The Shadow
By Michael Felberbaum
AP Business Writer
RICHMOND (AP) – Virginians bought more alcohol in the state’s beverage control stores and restaurants as the state agency saw a record profit in the last fiscal year.
The Virginia Department of Alcoholic Beverage Control said the agency has seen retail sales increase to record levels consecutively for the past 13 years, even as discussions continue about privatizing the state’s liquor stores. The agency said it saw a record profit of $121 million in the last fiscal year and has contributed more than $1.5 billion to the state’s general fund during the last five years.
According to the agency’s most recent annual report, gross wholesale and retail sales increased 2.5 percent to nearly $693 million for the fiscal year that ended June 30. The number of cases of wine, spirits and nonalcoholic mixers sold increased more than 3 percent to about 3.98 million cases. That translates to more than 49 million bottles, or nearly 10 million gallons.
“Our industry is such that sometimes people drink when they’re sad and sometimes people drink when they’re happy, so there’s all kinds of things that go into it. We’re also one of the first industries that starts to come back a little bit when the economy turns around,” said Curtis Coleburn, the agency’s chief operating officer.
Sales at the about 130 state-run liquor stores open on Sundays increased nearly 10 percent, and sales to restaurants increased about 3 percent compared with a 2.5 percent decline in the previous year. The number of transactions at the state-owned stores increased by about 2 percent to 25.5 million.
“Part of it is just people being more comfortable with the economic situation. Some of it is, once again, people get tired of depriving themselves,” Coleburn said.
Sales of vodka increased about 6 percent to nearly 1.3 million cases, with four brands in the top 10. But Jack Daniel’s remains the top-selling brand in Virginia based on dollar figures, and officials say that it has been the mainstay for as long as they can remember.
“It’s really a stable, cash-cow kind of product,” Craig Vanderland, the agency’s financial head, said of the brand. “It’s been around forever and it has an established, very loyal clientele – not a lot of substitutes.”
The 2011 fiscal year was the first year that Virginia law allowed companies to conduct product tastings in the state’s about 330 liquor stores. More than 2,850 tastings were held during the year, but officials said they were unable to quantify how successful the tastings were at driving sales. Companies are allowed to sign up to hand out samples of 1.5 ounces – or about a shot – of distilled spirits to customers.
The agency also said in its annual report that it remains committed to reducing sales of alcohol to minors. Employees at state-owned liquor stores check about 2.2 million identification cards each year, yielding a 98 percent compliance rate. And compliance rates for licensees like restaurants and bars remain at 90 percent.
The latest alcohol sales figures for Virginia come amid failed attempts over the past few years by Gov. Bob McDonnell to put state-owned liquor stores into private retailers’ hands, noting that free market booze could generate tax money for roads.
When it became clear that McDonnell’s campaign pledge would actually yield less cash than the ABC stores now net, the initiative died before the 2011 General Assembly session began. The proposal couldn’t even find a Republican sponsor in the GOP-ruled House, so Delegate Bob Brink, D-Arlington, took it up for them. Republicans were not amused, and the privatization efforts fizzled. McDonnell has said he’ll try the bill again in 2012.
