What is going on with the North Carolina ABC System, and more importantly, our Barrels!

Rickhouse Ramblings Barrel Picks

Our faithful followers all know that it has been quite a while since the weekend of April 24th when we, Rickhouse Ramblings, travelled to Ragged Branch Distillery in Charlottesville, Virginia to pick our 3 barrels. After initial delays with labeling, Alex and Josh Toomey at the distillery were able to get our barrels bottled and ready for shipment on June 16, 2021. Josh texted us on June 21, 2021 informing us that the pallets were loaded on the truck and ready for delivery to LB&B in Raleigh. The shipment was delivered to the warehouse in Raleigh on June 23rd, where they still sit today. The question lingering in all of our minds is this: What is the issue with delivery?

To help answer this question, let’s first take a look at the big picture issues in North Carolina, then drill down a little deeper to what the problem is with our Rickhouse Ramblings barrels.

Inventory Issues at Local ABC Stores in North Carolina

If you have ventured into your local ABC store in the past month or so, chances are you have found consistently empty shelves, missing products, distraught store management and staff, and upset customers. Items you would never expect to see missing from a shelf – Jack Daniel’s, Jim Beam, Woodford, Wild Turkey, and more – are nowhere to be found or are available in very limited quantities. In fact, a quick comparison of the ABC systems warehouse inventory on August 3, 2021 versus August 3, 2020, shows a very depressing reality–common bottles are way down in case count at the LB&B Raleigh warehouse. Jack Daniel’s No. 7 Black Label had 340 cases of 750 ml bottles in inventory at close of business 8/2/2021 compared to 1,410 cases on the same day in 2020. In 2020, you could find 1,044 cases of Woodford Reserve versus 362 cases available at close of business on August 3. The same holds true for several other popular brands as well, although looking squarely at the numbers, it appears Brown-Forman may be more impacted than the others. But why is this? (Source: https://abc.nc.gov/StoresBoards/Stocks)

Glass Shortage and Logistics Issues

The impacts of COVID-19 on the worldwide supply-chain are beginning to be felt in full. Distilleries and other companies are having difficulty securing glass bottles to fill and ship out for distribution of their products. Suppliers are back-logged with orders of glass. As with any supply chain, a bottleneck in the process can wreak havoc on the entire production process. The world of liquor is no different, and they are unfortunately feeling the same pains. (Source: Forbes: Is There A Liquor Shortage Looming In Your State; WBTV:Diving Into Liquor Shortage As One Of The Many Lasting Impacts Of COIVD 19 Pandemic)

Perhaps you’ve been on vacation lately, like millions of other Americans, and have visited liquor stores outside of North Carolina. If so, you have probably noticed no sign of this shortage. That’s because the State of North Carolina ABC system is also experiencing a significant shortage in truck drivers to make deliveries. Your local ABC store may receive deliveries every 2 weeks instead of weekly. You might also notice that the deliveries they’re receiving are often delayed or missing ordered items completely, as is the case with our Ragged Branch barrels. A quick Google search will yield several articles outlining some problems: local bars and restaurants cannot get products from the ABC system to serve customers; ABC stores have increasingly empty shelves; and stores across the border in South Carolina are experiencing an increase in sales as consumers in Charlotte and the surrounding areas flock across the border to fulfill their needs. (Source: AXIOS Charlotte: Charlotte Liquor Stores Are Selling Out Of Tito’s and Tequila)

LB&B Warehouse Issues

If you are like us, you see the issues this industry is having with glass bottles and think, “Well, what does that have to do with the delay in our 3 Ragged Branch Barrels?” You get a gold star for a fantastic question with an easy answer…it doesn’t!! Our barrels have been in Raleigh, bottled and ready for delivery, since June 23, 2021. 

By now you might be thinking, “Ok, so you said deliveries occur to the store every two weeks, give or take a day or two, so again what is the point? It’s been 41 days and counting!” Another great question! Our bottles missed the truck scheduled for delivery on June 25th – possibly explainable by the time needed for the warehouse to scan in the palates, load the truck, and send it to the ABC store…an understandable delay. The next scheduled delivery was July 16, 2021. Friday, July 16th came and turned into a delay until Monday, July 19th. A quick contact had LB&B promising that our delivery would be on that truck. A promise is a promise, but our hopes were dashed when Monday July 19th rolled around and the bottles had somehow missed the truck. Not to worry though because the next delivery date to the store is July 30th, 2021. The bottles surely have to make this truck, right?! Wrong. No explanation and no delivery…you have got to be kidding. Here we are now, August 4, 2021, with absolutely zero indication as to why the truck from July 30th, which our store GM told us was delayed a day or 2, never arrived or that our bottles are in town. So what’s the big deal? Why aren’t the bottles shipping? They are sitting in a warehouse in Raleigh, just collecting dust at this point.

The answer here is actually quite simple! This is not an issue with a glass shortage nor is it an issue with a lack of truck drivers…this is a LB&B Warehouse issue. But why are we surprised, this isn’t an entirely new situation we are facing.

In 2018, the North Carolina state auditor issued findings on the vendor LB&B and its work on behalf of the North Carolina ABC Commission. This report shed a lot of light on the operations at LB&B, and not the bright and shiny spotlight kind. The report noted the deficiencies and inadequacies in the warehousing provided by vendor LB&B of Raleigh. In fact, the report found that, through poor administration, LB&B had cost North Carolina taxpayers an estimated $11.3 million over the past 13 years! Additionally, unused warehouse space ended up costing the state another $2.1 million over 7 years. Finally, LB&B was found to have occasionally misled the ABC Commission in fuel prices, requesting unnecessary funds to cover fuel costs. The total estimated contract cost to LB&B from 2004-2017 was $77.7 million. 

Despite all of these concerning findings, the NC ABC Commission entered into a 10-year contract extension (after the normal state bidding process) with LB&B to continue to be the logistics and warehousing vendor. Under the new deal, LB&B agreed to (1) be “nearly error free”, (2) provide on-time deliveries, (3) increase delivery frequency to the 171 ABC boards, (4) implement a new system platform for inventory and management. The new contract will cause the cost of bailment, beginning August 1, 2021, to increase from $1.50 per a case to $2.75 per a case. This cost will presumably be passed down to the end consumer at an estimation of approximately $.20 to $.40 per a bottle purchased, depending on the number of bottles per case. (Source: The Robesonian: State to Renew Controversial ABC Contract and Increase Liquor Prices)

So What About Our Bottles?

None of these issues were exactly breaking news to us at Rickhouse Ramblings. In early June, we caught wind of the issues that the truck driver shortage was causing in parts of the state. The issue was broached with the GM of our chosen store and we were assured that this would not be an issue we would face. Given the issues we experienced this year and the news about labor issues, Rickhouse Ramblings tried to be proactive by asking on June 9th, 2021, that an exception be made by Raleigh to allow the barrels to be delivered directly from Ragged Branch Distillery to our ABC store. This was not a new idea by any stretch of the imagination and something that had been done before. That request was either not presented to Raleigh or rejected – we were never notified which was the case. That leaves us here…42 days from delivery to Raleigh, without the bottles and without any tangible explanations of when our delivery will occur. We are left hanging, with no end in sight. We are simply living daily, just hoping and praying that this saga will soon come to a close in the extremely near future. We are fully aware that it is a “silent rule” amongst local bourbon societies and whiskey clubs not to speak negatively about the ABC system or risk repercussions, but at this point, we are not interested in politics!