Beverage alcohol control in Virginia has fundamentally changed in recent years. Rather than a department or agency, the VABC now legally operates as an “authority.” Approval for this shift occurred during the 2015 General Assembly session, and transformation officially took place, gradually, in 2018.
So what does that mean for the newly minted Virginia Alcoholic Beverage Control Authority?
From a technical standpoint, the VABC is now an independent political subdivision within the state government. In other words, becoming an agency allows the VABC to operate more like a business. That’s a significant advantage while running 392 beverage alcohol retail stores across Virginia.
Overall, the change amounts to increased flexibility. No longer is the VABC beholden to requirements of the Virginia Public Procurement Act, the Personnel Act and the Virginia Information Technology Act. Again, the goal is better business with fewer governmental roadblocks. Operating as an agency is more fluid.
The responsibilities of the VABC have not altered. The authority still regulates alcohol industries within the state, while also generating significant revenue through sales of distilled spirits, Virginia wine and mixers.
The change has affected VABC leadership, however. Like a business, an authority requires a Chief Executive Officer. First up for this important role is Travis Hill.
The VABC CEO is no stranger to governmental law or alcohol regulation. Previously Hill served as the VABC COO. Before that he was Virginia’s deputy secretary of agriculture and forestry, which followed time spent as an attorney in Richmond.
There, Hill represented clients before the Virginia General Assembly, the State Corporation Commission and other regulatory bodies — including the VABC. His career has truly taken him full circle.
The VABC board also transformed under the change to an authority. The former, full-time, three-person board has become a part-time, five-person board — similar to boards of directors in the private sector. The chair is Maria J. K. Everett. Prior, she was a senior attorney at the Division of Legislative Services and director of the Virginia Freedom of Information Advisory Council. And like Hill, she has also seen her past work link into her future job.
Making the Change
In her prior roles, Everett had staffed legislative committees at the Virginia State Capitol, and served as counsel to the House Committee on General Laws. For decades she drafted laws — including the authority legislation for the VABC.
“I worked on that with Travis while he was the COO, and neither of us could have anticipated that we would be the ones asked to implement it,” Everett recalls with a laugh.
“It’s neat how it’s come full circle,” Hill agrees.
Part of the motivation in becoming an agency was relieving the age-old pressure that faces all control states. That is: privatization.
“The idea of privatization came around and nobody wanted to follow that, so the model of authority helped calm that push for privatization,” Everett says. “An authority is one deviation out from what you would consider government.”
But there’s so much to gain in that single deviation. For instance, shipping SKUs quicker to stores — with fewer bureaucratic steps in between — to ensure that popular products remain in stock.
While the VABC has changed greatly behind the scenes, the visible result overall for the public has been little if anything.
“The sign of a perfect transition is that the customer doesn’t realize that anything is different,” Hill says. “The public hasn’t focused deeply into the authority change, while we continue to fulfill our mission with the ability to make quicker decisions and operate faster to address issues as they arise.”
“Becoming an authority gave us the mindset that we could change and respond proactively while moving quickly,” he adds.
The timing of this enhanced flexibility was fortunate. Unbeknownst to anyone, lurking just around the corner was an existential threat that bore down on the world in the years ahead. The VABC — like the rest of us — could use all the help there was in addressing Covid-19.
Handling The Health Crisis
One example of why the agency designation was beneficial was the VABC’s pandemic response.
The Virginia Public Procurement Act had placed limitations on purchases for the former agency model. Free from those confines, the VABC could obtain PPE and cleaning products more quickly while Covid swept across the state. This includes buying 50 barrels of bleach during those initial days of dwindling supplies — a much-needed source of sanitization that immediately went out to the entire store fleet.
“That was a good example of people saying, ‘Here’s the problem, so how do we fix it?’” Hill recalls.
During the pandemic, authority staff actually increased. In a commitment to help licensees however possible, the VABC hired displaced bar and restaurant workers for warehouse jobs, as off-premise volumes spiked. This initiative added more than 1,000 new workers — helping many affected by on-premise closures.
Extra staff was also necessary because the VABC gave retail employees permission to call out if they felt uncomfortable coming in during the pandemic. With an expanded labor pool, the authority plugged holes at stores as some people understandably chose to stay home.
Other efforts to aid licensees during the pandemic were numerous. The VABC deferred license fee payments for 90 days. The authority altered how signatures were obtained, lowering the number of touchpoints that could potentially spread Covid. Curbside pickup went into effect, as did cocktails-to-go and other new channels for sales.
“We really tried to shift our rules and requirements to whatever the marketplace allowed us to do,” Hill says.
Of course, none of this would be possible without the work of the entire VABC staff. “I think their work has been really amazing,” says Everett. “There’s a lot of talented people here.”
The VABC also invited licensees onto agency conference during this crisis.
“It’s good for them to hear what’s going on with a real-time exchange,” Hill says. “That helped lead to a stronger relationship with the licensees. And it showed them the teamwork between all our departments, as everybody was pulling together and doing incredible work.”
Building New Beginnings
Another area where the authority model proved productive was in the design and construction of a new VABC central office and warehouse.
Virginia government approved this project during the 2018 legislative session. The previous structures dated back to the ‘70s. Simply put, the VABC was running out of room as both staff and storage needs expanded.
“We could not continue doing the volume we’re doing now with the old facility,” Hill says.
Located in Hanover County, near Richmond, construction on the new sites will be complete in June of this year. The goal is for the new spaces to last the VABC for the next 20-25 years.
400 employees will work at the new central office, which is 100,000 square feet. Improvements include more efficient use of space, Hill says, plus more conference rooms. Currently, reserving a conference room in the old office is a challenge.
The new warehouse measures 300,000 square feet. Taller than its predecessor, the building allows for more racking of product. The larger overall layout also grants additional room for conveyor belts and moving lanes.
“We can pick a higher number of products, faster and more efficiently,” Hill says.
Helping garner approval for this massive construction project was that change to an authority model.
“People in the state felt more comfortable with us doing all this because we’re an authority,” Hill says. “The commonwealth sees us as a business, and is confortable investing in our future. We’re continuing to grow our fleet and our product offerings.”
The Need for Ecommerce
The new facilities will also better serve the authority’s continued push into ecommerce. Especially as Virginia and the rest of the world remains under the threat of Covid-19.
“Early on during the pandemic, we started talking about keeping the stores open. What could we do?” recalls Everett. “We landed on ecommerce. In late May or early April, we made sure that we could fulfill our online orders quickly.”
Curbside pickup rolled out during this time. As did an acceleration of overnight shipping for in-state orders. (The VABC does not ship out of state.) The authority went from having one pilot store that provided overnight shipping to now five.
“We’ve seen some good initial reactions to that,” Everett says. “And we see the potential to pivot if the pandemic gets even worse.”
This includes work by the VABC to offer on-demand, same-day shipping.
“We have to make sure that we can do it safely,” Everett says. “The consumer now expects this kind of service from all sort of retailers, so we’re trying to ship into that space as well.”
This rapid evolution in ecommerce — experienced by businesses worldwide in 2020 — required the VABC to build out processes and technology to support the rising online volumes.
The authority’s tech has certainly come a long way in a short time. In 2015, the VABC launched its first ecommerce website. Before that, the website offered only PDFs of product lists.
“In six years we’ve gone from that to now doing curbside pickup and same-day shipping,” Hill says. “It’s important to keep that in perspective.”
Supporting Virginia Businesses
Known for its wineries, Virginia also contains fast-growing industries for both craft beer and distilling. And unlike their viticultural counterparts, most brewers and distillers had not yet setup a robust shipping business before the pandemic.
“They were really impacted by on-premise closures,” Hill says. “That’s why we so quickly authorized delivery, curbside and the ability to drive across town to drop off product as a VABC store. We were able to continue to afford them market access, and they’ve done a great job. It’s really been a lifeline for them to continue to operate.”
Created in the prior legislative session, the Virginia Spirits Board has also greatly helped state producers promote their products during the crisis.
For breweries, the VABC has allowed additional containers for growler sales, since breweries cannot accept used growlers due to Covid contamination risk. Virginia also supported the manufacture of hand sanitizer by craft producers throughout the state.
“The hand sanitizer decision was quick, it made sense and it helped out licensees and the authority as well,” Everett says.
What’s Next?
The authority model should continue to pay dividends in Virginia for the years ahead.
“Our approach is trying to partner with people involved in the industry, rather than acting solely as the regulator,” Everett says. “Our first thought is always, ‘How can we be creative in fixing issues?’”
As for Hill, he remains committed to the level of communication obtained during the pandemic. “Communications are so key to the stakeholders across the board so that people really know what’s going on,” he says.
And the VABC’s first CEO truly enjoys how the authority model has allowed “more flexibility. The way that we can change and respond so quickly now, we couldn’t do that before as a state agency.”
Information from the VABC website was used in this article.
Kyle Swartz is editor of StateWays magazine. Reach him at kswartz@epgmediallc.com or on Twitter @kswartzz.
