The 2019 Beverage Alcohol Retailers Conference was full of interesting information – we will be sharing some of the highlights over the next few weeks.

The opening keynote was provided by David Jabour, owner of Twin Liquors.  They have 80 stores in Texas.  It is always fascinating to see that the bigger stores face many of the same operational challenges as smaller stores.  

Twin Liquors began as a single neighborhood store.  Jabour’s father was in the business and had a twin brother.  The chain was actually started after his father retired from his original store, and missed the business.  David and his sister now run the company – keeping it a family business.  Jabour shared his ideas in response to a number of one-on-one questions.

On pricing - value doesn’t mean price alone.  Liquor stores can sell below cost in Texas, but Twin Liquors tries not to do that.  It is important to add value to the product.  Value equation is different in every market.  Need to be competitive, but what does the store offer?  How excited is the customer to shop with you?  If they are just shopping with you for low prices, the consumer will easily go to the next guy.  Shoppers want to be connected to “their” store.

Changes in Texas – certainty that we all have is that all of the laws under the 21^st amendment will continue to be challenged.  As retail focuses on the beverage alcohol category, pressure will increase.  Historically, the laws have focused on safe regulated sale of the product, which has created some very good laws for our industry.  Walmart is challenging a number of our laws in Texas – and moved in federal district court.  In late April, became an Appellate Fifth Circuit case.  Very interesting.  Will get a decision from that in the next few months.  We will see what that brings, but it could be an overnight change in our state.  We have to be prepared for that.  What does that mean?  Always try to be the best that you can be.

Courts are changing the rules.  Tennessee – first spotlight in Tennessee – more and more is going on in the courts more than the statehouses.  That is going to continue.  (Tennessee is the residency case.)

You have to be involved in your state trade associations.  ABL provides an amazing conduit for all of us to dialogue in a format that exchanges issues and best practices among the states.  If it is going on in another state, it is likely to come to your state.  We are all here because of those state trade associations that have put good laws in place for our industry throughout the years.  Jabour is an ABL board member.  Stay involved.  Stay engaged in trade associations.

BARC is also a great venue to exchange best practices.  Not necessarily just state laws, but other challenges and opportunities that we have.  Things that we are doing here today make us better.  The more that we can communicate, the more we share best practices, and we can pick up valuable lessons from others.

"We know that beverage alcohol is at its best with independent retail.  We do not want to be a dying breed, we want to be a thriving breed."

Will Twin Liquors expand to other states?  Texas is a big state.  Not really looking to invest outside of that.  The moment you quit investing in growth is the moment you are slipping behind.  We continue to look to invest in growth / acquisitions as they come to us.  We have never acquired a company where we were looking to grow.  Maybe it was a family business that didn’t have a succession in place or didn’t want to continue to run the business.  We’ve never gone out and aggressively pursue those acquisitions, they have come to us.

Choices to add services or locations come down to answering consumer demands.  If the consumer wants it, then we are going to look at it – part of our business plan is to respond to the consumer demand.

Some of the new technologies and strategies in the business are disruptive to our current business model, how do you address those challenges?  We want to be prepared to respond to change, but the challenges are the disruptions.  The current regulated model works today and we need to continue to convince politicians and judges that it works well and why it is important.  At the same time, we have to recognize what our customers want and will support.  Be prepared for change.

Today, every consumer wants everything now.  That mentality gets going and the confluence of that with the three tier system looks like tectonic plates merging.  It creates tremors and we have to try not to build on a fault line.  That’s what disruption is.  We have to be prepared to have those conversations with our elected officials.  Most of them want to help – we are the face of the communities we serve and they want us to be there and to provide jobs.  They have conflicting pressures on them, so you have to be there to educate them.

Ultimately, it has been fun to build from one little 700 foot store into the current company.  But it is about more than that.  We have built brands and other things.  We’ve been part of this industry going back to Prohibition.  It is all about how to make this industry better.  Take a brand like Tito’s.  I can think back to the infancy of Tito’s and how we helped to grow that brand.  That is one of the fun things.  Told story about encouraging Tito to resist the urge of getting into flavors.  And he did - think that was a good decision.  Deep Eddy is a growing brand.  Remember when it had base flavor and sweet tea.  Was thinking about their flavors, habanero and lime were considered – he urged them to do the Texas Ruby Red Grapefruit – loved sharing the ideas, knew it could grow and be popular.  That was a fun thing to do – to share those ideas and see them succeed.  Takes all of us to make it better and do that ten fold over.  One conversation at a time.

The Q & A with David Jabour was very interesting.  Hope you find something of interest to take from these notes!  We will share more from the conference in upcoming communications.

Apr 5, 2019   https://governor.kansas.gov/governor-kelly-signs-bill-supporting-licensed-retail-liquor-stores/

Encourages Kansans to continue to shop local, signs five additional bills yesterday

Kansas Governor Laura Kelly signed several bills yesterday, including one that provides support to local licensed retail liquor stores and the Kansas citizens who own them.

“Throughout my years of serving in the Legislature, I have supported our licensed retail liquor stores and the Kansas citizens who own them,” Kelly said. “I know that April 1 has brought new challenges as well as new opportunities for these small Kansas-owned businesses.”

House Bill 2035 simplifies the tax duties of licensed retail liquor stores, as it relates to the sale of cereal malt beverages and strong beer products. It also provides for uniform law enforcement under the New Beer Law that became effective on April 1, 2019. This legislation will become effective upon its publication in the Kansas Register.

“I encourage Kansas shoppers to continue to choose to shop at local businesses where the profits and tax dollars support the local economy,” Kelly said.

KABR is asking Governor Kelly to expedite signing HB 2035 which was passed by the Legislature late last week so it can be published in the Kansas Register - triggering its effective date.  HB 2035 establishes the tax rate for cereal malt beverages by a retail liquor store at the 8% enforcement tax rate - equal to the tax paid on other alcoholic beverage products.  This bill also provides for uniform law enforcement under the new Beer Law that become effective April 1.  This bill is basically another trailer bill for 2017 Sub for SB 13 - the Beer Law.  KABR, KWSWA, Division of ABC, Kansas Association of Chiefs of Police, the Kansas Sheriff's Association and the Kansas Peace Officers Association had lobbied for the bill to be final prior to April 1, but there was a delay for House concurrence.  

The Division of Taxation sent a notice Tuesday night telling retail liquor stores to charge sales tax on cereal malt beverage products until this legislation is implemented (on publication in the register). Currently, liquor stores pay enforcement tax on all beer, wine and spirits products. This is an issue for programming point of sale systems and recordkeeping.  This is, of course, evidence that cereal malt beverages have not "gone away" as advertised by the Uncork proponents.

Additionally, any charges filed by a local law enforcement officer and submitted to the Division of Alcoholic Beverage Control since April 1 could be challenged because HB 2035 was not final prior to the April 1 rollout of the Beer Law.

From: KDOR_ABC Email [mailto:KDOR_ABC.Email@KS.GOV]
Sent: Tuesday, April 02, 2019 4:47 PM
Subject: Division of Taxation's Notice to Retail Liquor Stores regarding Taxation of Cereal Malt Beverage Products

NOTICE TO RETAIL LIQUOR STORES

2019 H.B. 2035 amends K.S.A. 2018 Supp. 41-308 to provide that all alcoholic liquor, cereal malt beverage and nonalcoholic malt beverage sold by a holder of a retail license shall be subject to the liquor enforcement tax imposed by K.S.A. 79-4101.  This change is effective April 1, 2019 and upon publication of the act in the Kansas register.  Until such time as such publication occurs, holders of a retail license shall continue to collect retailers’ sales tax on the sale of cereal malt beverage.  On the day of publication of the act, liquor enforcement tax shall be collected on such sales.

Kansas Department of Revenue - Alcoholic Beverage Control

Mailing Address:  Mills Building , PO Box 3506 , Topeka , KS 66601 -3506

Physical Address:  109 SW 9th Street , 5th Floor, Topeka , KS 66612

Phone:  785-296-7015

Fax:  785-296-7185

Email:  KDOR_abc.email@ks.gov

Website: www.ksrevenue.org/abc.html

Facebook:  www.facebook.com/KansasAlcoholicBeverageControl

NOW IN ITS THIRD YEAR, the Beverage Alcohol Retailers Conference is the only national event that provides off-premise retailers the opportunity to gather together, network with colleagues and share best practices to improve their businesses and KABR members are eligible for a 50% discount registration using the promo code PARTNER.  https://bevretailersconference.com/ 

Join us in Louisville on June 10-12 for another education-first BARC, where you’ll meet our contributors, editors and our most avid readers. Our track sessions, panel discussions and keynote presentations will all provide valuable educational material, which will make leaving your store for a few days worthwhile. Over the past two years, the event has grown by 20% in attendance. If you have attended in past years, we hope to see you in Kentucky next year, as we have some unique opportunities you will only find at BARC. If you’re new to BARC, please consider joining us in 2019!

Top 100 Retailers

In 2019, Beverage Dynamics will once again recognize retailers from throughout the country who demonstrate innovation, excellent customer service and superior beverage alcohol industry knowledge. Will your store make the list?

Nominations for the 2019 Top 100 Retailers are now open through the end of February.

Winners will be honored at the Beverage Alcohol Retailers Conference in Louisville on June 12, and featured in the July/August 2019 issue of Beverage Dynamics.

Retailers are preparing for change on April 1 2019, when the laws regulating the sale of strong beer in Kansas will change.  CMB retailers will be able to sell beer up to 6.0% ABV and liquor retailers will be able to offer other products besides alcoholic liquor. Depending on your perspective, this change may be welcome, or you may be dreading the experience.  Many retailers are making changes to ease the transition and hope to carve out a new space in the retail market.

KABR hosted its annual conference in October, featuring education regarding the upcoming changes to Kansas beer sales and strategies for retailers.  Since then, AB Inbev and Coors/Miller have hosted retailer gatherings to share information about the transition and what to expect.  Debbi Beavers, Director of the Division of Alcoholic Beverage Control, participated in these events and shared the presentation linked below to help retailers navigate the changing rules.  The information has been updated as new questions have come forward.

Remember, KABR is in regular contact with the Director and others in the industry.  If you have questions or concerns, please do not hesitate to contact us and we will do our best to get what you need.

CHANGING BEER SALES IN KANSAS - ABC Presentation

ABC RETAILERS HANDBOOK - Updated 2018

INDUSTRY NOTICE January 2019

Delays in tabulating the votes in Johnson County forced election watchers to wait until 8 a.m. today to get the unofficial results of the Republican primary race for Governor.  Results are still unofficial, with recent mail-in ballots, provisional ballots, and some hand counted ballots not yet included.

Does your vote count?  Take note of incumbent State Representative Steve Becker of Buhler who appears to have lost his seat by one vote.  

The posted results show Secretary of State Kris Kobach winning the primary by a very narrow margin of 191 votes out of 311,009 recorded votes.  Although the election has been called, Governor Colyer is not yet conceding the race, releasing a statement this morning saying that with, "the presence of thousands of as yet uncounted provisional ballots and the extraordinary problems with the count, particularly in Johnson County, this election remains too close to call."

Senator Laura Kelly won the Democrat primary with more than twice the votes of the closest challenger.

Republican Primary - Governor

Democrat Primary - Governor

Watkins wins Republican Primary for 2nd District US House of Representatives.  Steve Watkins, a former Army Ranger and a newcomer to Kansas politics, has defeated three state senators, a state representative, and a former Speaker of the House to be the Republican candidate for the 2nd District Congressional seat retired by Rep. Lynn Jenkins.  Watkins beat Senator Caryn Tyson with a hefty campaign account primarily funded by his father.  Read the KC Star article here.  Watkins will now face former Rep. Paul Davis (D-Lawrence) who ran for Governor in 2014.

The incumbents won the other congressional primary races (Marshall, Yoder, Estes).  There was a close Democrat primary to select the candidate to challenge Kevin Yoder in the general election, with Sharice Davids emerging as the winner.  Davids is Native American, a mixed martial arts fighter and openly LGBT.  Read article here.  Democrats believe Yoder's seat could be vulnerable in the November election.

Democrat Primary for 2nd District Congress

Insurance Commissioner:

Schmidt will run against Nathaniel MacLaughlin (D-Kansas City) in the general election.

Secretary of State:

Schwab will face Brian "BAM" McClendon, a software designer, developer and engineer with connections to Google Earth and Uber, for the general election in November.

No More Campaigning:  There are 16 statehouse races that had only a primary race – in other words, the winning candidate has no general election opposition filed for the seat.  12 of these are Republican races and 4 are Democrat.

District 6 – Incumbent Rep. Jene Vickrey (R-Louisburg) defeated challenger Clifford Blackmore (R-Paola).  He won the vote 62% to 38%.  

District 11 – Incumbent Rep. Jim Kelly (R-Independence) defeated challenger John Lowrance (R-Independence).  He won the vote 76%-24%.

District 12 – Incumbent Rep. Doug Blex (R-Independence) defeated challenger Brad Hall (R-Independence).  He won the vote 69%-31%.

District 13 – Incumbent Rep. Larry Hibbard (R-Toronto) defeated challenger Londa Tindle (R-Fredonia).  He won the vote 55%-45%.

District 22 – Incumbent Rep. Nancy Lusk (D-Overland Park) defeated challenger Michael L. Coleman III (D-Overland Park) with 89% of the vote.

District 46 – Incumbent Rep. Boog Highberger (D-Lawrence) defeated challenger Benjamin Ferlo (D-Lawrence).  He won the vote 88%-12%.  

District 55 – Incumbent Rep. Annie Kuether (D-Topeka) defeated challenger Joseph Stringer (D-Topeka) 88%-12%..  

District 64 – Rep. Susan “Suzi” Carlson (R-Clay Center) beat Kathy Martin (R-Clay Center) 53%-47% to win the seat retired by Rep. Susie Swanson.

District 74 – Stephen Owens (R-Hesston) defeated six term incumbent Rep. Don Schroeder (R-Hesston) 55%-45%.  Owens is considered more conservative with endorsements from the NRA and Kansas Chamber.

District 75 – Former Rep. Will Carpenter (R-El Dorado) will return to Topeka after winning the primary 60%-40% against one term incumbent Rep. Mary Martha Good.  This was a rematch - Good beat Carpenter in the 2016 election by only 40 votes as a more moderate leaning candidate.

District 80 – Wellington businessman Bill Rhiley beat one term incumbent Rep. Anita Judd-Jenkins (R-Arkansas City) 58% to 42%.  Rhiley had conservative endorsements.

District 87 – This seat is retired by Roger Elliot.  Renee Erickson (R-Wichita) beat Jeff Kennedy (R-Wichita) 56%-44%.

District 89 – Rep. KC Ohaebosim (D-Wichita) held onto his seat against two Democrat challengers from Wichita – LeSean Tarkington and Marty Keenan.  

District 104 – Rep. Steven Becker (R-Buhler) appears to have lost his seat by one vote to challenger Paul Waggoner (R-Hutchinson) 2,014-2,013.  There will be a recount.

District 107 – Incumbent Rep. Susan Concannon (R-Beloit) beat challenger Sam Sacco (R-Concordia) 56%-44%.

District 124 –  Martin “Marty” Long (R-Ulysses) won 64% of the vote over Jeffrey G. Locke (R-Sublette) to fill the seat retired by Rep. Steve Alford.

The Kansas House of Representatives may see a slight shift to the right.  There are several House races where conservative Republican candidates unseated more moderate Republicans that won in 2016.  In addition to the losses of Reps Schroeder, Good, Judd-Jenkins, and Becker - 

District 8 – Rep. Patty Markley (R-Overland Park) lost to Chris Croft (R-Overland Park) 58%-42%.  Croft will face Michele Lobitz (D-Olathe) in November.

District 28 – Rep. Joy Koesten (R-Leawood) lost to Kellie Warren (R-Leawood) 42%-58%, who received conservative endorsements.  Warren will take on Brian Clausen (D-Leawood) in the general election.

On the other hand - conservative Republican John Whitmer was also unseated:

District 93 - Republican incumbent John Whitmer (R-Wichita) lost to challenger J.C. Moore (R-Clearwater) by 52 votes (1136-1084).  Moore will run against Clifton Beck (D-Clearwater) in the general election.  Moore is a retired educator with a doctorate in chemistry - he cites four priorities: fiscal responsibility, excellent schools, great roads and expansion of KanCare.

Other House Primary Results:

District 5 - Mark Samsel (R-Wellsville) beat Renee Slinkard (R-Parker)  and will run against Lassey Murphy (D-Lane) in November to fill the House seat left behind by Kevin Jones, who ran for 2nd District Congress.

District 14 – Charlotte Esau (R-Olathe) won the House seat held by her husband Keith Esau as he seeks the Secretary of State’s office.  She beat Aaron Young and Tom Stanion with 46% of the vote and will face Democrat Angela Schweller in the general election.

District 17 – Rep. Tom Cox (R-Shawnee) won his primary with 75% of the vote against Jim Eschrich.  He will now face Democrat Laura Smith-Everett of Shawnee

District 18 - Incumbent Rep. Cindy Neighbor (D-Shawnee) beat challenger Andrew Hurla with 82% of the vote, and now faces Republican primary winner Eric Jenkins, who beat Cathy Gordon.

District 27 – Rep. Sean Tarwater (R-Stilwell) won his primary with 46% of the vote against Karen Snyder and Rochelle Bird.  Tarwater will face Democrat Nicole Rome of Overland Park in the general election.

District 29 - Former Rep. James Todd (R-Overland Park) beat Peggy Galvin to set up a rematch against current Rep. Brett Parker (D-Overland Park).

District 30 – Wendy Bingesser (R-Olathe) beat Colleen Webster by less than 200 votes.  Bingesser is considered more conservative than Webster.  She will face the winner of the Democrat primary for this seat, Brandon Woodard(D-Lenexa) who beat Matthew Calcara.  This seat is left open by Rep. Randy Powell, who did not file for election.

District 38 - Incumbent Rep. Willie Dove (R-Bonner Springs) won over Noel Hull with 64% of the vote.  He will face Democrat Stuart Sweeney of Linwood in November.

District 39 – Former Rep. Owen Donohoe (R-Shawnee) won by 203 votes (54%) over Kristy Acree with Rep. Shelee Brim is not running for reelection.  Brim had endorsed Acree.  Donohoe will now face Democrat Michael Bolton. 

District 40 - Incumbent Debbie Deere (D-Lansing) beat Donald Terrien in the primary and will face Republican David French in the general election.

District 42 - Incumbent Jim Karleskint won his primary over Lance Neelly with 53% of the vote (less than 200 votes).

District 45 - Former lobbyist Cynthia Smith (R-Lawrence) won the primary against Ronald Thacker for the seat held for many years by retiring Rep. Tom Sloan.  The Democrat primary was won by Mike Amyx over Steven Davis and Aidan Loveland Koster.

District  49 – House Speaker Pro Tem Scott Schwab is running for Secretary of State.  Megan Lynn won 89% of the vote over Fsehazion Desalegn.  Lynn has been endorsed by Schwab.  Lynn will now face Democrat Darnell Hunt.

District 59 - Incumbent Rep. Blaine Finch (R-Ottawa) beat former Rep. Shari Weber with 71% of the vote.  He faces Democrat John Hall of Quenemo in the general election.  

District 86 - Incumbent Rep. Jim Ward (D-Wichita) beat Alexander Vulgamore with 86% of the vote.  He now faces Republican Jim Price of Wichita for the general election.

District 93 - Republican incumbent John Whitmer (R-Wichita) lost to challenger J.C. Moore (R-Clearwater.  Moore will not run against Clifton Beck (D-Clearwater) in the general election.  

District 97 - Nick Hoheisel (R-Wichita) beat Michael Waller by 108 votes to fill the seat left by retiring Rep. Les Osterman (R-Wichita).  Hoheisel will face Rebecca Jenek (D-Wichita) in November.

District 99 - Kristi Kirk (D-Wichita) beat Gerald Winget in order to challenge incumbent Rep. Susan Humphries (R-Wichita) in November.

District 100 - Incumbent Rep. Daniel Hawkins (R-Wichita) beat challenger James Francis Breitenbach with 76% of the vote.  Hawkins will face Democrat Jennifer Winn in the general election.

District 113 - Incumbent Rep. Greg Lewis won his primary over Brett Fairchild with 66% of the vote.  The Democrat primary was won by  David Curtis over David Serrault.