StateWays - July/August 2015

StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions

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35 StateWays n n July/August 2015 flavored whiskeys on our shelves." Failure to recognize declining categories may result in un- sold stock sitting on shelves. That space could have gone to more-popular, better-selling products. And if agencies are slow to respond to upward trends, they may miss out on profit. The Wyoming Liquor Division, which operates only the warehouse side of the business, keeps "approximately three months worth of product in our warehouse to accommodate any increase and to avoid out-of-stock issues," explains Angie Lebeda, WLD purchasing manager. Staying on top of positive trends has paid dividends for other agencies. "When Pinot Noir experienced a surge in sales nationwide, the NHLC was able to increase the number of different brands of Pinot Noir in stock and expand shelf space to accommodate the category's increase in sales," Gerrish remembers. "Similarly, the latest trends in wine include Prosecco and Moscato, and as they become more popular, those products will experience an upturn in our stores as well." To Add or Not to Add? Like other states, Pennsylvania holds several listing periods each year. The agency accepts requests from vendors to stock new products. Category managers review the submissions. They assign one of four "category roles" to each potentially new SKU: mature, maintain, growing, or emerging. Submissions are further broken down by price segments: value, standard, premium, super-pre- mium, and ultra-premium. "When we open the listing period, the buyer's focus is on the growing and emerging categories, and we ask vendors to keep that in mind when submitting a listing," Kriedeman explains. Once the listing period closes, buyers go through the categorized submissions to determine what products interest the agency. "They make decisions based on category roles and marketing support," Kriedeman says. "We factor in the dollars the supplier is going to spend in our market to promote the product." This includes advertising in the agency's Taste magazine, holding in-store tastings and handing out coupons. "If a product is in a growing or emerging category, but doesn't have much marketing support, we may not request another meeting to discuss that item," Kriedeman says. "If a product is in a mature or maintain category, and has a lot of marketing support, we may request a meeting to discuss the product, especially if that product is unique." Products under consideration are discussed and taste- tested with the suppliers. If the PCLB team believes a customer need exists, or that an item will sell well, they rec- ommend the product to the PLCB board, which maintains final approval. In New Hampshire, recently added SKUs are placed in se- lect outlet stores for six months to determine if they can meet the required gross profit requirement. Based on the performance of each product, they will be listed either as Full Distribution (all outlet locations), Specialty Distribution (top 33 locations) or Limited Distribution (top 15). Since other agencies operate with similar objectives and mechanisms when adding SKUs, it makes sense for states to stay aware of which new products have sold well elsewhere. "We have access to NABCA sales data to see how products are performing in other states, and many times we check the initial sales of a new item," Gettings says. "If its sales are extremely high, Virginia ABC will put it into more locations quickly." The Date of Delisting As customer palates evolve, products and categories can fall out of favor. This requires adjusting stock, so that poor sellers do not "It is our customers who really choose what will succeed and what will fail" – RICHARD GERRISH, NEW HAMPSHIRE LIQUOR COMMISSION

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