Stateways Sept-Oct 2014

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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StateWays Q Q September/October 2014 22 CONTROL STATES EXECUTIVE FORUM +++++++++++++++++++++ 2014 was of 12.4 million gallons, an increase of only 3.1 percent over the previous year. Record dollar sales were due in part to our focus on better inventory management and improved customer service to meet the needs of Ohio consumers. An impor- tant part of that was the Division's Spirits Innovation Program (SIP). SIP was initiated to enhance the overall shopping experience and modernize the look and feel of contract liquor agencies that sell spirituous liquor. In FY 2014, the Division and its industry partners, Diageo and Republic National Dis- tributing Company, reset 134 Contract Liquor Agencies to optimize product selection, maximize consumer value and increase shopper satisfaction by providing an im- proved and consistent store experience. This exceeded the SIP goal of resetting 125 Agencies in the first year of the program. New Products and Tastes The 134 reset Agencies represent 48 percent of the spirits business in Ohio; those stores experienced an 8.2 percent increase in sales as opposed to 4.7 percent growth in Agencies that have not been reset. Another part of this success is attributed to the so- phistication of consumer tastes, which is exemplified in Ohioans purchasing more premium products, including the many new flavored items. Vodka and American Whiskey accounted for almost 50 percent of total sales during FY 2014. These two cat- egories were followed by Rum and Canadian Whisky. The category that experienced the most growth in FY 2014 was Brandy at 15.5 percent, followed by cordials at 14.7 percent and Irish Whiskey at 11.5 percent. Many of the new products are flavored items and ac- count for much of the growth. While flavored Vodkas kick- started this trend, consumers can now enjoy a diversity of flavored whiskeys, tequilas and rums. The top five flavors in FY 2014 were spiced, herbal, cinnamon, peach and orange. We are proud of the efforts that helped make FY 2014 so successfully, and expect more great things in 2015 with the continuation of the SIP resets and the help and coop- eration of our industry partners. By taking a fresh look at regulations and our opera- tions, Ohio is a leader and example of what government can do to affect positive change and help improve the economic future for its stakeholders. Business friend- ly regulations, encouraging responsible consumption with safety in mind and our commitment to excellent customer service will help create jobs and keep Ohio's economy strong. OREGON Rob Patridge Interim Chair, Liquor Control Commission Record-Breaking Distilled Spirits Sales D istilled spirits sales in Oregon are higher than ever, breaking half a bil- lion dollars in the first year of the two- year budget cycle. Gross sales for distilled spirits for fiscal year 2014 totaled $518.6 million. This is $21 million (4.2 percent) more than the previous fiscal year. OLCC is expected to generate over $1 billion in gross distilled spirits sales for the 2013-2015 biennium. As the third largest revenue source for the state, the net profits from distilled spirits sales fund critical pro- grams like education, healthcare, and police. A total of $213.8 million in profits from liquor sales are distributed to the state's general fund, counties and cities for fiscal year 2014. The growth in sales is not necessarily attributed to consumers purchasing more spirits. Sales and distribu- tion statistics indicate that an improvement in the econo- my, customers purchasing more expensive products, and Oregon's population growth are likely the driving factors in the increase. Oregon's Craft Beverage Industry Oregon is home to a variety of alcohol beverage in- dustries, from flourishing wineries and breweries to bur- geoning distilleries and cideries. The success of vintners and brewers has encouraged distillers and hard cider makers to take advantage of the positive business climate available in Oregon. Lawmakers have brought about a variety of policy changes that help small Oregon businesses get a foothold in the market. For example, a recent change allowing cider to be sold in refillable containers called "growlers" allows cideries to take advantage of the rising popularity of growler fill stations popping up across the state. An- other change is that Oregon distillers can have up to five additional locations where they can sell their own craft spirits. This has had a big impact on craft distillers in the state who choose to use it as an opportunity to expand their footprint and distribution. In addition to a favorable business climate, the high quality of Oregon grains and produce also have an im- pact on the quality of local products made and sold in the Beaver State. High quality craft beverages in turn affect the growth in Oregon's tourism stemming from popular events like the Oregon Brewers Festival and the Pendle- ton Round Up.

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