Summer 2017 Insider

THE V OICE OF AMERICA’S BEER, WINE & SPIRITS RETAILERS

ABL INSIDER VOL. 11, NO. 2 | SUMMER 2017

A PUBLICATION OF AMERICAN BEVERAGE LICENSEES

Maintaining a Fair & Level Playing Field In an Evolving Retail Environment

VOL. 11, NO. 2 | SUMMER 2017

contents 3 homefront

ABL Board Elects Steve Morris As Association’s President

4 leading

Stronger Together: A Unified Voice for Beverage Retailers

5 where we stand

In an Evolving Retail Environment, Knowing Trade Practice Law Is Important

10 convene

Coming Up Aces: ABL Annual Meeting - A Rousing Success

11 spotlight

Brown-Forman Retailers of the Year Recognition

12-13 at-a-glance

Photos from the 2017 ABL Annual Meeting

14 national impact

6-7 legislative update

House GOP Leadership Strips Swipe Fee Repeal from Financial CHOICE Act

Legislation That Could Impact Beverage Retailers Nationwide

15 state & industry update

8 industry voices

Craig Purser, President & CEO, NBWA

16 associate & affiliate members

9 industry voices

Craig Wolf, President & CEO, WSWA

industry calendar

June 2017

September 2017

Illinois Licensed Beverage Association Annual Golf Outing

ABL Fall Board Meeting

June 5 | Spring�ield, IL

June 10-12 | Minneapolis, MN

September (Date TBD) | Washington, DC September 6-8 | Chicago, IL

10th Annual Alcohol Law & Policy Conference

ABL Summer Board Meeting

June 11-14 | Denver, CO

National Conference of State Liquor Administrators Annual Conference

September 11-14 | Billings, MT

Montana Tavern Association Convention

September 17-19 | Alton, IL

Illinois Licensed Beverage Association 132nd Annual Convention

June 12-14 | Minneapolis, MN

Beverage Alcohol Retailers Conference

September 22-25 | Boston, MA

Wine & Spirits Guild of America Meeting

July 2017

July 30-31 | Fort Worth, TX

Texas Package Stores Association 70th Annual Convention & Trade Show

October 2017

October 2-5 | Appleton, WI

Tavern League of Wisconsin Fall Convention & Trade Show

October 16 | Washington, DC

Wine & Spirits Wholesalers of America Fall Membership Meeting

Published by: American Beverage Licensees 5101 River Rd, Suite 108 Bethesda, MD 20816 (301) 656-1494 www.ablusa.org editor MATTHEW EVANS

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ISSN# 2331-6594 (c) 2017 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.

AMERICAN BEVERAGE LICENSEES

executive director JOHN BODNOVICH director, trade relations & operations SUSAN DUFFY communications manager MATTHEW EVANS

homefront ABL Board Elects Steve ABL Honors 18 Beverage Morris As New President Retailers at Annual Meeting

teve Morris, owner of Jorgenson’s Restaurant & Lounge in ighteen beverage licensees from across the United States Helena, Montana, was elected by the American Beverage were recognized as Brown-Forman Retailers of the Year SLicensees E (ABL) Board of Directors at its annual meeting at the 2017 ABL Annual Meeting in Las Vegas, Nevada. as the 8th President of ABL, the nation’s largest national association dedicated to representing the interests of beer, wine and spirits retailers.

Elected on March 27, 2017, Morris, will serve a two-year term, leading the association as it advocates on behalf of on- and off-premise beverage licensees from across the country.

Nominated by their state beverage associations for their success and dedication to the beverage alcohol industry, these business owners were honored in a ceremony at the ABL Honors Gala on March 27, 2017.

For more than two decades, the Brown-Forman Retailer of the Year awards have celebrated independent retail beverage business owners who engage in responsible sales and service of beverage alcohol, and who are committed to their state beverage associations. ABL congratulates all of the honored businesses and licensees for their outstanding and continued contributions to the industry and their communities.

“Independent beverage retailers support a dynamic and spirited industry, while also promoting and encouraging the responsible sale and enjoyment of beer, wine and spirits,” said ABL Executive Director John Bodnovich. “It is in this spirit that they are recognized with this award before their industry peers and held up as examples of success.”

ABL’s Newly-Elected President Steve Morris Addresses Attendees at the 2017 ABL Honors Gala at the Monte Carlo Resort & Casino in Las Vegas, NV.

“Steve is one of ABL’s most passionate and active board members who, with nearly 30 years of experience in the industry, brings a wealth of knowledge and insight that will make him an effective leader of the association,” said ABL Executive Director John Bodnovich. “Having spent time leading the Montana Tavern Association and working directly with Montana legislators, Steve knows how to address the needs of his peers in the retail tier, while also working collaboratively with government and industry partners. His years of experience on the ABL Board of Directors will also prove invaluable in his new leadership role.”

Morris has been a member of the ABL Board of Directors since 2005, serving as Vice President and an At-Large Representative. In 2003, he was named a Brown-Forman Retailer of the Year and, since 2009, he has served on the board of directors’ Government Affairs Committee.

Morris has owned and operated Jorgenson’s Restaurant & Lounge in Helena with his wife, Barb, for nearly three decades.

He is also actively involved in the Montana Tavern Association (MTA), where he has been a member since 1989 and served as President from 2001-2003. He was also presented with the 2015 Durkee Award, the MTA’s highest honor.

“I am both humbled and honored to serve as the next president of American Beverage Licensees,” said Morris.

“For the past 15 years, ABL has worked tirelessly in support of the interests of independent beverage retailers, and I look forward to working closely with the board and staff in the years to come as we advance our platform and provide our members with tangible results on a range of issues.” |

Pictured Left-to-Right: Bill Asbury | Mark Brown | James Castellani | Richard R. Laczkowski | Mike Scheuerman | Carolyn Joy | Michael Rasp (Brown-Forman) | Debbie Mayfield | Mike Maro | Sean Barry | Mike Harris | Neil Caflisch | John Cutter | Mickey Daniel

Brown-Forman, one of the world’s leading distilled spirits producers, has remained a steadfast sponsor of the awards, recognizing the importance of vibrant independent alcohol retailers, and continuing their support of those who are the last to handle beverage products before they reach the hands of consumers. In attendance to present awards to this year’s recipients was Michael Rasp, Brown-Forman’s Nevada State Manager.

“We are grateful to work with Brown-Forman in honoring responsible beverage retailers across the country,” Bodnovich added. |

Please See Page 14 for the Full Listing of the 2017 Brown-Forman Retailer of the Year Award Recipients.

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leading Stronger Together: A Unified Voice for Beverage Retailers

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STEVE MORRIS President American Beverage Licensees

s this is my first “Leading” column in the ABL Insider as the recently-elected President of American Beverage Licensees, I would like to take this opportunity to thank the Board of Directors for their support and vote of confidence in electing me to lead this great association for the next two years. I would also like to thank the individuals who ran for positions on the Executive Committee – and to congratulate those who won and will serve alongside me during my tenure.

For those of you who I have not yet had a chance to meet, please allow me to formally introduce myself: my name is Steve Morris and I am from Helena, Montana, where I have owned and operated Jorgenson’s Restaurant & Lounge with my wife, Barb, for nearly 30 years. I am also the longest serving member of the Montana Gaming Advisory Council, currently serving in my eighth two-year term, and having been appointed to the position by four different state attorney generals.

From the very beginning of my time as a beverage licensee, I realized the important role that associations play in supporting the interests of their members and their businesses. I myself have been an active member of the Montana Tavern Association (MTA) since 1989, serving in several positions and roles, including as MTA President from 2001-2003.

I have also been actively involved with ABL for over a decade, having served on the ABL Board of Directors since 2005. During this time, I have held elected positions as Vice President and AtLarge Representative – as well as currently serving as the Co-Chairman of the recently created ABL State Issues Group, which is working on increasing ABL’s focus and ability to share information with our state association members.

During my nearly three decades as a beverage licensee, I have witnessed firsthand many of the same changes, challenges, and threats to our industry that have directly impacted you and your businesses. These include battles with state legislators over regulations; disputes over music licensing fees; pressure to expand the retail alcohol market to non-traditional entrants; and the growth of no supplier retail privileges, some of which blatantly disregard the tenants of the Three-Tier System.

Through it all, the support, information, and assistance provided by my state association and ABL has proven time and again how invaluable these organizations are to my – and OUR – continued success.

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Speaking of continued success, I would like to thank Warren Scheidt, ABL’s immediate pastpresident, for his leadership of, and dedication and commitment to, ABL over the course of the past two years; I look forward to continuing and championing many of the initiatives spearheaded during your term.

As the voice of independent beverage retailers across this great country, ABL strives to provide its members with timely, concise and informative updates on a wide range of subjects and topics which directly impact their businesses and lives.

To this end, I will be working with our dedicated staff to continue our efforts of bringing awareness to new challenges and opportunities facing our base: from addressing federal policy on minimum wage and overtime, to examining new technologies retailers can adopt to improve their bottom line.

I am also committed to increasing the relative value of ABL membership for our existing members by exploring options to improve members-only benefits, including a recently launched State Law Database which tracks legislation and regulations on a variety of topics.

Another area where I plan to work diligently during my term is the growth and enhancement of our membership base. As a national association, we are stronger together – acting as a single, unified voice on wide range of issues.

With “power in numbers,” our voice will be heard loud and clear. To this end, I will be working with ABL staff to make myself available to both our Affiliate and Associate members, attending their annual meetings and events, and provide background and updates on the efforts of ABL in Washington.

I will also be implementing a parallel effort aimed at membership recruitment. In addition to solidifying relationships with our existing state affiliate members, I will also be reaching out to the various state associations which have never been a part of ABL, as well as former associate member associations.

I would like to again thank our board for their confidence in my ability to lead this great association over the course of the next two years, and for all the support I have received from friends and colleagues; I am both humbled and honored to serve in this important role, and I look forward to serving as your President. |

where we stand In an Evolving Retail Environment, Knowing Trade Practice Laws Is Important

B JOHN BODNOVICH Executive Director American Beverage Licensees

ar, tavern or package store owners know a thing or two about competition. They compete every day with other hospitality businesses in their towns and cities, doing everything within the limits of local, state and federal laws to attract customers to their businesses.

Independent beverage licensees are focused on selling beer, wine and spirits. That’s what they got into the business to do, and it’s what they specialize in. They may sell some other products – food in bars and taverns; foodstuffs or mixers in package stores – but they are experts in retailing beverage alcohol.

Unlike other products, beverage alcohol has unique qualities that have earned it, among other things, two amendments to the U.S. Constitution, and a host of regulations on its production, distribution, retail sale and consumption. It’s an age-restricted product which, if misused, can cause harm. Beverage licensees recognize this – as do their industry partners in the other tiers of the system – and take steps to make sure that alcohol is sold and enjoyed responsibly.

Going hand-in-hand with the mindset of responsibility is a respect for the regulatory and permitting systems that traditional retail beverage licensees bought into when they went into business. The rules are clear on what they can and can’t do, but for a few reasons, it’s more important than ever that independent beverage licensees refresh themselves on what is acceptable when it comes to trade practices.

Market Newcomers Challenging Norms Talk to any beverage alcohol analyst or industry observe and they will tell you that we are in the midst of an unprecedented expansion of the retail alcohol marketplace. (SIDE NOTE: I was in a garden store a few weeks ago and was a bit surprised – though perhaps I shouldn’t have been – to see that they had a full bar serving beer, wine and cocktails to shoppers who were otherwise picking out geraniums and flower pots).

Expansion in the alcohol retail marketplace is coming from two areas in particular. The first is from retailers that have not traditionally sold alcohol. Garden stores are one such example, but add on zoo’s, movie theaters, fast-food (or “fast-casual”) restaurants, dollar stores, grocers and . . . well, you get the idea.

These retailers of general consumer goods bring with them their own modes of operation

for non-alcohol products and negotiating deals that are many times non-permissible for beverage alcohol. Unaware in some instances of the reasons and importance of trade practice laws for alcohol, these new alcohol retailers will sometimes chafe at what they perceive to be inefficiencies, but actually are what independent retailers know to be effective checks against tied-houses and exclusionary practices that could stifle competition amongst retailers and limit choices for customers.

The other area where expansion in the retail marketplace is coming from is alcohol suppliers.

Accompanying the growing number of breweries, distilleries and wineries in the U.S. has been a push by many of these suppliers to increase their ability to capture the margins of all three-tiers of the alcohol industry by demanding expanded retail privileges.

What was once a series of modest tasting rooms or souvenir shops where a visitor might buy a bottle and a t-shirt, have been eclipsed by what are now full-blown bars and stores selling cases of products that would otherwise be purchased in bars or package stores.

Distillers, seeking access parity with brewers, are following the brewing playbook by increasingly pushing for expanded retail privileges, as are some wineries. Around 30 states allow suppliers to have some sort of direct-to-consumer sales of spirits.

Direct-to-consumer sales by suppliers isn’t new, and it isn’t illegal in states where laws have been relaxed – often under the banner of “economic development”. But there is concern from some in the industry that as “OWN-Premise” sales gain traction in state legislatures, the lines of the three-tier system that has fostered a beverage alcohol marketplace in which these suppliers have come to exist and succeed, are getting increasingly blurred.

In more than a few cases, suppliers are now entering direct retail competition – with much higher margins and sometimes exclusive products that are not made available to retailers – with the very retailers who have helped build their brands.

Continued on Page 7

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legislative update House GOP Leadership Strips Swipe Fee Repeal from Financial CHOICE Act | “Death Tax Repeal” Co-Sponsor Update

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ouse GOP Leadership to Strip Swipe Fee Repeal from Financial CHOICE Act Following months of pressure from a united retail community and its trade groups in Washington, DC, House Republican Leadership announced on May 24 that it would remove divisive swipe fee language from the Financial CHOICE Act (H.R. 10). The decision to do so comes after weeks of ferocious lobbying by the retail industry, which opposed the language that would have repealed the “Durbin Amendment” on debit card swipe fees, and the banking industry which, led by the some of the world’s largest banks and credit card companies, sought to undo the policy that was part of the Dodd-Frank financial reform bill of 2010.

Despite the announcement, much can still transpire between the time the bill hits the floor for debate and is voted on.

This includes: the agreement to various rules for debate; a potential manager’s amendment that could alter parts of the bill – including removing the swipe fee provision, Section 375; and any floor amendments.

ABL, along with its partners in the Merchants Payments Coalition, has been actively engaged in the advocacy efforts to keep in place policies that have brought competition to the debit card swipe fee marketplace. Through letters to Capitol Hill staff and offices, as well as grassroots activation of its members during the important whipcount process, ABL was stepping up for its members and their businesses.

Music Licensing Legal Fight Heats Up with Department of Justice, BMI On May 18, the Department of Justice (DOJ) filed a brief in its appeal of a decision by the court for the Southern

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District of New York, which rejected the DOJ’s ruling that the consent decree governing BMI requires “full-work” (or “100%”) licensing. Instead, the district court held that BMI can engage in “fractional licensing.” While this finding has been applauded by BMI, it has been challenged by licensees of music public performance rights.

631) now has 83 House co-sponsors and, more notably, 36 Senate co-sponsors.

The text of this legislation may be included in a larger tax reform package being worked on by House Republicans.

ABL is on-the-record supporting the legislation via letters from the Family Business Estate Tax Coalition and the Family Business Coalition.

Per the DOJ’s ruling, even if only one of the three songwriters of a single song is affiliated with BMI, BMI has to license 100% of the song. In other words, to legally perform the song in a bar or restaurant, a licensee would only need a license from BMI. This is known as “full-work” or “100%” licensing, and has been the standard operating procedure for music licensees for decades. The District court rejected this view, and it is now up to the Circuit court to determine what the law says. ABL, along with its colleagues in the MIC Coalition, is tracking this case as it develops.

Tax Overhaul Remains a Work in Progress; Ways & Means Holds Hearing on BAT Acknowledging that there remain a number of uncertainties even within his own party, House Ways & Means Committee Chairman Kevin Brady (RTX) has begun tempering expectations on the timeline for moving a tax overhaul bill through the House. The Chairman has announced that he is now targeting the year’s end for passage of a tax reform package, which falls short of the initial goal of passage this summer. Despite laying groundwork for months on his plan, Brady has run into headwinds that include a Trump Administration White House focused on passing healthcare reform first, as well as the inherent complications of moving a tax bill, which by its very nature is going to have winners and losers. Chairman Brady has yet to release draft language for the bill.

“Craft Beverage Modernization” Co-Sponsor Update As of May 25, the Craft Beverage Modernization and Tax Reform Act (CBMTRA) (S. 236; H.R. 747) has attracted 44 Senate and 191 House cosponsors. The bill, which would provide federal excise tax relief to alcohol producers, is supported by the American Craft Spirits Association, Beer Institute, Brewers Association, Distilled Spirits Council, WineAmerica and the Wine Institute. The lead lawmakers on the bills are Senate Finance Committee Ranking Member Ron Wyden (D-OR) and Senator Roy Blunt (R-MO); and Reps. Erik Paulson (R-MN) and Ron Kind (D-WI) in the House.

“Death Tax Repeal” Co-Sponsor Update The Death Tax Repeal Act (S. 205; H.R.

Despite the slow start, on May 23, the House Ways & Means Committee held a hearing on what has quickly become the most contentious aspect of the House Republican tax plan: the border adjustment tax or BAT. Chairman Brady and other key Republicans defended the proposal to tax imports and exclude exports in the second of a series of hearings on the House GOP tax blueprint. The BAT is the cornerstone of the House GOP tax plan, designed to raise $1.2 trillion in revenue over 10

legislative update years that would help pay for reduced tax rates. House and Senate Republicans are at odds over the proposal, with retail and energy industries among its toughest critics. The Trump Administration has been decidedly lukewarm on the issue.

Awaiting Trump Administration Action of Overtime Rule The Trump Administration has until the end of June to file its brief in a case that will determine the validity of an Obamaera regulation that would significantly increase the number of workers who receive overtime pay when they work more than 40 hours in a week. In November 2016, a federal district court judge in Texas ruled in favor of 21 states and a coalition of business groups that had sued to block the rule change. The

case is now before the before the Fifth Circuit Court of Appeals.

While a Democratic Administration would likely have vigorously defended the legitimacy of the regulation, it is less clear just how strong a defense the Trump Administration will make to what some view as regulatory overreach. Intervenor status has not been granted to any third parties at this time. Labor Secretary Alexander Acosta is reviewing the rule and indicated during his confirmation hearing that he could see raising the salary threshold but by a lower amount.

The current regulation roughly doubles the annual salary level to $47,476 under which all workers must be paid at least time-and-a-half for more than 40 hours

Continued from Page 4:

Knowing the Law & Who to Call As three-tier lines blur, and new market entrants seek to change fundamental industry regulations, are state and federal trade practice laws – and more importantly those who enforce them – prepared for this stress test? Time will tell, but one thing is clear: those beverage retailers who are looking to maintain a fair and level playing field in the industry should arm themselves with information.

What can a small, independent beverage retailer do if they think a group or company is running afoul of state or federal trade practice laws? The first and most important thing is to find out what your state’s laws and regulations are concerning beverage alcohol trade practices. Some states have robust and specific trade practice regulations that will map out what is allowed and what isn’t.

Over the past few years, several states have ramped-up their trade practice enforcement training of regulators, bringing heightened awareness to this issue. A handful of high-profile

worked, and sets that level to adjust with inflation starting in 2020. The Labor Department last updated the threshold in 2004.

FDA Delays Menu Labeling Rule A federal mandate requiring calories be posted on menus was to take effect May 5, but has now been delayed by the Trump Administration to allow for public comment on the rule. The Food and Drug Administration has announced that it will delay implementation until May 2018 to ask for public feedback about how to make the menu labeling rule more flexible and less burdensome on businesses while still providing helpful information to consumers. |

trade practice violation cases in states like Massachusetts and Washington have also spurred a renewed emphasis on enforcement.

Retailers also have an outlet at the federal level. Though the Alcohol and Tobacco Tax and Trade Bureau (TTB) does not directly license alcohol retailers, a task left to the states per the 21st Amendment, it does license retailers’ industry partners in the wholesaler and producer tiers, and has a division dedicated to trade investigations that will pursue cases if things do not appear to be on the up-and-up.

If you have questions about trade practices, you should not hesitate to contact TTB at 855-TTB-TIPS (855-882-8477) or TIPS@TTB.GOV. In an evolving retail alcohol landscape, knowing the rules of the road when it comes to trade practices will help keep the entire industry on the right track, and continue to foster the competitive, diverse and exciting beverage alcohol industry we enjoy today. |

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industry voices Looking to Past Disruption to Prepare for Future Disruption

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isruption. It defines everything from the political environment to how we consume news, how we ride to the airport, the way we shop… and yes, disruption defines the alcohol industry, too.

CRAIG PURSER President & CEO National Beer Wholesalers Association

Disruption was top of mind at NBWA’s Annual Legislative Conference this spring when 750 beer distributors, representing all 50 states, gathered in the nation’s capital. In the days and weeks prior to the conference, Amazon – the $460 billion online retailer – had been making news. Headlines read: “More Than Half of the Internet’s Sales Growth Now Comes From Amazon,” or “Amazon Now Worth Twice as Much as Wal-Mart” and “Amazon Opening Store That Will Eliminate Checkout — and Lines.”

As Amazon eliminates checkout lines, online sales and other technological advances are disrupting brick-and-mortar businesses. The reason is pretty simple: you don’t have to leave home to order a gallon of milk or a roll of toilet paper.

So, what happens as Amazon gets into the alcohol business? How would this impact independent alcohol retailers and beer distributors? Sure, it’s disruptive. But there will always be disruption.

The real question is how will we manage the disruption? How will we prepare for change?

To prepare for disruption, we need some historical perspective. During the Legislative Conference, we looked at several examples including Kodak and Legos – two household names that had very different endings.

After Kodak was founded in 1888, it dominated film and camera sales for a century. In 1976, Kodak controlled 90 percent of film sales and 85 percent of camera sales. Although Kodak invented the digital camera, Kodak didn’t embrace the digital camera. In 2006, camera phones outsold regular cameras. And by 2012, Kodak filed for bankruptcy.

On the other hand, Lego, which started making wooden toys in 1932, embraced disruption and pivoted several times. In 1949, Lego swapped wooden toys for interlocking plastic blocks. A few decades later, the landscape was changed by new technology – such as television, electronic toys, the Internet and video games. Lego sales started slumping badly, and the company was facing bankruptcy. But then, the company asked some tough questions, made some difficult changes and got back to the basics, focusing on

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core products and values. By 2013, Legos had record revenue and profit and, two years later, it was named the most powerful brand in the world.

The alcohol industry also has experienced disruption. Many beer distributors remember when wine coolers were destined to destroy the beer industry. Then came flavored vodka that made suppliers, distributors and retailer take note. Retailers will remember when Wal-Mart opened the first supercenters. Sure, the industry changed, but beer distributors are still selling beer to independent retailers.

Now, technology is changing the way distributors warehouse and inventory beer. Technology is changing the way retailers run their businesses.

And technology is changing how consumers purchase alcohol – from using mobile apps like Drizly to selecting their drink of choice on Amazon.

All of this change means distributors and retailers must make sure all companies in this space are operating in compliance with state alcohol laws.

And that’s already happening. Several state alcohol regulatory agencies have asked Amazon how the company will comply with laws regarding alcohol retail licenses, to ensure that the online retailer is not exempt from the requirements imposed on brick-and-mortar retailers. Because Amazon wants to be a licensed retailer selling alcohol to consumers, the company must have a physical presence in the state and be licensed only as a retailer selling to in-state consumers.

All of these “disrupters” must ensure that alcohol is sold only to those over 21 and not delivered to anyone who is intoxicated. It’s by enforcing state laws – which work to level the playing field for all retailers – that all businesses, including independent retailers, can compete in the marketplace and continue to grow.

There’s no doubt that many brick-and-mortar businesses have faced disruption from new technologies and new ways of doing business.

The alcohol industry is no different. However, what is different, is that the 21st Amendment and effective state regulations create a level playing field – so that established businesses and new disruptors can all compete. That’s why NBWA and state beer distributor associations look forward to working with the American Beverage Licensees and its members to “lean in” to the future. |

industry voices Complimenting & Enhancing the Three-Tier System

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wo years ago, a WSWA subsidiary, WSWA Services LLC, partnered with Drizly because our members recognized this new company had the potential to invigorate the marketplace, while operating in a manner that complies with and enhances the three-tier system.

CRAIG WOLF President & CEO Wine & Spirits Wholesalers of America

Since that time, Drizly has continued to thrive, and its accomplishments have been recognized with over $33 million in total venture capital investments. Its management and employees have found success by making the three-tier system work more efficiently, and consumers (and retailers) have engaged. Over the past year, Drizly has signed up more than 100,000 new users and partnered with hundreds of new retailers.

This work is also giving retailers, wholesalers and suppliers important new information about consumers and the purchasing process.

I’d like to update you on what we’ve learned.

Empowering Retailers: Drizly is one of the first and the largest online platform connecting beverage alcohol consumers and retailers. And, as you may recall, it is not a delivery company.

Instead, it relies on local independent retail partners to execute delivery, verify identity and legal drinking age of customers, and process payment. This approach appeals to WSWA and our members because it empowers retailers and provides an efficient platform to engage their local customer base. It complements the wholesaler mission of brand building and marketing while complementing retailers’ goal of attracting local customers.

While a partnership with Drizly is not a silver bullet for retailers, many agree that it can be an important tool to help them reach an expanded circle of local consumers.

At the same time, many independent retailers have stepped up to compete on their own terms. These local retailers have developed and are using robust websites and online ordering, sophisticated email marketing, loyalty programs, inventory management and tracking, and they are engaging with customers through in-store pickup and retailer delivery programs. Competition is helping all players get better and innovate in their own ways. All of these efforts help you offer to consumers the widest array of products available anywhere in the world.

retailer participation has empowered consumers to make choices based on price in new ways.

One customer may be willing to pay more for a certain product delivered at a certain time from a particular retailer, while another customer may use the platform to compare prices across multiple retailers in a given area—and make their decision accordingly.

In a recent interview with Wine & Spirits Daily, a Drizly spokesperson noted that “price variability across a single city can be as high as 45% for the same product, and our users love the ability to be able to see different price points and fulfillment options at our different partnering retailers.”

This type of data transparency is increasing in all consumer product categories.

Another benefit of the platform is the immediate availability of product sales data—something that benefits retailers, Drizly and wholesalers.

The company tracks trending products each week and by market and region and markets to its user audiences based on this information.

Over time, all partners can use this information to help position their business to meet or adapt to the needs of their market. The more we know, the better we can respond.

Looking Ahead: Drizly’s growth is expected to continue along with continuing evolutions and innovation in the traditional retail space. We remain bullish on the potential for Drizly as well as our belief that nothing quite replaces the interaction between an informed local retailer and an engaged local customer.

As technology continues to evolve and our industry continues to adapt, we will remain committed to the core principles of the threetier system: ensuring product integrity, efficient tax collection and regulatory oversight, and protecting public safety.

We may be using new tools, but our commitment to these principles remains as important now as ever. |

Choices and Data: Drizly also reported that

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convene Coming Up Aces: ABL’s Las Vegas Annual Meeting - A Rousing Success everage retailers and their partners from across the hospitality industry came together B in Las Vegas on March 26-28 for American

Beverage Licensees’ 15th Annual Meeting.

Attendees networked with their peers from around the country and learned about emerging issues in the beverage alcohol industry. Meeting speakers addressed a variety of important topics including the issues facing the wholesale tier, emerging trends in the beverage alcohol sector, mobile alcohol ordering platforms, music licensing, the growing recreational cannabis marketplace and legislation, and state alcohol policy initiatives.

Audio recordings of all presentations, along with PDF versions of most presentations, are currently available in the members-only section of the ABL website.

“The diversity of this year’s annual meeting program recognized the range of ABL member businesses from across the country,” said ABL Executive Director John Bodnovich. “From urban to rural, large to small, on-premise to offpremise, there was something from the meeting that all attendees could take home to use in their businesses, state associations and with elected leaders.”

Eric Dopkins, CEO & Founder of Milestone Brands, LLC, delivered the keynote address – discussing the keys to growth in the beverage alcohol industry and how best to position one’s business for success. The wholesale tier was represented at the meeting by Craig Purser, President & CEO of the National Association of Beverage Wholesalers, and Craig Wolf, President & CEO of the Wine & Spirits Wholesalers of America, who provided attendees with an overview of where the wholesale tier currently stands on important industry issues and where wholesalers are working with retailers.

Senior Vice President of the Beverage Alcohol Practice at The Nielsen Company, Danny Brager, gave a presentation on current and emerging trends in the retail environment, which covered various trends shaping the beverage alcohol sector, including Direct-to-Consumer sales and the growing number of places consumers can purchase beverage alcohol – such as salons and movie theaters.

Following the Annual Luncheon sponsored

by MillerCoors, the meeting delved into three important issues for beverage retailers: mobile alcohol ordering, music licensing and recreational marijuana.

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ABL INSIDER

The mobile alcohol ordering conversation featured Bryan Goodwin, Senior Vice President – Commercial Sales & Operations at Drizly, and Brad Rosen, CEO & Founder of Drync, who provided attendees with information on how their respective businesses operate, what their entry into the marketplace means for retailers, and how the they can work together with retailers. Steve Bene, General Counsel at Pandora Media, Inc., shared his perspective on the current state of music licensing, what it means for retailers, and the various challenges and opportunities that lay ahead when it comes to legislative and legal actions.

In a session titled “Seeds of Change: The Emerging Cannabis Marketplace & What It Means for the Beverage Alcohol Industry”, Vivien Azer, Managing Director & Senior Research Analyst at Cowen & Company, provided an in-depth economic analysis of the growing cannabis industry and market trends – from investment standpoints to interplay with the existing beverage alcohol market and its key players.

The ABL Annual Meeting closed its general session with a focus on state policy issues.

New Jersey State Senator Nicholas Scutari discussed his months-long research effort to identify effective recreational marijuana policy measures, including looking at parallels to the alcohol industry’s regulatory framework. In a presentation titled “Alcohol Policy: State of the States”, the National Alcohol Beverage Control Association’s Steve Schmidt, Senior Vice President – Public Policy & Communications, and Neal Insley, Senior Vice President & General Council, discussed various alcohol policy related issues currently taking place at the state level, and the implications some of these issues may have nationally.

The 2017 Annual Meeting also provided an opportunity for ABL to recognize those who make a difference in the industry. Eighteen retail beverage businesses from across the country were recognized with the 2017 Brown-Forman Retailer of the Year awards at the ABL Honors Gala. Also recognized was the 2017 ABL Top Shelf Award honoree, Tito Beveridge, Founder & Owner, Tito’s Handmade Vodka. The ABL Top Shelf Award recognizes those who have demonstrated excellence over their careers in the beverage alcohol industry and represents the highest recognition given by ABL. |

ERIC DOPKINS | Milestone Brands, LLC

DANNY BRAGER | The Nielsen Company

CRAIG PURSER | NBWA (L) CRAIG WOLF | Distilled Spirits Council (R)

BRYAN GOODWIN | Drizly (L) BRAD ROSEN | Drync (R)

STEVE BENE | Pandora Media, Inc.

VIVIEN AZER | Cowen & Company

spotlight

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at-a-glance

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ABL INSIDER

at-a-glance

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national impact State-Level Legislation That Could Impact Beverage Retailers Nationwide

A

rkansas: Senate Bill 284, which would allow grocery stores to sell more wines, passed in the House on March 1 after failing its first vote two days earlier, and now heads to the Senate.

After failing to pass initially, the bill was amended to allow liquor store owners to sell consumables, which is currently prohibited. The bill is supported by large, corporate grocers including WalMart and Kroger, and is opposed by independent liquors stores and the United Beverage Retailers of Arkansas.

Connecticut: Local beverage retailers are making their case in Hartford that the governor’s push to eliminate the state’s minimum pricing laws for alcohol will devastate their businesses by giving big box stores a big advantage. Current law has liquor stores, large and small, sell at prices put into place by liquor wholesalers.

The governor argues the current law comes at a cost to consumers, saying prices send customers across state lines.

The current liquor pricing law has been in place for more than three decades.

Total Wine & More has supported the governor’s plan, while it is opposed by the Connecticut Package Stores Association.

Indiana: Indiana lawmakers are considering doing away with a requirement that small wineries put up barriers to keep minors away from areas where alcohol is served. A bill before the Indiana Legislature would make several changes to state laws regulating alcohol, including removing barriers between minors and areas where alcohol is served in artisan distilleries and farm wineries.

That would put small wineries in the same category as boats and bowling alleys, where minors can be present where alcohol is served.

Kentucky: Liquor store owner and State Rep. C. Wesley Morgan has shepherded two of his eight pieces of liquor-related legislation through a House committee,

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ABL INSIDER

including HB 136, which would remove a mandate that wholesalers may not sell on credit to a retailer who is behind by more than 30 days in payments to a different wholesaler, and HB 155, which would let a liquor store owner to transport alcoholic beverages across county lines among his stores.

Missouri: A bill has been introduced that would allow alcohol retailers to offer “any coupon, premium, prize, rebate, sales price below cost, loyalty program, or discount” to consumers and to advertise a specific discount or price.

Currently, bars can advertise in advance of a promotion such as happy hour or ladies’ night, but they can’t place an ad that mentions specific discounts, such as dollar shots or penny pitchers. Total Wine & More, which has three stores near St. Louis, supports the bill, as do the Missouri Broadcasters Association and the Missouri Press Association, which stand to benefit from extra advertising opportunities.

Several smaller, Missouri-based liquor stores, including Springfield-based Brown Derby, oppose the bill which they believe would afford bigger stores with bigger advertising budgets to outspend smaller competitors, with the same effect on local liquor stores that Walmart had on mom-and-pop groceries.

Montana: House Bill 541 would increase the yearly amount of beer Montana breweries can produce six-fold, from 10,000 to 60,000 barrels. Current Montana law set a yearly production limit of 10,000 barrels on breweries that operate a tap room. The Montana Tavern Association has indicated that it will oppose the bill. “We want to see changes happen as part of a broader compromise,” said MTA government affairs director John Iverson. “Ideally, the people that have participated under the current rules are treated fairly. If you sell the same product to the same people, you need to play by the same rules.”

Ohio: A proposed tax increase on the

state excise tax on beer included in the governor’s budget has raised concerns in the state’s craft beer industry. The increase, which would amount to a penny a drink or ~30 cents per case of beer, targets the state’s larger brewers.

State tax officials, who argue that rates have not gone up in 25 years, said 95 percent of breweries still wouldn’t pay excise taxes under their proposal.

Oklahoma: A bill in the Oklahoma Senate would give voters in each of the state’s 77 counties the ability to decide whether liquor can be sold on Sunday. Under current law, liquor stores are required to close on Sundays. The legislation would allow voters to decide on a county-by-county basis whether liquor stores can open between noon and midnight on Sundays, beginning in 2018.

Pennsylvania: Lawmakers are considering two bills (SB 306; HB 438) that would allow private-sector businesses to sell spirits for the first time since Prohibition. The legislation would allow restaurant and hotel liquor license holders who currently sell wine to apply for the $2,000 spirit permits.

The permits would allow those businesses to sell up to three liters in a single transaction, and could be renewed for an annual fee of 2 percent of the cost of spirits purchased from the Pennsylvania Liquor Control Board.

Texas: New legislation (HB 2291) would lift a long-standing ban prohibiting outof-state retailers from shipping wines to consumers in Texas. The bill’s author called the state law “ridiculously anticompetitive… It is protectionist and it violates the rights of anyone who values the free market.”

He was inspired to introduce the legislation after receiving “a communication from a constituent who was a wine enthusiast. He couldn’t purchase wine anymore from the seller of his choice.” |

state & industry STATE

Alaska: Federal Authorities Prevent Recreational Marijuana Company from Paying State Taxes In late April, the United States Postal Service (USPS) rejected efforts made

by Juneau’s first recreational marijuana retailer – Rainforest Farms – to pay its taxes to the state. When one of the company’s owners attempted to submit their regularly-scheduled state tax payment to tax authorities in Anchorage via the mail system, USPS employees informed him doing so would be a direct violation of federal law.

to the next level. When the law goes into effect on July 1, individuals purchasing alcohol will be required to show ID with every purchase – regardless of their age.

While additional details have yet to be release, Montgomery County officials have state that the new policy was created with the intent to protect store employees. Prior to the passage of the new law, employees were only required to check identification for anyone who looked under the age of 35.

“Any proceeds from the selling of (marijuana) is considered drug proceeds under federal law, so you can’t mail that,” said Alaska Postal Inspector Aaron Behnen.

While Alaska currently has a single statechartered credit union and four statechartered banks, they have all indicated that they are not currently willing to take the risks associated with adding retail marijuana operations as members.

Colorado: Plans to Allow Marijuana Clubs Dropped by State Legislature A bipartisan proposal in the Colorado legislature, which would have seen the state become the first to permit regulated marijuana clubs, was recently abandoned.

The proposal would have allowed medicinal and recreational users of marijuana to bring their personal pot to clubs but was dropped due to uncertainty with the Trump administration’s position on enforcement of the federal laws pertaining to marijuana.

In a recent interview with the Denver Post, Colorado Governor John Hickenlooper (D) noted “Given the uncertainty in Washington, this is not the time to be. . . trying to carve off new turf and expand markets and make dramatic statements about marijuana.”

Maryland: County to Check IDs for All Alcohol Purchases Starting July 1 This summer, a new law will go into effect in Maryland’s Montgomery County, impacting everyone purchasing alcohol from any of the 28 countyoperated liquor stores. While most consumers may be familiar with signs at checkout counters noting “ID Under 35,” Montgomery County is taking things

INDUSTRY

The Drink of Summer 2017?

Canned Wine With sales of canned wine increasing over the last few years, the product now looks poised to go mainstream.

According to a recent study by Nielsen, sales of canned wine more than doubled between 2015-2016, generating more than $14.5 million in sales.

With such rapid growth, the category is seeing new entries from wineries both large and small. It is further estimated that some 20-40 new products will be released to the market in the coming summer months, with lines coming from Coppola and Lodi.

Industry Group Launches New Scholarship & Foundation Following the successful 2017 Women of the Vines & Spirits Global Symposium, held March 13-15 in Napa, California, industry trade group Women of the Vine & Spirits recently announced a new scholarship fund and foundation.

The group, whose mission is to support the advancement of women within the beverage alcohol industry, will announce the first-round recipients later this summer.

“The Women of the Vine & Spirits Foundation, Ltd. provides scholarships and awards for the purpose of helping women advance in their careers in the food, wine, spirits, hospitality,

or viticulture industries through education, leadership, and professional development, as well as fostering gender diversity and talent development across the industry at large.”

U.S. Wine Industry Presents Leadership Award to Oregon Senator Ron Wyden In May, industry groups WineAmerica and Winegrape Growers of America presented their 2017 Grape and Wine Public Policy Leadership Award to Senator Ron Wyden (D-Oregon) at the groups’ annual National Policy Conference.

“Senator Wyden has been a true champion of Oregon wines for years,” said Janie Brooks Heuck, Secretary of the WineAmerica Board of Directors, who presented the award. “As the owner of Brooks Wines in the Willamette Valley, I have benefited firsthand from his strong leadership, so it is a pleasure for me to help recognize him.”

The Chair of WineAmerica, Trent Preszler, PhD, further noted, “There are wineries in all 50 States, and we need the type of broad-based leadership that Senator Wyden has provided to advance this all-American industry. We are truly grateful for his support.”

Data Finds That Happy Hour Pays Off for Bar Operators Integrated POS provider Cake recently released the results from a recent survey which compared more than 400 bars that offered and did not offer happy hour promotions (all of which were users of the Cake platform). In reviewing the survey results, the company determined that bars offering some sort of happy hour promotion experienced an increase of roughly 30% higher sales, when compared to establishments no offering happy hour promotions.

One of the key takeaways from the study was that the size of the bar had little impact on the results: smaller establishments typically saw increased revenues during happy hour compared to those without happy hour which would usually outperform them. |

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