STATEWAYS FISCAL YEAR IN REVIEW 2004


For the eighth consecutive year, StateWays presents its annual overview of the financial progress being made throughout the control states, including a general picture of the beverage alcohol business as well as separate reports from 19 control jurisdictions. As always, we are grateful to all the control state agencies that have provided extensive information to help us compile this yearly feature. Included in the report are gross dollar sales, revenue contribution, distilled spirits and wine sales volume (where applicable), operating expenses and the numbers and types of outlets and employees in the system. The states have also included projected gross dollar sales and projected revenue contributions for fiscal year 2005. We have also included state rankings based on total sales. This year we were able to gather information from every jurisdiction but North Carolina. While the North Carolina Alcoholic Beverage Control Commission did its best to provide the information, it could not furnish a complete audit before we went to press. Because of that, we used North Carolina’s FY 2003 statistics for purpose of comparison.


Total gross dollar sales throughout the control states (with the exception of North Carolina) reached $5.698 billion in FY 2004, exceeding the revised FY 2003 total of $5.443 billion (not including North Carolina’s $486.1 million) by about $255 million, representing a 4.7% increase. Meanwhile, overall revenue contribution by the control states similarly rose, up 6.7%, while distilled spirits case sales grew by 5.3%. These figures compare favorably versus national sales trends in 2003: Nationally, spirits case sales rose slightly under 3.8% while national distilled spirits dollar sales increased 7.4%.



Fiscal Year 2004
(Based on 18 of 19 jurisdictions reporting)*

Category

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FY ’03**

FY ’04*

%Change

Gross Dollar Sales: (Millions $)

$5,443.7

$5,698.4.

+4.7%

Revenue Contribution: (Millions $)

$2,021.4

$2,156.0

  +6.7%

Distilled Spirits Sales: (Million Cases)

31.59

33.23

+5.2%

Operating Expenses: (Millions $)

$722.1

$751.2

+4.0%

* Does not include North Carolina, which was unable to complete its audit by press time.

** Fiscal Year 2003 figures updated and slightly revised. The statistics are also adjusted to withhold North Carolina’s FY 2003 statistics in order to make accurate comparisons between FY 2003 and FY 2004.

Clearly, control state beverage alcohol operations continue to thrive, even where challenges remain. In some instances, state government operations are being affected by a continued shortage of funds and the states have looked to their beverage alcohol control operations to help with the shortfall. In the most extreme case — the state of Maine — the retail and wholesale operations have been sold and effectively privatized. Still, while more than half of the control states slashed their employee rolls in an attempt to cut costs last year, this year only a handful of states cut employees, while nine control states actually added staff. This suggests that either costs are coming under control or that the various commissions are finding more effective ways of saving money. Even more impressive is the fact that 11 control jurisdictions added either agencies, state stores or retail outlets, while only four states decreased in those areas.


As we’ve said here before, the general trend in the control states is positive, driven by the modernization that has been progressing since the mid-1990s within the wholesaling and retailing segments as well as within the agencies’ headquarters. Utilizing the latest best business practices and an ongoing commitment to the control and regulatory functions mandated by state governments have been the touchstones of the control states during these years.


As noted earlier, the overall control state system figures in FY 2004 saw increases in several areas compared to FY 2003. The gross sales increases previously cited include gains in every control jurisdiction. As has been the case for several years now, some states showed modest rises, but several others posted sizable gross dollar increases. For example, Pennsylvania boosted sales by a staggering $120 million in FY ’04, a huge gain over the previous year, bringing the state’s total to approximately $1.388 billion. Second-ranked Michigan saw sales growth of about $32 million in FY ’04, reaching an estimated $800 million. And third-ranked Washington added almost $52 million in sales, doubling last year’s increase, for a total of $609 million. Fourth-ranked Ohio had sales jump by about $34 million to more than $552 million, while Virginia recorded an equally impressive gain of about $32 million in sales in FY ’04, to more than $490 million. For its part, New Hampshire saw sales increase by almost $27 million, to $373 million. Indeed, throughout the control system, many other states posted notable sales growth.


The combined revenue contributions to state coffers increased in FY ’04 by about $135 million compared to FY ’03, for a 6.7% gain. As last year, most of the states showed modest increases, while a few were able to contribute much larger amounts to the state government than the year before.


About 1.6 million more cases of distilled spirits were sold throughout the control states in fiscal year 2004 than in the previous fiscal year. The adjusted total (including revisions and excluding North Carolina) of approximately 33.23 million cases represents a 5.2% increase over FY ’03 totals.


Total operational expenses increased 4.0% in FY 2004, representing a $29 million increase over FY 2003 costs; however, the rate of increase actually slowed versus the 7.6% overall gain in operational costs last year. Still, as we’ve stated for the past few years, these expenditures are most often funds needed for long overdue improvements, whether it be for updated facilities or for new technologies.


The following, then, represents the individual statistics for each of the control states responding to our 2004 Fiscal Year in Review.



RANKED ACCORDING TO FISCAL YEAR 2004 SALES

RANK

STATE

REPORTED
FY ’04 SALES*
($ millions)


Pennsylvania 

$1,388.1 

2
Michigan

$800.0**

3
Washington

$609.0

4
Ohio

$552.8

5
Virginia

$490.7

6
North Carolina

$486.1***

7
New Hampshire

$373.0

8
Alabama

$289.7

9
Oregon

$289.1

10
Mississippi

$193.5

11
Utah

$168.3

12
Montgomery Cty, MD

$168.1

13
Iowa

$135.2

14
Maine

$89.1

15
Idaho

$86.0

16
Montana

$70.8

17
West Virginia

$59.9

18
Wyoming

$56.4

19
Vermont

$47.0

* Numbers are rounded to nearest one-tenth.
** Estimated
*** FY 2003 sales figures

Source: StateWays from control state agencies.

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