NABCA INDUSTRY STEERING COMMITTEE ROUNDTABLE

The NABCA’s 62nd Annual Conference is themed, “Opportunity Through Unity,” which is especially apt when considering the NABCA Industry Steering Committee. The committee meets semiannually with the NABCA Board of Directors to address issues of mutual interest between suppliers and the control states. This year, we asked members of the Steering Committee to consider control state issues that will be most relevant as we approach the millennium. In this issue of StateWays and in the previous issue (March/April 1999), top officials from the control states offer their perspectives on this question (“Facing The Millennium” and “Facing The Millennium, Part II”). Now, several members of the Steering Committee give their views from an industry perspective.


Steering Committee members who participated include Paul Beggan, vice president, sales, Bacardi-Martini, USA; Stephen A. Bellini, senior vice president, general manager, North America, Atlantic/Pacific Region, Seagram Americas; Robert W. Biles, vice president, division manager, Brown-Forman Beverages Worldwide (committee alternate commenting along with Michael V. Cheek, president of Brown-Forman’s North American Group); Edward L. Golden, president, Barton Brands; Donn S. Lux, president, David Sherman Corp.; John Lundstrom, vice president, sales, Jim Beam Brands; and Chuck Phillips, president and ceo, United Distillers & Vintners, North America.


PAUL E. BEGGAN,


BACARDI-MARTINI USA


To me, the most compelling issue facing the control states in the 21st century will be the further clarification of the exact role of a control state. It will be done from the standpoint, in my mind, of deciding whether each state is a business dedicated to serving consumers and on/off-premise retailers in the responsible growth of beverage alcohol in that state or an operational arm of a regulatory agency. Either choice will be forced to respond to a unique set of market pressures.


If the choice is to be a business dedicated to growing the beverage alcohol business, the retail pressure of selection, service, profitability, category management, merchandising and e-commerce will have to be seized upon as aggressively as other retail businesses have. On-premise selection, education, merchandising and solicitation would all have to be reviewed to make sure that this business segment retains its vitality in a control state.


Conversely, if the choice is delivery and regulation, then improving efficiencies, controlling overhead and improving service is key. At the same time, regulations must afford the independent retail operator the opportunity to be as successful as he can.


There has been a change in philosophy in certain control states over the past years — it seems to me to be more business-oriented than “control.” That speaks well for the future of our industry, the customers we serve and the consumers who enjoy our products responsibly.


STEPHEN A. BELLINI, SEAGRAM AMERICAS


The issue that will most affect the control states is whether or not the control states system will evolve at the same rapid rate as business in general. In today’s business world, change is constant and flexibility is essential. This continuing evolution can pose challenges and opportunities to the control state system as we know it in the form of privatization, electronic commerce, category management and beverage alcohol education.


As an example, in the area of electronic commerce, the web site provides an electronic data interchange which can be used for price filings, warehouse transactions, purchasing, etc. Currently, several states are involved in projects with Seagram and other suppliers as well, to maximize the efficiencies from this technology. This is the path of the future.


As we enter the millennium, the challenge to many control states will be to meet or exceed the pace of change that is certain to surround them. I think the last decade was significant for the control states because, by and large, the states made measurable progress on many fronts. Key states reinvented policies and systems which led to significantly improved business efficiencies. In order for the control state system to remain healthy, this trend must not stop — it must accelerate.


Educational efforts to prevent underage drinking.


We strongly support educational efforts designed to prevent underage consumption. Currently, we have developed a new series of ads that will more effectively communicate this important message. For more than 60 years, Seagram has been an industry leader in promoting the responsible consumption of beverage alcohol. This year, the company decided to enhance its responsible drinking advertising campaign by introducing brand specific responsibility messages. For example, the Captain Morgan responsibility ad features the Captain “marking” the ad and telling consumers to enjoy a Captain and Cola responsibly. Moderate consumption is part of a normal lifestyle.


Consumption trends.


We, at Seagram,feel as long as the economy continues to grow and prosper, that the current trend of premium products’ growth will continue beyond the year 2000. In all spirits categories, the premium and superpremium products are making the most substantial gains in consumer acceptance and awareness with case and profit growth. Distillers are investing resources to build premium imagery for their products and nothing short of a major shift in the economy should change that trend. There is a unique opportunity for control states to improve profitability as the consumer trend toward premium products continues. Those states that acknowledge this trend and tailor their actions toward it will prosper. Those states that ignore this trend are certain to experience a decline in profitability.


ROBERT W. BILES, BROWN-FORMAN


BEVERAGES WORLDWIDE


In the 21st century, I see changes in the control states in these areas:


Technology. We will all be more dependent on technology to help us run our business and make better decisions. New systems will allow suppliers and control states to take costs out of the system. The internet will explode as a consumer communi cation vehicle.


Continued evolution towards a consumer-oriented environment. State systems will be more proactive in asking what consumers would like in terms of products, services and the whole “shopping experience,” and they will make changes to insure that consumers are happy.


States will be more progressive in terms of limiting SKUs to those that return the most profit.


Spirits advertising on television, radio and the internet.


With television, only time will tell. In the current political environment, it is unlikely that a large number of broadcasters will accept spirits ads anytime soon. While they may want to take our ads, they are afraid of controversy and they are afraid of the FCC. I do feel strongly that spirits should be able to advertise in all mediums. What is best for our business would be for spirits to be allowed equal access, to be on par with wines and beer. The lack of this opportunity, which beer and wine have enjoyed for years, places spirits at a distinct disadvantage, and it furthers the common perception among the public that a drink of “spirits” contains more alcohol than a glass or wine or beer. Our industry has an obligation to educate the public, and I can think of no better way to do this than to be given mainstream access to television.


Yet, in a future administration with a new FCC, times will change. I continue to believe that the responsible answer lies in a single, voluntary code governing the marketing and advertisement of beer, wine and distilled spirits. Perhaps the recent inquiry into alcohol advertising by the Federal Trade Commission will lead us in this direction. In the meantime, it is up to our industry to observe the highest standards for our print, outdoor, radio and internet advertising. We can do this by carefully following DISCUS’s Code of Good Practice.


Growing the market for alcoholic beverages in a socially responsible way.


Continue to invest behind our brands and market them responsibly.


Pay special attention to the on-premise, where trends are born and brands are built. We have invested heavily in the on-premise, and we now have a 45-person team dedicated to this channel selling all of our spirits brands in major metropolitan markets. We see this as a very important thrust to grow our brands.


Nurture our brands with the new demographic segments of consumers. Make sure your stores are clean, well lit and provide the services consumers need. Do you have someone on your staff who speaks Spanish?


Lastly, each of us must educate as many people as we can — friends, family, legislators — about the positive side of the beverage alcohol industry and responsible consumption. Then, we will be assured of growth for many years to come. I applaud the Century Council for their work on our behalf. We must all continue to work with local authorities to educate them about “the rest of the story” on beverage alcohol. Be a leader — show your community that you have an upstanding business. Be proud of what you contribute.

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