News

County ABC store could sink existing town stores

Fletcher ABC manager Tony Patterson (head of table) and ABC noard members John Grafing, Louis Linn and Larry Waldrop conduct business.

By Bill Moss, Published: August 21, 2012

FLETCHER — An ABC board meeting is an informal affair here. Members sitting around a non-descript conference table in the back of the liquor store, though unaccustomed to press coverage, welcomed a reporter and volunteered to answer questions about the suddenly altered landscape of state-sanctioned liquor sales.

After voters made Henderson County legally wet for the first time in history in May, the county Board of Commissioners appointed a county ABC board. Board members met for the first time on Aug. 1 and heard from a top state ABC official about the options, which include operating one or more stores, merging with one or more of the three town ABC boards or doing nothing.
"I think for right now we don't see any advantage of us merging and nobody can tell us one," said Larry Waldrop, the chairman of the Fletcher ABC board. "It's a big mess because nobody knows what the county is doing and there's not much we can do about it."
At stake are three town-operated businesses that take in a combined $7.6 million a year from customers buying bourbon, tequila, vodka and other spirits. The state skims off a handsome 22.7 percent in taxes and regulates everything about state liquor sales. The only competition is based on location and store selection, and location could be the factor that nukes any thought of opening even one more ABC store in the county.
Hendersonville has two stores and a third under construction behind Zaxby's on Upward Road, and Fletcher and Laurel Park have one each.
Fletcher has experience with what it considers predatory competition. The city of Asheville built a new ABC store on Sweeten Creek Road, only two miles from Fletcher's store on Rockwood Road off Airport Road. The city chose that location after the state ABC Commission rejected its application to build a store next to the Ingles just over the county line.
"They would have been closer to (Fletcher) Town Hall than we are," said Fletcher ABC store manager Tony Patterson.

Hendersonville tops sales
Among the three ABC boards, Hendersonville has sales of $4.7 million and a profit percentage compared with Fletcher, at $1.9 million and 4.46 percent, and Laurel Park, at $1.02 million and 2.14 percent.
Waldrop, who has been a controller for several companies, said he does not see how the numbers would come up better for anyone if the system were to merge.
"I volunteered my services to them or my advice. They seemed to think they didn't need it," he said of his offer to the county. A couple of months ago, the three city boards participated in a conference call with Laura Lee, the audit director for the state ABC Commission. While the state commission is publicly neutral, local ABC board members say it's clear that the state would prefer that Henderson County merge its now four ABC boards into one. So far there have been no takers. Fletcher is a no vote.
"The last time I talked to Hendersonville they didn't want anything to do with it either," Waldrop said.
During a work session on July 12, the Laurel Park Town Board met with the town's ABC board and its manager, Karen Jordan. Jordan told the board that the state encourages counties to merge ABC boards once a county board is formed, although the state cannot force a merger. The Town Board agreed that under any consolidation the town wanted to protect revenue, protect the full-time employees of the store, keep the location and get a seat on a county ABC board.
"There's nothing on the table because the county board just started and nobody knows what they're wanting to do," said Laurel Park Town Manager Jim Ball.

'Not a cash cow'
Charlie Byrd, the former city schools superintendent who chairs the Hendersonville ABC board, said ABC stores are squeezed by competition and regulation.
"It's not the cash cow a lot of people think it is after you get through paying taxes and our required distribution," he said. "It's tough to make that 6 percent" profit the state wants to see. "There is just so much to be sold, there's so many that are going to drink alcohol, no matter the governing body."
Hendersonville officials point out that the town ABC board already gives half its profits to Henderson County — 25 percent to the county's general fund, 24 percent to county schools and 1 percent to the public library. The distribution totals $100,000 a year.
The Mills River Town Board directed its town manager to write to the new ABC board to say it would like a liquor store, and hoped to share profits.
"That would hurt us real bad because that's less than what 2 miles from us," said Waldrop, the Fletcher ABC chairman. "We would fight it."
After Asheville opened the Sweeten Creek ABC store, Fletcher's sales dropped by 25 percent. A Mills River store on the other side might just put Fletcher out of business.
Two locations that current city ABC board members cite as possibilities are Edneyville and Etowah.
"If you put one in Etowah, that's gonna kill off Laurel Park," Waldrop said.
If talk of a merger becomes serious, the issue is likely to become a political battle. The ABC's boards have a good deal of autonomy in how they operate stores. When it comes to consolidation, the town boards and the Henderson County commissioners would have to work out the details, including the distribution of the profits.
"There's just a number of issues that will have to be addressed if they want to have an ABC board," Byrd said. "If they built a store, it's very expensive, then you've got to stock it."
Lee, the state ABC official, said it costs roughly $250,000 to renovate space and stock a new store in a lease situation. To buy property and build would cost much more.