The Idaho State Liquor Division (ISLD), the goal is to provide “world-class customer service,” said Jeff Anderson, ISLD director and incoming chairman of the National Alcohol Beverage Control Association (NABCA). “That’s the very least our citizens deserve from us.”
Since becoming ISLD director in 2010, Anderson has been implementing a modernization campaign of the division’s 66 state stores, called iMod. “It’s really consumer-focused,” he said.
One prong of the campaign is to have “the right product at the right place,” Anderson explained. Working with suppliers, the ISLD is looking at its different markets, rural in Northern Idaho and upscale and urban in Southern Idaho, and at the marketing, merchandising and shelf-sets of products in individual stores, “really drilling down into product sets,” Anderson said, to have the optimum selection of products at each individual store, with a focus on premium and super-premium products.
“The effects have been astounding and measurable,” said Anderson. “Our customers are not drinking more but they are drinking better.” According to the ISLD’s 2013 Annual Report, while sales volume in the state was up 4%, sales in dollars was up 7% and net income was up 8%. The ISLD generated over $60 million for the state in 2013.
The iMod campaign has also upgraded the look of Idaho’s state stores. New four-sided shelving units, called pods, for example, have eliminated the need for cardboard and case stackings in the stores.
As store leases end, the ISLD looks for better locations. “Is there good parking? Does it have ease of egress, such as a stoplight? Is it near or adjacent to a grocery store to be convenient for customers? We put all those criteria in a big bucket and stir,” said Anderson.
The ISLD is also continually upgrading the look of its stores as opportunities arise, with finishes such as polished-concrete floors and more sophisticated lighting.
A main target of all this upgrading: female customers. “When I arrived in 2010, I asked a simple question: Who is our customer?” said Anderson. A simple check – cashiers indicated whether the customers they served were male or female – showed that 73% of the customers in state stores were men and only 27% were women. For a product used by both genders, such as spirits, Anderson explained, that was not a good ratio.
Plus, he pointed out, “Female customers tend to spend more time shopping, their baskets are bigger and they are more likely to buy premium and superpremium products.”
By focusing on the convenience, ease of shopping and look of their stores, the ISLD has been improving that ratio. “It might not be 50/50 yet,” said Anderson, “but it’s not definitely 73/27 anymore either.”
“Our goal is to have our stores continue to look and feel like a good-quality retailer, to provide knowledgeable, friendly, helpful service and to have the product you want at a fair price,” he said. “With something like iMod, there is never a finish line. You have to continually adapt to the needs of the customer.”
Sound Business Principles
Anderson, who has also been, since 2007, the director of the Idaho Lottery, spent the bulk of his career – 26 years – in broadcasting, including serving as vice president and general manager of the CBS television affiliates KBOI in Boise and KIDK in Idaho Falls. “My experience has been, not in government, but in private business, where the focus has to be on the customer,” he said, “and now, as director of the liquor division and of the lottery, I am running entities that have consumers and revenues and expenses and profits. They are quasi-businesses that need to be run with sound business principles. With the lottery, I have salespeople and deal with advertising. With the liquor division, I have storefronts and store employees.”
And the core principle of running a successful business is treating the customer well. “And when I say ‘customer,’ I mean a pretty broad spectrum,” said Anderson. “I mean both internal and external customers. I mean, not only our customers and our licensees, but also our suppliers and the landlords of our store locations and our vendors. Internally, I mean our sales associates and other employees. Everybody in the supply and the value-added chain. We need to develop a trust with all of them, both with our retail customers and with our suppliers. It is the foundation.”
The ISLD controls the distribution and sale of distilled spirits in the state of Idaho. In addition to its 66 state stores, which account for the bulk of the division’s sales of distilled spirits, the ISLD oversees 100 agencies, located mostly in sparsely populated rural regions. The ISLD’s central office, with a staff of 21, and its warehouse, run by a staff of 14, is located in Boise.
Then it comes to serving as NABCA chairman, Anderson’s focus will also be on all of the association’s customers and the association’s relationships with them.
Anderson has been serving as chairman since January, when J. Neal Insley, the prior chairman, left the Virginia Department of Alcoholic Beverage Control (VABC). “That’s the nature of the beast – with new governors, new opportunities – we have had chairmen leave before their terms were up before,” said Jim Sgueo, NABCA president and ceo. In fact, Insley actually served as chairman for 18 months, longer than any other chairman, because the chairman before him, Mark Bodi of the New Hampshire Liquor Commission, left his position in June of 2012, after serving only six weeks as NABCA’s chairman.
Anderson has been serving out Insley’s chairmanship, which has the theme “Protect and Serve,” since January and will commence his own chairmanship year starting in May. Steve Larson, administrator of the Iowa Alcoholic Beverages Division (IABD), is the chair-elect and will become the chairman in May 2015.
When it comes to improving its customer service, one focus of the NABCA is to continue to maintain and improve its statistical-data products. “More and more customers, such as suppliers, brokers, financial analysts and a few retailers, are relying on the accuracy and timeliness of our data to make their business decisions,” said Sgueo. “We are primarily funded by our statistical data products. So, our main thrust, when it comes to our statistical-data products, is an expansion and improvement of our service and our information.” One major investment will be in the NABCA’s infrastructure, the hardware it uses to produce and crunch its statistics.
The NABCA is also working on expanding services to its members. Attendance at the association’s meetings, such as the administrators’ conference and the legal symposium, have been at an all-time high.
The NABCA will continue to plan and execute more “field trips” as well, Sgueo said. For example, earlier this spring, for the third time, the association sponsored a representative of each member state to go to the MODEX trade show in Atlanta to see the latest developments in warehouse, distribution and supply-chain technologies. Many of the control states’ agencies have made changes to their warehouse operations based on what they’ve learned at this trade show. The Idaho State Liquor Division sent three people, sponsoring two of them themselves, reported Anderson. The ISLD runs its own warehouse, located in Boise, with a staff of 14 employees. It receives, stores and distributes over a million cases per year over a geographic area over 83,000 square miles in size.
“And the legal symposium is very, very valuable,” Anderson said. This year’s legal symposium had 12 seminars scheduled in its 1 ½ days and attracted about 250 attendees.
The administrators’ conference will be held in Boise this year. Last year, about 250 attendees came to the conference in Williamsburg, VA, which featured 18 seminars.
And the NABCA recently organized a media summit, about how to interact more proactively and positively with the press. This members-only meeting featured presentations by a representative of the Washington Post, by an advertising agency and by a blogger.
“The symposia and the conferences are good learning experiences,” said Anderson, “and a chance for people doing the same jobs to network and develop friendships.”
The NABCA has also increased the amount it dispenses in grants for alcohol education effort, up 50% to over a half-million dollars.
And in the next couple of months, the association will be unveiling its online survey book. “It used to be available only to members before,” said Sgueo, “but we want to expand service and provide it to folks who need it, such as researchers and officials in both the control and open states.”
The NABCA has also been reaching out more to entities similar to the control states located throughout the world, such as some Canadian provinces and Nordic countries that run their own control systems. “It is fair to say that they are facing some of the same things we are,” said Sgueo, who reported that Canadian representatives came to the logistics trade show, the media summit and both Nordic and Canadian representatives are at the annual conference. “Truthfully, alcohol is a global entity and these agencies from other countries look an awful lot like us,” said Sgueo.
As NABCA chairman, Anderson said, “I’d like to make sure that the NABCA continues to provide the best value to its members and their employees as well as to society at large.”
In other words, good customer service.
Front-Row Seat To Privatization
The Idaho State Liquor Division (ISLD) has always received some business from customers coming across the border from Washington State. “Because of the nature of the way Washington taxes worked, we always got some Washington customers,” said Jeff Anderson, ISLD director and incoming NABCA chairman. “What cost $10 or $11 in Washington cost $7 here and that meant that when someone from Washington was on their way to Cabela’s, they might fill their tank with gas, buy a carton of cigarettes and stop and shop at one of our state stores.”
But when Initiative 1183 was implemented in Washington State in June of 2012, privatizing the distribution and sale of distilled spirits in that state, the ISLD border stores saw a wave of more business, particularly in the sale of premium and super-premium products. The new Washington State fees and taxes are calculated as a percentage of a distilled-spirit product’s price, thus raising the price more on higher-priced products. “Pre-1183, a bottle of Patrón might cost $50 in Idaho and $53 in Washington and the consumer wasn’t going to drive over for that,” explained Anderson, “but now Patrón, still $50 here, is $60, $65, $70 in Washington. The price mix of our stores at the border changed and they started doing more volume.” The ISLD’s newest store, called “State Line,” which opened in October of 2012, quickly became the ISLD’s largest-volume store, with sales of over $6.7 million in Fiscal Year 2013. The ISLD now estimates that about 6% of its total distilled-spirits sales are coming from Washington State. “The change has peaked,” said Anderson, “but the stores on the border have a bigger base of business now.”
When it comes to the possibility of privatization in Idaho, Anderson believes that the environment and the sensibilities of the citizens in Idaho are different enough from those in Washington that the idea wouldn’t gain traction in the same way and that, wherever and whenever privatization is considered, “there will probably be a little more sensitivity to the impact on price,” in light of what happened in Washington State.
“It’s not like the privatization debate hasn’t been going on for 75-80 years,” said Jim Sgueo, NABCA’s president and ceo. “Our job is to provide as much information as possible to those making the decisions so that they are making informed decisions.”
Anderson concurred, explaining, “Our job as public servants is not to be advocates for one position or another, it’s not to argue that control states are better. Our job is to tell the truth, to model and explain what we do, how we do it and why we do it.”
Or, as Anderson wrote in the ISLD’s 2013 Annual Report, which details its operations and finances for the year, “Good government requires openness in evaluating various options but at the end of the day the system we enjoy is efficient and serves our constitutional mandate.”
List Of Current NABCA Directors
H. Mac Gipson
Administrator Alabama Alcoholic Beverage Control Board
Jeffrey R. Anderson
Idaho State Liquor Division
Stephen E. Larson
Iowa Alcoholic Beverages Division
Maine State Liquor & Lottery Commission
George F. Griffin
MD-Montgomery County Department of Liquor Control
Andrew J. Deloney
Michigan Liquor Control Commission
J. Ed Morgan
Mississippi Department of Revenue
Montana Department of Revenue
Joseph W. Mollica
New Hampshire State Liquor Commission
James C. “Jim” Gardner
North Carolina Alcohol Beverage Control Commission
Bruce D. Stevenson
Ohio Division of Liquor Control
Oregon Liquor Control Commission
Joseph E. “Skip” Brion
Pennsylvania Liquor Control Board
Utah Department of Alcoholic Beverage Control
Stephanie M. O’Brien
Vermont Department of Liquor Control
Virginia Department of Alcoholic Beverage Control
Ronald M. Moats
West Virginia Alcohol Beverage Control Administration
DirectorWyoming Department of Revenue, Liquor Division