ABL Insider Spring 2013

ABL Insider THE VOICE OF AMERICA’S BEER, WINE & SPIRITS RETAILERS

A PUBLICATION OF THE AMERICAN BEVERAGE LICENSEES | VOL. 7, NO. 1 | SPRING 13

Piecing Together State Alcohol Legislation What to Expect in 2013 Page 11

2013 State Alcohol Legislation

Announcing the 2013 ABL Annual Conference June 9-11, 2013 Alexandria, VA page 9

Special Preview Insert

Dealing with the Unplanned & Unchecked Expansion of Alcohol Access page ABL INSIDER | SPRING 13 |

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ABL Insider

A PUBLICATION OF THE AMERICAN BEVERAGE LICENSEES | VOL. 7, NO. 1 | SPRING 2013

a word before

ABL Releases Economic Impact Data for State Legislative Districts

Published by: American Beverage Licensees (ABL)

ABL Affiliates now have access to economic impact reports for state legislative districts With legislative sessions underway throughout our affiliate states, ABL has released an expanded version its2012 Economic Impact Study of America’s Beer, Wine and Spirits Retailers. It will now include the economic contributions of beverage licensees in state house and state senate districts across the country.

With so many important issues in alcohol policy being debated and discussed at the state level, ABL has developed a tool for beverage licensees to quantify the incredible contributions they make to their communities through jobs, taxes and economic impact. America’s beer, wine and spirits retailers now have the ability to tell their overwhelmingly positive story to their State Senators and Representatives as they

advocate under state capitol domes from Hartford to Austin to Cheyenne.

Through the ABL website, www. ablusa.org, ABL members can create reports and download

data detailing the number of jobs they provide in the community as well as the dollars back into the local economy: total economic impact within the state legislative district and the amount of tax support that they provide to their communities.

“ABL remains keenly focused on alcohol issues on the federal level, but we recognize that strong retailers make strong advocates to Congress.

Fighting to keep them in business is at the core of ABL’s mission and ultimately beneficial for anyone who desires a diverse and vibrant alcohol marketplace full of entrepreneurs and locally-owned family businesses,” said John Bodnovich, ABL’s Executive Director.

Access to state Senate and House district data is free to ABL members and requires additional log-in information which can be obtained by contacting the ABL office. The 2012 Economic Impact Study of America’s Beer, Wine and Spirits Retailers, which was prepared by John Dunham & Associates, can be sorted nationally, by state and by congressional district, and is also available at www.ablusa.org. |

5101 River Rd, Suite 108 Bethesda, MD 20816 (301) 656-1494 www.ablusa.org editor ROSANNE FERRUGGIA (c) 2013 American Beverage Licensees.

All rights reserved.

The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher. executive director JOHN BODNOVICH director, trade relations & operations SUSAN DAY DUFFY manager, communications & public relations ROSANNE FERRUGGIA

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The Impact of You

Looking Back at the 112th Congress, Looking Ahead to the 113th

U.S. Alcohol Regulation: A Model for Success

Craig Wolf is 2013’s Top Shelf Award Honoree

where we stand

BY CHUCK FERRAR ABL President

dc update

from the industry

BY CRAIG WOLF President and CEO, Wine & Spirits Wholesalers of America

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from the office

Unplanned & Unchecked Alcohol Access Expansion A Threat

BY JOHN BODNOVICH ABL Executive Director

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from the industry

Distributors and Retailers: Partners in Delivering Economic & Commercial Value

BY CRAIG PURSER President / CEO, National Beer Wholesalers Association

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affiliate and state update calendar of events state legislative highlights

conference 2013

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membership memo

Swipe Fee Settlement Guidlines for Merchants

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special feature

Across the Pond: Britain’s Deregulation and Backlash

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industry update

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special feature

How Store Appearance Improves the Value and Profitability of our Liquor Store System

BY Pam Erickson Public Action Management, PLC

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associate members affiliate members

where we stand

BY CHUCK FERRAR, PRESIDENT AMERICAN BEVERAGE LICENSEES

Putting Grassroots Tools in Members’ Hands My last year and a half as ABL’s

President has given me a new perspective on how you, our members, and your state chapters respond to the challenges you’re facing. It isn’t just licensing limits in my home state of Maryland, or Sunday sales in Texas, or tax increases in Illinois: We are in a constant, multi-front battle to keep our businesses, and our valuable contribution to our communities, alive for the long haul.

I recognize that now, more than ever, we are facing challenges no other industry – and no other part of OUR industry – will face, but I am encouraged by how well our members have handled them. By talking to other state affiliates through ABL, we’ve realized that many of us are facing the same threats to our livelihoods, sometimes against the same formidable opponents. By sharing information with each other, telling each other what works and what does not, we are able to mount a more effective campaign for ourselves as a unified retail tier.

The biggest change in how I talk about my business and how the Maryland State Licensed Beverage Association is talking about our industry has come from ABL’s Economic Impact Study. This has been

“As we continue to focus on the strength of grassroots empowerment and a cohesive government affairs approach, I know my membership is only increasing in value.” an incredible asset for us. I can now walk into my Congressman’s office and tell him not only what my own business contributes to the local economy, but how many jobs, how much tax revenue, and even the ripple effect of both on- and offpremise retailers have in his district.

It’s incredibly powerful to see how much beverage retailers contribute, especially during tough economic times.

After using this tool, the first thing I thought, and many others thought it too, was that it would be great if we could do the same thing for our state-level battles, talking to our State Assemblymen and State Senators about the impact our businesses have on their local districts. ABL heard these requests from its affiliates and have now expanded this tool to go down to the state house and state senate districts. With our legislative

session in Annapolis having just started, I personally cannot wait to use this information at every opportunity. ABL has always been a champion for the value of the beverage retailer, and now I have actual proof of that value every time I walk into a meeting.

We know that we are only as strong as our state affiliates. For 2013, ABL’s priority number one, and mine, will be delivering value to our membership.

Through the use of the study, through facilitated communication among members, to local support, and through continued federal advocacy on behalf of our members, our goal is to enter 2014 healthier and stronger than we are now.

I cannot say enough how important membership in ABL has been to us in Maryland the last few years. As we continue to focus on the strength of grassroots empowerment and a cohesive government affairs approach, I know my membership is only increasing in value. It is $25 very well spent. Because that’s all it is for each member of ABL - $25 to have this incredible resource at my disposal all year, spent through my state association dues. That is the most direct return on my investment I have ever seen.

So as we gear up for 2013, and the legislative concerns we have, ABL is going to take a closer look at the state and local legislation that we are facing.

The staff in our DC office is already tracking alcoholrelated state legislation that has been introduced, and we’re developing a state alcohol policy work group to discuss and strategize on how to tackle issues. If you are facing something at the state, county, or municipal level, I encourage you to reach out to ABL staff for help. Op-Eds, letters, press releases – if they don’t have them already, they will work with you to get something ready for you.

I am looking forward to gearing up for a new Congress, a new legislative session, and a new challenge. I look forward to working with all of you to bring our value to the beverage licensees community to the forefront over the next year. |

ABL Members at the 2012 ABL Convention in Las Vegas

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from the office

BY JOHN D. BODNOVICH, EXECUTIVE DIRECTOR AMERICAN BEVERAGE LICENSEES

Dealing with the Unplanned and Unchecked Expansion of Alcohol Access With the books closed for 2012, Congress and state legislatures are already in fullswing for 2013. While the talk in Washington has been dominated by gun control, immigration and financial matters, states are wading in to a much more varied menu of issues.

From balancing state budgets to addressing taxes, from Augusta to Topeka, the gears of state legislative politics are cranking back to life.

State-level legislation concerning beverage alcohol is also popping up in lots of places. Thanks to the 21st amendment, states have the right to determine how and when alcohol is distributed and sold within their borders. This has provided the country with a tapestry of alcohol policies that are tailored to the culture and citizens of each of the states.

It’s a system that has worked for nearly 80 years and has provided the most diverse and exciting alcohol marketplace in the world. Open for independent entrepreneurs and global corporations alike, the options for business and consumers, driven by competition, are abundant.

Beverage retail specialists are central to the health and control of the alcohol marketplace.

Yet despite the overwhelmingly positive impact that the hardworking men and women of the beverage alcohol industry have when it comes to creating jobs and revenue, a misguided and potentially very harmful trend is taking bloom in states throughout the country. Proponents of unplanned, unchecked expansion of beverage alcohol retail licensing are on the march.

Among their proposals are opening up outlets such as gas stations for the sale of distilled spirits; allowing the sale of beer and wine in grocery stores where self-checkouts are becoming more of the norm; and flooding cities and towns with additional bar, tavern and “brewpub” licenses to stoke tourism, all while ignoring the welfare of the other licensed businesses in the community.

A Manufactured Crisis?

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Travel to any country outside of the United States and stop in a licensed business and chances are the selection is not going to better than what you can pick up at your local bottle shop or neighborhood bar. The explosion of flavored spirits, craft beer and accessible wine brands has led to

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licensees expanding their selections and appealing to the demands of their customers’ palettes. In order to stay in business, they have modernized their businesses and inventory.

Yet the drumbeat continues: “consumers require more convenience” and “revenues will increase with more availability.”

Unfortunately, these straw men do little to address true issues concerning the beverage alcohol industry. They merely serve to (please excuse the pun) gin up public resentment for beverage retailers who are already delivering on their promise to customers and their responsibility to their communities.

Free-market ideologues are also astonished that the well-regulated alcohol industry is thriving and for the most part wants to continue to have reasonable government oversight of the alcohol market that ensures product safety, tax collection, accountability and public safety. Of course, when all government oversight is objectionable, embracing that regulation as a small business owner is confounding.

Take Indiana, for example, where some are trying to convince the public that they are being underserved by the state’s off-premise beverage alcohol retailers. From having met with and spoken to hundreds of Indiana offpremise licensees, I can tell you that the last thing these businessmen and women want to do is fail to provide what their communities’ desire. They also want to run their businesses as profitably as possible.

This matter is put in even starker relief when one considers that as of today, Hoosiers may legally purchase alcohol from a package liquor store during 120 of the 168 hours of each week in hundreds of stores in every corner of the state. That means that alcohol may be sold during more than 70 percent of the time during a week.

Stores are even allowed to open as early as 7:00am to accommodate workers on overnight shifts.

And straight from the “be careful what you wish for” department, the good people of Washington State are still trying to figure what has been become of their alcohol marketplace following drastic changes to the state’s alcohol retail system with the passage of ballot initiative 1183 in November 2011. The new “open” market has led to reports of increased shoplifting as well as calls for legislation from citizens who have buyer’s remorse after supporting I-1183. These voters were expecting lower prices and a wider selection but instead have been faced with increased costs and the squeezing-out of local, independent retailers.

Modernization & Control – Striking a Balance

In the film The Princess Bride, after the character Vizzini utters the word “Inconceivable!” one too many times, another character, Inigo Montoya says, “You keep using that word. I do not think it means what you think it means.”

“Modernization” is one such word that means different things to different people in the alcohol industry. To some, it means having access to alcohol sales at pretty much any retail outlet conceivable. To others, it means an ID scanner behind the bar, or a new P.O.S. system for their store.

As an industry and a culture, we would be best served not to confuse modernization with simple expansion.

While beverage alcohol retailers are not luddites ,and embrace new technology that helps them better serve their customers and communities, changing long-standing and long-effective laws for no better reason than because they have simply been on the books for a long time isn’t a very good reason. Neither is painting with a broad, philosophical brush that eschews all regulation of alcohol as government meddling.

Another word that goes hand in hand with modernization is “control.”

Independent alcohol retailers are part of a state’s control regime whether they like it or not. Most embrace this role and the huge responsibility that it requires. It means looking at more IDs in a day than most police officers.

It means acting as an extension of a state’s enforcement arm. And above all, it means doing their level best to prevent occurrences of drunk driving and underage consumption of alcohol.

One fact that remains clear is that independent beverage licensees are trained specialists when it comes to handling and selling beverage alcohol.

In many cases, alcohol is one of the very few products they are allowed to sell. Most of these businesspeople are not averse to increasing their ranks with other dedicated beverage retail specialists in order to meet the needs of the public. Nor will they shy away from competition provided the field for that competition is a level one.

So when we look at licensed alcohol retailers and consider plans to expand an already enormous, efficient and effective marketplace, it’s critical we consider the consequences, not only for independent beverage retailers who for decades have been fullyvested in their communities, but also for consumers who enjoy their selection and service. |

washington, dc update Looking Back at the 112th Congress; Looking Ahead to the 113th The President has been sworn in for his second term in office and the 113th Congress’ legislative agenda is starting to take shape. What does this mean for beverage alcohol retailers? Let’s take a moment to look at back at ley legislation from the 112th Congress, and think about what may lie ahead in 113th.

112th Congress

During the 112th Congress, which lasted from 20112012, ABL tracked or worked on more than 35 federal bills that were of concern to the beverage licensees.

Transportation Reauthorization The legislation that figured most prominently for licensees in the 112th Congress was a bill to reauthorize transportation spending (MAP-21) and its role in the ongoing effort to address drunk driving. ABL conducted a variety of grassroots advocacy activities and made outreach to key stakeholders as the legislation wended its way through the legislative process. In the end, the bill passed in June 2012, calling for a 27 month spending reauthorization to the tune of $120 billion. Of note to those interested in federal drunk driving policy, the bill maintained minimum penalties for repeat DWI offenders, but otherwise included no other significant changes or mandates. It did include provisions for grant incentives to states that pass all-offender interlock mandates. It also provides funding for invehicle alcohol detection If Congress doesn’t act before the clock device research. strikes midnight on December 31, 2012, Estate Tax As a member of Family family-owned businesses will be hit Business Estate Tax with a crippling estate tax burden.

Coalition (FBETC), ABL was part of a group that

113th Congress

ABL has hit the ground running with the 113th Congress, even if the House and Senate are just now wrapping up a month of organizing and passing rules under which to operate for the next two years. With 67 freshmen IT’S TIME FOR DEMOCRATS AND REPUBLICANS TO COME WE CANNOT ALLOW THE ESTATE TAX TO RETURN TO LEVELS TOGETHER, as they did at the end of 2010, when 277 NOT SEEN SINCE 2000. If Congress does not act now: in the House and 12 new 15 times more families will pay the estate tax Representatives and 81 Senators compromised on estate Senators, ABL has made tax legislation. The result was an exemption level of $5 24 times more farming estates will pay the estate tax 13 times more small businesses will pay the estate tax million and the maximum rate of 35%. That bipartisan outreach to them and agreement will expire at the end of this year.

1.2 million jobs will be lost their staff to introduce It is imperative that Congress act now to extend America’s Beer, Wine and the $5 million exemption and the 35% top rate.

Spirits Retailers and share some important issues The Family Business Estate Tax Coalition (FBETC) is a grassroots coalition with these new members. www.EstateTaxRelief.org of over 50 national family-owned business organizations.

What policy debates can we expect to see in the 113th Congress?

Taxes A perennial issue, alcohol tax increases always tend to be suggested by the public health community, As a member of the FBETC, ABL helped successfully advocate for but a united beverage permanent death tax reform. industry has succeeded in opposing harmful and regressive increases.

A tobacco tax increase bill has been introduced this year

by Senators Dick Durbin (D-IL) and Frank Lautenberg (DNJ). The tobacco tax equity proposal would raise taxes on several tobacco products not currently covered by cigarette-related taxes including small cigars and loose tobacco for rolling.

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Air Conditioning Contractors of America American Beverage Licensees American Farm Bureau Federation ® American Foundry Society American International Automobile Dealers Association American Trucking Association American Wholesale Marketers Association AMT-The Association For Manufacturing Technology Associated Builders and Contractors Associated General Contractors of America Automotive Aftermarket Industry Association Bowling Proprietors Association of America Communicating for America

Comporium Group/Rock Hill Telephone Company Financial Executives International Food Marketing Institute Heating, Air-Conditioning & Refrigeration Distributors International (HARDI) Independent Insurance Agents & Brokers of America International Sign Association Marine Retailers Association of the Americas Mortgage Bankers Association National Association of Home Builders National Association of Manufacturers National Association of Wholesaler-Distributors National Automobile Dealers Association National Beer Wholesalers Association

National Black Chamber of Commerce National Cattlemen’s Beef Association National Confectioners Association National Electrical Contractors Association National Federation of Independent Business National Funeral Directors Association National Grocers Association National Newspaper Association National Propane Gas Association National Restaurant Association National Roofing Contractors Association National Small Business Association National Telecommunications Cooperative Association National Tooling and Machining Association

National Utility Contractors Association Newspaper Association of America Petroleum Marketers Association of America Policy and Taxation Group Precision Machined Products Association Precision Metalforming Association Printing Industries of America Society of American Florists Tire Industry Association U.S. Chamber of Commerce Western Growers Association Wine Institute Wine & Spirits Wholesalers of America

successfully advocated for permanent Estate Tax (or “Death Tax”) reform that will allow for the successful future transition of family-owned bars, taverns and package stores from one generation to the next. Included in the legislation passed to avoid going over the “fiscal cliff”, the compromise legislation raises the top rate is raised to 40%, but it maintained the current exemption level and indexed it to inflation and provides for spousal transfer. ABL and FBETC had supported maintaining the 2010 estate tax compromise of an exemption level of $5 million and the 35% maximum rate. Considering that a failure to achieve a bi-partisan agreement would have led to reverting to $1 million exemption and 55% top rate, this agreement will provide certainty for beverage retailers planning for the future of their businesses and estates.

Swipe Fee Reform ABL celebrated the anniversary of debit card swipe fee reform in October 2012, using the occasion to push for credit card swipe fee reform and guard against any attempts to repeal the Durbin Amendment. ABL continued its work with the Merchants Payments Coalition.

Alcohol Taxes ABL successfully joined with other alcohol industry group to make sure that taxes on alcohol did not increase in 2012. The association also worked with state affiliates to oppose state and municipal alcohol tax proposals. |

Swipe Fee Issues An attempt to repeal permanent swipe fee reforms achieved two years ago would not be entirely unexpected, though there is currently much more than Congressional action taking place on the swipe fee front. In addition to a number of state bills that would prevent retailers from adding a “surcharge” to purchases made using Visa or MasterCard in order to cover credit card swipe fees, a $7 billion swipe fee settlement has been postponed until the fall of 2013. There will be more to share on this as it develops, but much hangs in the balance for retail interests in the meantime.

Highway Safety & Drunk Driving Though the transportation bill of 2012 dealt with many of the federal policy approaches to drunk driving, it would not be surprising for stand-alone drunk driving legislation to be introduced in the first session of the 113th Congress.

The prospects for that sort of legislation will depend to a large degree on what it would call for – mandates, ignition interlocks, research funding, etc.

E-Fairness In the 112th Congress, legislation was introduced that would have forced out-of-state online retailers to collect online sales tax. The Marketplace Fairness Act was pushed by brick-and-mortar retail interests, and gained some notable traction in the Senate. It’s safe to say that a similar effort will likely be launched in the 113th Congress Corporate Tax Reform With fiscal challenges facing the country, Obama Administration officials have suggested that it might be worth reconsidering tax rules that allow businesses to be taxed as partnerships, S corporations, limited liability corporations or other so-called pass-through entities.

ABL will be watching this closely as a change to business tax rules could wreak havoc for small businesses. |

ABL 2013 Annual Conference in Washington, DC

This June, ABL will hold its annual conference just outside of Washington, DC in Alexandria, VA. This year’s program will focus heavily on government affairs and legislative issues. Attendees will also have the opportunity to visit with their members of Congress on Capitol Hill. This should provide ABL with a great opportunity to share its perspective on the issues affecting beverage licensees. |

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from the industry

BY CRAIG PURSER, PRESIDENT / CEO NATIONAL BEER WHOLESALERS ASSOCIATION

Distributors and Retailers: Partners in Delivering Economic & Commercial Value With new sessions of

Congress and state legislatures now underway, debates over the public debt, government spending, taxes and economic reform are taking center stage. As local businesses in communities across the country, independent alcohol retailers and licensed beer distributors must be engaged in these discussions by educating elected leaders, the media and the public about your businesses’ economic impact and the quality jobs you provide.

To that end, the American Beverage Licensees’ (ABL) 2012 Economic Impact Study of America’s Beer, Wine and Spirits Retailers underscores the significant impact that retail beverage licensees have on jobs, taxes and the overall economy. This is an invaluable tool in educating policymakers, as well as the public, about the contributions that America’s bars, taverns and package stores make in cities and towns across the country.

“Generating 130,000 direct jobs – and fueling a total of more than 345,000 direct and indirect jobs – beer distributors add $54 billion to the nation’s gross domestic product.”

Similarly, the National Beer Wholesalers Association (NBWA) has released a new economic impact report – America’s Beer Distributors: Fueling Jobs, Generating Economic Growth & Delivering Value to Local Communities – that provides the first-ever comprehensive report on beer distribution companies’ total impact on national and state economies.

The report, produced by Dr. Bill Latham and Dr. Ken Lewis of the Center for Applied Business & Economic Research at the University of Delaware, presents an in-depth view of beer distributors’ economic

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contributions by taking into account how beer distributor activities are intertwined with many parts of the economy, especially the personal services sector. The report also accounts for the amount of resources contributed by beer distributors in supporting community events and local economic development, contributing to charitable causes and promoting responsible alcohol use and adds the impacts of these activities to the usual impacts of distributor operations.

The economists note that the beer distribution sector has been tremendously undervalued in previous economic reports.

Generating 130,000 direct jobs – and fueling a total of more than 345,000 direct and indirect jobs – beer distributors add $54 billion to the nation’s gross domestic product and offer far reaching benefits to brewers, retailers, consumers and government agencies at all levels.

Beer distributor activities contribute nearly $10.3 billion to the federal, state and local tax bases. (This does not include the nearly $11 billion in federal, state and local alcohol excise and consumption taxes.) The beer distribution industry also contributes more than $22 billion in transportation efficiencies for the beer industry each year, and its contributions to local community activities generate

$175 million in impacts annually.

With more than 3,300 independent beer distribution companies directly employing more than 130,000 hardworking men and women in communities across the country, America’s beer distribution industry provides significant economic and commercial value. Distributors deliver economic benefits in their communities through local business-to-business commerce, investments in local infrastructure and capital assets and tax revenue. They provide services that improve efficiency for trading partners, especially small brewers and the more than 500,000 licensed retailers across the country. Distributors also ensure a broad selection of products for consumers to enjoy.

After all, this system supports more than 13,000 labels of beer!

I invite you to read the full report, including state by state data, on NBWA’s website at www.nbwa.org.

America’s beer distributors and independent retailers each have a great story to tell about the quality jobs you provide and the investments you make in your local communities. Together, distributors and retailers must make sure members of Congress and other policymakers understand: the industry that moves beer also moves the economy in a big way. |

from the industry

BY CRAIG WOLF, PRESIDENT AND CEO WINE & SPIRITS WHOLESALERS OF AMERICA

U.S. Alcohol Regulation: A Model for Success In Asia, Latin America

and even in Europe, reports regularly surface of counterfeit and unsafe product making its way to kiosks, black market street vendors and other outlets— and ultimately on to consumers.

Last fall, news reports from Europe were full of accounts of tainted product entering the marketplace and causing significant harm, even death, to scores of consumers.

These problems are rare to nonexistent in the U.S. market.

That is because producers, wholesalers and retailers all work within a heavily-regulated industry with oversight and checks at each level.

In its three-quarter century history, the U.S. beverage alcohol regulatory system has delivered

“As regulators work to craft the systems for this oversight, what they ultimately create may - and should - resemble the system we rely on for consumer protection, market regulation and tax collection in the beverage alcohol industry.” an unparalleled record of consumer safety and diversity of available products—produced and delivered in a well-regulated and responsible manner that provides a predictable stream of tax revenue to government.

two states—Colorado and Washington—possession and use, under certain and regulated circumstances, is now legal for adults.

producers, distributors, sellers and other transactions will be defined. All these pieces are already in-place in the beverage alcohol regulatory structure.

The mechanism for regulation and enforcement of this newly legal product however, isn’t fully established. But it is a sure bet that state legislators, governors and other officials will want to ensure a robust oversight and regulatory program to protect public safety and market integrity.

It is likely that Washington will not be alone in tasking alcohol regulators with crafting, overseeing or making recommendations on how to oversee this new legalized marijuana marketplace. It is equally likely that they will want to ensure a safety-oriented system with a record as strong as the alcohol oversight system is put into place.

As regulators work to craft the systems for this oversight, what they ultimately create may - and should - resemble the system we rely on for consumer protection, market regulation and tax collection in the beverage alcohol industry.

Colorado voters passed a measure calling on the state legislature to create from scratch a regulatory framework.

In Washington, the initiative passed by voters called on the state liquor control board to put in place a system based on the structure used for alcohol. Media reports indicate as many as a dozen states may take legislative or initiative action on this issue in the next two years.

That means states will have to define the scope and role for producers, outline the role of distributors, and craft a system for the safe retail sale to consumers. Licenses will be required, checked and managed, while these states will also put in place tax assessment and field level enforcement programs to ensure revenue collection goals are met and unlicensed entities are held accountable. Roles for

And this increased profile demands that all parties be informed about how well our system has worked because it will likely be seen as a benchmark – the model for safe and accountable distribution of a socially sensitive product.

WSWA and our members take no position on the question of marijuana legalization. But we will continue to educate lawmakers, regulators, the media as well as public and policy experts about our shared record of success.

The men, women and businesses of the U.S. alcohol beverage industry are proud of our successful and responsible system and its impeccable record. We have the recipe for success and it’s likely others will seek to emulate it going forward. We are happy to share with them the lessons we have learned about the responsible and accountable distribution of our products. |

The American model for alcohol distribution is now the subject of discussion in many states as the issue of marijuana legalization continues to gain traction with voters, state legislatures and advocacy groups. In

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affiliate & state update Maryland Zoning Overhaul Targets Retailers; Licensing in Colorado; Safe Rides in Alaska and Wisconsin; Privatization Debates in 2013 Control State Governments Looking to Get Out of the Liquor Business?

After last year’s privatization in Washington state excluded small business owners through a square footage requirement, ABL has been tracking all proposals for privatization, but does not support or oppose privatization within states.

Governor Tom Corbett has proposed auctioning existing wine and liquor store licenses and opening beer and wine sales licenses to grocery and convenience stores in Pennsylvania, reports the Levittown Patch. Tying the profits to education funding, the administration estimates that the proceeds would bring over $1 billion in revenue.

Provisions within the proposal include doubling the number liquor stores from 600 to 1200; allowing big-box stores, grocers, convenience, and drugstores to apply for licenses; “Enhanced licenses” for current beer distributors to sell by the six-pack; and allows restaurants and bars to sell cases and up to six bottles of wine for off-premise consumption.

Chief opponents include Pennsylvania’s unionized store clerks. In an editorial on the Pittsburgh-Post Gazette, Wendell Young, chairman of the United Food and Commercial Workers of PA Wine and Spirits Council, wrote that privatization policies called for would raise taxes and prices, jeopardize 5,000 jobs, and cause health concerns.

An Alabama State Senator has also proposed privatization of the 169 retail ABC stores throughout the state, reports AL.com. Sen. Arthur Orr told the publication that eliminating the expense of retail stores, including rent and employees, would save the state $46million annually.

The proposal would limit the number of licenses available in a given location, to be determined by a five-member commission. One of twelve retail control states, Alabama’s Alcoholic Beverage Control Board reported more than $200 million distributed to state and local governments during the 2011 fiscal year. In the article, NABCA chairman Jim Squeo cautioned legislatures to consider the effect of potential lost revenue within their states.

As the bill has not been officially proposed, Alabama Governor Robert Bentley has not taken a position.

House Minority Leader Craig Ford is concerned about displacement of the state employees working within the shops and the possible loss of income.

ABL affiliate the Alabama Beverage Licensees Association is waiting for the bill to make a decision on their support of the measure.

Controversial Maryland Law Limiting Liquor Stores Uses Zoning

A proposition to reduce the number of liquor outlets in Baltimore would be the first overhaul to the city’s zoning code in 40 years, reports the Baltimore Sun. The measure would force some retailers to close, and those business owners, as well as the Maryland State Licensed Beverage Association, are opposing it.

Mayor Stephanie Rawlings-Blake’s city planning and health officials are attempting to reduce the density of liquor store establishments through the proposed zoning code. Of the 100 stores that would be considered in violation of the new code, all have been in business since the 1970’s. Maryland State Licensed Beverage Association has submitted a letter to the Planning Commission arguing that these decisions are the sole jurisdiction of local liquor boards.

calendar of events

Colorado: Beer, Wine & Spirits in Grocery

According to the Colorado Statesman, the 2013 legislative session will be the fifth attempt at allowing grocery and convenience stores to sell beer, wine, and liquor. Currently, owners may obtain one license for full-strength beer, wine and spirits sales, while only “near beer” under 3.2% ABV is sold in additional stores.

The proposed measure allows for an increase in the number of allowed licenses from one to five. It is opposed by craft brewers and package stores, including ABL’s Colorado affiliate, the Colorado Licensed Beverage Association.

Craft brewers feel the measure would hurt their business model, which does not include widespread distribution in grocery stores. Craft brewers interviewed pointed out that the bill, which is to ostensibly “help” small breweries, was written and presented without their input.

Affiliates Provide Safe Rides Home for the Holidays

ABL Affiliates throughout the country encouraged safety and responsibility this holiday season. The Tavern League of Wisconsin (TLW) continued their successful Safe Ride program, which offers tens of thousands of free rides home from TLW members all year long.

In Alaska, Anchorage CHARR enhanced their yearround “Off the Road” program of safe rides with “Operation Tipsy Tow.” The program, operational during the holidays, provided free tow service from Anchorage CHARR members through Triple A and a private towing company. |

March 5-6 Alaska CHARR Legislative Summit Juneau, AK

May 15-19 NABCA Annual Conference Phoenix, AZ

March 9-11 ABL Board of Directors Meeting Atlanta, GA

June 3 Illinois Licensed Beverage Association Golf Outing

Sept 29-Oct 2 NBWA 76th Annual Convention & Trade Show Las Vegas, NV

June 9-11 ABL Annual Conference Alexandria, VA

Sept 29-Oct 3 NCSLA Regional Conference Oklahoma City, OK

June 17 New Jersey Liquor Store Alliance Golf Outing

Oct 1-3 Alaska CHARR Convention Kodiak, AK

March 11-13 NABCA Legal Symposium Alexandria, VA March 19 Tavern League of Wisconsin Legislative Day Madison, WI March19-21 Night Club & Bar Trade Show Las Vegas, NV March 21 New York State Liquor Store Association Annual Dinner Albany, NY April 8-11 Tavern League of Wisconsin Spring Conference & Trade Show Eau Claire, WI April 14-17 NBWA Legislative Conference Washington, DC April 16-17 Responsible Retailing Forum Conference Milwaukee, WI April 22 Ohio Licensed Beverage Association NE Ohio Bar Expo Cleveland, OH

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| ABL INSIDER | SPRING 13

April 28-30 WSWA 70th Annual Convention Orlando, FL

June 24-28 NCSLA Annual Conference Honolulu, HI July 15-17 Beer Institute Annual Meeting Chicago, IL July 20-23 Wine & Spirits Guild of America Summer Meeting Seattle, WA July 29-30 Texas Package Stores Association 66th Annual Trade Show & Convention Arlington, TX Sept 8-11 Illinois Licensed Beverage Association 127th Annual Convention Kankakee, IL Sept 9-12 Montana Tavern Association 58th Annual Convention & Trade Show Butte, MT

Sept 23-25 WSWA Fall Membership Meeting

Oct 5 Indiana Association of Beverage Retailers Trade Show Michigan City, IN Oct 7-10 Tavern League of Wisconsin Fall Convention & Trade Show Green Bay, WI Oct 10-12 Great American Beer Festival Denver, CO Oct 14 Ohio Licensed Beverage Association Buckeye Bar Expo Columbus, OH Oct 16 Massachusetts Package Stores Association Trade Show Marlboro, MA Oct 20 NABCA Administrators Conference Williamsburg, VA Oct 21 Metropolitan Package Store Association Annual Dinner Howard Beach, NY

2013 State Alcohol Legislation

Throughout the country, beverage alcohol regulations and legislation have been introduced in state and local governments. Here’s a quick look at some common statelevel proposals.

Montana HB 56: Prohibits reductions on price of liquor below the posted price other than 8% for unbroken case lots.

Indiana SB14, SB231: Cold beer in groceries and convenience stores

New York AB2489, SB 204, SB 1116: Allows off-premise liquor retailers to sell wine supplies (corkscrews, glasses)

New York AB 1370, SB 356: Allows retail licensees for on-premises consumption to join in a cooperative agreement for the purchase of alcoholic beverages Colorado SB 54: Adults 18-20, accompanied by parent, guardian, or spouse could be served 1 alcohol beverage in onpremise establishments.

Mississippi SB 2114: Authorize permits that allow sampling or tasting events at package retail stores.

Bottom Line: Tax & Finance

Smoking & Tobacco

• Illinois HB 977: Ban on credit card surcharges • Kansas HB 2018: Credit card surcharge exemption for certain educational institutions • Massachusetts HD 436: Increasing the excise tax on alcoholic beverages • New Hampshire HB 168: Would increase the beer tax from 30 to 40 cents per gallon; proposed to be used for the prevention and treatment of alcohol abuse.

• Oregon HB 2515, SB 118: Removes prohibition against local government enactment of taxes on alcoholic beverages • Washington HB 1122: Extends tax on beer of $15.50/barrel through December 2016

• Colorado: Expected legislation to “license” tobacco retailers.

• Illinois SB 53: Prohibits smoking on indoor patios • North Dakota HB 1253: Reimbursement of costs incurred in complying with smoking restrictions in public places and places of employment

Craft and Small Producers • Indiana HB 1293: Creates an artisan distiller's permit for no more than 20,000 gallons of liquor in a calendar year • Indiana SB 100: Allows a small brewer to sell the brewer's beer to consumers for carryout at a farmers' market that is operated on a nonprofit basis, in a quantity of not more than 576 ounces per consumer at any one time (no Sunday sales permitted) • Maryland HB 4, SB 32: Authorizes brewery licensees to sell beer for on–premises consumption • New York SB 434: Allows permits for brewers, manufacturers, and importers to serve small samples • New York SB 267: Authorizes roadside farm markets to sell wine from up to two farms or micro-wineries located within 20 miles • North Dakota HB 1077: A licensed winery that produces no more than 50,000 gallons per year may sell and deliver the wine directly to licensed retailers • Oklahoma SB 179: Allowing certain spirit sales and samples at distilleries

Grocery, Big Box & Chain Availability • Colorado: A bill to put craft beer in grocery and convenience stores and to increase the number of liquor store or pharmacy liquor licensed businesses from the current 1 to 5. (Expected) • Oklahoma SB 179: Allowing certain spirit sales and samples at distilleries • Utah SB167: Allows one “master license” for restaurant chains • Washington HB 1009, SB 5111: Prohibits liquor at self-checkout

Non-Member States • Missouri HB 109: Prohibits caffeinated malt beverages from being imported, produced, manufactured, distributed, or sold at any retail outlet in this state • Missouri SB 114: Would allow homebrewers to take their homebrew out of their homes and pour it at exhibitions or competitions, such as homebrewer contests, or tastings.

• South Dakota SB 94: Social Host; prohibits a social host from permitting the underage consumption of alcoholic beverages on the social host's premises • Washington SB 54: Allows “malt beverage” permits to sell wine

Sunday Sales Indiana HB 1146, SB13 Minnesota SF0225 New York SB 351, SB 2227 Texas HB 421

Direct Shipment • Indiana SB 15: Allows a direct wine seller to sell and ship wine directly to a consumer • North Dakota SB 2147: Direct shipment of alcoholic beverages from out of state • Pennsylvania HB 121, SB 36: Direct shipment of wine

Interlocks • New York AB 837, SB 1347: Mandates ignition interlock devices for school buses • Texas HB 260: Requires the use of an ignition interlock device on conviction of certain intoxication offenses.

ABL will continue tracking legislation throughout the year, and maintains a spreadsheet on the Members Only section of the ABL website. Contact your state affiliate for password information.

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conference 2013 Wine & Spirits Wholesalers of America’s Craig Wolf to be Honored with ABL Top Shelf Award Craig Wolf, President and CEO of the Wine and Spirits Wholesalers of America (WSWA), has been selected as the 2013 American Beverage Licensees Top Shelf Award honoree. In addition to his work in the beverage alcohol industry, he is a Major in the United States Army Reserve and a veteran of Operation Enduring Freedom.

Many of you know him from his years of attending the ABL conference and other industry events.

The ABL Top Shelf Award annually recognizes one member of the beverage alcohol industry who has not only made a powerful impact on the industry, but also demonstrated a positive influence on his or her community. Past ABL Top Shelf Award honorees have included members of the beverage alcohol industry from all three tiers and representing interests in beer, wine and spirits. This year’s award will be presented at the ABL Annual Conference on June 10, 2013 in Alexandria, Virginia.

“As the ABL Annual Conference comes to Washington, D.C., we are proud to recognize an industry advocate and military officer of Craig’s stature with the retail beverage industry’s highest honor, the ABL Top Shelf Award,” said John Bodnovich, ABL’s Executive Director. “Over more than a decade, Craig has been a champion for the three-tier system and an ally to retailers throughout the country. His dedication to our great industry is only slightly overshadowed by his incredible character and record of service to our country while in uniform.”

In addition to his advocacy efforts in Washington and in states across the country, as WSWA’s President, Mr. Wolf engages with the media, regulators and the law enforcement community to support legislation, regulation and public policy that promotes a consumerfocused, accountable and responsible system for the distribution of beverage alcohol, and which serves to prevent underage access.

“The U.S. beverage alcohol industry 2013 Top Shelf Award Honoree Craig Wolf has built a three quarter century active role in the public policy discourse in reputation for delivering the widest array Washington. of products available anywhere in the world in a manner that guarantees safety, Prior to joining WSWA, Mr. Wolf served accountability and integrity at each level. as Counsel to the United States Senate One of the reasons for this unrivaled record Judiciary Committee, as a Trial Attorney in of safety and success is the close working the Criminal Division of the Department relationship between stakeholders at every of Justice, and worked for five years as level, and in every sector of the industry. an Assistant State’s Attorney for Allegany WSWA’s longstanding partnership with ABL County, Maryland. on key issues is essential for our members and helps ensure when we advocate with Mr. Wolf is a Major in the United States elected officials we speak with a powerful Army Reserve and veteran of Operation and united voice,” Wolf said.

Enduring Freedom having served in Afghanistan.

“I am honored to have been selected to receive the Top Shelf Award, and I Founded in 1943, WSWA represents look forward to continuing our strong 355 wine and spirits wholesalers and partnership with ABL in the months and brokers whose members operate in all years ahead,” Wolf added.

50 states and the District of Columbia.

ABL works closely with WSWA to maintain Mr. Wolf has been WSWA’s President and and strengthen the relationship between CEO since 2006, where he had previously the retail and wholesale tiers of the held the position of General Counsel for industry and on programs to promote nearly seven years. Since taking over the responsible sales, service and use of as CEO, WSWA has continued to grow as beverage alcohol. | a prominent trade association with an

“Beverage licensees know the importance of having a strong relationship with our distributors, and we’re fortunate to be able to recognize an industry leader and good friend in Craig Wolf,” said ABL President Chuck Ferrar, the owner of Bay Ridge Wine & Spirits in Annapolis, Maryland.

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| ABL INSIDER | SPRING 13

For

more information and

registration for the

2013 ABL Conference in

See

Washington, DC

our Insert in this Issue

membership memo Swipe Fee Settlement Guidlines for Merchants

In 2012, the largest proposed class action settlement in history - worth $7.2 billion - was announced between retail merchants and Visa/MasterCard and their issuing banks.

What do you need to know about the lawsuit and how does it affect you?

BACKGROUND

In 2005, lawsuits were brought against Visa/MasterCard and issuing banks challenging anticompetitive effect of interchange rules. A class action lawsuit was also brought by retail trade associations and 13 small retailers. Seven years later, in July 2012, a proposed settlement for approximately $7.2 billion was announced between the plaintiff class of merchants, of which beverage licensees that accept Visa & MasterCard are a member, and the defendants (Visa, MasterCard and several banks). In November 2012, – Judge John Gleeson of the United States District Court for the Eastern District of New York granted preliminary approval to the proposed settlement.

The judge now must decide whether to grant final approval to the settlement.

WHAT HAPPENS NEXT?

WHAT IS IN THE SETTLEMENT?

The next step is for the federal judge to decide The proposed settlement offers class members: whether to grant final approval to the settlement.

- Money damages of about two months’ worth of interchange (~$7.2 billion spread amongst 8 million Merchant class members have until May 28, merchants) and, among other things, limited modifications to Visa’s and MasterCard’s surcharging 2013 to let the judge know what they think of rules. the settlement, which includes opting out and - Meager changes to Visa and MasterCard rules that end in 2021. submitting written objections to it, or accepting it.

A hearing for the final approval of the settlement is The proposed settlement requires that class members: scheduled for September 12, 2013.

- Release Visa and MasterCard from liability — forever — for any anticompetitive rules currently in place

ARE YOU PART OF THE SETTLEMENT?

Any person, business or other entity that accepted Visa or MasterCard credit or debit cards in the U.S. at any time between January 1, 2004 and November 28, 2012 may be eligible to receive a payment. Settlement notices are currently being distributed to merchants across the country. If you are not sure whether you are part of this settlement, you can contact the Class Administrator at: 1-800-625-6440 or info@ PaymentCardSettlement.com.

(including the interchange or swipe fee rules) and/or any “substantially similar rules” instituted at any time in the future.

The proposed settlement does not: - Provide any fundamental market changes that would constrain Visa and MasterCard over time from continuing to raise rates to a point at which merchants essentially pay for their own settlement — and more.

- Change the two fundamental problems with the current swipe fee system: 1) Visa and MasterCard fixing rates for their banks so that banks don’t compete on price; and 2) Visa and MasterCard policing merchants to make sure the fees stay hidden and there are no competitive market forces.

WHAT ARE YOUR OPTIONS? 1. Do Nothing/Accept

If you do nothing — that is, you decide to neither opt out nor object — you will be deemed to have accepted all of the terms of the settlement, including its release terms.

2. Object to the Settlement

Objecting to the settlement means telling Judge Gleeson why you oppose the proposed settlement. The benefit of objecting is that you may persuade Judge Gleeson or the Second Circuit Court of Appeals that the proposed settlement is unfair and that it should not be approved. If you do not object, it will be presumed by the court that you approve of the proposed settlement’s terms. If you do not agree with all of the settlement’s terms, you should consider objecting. If you do not object, you will be deemed to have accepted those terms of the deal. Even if you opt out to preserve your right to seek past damages, you will still be bound by the release and the various purported rules changes (offered in lieu of swipe fee changes). Therefore if you think the deal is bad overall, you should object to it and consider opting out as well.

How Do I Object?

3. Opt Out of the Settlement

Opting out means that you exclude yourself from the past damages settlement class, which preserves your right to sue Visa and MasterCard for past damages for conduct that occurred before November 27, 2012. Opting out does not exclude you from the proposed settlement’s release that purports to change certain Visa and MasterCard rules (but not Visa’s or MasterCard’s swipe fee-setting practices). You will only be able to collect money damages relating to Visa’s and MasterCard’s rules if you sue Visa and MasterCard on your own or if you are part of a class action suit of all companies that opt-out of the settlement.

Opting does send a message to the court that, in addition to any objection, you feel strongly enough in your opposition to the settlement that you want to exclude yourself from it in the only way that you can. Therefore, if you believe the proposed settlement is bad overall and you want to be able to preserve your right to sue for more damages, you might consider opting out and objecting to the proposed settlement.

You can object to the proposed settlement by submitting a Statement of Objections to Judge Gleeson and the lawyers for the proponents of the proposed settlement at the How do I Opt Out? addresses below by May 28, 2013. For sample objections, please contact ABL. Two sample You opt out by submitting an opt-out letter to the settlement administrator by May 28, objections are available: One for merchants who opt out and one for merchants who do not 2013. For a sample letter, please contact ABL. If you create your own letter, be sure to include the following information: opt out. If you create your own objection, be sure to include all of the information: • The words “In re Payment Card Interchange Fee and Merchant Discount Antitrust • The words “In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation.”

Litigation.”

• Your business’s name, address, phone number, and taxpayer ID number.

• The reasons you object to the proposed settlement.

• How long you have accepted Visa and/or MasterCard.

• Your name, address and phone number.

• A statement that you want to be excluded from (opt out of) the settlement class.

• How long you have accepted Visa and/or MasterCard.

• Names and addresses of all of your business locations.

• Information regarding the individual signing the objection.

• Position of the individual signing the letter that authorizes him/her to exclude your • If your own lawyer represents you with respect to the proposed settlement, his/her business from the settlement. contact information.

You must mail your letter to P.O. Box 2530, Portland, OR 92708-2530 before May 28, Copies of your objection must be mailed to each of the three addresses below by May 2013. Be sure to keep a copy of your letter.

28, 2013. Keep a copy of your objection for your records.

U.S. District Court for the Eastern District of New York Clerk of Court 225 Cadman Plaza Brooklyn, NY 11201

Alexandra S. Bernay Robbins Geller Rudman & Dowd LLP 655 West Broadway, Suite 1900 San Diego, CA 92101

Wesley R. Powell Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, NY 10019

*NOTES

- You can both object to and opt out of the proposed settlement. However, if you do not opt out you will lose your right to sue for more damages or challenge other conduct that occurred before November 27, 2012.

- The deadline to object or to be excluded is May 28, 2013.

- Opting out and objecting is the most complete way to express your opposition to the proposed settlement. You will also get the best protection from any argument that you have accepted the proposed settlement’s release terms.

FILING A CLAIM

Claim Forms are not available at this time. If the Court approves the settlement at or following the September 12, 2013 hearing, the Court will then approve a Claim Form and set a claim deadline. If you received a Settlement Notice in the mail, a Claim Form will be mailed or emailed to you automatically. The Claim Form will also be posted on: www.paymentcardsettlement.com. Merchants can preregister for your claim, which is optional and does not affect your rights under the settlement. Merchants with multiple locations and/or franchise locations as well as single location merchants are encouraged to preregister. The information you provide will be used to assist the Class Administrator in the preparation of your Claim Form.

Coming in the next ABL Insider...

Affordable Care Act Guidelines for Beverage Licensees ABL INSIDER | SPRING 13 |

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special feature: across the pond In November 2012, British Prime Minister David Cameron introduced a proposal for a minimum per-unit price for alcohol.

What led to this proposal?

Wine, beer and spirits are now available 24 hours a day, seven days a week.

There has been a 25% growth in the number of off-premise licenses, increasing the availability of alcohol.

Daily Mail, Nov 18, 2012, "'It's cheaper to get drunk than go to the cinema..."

The British Government Takes on Alcohol Abuse

In November 2012, British Prime Minister David Cameron proposed a minimum pricing scheme per alcohol unit for off-premise sales and a ban on bulk buying promotions e.g. “buy one, get one free” and percentage discounts on case purchases. What has led to these changes, which may be challenged in the European Union as unfair trade laws?

Since the 1960’s, Britain’s retail alcohol sales industry has been slowly deregulated. One of the few remaining restrictions is an 18-year-old drinking age. What has followed, in Minister Cameron’s words, was the “scandal of our society.” Extreme ease of access and binge drinking have led to societal problems throughout the country, costing millions. Supermarkets use alcohol as “loss leaders,” selling below cost to bring customers in to shop and recoup from overall sales. Alcohol is treated as any other commodity on supermarket shelves, from paper towels to a can of peas.

The culture of alcohol in the United States remains different from that of Great Britain. One-third of Americans abstain from drinking alcohol, and over the last twenty years teenage consumption has consistently dropped. Perhaps not-so-coincidentally, the U.S. has one advantage that Britain does not: a comprehensive three-tier system of regulation that promotes unparalleled choice, responsible availability, and moderate consumption of beverage alcohol.

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| ABL INSIDER | SPRING 13

The average Briton drinks more than 13 litres of pure alcohol a year, higher than the European average and equivalent to nearly 500 pints of beer.

The Telegraph, Feb 11, 2011, "British drinking is among world's highest"

Beer accounts for 43% of the alcohol consumed, with 30% wine and 21% spirits.

A snapshot of the country’s drinking patterns found people underestimate their alcohol consumption by up to 40%.

The Telegraph Feb 7, 2013 “United Kingdom: 'Moderate drinkers' underestimate alcohol use by 40 per cent, says health chief”

There has been a 45% rise in home alcohol consumption over the last 20 years.

Metro, Feb 14, 2012, "David Cameron: Alcohol abuse is the scandal of our society"

Sensible Regulation & Smart Sales Set the U.S. Apart

In the U.S., a strong legacy of regulation has prevented massive vertical integration, commonplace in the United Kingdom’s liquor industry. The three-tier system prevents the unfettered sale of extremely cheap alcohol, while maintaining a healthy industry overall.

Far from both extreme regulation and a complete laissez-faire marketplace, the U.S. alcohol sales model sits in contrast to its British cousin.

State-by-state regulation of beverage sales – per the 21st Amendment – has allowed for the growth of specialized liquor stores and bottle shops: ones that allow for alcohol experts to provide the greatest availability of products while promoting safe and responsible sales and consumption. Consumers are more educated about quality products, as craft beer and spirits sales boom, and boutique wineries flourish. Plenty of options exist even as we continue to see teenage drinking decline as efforts to prevent underage access to alcohol continue.

While it seems there is much that Britain can learn from the United States, what lessons can we take from the Brits? One clear message is that the treatment of alcohol like any other commodity is foolhardy at best and downright dangerous at worst. A unique and age-restricted product, beverage alcohol deserves to be handled and sold with the caution afforded it by retailers licensed specifically to do so. Commonsense regulation, mixed with the right amount of marketplace competition, is a winning formula for customers and communities alike.

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industry news Swipe Fees, the FDA, Fiscal Cliff, State of the Beer Industry, and Beer Wholesaler Impact Beer Production, Definitions & Acquisitions

In December, the Beer Institute announced new data showing that the number of active permitted brewers rose to a historic high of 2,751, as reported by the Alcohol and Tobacco Tax and Trade Bureau (TTB), the highest number of U.S. brewers ever recorded by the Beer Institute.

“Whether it is a major brewery that supports thousands of good-paying jobs or a microbrewer that is expanding, brewers help our economy...Today, there are more than 1.8 million Americans at work because of beer,” said Joe McClain, President of the Beer Institute, which represents brewers and beer importers.

Later that month, The Brewers Association, a trade association representing small and independent American craft brewers, released a statement on the increase in production and promotion of “craft-like” beers by large breweries. The Brewers Association called for transparency in the marketing of “crafty” beers or the purchasing of small and independent breweries, and told Bloomberg BusinessWeek in an interview that all brewers should label their products so consumers aren’t misled about a beer’s origin.

The Brewers Association has also published a list of small and independent domestic breweries on BrewersAssociation.org.

In January, the Department of Justice filed suit to halt Anheuser-Busch InBev’s proposal to purchase half of Mexican brewer Grupo Modelo. Department of Justice lawyers contend that market dominance by AB-InBev and MillerCoors would give companies power to raise prices. The Financial Times reports that AB-InBev will contest the suit, setting up a potential court battle. Ongoing private negotiations with the government could preempt court deals through concessions on the deal.

Swipe Fees: Surcharges and Calls for Regulation As of January 27, retailers have the right to charge “check-out fees” to customers utilizing credit cards. Some consumer advocates, however, do not expect a widespread use of the fees in the short run, and are pushing for states to pass surcharge bans. Ten states, including New York, California, and Florida, already have such laws on the books.

Considering the highly-competitive nature of the retail market place, consumers could easily choose to shop in a store where

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credit cards are treated the same as cash, despite the increased cost to the business owner. According to the Merchants Payments Coalition, fees take 2-3% of every U.S. credit card purchase, while the average profit margin for a U.S. merchant is just 1-3%. These are the highest fees in the world, and 7-8 times higher than standard European rates.

Small business owners, like the Iowa Retail Federation, are asking for regulation of the fees in much like debit card regulations that took effect last year. The $50 billion is a windfall for Visa and MasterCard, who, with 80% of the marketplace, have no incentive to lower this charge hidden to consumers.

Jeffrey R. Anderson New Chairman-Elect for NABCA Board

In January, Jeffrey R. Anderson, director of the Idaho State Liquor Division (ISLD) was elected Chairman Elect of the National Alcohol Beverage Control Association by the Board of Directors at their meeting in Florida. He will assume the role of chairman in May 2014 following the completion of the current chairman, J. Neal Insley, who is also chairman of the Virginia Department of Alcohol Beverage Control.

Anderson was appointed director of the ISLD by Governor C.L. “Butch” Otter on April 30, 2010.

He also serves as director of the Idaho Lottery, a position he’s held since January, 2007. He came to state service after twenty-six years in broadcasting, recently as vice president and general manager of CBS television affiliates KBOI (Boise) and KIDK (Idaho Falls).

“Jeff brings a wealth of experience in the media sector and other disciplines that will be very beneficial to NABCA. We look forward to his leadership in the Association”, said Jim Sgueo, NABCA president and CEO.

NBWA Releases Economic Impact of Beer Distributors The National Beer Wholesalers Association (NBWA) has released a new economic impact study that provides the first-ever comprehensive report on beer distribution companies’ total impact on national and state economies.

| ABL INSIDER | SPRING 13

Key findings of the new economic impact study include: - The beer distribution industry directly employs more than 130,000 people.

- When the impacts of distributor capital investment and community involvement are considered, the total number of jobs exceeds 345,000.

- Beer distributors add $54 billion to the nation’s gross domestic product.

- Beer distributor activities contribute nearly $10.3 billion to the federal, state and local tax bases.

- The beer distribution industry contributes more than $22 billion in transportation efficiencies.

- Beer distributor contributions to local community activities generate $175 million in impacts annually.

“With more than 3,300 independent beer distribution companies directly employing more than 130,000 hardworking men and women in communities across the country, America’s beer distribution industry provides significant economic value,” said NBWA President & CEO Craig Purser. To view the full report, visit www. nbwa.org.

New FDA Food Safety Rules Open for Public Comment As part of the Food Safety Modernization Act, or FSMA, signed into law by President Obama in 2011, the FDA has announced proposed federal safety rules. According to the National Restaurant News, the FDA will target food manufacturers and produce growers and harvesters and hold no direct impact on restaurant operations. The rules include egg safety and increased testing for E. coli in beef, and requires all makers of food sold in the U.S. to develop formal plans for preventing foodborne illnesses. |

business news

BY PAM ERICKSON PUBLIC ACTION MANAGEMENT, PLC

How Store Appearance Improves the Value and Profitability of our Liquor Store System Our liquor/package

store system is a very important part of alcohol regulation and provides many public safety benefits, but the stores must also be profitable businesses to survive.

Let me share my experience with Oregon’s liquor store system and how we promoted better locations and upgraded appearance to improve the overall profitability of our stores.

As the director of the Oregon Liquor Control Commission, I ran a chain of 240 retail stores. These were not “government stores.” All were operated by private “liquor agents,” that is, local small independent business people.

We had a big problem with store appearance. It was threatening our system. After all, who wants to go to a dirty, ugly store in a rundown area to buy alcohol?

We developed a business plan and pushed hard on store appearance and better locations. We required an upgrade proposal whenever we hired a new agent. We used store appearance as a major factor in evaluations that governed whether someone’s contract was renewed.

At one time, there were almost no female liquor agents. We began to hire more women and they showed an understanding of the female

set the standard. They upgraded lighting and maintained a very clean and neat store. They used seasonal decorations in the windows and throughout the store to make the shopping experience pleasant. Some featured nice displays of glassware and provided serving suggestions. Others sought out the best locations, usually near a grocery store, for customer convenience. Again, this is important for the female customer, who more often than not does the family grocery shopping.

It was a challenge to convince long-term agents that making an investment in store upgrades or new locations was worth the money. After all, small businesses usually don’t have a lot of excess cash and some banks won’t loan money for liquor businesses. We had to demonstrate that improvements translated to greater sales. By tracking sales, particularly before and after upgrades, we were able to demonstrate that upgraded appearance and better locations translated into increased sales.

We had a particular issue with window signs. These were often unattractive and covered almost the whole window. Most of these signs came from cigarette companies, and agents received a monthly fee to post many of these signs.

Understandably, few wanted to give up the revenue. Some found ways to place the signs in a more attractive fashion.

Many came to recognize that if the store isn’t inviting, some potential customers won’t enter and there will be no chance to make a sale.

The proper use of window signs can enhance a licensed establishment’s appearance and boost the bottom line for the business.

customer. Women are more impacted by store appearance and may even be reluctant to enter a liquor store. We felt that poor store appearance was a barrier to a major segment of customers.

Many of the new women agents

After a year or two, we had some surprising successes. One of the ugliest stores was owned by an agent who had been around for over 40 years.

He showed no interest in changing anything and I figured he was a lost cause. On a whim, I stopped by his store one day. Upon entering, my jaw literally dropped. He had

completely remodeled his store. I gasped, “This is just beautiful!”

The agent proudly smiled and said he was quite surprised at the reaction of his customers. They were thrilled and excited about the changed store. He said he never thought it would make any difference.

It is exceptionally important for us to retain our liquor store system.

These are excellent venues for the sale of alcohol, and usually, kids can’t even enter. The businesses are experts in alcohol retailing and the regulations which govern sales. Liquor stores keep the prices reasonable and balanced.

A limited amount of liquor outlets helps law enforcement…breaking it open and letting anyone sell alcohol, anytime, anywhere makes their job much more difficult. We owe a great deal of thanks to these specialty businesses. | Public Action Management, PLC is a company that provides expertise in public policy leadership. The current focus is on alcohol issues: support for alcohol regulation, prevention of underage drinking, support for alcohol moderation.

Pamela S. Erickson, President and CEO, has over 17 years’ experience working on alcohol issues. She served as Executive Director of the Oregon Liquor Control Commission for seven years. In 2003, she left to join Oregon Partnership, an alcohol and drug abuse prevention organization.

In 2007, she formed her own company. A major project involves an effort to educate policy makers, regulators, and others about the value of marketplace regulation. The program is called “Campaign for a Healthy Alcohol Marketplace,” and operates nationally. She has worked with over 20 states, has published several reports and issues a monthly newsletter. All resources are available free of charge at www.healthyalcoholmarket.com.

ABL INSIDER | SPRING 13 |

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associate members ABL maintains a robust Associate Membership roster, with membership support coming from all levels of the beverage alcohol industry.

DIAMOND Beer Institute Diageo National Beer Wholesalers Association Wine & Spirits Wholesalers of America

PLATINUM Bacardi USA Beam, Inc. Distilled Spirits Council of the United States

ALABAMA Alabama Beverage Licensees Association ALASKA Alaska CHARR Anchorage CHARR ARKANSAS Arkansas Beverage Retailers Association COLORADO Colorado Licensed Beverage Association CONNECTICUT Connecticut Package Stores Association FLORIDA Retail Beverage Council of the Florida Retail Federation GEORGIA Georgia Alcohol Dealers Association

GOLD Brown Forman Castle Brands Charmer-Sunbelt Group Glazer’s, Inc. Pernod Ricard USA Republic National Distributing Co.

SILVER Constellation Brands Moet Hennessy USA Monarch Beverage Company Patron Spirits Company Remy Cointreau USA

affiliate members

ILLINOIS Beverage Retailers Alliance of Illinois Illinois Licensed Beverage Association INDIANA Indiana Association of Beverage Retailers Indiana Licensed Beverage Association KANSAS Kansas Licensed Beverage Association KENTUCKY Kentucky Association of Beverage Retailers Kentucky Licensed Beverage Association MARYLAND Maryland State Licensed Beverage Association MASSACHUSETTS Massachusetts Package Stores Association

MINNESOTA Tavern League of Minnesota MISSISSIPPI Mississippi Hospitality Beverage Association MONTANA Montana Tavern Association NEVADA Nevada Tavern Owners Association NEW JERSEY New Jersey Liquor Stores Alliance NEW YORK Empire State Restaurant & Tavern Association Metropolitan Package Store Association New York State Liquor Stores Association OHIO Ohio Licensed Beverage Association

BRONZE CardTronics Luxco Sidney Frank Importing Co.

OKLAHOMA Retail Liquor Association of Oklahoma RHODE ISLAND Rhode Island Liquor Stores Association SOUTH CAROLINA ABC Stores of South Carolina SOUTH DAKOTA Licensed Beverage Dealers of South Dakota TEXAS Texas Package Stores Association VIRGINIA Virginia Licensed Beverage Association WISCONSIN Tavern League of Wisconsin WYOMING Wyoming State Liquor Association WINE & SPIRITS GUILD OF AMERICA

American Beverage Licensees 5101 River Rd Suite 108 Bethesda, MD 20816 (888) 656-3241 www.ablusa.org American Beverage Licensees

is the preeminent national trade association for retail alcohol beverage license holders across the United States.

Its members, who number nearly 20,000, are comprised of on-premise and off-premise retailers who annually help infuse billions of dollars into the American economy. ABL represents the interests of American small business owners and a historical part of the American way of life. Many members are independent, family owned operators who assure that beverage alcohol is sold and consumed responsibly by adults. |

www.ABLUSA.org | www.FACEBOOK.com/ABLUSA | www.TWITTER.com/ABLUSA

ABL Expands National Economic Impact Report to Include State Data

ABL 2013 Top Shelf Award HonoreeIs Craig Wolf

Putting Grassroots Tools in Members’ Hands

REPORT

IMPACT

ECONOMIC

2012

ABL Insider

A PUBLICATION OF THE AMERICAN BEVERAGE LICENSEES | VOL. 7, NO. 1 | SPRING 13