LOOKING FORWARD

Readers of StateWays are already well aware of Randall Smith’s stellar career at the Alabama Alcoholic Beverage Control Board, since his stewardship of the Alabama ABC was the subject of our recent cover story (January/February 2002 StateWays). About the time that story was published, Smith learned that he was tabbed to be NABCA President-Elect for 2002-2003, and thus due to be named NABCA President in 2003-2004. Soon, however, he also learned that the already appointed NABCA President-Elect for the coming year, John E. Jones, III, the well-respected chairman of the Pennsylvania Liquor Control Board, had withdrawn his name as upcoming NABCA President, due to outside circumstances that would not allow him to focus his time properly on all the duties an NABCA President must perform. So, Randall Smith was quickly thrust into the position of incoming NABCA President, and he has accepted that challenge wholeheartedly. [Of course, readers of StateWays also now know that the reason Jones withdrew as upcoming NABCA President is that he has been highly honored by being nominated to the Federal bench by President George W. Bush and is now awaiting confirmation.]

Randall Smith (left), incoming NABCA President, has known NABCA Executive Director Jim Sgueo for about 20 years, and they are both looking forward to continuing that organization’s progress in the coming year.

Indeed, in the months leading up to his tenure as NABCA President, Smith has crisscrossed the country in a burst of activity, attending and participating in a slate of meetings and conferences from Portland, ME (NABCA Administrators Conference), to Las Vegas, NV (ABI-EC Conference where he addressed the conference), to Cincinnati, OH (NABCA Executive Steering Committee Meeting), to New Orleans, LA (NABCA Finance Committee Meeting), not to mention an industry-related side trip to France and a CALJ (Canadian Association of Liquor Jurisdictions) meeting in Quebec. All this, while still totally involved in the running of the Alabama ABC.

“I just want to keep up the momentum created by Ed Buelow, John Byrne, Ken Wynn, Johnnie Burton, Eben Marsh, and the other NABCA Presidents that preceded them,” said Smith. “And through it all, Jim Sgueo and the entire NABCA staff have done a phenomenal job of getting things done. I really can’t say enough about the job that they have all done.”

Smith has known and worked with Jim Sgueo, NABCA Executive Director, for about 20 years. Both of them understand the control state business from A to Z, having worked their way up through the ranks to the top positions. Smith began working for the audit section of the Alabama ABC in 1981, after a nine-year tenure with the Examiners of Public Accounts, the auditing agency of the Alabama state government. He moved from the audit section to the product management bureau in 1987, where he was in charge of all purchasing decisions, retail stores and marketing when he was appointed Administrator of the ABC Board in January 1999. He had also been involved in legislative liaison work for the ABC through the years. For his part, Jim Sgueo started as a mail clerk for the NABCA back in 1967. Since then, he’s held just about every job in the Association, he said, and was named Executive Director in January 1993.

Both Smith and Sgueo view the NABCA as an organization that functions on several different levels. Its central and basic mission is to act as a forum for the 19 control jurisdictions — “bring together 19 as one,” Smith said — and provide a wide range of statistics, data and organizational information that help NABCA members effect meaningful policy in their states. In addition, the organization also provides important data to suppliers about conducting business in the control states. “We serve as a clearinghouse for information to and from the control states and industry,” Sgueo noted. “We create a format in which the industry and the control states can interact in a mutually beneficial manner.”

Smith would like to continue expanding NABCA’s al-ready central role as a facilitator between the control states and industry, especially as an “electronic liaison” between the states and suppliers. In fact, that has become a growing area of activity for the NABCA, Sgueo added, particularly concerning many types of business transactions such as price quotations, purchase orders and inventory tracking.

Indeed, Smith is currently the Chairman of the NABCA’s Information Technology Committee. He sees it as a critical arena. “There’s a lot of potential on that committee,” Smith said. “The issues raised there flow into many of the things happening in the control states now. When you start looking into different areas, information technology almost always plays a part, whether it’s in the regulatory area, products and procedures, even the education area, as well as electronic commerce.” In fact, Smith noted that he would like to see “the NABCA and the control states become a force for setting national standards for electronic commerce.”

A UNIQUE POSITION

Smith, the current NABCA President Eben Marsh, the members of the NABCA Board of Directors and Sgueo all seem to be on the same page when they talk about the potential of the organization.

“We all should understand that control is a primary function of what we do individually and collectively as states,” Smith said, “but we also have to balance that function with our mandate to serve our citizens as wholesalers of beverage alcohol and, in many instances, retailers of distilled spirits and wine.”

He continued, “In the control states we come from a ‘partnership’ with industry members, but at the same time we represent the regulatory side as well as advocacy groups.” In addition, he noted that most, if not all, NABCA Board Members are appointed by their respective Governors and have a genuine understanding of the political process.

Because of all these connections, the NABCA is in a unique position, Smith said, to become an important objective voice on alcohol policy on a national level. To some degree it already is. Certainly, the NABCA’s ambitious program of meetings and conferences addresses many of the central issues concerning alcohol use, abuse and regulation throughout the country. In addition, The Century Council has invited the NABCA to participate as an advisory board member, Smith said. And Executive Director Sgueo (representing the NABCA) is now sitting on a national alcohol policy group: the Executive Working Group of the Leadership Initiative to Combat Underage Alcohol Abuse and Consumption 9-15 Age Group (funded by the NIAAA).

Concerning the NABCA’s potential central role in the ongoing national debate surrounding the use and abuse of beverage alcohol, Sgueo explained, “I believe we [the NABCA] uniquely sit on the merchandising side and the regulatory side, and that perhaps we can bring opinions to the table without the perceived bias brought by others.”

As NABCA President, Smith wants to continue bringing all segments of the industry together to carry on discussions regarding all the issues surrounding beverage alcohol. The recent “Alcohol Education Summit,” held this past March, is a wonderful blueprint for effecting that kind of interaction. “It was one of Eben’s [Eben Marsh, current NABCA President] main goals,” Sgueo noted, to create a forum for these groups to address various issues that arise in both control and open states.

Participants in the Summit included state regulators from liquor control boards from both open and control states, beverage alcohol industry representatives, scientific researchers who have conducted studies on the abuse and misuse of beverage alcohol, and representatives of beverage alcohol policy advocacy groups.

The panelists dealt with issues central to the national alcohol debate. For example, how do you balance economic development — in a tourist area, for instance, where more than just a few liquor licenses are likely to be requested — with beverage alcohol control? And they were asked to respond to various scenarios that control state officials are often asked to handle on a day-to-day basis.

These types of meetings are very helpful, Sgueo said, and will “hopefully establish a culture of this kind of interaction in the future.”

Smith pointed to the NABCA’s Joint Committee of the States as another forum where all segments and constituencies in the industry can work together to expand their relationships. Made up of members of the NABCA and NCLSA (National Conference of State Liquor Administrators, from the open states), the group also brings together industry associations, beverage alcohol suppliers and advocacy groups to grapple with a variety of issues. For example, it recently dealt with standardization of license renewals and electronic COLA (Certificates of Label Approval). It also recently addressed a controversy over labeling in the newly expanded “malternative” beverage category. “The advantage of a group like this,” Smith noted, “is that a small state like Alabama would have a hard time voicing its concerns over something like this with a national producer. When all the states band together, it gives you a chance of making a difference.”

EXPANDING SERVICES

The lineup of NABCA services has been growing in number and influence in recent years.

When Sgueo was appointed Executive Director, the NABCA budget was under $2 million. The last time StateWays interviewed Sgueo for a story about the NABCA a few years ago, the budget was just under $4 million. Today, the NABCA has a budget of just under $5 million, with a full-time staff of 26 members. During these years, the organization has demonstrably increased its reach, its operations and its effectiveness.

The NABCA Survey Book has grown in the past few years from 25 to 45 surveys, and “it has proven to be a handbook for people in the industry and the states in trying to determine state operations,” Sgueo said. The compendium of business practices it covers includes areas such as distribution channels, advertising rules and regulations, markup tax policies, listing and de-listing procedures and direct shipping regulations.

Another example is the statistical reports the NABCA can offer. All the control states participate by providing as much information/data as they can and the NABCA compiles that information to give complete competitive data regarding retail takeaway in many markets. The information can also be customized to break out the data at the state, store and licensee level. “Our SAM [Statistics for Alcohol Management] project is expanding. It provides sales data at the lowest unit within a state, whether it be store or licensee. It is complete, accurate and timely data for suppliers,” Sgueo said. “There are now more than 30 on-line users. All but two states are included and they will be added to the system before the end of the year.”

In addition, the NABCA continues to expand its ability to act as a “value-added network” for the control states, by tailoring the information it gathers into something usable for the states.

The NABCA’s Symposium on Beverage Alcohol Law, held in early March this year, is a further example of the organization’s commitment to providing as much information as possible through a variety of forums. The Legal Symposium brought together lawyers, academics, beverage alcohol industry executives, government, trade organizations and people from control and open states. The Symposium examined legal issues from all perspectives of the alcohol beverage industry — government, producer, distributor and retailer — in a series of meetings and discussions. Topics ranged from, “Perspectives on the Three-Tier System” to “Who Pays? The New Era of Liability and Responsibility on College Campuses” to “Ethical Rules for State Regulators and Those They Regulate.” Roger Cossack, the former co-host of CNN’s “Burden of Proof” delivered the Keynote Address.

Both Smith and Sgueo agree that the Administrators Conference is “one of the most valuable events the NABCA holds each year.” The NABCA Administrators Conference, held the first week in April this year, brings together administrative staff from all control jurisdictions who are responsible in four areas: products and procedures, information technology, regulatory, and education task force. The four administrative staff from each state attend meetings that provide an incredibly valuable opportunity for an interchange of views, policies and ideas among all the participants. “It’s great to acquire business information as well as to create personal relationships, both at the staff and administrative levels,” Smith stated.

Smith chaired the IT Committee at the Conference where they continued working on the 832 Project, which concerns electronic price filing. “It’s another example of something that benefits both industry and the states,” Smith offered, “and the NABCA is the medium through which it flows.” There was also a presentation concerning disaster recovery planning, Smith said, and how states can prepare and try to insure against losses from fire, hurricanes and even worse. “This would not only apply to actual loss of data, but also to fallback plans with industry if, for example, your warehouse burns down. The presentation also introduced a software template that could be used by all the states, administered through the NABCA.”

Sgueo, who also attended the Conference, added, “There was a lot of discussion concerning the malternative category. In all the meetings everyone was just trying to keep track of what’s going on. There are issues about the labeling, but there are also issues for some of the states about where and how these products should be sold through the control systems. Knowing the formula for the product is important because in some states there are strict interpretations of laws that stipulate if there is more than 0.5% of spirits in the product, then it has to be sold through the state system. The issue is what’s in these products exactly; that will dictate where and how they are sold.”

He added, “The networking opportunities at the Administrators Conference continue to improve and benefit all of the states in their day-to-day operations. For example,” Sgueo pointed out, “To understand how a state handles its markups or its purchasing practices is incredibly helpful for key staff members from other states to find out about.”

Where participants really benefit is in the interactions concerning the public health education and alcohol responsibility fields, where “there is tremendous energy among the conference members trying to extract the best practices from other states representatives and bring it back to their states.”

The Conference’s success is probably reflected in Sgueo’s conclusion that “most of the control states have become very efficient organizations from a business and regulatory standpoint,” which is probably one of the reasons that the issue of privatization has seemed to move out of the spotlight recently, “although it never entirely goes away.”

THE PRESIDENT’S PRIORITIES

Smith pointed out that “Sgueo is super in letting the NABCA President, and the Board, establish a direction, a priority, and then mobilizing his staff to help get it done.

“The really phenomenal thing about the NABCA and its Directors is that the members are all well accomplished and come from all walks of life; there are lawyers, politicians, people with corporate backgrounds, businesspeople, and those who have come up through the ranks, like myself. They are people of quality and recognized leaders, such as John Jones, who’s been selected as a Federal Judge, and Johnnie Burton, a recent past NABCA President, who was just named as Director of the Mineral Management Services Division of the Department of Interior.”

As incoming President, Smith’s priorities are first, to be an “ambassador for the NABCA, to help new Board Members fully appreciate all that the NABCA can offer the control states and the industry. I want to make sure the NABCA remains strong and supported by the states.” He added, “The NABCA has a proven track record of some major accomplishments, but there are opportunities for it to become much more, given its unique position.”

In addition, he would like to “really work to improve relationships with our business partners and advocacy groups, as we’ve been doing through the Joint Committee on the States,” to help accomplish things for both industry and the states. “I want to keep pointing out to industry that we have a multifaceted role — licensing/regulatory as well as being a business partner — and at the same time make it clear to advocacy groups that we are not just business partners of industry. In this way, all sides know that the NABCA is a group they can come to in order to help solve problems.”

Smith concluded that “as we develop these relationships, we come closer to being a leader on the national level in discussing policy. That’s where we need to be.”

NABCA COMMITTEES

Here is a lineup of last year’s NABCA’s committees and their respective chairpeople. Many of the chair assignments may change following the 65th NABCA Conference in May.

STANDING COMMITTEES

Education Committee
Chairman:
Clarence W Roberts (Virginia)

Finance Committee
Chairman: John E. Jones, III (Pennsylvania)

Governance and Membership Committee
Chairwoman:
Rae Ann Estep (Ohio)

Long Range Planning Committee
Chairman:
“Dyke” Nally (Idaho)

Internal Affairs Committee
Chairwoman:
“Johnnie” Burton (Wyoming)

ADVISORY COMMITTEES

Information Technology
Committee
Chairman: Randall Smith
(Alabama)

Education Task Force
Chairwoman: Joanne Schlaginhaufen
(North Carolina)

Products and Procedures Committee
Chairman: Ed Buelow, Jr.
(Mississippi)

Regulatory Committee
Chairman: Lynn Walding (Iowa)

Industry Statistics Committee
Chairman:
Ron Rubinstein, newly appointed
(Sidney Frank Importing)

OTHER COMMITTEES

Industry Relations Committee
Chairman: Eben Marsh (Maine)

Joint Committee of the States
Chairman: John Byrne (New Hampshire)

Vice Chairman: Randy Yarbrough
(Texas Alcoholic Beverage Commission)

Industry Executive Steering Committee
Chairman: Bob Biles
(Brown-Forman Spirits Americas)

Board Executive Steering Committee
Eben Marsh, President (Maine)

Randall Smith,
President-Elect (Alabama)

Johnnie Burton,
Past President (Wyoming)