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  • PS COMMITTEE #2 October 16, 2014

    Update

    MEMORANDUM

    TO: Public Safety Committee

    FROM: Justina J. Ferb~islative Analyst SUBJECT: Update - Department of Liquor Control

    Draft Final Comprehensive Long-Range Strategic Business Plan

    Those expected for this discussion:

    George Griffm, Director, Department of Liquor Control

    The Department of Liquor Control Director will brief the Committee on the contents of the Draft Final Comprehensive Long-Range Strategic Business Plan for the Department of Liquor Control (DLC) developed by The PFM Group.

    The Plan is composed of the following chapters:

    I. Introduction - History ofDLC and Scope of Work - p.1 II. Environmental Scan - Analysis of Economy, Demographics, Benchmarking and

    County Wholesale, Retail and Licensing Operations p. 7 III. Strengths, Weaknesses, Opportunities and Threats Analysis - Rundown of

    SWOT issues - p. 55 IV. High-Level Findings - Current and forward-looking indicators that may impact

    DLC's future successes p.59 V. Mission, Vision, Values and Goals - Overview p. 65 VI. Strategies and Recommendations - Recommendations of PFM Group for

    improving DLC operations - p. 67 VII. Implementation - Broad recommendations on transitional steps and action

    planning - p. 77

    There are two sections of the plan in which DLC has requested clarification or modification;

    therefore, the Plan is not final.

    Attachment: DLC Strategic Plan

    rewrite

    F:\FERBER\Liquor\PS COMM 1016-14 DLC Strategic Plan.doc

  • Montgomery County, Maryland

    Department of Liquor Control

    Draft Final Report

    Comprehensive Long-Range Strategic Business Plan

    July 11, 2014

    PFM

    The PFM Group Financial & Investment Advisors

    Two Logan Square, Suite 1600 18th & Arch Streets

    Philadelphia, PA 19103 215.567.6100 phone

    215.567.4180 fax

    wwwpfm.com

    http:wwwpfm.com

  • Table of Contents

    1. Introduction History of DLC .........................................................................................................................1

    Scope of Work .........................................................................................................................3

    II. Environmental Scan Economy ..................................................................................................................................7

    Demographics ..........................................................................................................................7

    Benchmarking Analysis .........................................................................................................13

    County Retail Stores ..............................................................................................................24

    County Wholesale Distribution ..............................................................................................35

    Licensure, Regulation and Education ....................................................................................49

    On-Premise Licensees ..........................................................................................................50

    Private Beer and Wine Stores ...............................................................................................52

    III. Strengths, Weaknesses, Opportunities and Threats Analysis Overview ................................................................................................................................55

    Strengths ................................................................ : .............................................................. 55

    Weaknesses ..........................................................................................................................55

    Opportunities ..........................................................................................................................56

    Threats....................................................................................................................................56

    IV. High-Level Findings Overview ................................................................................................................................58

    Business Environment ...........................................................................................................58

    Business Results ...................................................................................................................59

    General Operations ...............................................................................................................59

    Wholesale Operations ...........................................................................................................59

    Retail Operations ...................................................................................................................60

    V. Mission, Vision, Values and Goals Overview ................................................................................................................................64

    Mission ...................................................................................................................................64

    Vision .....................................................................................................................................64

    Values ....................................................................................................................................65

    Goals .....................................................................................................................................65

    VI. Strategies and Recommendations Fleet Recommendations ........................................................................................................67

    Operations Recommendations ..............................................................................................69

    Retail Recommendations ......................................................................................................71

    VII. Implementation Transition and Action Planning ..............................................................................................77

    ~M~---------------------------------------------------------------

    ~

  • Appendices Appendix A Appendix B

  • I. Introduction

  • Introduction

    History ofDLC

    Following the repeal of Prohibition in 1933, the states and their component jurisdictions were granted the authority to regulate the sale of alcohol. Many states made the decision that monopoly control over some portion of the alcohol distribution system - wholesale, retail or both - was the best method to balance the rights of individuals with the broader community interest. Among jurisdictions that opted for this methodthe control method - was Montgomery County, Maryland.

    On December 5, 1933, the Liquor Control Board for Montgomery County was established. For eighteen years, the Liquor Control Board was responsible for the sale and distribution of beverage alcohol in Montgomery County and served as the Board of License Commissioners. Then. on July 1, 1951, the Department of Liquor Control (DLC) was created, and the Board of License Commissioners became a separate entity.1

    Today, the Board of License Commissioners is responsible for licensing and regulation in accordance with Article 2B of Maryland State law, and its office shares the responsibility for enforcement with the Police. The DLC is responsible for the wholesale of all alcoholic products to licensees for on-premise consumption (primarily bars and restaurants). The DLC also owns and operates twenty-five retail stores, which have the exclusive right to sell distilled spirits in the County for off premise consumption. These stores, along with private retail license holders, are responsible for the sale of beer and wine for offpremise consumption.

    The mission of the Montgomery County Department of Liquor Control is to provide licensing, wholesale and retail sales of beverage alcohol products, enforcement and effective education and training programs, while promoting moderation and responsible behavior in all phases of distribution and consumption. In fulfilling this mission, the Department uses no general fund revenue, relying solely on the income from its operations. Indeed, in 2013, Montgomery County was able to issue bonds by pledging the revenue of the DLC. 2 In 2013. the DLC's charges for sales and services were over $256 million and the Department transferred over $25 million to the County General Fund. 3

    The DLC is organized into three divisions. The Operations Division contains both the DLC warehouse (overseen by the Warehouse Operations Manager) and its twenty-five retail stores (overseen by the Retail Operations Manager and two Retail Regional Managers). The Administration Division contains central office departments such as IT, Finance and Purchasing. In 2007, the County Executive moved some enforcement operations such as alcoholic beverage inspectors, into the Division of Licensure, Regulation and Education (LRE).4

    For the Fiscal Year ending June 30, 2013, total DLC sales increased by 2.4 percent. County-run retail stores reported sales of $122.2 million, an increase of 2.5 percent over the prior year. Wholesale sales were also up by 2.3 percent. Distilled spirits was the growth leader, with the number of cases of distilled spirits sold up by nearly four percent (3.97 percent) over the prior year. This is consistent with national performance, where, in 2012, spirits sales rose 3.5 p

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