine (up to 16%) and tax the higher alcoholic beer at the same rate as wine.
S344: Bans mail order and Internet sales of tobacco and tobacco products.
H700: Permits wine manufacturers and malt manufacturers to sell bottles of wine and beer at a special event.
H93: Creates the same limits on holding an interest in a Vermont retail liquor license for both in-state and out-of-state beer producers. It closes the loophole in & V.S.A. Section 230 that allows an out-of-state Certificate of Approval holder to have total and unconditional ownership in a Vermont retail license.
S313: Permits wine to be stored in a climate-controlled facility, imported and transported to the owners of the product.
H149: Clarifies what constitutes valid identification for purchase of alcoholic beverages. It also allows the Department of Liquor Control to issue tobacco retail licenses rather than municipalities.
S324: Adds beer to the current wine tasting laws enacted by the legislature.
Warehouse Management System Status
DLC’s Warehouse Management System (WMS) project is well through the design process, with most of the major issues and decisions having been made, and plans laid for the configuration of the software to match changes already being made in the warehouse’s material handling systems. The warehouse has new racking in place to accommodate the changes to the new system. There have been some delays due to staffing at DLC. We hope that the system will go live shortly after the December holiday season.
DLC is experiencing its 13th straight year of growth in sales dollars. In Fiscal year 2008, sales reached $56,907,846; this represents a 3.9% ($2.1 million) increase over FY2007 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. New catering legislation will be introduced this January as a result of last year’s study and recommendations.
Alcohol and Tobacco Education
Education continues to be a very important part of DLC’s mission. The education staff, along with field investigators, has provided 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 90+% 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. DLC has also conducted workshops in August at the National Leadership Conference in Nashville.
Pamela O'Berry Evans
Virginia Department of Alcoholic Beverage Control
As we recap a busy fiscal year at the Virginia Department of Alcoholic Beverage Control (ABC), we are proud to highlight agency initiatives, objectives, government mandates, public safety measures and of course, sales.
ABC completed Fiscal Year 2008 with a record $614.3 million in annual gross sales. Although slightly below forecast, sales increased by 5.6 % over last year.
The General Assembly passed legislation allowing for the expansion of Sunday sales, adding 36 stores to the 95 stores already open from 1 p.m. to 6 p.m. on Sundays. Sunday sales began in 2004 when legislation allowed it in designated areas, based on population. A total of 131 of Virginia’s 332 stores are open on Sunday.
New legislation making it an ABC violation for licensees to allow their businesses to become meeting places for gangs enhances the control arm of the agency mission.
Another new law that addresses public safety allows ABC agents to check the national criminal database when conducting background checks for prospective licensees. For the past several years, ABC agents have had access to Virginia-only checks, and many licensee applicants are not natives of Virginia.
Statewide community involvement through the newly established Community Advisory Council allows for the exchange of information about services available and community needs. Council meetings, held in all four regions in the state, allow representatives from local public safety, educational and community organizations to meet with representatives of ABC.
Under the leadership of Governor Tim Kaine, guidelines have been established to ensure fiscal accountability while safeguarding the Commonwealth’s assets. To comply with the Agency Risk Management Internal Control Standards, or ARMICS, ABC identified and provided extensive documentation of eight fiscal processes deemed critical to the agency. The Internal Audit Division developed and tested the internal controls over these processes.
ABC continues to enhance its “going green” efforts in response to the administration’s Environmental Stewardship initiative. ABC has been recycling the 70,000 warehouse pallets for the past five years, and more shrink wrap recycling was added recently. ABC recycles approximately 11 tons of shrink wrap and 308 tons of cardboard annually.
Education/prevention efforts include two new initiatives. The agency has received state and national awards for implementing its innovative Alcohol and Aging initiative designed to alert older adults and their caregivers about the effects of alcohol on the older population. In addition, partnerships with military bases in the state include efforts to promote alcohol responsibility and education about Virginia ABC laws.
ABC remains committed to balancing control, service and revenue for the citizens of Virginia.
Washington State Liquor Control Board
Promoting public safety, reforming laws and regulations, and improving agency operations will be the main focuses of the Washington State Liquor Control Board (WSLCB) in the coming years. Work is underway on these initiatives, and recent developments have allowed the WSLCB to position itself to meet the demands of the dynamic 21st century business and social environment head on.
Promoting Public Safety
An ongoing poster campaign in our liquor stores — the latest piece in our public safety initiative — will encourage parents to hold regular conversations with their children about alcohol.
Recently, parents shared their perspective on youth alcohol issues during parent focus groups. Along with our 2006 youth focus group data, the information will support future educational programs. Also, we are exploring partnerships with suppliers to bring in more public safety messaging to stores.
The first class of the best-trained officers in WSLCB history recently graduated from our new Basic Liquor Enforcement Academy — an academy unique in the nation. In August, officers started using laptops in the field. They can access our electronic database to get a more complete picture of their enforcement area and build personalized enforcement and education plans for each licensee.
We renewed our focus on supplier social responsibility. Suppliers’ efforts in this area will soon become part of the Supplier Scorecard, a tool used to encourage suppliers to meet established operational targets when delivering to our Distribution Center.
Reforming Laws and Regulations
We want to ensure alcohol-related laws and regulations are effective, flexible and reflect today’s environment. We led two reviews of the state’s Three-Tier regulatory system, but were unable to seek legislative changes as we defended the laws in the Costco v. Hoen lawsuit. A legislative committee just started an extensive review of the beer and wine distribution laws.
We will closely monitor a year-long pilot program that starts this fall allowing 30 grocery stores to hold beer and wine tastings. Also, craft distillery and hotel licenses are now available.
Gross sales are expected to continue to increase at a rate of more than 5% annually during the next decade, thanks to factors such as an increase in state population, greater product diversification, and successful Sunday sales.
Equipment upgrades in stores, along with a major expansion and upgrades at the Distribution Center, will build long term capacity.
The WSLCB has utilized two approaches that identify opportunities for improvement. Government Management Accountability and Performance, which is used throughout Washington state government, focuses on accountability and measurable results. The Washington State Quality Award — based on the Baldrige Criteria — encourages continuous improvement.
In all, the WSLCB is at a leaping off point for an exciting future.
West Virginia Alcohol Beverage Control Administration
The West Virginia Alcohol Beverage Control Administration has reported record sales for FY08. When the fiscal year ended on June 30th sales totaled $74,508,454.58, up 6.85% over FY07 total of $69,729,188.71. The $74 million in recent sales accounted for 614,316 cases shipped, up 20,315 cases from last year’s total of 594,001 cases shipped. The increase from 2007 to 2008 was marginally greater then the increase from 2006 to 2007. In 2006, sales totaled $66,035,981.23 with 577,944 cases shipped, which was a 5.6% increase.
In West Virginia the population continues to be on the decline while the average median age continues to grow. The increase in sales stands in stark contrast to the state’s demographics. I attribute this growth to the use of technology and better marketing practices and policies to serve our retailers, vendors, brokers and distillers.
Since 1990 when the retail sale of spirits was privatized, the WVABCA has worked to better serve our customers by listing a wide array of products, develop clear and consistent billing and shipping practices and hold events to allow the distillers and brokers to market their products to the retailers.
Most recently the distribution center has initiated a new review policy for the bailment inventory to ensure that products are meeting the sales objectives set forth by the vendor. This new approach allows the WVABCA to maintain a tighter inventory control by determining which product(s) comprise the ABCA Bailment Portfolio. This Portfolio is designed to meet customer demand by adhering to a marketing plan.
This movement of product is critical to the continued increase in our sales and the sales of our retail on-premise customers. To foster and support this effort the WVABCA has initiated a dry sampling of new products and supported a broker’s spring show to allow vendors the opportunity to introduce and increase awareness of their products to the retailers. Additionally the WVABCA holds an annual fall trade show for special holiday orders, mixology classes, tastings and events designed to maximize orders and profits. This event continues to grow each year.
The retail stores’ operation, both its size and scope, will be monitored closely on the eve of re-bidding which occurs every ten (10) years and will be up in 2010. The WVABCA is developing a set of criteria for the new licensee to ensure that proper space is allocated for product and that retailers maintain a minimal amount of product. It is anticipated that this move will increase sales and place an even greater demand on the WVABCA distribution process. Therefore, the distribution center has been meeting with vendors to determine the best warehouse racking system and layout. In preparation of these changes equipment will be purchased to meet shipping demands and software will be integrated to streamline the ordering, billing and shipping systems. Already steps have been made to eliminate paperwork and deal with returns to allow the operation to recoup fees.
While these steps are innovative and necessary for the WVABCA to undertake to be more efficient and better serve our customers and citizens we are just starting to reap the benefits. It is expected that our growth will continue even in these uncertain economic times.
Wyoming Department of Revenue Liquor Division
Spirit and wine sales in Wyoming continue to grow due to the “Boom – Bust” cycle driven by the mineral industry. During the first ten months of FY08, the Department of Revenue, Liquor Division, experienced a 5% increase in case sales, boosting revenue by more than 8%.
The Liquor Division and its 1,200-plus retailers are very excited about the new Web-based ordering system eLiquor 2.0. Implemented in November 2007, some of the features beneficial to retailers include: 24 hour ordering; 24 hour account access; product browsing (including more than 1,800 listed and 22,000 special order items); quick order entry; and quick lists and customer order history. This system also allows licensed sales brokers access to look up information regarding: current sales; live inventory; open purchase orders, and an out of stock report. Division employees, retailers and sales brokers all utilize the price calculator to analyze future price changes and determine retail sales price based on product FOB.
The Liquor Division warehouse updated its technology with new state-of-the-art scanners for faster, more accurate order processing. They also added new upright pallet racking and push-back racking for additional stock as demand increases.
The energy boom in Wyoming continues to cause significant employee turnover in the hospitality industry, fueling a high demand for alcohol server training throughout the state. The Liquor Division is poised to exceed its FY08 target of 1,750 servers trained in the TIPS program. A TIPS “Train-the-Trainer” class sponsored by the Liquor Division in May produced 21 soon-to-be certified trainers with a diversity of skills, careers and backgrounds, including: law enforcement; community coalition personnel; retail sellers, and a state legislator (Representative Deborah Alden, REP., House District 3).
The number of on-site unannounced retailer inspections by Liquor Division agents grew to over 2,000 and experienced a 95.2% compliance rate. The Liquor Division distributed over 10,000 Alco-Saliva test kits through the Wyoming Association of Sheriffs and Chiefs. The test kits disseminated in local communities are designed to arm parents with the tools they need to win the battle against underage drinking. This project was funded through an NABCA Educational Mini-Grant.
The direct shipment of wine program continues to grow with 626 out-of-state shippers licensed to ship wine products to consumers in Wyoming. Projected sales for FY08 are $2.5 million, with over 11,000 invoices processed.