County Task Force Faces Recurring DLC Problems at First Meeting

County Task Force Faces Recurring DLC Problems at First Meeting

As group begins to examine the county's alcohol distribution department, retail store and restaurant owners say problems remain

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Recurring problems with products and delivery popped up during a discussion Thursday at the first meeting of a new working group tasked with examining different organizational models for alcohol distribution in the county.

Despite the best efforts of Bonnie Kirkland, chairman of the 11-member task force and a county assistant chief administration officer, to keep the discussion focused on ways to change the structure of the county’s Department of Liquor Control (DLC), the two licensees on the board continued to describe ongoing distribution problems.

Pinky Rodgers, co-owner of Pinky & Pepe’s Grape Escape in the Kentlands, took issue with comments from county officials that the department’s operations have been improving since it began implementing an action plan about a year ago. The department controls the wholesale distribution of alcohol and the retail sale of all liquor in the county.

In the past 30 days, eight of the nine deliveries to her business have had problems that ranged from incomplete orders to broken bottles and moldy boxes, she said. Rodgers also brought photos of rusty DLC delivery trucks that she says leak, resulting in the delivery of soggy packages to her business.

 

Photos provided by Pinky Rodgers. 

Fariba Kassiri, the DLC’s interim executive director and also a member of the working group, immediately took issue with Rodgers’ comments, saying the county’s data shows the department’s deliveries  to the store are accurate 85 percent of the time.

“I apologize if there are actual issues,” Kassiri said, “but our data doesn’t show that.”

Brian Vasile, owner of Brickside Food & Drink in Bethesda, the only other licensee appointed to the task force, also disputed the accuracy of product deliveries. Both he and Vasile say they do not trust the county’s data concerning the DLC.

Gino Renne, president of MCGEO, the union that represents about 350 DLC workers, also jumped into the discussion, saying that product breakage is caused by nighttime workers who don’t belong to the union, but instead work for a private company hired by the county that is paid by the number of cases workers load.

“They just throw things on the truck,” Renne said.

John Zeltner, DLC’s chief of warehouse operations, said after the meeting the department hasn’t found significant problems with the night crew’s work and that the county is working to replace its aging fleet of delivery trucks. The county bought six new trucks this year to replace older vehicles, and plans to continue replacing trucks in future years, Zeltner said.

The latest disagreement appeared to be a continuation of the difficulties the County Council and later the General Assembly faced when attempting to solve the department’s problems, which have ranged from poor customer service and product selection to inaccurate deliveries and a lack of retail liquor stores.

Each side in the debate is entrenched—county officials want to keep the approximately $30 million in annual profit the department generates and the union wants to keep its workers’ jobs while private beer and wine stores and restaurants are seeking the level of service and selection they believe private distributors provide in counties that don’t control alcohol sales and distribution.

The DLC is the wholesale supplier and distributor of all beer, wine and spirits in the county (except a few breweries that can self-distribute). The DLC distributes to about 800 licensed  restaurants and privately-owned beer and wine stores.

Despite the discord late in the meeting, there was one proposal that liquor producers believed could solve the problem of the lack of retail liquor stores in the county.

Dwayne Kratt, senior director of government affairs for the alcohol producer Diageo, said the county could pursue a liquor “agent” model similar to the system operated by the state of Maine. The model would allow the county to remain the wholesaler of all liquor, but would also allow certain beer and wine stores to begin selling liquor in order to satisfy retail demand and recapture alcohol sales that many believe are going to neighboring jurisdictions such as Virginia and Washington, D.C. The county could still make money by selling the liquor at a markup to the stores and it would retain county jobs because the liquor would still need to be delivered to the stores.

“That’s a concept I think can get you to your $30 million, if not higher,” Kratt said.

Kratt’s comments came after David Ozgo, an economist for the Distilled Spirits Council, which represents major liquor producers, showed statistics detailing how underserved the county’s retail alcohol market is compared to national and state averages.

Ozgo said the county, which operates 25 liquor stores, has 0.34 retail liquor stores per 10,000 adult residents. To put that in perspective, control states—those that control the distribution of alcohol—average about 1.84 liquor stores per 10,000 adults, while Maryland, excluding Montgomery County, averages 3.02 stores and the U.S. average is 3.34, according to Ozgo.

Due to a lack of convenience for local customers, the county is missing out on about $141 million in alcohol sales, he said.

“A lot of sales that ought to be occurring in Montgomery County are occurring in D.C.,” Ozgo said. “Consumers crave convenience. If they buy spirits elsewhere, they’re going to buy wine and beer as well. People like to buy all three products under the same tent.”

Jennifer Hughes, a working group member and director of the county’s Office of Management and Budget, tempered Ozgo’s comments, saying that DLC commissioned its own study about two years ago and found it could open 12 new stores without cannibalizing sales at other stores.

“We very much encourage DLC to open additional stores,” Hughes said. A plan to open more stores was put on hold as the department’s problems gained attention over the previous two years, she said.

The DLC did just open a new store in Rockville, and plans to open another in the city and Aspen Hill later this year. The DLC also closed its Chevy Chase liquor store that was adjacent to the D.C. border. That store lost $278,431 in 2013—the only county store to lose money that year.

The task force, appointed by County Executive Ike Leggett, also includes finance director Alex Espinosa,; Kevin Atticks of the Maryland Wineries,Brewers, and Distillers Associations; John Favazza of the Maryland Beer Wholesalers Association; Joseph Giardina, division manager of the alcohol distributor Breakthru Beverage Group; and District 39 state delegate Charles Barkley, who also serves as chairman of the alcoholic beverages subcommittee. Montgomery County Council member Hans Riemer, who is the council’s representative, did not attend Thursday’s meeting—he said he was traveling with his family— but one of his staffers distributed a letter in which he said he wanted to explore the possibility of a local distribution charge levied on private distributors to make up for lost revenues if the DLC were to stop distribution.

Bethesda and Silver Spring Chamber of Commerce leaders Ginanne Italiano and Jane Redicker said after the meeting Thursday that local customers should be part of the working group. Joy Nurmi, special assistant to Leggett, said customers are welcome to attend the working group’s meetings and will be invited to share their comments at the end of the meetings.

Adam Pagnucco, who is heading a campaign to end the county’s alcohol monopoly and attended Thursday’s meeting, said afterward customers will lose out “if the only thing that comes out of this task force is that DLC gets to open more liquor stores and nothing else changes.”

Two additional work group meetings are scheduled for 10 a.m. Aug. 10 and Sept. 15. The location of those meetings have not been finalized.

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