RD185 - Annual Report of the Department of Alcoholic Beverage Control


Executive Summary:
Striving for excellence while balancing control, service and revenue impacts all areas of agency operations as employees of Virginia ABC dedicate themselves to furthering the vision of the agency while carrying out its mission.

The mission of ABC is to control the distribution of alcoholic beverages; operate efficient, conveniently located retail outlets; enforce the laws of the Commonwealth pertaining to alcoholic beverages and youth access to tobacco products; and provide excellent customer service, a reliable source of revenue and effective public safety.

As one of 18 control states across the United States, Virginia shares a common goal of safely and responsibly administering the sale and distribution of alcoholic beverages. This is achieved through regulation of a three-tier system involving distributors, wholesalers, and retailers. ABC serves as the wholesaler and retailer of distilled spirits in Virginia. Goods are purchased from domestic and international vendors and shipped from all over the world to a seven-acre central warehouse facility in Richmond.

Retail outlets include 293 state-operated ABC stores that sell packaged distilled spirits and Virginia wines to the public and to 3,584 mixed beverage licensees for sale/consumption in their restaurants throughout the state. Licensees (also considered retailers) include 10,038 private or corporate owners of establishments, holding approximately 18,622 ABC licenses allowing sales and/or consumption of beer and wine or mixed beverages on- or off-premise. Licensees, as well as ABC store employees, are required to comply with ABC laws.

In Fiscal Year 2004, 293 ABC stores were responsible for over $490 million in gross sales and the sale of approximately 3.2 million cases of distilled spirits, Virginia wines and assorted mixers. A major source of revenue for Virginia state agencies, the General Fund and localities, ABC provided over $240 million in contributions to the Commonwealth for Fiscal Year 2004.

Considerable effort is expended to support the agency’s goal to expand the retail store network to improve customer convenience. Market plans, management reports, operational studies, real estate location studies and a wide array of data come into play in the decision-making process to ensure optimum customer service and profitability for the Commonwealth. ABC opened 17 new stores in Fiscal Year 2004.

Product merchandising and category development also require constant review in order to stay on top of the latest industry trends in merchandising and shelf management.

Implementation of a new Point of Sale (POS) system for all retail stores and testing for implementation of Management of Inventory and Product Sales (MIPS) began in Fiscal Year 2002 and continued with enhancements in Fiscal Year 2003 and 2004. Both are Web-enabled systems that increase the efficiency of ABC’s business activities and provide a platform for well-informed decision making and improved customer service. Fiscal Year 2004 also brought a more developed and functional Incident Based Reporting (IBR) system that is used by all enforcement personnel, and a new Time, Attendance and Leave (TAL) reporting system that is used by all agency personnel.

The agency is dedicated to ensuring that legal-aged adults who choose to responsibly consume alcohol can do so in a safe environment – one that is compliant with the laws and regulations of the Commonwealth. ABC’s Bureau of Law Enforcement has eight regional offices and 127 special agents and supervisors located throughout Virginia.

ABC special agents have full police powers with a diverse range of duties – from investigating license applicants, to detecting illegal distilleries, to enforcing criminal and ABC laws in more than 14,000 licensed establishments. Criminal activities ranging from drugs and vice, to money laundering and tax evasion are investigated and prosecuted through the state court system. ABC special agents also participate in state, local and federal task forces investigating criminal activities.

Illegal activities in licensed establishments may lead to criminal charges and/or to administrative charges against the license(s). ABC violations investigated by ABC Enforcement are reported to the Hearings, Appeals and Board Administration Division to be placed on the docket for an administrative hearing. Opposing sides introduce evidence in support of their case before an administrative law judge or hearing officer who weighs the evidence presented and issues a decision a short time later. Administrative hearings can result in dismissal, fines, suspension or revocation of a license.

Once the decision is issued, either party has 30 days to appeal the case to the ABC Board. In an appeal hearing, arguments are presented summarizing each side of the case, but no new evidence is introduced. The Board may uphold the hearing officer’s decision, alter it or dismiss it. The Board issues a final order and again each party has 30 days to appeal, this time to the Circuit Court in the locality where the licensed establishment is located.

Some of the most common violations include selling to an intoxicated person, allowing disorderly or lewd conduct, allowing distribution and/or use of illegal narcotics on the premises and selling to an underage person.

Committed to preventing sales of alcoholic beverages and tobacco to underage persons, ABC special agents conduct continuous alcohol and tobacco enforcement operations. Underage buyers are utilized to conduct checks on retail licensees that sell alcohol, including ABC stores, and on retail establishments that sell tobacco products. Compliance rates for sales of alcohol to underage buyers reached a record 91 percent for Fiscal Year 2004. This compares to a rate of 77 percent two years ago.

ABC continues to lead the Commonwealth in alcohol prevention and community education initiatives. ABC Bureau of Law Enforcement’s Education Section provides training to local law enforcement agencies on the alcohol laws of Virginia and provides compliance training for licensees. In addition, the agency provides thousands of dollars in grant funding to enhance community prevention coalitions, and produces prevention materials and hosts training sessions and conferences for communities, colleges and universities throughout Virginia.

ABC Enforcement’s Tax Management section audits and collects the wholesale wine and malt beverage taxes for all wine and beer sold in the Commonwealth, amounting to nearly $68 million this year.

ABC is a multi-faceted agency requiring much business support as it carries out its mission. In addition to Wholesale/Retail Operations, the Bureau of Law Enforcement and Hearings and Appeals, many employees offer their expertise through support divisions.

The Division of Policy, Analysis and Support Services provides program and decision support services to internal and external customers. Staff manages the procurement of goods and coordinates the analysis, development and maintenance of agency policies. The division also leads the agency in developing, updating and reviewing its strategic plan and handles citizen Freedom of Information Act (FOIA) requests.

The Division of Information Technology Services offers support to all agency divisions by providing sound technology solutions. The division has revamped its development environment and has taken the lead in preparing the agency for Internet-based transactions through implementation of major new computer-based systems.

The Financial Management Services (FMS) Division is responsible for all fiscal functions of the agency including payroll, budgeting, cash receipts, cash disbursements and financial reporting. The division processed payments of $264 million in purchases of merchandise for resale in Fiscal Year 2004 along with $58 million in payroll related expenses and over $32 million in other operating expenses. The Sales Audit Section of FMS receives nightly polling information from all ABC stores and is responsible for balancing and reporting daily store activity to include sales, cash, credit card transactions, taxes and cost of goods sold.

Property Management Services Division maintains rented and owned properties including the Central Office, Warehouse, Regional Enforcement offices and ABC stores. Staff performs renovations, upgrades and repairs for these properties. The division negotiates leases for all agency-leased space and takes the lead in preparing contracts for work that is outsourced.

The Human Resources Division screens thousands of applications and consults with managers who are hiring staff to fill vacancies that further enhance the agency’s work force. During the fiscal year, 122 classified and 824 part-time new employees joined ABC.

The division’s Training Section offers employees the opportunity to attend training programs to increase their professional development, management development and technical skills. Classified employees statewide participated in over 715 workshops and conferences. The Retail 101 training program equipped 675 part-time employees this fiscal year with the skills and knowledge necessary to provide excellence in customer service and effective public safety. The agency also provided tuition assistance, in accordance with ABC policy, to 13 employees.

In Fiscal Year 2004, the Hearings, Appeals and Board Administration Division received and processed 1,242 cases resulting in $1,681,175 in penalties and fines. In addition to administrative violations, the division dockets contested license applications referred for hearing. In most cases, the hearing officer and court reporter travel to the community where the licensee is located to conduct the hearing. The division processes all consent settlement offers and offers in compromises – two methods of resolving hearings issues before the case goes to trial.

The division processes modifications to administrative hearings decisions, late appeals, reconsiderations and all decisions on appeals, known as board orders. Staff is also responsible for processing all hearings-related Freedom of Information Act (FOIA) requests.

The Internal Audit Division has agency-wide responsibility for identifying risk, assisting management in developing a proper internal control environment and offering recommendations for creative business solutions to enhance agency business practices and policies. The division is also responsible for conducting agency administrative reviews and investigating all state hotline complaints.

The Public Affairs Division is charged with disseminating information to the news media and to the public. Publicizing agency programs and activities resulted in 63 news releases and staff responded to 888 media inquiries in Fiscal Year 2004. The division is responsible for managing the content on the agency Web site and handling all media-related Freedom of Information Act (FOIA) requests. Staff also provides writing, graphics, marketing and photographic support to all agency divisions, striving for a unified message.

Throughout the Commonwealth, ABC employees are partnering to carry out the mission of the agency. All divisions of the ABC team provide important functions necessary for the agency to provide excellence in all areas of control, service and revenue.