When bar and restaurant operators wanted to replenish their liquor stocks under the state’s liquor sales monopoly, they could fax their shopping lists of products to their nearby assigned state liquor stores and then pick up the completed order a few days later.
That relic technology and service level is fading into history with the advent of liquor sales privatization in Washington.
Now, those same restaurateurs can log into a website, order their goods online and have the alcohol delivered to their door the next day. With major liquor distributors such as Southern Wine & Spirits, those bar and restaurant owners can track their order fulfillment online and see a detailed history of their purchases.
For the restaurant industry, that kind of convenience and service is part of the reason the industry campaigned for Initiative 1183. That initiative, in a little more than six months, is scrapping the decades-old state liquor sales and distribution system in Washington and replacing it with a fully privatized model.
While the general public won’t see the rollout of the private model until June 1, restaurant and club owners have gotten a preview of privatization. The Washington Liquor Control Board has allowed private distributors to sell spirits for resale to the restaurant industry since March 1.
The preliminary results have been reasonably successful, said Bruce Beckett, vice-president of governmental affairs for the Washington Restaurant Association.
Some restaurant owners have yet to begin sourcing their liquor from private distributors, instead clinging to their familiar pattern of buying their supplies at state liquor stores, he said.
After May 31, that won’t be a choice. The state stores will close for good then, to be replaced by a tier of distributors and private retailers.
“I expect we’ll see a bumpy transition,” said Beckett, “but I think that after a few months all the glitches will be worked out.”
On the liquor distribution side, vendors have scrambled mightily to create a whole new distribution infrastructure to serve the 1,500-plus retail liquor sales outlets. That’s five times the number of outlets selling liquor as state operated or contracted stores.
The liquor distributors have had just a few months to create that network since the initiative was approved by voters in November.
On Valley Avenue in Puyallup, for instance, Southern, the nation’s largest spirits distribution company, moved quickly to created a highly automated, computer-driven warehouse. Wayne Chaplin, Southern’s president, called the new warehouse the “crown jewel” of the company’s new Washington network of distribution centers.
Southern took a gamble in buying the vacant, 350,000-square-foot warehouse. The company acquired the building last September, before the November vote on the liquor sales initiative.
Had that initiative failed, the warehouse would have handled wine only, said Shawn Youmans, Southern’s Pacific Northwest vice president of operations.
READY FOR TRANSITION
Since the initiative passed, Southern has worked tirelessly to get the building ready for the transition.
Inside, the company installed the most advanced automated warehouse management and distribution system in its 35-state network of distribution centers.
The system includes four long lines of racks, some as tall as three levels, holding pallets and cases of liquor and wines. The warehouse itself houses some 15,000 different products and a million cases of inventory. That inventory, guarded by 100 closed-circuit cameras and security systems is worth an estimated $60 million.
The company expects that at full production, the distribution center will handle some 7 million cases of liquor and wine a year, said Youmans. On a good day, the facility will process some 39,000 cases of liquor and wine.
Under the advanced distribution system, the warehouse’s computer system provides pickers with step-by-step instructions on what products to pull from the storage racks to fill orders.
Larger orders for multiple cases are handled by forklifts. Those forklifts are hinged in the middle to allow the lifting mechanism to turn 90 degrees from the forklift bodies to access products on the adjacent racks. Those so-called “benders” allow the warehouse to have narrower aisles, increasing the density of the warehouse and its efficiency.
Individual bottles are picked by human workers working along a long line of products. Those pickers can interact with the computer system through wireless headsets.
That voice recognition system trains itself to understand each employee’s voice. It understands multiple languages and regional accents.
The distribution center in Puyallup will act as a hub for Southern’s Washington and Alaska operations. The warehouse will be replenished from incoming shipments during the day. At night, orders will be assembled and put on trucks for delivery. The company will operate a handful of satellite distribution centers in Seattle, Spokane, Kennewick and Vancouver, to which orders assembled in Puyallup will be brought by large trucks and then transferred to smaller trucks for delivery.
HOW BIG RETAILERS PLAN ORDERS
Large customers such as Safeway will bring their own trailers to the Puyallup distribution center to receive orders for its network of stores.
Some larger chain restaurants may warehouse liquor in a central warehouse of their own, giving the chains cost advantages of quantity buys from Southern or one of the three dozen or so distributors setting up shop in the state. Beckett said individual and small chains of restaurants are now actively talking about forming cooperatives to give themselves quantity buying power from the large distributors that have exclusive distribution rights for many lines of spirits in the state.
Southern has hired about 120 warehouse workers in Puyallup and some 90 drivers. The company still has openings for about 15 more drivers, said Booth. Applications are available for those on the company’s website, www.southernwine.com. The company has hired some 300 sales people to work from its Kirkland sales office.
PRICES REMAIN MYSTERY
The restaurant association’s Beckett said the jury’s still out on what prices will be compared with what the state charged. Liquor sales are still heavily taxed in Washington to raise funds for governmental programs.
Southern and one or two other distributors will control the lion’s share of the distribution in Washington through exclusive deals with distillers and importers, he said.
But retailers will be able to make direct deals with craft distillers, and some retailers such as Costco, which spent more than $20 million support the initiative, may bypass the distributors by creating their own house brands of liquor.
If Costco, for instance, creates a private label “Kirkland” brand of whiskey, vodka and gin, restaurants could buy that product directly from the warehouse store and use those brands as their “well” brands of liquor if the brands were inexpensively priced.
The Washington Liquor Control Board has attempted to limit resellers’ daily purchases at retailers to 24 liters a day, said the restaurant association executive, but that limit in practice may be difficult to enforce.