Audit Shows North Carolina ABC Wasted Over $13 Million

FILED AUGUST 10, 2018

An audit of the North Carolina Alcoholic Beverage Control Commission wasted as much as $13 million in taxpayer dollars over the last 13 years. The major issues were that the commission did not procure, administer or monitor its contract costs for warehousing and distribution service contract with a company called LB&B, and that it was renting warehouse space it kept empty.

"There was just no overview, no oversight," says state auditor Beth Wood in an interview. "There was no monitoring of that contract. You just had a contractor come up and say 'I want more money,' ... and whatever the contractor asked for, it was what they got."

However, the auditor found no evidence of criminal behavior. "We looked to see where there was some back-scratching," she said, but there was no solid proof, and it wasn't LB&B's fault the agency didn't monitor them.

Though, the auditor did say LB&B owes the state $300,000, and some private distilleries $12,000 for inventory shrinkage.

DELIVERY A "MAJOR SOURCE OF GROWTH" FOR ON-PREMISE

The on-premise channel in total has been lackluster of late, but delivery has become "one of the only major sources of growth," David Portalatin, a vp for researching company NPD Group, tells Nation's Restaurant News.

On-premise delivery sales are up 20% since 2012, but still account for just 3% of all restaurant orders. Within delivery, the order methods that are most popular are: digital from restaurant, third party apps like Seamless and Grub Hub, and then telephone. Digital orders, in particular, have jumped 27% in that timeframe, and now represent as much as 52% of all deliveries.

"As delivery grows, it offers [operators] an opportunity to imagine how to set [themselves] apart from competition," David says. Though he adds that traditional on-premise model "isn't going away."

CUSTOMER EXPERIENCE IS KEY TO ONLINE WINE SALES

Through Whole Foods and Prime Now delivery, Amazon is making its way back into the world of wine delivery, and potentially transforming the DTC channel as we know it. Paul Mabray, wine industry tech guru and ceo of Getemetry.com, said in a interesting post that "to beat Amazon the wine industry needs to look at shipping through the lens of customer experience."

Consumers have a lot of expectations when it comes to getting items delivered. At minimum, they want free shipping, faster shipments, on-demand access to shipping information and better shipping communications. Wineries could just follow in Amazon's footstep, but Paul thinks they can go a different route more successfully as a "luxury customer-centric product."

He also shares a few examples of companies trying to tackle the ho-hum delivery experience through innovative means. For instance, Vin Delivery is a Northern California logistics company that works with the consumer to schedule a delivery time and location, and then helps them unpack and take away the trash. Premium Wine Delivery in Texas has a similar model, but has a focus on keeping wine safe from the heat, and avoiding the summer hold issue in Texas through temperature controlled shipping options.

"Only by looking at how we differentiate to solve real customer problems and creating asymmetrical customer-centric strategies, even at premium costs, will we be able to compete against the Amazon effect," he concludes.

JEFFERSON'S DRIVING CASTLE BRANDS' GROWTH IN Q1

Castle Brands, the owner of Jefferson's bourbon, Goslings rum and Knappogue Castle whiskey, finished out its first quarter with sales growth of nearly 11% to $23 million.

The sales for its flagship brand, Jefferson's bourbon, were up a healthy 50% to $7.8 million, pushing the brand past the 80,000-case milestone. To be able to keep up with demand the company purchased an additional $4 million worth of bourbon.

Castle Brands is following the same successful Jefferson's road map for its Irish whiskey brand, Knappogue. It has debuted a number of small batch expressions including 14 Year Old, 16 Year Old and 21 Year Old. Castle brands evp and coo John Glover noted that the additions on the high-end are raising the average price for Knappogue.

'We expect that these growth trends and improving financial performance will continue," said coe Richard Lampen in a release.

WSD BRIEFS:

TERRESSENTIA NAMES NEW CEO. Terressentia Corp., a spirits supplier specializing in rapidly aged spirits, has appointed Diageo alumni Simon Burch as its president and ceo. He will be responsible for overseeing the day to day operations of Terressentia, including the bulk and private label business, as well as the O.Z. Tyler Distillery located in Owensboro, Kentucky. Prior to his position at Terressentia, he served as cmo for Belvedere vodka, and before that, he was svp of marketing at Diageo, where he led Smirnoff brand.

LEADERSHIP CHANGES AT ALLIED BEVERAGE GROUP. New Jersey-based Allied Beverage Group has made a number of leadership changes. Promotions and position changes include naming John Barry and Phil Sobel vp of sales, where they will co-manage the key sales divisions; Frank Bilancio as vp of key and strategy accounts; Michael Hermann to vp of marketing and business development; Hana Konheim as vp on-premise; Tom Fandel vp of supplier relations and innovation; and Maggie Maxwell as vp corporate wine sales.

Correction: an earlier version of this article stated Allied Beverage was integrating into the Breakthru Beverage network. Allied Beverage is merging with Breakthru Beverage in New Jersey, but Allied still holds a majority share in the company and will not be joining the national Breakthru network.

Until Monday,

Your Editors
Emily Pennington - emily@winespiritsdaily.com
Sarah Barrett - sarah@winespiritsdaily.com

"Wherever you are, be all there. Regardless of where you are at in life, show up to it. Like I said, the best way out is through." -- Leena Sanders

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