Facing New Challenges

The members of the National Alcohol Beverage Control Association (NABCA) are old hands at dealing with change. After all, as government agencies, control state systems have to deal with changes in law, newly elected legislators and governors, the always-changing economy, ever-changing demographics, constantly changing technology and even changes in beverage alcohol products themselves.

Key members of the Idaho State Liquor Dispensary include (from left), Dyke Nally, Superintendent; Margo Edmiston, Human Resources Officer; Bill Applegate, Director of Procurement, Pricing and Distribution; Ken Winkler, Chief Financial Officer; and Glenn Harbig, Senior Accountant. Another key member of the team is Bob Bergstrom, IT Manager (not pictured).

But, these days, control state agencies find themselves facing even more change than usual. “There’s probably been more change this year than in the last 10 years,” said Jim Sgueo, NABCA’s executive director. (And Sgueo knows of what he speaks: he has been the association’s executive director since 1993 and has been with the association in various other capacities since 1968.)

“The reasons for [all the change] are, number one, there were 13 gubernatorial elections in the control states last year, which resulted in several administration changes, and number two, legislators and governors across the country are being faced with huge budget deficits,” explained Sgueo.

For many control states, new legislators and governors coupled with budget deficits “means, all of a sudden, nothing is sacred, everything is on the table,” said Sgueo.

Including privatization.

“In some cases, the control system might look like something of an anachronism to [these newly elected politicians],” said Sgueo. “They don’t always understand it.”

“As a result, in this economic environment, they look at privatization as a large one-time payment to help offset the immediate budget deficit,” continued Randall Smith, the current NABCA President and Administrator of the Alabama Alcoholic Beverage Control Board.

“And, of course, that’s short-sighted, when you have a system that delivers revenue to the state year in and year out,” concluded Dyke Nally, the incoming NABCA President and Superintendent of the Idaho State Liquor Dispensary.

So, what’s a new NABCA president to do?

“There’s been so much transition lately. Within the NABCA board itself, we have several new directors. My first, immediate goal is, through forums and meetings, to get everybody, especially the new directors, up to speed on what the NABCA is and what it does,” said Nally. “My second, longer-term goal is to elevate and improve policy-makers’ understanding of the control system, both at the state and the federal level.”

Another issue Nally anticipates dealing with this year is beverage alcohol advertising. “There has been increasing concern over the marketing strategies of some beverage alcohol producers. As state regulators, NABCA Board members expect to be a part of the discussion, and hopefully, the solution to this thorny problem,” Nally stated.

Nally, who has been the Superintendent of the Idaho State Liquor Dispensary since 1995, is uniquely suited to respond to the future. At the NABCA, he has served, in recent years, as the chairman of several forward-looking committees, including the Long-Range Planning Committee, the Conference Planning Committee and the Industry Relations Committee.

Dyke has particularly strong political connections at several levels of government. “He brings with him a great opportunity to publicize the control system story,” said Sgueo, “that a well-run control system is an efficient, responsible and lucrative way to distribute beverage alcohol products for the states.”

And he’s exactly the kind of guy people bestow affectionate nicknames on. James Michael Nally’s nickname, Dyke, dates from childhood, when a playmate couldn’t pronounce “Michael,” the name Nally’s parents called him. “My mother still calls me Michael,” Nally reported. [Interestingly, Dyke’s family is heavily involved in state and federal government: His wife, Claudia, is Idaho Governor Kempthorne’s receptionist; his sister, Patti Ann Lodge, is a State Senator; his brother-in-law, Edward Lodge, is a Senior Federal District Judge; and his nephew, Ed Lodge, is a lobbyist.]

Nally is a natural at communications and public relations. Not only does he act as the public information officer for the Dispensary, responding to all media requests, but he also draws on extensive communications experience from previous positions, such as when he was the executive director of alumni relations at Boise State University.

Indeed, Nally’s wide-ranging life experiences date back to his high-school and college days, when he was not only an All-American quarterback in high school, but also worked as a ranch hand, a firefighter (for the Bureau of Land Management) and a smokejumper (for the U.S. Forest Service). He served in the U.S. Air Force, Idaho Air National Guard, once owned a food and beverage establishment of his own, has experience as a realtor and, immediately after high school, even worked as a school-bus driver.

“I’m pleased to be part of the continuity of the NABCA, to work with the outstanding, professional staff at the organization, to help continue moving forward, and to provide resources and support for the state systems,” –Dyke Nally

Under his watch, the Idaho State Liquor Dispensary ticks along like a well-tuned machine. The Dispensary operates 52 state stores (the newest, serving the town of Eagle, opened early this year) and oversees 101 contract agencies (private businesses that handle distilled spirit sales for the Dispensary in more sparsely populated areas of the state).

The Dispensary’s sales for fiscal year 2003 will approximate $78 million, with a net profit of $24.5 million. That’s up from sales of almost $74 million and net income of a little over $22 million in 2002. At the same time, Idaho’s annual per-capita consumption figures remain among the lowest in the nation. In 2002, the per-capita consumption of distilled spirits in Idaho was one gallon even, compared with an average of 1.12 gallons for all 19 of the control jurisdictions combined and 1.32 gallons for open states.

Four years ago, the Dispensary built a 65,000-square-foot warehouse. In August 2002, the Dispensary paid off the purchase. Nally estimates that owning its own warehouse, rather than leasing one as the Dispensary had been doing, will save Idaho taxpayers more than $3 million dollars over the remaining 16 years.

The Dispensary continues to upgrade the point-of-sale computer system used by its state stores and many of its contract agencies. It also recently installed security cameras in all state stores. And, although its stores normally sell only distilled spirits, the Dispensary, in partnership with the state’s beer and wine distributors, has begun a program of promoting Idaho’s award-winning premium wines in its state stores.

The Idaho State Liquor Dispensary keeps itself primed for the future. Indeed, Nally reported that the Dispensary operations’ “efficiency ratios compared very favorably with national ratios for similar private retail businesses.”

In the meantime, the 230 people who work at the Dispensary “are just incredible,” said Nally. Promoting from within is the norm at the Dispensary and many of the staff have been with the organization for many years. In fact, the three district managers for the state, Art Lee, Bruce Christensen and Gordon Hubbard, have each been with the Dispensary for more than 30 years. “They know every nook and cranny of the state — and it’s big out there,” said Nally proudly.

Key people at the Dispensary’s central office include Ken Winkler, Financial Officer; Winkler’s Administrative Assistant Joan Urresti; Glenn Harbig, who is in charge of Accounting; Bob Bergstrom, Information Technology (IT) Manager; Bill Applegate, Manager of Procurement, Pricing and Distribution; Kay Bennett, Special Order Manager; and Margo Edmiston, Human Resources Officer, who is in charge of administrative support and human resources. Nally’s Administrative Assistant, Michelle Morrison, has worked with Dyke in various venues for more than 30 years.

When it comes to the future, Nally feels that the need to expand and improve the flow of information to the public, state legislators and governors is NABCA’s most pressing concern. “Some legislators come in with the mindset: ‘We need to get out of the liquor business,'” said Nally. “That’s why helping them understand the benefits of the control system is so important.”

But Sgueo stressed that “the control system is a compelling story and certainly not unique to this country.”

Nally enjoys telling that control system story. “The public often holds misconceptions about control systems,” he explained, “especially about price, availability and selection. But when given some explanation, in a few minutes, these very same people are saying, ‘I didn’t realize that.'”

State legislators are the same as the public at large. “Once you give them information and educate them about the control systems, legislators tend to be on your side,” said Nally. “It’s why none of the control jurisdictions, since 1933, have abandoned the idea.”

The NABCA works hard at educating people about control systems. “We are not a lobbying group,” said Nally. “We are providers of statistical, operational and even public health information.”


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