Posted on | July 3, 2012
Written by | BevNetwork
Control states are not generally known for being agents or objects of change, but given the recent rumblings of privatization and a continued tight economy, the National Alcohol Beverage Control Association Annual Conference, held this year on Marco Island, FL, was more abuzz than usual.
Mark Bodi of the New Hampshire State Liquor Commission officially took the reins as chairman of the board, succeeding Patrick “P.J.” Stapleton of Pennsylvania. Bodi is the seventh board chairman from New Hampshire and the first since 1999 to assume the leadership role. He was appointed Director of the New Hampshire Liquor Commission by Governor John Lynch in May 2007. His two decades of prior experience in private-sector advertising, marketing and public relations should come in handy, as one of the recurring themes of the conference was that control states are being compelled to be more attentive, responsive and even creative than ever.
Bodi said, “My goal for this year is to build upon our predecessors’ efforts to advocate for and transition to the adoption of more progressive control and modernization strategies for all control states. Progressive control means implementing new and more efficient technology to improve service and reduce expenses.” NABCA President and CEO Jim Sgueo thanked outgoing chairman P.J. Stapleton of Pennsylvania for his year of service, stating, “P.J. has been a steadfastpresence and a great ambassador for the control systems and the association. His commitment to NABCA during these difficult times and transitions in the states and on our board has been unwavering and thoughtful, and it is greatly appreciated.”
Keeping Control a Priority
The keynote speakers were former Pennsylvania Governors Tom Ridge and Ed Rendell, who discussed the implications of the upcoming presidential elections. Business sessions centered on the importance and benefits of having control state systems, intertwined with a little myth-busting regarding common criticisms.
At the session entitled “75 Years Young,” Rob Sands of Constellation and William Goldring and Mark Brown of Sazerac discussed the impact of the the changing global economy. Sands, speaking about how the market has evolved, said, “Today, growing market shares and building brands have made great strides; control states are efficient, fair and well regulated.” He added that the industry as a whole is seeing diverse demographics among new consumers: “Women becoming very significant consumers. Millennials are 12 million strong and are growing the wine market. They are the driving force. Because of the economy consumers now have higher expectations of products.”
Panelists agreed that remaining profitable and competitive today requires: innovation, modernization and collaboration. On the innovation front, it was pointed out that suppliers are always looking for what’s new; if control states want to capture new profits, they need to have a process in place to quickly list new brands. On modernization, the focus was on the shopping experience, as consumers have grown accustomed to sleek presentations; in turn, control states should adopt the mindset mindset of the big store retailers. Collaboration—anchored by open and ongoing communication—is vital because suppliers and control states share a sense of purpose in serving communities.
George Griffin, director of the Montgomery County Dept. of Liquor Control, moderated the session entitled “Control State Myth Busting.” Taking on the myth of inefficiency, panelist Bob Peter, Liquor Control Board of Ontario, explained his Canadian province aims to curb inefficiency by approaching the concept that “you are not in the storage business, but in the flow business.” He emphasized the importance of training to increase staff knowledge and technology to improve product flow, adding that having managers on a five-day work week also helps. Michael J. Keyes of Brown-Forman urged attendees to work more with suppliers and incorporate better customer service. Control systems need to “change customers’ perception,” he said, and “let them see more efficiency.” Clean stores, professional staff and a sampling program all make for a more positive buying experience.
Questions of Selection & Service
Addressing the lack of selection in control states, Keyes noted that this concern is “becoming more of a myth over time.” Donn Lux of Luxco added that some issues are limited to independent states not having the resources to give more selection. Simon Hunt of William Grant & Sons pointed out that breadP.J. Stapleton;
William Goldring, Sazerac; Mark Brown,
Sazeracth of selection varies by category, and that social media is changing perception of selection.
Bob Peter reminded that regardless of breadth, the 80/20 rule still applies in Ontario: 20% of SKUs generate 80% of the sales. Ontario scaled down to 21,000 products, he said, because they are “interested only in products with a good marketing plan in place.” He added that the issue is not simply about selection, but also how products are presented. Ontario stores display by country then varietal. “Premium items have top shelf,” he noted, “which gives consumer a perception there’s a bit of variety.” Lately Ontario has expanded selection via some bigger stores with larger assortment; also online consumers can purchase items that are not in all stores.
Customer service was targeted as an area where control states can make progress with effort. Simon Hunt stressed education translating to good customer experience. Bob Peter echoed the training factor; in Ontario, product consultants are paid higher, spirit advocates are trained, they have beer gurus and wine experts and emphasize product knowledge among all employees. Ontario also uses mystery shoppers and tries to provide continual employee feedback. Responding to Peter, Mike Keyes noted that the Ontario approach compares with that of the best stores in open states. “Accept the fact that you work for the government,” he said. “Get over it and decide how to work or make the system better.”
At the business session on “transitions,” industry leaders encouraged attendees to accept the evolution of the industry, but within the context of overall strength. John McDonnell, COO Patrón Spirits and newly appointed chairman of the board for DISCUS, reminded: “Our industry enhances people’s lives.” Control states need effective innovation; and they need to “put aside misguided efforts to use our industry as tax resource.” In the process, they should always convey an attitude of social responsibility to the public.
Charlie Merinoff pointed out that consolidation is driving the industry and that deregulation will continue to be a major topic. In this environment, he pointed out the value of the distributor. “We are not defined by state law; not limited to logistics,” he said. “Wholesaler value is defined by the value created in marketing and bringing brands to market.” The industry is healthy, Merinoff stated, and it is important to continue to educate stakeholders on “the importance of a regulated system.”
by Wanda G. Rowe and W.R. Tish