The N.C. Alcoholic Beverage Control Commission and the company operating the state’s liquor warehouses are trying to offer a modicum of relief to local boards suffering from problems with the global supply chain.
ABC chairman A.D. Zander Guy proposed dropping warehouse bailment charges from $2.75 per case of liquor to $1.50, for 120 days retroactive to July 1. The move basically removes an increase to the bailment fee, which was part of a new 10-year contract for LB&B Associates, which runs the warehouse.
The commission, during its monthly meeting Wednesday, Aug. 11, voted to approve the measure, as well as proposals from LB&B to amend its contract to reduce fees to offset packaging and transportation costs incurred by the state’s 170 ABC boards.
The ABC is in charge of controlling state alcohol production, storage, sales, and distribution. North Carolina is one of just 17 control states, meaning the government oversees wholesaling and/or retail operations regarding spirituous liquor. It’s the only state that uses a system of local boards to regulate spirits.
“Our ABC boards have suffered some discomfort,” Guy said Wednesday.
In March, the N.C. ABC voted unanimously to recommend the state renew the contract for warehouse services to LB&B, effective July 1. To fund the new contract, the ABC announced then that bailment — which pays for warehouse operations — would increase on Aug. 1 to $2.75 per case of liquor, from $1.50 per case.
The move Wednesday effectively reverses that increase.
The state ABC, according to its 2019 annual report, collected about $1.2 billion in revenue, distributing some $85 million to city and county governments. It collected another $27 million in permitting fees, sending, in total, about $350 million to the state’s general fund.
The state and LB&B, Guy said, are working out the “bugs” related to efforts to upgrade overall efficiency, an aspect of LB&B’s new contract. LB&B was the target of an audit in 2018. The audit found issues with LB&B’s operations had cost the state about $13.5 million, state Auditor Beth Wood found.
The new agreement, the ABC has said, includes a requirement of nearly error-free and on-time deliveries as well as increased delivery frequency to the state’s 170 local ABC boards. “The new contract will involve a comprehensive computerized warehouse management and operations platform that will include backorder capability and increased visibility into real-time warehouse inventory that the local boards have indicated are service priorities,” the ABC said in a statement.
“They understand things have not been going the way they ought to, … and they wanted to offer some relief,” Guy said of the contractor Wednesday.
But bars, restaurants, and consumers across the state are having a hard time getting certain brands of liquor from N.C. ABC. The retail demand for spirituous liquor has remained high, even as more bars and restaurants have opened in recent months, straining the supply even further, N.C. ABC spokesman Jeff Strickland has told CJ.
Global shortages on items such as glass, cardboard, and even labels for bottles have exacerbated the problem.
“Broadly speaking, there have been strains on the global supply chains of a variety of products throughout the entire pandemic, and not just here in North Carolina,” Strickland said.