News

County may seek merger of ABC boards

Laurie Lee, the state ABC audit and pricing director, (left) explains state law to the new county ABC board, from left, Rick Holbert, George Erwin, Beau Waddell, Patricia Jones and Rick Livingston.

By Bill Moss, Published: August 1, 2012

Henderson County's new ABC Board took the oath of office on Wednesday afternoon and began preliminary discussions of whether to set up on their own or seek a merger with one or more of the existing ABC boards in the county.

Several board members said they want to pursue the idea of a merger rather than going it alone. That approach, a top ABC administrator from Raleigh said, had been successful in other counties with several cities that sell liquor.
New board members sworn in were Beau Waddell, chairman; George Erwin Jr., Rick Holbert, Patricia Jones and Rick Livingston.
In Henderson County, separate ABC boards operate stores in Hendersonville, which has two stores and a third under construction (behind Zaxby's, on Upward Road at I-26); and Laurel Park and Fletcher, which have one each. The county board could locate a new liquor store in an unincorporated community such as Etowah, Horse Shoe or Upward, or it could site one in Mills River, where the Town Council has indicated a desire to have one and share the proceeds.
Laurie Lee, Director, ABC Board Audit and Pricing for the state board, said that some counties have struggled with too many boards sharing a finite amount of liquor sales and have had success with mergers. Even now, Henderson County has three boards (which are paid), each with a general manager, finance officer and auditor. And adding a sixth ABC store is no guarantee of additional money for the county and towns.
"As you look at the county and whether there's a need for additional stores, anyone that wants to drink is pretty much already drinking," Lee said. "Opening a new store doesn't make a new drinker. So you're taking a pie that's already out there and slicing it thinner every time you open a new store.
"You do generate some new business because it's more convenient and there's more impulse buying. In a place like this, unless you're tapping into a totally new market, you're really not.
"Hendersonville's putting a new store out on the highway, south of here. They're going to siphon some business off from their other two stores, but they're hoping to add to that new business coming up from the south. So they're mitigating some of the sales they're going to lose by having new ones come in" from South Carolina.
While the state does not make recommendations, Lee said mergers have been a successful approach.
"I don't think there's been any mergers that didn't show a profit," Lee said. A common scenario for distributing profits would have each town keeping profits from their stores after overhead and administration and the county getting a percentage of the net revenue. The formula would have to be worked out by the boards involved in the merger.
"You have a lot of choices, a lot of different directions to go," she said. "We're not going to encourage you to open a store."
County Manager Steve Wyatt, who was sitting in on the meeting, said that while ABC officials can't say so publicly the state "would prefer a fewer amount of ABC boards." He drew the comparison to school systems with duplicative spending. The state has 100 counties and 118 school districts. "Catawba County has three school boards, three superintendents, three of everything," he said.
Board members agreed that they want to consider a merger as one of the options to pursue. Other options are starting an ABC board or doing nothing.
"It's expensive to get a store up and running," Lee said. "Even going into rental property, upfitting a store, stocking it initially, you're looking at about $250,000 to get a store started today. So you can see, with profit margins as narrow as they are, it takes a long time before a board pays off that debt and can turn around and start distributing profits back. So that's an issue to keep in mind."