Liquor Stores N.A., which bills itself as the largest publicly traded beverage alcohol retail chain in North America, is poised to build upon that strength. The Edmonton, Alberta–based company—which now operates 36 liquor stores in the United States—is in the midst of major initiatives designed to bolster its operations platform and drive long-term profitability growth. With a new leadership team in place, Liquor Stores N.A. is now focused on enhancing its units, product selection and customer service, with an eye toward expansion into new U.S. markets.
With more than 200 stores in Canada operating under the banners Liquor Depot, Liquor Barn, and Wine and Beyond, Liquor Stores N.A. is widely considered to be Canada’s largest private-sector off-premise beverage alcohol player. In the United States, the company operates the 23-unit Brown Jug retail brand in Alaska and 13 Liquor Barn and Liquor Barn Express locations in Kentucky. Liquor Stores N.A. had total revenue of $661 million in 2013, with U.S. sales contributing $157.5 million. For the nine months ended September 30th, 2014, total revenue increased to $497 million from $477 million, with same-store sales in the United States up 0.3 percent during that period. The company noted that while sales in its Kentucky stores increased, its Alaska units were down year-to-date. The company employs about 500 workers at its U.S. units, which range in size from 1,500 to 45,000 square feet, with the average outlet at around 10,000 square feet.
Liquor Stores N.A.’s roots date back more than 20 years to the founding of the Liquor Depot Corp., one of the first private beverage alcohol retail chains to be established following Alberta’s move to privatization in 1993. In 2004, the company went public with an initial public offering of the Liquor Stores Income Fund. Four years later, the Canadian firm entered the U.S. market when it purchased the Brown Jug chain from Lowell Shin, followed by the acquisition of the Liquor Barn stores in Kentucky from Robert Rosenstein in 2009 (both Shin and Rosenstein are Market Watch Leaders). In 2010, the business was converted from an income trust into a dividend-paying corporation, Liquor Stores N.A.
The company has shown dramatic growth since going public. Between 2004 and 2010, its holdings grew from 50 stores to 240 stores, and more units are currently being added. The large-format Wine and Beyond concept was launched in Canada in 2012, and according to president and CEO Stephen Bebis, it will be a key prototype for new stores going forward in both the United States and Canada.
Liquor Stores N.A. has made additional moves in recent years to position itself as a significant player in the North American beverage alcohol landscape. “We’re developing all the tools to help drive loyalty,” Bebis explains. “The key is getting a quality product to our customers at a fair price, as well as having a knowledgeable staff.” Bebis, with a deep résumé in retail, assumed his position in May 2013. He previously served as president and CEO of the specialty retailer Brookstone Inc. and has held senior leadership positions at several other U.S. and Canadian firms. “Beverage alcohol retail is a fun business,” Bebis says. “Most people who come into our stores are celebrating something.”
Earlier this year, Liquor Stores N.A. enhanced its leadership team with the addition of several executives with specialized retail expertise. Jason Fremstad, former director of wine and spirits at Walmart and a Market Watch Leader, was named senior vice president of general merchandise management and leads Liquor Stores N.A.’s merchandising strategy, including buying, pricing, product placement and promotion. Steve Rop, former director of global supply chain for Total Wine & More, was appointed senior vice president of supply chain, logistics and planning. The executives are responsible for Liquor Stores N.A. units in both Canada and the United States. The company has also consolidated its U.S. support operations, including a six-person buying team, into a single location in Louisville, Kentucky.
Service And Training
In addition to a strengthened management team, the company is putting a big focus on the in-store experience for its customers, with Wine and Beyond as the model. “They’re beautiful, modern superstores,” Bebis says. “They go deep in wine, carrying 6,000 to 8,000 SKUs, depending on the market, as well as an extensive selection of spirits from all over the world and an unparalleled selection of craft beers.” Other features include education centers, growler bars, wine accessories, and specialty food items like cheeses and fine chocolates, where legal. The 14,000-square-foot Brown Jug Friendly Spirits in Fairbanks, Alaska, is modeled after Wine and Beyond and features a tasting area, in-store experts across product categories, a 40-tap growler bar and party-planning services. The store, which opened in late 2013, offers 4,000 wines, 3,000 spirits and 1,400 beers. “We think the superstores will do very well in the United States,” says Bebis, noting that two Liquor Barn superstores—each 20,000 square feet in size—are scheduled to open in Louisville in 2015, with more likely planned.
Improved customer service is another initiative underway at Liquor Stores N.A. “Since I joined the company, we’ve made a big investment in training and development of people,” Bebis says. In the past, most category training was led by suppliers, but Liquor Stores N.A. now has its own training program. Directed by Lieske Renz, senior vice president of human resources, the initiative includes staffing category experts at more locations, as well as sending employees to visit wineries and distilleries. Bebis says the training program is now being rolled out in the United States.
Liquor Stores N.A. is targeting growth in exclusive brands under its “Preferred” program, which is still a small part of its business. “We’re focused on building great wines, spirits and beers that are exclusive to us,” Bebis says. “We want to work closely with our suppliers to develop those products.” Director of product development Jeni Bonorino, formerly with Total Wine & More, oversees the program.
The company is also committed to effective communication with customers. Its U.S. operations have long relied on traditional media, such as local newspaper ads and flyers. “We didn’t have a digital footprint at all in the United States until recently,” Bebis says. Current initiatives include enhanced support for social media like Facebook and Twitter and the Celebration Members Club, an online customer loyalty program that offers special savings and advance notice of limited-release products. “We’re more inventive and creative now in reaching our target demographics,” Bebis explains.
While Alaska and Kentucky are separated by thousands of miles and different climates, Bebis says the two states have a lot in common when it comes to selling beverage alcohol. “People in both markets love quality products like fine wine,” he says. “They also want knowledgeable sales staff, competitive prices and their favorite products in stock.”
Founded in 1955, Brown Jug is likely the largest specialty liquor retail chain in the state, with 18 stores in Anchorage, three in Wasilla, one in Fairbanks and one in Eagle River. Recently featured products include Bulleit Bourbon ($24.95 a 750-ml. bottle), The Prisoner red blend ($34.95) and Budweiser ($22.95 a 30-pack of 12-ounce cans).
Launched by the Rosenstein family in 1985 in downtown Lexington, Kentucky, Liquor Barn is the largest specialty spirits retail outlet in the state. The chain now accounts for between 9 percent and 10 percent of Kentucky’s off-premise beverage alcohol business, with six locations in Lexington, four units in Louisville, and one each in Bowling Green, Danville and Elizabethtown. Unlike Brown Jug, Liquor Barn is permitted to offer a wide array of specialty foods and ancillary merchandise, such as party goods and supplies. Recently featured products include Jim Beam Bourbon ($23.99 a 1.75-liter bottle), Woodford Reserve Bourbon ($62.95) and Apothic wines ($9.99 a 750-ml. bottle).
The wine offerings at Liquor Barn and Brown Jug range from 2,000 selections at smaller stores to 8,000 at the superstores. Prices start at $3.99 and can reach into the “thousands of dollars,” Bebis says. “We cover all price points in the superstores, while in the convenience locations, wines are mostly priced under $50.” Similarly, some of the larger outlets stock more than 800 Scotch whiskies and over 400 vodkas. “We’re very proud of our whisk(e)y selection,” Bebis says, noting that Liquor Barn stores are located on the Bourbon Trail. “We believe we have the best Bourbon selection in the United States.” Liquor Stores N.A.’s U.S. units offer spirits priced from under $10 a bottle up to Louis XIII de Rémy Martin Cognac at $2,300. Beer selections, meanwhile, vary by store and market with some locations offering “a couple thousand craft beers,” Bebis says. Beer is generally priced from below $10 a six-pack to $5 a 12-ounce bottle.
With the foundation set, Liquor Stores N.A. has its eyes on the future. An e-commerce business that launched in Edmonton over the summer will be rolled out to the United States “as soon as we get it right,” Bebis says. Retailers in Alaska and Kentucky are prohibited from selling beverage alcohol via the Internet, but orders can be placed online and picked up at local stores.
“The United States has been identified as our largest growth market, so we’re very focused on this country,” Bebis notes. In addition to the two new Louisville stores, a third—unannounced as of press time—is planned for 2015. “We’re looking to grow our footprint in the United States—we’ve cast a wide net and we’re narrowing that down now,” Bebis says, noting that the Canadian company will keep investing in its stores in Alaska and Kentucky. “We’ll continue to fortify the markets we’re in.”