The Alcoholic Beverage Control Study Committee finished its second day of hearings Tuesday and restaurant owners want changes to the way the ABC conducts business.
While they said they’re largely satisfied with the control state model in Mississippi where the state acts as the wholesale distributor for spirits and wine, they’d like changes to the online ordering system such as more options for split cases and would like the pace of deliveries to return to pre-COVID efficiency. They also have problems with how the DOR delists items from its warehouse inventory, which the agency does twice annually.
They also have problems with the DOR’s transition to a new shipping company, which they say make deliveries during peak business hours and are rough with product.
Tuesday, Steven O’Neil, who owns the Manship and Aplos restaurants in Jackson, said that he’d like to see increases with the ABC budget or even have the division split out into a separate agency with its own budget line.
That amount is considerable. For the fiscal year that ended June 30, the DOR transferred $88.62 million in ABC collections to the general fund. That represents an increase of 9 percent compared with fiscal 2019, when $81.3 million was transferred to the general fund.
O’Neil also said that his operation buys spirits from both the ABC and independent wholesalers, which are package stores that receive a permit from the ABC to conduct wholesale business. O’Neill said the price difference is about a 10 percent markup for items bought from an independent package store vs. those bought from ABC.
John Bean is the president and CEO of the Eat with US, a Columbus-based restaurant ownership group that owns Harveys, The Grills, Sweet Peppers Deli and the Bulldog Burger Company.
“Pre-COVID, I’d say operations were very good, organized, consistent and reliable,” Bean said. “But since COVID, and I recognize that everybody’s supply chain, labor issues have been disruptive, but it has been a challenge. Concerning the TAP (Taxpayer Access Portal) system, our managers have learned to navigate it, but a more friendly and simple system would improve the accuracy of orders and cut down on mistakes.”
Bean says the DOR transitioning from a five-case minimum (one case holds 12 bottles) to a 10-case minimum has created issues for restaurants with storage. The DOR allows split cases, but at least three of the bottles must be of the same item.
O’Neill said that restaurants often buy from package stores with independent wholesaler licenses since they can buy smaller amounts than they can from the ABC, with benefits for increased storage space and more cash on hand.
Charles Frazier is the owner of Weidmann’s Restaurant in Meridian. He says he’s managed restaurants in Louisiana and Tennessee, which are both license states where private wholesalers handle distribution of alcohol.
“We have a better system than that for purchasing most beverages as it is centralized and all brands are under one roof,” Frazier said. “The exception to this is the purchase of special orders, which require direct communication with a liquor brand representative who submits the order at ABC and then the product is shipped to us, the permit holder.
“This can result in even greater wait times for product as well as introducing an additional human element that can and often does unfortunately create mistakes.”
He also said that ABC policies on split cases are making it difficult for restaurant owners by tying up both cash and inventory space and forcing them to buy from local package stores with its added markup.
Tasho Kasaboulas, who owns Kats Wine and Spirits in Jackson and spoke before the committee for the Mississippi Independent Package Store Association, said that previous unsuccessful bills that would’ve privatized alcohol distribution would’ve preserved the state’s 27.5 percent wholesale markup on liquor and wine and allowed wholesalers to add their own on top of that. He said this would add up to a 35 percent price increase for Mississippi consumers.
“This would devastate our industry and the state as illegal shipments increase and consumers flock across state lines,” Kasaboulas said. “This would be particularly devastating for Southaven and the coastal areas.”
The study committee will present its findings November to the full Legislature.
The ABC announced it would cease taking orders for 10 days in July before complaints from package store and restaurant customers forced the agency to change course. The ABC returned to taking orders, but orders are taking a month for customers to receive them. During normal, non-holiday times, it usually took a day or so for deliveries to arrive for customers.
The numbers for fiscal 2020 show the strain on the ABC distribution system. For the fiscal year that ended June 30, the DOR transferred $88.62 million in ABC collections to the general fund. That represents an increase of 9 percent compared with fiscal 2019, when $81.3 million was transferred to the general fund.
Mississippi is one of 17 states known as control states, which means the government handles wholesale distribution of one or more of the three categories of alcoholic beverages (beer, wine and spirits). Some control states such as Alabama even handle retail sales with government-owned retail outlets.
