StateWays Best Practices 2019

StateWays magazine presents its 2019 Best Practices awards, recognizing the best in innovation, growth and efficiency in control states across America.

PLCB Earns Best Retail Innovation

by Maura Keller

Today’s consumers want new and exciting ways to experience premium products at an affordable price point, and with increased portability and convenience. 

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The Pennsylvania Liquor Control Board (PLCB) took home the 2019 Best Practices Award for Best Retail Innovation as part of its efforts to meet this increasing consumer demand by expanding merchandising of small-size products.

According to Dale Horst, PLCB director of marketing and merchandising, sales of wine and spirits in smaller-sized containers and alternative-packaging formats fill this need. These include 50-ml.-to-375 ml. sized bottles, cans and multipacks for spirits, plus cans, multipacks, Tetra Paks and other formats up to 651-ml. for wine. They also offer PLCB’s Fine Wine & Good Spirits stores a major opportunity for growth.

In the last fiscal year, the PLCB tripled the number of spirits items it carried in cans, and grew its canned wine offerings by 119%. This resulted in a 63.2% increase in wine and spirits can sales from fiscal year 2017-18 to 2018-19, and a 59.7% increase in unit sales.

“Across small-size wine and spirits categories, cans have exhibited the highest degree of growth,” Horst says. “Canned products also are highly appealing to consumers, because they offer a great deal of flexibility in terms of lifestyle, convenience factors and personal taste.” 

Single-use consumable containers are lighter, more durable and easier to transport than full-size glass counterparts. They also offer portion control and bypass storage issues and waste, and allow purchasers to engage with a broader range of products on a smaller, more affordable scale.

“Contrary to past perceptions, customers are tuned in to the fact that today’s alternatively packaged products offer high quality and good taste,” Horst says, “and for this reason are more open to embracing alternatively packaged products like canned wine, spirits and mixed cocktails.”

Horst and his team at PLCB recognize that visibility, access and selection are key for consumers. In fact, the addition of small-size shelf sets in Fine Wine & Good Spirits stores allows for the merchandising of small-size products in their own dedicated, highly browsable and self-service sections. 

“Comprised of varying sized racks, counter displays and other formats, these new displays allow shoppers to easily locate and interact with products prior to purchase and, as a result, have garnered a highly favorable response,” Horst says. 

To accommodate the growing demand for small-size products, Fine Wine & Good Spirits continues to expand its small-size product merchandising efforts through increases to the number of stores featuring small-size shelf sets, and also the exploration of new merchandising strategies in the form of test pilots aimed at positively engaging consumers.

In 2018-19, Fine Wine & Good Spirits conducted a series of pilots for small-size spirits that included:

  • A single-store pilot of a “grab bin” featuring an assortment of 50-ml. spirits located at the checkout area.
  • A three-store test of six-foot shelving displays featuring 63 different 50-ml. single-serve bottles and multipacks. 
  • A four-store pilot of four-foot shelving displays for 50-ml. multipacks, with each shelving display featuring 63 different multipacks. 

These pilots proved successful. Sales for non-multipack small sizes increased 33.7% in stores with the new focus on small-size merchandising.

Additionally, stores with small-size shelf sets saw an 11.6% increase in sales of standard 750-ml. bottles as compared to stores without the sets. The first “grab bin” pilot featuring small-size spirits yielded a 28% increase in dollar sales, and a 21% increase in unit sales for 50-ml. spirits, as compared to the same time period the previous year for the pilot store.

Dollar sales of spirits in small sizes (less than 375-ml., plus multipacks) totaled $112.1 million in the most recently completed fiscal year, a 16% increase over 2017-18, while unit sales increased 38.7%. 

“In line with consumers’ desire for small-size wine products in an array of alternative packaging formats, Fine Wine & God Spirits continues to expand existing shelving display units in stores as space permits,” Horst says, “from four-foot up to 12-foot sections to allow for an increased selection of small-size wine products including cans, multipacks and Tetra Paks.”

Unit sales of smaller wine packages grew 14.7% in fiscal year 2018–19, while dollar sales grew 15.6%. 

Currently, 96 Fine Wine & Good Spirits stores feature some type of enhanced small-sizes merchandising, up from the initial 61 test stores.

In fiscal year 2019-20, Fine Wine & Good Spirits plans to grow the number of stores with 50-ml. multipack shelf sets from seven to 183, and expand the number of stores featuring self-service, small-size shelf sets from 96 to 170 stores.

“Consumers continue to want to experiment with new and premium products, so we see an opportunity for continued growth in small sizes,” Horst says. “Our focus is tailoring our Fine Wine & Good Spirits stores to meet this demand.”

Moving forward, Fine Wine & Good Spirits will continue to expand its in-store portfolio of wines and spirits in small sizes and alternative packaging, and also make the products available online for purchase through FWGS.com.

“We’re also going to explore refrigeration units for small sizes within the next few months,” Horst says. “This will determine optimal in-store placement and product selections within the units.”

NHLC Wins Best On- and Off-Premise Partnership

By Maura Keller

When you combine amazing food with fabulous wine and spirits, it makes for memorable experiences. That is what the New Hampshire Liquor Commission (NHLC) delivers through New Hampshire Wine Week and Distiller’s Week, earning the NHLC the Best On- and Off-Premise Partnership Best Practice Award. 

Top winemakers traveled to New Hampshire in January 2019 for the 14th annual New Hampshire Wine Week. This is the NHLC’s weeklong celebration of wine. Months prior, the commission launched the first-ever Distiller’s Week, showcasing hundreds of the world’s best whiskies, tequilas, vodkas, rums and more. 

As explains NHLC Chairman Joseph Mollica, both series of events offer customers a staggering number of opportunities for in-store tastings and bottle signings, and culminate in two of the largest tasting events in New England: the Winter Wine Spectacular and the Distiller’s Showcase of Premium Spirits. 

To extend participation throughout each week, and to expand opportunities for customers to immerse themselves in the worlds of fine wines and spirits, NHLC partnered with a number of restaurants to host exclusive meet and greets, and pairing dinners, throughout the state. NHLC featured each dinner on its website, and promoted the sale of tickets. Additionally, NHLC was able to sell product to event attendees at a discounted price at select events. 

“Wine and spirits help unlock unique flavors in food and vice-versa,” Mollica says, “so it was natural to feature restaurants—on-premise licensees—in our weeklong celebrations.”

For NHLC’s signature tasting events, restaurants enjoy exposure they receive from the 1,000-plus guests who attend each event. 

“Dozens of restaurants participate in both events, serving up signature dishes,” Mollica says. “In addition, including food is critical to ensuring people enjoy responsibly.” 

Restaurants reserve their space up to a year in advance to secure participation for both events.

For New Hampshire Wine Week, more than 60 of the world’s best winemakers descend upon New Hampshire in January, because of the opportunity NHLC provides to interact with New Hampshire Liquor & Wine Outlet customers, as well as restaurant owners, chefs and staff. 

“Thanks in great part to our broker and supplier partners, we coordinate wine dinners that pair exceptional wines with custom-made menus, enabling diners to interact with winemakers and chefs and actually purchase cases of wine at the events,” Mollica says. 

During Wine Week, NHLC partnered with dozens of restaurants to feature exclusive pairing dinners, combining multi-course meals prepared by New Hampshire’s best chefs and delicious premium wines. Winemakers, who serve as hosts, work directly with chefs to pair the perfect wine with each course. Dinners included the following: 

  • A four-course dinner with Marilisa Allegrini of Allegrini Estates at Tuscan Kitchen in Salem. 
  • A family-style dinner and wine tasting with La Crema Winemaker Craig McAllister at Mombo was held in Portsmouth. 
  • A wine pairing dinner with David Philips of Michael David Winery was held at the Copper Door in Bedford.  
  • A wine pairing dinner with Sean Minor of Sean Minor Wines was held at Firefly in Manchester. 

With Distiller’s Week in its second year, NHLC is expanding the interaction with restaurants to mirror Wine Week, by coordinating events that offer educational and sales opportunities. 

“Last year, in partnership with brokers and suppliers, we offered nearly a dozen spirits dinners, tasting events and seminars at locations, including our outlets, a speakeasy, cigar bar and restaurants,” Mollica says. 

During Distiller’s Week, NHLC hosted an exclusive Pappy Van Winkle five-course tasting dinner at Crown Tavern in Manchester, in which guests were treated to sample of Pappy Van Winkle’s full line of bourbons. 

“These wine and spirit dinners drew thousands of guests last year alone from all over the northeast,” Mollica says. “Based on that success, NHLC plans to continue to increase the volume of these tasting dinners throughout the state during both of these signature weeks.”

So what does NHLC attribute to the significant success of both Wine Week and Distiller’s Week? NHLC affords the unique opportunity for consumers to have direct, meaningful interactions with winemakers, distillers and producers. 

“You don’t have to travel to an exotic destination or spend a fortune to obtain the access we provide,” Mollica says. “Consumers flock to our events, which regularly sell-out. Producers also value the opportunity to establish personal connections and make life-long relationships with consumers.”

For the upcoming Wine Week and Distiller’s Week, NHLC plans on making slight modifications to provide an even-more rewarding experiencing for consumers and vendors alike. 

New Hampshire Wine Week features an annual Cellar Notes educational panel and tasting for up to 150 people that has focused on topics such as “Women of Wine” featuring Gina Gallo of Gallo Wines, Laura Catena of Catena Wines, Cristina Mariani-May of Castello Banfi and others. NHLC has incorporated that model for Distiller’s Week and held a “Whiskies of the World” event last year. For 2019, they will host a “Women of Whisky & Spirits” featuring some of the industry’s leading female distillers, blenders and ambassadors.

“We also are using New Hampshire Wine Week as a model for Distiller’s Week and have expanded beyond our spirits expo to include more dinners and tasting events,” Mollica says. “The Pappy Van Winkle opportunity included is an example, and we will offer multiple dinners, seminars and tasting events in 2019.”

Finding a Transportation and Fulfillment Partner in Iowa

By Jeremy Nedelka

In May 2017, the Iowa Alcoholic Beverages Division issued an RFP for transportation and warehouse fulfillment, seeking a partner to serve its customers, reduce risk, build flexibility and scale, and maximize profits. After a thorough evaluation, the agency partnered with Ruan, a leader in the transportation, warehousing and logistics industry based in Des Moines. 

The agreement was signed in December 2018, with operations beginning the following April. Ruan now services more than 1,600 private retailers across Iowa and manages 2,300 SKUs. Since the transition began, routes have been adjusted to increase efficiency and productivity, and the IABD is currently tracking analytics to evaluate specific aspects of success resulting from the partnership.

The decision to issue the RFP was the culmination of planning that began in 2012 to improve distribution operations. “We grew to nearly 1,200 distribution points in 2012 and we knew that number was going to continue growing,” says Administrator Stephen Larson. “We had to plan for the future to ensure we could continue providing high-quality service to our customers and meet obligations to the state’s general fund.”

Since the transition to Ruan, both suppliers and retailers have seen improvements. Suppliers were previously assigned receiving appointments under the ABD, but now can choose times that works best for them. Ruan was able to accommodate an unplanned influx of 140 new retailers during the first six months of the partnership, and provides retailers with extra deliveries upon request to ensure adequate inventories for special events and holidays.

“Our core function is governing the alcoholic beverages marketplace in Iowa through licensing, regulation and category management,” Larson says. “This partnership allows us to focus on that, and allows Ruan to do what they do best, which is transportation management and value-added warehousing.”

More than 90% of the ABD warehouse handlers and driers were transitioned to Ruan, and the majority have been retained under the new partnership. 

“ABD and Ruan’s public-private partnership was a seamless transition because of the collaboration and thoughtfulness that went into the integration process,” says Marty Wadle, SVP of commercial solutions at Ruan. “We’re now in the continuous improvement phase, which will allow us to drive out waste and improve service.”

The agency anticipates Ruan will bring them suggestions to make deliveries even more efficient and tailored to the needs of retailers. “Ultimately, we think they’ll bring ideas to the table that we just couldn’t achieve when we were handling distribution,” says Business Operations Chief Herb Sutton. “That’s incredibly exciting to us and should be even more exciting to our customers.”

Nova Scotia Wins Best Technology Innovation

By Kyle Swartz

Customer experience is key. When Jillian Regan, director of service excellence for the Nova Scotia Liquor Corporation, led a project to determine how the organization could become more customer-centric, one common response was: flexibility.

Specifically, in purchasing products. The old system of reordering required phoning the NSLC sales desk, or sending in a fax. It was inefficient, and tied up staff. It was time for an upgrade.

So the NSLC IT Team, Order Team and IT partners developed a new, wholesale ordering website, from which licensees and agency stores can now place orders, whenever they want, though a personal computer, tablet or mobile device.

For this, the organization won Best Technology Innovation in our 2019 Best Practices.

“Remember, our customers do not work your typical 9-to-5 job,” Regan explains. “Bar owners are up to 2 or 3 a.m. Their busy times are the weekends, when our offices are closed.”

By launching a web portal that supports flexibility, the NSLC “let our customers know we are listening to them,” she adds.

Customers can build custom orders to meet their menus, or better suit their locations, while also maintaining a list of their favorite products for repeat ordering. The platform also provides insight into promotions, new items, limited-time offerings, local products and out-of-stock items.

“We used to send out a monthly email about what was on sale, discontinue, etcetera, but people are already besieged with too many emails,” says Regan. “This platform gives people the opportunity to go on the landing page and click on whatever products interest them, instead of getting all them in a mass email.” 

The NSLC launched the pilot version of the program in April 2018, with 20 licensees and four agency stores. Each customer was paired with a member of the sales desk as their personal guide in navigating the system. The NSLC also offered “Taste and Train” sessions at their premium store, The Port. This provided larger groups of customers the opportunity to learn about the new platform while sampling the newest offerings of rosés.

The system went live on May 21 of last year. The goal was to have 150 licensees using the portal within a year. The NSLC reached that target within nine months, Regan says, receiving “extremely positive feedback from our customers regarding its ease of use, convenience and accuracy.”

“We now see orders coming in when bars close at 2 a.m. as our wholesale customers embrace the flexibility to place their orders their way,” she adds.

The platform proved so successful that the NSLC used it as the model for developing their online cannabis retail site, which went live in October 2018.

Overall, the website was a “collaboration that resulted in success,” Regan says. This included multiple departments of the NSLC, outside developers and the NSLC customers themselves, who were brought in early on to test run the prototypes.

“They would play with it and suggest changes,” Regan says. “They literally built it with us.” 

The fine-tuning continues. In the future, the NSLC plans on enhancing the site’s interactivity, with an eye towards even greater customer friendliness. • 

Virginia’s Holiday Discounts and Promotions

By Jeremy Nedelka

Each year, the Virginia Alcoholic Beverage Control Authority gears up for the holiday season with a series of promotions and discounts on spirits in more than 370 retail stores, innovative website and social media content, and in-store tastings. In 2018 the agency coordinated its biggest holiday campaign yet, with multiple promotions throughout the season on Black Friday, Cyber Monday, Door Buster Days and six category-specific “Spirited Thursdays.”

The VABC saw overall revenue growth of $7.5 million during the holiday period of 2018. That included a 24% revenue growth on Black Friday, and a 60% increase in online orders on Cyber Monday. The Spirited Thursday promotions, which highlighted a different category with five products offered at 20% off each week, generated a $800,000 revenue lift.

Following the campaign, the agency conducted a consumer survey to measure the response. It showed an increase in the number of average visits to stores from 1.1 to 1.9, and an increase in the number of bottles purchased per consumer from 2.6 to 3.5, compared to 2017. The results show consumers were more aware of the promotions than in previous years.

The promotions were created in partnership with suppliers, who ensured inventory of discounted products was available in all stores when needed, and funded the 20% off discounts for Door Buster and Spirited Thursday promotions.

The VABC has seen continued success with awareness around its promotions in 2019, highlighting Virginia Spirits Month and National Bourbon Heritage Month during September. This year’s holiday campaign will begin early, with a Spooky Spirits Day promotion in October, when five products with a Halloween theme will be 20% off. All will be supported by a robust statewide social media campaign to drive consumer awareness and continue to increase sales.

Montgomery County and The Safety Alliance Team

By Kyle Swartz

Collaboration benefits everybody involved, and on numerous levels. For proof, look no further than the Montgomery County Alcohol Beverage Services in Maryland, for their program that benefitted multiple levels of the community, both in and out of the alcohol industry.

Originally a model derived from the Responsible Hospitality Institute, The Safety Alliance Team was revamped this year to address numerous community issues regarding businesses and events licensed to sell and/or serve alcohol. This alliance itself is an informal network of regulatory and code-compliance agencies, concerned about the impact of dining, entertainment and event businesses on public health, safety and quality of life.

So explains Kathie Durbin, chief licensure, regulation and education, Montgomery County ABS. “The Safety Alliance creates a central clearinghouse of communication and resource sharing to assist new businesses become better informed about roles and responsibilities, and provides a mechanism to monitor complaints and violations of existing businesses,” she adds.

Partners include the Montgomery County ABS Licensure, Regulation and Education Team, as well as the county’s health department, permitting services, police, environmental protection, council staff and fire marshal.

In addition to disseminating applicable code and regulatory information to licensed establishments, the alliance also holds quarterly meetings to network and share code compliance regulations and public safety. During these meetings, speakers share resources, increase program buy-in and educate to compress regulatory efforts and streamline services to the community. 

“The team has seen many positives through networking and presentations,” Durbin says. These meetings also help participants to “stay updated on trends, and identify issues in the various communities. Having support/contacts from other agencies also helps to put out fires when alcohol-related issues arise.  

Although considered enforcement, the Safety Alliance Team also acts in a proactive manner educating and developing positive relationships with businesses licensed for alcohol. “The free Alcohol Education and regulatory Training (ALERT) is given twice monthly — open to all businesses and their staff,” Durbin says. These proactive educational classes focus on alcohol laws, tobacco, hookah, outdoor dining, noises and sounds, fire, zoning and other related issues. 

“The team also helps businesses who sell and/or serve alcohol by conducting walk-throughs to identify potential violations, giving the business an opportunity to come into compliance,” Durbin adds.

Updating the Annual Report in Vermont

By Jeremy Nedelka

During the past year, the Vermont Division of Liquor Control significantly updated and improved its annual report, which is drafted to inform legislators and the public about the overall state of the agency.

The report is presented to the governor and legislature on January 1 each year, and had previously been a black-and-white list of financial reports, analysis and comparisons of year-over-year results. 

The new report is an expanded four-color version that includes a year-in-review section, organizational chart, photographs and a section for each division presenting their accomplishments and financial results. The report also provides a list of Vermont distillers and all retail store locations. 

“We’ve received numerous accolades to the appearance and content of the report,” says Director of Marketing Theresa Barrows.

The agency has planned an interactive presentation at the statehouse in February 2020 to further educate the legislature about the Division of Liquor Control’s activities and accomplishments.

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