How The Mississippi ABC Makes Strides Despite Minimal Resources

When any organization experiences massive growth, additional resources are generally required in order to maintain it. The Mississippi Alcoholic Beverage Control (ABC) agency has struggled to keep up with the steady growth it’s experienced for years, without seeing much in terms of additional financial support from the state.

The Madison-based ABC is a division located within Mississippi’s Department of Revenue. During the 2015 – 2016 fiscal year, the state’s net operating profit amounted to $58 million, but the ABC contributed a total of $106 million, accounting for nearly 3% of the state general fund’s overall revenue. Total ABC sales for the last fiscal year were $354 million. All stores within Mississippi are privately owned, but the ABC manages the warehouse and acts as the wholesaler for the state.

Currently, the ABC is led by Commissioner Herb Frierson (pictured atop, right, with Director James Eubanks, left), who was appointed by Mississippi Governor Phil Bryant in July 2016. Prior to his appointment to the ABC, Frierson served in the state legislature for more than 25 years and also worked as a real estate appraiser, high school teacher and coach. His most recent position prior to being named Commissioner was Appropriations Chair, which gave him a great deal of experience working with the Department of Revenue. Frierson’s main priority is to continue building on the success of his predecessors, encouraging growth and championing for the resources needed to make it happen.

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The ABC’s revenue last fiscal year was $354 million. It accounted for 3% of the overall revenue for the state’s general fund.

Planned Warehouse Expansion

Upon inheriting the top post at the ABC, Frierson was faced with several challenges – the main one being limited warehouse space.

“We’re trying to find the best possible solution for the state of Mississippi,” Frierson says. “We will be at full capacity by fiscal year 2017 or 2018. During the holiday season, we’re already at capacity now.”

In order to be as efficient and cost-effective as possible, Frierson and his team are investigating solutions that will work within the existing structure of the warehouse, specifically the installation of an automated racking system to free up 30% of warehouse space and allow the ABC to continue operating in the same facility for at least eight to ten more years.

The additional warehouse space will also give the ABC an opportunity to better meet the needs of Mississippi retailers, who constantly ask for new products that are requested by their customers. A changing market means the industry is saturated with growing trends, such as craft beer and flavored spirits. Frierson reports that back in 1966, the ABC stocked a grand total of 165 items. Currently, the agency stocks 4,300 products, in addition to offering more than 8,000 special order items. More warehouse space will allow the ABC to keep more products in stock at all times.

“We need to find a way to not only better identify products that will sell better than others, but look for automation opportunities that will further enhance the warehouse we envision for the future,” Frierson says. “We don’t see this market slowing down at all, and neither does the industry, so it’s important that we have the resources needed to keep up.”

A warehouse expansion proposal is expected to be delivered to the state legislature by the ABC in January 2017, offering several options for the lawmakers’ consideration.

Customer service is another main focus area for Frierson. Although he says the ABC already has great customer service, there is always room for improvement. Next-day delivery is available everywhere throughout the state with a five-case minimum order. Licensees have the added convenience of submitting and managing all orders online, which is a requirement for all ABC customers. Payment is also submitted online, eliminating the need for paper invoicing. Moving forward, Frierson says the ability to offer additional products will enhance the customer experience even more. He’s also in the process of creating an advisory board made up of different permit holders to advise the agency going forward.

“This will help us resolve some issues before they ever get too big, and will also help people engage with everything we’re doing,” Frierson says.

He hopes that the high quality of service the ABC provides to its customers will ultimately thwart those individuals in favor of privatization. While the concept of privatizing the beverage alcohol industry in Mississippi is floated from time to time, Frierson says the consequences of doing so would be dire.

“A 27% increase in sales tax will be necessary with privatization, which is something a lot of people fail to realize,” he says. “Our system has worked well for a long time and it will continue to. We also have one of the lowest product mark-ups of any state, and privatization would change all that and make things more costly for everyone involved.”

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Increased Enforcement

In addition to addressing the space limitation issue and working to enhance customer service, Frierson and his team are also focused on enforcement issues. While the ABC currently employs 126 people, only 24 are in law enforcement positions. Rusty Hanna, Chief of Enforcement with the Mississippi ABC, says that policing an entire state with only 24 agents at the helm is a major challenge.

“I’ve been here 32 years, and we actually have fewer people working in this area than we did years ago, and we have a whole lot more permittees than we did back then,” Hanna says.

The individuals currently serving on the enforcement team have a wide breadth of responsibilities. Agents oversee both enforcement and education, in addition to reviewing all license and permit applications. With the absence of an actual education department, all educational programming is supported by whatever grant money is available. Most educational outreach revolves around reaching out to middle school children in an effort to teach them about the dangers of underage drinking.

Enforcement agents have a presence at events where underage drinking is likely to take place, such as festivals and concerts. They also do a great deal of moonshine investigations and arrest individuals who buy and sell alcohol illegally. Mississippi consists of 31 dry counties and 47 wet counties. Four counties are half-wet and half-dry, and there are more wet counties for beer than there are for liquor. Adding to those complications is the fact that in 2012, the state legislature allowed any city with a population of 5,000 or more people to have an election on liquor, giving every dry county in Mississippi an opportunity to have at least one wet city. Currently, 16 wet cities reside within dry counties across the state.

During the 2016 fiscal year, the ABC logged a total of 878 criminal reports, with 133 of those being purchases/illegal sales. There were 456 cases of possession of beer/alcohol by minors and 103 attempted alcoholic purchases by minors. Of the total number of arrests made by the enforcement team last year, only five defendants were ultimately found not guilty. The enforcement team also conducted 747 permit investigations and 1,851 compliance investigations.

Recent accomplishments by the enforcement team include the implementation of the Intellicheck mobile app for all agents. Launched in Mississippi in November 2016, the app provides agents with a quick and effective way to verify the authenticity of IDs, making it easier to spot fakes.

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“Our system has worked well for a long time and it will continue to.” — Herb Frierson, Mississippi ABC Commissioner

“Anyone who wants a fake ID can get a fake ID, and they can easily get a very good one that most people would have a hard time identifying as fake,” Hanna says. “That’s why the app is so useful to us.”

Hanna thinks that underage drinking is one of the ABC’s primary concerns, and he worries about how effective his team can be in the future with such limited resources at their disposal.

“Right now, the same guy who goes to a school and talks to sixth-graders is the person who’s out doing moonshine investigations,” he explains. “Education is something we don’t spend a lot of time on. Not because we don’t want to, but because the resources aren’t there and we have to make do with what we have. It’s frustrating because underage drinking is a huge problem. Until you’ve seen a 19-year-old wrapped around a pole because he was driving under the influence, you don’t understand the impact of what’s really going on here.”

In an effort to reinforce its messages about underage drinking, the ABC manages various social media channels and distributes content primarily focused on prevention and intervention. SMS messages also are used to communicate messages to license holders.

“We want to try and take everything we are doing in-person and emulate it online and through social media,” Frierson explains.

The ABC also pushes out television commercials during the holiday season. Geared toward minors and parents, the messages focus on illustrating the consequences of underage drinking.

In addition to lacking more enforcement positions, the ABC also lacks the funds to pay its agents a lucrative wage. Frierson notes that salaries for law enforcement agents are not very competitive, which is also a problem with salaries for the warehouse staff.

“We’re paying our workers, especially our warehouse workers, very low wages, which makes it very hard to retain people and to get dependable people,” Frierson says. “It’s an in-between job for most people right now. The warehouse is located in an area that has other businesses offering a more competitive salary. People take our jobs until something better comes along, which it usually does.”

Associate Commissioner Meg Bartlett agrees. “A lot of our problems in the warehouse could be solved if we could offer people a higher wage,” she says.

Frierson says that the ABC plans to request additional funding from the state legislature to increase staff salaries. That, in addition to an overall increase in funding, will help the ABC make the necessary improvements to keep up with the rapid growth of the beverage alcohol industry within the state. •

Melissa Niksic is a freelance writer and marketing communications strategist from Chicago, IL. Her work has appeared in Chicago’s Daily Herald newspaper, Time Out Chicago, Suburban Life newspapers, and various magazines. She is also the author of several children’s books. Follow her @MelissaNiksic.

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