Throughout the year, the National Alcohol Beverage Control Association (NABCA) Board of Directors meets with the Industry Steering Committee, a group of industry leaders from distilled spirits companies, to address new and ongoing issues facing the beverage alcohol industry. StateWays once again asked these committee members to participate in a virtual roundtable where they were invited to discuss accomplishments of the past year and challenges facing their industry and the control states in the coming year. With an eye to “Collaboration Thru Communication,” the theme of the upcoming 74th Annual NABCA Conference, members who offered their thoughts this year include representatives from Remy Cointreau USA, Bacardi, Beam Global, Brown-Forman Corporation, Diageo North America, Heaven Hill Distilleries, Luxco, Moet Hennessy USA and Pernod Ricard USA.
John W. Byrne
Director of Control States, Alliance & Public Affairs Rémy Cointreau USA, Inc.
Vice Chairman, NABCA Industry Steering Committee
The past year has demonstrated a vigorous return of the consumer to purchase Premium and Super Premium brands, where category dollar sales have increased significantly. This is highly welcome news underscoring the long-term value proposition and draw of such brands, and their ability to generate substantial finance for Control States, as legislatures continue to press for added revenues.
Capitalizing upon the robust and far-reaching growth potential Premium and Super Premium brands hold, Rémy Cointreau USA, Inc. is committed to create innovative and state-of-the art consumer marketing and education programs which successfully passion and magnify the go to market advantage inherent within our premium brand portfolio. This lucrative strategy is parallel to an ongoing dedication to engage proactively, and communicate responsibly, with Control States’ leadership. Over the past twelve months, Rémy Cointreau USA has developed important resources to maximize the power of Digital Marketing and Social Media communications, actively engaging both consumers and trade partners. Through a focused campaign led by Nicolas Hériard-Dubreuil, Director of Digital Marketing, significant advances have modernized the company’s overall Digital communications strategy and application.
Consumer and Trade Engagement through Digital Communications Strategy
Why are Digital Marketing and Social Media platforms so strategically important? This is where our current and future consumers are, spending most of their daily media share. Adults log more than 15 hours a week on the internet, with 25% of that time engaging within social media channels. The average social network includes 200 friends per user, meaning each user can magnify each interaction or discussion to reach 200 additional people. For example, within the Rémy Martin Facebook page, its 22,000 fans represent an indirect social network sum of close to 4 million people in the United States of legal age.
The outputs of such dynamic and active engagement in the digital “space” generate exponential levels of word-of-mouth endorsements and sharing of experiences, constituting the strongest and most influential touch point between brands and consumers. These formidable bonds dramatically amplify customer focus and purchase intent. A “Digital Ecosystem” is thereby created, linking together our branded websites and newsletters, our partners’ sites and On/Off Premise customers’ own Digital/Social Media sites. Marketing, Public Relations and Advertising are critical disciplines driving the content and stimulus to fuel the energy of Social Media. In summary, the undeniable return on investment in a Digital Media communications strategy yields long term relationships with consumers, key influencers and trade partners; significantly increased levels of brand loyalty; greater stimulation of repeat purchases and, ultimately, an up-trade to higher marques and desire for brand experiences.
This year, the Industry Steering Committee expanded its program of meeting one on one with key state officials. The program was introduced at the October NABCA Administrators Conference, and meetings were held with each state to discuss operational and technological challenges that both state and industry face together. It was deemed a wholehearted success by all participants. The meetings offered a dialogue that will help states identify best practices as they continue to modernize their operations. Given the fiscal challenges each control state faces, it is even more important that legislature and industry partner to effect positive change.
Chairman Dan Gwadosky’s theme of “Collaboration thru Communication” for this year’s conference adroitly recognizes the challenges facing Control States with the industry in today’s ever evolving and modern communications age. We need to continue with open and honest dialogue about issues confronting the alcohol beverage industry, whether it be privatization, new distribution models, taxation and mark-ups or public health initiatives. Distilled spirits companies play a unique role in partnering with Control States in the sale of their products to consumers. As partners we have a vested interest to ensure our communication continues to be timely and candid.
VP of Strategic Alliances and Control States, Bacardi USA
Collaboration through Modernization
Today’s Control State operations look nothing like their predecessors of even five or ten years ago – they are more consumer-friendly, more accessible, are open longer and more often, and are more ably staffed and trained than ever before. In a word, they’re on the path to modernization.
Across every control jurisdiction, the look of stores has steadily improved. With attractive interior designs and a more convenient layout, such enhanced retail environments have helped stimulate increased store traffic and revenue per square foot. This is modernization on the move.
At the same time, working closely alongside with their industry partners, Control State officials continue to strongly emphasize responsible consumption in all media. And more recently, many Control States are creatively deploying the tools and techniques of new social media outlets – via the internet and smart phones – to broadcast important alcohol awareness, moderation and combating underage drinking messages to even wider audiences.
Amid all this evolution, one thing is sure, as the U.S. economy gradually recovers, recent modernizing trends will continue to be pursued by Control State officials, and at Bacardi U.S.A. we will remain committed in collaborating on these innovative, best practice efforts.
In markets as diverse as Pennsylvania, Virginia and Washington, ABC Boards and LCB State Officials are reviewing ways to improve their respective systems and have been open to discussing improvements with the industry. We all know that active and ongoing participation from suppliers is key to successful collaboration. Jeff Barr, Pacific North West Region Manager at Bacardi U.S.A., is the president of D.R.A.W., which stands for Distillery Representatives Association of Washington. The group works closely with the Washington State Liquor Control Board Business Advisory Council to develop sound legislative and administrative measures, particularly those designed to improve the conditions under which alcohol beverages are sold and consumed.
And this is only one example of how Bacardi takes leadership roles to collaborate with Control State officials, via local associations and national ones such as NABCA and NCSLA. We know how important it is to collectively gather information that can improve the market, which is why we actively participate and share information through industry steering committees and legislative subcommittees. What better way to compare what has been effective in one state that could be implemented in another control state?
It all boils down to information sharing so that Control State officials, administrators, store-level managers and staff are able to improve the system, insure control of the product, all while enhancing the shopping experience for the customer. This is the foundation of modernization through collaboration and it is what animates Bacardi U.S.A.’s interactions at the state level; in addressing critical legislative and administrative issues; and at the national level with industry trade associations and other interested groups and parties.
Together, the industry and Control States have made great strides. Across the country, collaborative efforts have resulted in off-premise tastings in Michigan and Virginia; Sunday sales in a growing number of Control State markets; an increased number of new and modern sales outlets; the relocation of stores to better serve changing demographic patterns; and many other new marketing initiatives comparable to open state markets. While consumers continue to drive and demand these modernization changes, it is up to Control State officials and the industry to respond responsibly, and creatively, and Bacardi U.S.A. will be an important collaborator in meeting these challenges.
But modernization is not deregulation; with it comes an ever greater responsibility to continue to combat underage drinking and drunk driving, while at the same time engaging in the promotion of socially responsible behavior and moderation. Bacardi U.S.A. remains fully committed in joining with Control State officials in this important work, which we often do in partnerships with ABC boards – such as with The Century Council’s partnership on alcohol awareness month with Michigan’s ABC board and Bacardi’s partnership with the Oregon Liquor Control Commission on a holiday PSA.
At Bacardi U.S.A., we see modernization and collaboration as a constructive approach to making good policy decisions, and this translates into good business.
VP, General Sales Manager, Control States and National Accounts, Beam Global
A Collective Voice That Serves Us All
In following the theme of this year’s NABCA conference of “Collaboration through Communication”, we as a distilled spirits community need to work even harder on our coming together as a cohesive entity.
Certainly we have many elements of the spirits community within the Control States: State ABCs, State Supplier/Broker Associations, Retailers, On Premise Operators, NABCA, DISCUS and Suppliers. These elements are focused on many of the same things, but we may come at those focus areas in different ways and with different intent. Nevertheless, we are all about this spirits business and the responsible management of it.
It is many people’s belief that alcohol is alcohol. Meaning spirits, wine and beer deliver the same alcohol content in the suggested servings of 12 oz. of beer, 5 oz. of wine and 1.5 oz. of spirits. This view is held by the supplier community, NABCA and DISCUS. But the way these alcoholic beverages are regulated, accessed and taxed in any one state varies greatly. Many of the reasons why there are these differences to the approaches to the various types of beverage alcohol is due to who speaks for that segment of the business and who lobbies in the arena of public opinion for these.
We as a spirits community have many opportunities to speak on behalf of this segment of beverage alcohol as well as educate others on the “what, when and hows” of spirits. But we also have many in other segments of the beverage alcohol community sharing opinions and points of view with state and federal government officials as well as constituencies in each area of the US. Certainly, taxation is a prime issue when we speak of how beverage alcohol is governed as well as access and regulation in general. But not all segments of beverage alcohol are saying the same thing.
All of our Control States have chosen a very specific path to follow in the regulation of spirits, but that discipline to spirits does not necessarily translate equally across all types of alcohol in the state. So as each entity of the beverage alcohol community has their own agenda, I think it important that we in the spirits segment become aligned as much as possible on the spirits issues of the day and have a good eye on what the right thing is to do for this segment long term.
Having a forum and organization such as NABCA is very important for us and other suppliers so that we can connect and communicate with our supplier peers as well as the State ABCs and NABCA. But also, having a group such as DISCUS serving our collective points of view of the supplier community is vital as well.
There have been good efforts in states such as Washington and Michigan where the DRAW organization and MSA, respectively, have done great work in bringing a concerted supplier and broker voice to the state and the communities there.
But with all of the good efforts by the groups mentioned above, there is still so much more to do. Unfortunately, our spirits message is in the minority not only in numbers but in strength of voice when it comes to representation and influence in governmental circles as well as the community in general. This is especially important when we talk about how we compare ourselves to the other beverage alcohol segments.
We will need to do more and think more creativity on how we can amplify our voices and messages to ensure spirits has a fair shake in public forums and in all of the decisions across the country. Beam Global is eager to continue that expanded partnership across the states, companies and organizations benefiting our industry. We all need to understand that we are all in this together and that we all derive benefits from the products we sell and the revenue they generate.
Vice President Control States and Canada, Brown-Forman Corporation
Our company has quite a longstanding tradition of growing brands within the industry and the current efforts behind Brown-Forman 150 lay this out clearly in the control states channel. The “150” designates our company’s age in the year 2020, which is not that far off in the future, and provides the rallying point for a perennial view of building. Around here, we also use the word “forever” quite a bit because there really is no end game. It helps us reaffirm what must be done to grow our market share through increasing the focus on innovation, improving our route-to-consumer through the existing alliance partnerships, and penetrating a more diverse consumer base. With this strategy as our backdrop, and the long-term view that we take on our business, it is easy to see how this part of our culture is highly visible to our partners within the control states.
No matter what part of the beverage alcohol business you are within, change is occurring at a much faster pace than seen in prior years. Our collective control states business is no exception. State governments are under considerable pressure to offset revenue shortfalls, larger retailers are exerting their new power through various means, brokers have been scrambling to align under multi-state configurations, suppliers continue to ramp up their efforts behind product innovation, and consumers, stung by an ailing economy, looked for better pricing across many brands and categories. I cannot think of a better time for us to be collaborating through communicating with one another! We all know that communication is critical, first and foremost, but it is “what we do” and “how we work” with one another (collaboration) that, ultimately, provides measurable progress. The Industry Steering Committee is just one example of how leaders can gather and work together to help the industry overall.
During this past year, Brown-Forman has made several key changes that impact our business approach toward the control states and Canada. First, was the creation of my role which focuses solely on this geography. This position links the state and regional leadership in the control state universe, champions best practices for superior execution, consults with brand marketing groups and SRA leaders, and serves as the primary contact for the NABCA. Second, we are continuing to use the Control States Advisory Committee to help guide our business. This group is composed of both Brown-Forman sales and marketing members as well as broker leaders. Third, we have now successfully transitioned Canada with a unique sales model that positions our partner, The Hive, representing and solely selling our portfolio across the provinces. Fourth, and most importantly, we have continued to increase our efforts behind the responsibility that we believe comes with producing beverage alcohol products. Whether in our advertising or the manner in which our brands are promoted, we have maintained a firm stance in this area and support numerous national, regional, and local programs to support responsible consumption.
Probably the most visible of all accomplishments is the new product innovation that is underway here at Brown-Forman. Just in this fiscal year, alone, we have launched Jack Daniel’s Tennessee Honey, a new line of Jack Daniel RTDs, el Jimador RTDs, Chambord Vodka, Collingwood, Canadian Mist Black Diamond, Soco Lime, Early Times 354 Bourbon, and Korbel Sweet Cuvee. Additionally, el Jimador and Herradura continue to grow rapidly in a tequila category where we are relatively new. This next year promises to provide even more to consumers who are thirsty for new and different products. Just as it was during the first 140 years of business with Brown-Forman—collaboration through communication with our state officials, brokers, and retail network—is critical to our success in building all of our brands, both new and existing.
President Control States and National Accounts, Diageo North America
I am thrilled to be taking on my new role as President of Control States and National Accounts. After spending the last 25 years with Diageo, I am looking forward to this exciting new chapter. There have been many positive changes over the last few years in Control States, and the time is right to capitalize on this momentum. To do so, there are three key steps in working with you that I know will deliver mutually-beneficial results for all of us committed to the Control State platform.
STEP 1: Review and Optimize Our Operating Model
One of the things that make a good company great is periodically examining its operations in order to optimize its business. With exactly this goal, I am currently leading a review of Diageo’s route-to-market system for Control States. The last time Diageo examined its distribution system was in 2000, shortly after the company was formed. That review produced Next Generation Growth, or NGG, which transformed the way beverage alcohol companies work with distributors and brokers in the US. Diageo consolidated its brands with one exclusive distributor or broker in states without alcohol beverage franchise regulations. This structure enabled distributors and brokers to provide dedicated resources for the Diageo portfolio.
NGG was a transformative change for the business – one that has produced invaluable business results. The review that is currently underway in Control States will take those changes to the next level, helping us transform our business across the Control State platform. Our focus is on identifying the best way to enhance resources in support of our brands, in order to best perform in the ever-changing environment in which all of us currently operate.
We expect the net effect of the review on Control States to be improved operations, better interface with Diageo’s supply chain and greater performance of Diageo’s premium portfolio in the marketplace.
STEP 2: Support the Business
A primary goal for the coming year is to continue to aggressively support the Control States in a number of key areas. First and foremost, Control States stand for Social Responsibility and Diageo will continue to support these efforts, as it is a priority for all of us. Over the past year, Diageo worked together with a number of Control States to deliver meaningful and effective social responsibility programs. Locally-driven, these initiatives have been dedicated to the reduction of underage drinking and in support of responsible adult consumption. That important work will continue in the coming year.
Diageo is also steadfast in its support of Control State Operations. With a dedicated staff, Diageo was able to assist several Control States to improve and enhance their systems, including work on warehouse designs, shopper insights and store sets. We look forward to working with more states on similar efforts to enhance existing business operations.
Finally, Diageo has a strong State Government Relations team which works with Control States to identify policy opportunities to Support Consumer Choice within the Control markets. As states seek ways to enhance state revenues, Diageo is exploring possible means to work with regulators to enhance consumer convenience while promoting responsible drinking. This past year, for instance, changes in several states will increase state revenues while adding needed store locations, allow for consumer tastings and extend state store hours – responding to consumer demand in these states. Diageo will continue to work to identify mutual opportunities to support Control State customers.
STEP 3: Build and Nurture Key Relationships
The most important element of effectively working with Control States, of course, is building relationships. I look forward to attending this year’s NABCA Annual Conference and getting to know the many dedicated Control officials that manage and run their state distribution systems for their constituencies. It’s with close collaboration that we’ll identify the best way forward for brokers, suppliers and Control States.
Vice President of North American Sales, Heaven Hill Distilleries
It is a pleasure to provide Heaven Hill Distilleries’ perspective on the issues facing the beverage alcohol industry and on the overall conference theme of “Collaboration Through Communication”. Heaven Hill is the country’s largest remaining independent family owned and operated distilled spirits supplier, and has been owned by the Shapira family since its founding in 1934, thus providing a unique and wide-ranging macro view of industry trends and changes. Through strong sales of both traditional brands like Evan Williams Bourbon and Christian Brothers Brandy, and through the more recent launch of innovative groundbreaking brands such as Pama Pomegranate Liqueur and Burnett’s Flavored Vodkas, Heaven Hill has gained a better perspective on what is happening at all levels of the three tier system and within the on- and off-premise environments.
It is through our heritage of independent ownership that we are able to pursue our own destiny and remain focused on initiatives and a culture that moves our business forward in a measured and manageable way. For us, and for many in the industry, maintaining the highest standards of corporate stewardship and citizenry are the key underpinnings of our overall mission—whether it is responsibility messaging, sustainability policies or civic involvement, we always strive to “do the right thing”. Similarly, our stability and multi-generational relationships have created equity with our trade partners that serve us well in an era of consolidation.
The ability to collaborate with our customers and trade partners stems not only from our initiatives and culture but perhaps more importantly from our ability to effectively communicate them. A lean management structure, and the focus and accessibility that result from it, is one of the hallmarks of Heaven Hill. We have a tradition and reputation with our Control States partners for straight talk, direct action and timely follow up that make big brands and major marketing initiatives work.
For our customers, Heaven Hill’s structure and accessibility have made us an effective, and successful, partner in the Control States. Consumers in these markets also benefit from our focus and now increasingly collaborate and interact directly with us through customer management strategies and social media. With the top selling brand in two Control States, and as the fourth largest overall supplier to the Control States, the opportunities for us to further enhance our position in this arena lie waiting ahead. We look forward to realizing these opportunities.
Sales Manager, control states and Canada, Luxco
Collaboration thru Communication
With “Collaboration Thru Communication” as the theme of this year’s NABCA Conference, I am reminded of what Captain said to the chain gang and specifically Luke Jackson in the movie “Cool Hand Luke”. After clubbing Luke, the Captain tells the chain gang emphatically, “What we have here is a failure to communicate!” Perhaps is wasn’t so much the message as it was the delivery, but one thing is for sure, without communication there can be no collaboration.
Communication is the life blood of any business organization. No organization can succeed or progress and win customers without effective communication. Effective