“My theme for the year is ‘Embrace change, honor tradition,'” said Lynn Walding, incoming NABCA president. “When I first started as Administrator [of the Alcoholic Beverages Division of the State of Iowa four years ago], I made a lot of changes. One of my staff asked me, ‘Are you going to change everything?’ My answer was, ‘I’m not going to change everything, but I am certainly going to look at changing everything.’ And it’s true of the NABCA, too. We constantly have to look at our programs, our conferences, the data we provide, to remain fresh and viable.”
Some of the key players in the Iowa Alcoholic Beverages Division (ABD)
gathered at their warehouse/headquarters complex located in Ankeny, IA. They are (clockwise, from front/center): Nicole Gehl, Program Development Coordinator; Karen Freund, Licensing Manager; Gary Marker, Tobacco Enforcement Bureau Chief; Bruce Ireland, Information Technology Manager; Lynn M. Walding, Administrator; James Kuhlman, Operations Manager;
Martin Deaton, Chief Financial Officer; and Judy Seib, Coordinator of Regulation, Rules & Special Projects.
Walding will be designating a special committee of the NABCA to review all of the organization’s programs and events. “We want to make sure our programs are vital and current,” said Walding. “We want to review what we are doing and how we can make it better.”
According to both Walding and Jim Sgueo, NABCA’s executive director, one of the most important tasks of the NABCA is to help its member control systems stay on the cutting edge.
“Obviously, our number-one concern is always privatization discussions and efforts,” said Sgueo. “New governors, new legislators ask, ‘Why are we in the business?’ Answering that question is always a number-one priority for us and for the states.”
“And it’s a legitimate question,” said Walding. “New governors and legislators always ask, and we have to be prepared to answer.”
“Long story short,” added Dyke Nally, current NABCA President and Superintendent of the Idaho State Liquor Dispensary, “the answer is lower per-capita consumption, higher per-capita revenues, with fewer social problems.”
But the control systems that can best justify their existence are the ones that have stayed modern, current and responsive to the needs of their state’s citizens.
“From the experience of Iowa, which lost its state stores, I can say that the consumer didn’t mind the control state model,” explained Walding, “but the model at that time didn’t take checks, had inconvenient hours and the outlet density was not the most conducive for customer service. The consumer wanted convenience.”
“The states that have privatized tended to be the ones that were unable to modernize or upgrade their operations. They did not maintain the level of efficiency you need to survive,” said Sgueo. “If you don’t change, modernize, you become extinct, outdated, irrelevant.”
Best Practices Guide
The NABCA is in the midst of developing a major tool for helping members keep up-to-date. Walding hopes to have a Best Practices Guide available to NABCA members by next year. The project was started back in 2003 by Dyke Nally and Randall Smith, former NABCA president and past Administrator of the Alabama Alcoholic Beverage Control Board.
After a long process of examining how different control states handle operational issues, such as listing and delisting procedures, outlet density, wholesale operations and employee standards and education, the Best Practices Task Force, made up of industry members of the NABCA and of the members of the organization’s Products & Procedures Committee, met on March 23rd. Their recommendations will be reviewed at the Best Practices Summit, a two-day meeting in November.
The goal is a publication identifying states with the best practices when it comes to various operational issues. “This will give administrators access to ideas with proven success,” said Walding. “I changed the way my predecessor had handled the listing of products, but I had no idea of what other states did or what the [alcohol] industry thought.”
“Truthfully,” said Sgueo, “this is a major thrust for us: the effort to modernize and to provide a convenient shopping experience for the customer can be consistent with the control state model.”
Modernize, Modernize, Modernize
Most, if not all, of the control states are instituting changes designed to modernize their systems. “Idaho recently passed a law allowing Sunday sales, which will go into effect on July 1st; Virginia has increased its outlet density and modernized its stores; Pennsylvania has Sunday sales and outlet stores, among other things; Utah has improved its warehouse,” said Walding. “Collectively, there is an effort out there to modernize.”
The Tobacco Enforcement section of the Iowa ABD includes (front row, left to right): Gary Marker, Tobacco Enforcement Bureau Chief; Ron Turner, Tobacco Enforcement Investigator; Steve Nemmers, Tobacco Enforcement Investigator; (back row, left to right): Steve Brown, Tobacco Enforcement Investigator; Bill Missman, Tobacco Enforcement Investigator; and, not pictured is Steve Henson, Tobacco Enforcement Investigator, who is currently serving in the armed forces in Iraq.
“Personally, I think the term ‘control state’ is a misnomer,” he continued. “In many ways, we are more open than the ‘open states.’ All states have some sort of control [over the sale of alcohol.] Open states might have blue laws. Of the 19 control states, 12 have Sunday sales and four are looking at adding them. It wouldn’t be beyond reason to think that in the next few years, we’ll all have Sunday hours.”
When it comes to honing its own abilities, the NABCA has also been and will continue to be proactive. “We ask ourselves, ‘What are our core functions?'” said Walding. “It is to help maintain the control systems throughout the United States. What can we, as an association, do to further that cause? Focusing on our assets, what improvements can we make to what we offer; how can we enhance our role?”
Within the NABCA, the organization has greatly expanded its SAM II (Statistics for Alcohol Management) database. “At the beginning of the year, it had licensee/account level information from 10 states,” said Sgueo. “Soon, it will have 12. And it will grow to 15 by the end of the year.” Sgueo pointed out that more and more suppliers and brokers have bought access to SAM II. “It’s an extremely valuable tool for the industry, and those who don’t have SAM II are at a marketing disadvantage,” he said.
Last year, the NABCA began sending out a daily email newsletter to its members, which includes current news relevant to alcohol policy and regulation. “This year, we’ve greatly enhanced it by also including press releases from the states as well as from NABCA members,” said Sgueo. “It is an interactive tool for NABCA members to communicate and stay current with beverage alcohol news.”
Another key task for the NABCA has always been building and maintaining relationships. At its most basic level, this includes educating people — consumers, legislators, even an agency’s own employees — about what control really is.
The NABCA has also been improving its relationship with brokers, many of whom are members of the association. This initiative, started by Nally last year, is something Walding will continue.
“It had become evident over time that brokers, though significant contributors, were not very involved in the NABCA,” said Nally.
“And they are responsible for about 10% of our revenue stream,” added Sgueo.
So, a Broker’s Task Force, made up of six geographically diverse broker members and the members of the NABCA’s Industry Steering Committee, was formed. “And that was one of the best meetings I can remember,” said Nally. “They had good ideas, which will only help enhance the association.” Their requests ranged from ideas for items to be included on the agenda of the next annual meeting to making sure that they were all receiving the daily NABCA email. “And one of the best things that came out of the meeting was that the brokers got to spend some time among themselves and with their suppliers,” said Nally.
Said Walding, “I am looking forward to continuing with the Brokers Task Force. Brokers are certainly one of the major stakeholders in our organization.”
What is the attitude of the industry toward the control model? “They are accepting of it, have learned to deal and adapt to it,” said Walding. “And those who have been able to embrace it have gained the advantage. By learning the different intricacies of the control state systems, they’ve enhanced their revenue.”
In the last year, Sgueo pointed out that several major supplier companies have created control state sales teams. After all, the control states represent 25% of the total beverage alcohol business in the U.S. “They tend not to try to get in and change things, to make major overhauls,” he said. “They want things like Sunday sales or lower taxes, but they are more accepting of late than ever before.”
Connecting With Many Groups
The NABCA will continue to meet with a broad range of groups with connections to control systems. In the last year, this has included meeting with both the Federal Trade Commission and with a variety of public health organizations, such as the Center Against Marketing & Youth (CAMY), the Center for Addiction & Substance Abuse at Columbia University, to discuss the issue of distilled spirit advertising. (See sidebar.)
The NABCA has also met with the U.S. Trade Representative’s Office about on-going global trade talks, where some countries want to break down any barriers to an open market — and may view control systems as a barrier. “We have assurance from the Office of the U.S. Trade Representative (Robert Zoellick) that alcohol would be an exempt item. It would not be part of the European Union (EU) trade discussions,” reported Walding. “That’s good news, but these are on-going trade negotiations and we will continue to monitor the situation.”
In front of the lobby reception area of the Iowa ABD are (left to right): Nicole Gehl, Program Development Coordinator; Brenton Saron, Program Assistant; Lyndsay Perrin, Intern; and, Philip Wedgwood, former Administrative Assistant.
Walding’s take on global trade issues pertaining to alcohol is this: “You have to be aware that the U.S. has a unique history when it comes to alcohol and a unique legal structure, with the 21st Amendment. States do want to control their destiny, they want to be able to address their social problems individually and we want to preserve that right, going forward.”
Indeed, the NABCA maintains relationships with control systems around the world. “A fairly large percentage of the world is under a control system,” pointed out Nally. The NABCA was invited to the International Retail Monopoly Seminar in Oslo, Norway. There, Walding, Sgueo and Nally along with Vern Danielsen, chairman of the Virginia Alcoholic Control Board, and Ken Wynn, director of the Utah Department of Alcoholic Beverage Control, represented the U.S. and the NABCA.
The NABCA also maintains a relationship with the Canadian Association of Liquor Jurisdictions (CALJ), its Canadian counterpart. The entire country of Canada operates under a control system. Walding has already begun meeting with representatives from CALJ.
And Walding will be in an especially good position to forge bonds within the U.S. Following his year-long stint as NABCA President, he will become President of the National Conference of State Liquor Administrators (NCSLA), an organization that includes members from the open states.