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Pa. Liquor Control Board asks universities for help in redefining its sales model
Tuesday, July 20, 2010

Soon enough, we may learn whether university statisticians and economics students will earn an A in selling booze.

The Pennsylvania Liquor Control Board is asking the state's universities to provide "statistical analysis and economic research to help redefine the PLCB's current sales model." The board sent out the bid invitations in late June, and proposals are due July 28.

In the past several years, the PLCB has sought sales, marketing and organizational guidance from a variety of contractors and resources -- not unusual for an organization or company the size of the liquor control board, with $1.8 billion in annual sales.

In 2007, it entered a contract with E.&J. Gallo Winery and Future Brands LLC to study consumer preferences. The following year, it launched a campaign to remake the PLCB image with an "enduring, iconic brand identity." San Francisco-based Landor Associates eventually won a $3.7 million contract to run that campaign. Later, the PLCB signed a $174,000 contract with a Pittsburgh company to train employees to better interact with customers.

That brand-end tinkering is separate from the mission of more fully understanding the PLCB's customers and their buying habits. Because it is an enormous wholesaler, distributor and retail operation rolled into one, it has a wealth of robust sales data, the envy of private-sector distributors.

But how best to use it? PLCB board Chairman Patrick J. Stapleton III said the university query is driven by "more of an outreach" to the schools, than by any actual shortcomings in the system's own data analysis.

In the document issued by the liquor control board, the system said it was looking for data-collection advice, development of new sales models and tutorials, information about inter-store sales migration and cannibalization, and sales "relationships, patterns and correlations which may not be readily or intuitively apparent."

On the branding end of things, meanwhile, the tinkering continues. In the next few weeks, the PLCB hopes to find a location where it can open its Pittsburgh "prototype" store, one of several stores-of-the-future opening around the state (the first opens Wednesday in New Hope).

Also, the PLCB recently rolled out a new consumer website. The site, created by Landor and some in-house designers, is finewineandgoodspirits.com. (The old site, pawineandspirits.com, now redirects visitors to the new one.)

"The shelf life of a website is a year or two. That [old] website was five or six years old," Mr. Stapleton said.

Also this summer, the PLCB is looking to expand its Wine Advisory Council to include advisors on spirits and liquor, in hopes of improving the stores' spirits selection, in the same way the Chairman's Selection program has improved wine choices. This expansion arises partly out of a study compiled by a group of self-appointed Pittsburgh-area spirits researchers, led by cocktail and spirits enthusiast Nathan Lutchansky.

The study, called "Specialty Spirits in Pennsylvania Liquor Stores," suggested that in-store selection within the PLCB suffers when compared to California-based Beverages and More chain, which runs more than 100 stores and offers about 1,500 products on its shelves, compared to the Pennsylvania stores' roughly 670 products.

The study also says the system favors trendy items, such as grape vodkas and flavored rums, over spirits that are actually sought out by serious bartenders and spirits junkies.

"The PLCB has excelled at stocking those categories that are disdained by the specialty spirits community, and gives only token regard to most categories in which we are interested. This is our fundamental complaint regarding in-store product selection."

"They've got two problems to deal with," Mr. Lutchansky said. "One is an enormous bureaucracy." The other, he said, is "they don't have the resources to do as much research as they'd like to do" on trendy, niche spirits.

The PLCB's buyers and product managers have been enthusiastic about the third-party study, Mr. Lutchansky said, and the system has added several products to its catalogue in recent months thanks to his group's recommendations.

Recent additions include Stranahan's Colorado Whiskey, Black Maple Hill Small Batch Bourbon, Cardenal Mendoza brandy, Anchor Junipero Gin, Banfi Grappa, El Dorado 15-year-old rum, Glenmorangie Nectar D'or Scotch and Partida Blanco tequila.

Mr. Stapleton said he welcomed the input.

"The spirits world is changing. There are many new small-batch spirits being distilled around the country and around the world." As a result, bars and retail shoppers are "looking for something different than what was typically requested [in] the past."

In his spare time, Mr. Lutchansky runs a website -- plcbusersgroup.org -- that tracks weekly additions to and subtractions from the PLCB's inventory catalogue.

Bill Toland: btoland@post-gazette.com or 412-263-2625.
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First published on July 20, 2010 at 12:00 am