Known for its industrial past and numerous bridges, Pittsburgh, PA, was the site for the NABCA 28th Annual Administrator’s Conference. NABCA President and CEO Neal Insley welcomed attendees to this year’s event. Board Chairman Tim Holden, who is also chairman of the Pennsylvania Liquor Control Board, extended a warm greeting from Governor Tom Wolf. Holden also provided opening remarks that included facts about the city’s numerous brides, that it was the site of the whisky rebellion and listed several celebrities that were born in the city. The names dropped included Gene Kelly, Michael Keaton, Arnold Palmer and Joe Namath.
Attendees for this conference were representatives from control jurisdictions across the United States, plus industry members and guest presenters.
Monday began the first full day with committee meetings consuming the morning’s activities. The afternoon offered attendees the choice of educational sessions, for which summaries of some are below.
Losing Control Beyond the Just the Sales
During this general session, Moderator Jeff Anderson of Idaho teed up the panel presentation by offering three overall themes for the discussion. They were choices and consequences, liquor is not just another product and caring for the customer.
Rick Garza, Director, Washington State Liquor and Cannabis Board, addressed the consequences of Initiative 1183 dismantling a $940 million business. After the initiative passed, the state went from a control system to a license state in six months. Small businesses and the voters in the state did not benefit from the initiative passing. They experienced less product SKUs, higher costs and increased alcohol outlets. Big box retailers were the beneficiaries of the change.
David Ballew, Hood River Distilleries, candidly shared what his booming business experienced after the initiative passed and the steps taken to rebuild it. As a small business looking to grow, in working with a control system, it took one call to get his product into all agency-run stores versus now having to call several retailers to do so. Other benefits of engaging with a control system occurred with logistics in that deliveries were sent to one place and the agency distributed it to all of its stores. Now, products need to be delivered to each retailer selling Hood River products.
Bill Kerr, PhD, Alcohol Research Group, Public Health Institute presented some of the results from a research study conducted after Initiative 1183 had been in effect. It found an increase in ER visits due to harms from drinking alcohol and an increase in injury that led to hospitalization, mainly in urban areas., among other outcomes.
Logistics of Direct to Consumer (DTC)
Moderator Eddie Wirt, NABCA, and panelists addressed the growing paradigm of alcohol delivery in the US. Jake Hegeman from the Wine and Spirits Wholesalers of America (WSWA), Toney Anaya of DoorDash and Mark Smith of Shipt spoke about how delivery services have risen to address the changing environment. Hegeman gave an overview of the landscape of alcohol delivery in the US, explaining how changes that were occurring prior to the COVID-19 pandemic have been accelerated, creating a quickly changing environment for alcohol delivery services to have to adapt. Smith and Anaya described some of the steps that delivery companies have taken to prevent illegal sales, such as age verification, ID checking technology, and internal monitoring of deliveries
Regulatory Compliance and Capacity: What’s Data Got to Do with It?
Carrie Christofes, Executive Director of the National Liquor Law Enforcement Association (NLLEA), provided an overview of the association’s recent project on Record Management Systems (RMS) for Alcohol Regulatory and Enforcement (ARE) agencies. It allowed them to conduct efficient data collection, use data to inform ARE practices, and enhance the interoperability of RMS systems within agencies across departments, outside agencies with partner organizations, including other state/local agencies, researchers and community groups. She also highlighted the importance of good data collection as a mechanism to provide the backing to support the public health and safety rationale for alcohol regulations based on the 2019 US Supreme Court case, Tennessee Wine and Spirits Retailers Association v. Thomas. The outcome of this case put ARE agencies on notice that the courts are demanding a higher standard for providing the public health and safety rationale for alcohol regulations. NLLEA conducted qualitative research to analyze the current landscape of RMS across ARE agencies and has summarized these findings in a report that can be accessed here.
Maria Cardiellos, Executive Director of the Integrated Justice Information Systems Institute (IJIS Institute) presented on how together, NLLEA, NABCA and IJIS are working to develop functional standards for ARE agency RMS’ to help ARE agencies have agreed upon standards from which RMS service providers can develop modules specific to these functional standard requirements. The hope is that these functional standards will 1) improve data collection with the ARE community, 2) create more efficiencies within the agencies using the data to inform regulatory and enforcement practices and 3) enhance the information sharing capabilities of ARE agencies moving forward. The project is led by a Steering Committee of ARE experts and is informed by subject matter experts across the following domains: enforcement, compliance, licensing, adjudication, research and community.
Danielle Ellston, Deputy Chief of Enforcement and Licensing of the New Hampshire Liquor Commission (NHLC) helped bring the real-life application of RMS tools and the important role they play in substantiating the value of an ARE agency. She explained the steps the NHLC has taken to respond to a recent audit of its agency’s effectiveness in the areas of enforcement, compliance and adjudication and whether the efforts the agency takes to gain voluntary compliance is working. While the agency was tracking key data variables, the data was not gathered in a way that permitted them to analyze progress because of their actions. They have incrementally implemented three initiatives to better assess their effectiveness. First, developing a progressive discipline plan, including verbal counsel, warnings, and administrative notice (e.g., fines, suspensions); however, there are exceptions to this structure for aggravated violations, sales to minors, sales to intoxicated individuals where they automatically go for administrative notice given the nature of the violation. Second, they instituted a program, “Compliance in 90 Days” where they seek to get voluntary compliance over 90 days with education and counsel to licensees. Third, they are piloting an administrative points system for licensees to create transparency in violation penalties for licensees and the public overall.
The session concluded with a question-and-answer segment.
Scorecarding 2.0
This session was moderated by Iowa Alcoholic Beverages Division (ABD) Director and past NABCA Board Chairman Stephen Larson. Panelists included ABD Chief Operating Officer Herb Sutton and State of Iowa Cloud Operations Manager Martin Moen. They showcased the Iowa Scorecard 2.0 for alcohol suppliers. Sutton explained how the system was designed in-house to provide suppliers and ABD with a tool to track their shipments and statistics. Moen gave a live demo of the Scorecard, showing how it could be used to track inventory of over 3,000 products, late and damaged shipments, historic sales and purchase orders, and more tools to help suppliers and ABD manage the stock of product with daily updates.
What Does Media Relations Look Like Today and in the Future
Moderator, Kristen Castle, Ohio Division of Liquor Control, talked about the media relations landscape of today and how it has changed. She then introduced the panelists for this session who each cited examples and approaches used to glean positive media coverage and to build relationships with various media outlets.
E.J. Powers of Montagne Powers, which manages communications efforts for the New Hampshire Liquor Commission, addressed the changing media landscape and the challenges and opportunities for control systems. He also talked about reinforcing the value of the control model showcasing results of the system for citizens in NH. Regarding what the future holds for media, Powers said that there will continue to be contraction of media outlets and less trusted sources for public information. He recommends creating a plan, becoming your own advocate, generating your own consistent content, becoming a trusted source to the media and identifying media to establish relationships for your agency.
Michelle Schmitt, Utah Department of Alcoholic Beverage Services, showcased the agency as a “Brand Evolution Case Study,” changing its name from “Alcoholic Beverage Control” to “Alcoholic Beverage Services.” Her approach to this used a public relations planning process which identified communication goals, audiences, messages, messengers and the media as part of the strategies to meet goals, despite realizing that the media is not the only means for getting content out. She had established credibility with the media in her community and was able to develop and provide messages that they used verbatim in their coverage of the name change. Regarding what lies ahead, she said there will be an increase in news websites (citing Axio), a greater need to carefully monitor the web, more niche social media groups, publications and channels, and finding a way to capture opportunities to break through the noise.
Crossover Products: Blurring of Soft Drinks to Hard Drinks
Buddy Buckner, Associate General Counsel for NABCA, opened the session introducing the panelists.
Courtney Armour, Chief Legal Officer with Distilled Spirits Council (DISCUS) and Responsibility.org, focused on the two soft drink producers getting into the alcohol space with products such as Hard Mt. Dew and co-branded products such as Jack Daniels Coca-Cola. She raised the concern about consumer confusion and an inability to detect the alcohol product from its non-alcoholic counterpart. She also discussed DISCUS’ Code of Responsible Practices for Beverage Alcohol Advertising and Marketing, which seeks to ensure alcoholic products are packaged and marketed appropriately and responsibly and only to those over the legal purchasing age of 21. They have created a Producer Guidelines Suggested Practice document that highlights the following: 1) Only advertise to those over the legal drinking age of 21, 2) avoid promoting irresponsible use of the product, 3) avoid promoting activities that require a high degree of coordination, 4) being clear that product contains alcohol on packaging. Additionally, DISCUS has created a Retailer Guidelines for Responsible Merchandising document to educate retailers about how to place products in the store, to avoid placing products around youths, to provide clear signage that identifies a product contains alcohol and to avoid selling to those under the minimum legal drinking age of 21.
Paul Pisano, Senior Vice President, Industry Affairs and General Counsel for the National Beer Wholesalers of America (NBWA) discussed Hard Mt. Dew and concerns related to trade practice, such as slotting fees. He also addressed three-tier system concerns related to who owns the product, who is distributing the product and the legalities around how the product is getting to market across the 10 states where it is being sold. He highlighted Georgia, Nevada, Illinois, and Virginia where NBWA has issued guidance, denied licensure, or have pending litigation on these various concerns about Hard Mt. Dew. He also highlighted the sheer size of the non-alcohol producer market which dwarfs the alcohol market (e.g., Coke: $245 billion vs Diageo $91.4 billion).
The session concluded with the panelists discussing the important role regulators play in monitoring this new product, and the need to educate soft drink companies seeking to enter the alcohol marketplace so they understand the unique regulatory landscape in each state.
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The conference continues Tuesday with sessions that include Listing and Delisting, Flippers and Shippers, the ABCs of DEI, and many other topics.