“Collaboration through Communication” was the theme of the 74th annual National Alcohol Beverage Control Association Conference, held May 11-15 at the Arizona Biltmore in Phoenix, AZ.
The conference focused on gathering together all the stakeholders in the control systems, from citizens to administrators to legislators, and creating a open dialogue. Chairman Dan Gwadosky of Maine worked over the last year to accomplish those goals, and continued the sentiment into the opening of the conference.
NABCA President and CEO Jim Sgueo also took the opportunity to thank Gadwosky for his year of service as the organization’s chairman. “Dan has been a tremendous Chairman of the Board,” Sgueo said. “He has improved the channels of communication between all stakeholders in the industry and effectively displayed the unique position of balance Control States hold for responsible sale and distribution of alcohol. I look forward to working with him as he continues his position on the Board of Directors.”
The conference was well attended by industry and control state representatives alike. From the Welcome Reception to the keynote addresses to the numerous sessions, attendees caught up with old acquaintances, mingled with newcomers and shared insights with the industry’s experts.
Cokie Reflects on her Career
Political commentator Cokie Roberts, cited by the American Women in Radio and Television as one of the fifty greatest women in the history of broadcasting, thrilled the crowd with stories from her decades working in Washington.
Of today’s political climate, she quipped “Who wouldn’t enjoy watching the politics of today?” She referred to the current field of Republican presidential candidates as “a field in search of a star” and said that the intense partisanship described by many commentators misses the point. “The competition right now is within the parties, not between the parties,” she said.
Despite the fact that partisanship and polarization is currently high (though Roberts said not the highest in the history of the country), she believes the United States achieves moderation through divided government.
There is one current political trend that she says is counterproductive: money in politics. “Billion dollar elections are good for TV stations,” Roberts says, “but they’re not good for anyone else.”
The suppliers weighed in during a panel discussion moderated by incoming NABCA Chairman Patrick Stapleton. Bill Newlands, President North America of Beam Global Spirits & Wine, Mark Teasdale, CEO and President of Proximo Spirits and Steve Bellini, Senior vice president of Sales at Sidney Frank Importing discussed the issue of control systems being monopolies and how that impacts their companies and customers.
“The monopoly issue is rooted in a time when control states were less consumer-friendly,” explained Bellini. “There’s been a lot of progress, and I’d give the control states high marks on selection today.”
Bellini said that pricing is a different issue, but Stapleton quickly reminded him that most pricing formulas are set by state statute and regulators don’t always have the flexibility they want or need.
Bringing up a theme that ran throughout the conference, Newlands said the tax system on spirits versus beer and wine is very different and changing it could be very advantageous.
The conversation quickly turned to the process of listing and delisting products and whether smaller companies have a chance to compete in the control states.
“As a monopoly we believe we should list everything,” Stapleton said. “But we have many products that site in the warehouse so we need to be careful.”
Teasdale said that the important factor is the window between listing and delisting, since companies spend so much money on ads and promotions to build brands. “We have a development process, so our challenge is looking at the opportunity to create value if the window is open longer,” he said
Bellini agreed. “New products are the lifeblood of the industry,” he said. “It’s a pain in the neck for administrators, IT and store managers, but we have to find a way to come to grips with it.” He also said in the control sates, smaller brands have a better chance to succeed than in open states. “There’s not a more level playing field overall, but the starting gate is more level,” he said. “After that it’s all about investing in the brand.”
Newlands agrees. “The opportunities for smaller brands in the control states keeps big brands on their toes,” he said. “I feel if someone has a great idea they should have at it, since that’s what free enterprise is all about.”
Teasdale also believes the market will sort out the competition between brands. “At the end of the day, small or big companies, it’s brands that win,” he said. “If there’s a great product and it’s well-promoted, people will buy it.”
Bellini summed up the recent surge in line extensions and new products by citing a different part of the drinks industry. “The transition in the soda business with consumers seeking different flavors and variations can lead to an infinite number of products,” he said. “That’s moving over to our business now.”
The Lines are Blurring
Commissioner Shaun a Helfert of Montana led a panel discussion about the blurring of alcohol definitions, caused by “the proliferation of new products that don’t fit our traditional alcohol definitions,” she said.
The state of Montana recognized this trend early and has put guidelines in place to define what’s included in its inventory and clearly defines beer, wine and spirits. For example, beer must be 8.75 percent alcohol-by-volume or lower and cannot include caffeine or stimulants, or up to 14 percent ABV if at least 75 percent of the sugars used for fermentation are derived from malted cereal grains.
The agency isn’t looking to ban all non-traditional drinks, just provide better information to consumers. “We can’t regulate human behavior,” said Sam Monismith, professor of Behavioral Sciences and Education at Penn State Harrisburg, “but we want people to be informed so they can make good decision. Content, size, labeling, appearance, effects, and flavors all impact how a drink should be regulated and clearly defined.”
Dr. Monismith emphasized that standard drink sizes are often forgotten as containers become larger and that consumers often don’t realize the alcohol content of some high-proof beer.
Bill Kerr of the Alcohol Research Group concurred, saying his research shows that standard drink labeling (such as the labeling in Australia) better allows consumers to track their alcohol intake. “Flavored malt beverages have packaging that can contain up to five standard drinks in a single can,” he said. “That’s a recipe that leads to overdrinking.”
All three speakers agreed that the current taxation rates on beer, wine and spirits no longer reflect the modern brewing, distilling and mixing processes that create such a wide array of hybrid drinks.
Sharing the Story
Next year will mark 75 years since the NABCA’s founding, and Mark Bodi has been chosen as chairman-elect to take the reigns following the anniversary conference. Current Chairman Patrick J. Stapleton of Pennsylvania has chosen “Acknowledging the Benefits of Control” as the theme for that gathering and as the focus of the upcoming year. The NABCA seeks to counteract some of the negative information spread by proponents of privatization by showing that the control system should be celebrated.
“We should not hide our accomplishments from the light of day,” Stapleton said at this year’s event. “We have a story to tell and my goal is to make sure the media, government officials and community leaders hear the rest of the story. As we prepare to celebrate 75 years of the experiment of our control models, let us remember that is has been acknowledged by experts and research that there are many benefits to the Control State systems, both economic and social.”