Open Market Dropped County Liquor Revenue By 35%; Six Positions Cut Last Month

SNOW HILL — Roughly three months since the liquor wholesale market was flung wide open in Worcester County, the county-run Department of Liquor Control (DLC) has found itself embattled. Loss of revenue from wholesale has been greater than anticipated though the DLC hopes to stay afloat by downsizing and relying on retail operations.

Worcester alcoholic beverage licensees were permitted to deal directly with wholesalers on July 1 and already the DLC’s bottom line has taken a hit. This has led to a re-structuring of the department and at least one round of layoffs.

“We laid off six people [last] Friday from our warehouse and our operations side,” confirmed DLC Director Bobby Cowger this week.

The driving force behind the need for downsizing is a 35-percent loss of wholesale revenue that normally would have come from county alcoholic beverage license holders. Prior to July, those licensees had no choice but to order wholesale through the DLC. The sunset provision allowed them to deal with private wholesalers directly, effectively cutting out the county as the middle man.

Initial projections this summer anticipated that the DLC would lose about 25 percent, or $2.6 million, in annual wholesale revenue. But three months down the line, Cowger acknowledged that actual losses are trending higher than expected. He blamed it on a variety of factors, including some pricing controversy that the county wants investigated by the state Comptroller’s Office.

“Right now, we’re down about 35 percent of our business with them since the new law change,” said Cowger, “but if we had more competitive pricing I guarantee that we would gain 75 percent of that business back because I feel like the licensees are very satisfied dealing with us now.”

Some area licensees have spoken favorably of the DLC and Cowger as director in the past but personal feelings aside it is obvious that many are happy to buy from wholesalers directly because of the cost savings. A number of licensees are using direct buying but turning to the county for accessibility or to fill immediate orders when they can’t wait for distributors. Cowger is optimistic that DLC customer service and convenience will help stabilize revenue.

The loss of six full-time county jobs last week was painful for the department, Cowger continued, but might possibly be enough to keep the DLC alive without further need for downsizing.

“I’m hoping that’s the end of it because we’ve really cut to the bare bones now … if anything happens beyond now, it would probably be that it would dissolve the DLC,” said Cowger. “We’re going to fight it to the end. I think that we’re still going to be fine with those cuts as long as our loss of business doesn’t continue to drop but I think that it has leveled off at this 35 percent.”

While Cowger doesn’t expect to cut any more full-time employees for the time being, he did say that of the many part-time employees that are hired every summer, several will likely not be re-hired if current revenue losses hold.

One area where Cowger remains highly positive is the DLC’s retail side despite an explosion of competition over the summer. The DLC maintains seven liquor markets across the county, many of which also stock wine but not beer. Retail revenue is holding more or less steady, according to Cowger, though the county is seeing new private liquor sellers crop up every month.

By Cowger’s estimation, the number of private, off-sale liquor retailers has roughly doubled over the past four months, primarily in Berlin and Snow Hill though many other parts of the county already allowed those privileges.

“They’re doing just what we were afraid of. They’re opening it up to where there’s going to be a liquor store on every corner,” Cowger said.

Approval for new liquor off-sale is under the purview of the Board of License Commissioners (BLC). At September’s BLC meeting, the board heard three different applications for private liquor off-sale privileges, rejecting two for lack of need and approving one. During the meeting, attorney Mark Cropper suggested that if the DLC is afraid of competition it shouldn’t be in the liquor business.

“I’m not scared of competition. But you’re just opening it wide open so that everyone is going to be selling it and nobody is going to be making any money,” Cowger said.

However, the final decision lies with the BLC and the county recently adopted a stance not to actively oppose applications for private liquor. Cowger believes the DLC retail can survive as it is now. DLC wholesale is walking on thinner ice, but Cowger expects that the 35-percent revenue loss is basically rock bottom and looks for things to stabilize. Any further downslide could threaten the solvency of the department.

“One thing this department has to do, it has to be profitable or it will go away,” Cowger said.