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Stateways fiscal year in review 2007: an annual report providing an overview of sales volume, revenue and other data throughout the control states.

This is the eleventh consecutive year that StateWays is presenting its annual overview of the financial progress being made throughout the control states, which includes a general picture of the beverage alcohol business as well as separate reports from the 19 control jurisdictions. As we've noted before, we are grateful to all the control state agencies (and their personnel), which have provided extensive information to help us compile this yearly feature. Our report details the state-by-state results of gross dollar sales, revenue contribution, distilled spirits and wine sales volume (where applicable), operating expenses and the numbers and types of outlets and employees in the system. The states have also included projected gross dollar sales and projected revenue contributions for fiscal year 2008. We have also included state rankings based on total sales. Once again, we were able to gather information from every jurisdiction. And, we've updated the 2006 fiscal year statistics (which correct any estimates that we made) in order to present a complete picture of the beverage alcohol business--and its growth --throughout the control states.

That growth, once again, has been significant.

Total gross dollar sales throughout the control states reached $7.792 billion in FY 2007, exceeding the revised FY 2006 total of $7.320 billion by about $472 million, representing a 6.5% increase. This rise was just slightly below last year's percentage increase in gross revenues (up 8.0%). Meanwhile, overall revenue contribution to the state coffers by the control jurisdictions similarly rose in fiscal 2007, up 8.0%, to $2.714 billion, compared with a revised $2.513 billion in FY 2006. Sales volume results for distilled spirits were once again notable, with case sales growing by 3.8% to 41.43 million in FY 2007, almost matching the 4.2% increase of FY 2006. Overall, these figures once again compare favorably versus national sales trends in 2006 (the last year for which we have full-year statistics). Nationally, spirits case sales rose about 3.7%. And, as had been the case for several years now, national sales revenue grew at about twice the rate of the volume increases.

These stats--sales revenue increasing about twice as fast as volume--highlight one of the major trends in the beverage alcohol industry today, in both open and control states: Beverage alcohol operations continue to benefit from the increasing appeal of superpremium products, which bring in more dollars and higher profits.

For Fiscal 2007, 12 control jurisdictions added agencies, state stores or retail outlets (compared to 11 in FY 2006), while four states showed a decrease in those retail numbers (compared to five in FY 2006). Once again, just three states maintained the same number of outlets as in FY 2006. Regarding personnel matters, six control states added staff to their operations (compared to 12 that added staff last year), while six decreased staff (five last year), with the remaining seven staffing at about the same level (though it is sometimes difficult to determine that exactly, especially when jurisdictions mix full-and part-time staff).

As we've said here before, the overall trend in the control states has been positive, at least since the early 1990s, if not before. Many control states have benefited from the significant rise in efficiencies brought about by technological advances. In fact, control state agencies continue to update and modernize at a healthy pace--often depending upon how much and how often state legislatures made funds available--at just about every level of their operations, from headquarters to stores to warehouses and beyond, resulting in tremendous progress on many fronts. Indeed, control state agencies have become more and more successful at delivering revenues as well as spearheading a variety of programs meant to aid in the enforcement of beverage alcohol laws and in educating the public concerning the use and abuse of beverage alcohol products, among other efforts.

As stated earlier, the total control state system figures in FY 2007 saw increases in several areas compared to FY 2006. The overall gross sales increases previously cited include gains in every control jurisdiction. As has been the case for a number of years now, some states showed modest rises, but several others reported sizable gross dollar increases. For example, the top-ranked control state, Pennsylvania, boosted its sales by an amazing $113 million in FY '07, bringing the state's total to approximately $1.686 billion. Second-ranked Michigan saw revenue growth of about $25 million in FY '07, reaching about $890 million. And third-ranked Washington added an impressive $48 million in revenues, for a total of $774 million. Fourth-ranked Ohio had sales jump by about $34 million to more than $672 million, while North Carolina posted a gain of about $54 million, to just over $651 million. Virginia recorded a significant gain of about $35 million in revenues in FY '07, to $607 million, while New Hampshire saw sales increase by more than $20 million, to just under $440 million. Indeed, throughout the control system, several other states posted notable sales growth.

The combined revenue contributions to state coffers increased in FY '07 by just about $200 million compared to FY '06. This year, all 19 jurisdictions showed increases in their revenue transfers to their states (compared to last year when a few showed decreased numbers). Most were modest to moderate increases, while several were able to contribute much larger amounts to the state government than the year before.

Meanwhile, about 1.52 million more cases of distilled spirits were sold throughout the control states in fiscal year 2007 than in the previous fiscal year. In fact, all 19 control jurisdictions reported spirits case sales volume increases in FY 2007, contributing to the total of approximately 41.43 million cases.

Total operational expenses increased by 5.9% in FY 2007, representing an approximately $57 million increase system-wide over FY 2006 costs. Last fiscal year, we saw a 6.9% bump in costs, so these results show a slight reduction in the rate of cost increases. Still, it is wishful thinking to suggest that operational costs will decrease in the future. Besides the reality of ever-increasing basic costs, the fact is that when you open more stores, your costs increase. And, as we've stated for the past few years, these expenditures are also often funds needed for long overdue improvements, whether it be for updated facilities or for new technologies. This year, one state (Wyoming) actually reported a decrease in costs, while two said they maintained the same level as the year before. Sixteen states showed increases.

The following, then, represents the individual statistics for each of the control states responding to our 2007 Fiscal Year in Review.
KEY STATISTICS

Fiscal Year 2007
(Based on all 19 jurisdictions reporting)

Category FY '06 * FY '07 %Change

Gross Dollar Sales: $7,320.4 $7,792.8 +6.5%
(Millions $)

Revenue Contribution:
(Millions $) $2,513.5 $2,714.0 +8.0%

Distilled Spirits Sales: $39.9 $41.4 +3.8%
(Million Cases)

Operating Expenses: $964.4 $1,021.2 +5.9%
(Millions $)

* Fiscal Year 2006 figures updated and revised.

THE CONTROL STATES

 REPORTED
 FY '07 SALES *
RANK STATE ($ millions)

1 Pennsylvania $1,686.1
2 Michigan $890.0
3 Washington $774.2
4 Ohio $672.7
5 North Carolina $651.5
6 Virginia $607.0
7 New Hampshire $439.9
8 Oregon $375.2
9 Alabama $330.0
10 Mississippi $235.0
11 Utah $229.6
12 Montgomery Cty, MD $201.9
13 Iowa $177.5
14 Idaho $121.6
15 Maine $107.5
16 Montana $92.3
17 Wyoming $73.5
18 West Virginia $72.5
19 Vermont $54.8*

* Numbers are rounded to nearest one-tenth.

Source: StateWays from control state agencies.

ALABAMA

Alcoholic Beverage Control Board
(Fiscal year end: 9/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Dollar Sales $325.0 m $330.0 m
(Spirits, wine)

Revenue Contribution $132.0 m $135.0 m

Distilled Spirits 1.96 m 2.03 m
(Mixed cases)

Wine (Mixed cases) 66,471 54,460

Operating Expenses $33.0 m $35.0 m

Retail Outlets 158 state stores 160 state stores
 450 private retail 480 private retail

Employees (full-time) 639 656

Projected gross sales for FY 2008: $345.0 m

Projected revenue contribution for FY 2008: $139.0 m

Note: New and additional store locations.

IDAHO
State Liquor Dispensary
(Fiscal year end: 6/30/07)
All dollar amounts rounded to the nearest tenth.

 FY'06 FY'07
Gross Sales
(Spirits, wine) $109.6 m $121.6 m

Revenue Contribution $37.2 m $42.4 m

Distilled Spirits
(9-liter cases) 748,468 794,975

Wine
(9-liter cases) 10,903 10,558

Operating Expenses $14.4 m $15.4 m

Retail Outlets 54 state stores 59 state stores
 101 agencies 102 agencies
Employees
(total full-time,
permanent part-time,
part-time) 250 252

Projected gross sales for FY 2008: $133.8 m
Projected revenue contribution for FY 2008: $46.6 m

IOWA

Division of Alcoholic Beverages
(Fiscal year end: 6/30/07)

All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales
(Spirits only) $160.9 m $177.5 m

Revenue Contribution $83.0 m $84.4 m

Distilled Spirits
(Mixed cases) 1,372,731 1,467,791

Operating Expenses $4.5 m $5.3 m

Retail Outlets 530 off-premise 535 off-premise
 private stores private stores

Employees (full-time) 55 55

Projected gross sales for FY 2008: $185.0 m

Projected revenue contribution for FY 2008: $86.0 m

MAINE
Bureau Of Alcoholic Beverages & Lottery Operations
(Fiscal year end: 6/30/07)

All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales
(Spirits, $105.3 m $107.5 m
fortified wine)

Revenue Contribution $2.6 m $4.4 m

Spirits & Wine
(fortified)
(Mixed cases) 786,198 * 799,736

Operating Expenses NA NA

Retail Outlets 319 agency 327 agency
 stores stores

Employees 2 2

Projected gross sales for FY 2008: $110.0 m

Projected revenue contribution for FY 2008: $4.8 m

* Revised

Note: In 2004, the State of Maine signed a 10-year
contract with a private company to lease the State's
wholesale liquor activities associated with distributing and
selling distilled spirits and a modest amount of fortified
wine (which is also sold by wine/beer wholesalers). The
state received an initial payment for the lease and also
receives annual revenue sharing.

MISSISSIPPI
Alcoholic Beverages Division
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY'07
Gross Sales
(Distilled spirits, wine $221.1 m $235.0 m

Revenue Contribution
(Includes taxes, fees) $78.3 m * $82.8 m

Distilled Spirits
(Mixed cases) 1.54 m * 1.58 m

Wine (Mixed cases) 880,897 940,868

Operating Expenses $7.6 m $8.5 m

Retail Outlets 1,453 private 1,497 private
 licensed stores licensed stores

Employees (full-time) 119 116

Projected gross sales for IFY 2008: $230.0 m

Projected revenue contribution for IFY 2008: $82.0 m

* Revised

MICHIGAN

Liquor Control Commission
(Fiscal year end: 9/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07
Gross Sales
(Spirits only) $865.1 m * $890.0 m

Revenue Contribution $316.6 m * $320.0 m

Distilled Spirits 6.3 m 6.4 m
(Mixed cases)

Operating Expenses $64.2 m * $65.3 m
Retail Outlets 3,966 off-premise 3,975 off-premise
 licensees licensees

Employees
(full-time) 149 148

Projected gross sales for FY 2008: $900.0 m

Projected revenue contribution for IFY 2008: $322.0 m

* Revised

MONTANA

Montana Department of Revenue
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales
(Spirits, fortified wine over $83.9 m $92.3 m
16% alcohol)

Revenue Contribution
(Includes fees) $25.0 m $27.0 m

Distilled Spirits
(Mixed cases) 570,147 616,400

Operating Expenses $2.0 m $2.0 m

Retail Outlets 97 agency 97 agency
 stores stores

Employees 13 (full-time) 13 (full-time)
 4 (part-time) 4 (part-time)

Projected gross sales for FY 2008: $101.9 m

Projected revenue contribution for FY 2008: $31.0 m

MONTGOMERY
COUNTY, MD

Department Of Liquor Control
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales
(Spirits, wine $191.3 m $201.9 m
and beer)

Revenue
Contribution $20.7 m $22.1 m

Distilled Spirits
(Mixed cases) 330,214 346,011

Wine (Mixed cases) 863,535 902,577

Operating Expenses $29.4 m $30.6 m

Retail Outlets 24 county-run 24 county-run
 1 contractor-run 1 contractor-run
 156 private 152 private
 licensed off sale licensed off sale
 904 total private 922 total private
 licensed licensed

Employees 250 (full-time) 250 (full-time)
(* Full-time 78.3 (part-time) * 78.3 (part-time) *
Equivalent)

Projected gross sales for FY 2008: $205.9 m

Projected revenue contribution for FY 2008: $22.2 m

NORTH CAROLINA

Alcoholic Beverage Control Commission
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales
(Spirits, $598.4m $651.5 m
fortified wine)

Revenue Contribution $189.6 m $206.6 m

Distilled Spirits
(Mixed cases) 3.77 m 3.90 m

Operating Expenses $90.1 m $96.2 m

Retail Outlets 392 * 399

Employees ** 1,250 (full-time) 1,260 (full-time)
 825 (part-time) 850 (part-time)

Projected gross sales for FY 2008: $703.0 m

Projected revenue contribution for FY 2008: NA

* Revised

NEW HAMPSHIRE
State Liquor Commission
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales
(Spirits, wine) $419.1 m $439.9 m

Revenue Contribution $133.5 m $137.5 m

Distilled Spirits
(Mixed cases) 1.76 m 1.81 m

Wine
(Mixed cases) 2.37 m 2.45 m

Operating Expenses $30.1 m $32.2 m

Retail Outlets 75 state stores 77 state stores
 3 agencies 3 agencies

Employees 302 (full-time) 301 (full-time)
 497 (part-time) 545 (part-time)

Projected gross sales for FY 2008: $462.0 m

Projected revenue contribution for FY 2008: $145.8 m

OHIO

Division Of Liquor Control
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales $638.8 m $672.7 m
(Spirits only)

Revenue Contribution
(includes taxes) $252.7 m $257.8 m

Distilled 3.6 m 3.8 m
Spirits only

Operating Expenses $49.3 m $49.9 m

Retail Outlets 428 contract 436 contract
agency outlets agency outlets

Employees 144 123
(full-time)

Projected gross sales for FY 2008: $699.6 m

Projected revenue contribution for FY 2008: $279.8 m

Note: The Division increased its profit in FY07 by $11.6
million for a total profit of $203.2 million. The profit
margin also increased to 29.54%. This is due to the
Division's efficient operations in areas such as inventory
control, product selection and shelf standardization, and
placement of sales outlets in areas with increasing
customer demand and economic viability.

OREGON

Liquor Control Commission
(Fiscal year end: 6/30/07)

All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07
Gross Sales
(spirits only) $344.7 m $375.2 m

Revenue Contribution $139.7 m $141.8 m

Distilled Spirits 2.30 m 2.43 m
(mixed cases)

Operating Expenses $50.3 m $61.2 m

Retail Outlets 243 agencies 241 agencies

Employees 215.46 215.46
(full-time
equivalent)

Projected gross sales for FY 2008: $410.0 m
Projected revenue contribution for FY 2008: $164.8 m

Note: The Commission acquired a new distribution facility
located less than a mile from the main warehouse. The
facility offers 104,800 square feet of storage space and
2,000 square feet of office space. The new warehouse will
help to improve efficiency and responsiveness to the
growing distilled spirits market in Oregon.

UTAH

Department of Alcoholic Beverage Control
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales
(Spirits, wine, $202.3 m $229.6 m
heavy beer)

Revenue Contribution $79.7 m $89.3 m

Distilled Spirits
(Mixed cases) 744,666 788,787

Wine
(Mixed cases) 785,790 837,902

Operating Expenses $20.6 m $25.0 m

Retail Outlets 37 state stores 38 state stores
 88 agencies 88 agencies

Employees 224 (full-time) 240 (full-time)
 316 (part-time) 315 (part-time)

Projected gross sales for FY 2008: $239.2 m

Projected revenue contribution for FY 2008: $92.0 m

PENNSYLVANIA

Liquor Control Board
(Fiscal year end: 6/26/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07
Gross Sales
(Spirits, wine, $1,573.1 m $1,686.1 m
accessories)

Revenue Contribution $419.5 m * $513.3 m

Distilled Spirits 5,646,165 5,830,455
(mixed cases)

Wine (mixed cases) 6,628,239 6,878,546

Operating Expenses $326.8 m ** $347.1 m

Retail Outlets 646 state stores 630 state stores

Employees 2,998 (full-time) 2,963 (full-time)
 1,659 (part-time) 1,646 (part-time)

Projected gross sales for FY 2008: $1,801.6 m

Projected revenue contribution for FY 2008: $469.0 m

* FY06-07 Revenue Contribution included an extraordinary
increase of $70 million in requested profit transfers.

** Revised

Note: Sixteen marginal locations were closed. Two new
consumer-oriented wine programs were introduced:
Sommelier Collection and Power Purchase.

VERMONT

Department Of Liquor Control
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07
Gross Sales
(Spirits, $53.0 m $54.8 m
fortified wine)

Revenue Contribution $13.9 m $14.8 m

Distilled Spirits 347,411 353,288
(Mixed cases)

Fortified Wines 15,349 16,059
(Mixed cases)

Operating Expenses $6.8 m $7.9 m

Retail Outlets 75 agencies 75 agencies

Employees (full-time) 57 56

Projected gross sales for FY 2008: $56.5 m

Projected revenue contribution for FY 2008: $15.2 m
Note: Increase in Operating Expenses was chiefly due to:

(1) a new incentive commission program for reimbursing
liquor agents for the services they provide;

(2) paid contractual professional services for developing
a new warehouse management system;

(3) increase in bottle deposit handling fee
from 3 cents to 3.5 cents.

VIRGINIA
Alcoholic Beverage Control Board
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales
(All ABC store $572.0 m $607.0 m
products)

Revenue Contribution $280.9 m $290.3 m

Distilled Spirits
(Mixed cases) 3.5 m 3.6 m

Wine (Virginia
wine only)
(Mixed cases) 4,270 5,561

Operating Expenses $111.9 m $123.7 m

Retail Outlets 313 state stores 327 state stores

Employees
(full-time) 976 971

Projected gross sales for FY 2008: $645.0 m

Projected revenue contribution for FY 2008: $300.0 m

WEST VIRGINIA

Alcohol Beverage Control Commission
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07
Gross Sales
(Spirits only) $66.0 m $72.5 m

Revenue Contribution $11.5 m $13.0 m

Distilled Spirits 577,944 594,001
(Mixed cases)

Operating Expenses $6.7 m $6.7 m

Retail Outlets 159 private 159 private
 retail outlets retail outlets

Employees 97 (full-time) 97 (full-time)
 3 (part-time) 3 (part-time)

Projected gross sales for FY 2008: $75.0 m

Projected revenue contribution for FY 2008: $15.0 m

WASHINGTON

Liquor Control Board
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07

Gross Sales
(Spirits, wine,
malt, cider) $726.3 m $774.2 m

Revenue Contribution $298.0 m $323.7 m

Distilled Spirits
(Mixed cases) 3.7 m 3.9 m

Wine (Mixed cases) 514,167 520,046

Operating Expenses $88.0 m $106.5

Retail Outlets 158 state stores 161 state stores
 152 contract 151 contract
 stores stores

Employees 616 (full-time) 645 (full-time)
 646 (part-time) 754 (part-time)

Projected gross sales for FY 2008: $776.9 m

Projected revenue contribution for FY 2008: $311.4 n

Note: $.42/liter surcharge removed July 1, 2007;
significant increase in budgeted expenditures.

WYOMING

Liquor Commission
(Fiscal year end: 6/30/07)
All dollar amounts are rounded to the nearest tenth.

 FY '06 FY '07
Gross Sales
(Spirits, wine) $64.5 m $73.5 m

Revenue Contribution
(Includes fees) $8.0 m $10.1 m

Distilled Spirits
(9-liter cases) 389,684 427,463

Wine
(9-liter cases) 290,003 315,612

Operating Expenses $2.9 m $2.6 m

Retail Outlets 738 off-premise 733 off-premise
 retail licensees retail licensees

Employees 36 (full-time) 36 (full-time)

Projected gross sales for FY 2008: $80.9 m

Projected revenue contribution for FY 2008: $11.1 m
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Author:Brandes, Richard
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Date:Nov 1, 2007
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