- In State Fiscal Years 2024 and 2025, the ABC system generated $713 million and $696 million in public revenue.
- Tito's Handmade Vodka far outpaces all other products sold in North Carolina ABC stores selling more than 300,000 cases.
A new state audit report of North Carolina’s liquor warehousing and distribution contractor found key delivery benchmarks were not consistently met, despite the Alcoholic Beverage Control (ABC) system generating over $1.4 billion in revenue in two years.
The Office of the State Auditor’s report examined the ABC Commission’s oversight of its distribution vendor, LB&B Associates.
State Auditor Dave Boliek emphasized that this performance audit provides a transparent overview of where the ABC system meets its goals and where consistent shortfalls, especially in delivery, require targeted improvements.
“North Carolina’s ABC system is a major source of state funding that comes with many intricacies, and our performance audit examined and provided layers of data behind that system,” said State Auditor Dave Boliek. “With key performance measurements holding the state’s alcohol distribution process to a high standard, this report gives a transparent overview of the supply, demand, costs and where some improvements can be made.”
Liquor is stored in two state-managed warehouses in Raleigh and Clayton, with LB&B handling distribution under a contract that runs through 2031. The vendor was paid $21.9 million in 2025.
Auditors reviewed five contractually required key performance indicators (KPIs) over eight quarters. LB&B consistently met cost accuracy, outstanding claims, and safety performance throughout the review period. However, it fell short on on-time delivery and fill rate.
The vendor failed to meet on-time delivery targets across all eight quarters, averaging 96.4% on-time, below the 2024 and 2025 thresholds of 99% and 98%. The audit identified driver shortages, mechanical problems and severe weather as primary delay factors.
LB&B also missed the fill rate requirement — a minimum of 165,000 cases shipped weekly — in one quarter, which auditors linked to seasonal demand declines following the holidays.
The audit provided several recommendations addressing both performance improvement and oversight. First, auditors urged the ABC Commission to collaborate with LB&B to address the root causes of late deliveries. Recommended actions include developing contingency plans, establishing improved fleet maintenance schedules, arranging access to backup vehicles and implementing strategies such as cross-training and on-call staffing to address driver shortages.
In addition, the report recommends that the ABC Commission and LB&B focus on route-level improvements for deliveries that are repeatedly delayed, using trend analysis to better identify and address problem delivery areas.
Auditors further advised the commission to anticipate and plan for seasonal demand fluctuations by using historical data to adjust staffing and logistics—scaling operations during peak periods and consolidating routes during slower months.
To improve accountability, the audit also recommends enhancing KPI monitoring by implementing real-time performance dashboards, clearly defining thresholds requiring corrective action and mandating that the contractor submit quarterly improvement plans when performance targets are not met.
Despite those shortcomings, the audit highlighted the scale and financial importance of North Carolina’s ABC system. North Carolina is one of 17 control states that regulate liquor sales and distribution. The system operates through 171 local ABC boards, which run 452 retail stores statewide.
In State Fiscal Years 2024 and 2025, the ABC system generated $713 million and $696 million in public revenue. These funds were distributed to the State’s General Fund, counties and municipalities, alcohol education, law enforcement, rehabilitation, and health services.
Mecklenburg County led all local ABC boards in gross sales across fiscal years 2024 and 2025, generating $280,085,705, followed by Wake County at $222,276,672. Greensboro reported $80,819,076 in sales, while New Hanover County reported $72,611,286 and the Triad Municipal ABC Board reported $66,066,881.
The audit also highlighted consumer trends. ABC “best sellers” data shows Tito’s Handmade Vodka far outpaces all other products sold in North Carolina ABC stores. Across fiscal years 2024 and 2025, Tito’s sold more than 300,000 cases in various sizes, well ahead of any other spirit brand.
The ABC Commission accepted the findings and recommendations included in the audit, noting in its response that, “In addition to its importance to the citizens of our state, this performance audit process helps the ABC Commission team highlight concerns and gain valuable insight into solutions and opportunities for improvement.”