Beverage Dynamics

Beverage Dynamics Mar-Apr 2016

Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.

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26 Beverage Dynamics • March/April 2016 www.beveragedynamics.com [ RETAIL PROFILE ] FAMILY AND SERVICE Gershman, a former Grand Forks City Council president from 2000 to 2014, took over Happy Harry's in 1976 from his father, Harry, who started the company in 1944. In 1990, Gershman opened a second store, this one in Fargo. In 1993, he opened a second Grand Forks location. The new unit incorporates all the touches that have made Happy Harry's so successful for so long: for example, carry out service in all stores. Whether a single bottle or cases, a staff member carries all purchases to the customer's car, something especially helpful in the frigid ND winter months when juggling gloves and keys and bottles can be awkward. "Why would you put your customers through that?" Gershman asks. A new tweak seen in all the stores are beer growler stations, with rotating tap handles that differ from store to store. "This has been really fun for us and we're able now to feature some of our local North Dakota breweries as well. Beers that typically were only offered on-premise and now we have a vehicle to sell our customers these limited release beers, with a technology that keeps them fresh for 30 to 45 days," Mitzel says. With beer making up about 45 percent of Happy Harry's chain-wide sales, upgrading beer was a big boost (spirits account for about 28 percent, wine 24 percent and other items about three percent). "The steady business growth of the growlers is very encour- aging," Gershman says. "Lots of pubs and restaurants have them, but our system [the patented Pegas counter pressure fi lling tech- nology] works better than most systems." In addition, the growl- ers stations offer tastings three times a week for fi ve to six hours "Our market always has been a very strong beer market," Mitzel says, "Fifty-fi ve to sixty percent of it is driven by the big national brands, but as we grow, beer sales may tick up because of growlers and craft beer." Changes in wine trends have been slower. "Our market has always been driven by western wines - California, Washington and Oregon," Mitzel says. "We share similar trends to the coun- try, but sometimes it takes a while for them to get here. We're in the sweet belt so we may sell a higher percentage of Moscato and Reisling and other sweet things, because our customers have always called for them." With spirits, the larger store size has increased small distiller product introductions, Mitzel says. "The market has been really receptive to small distillers within the region, and some of them put together nice products with great packaging. Some are as good as any national brand, and we're seeing a groundswell of support for many of them." EMPLOYEES FIRST Simultaneously with the building of the store, Gershman was working on yet another project - turning Happy Harry's into an employee-owned business through a complicated employee stock ownership plan (ESOP), a common tool used to pass ownership of a business to its employees. In it, employees buy or earn stock in the company while they are employed and are paid out for their stake in the business when they leave the company or retire. "As of Jan. 1, the company is 100 percent employee owned, and I'm very proud of that. I have no successor in the business and if you sell a business like ours outright, the fi rst place any- one will look to save money is the key people and I couldn't do that - they've been so loyal to us," Gershman says. He's still in charge for now, and he's optimistic no serious changes will occur anytime soon. "The thing is this - change is going to visit you, whether you like it or not. The key was, this is a way for me to manage change rather than wait for something drastic to happen. I was able to put my hands on the steering wheel and manage the change that I wanted." The same smooth transition to a new store fi lled Gershman with confi dence that he had the key people in place that would justify an ESOP. "The key is to have qualifi ed people to turn the business over to. More than one key person; you need a depth of qualifi ed talented key people. We have such a strong bench. When we opened the new store, we had the management team to move in and didn't miss a beat. If you came in the fi rst day, you would have thought based on the talent we had there that we'd been open for years." BD JACK ROBERTIELLO is the former editor of Cheers magazine and writes about beer, wine, spirits and all things liquid for numerous publications. More of his work can be found at www.jackrobertiello.com. Whether a single bottle or cases, a staff member carries all purchases to the customer's car, something especially helpful in the frigid ND winter months...

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