In football, the last player who wants the average fan to know his name is the long snapper. This player hikes the ball to the holder for place kicks and blocks. He is only mentioned if he makes a dreadful mistake that results in a blocked kick.
Mississippi’s Alcoholic Beverage Control (ABC) warehouse and distribution system is like a long snapper in that most residents in the state were unaware that their state government is in the alcohol distribution business.
Mississippi is one of 17 control states nationwide, which means the government has a monopoly on at least one of the three categories of alcoholic beverages (beer, wine and spirits). Some states even have retail outlets. The Mississippi ABC distributes spirits and wine to private retailers but allows beer to be distributed by private wholesalers.
When things go well, no one notices that one of the largest warehouses in the state is owned and operated by the taxpayers.
But when the COVID-19 pandemic kept thousands at home and led to restaurants and bars being closed, the distribution network couldn’t handle a massive increase in sales volume. Orders that once took a week to deliver took three weeks or longer. The warehouse staff fell behind filling orders and in July 2020 the ABC decided to stop filing orders from retailers.
They later walked back the delivery timeout after a massive outcry from retailers, but could you imagine FedEx or the United Parcel Service telling customers at Christmas that they’ll stop shipping orders until they catch up on a backlog? When FedEx or UPS need more workers temporarily, they have the flexibility as a free-market business to spend the money to do so. These shipping giants also will purchase equipment upgrades as needed that improve efficiency.
The ABC also had some problems last year when it switched from one trucking company to another.
The problem is that government has a wholesale distribution monopoly of a legal product that is a regulatory holdover from the Prohibition era.
When ABC needs more money for overtime or to hire additional workers, they must beg the taxpayers through the Legislature for it. The 212,000 square foot warehouse in Gluckstadt (built in 1983) is hopelessly behind the times with modern logistics and will require tens of millions of taxpayer dollars for upgrades.
Spending that money now won’t be a permanent solution, as the warehouse will need more upgrades within a decade or so, forcing the ABC to go to taxpayers again for another handout.
The other problem is that the state is limited on how much they can pay warehouse staff and must compete against Amazon (which can offer more pay and better working conditions) and other logistics operations for a limited pool of workers. Many of these workers don’t want to work in Gluckstadt’s non-climate-controlled warehouse in the sweltering Mississippi summer.
The easiest way to fix this situation is to get the state out of the distribution business entirely as proposed in a bill by state Rep. Trey Lamar, R-Senatobia. Prices might increase as a result, but the state doesn’t need to be in the wholesale distribution business of any legal product. Putting private wholesalers in charge of distribution would inject competition into the mix and allow retailers to have a choice of wholesalers. It would also likely result in more choices for consumers, as warehouse capacity at present limits the number of products that ABC can stock. Retailers can request ABC stock a particular whiskey or wine vintage, but there’s no guarantee that officials can or will.
If private distributors can handle beer as they have for decades, why not lower-volume products like wine or spirits?
Wholesale distribution of alcohol is not a core function of government like policing, education or infrastructure.
There are other options, but none are as simple as divesting the warehouse and having private wholesalers take over the business.
The state could get a private contractor to run the warehouse, but the limiting factor for that is the state’s prohibition on any contract longer than four years. Imagine the chaos if the contract turned over to a new vendor in four years. It’d likely make the COVID-19 rush look pedestrian.
An option that wasn’t discussed was the Legislature chartering a non-profit like the Mississippi Lottery Corporation to run the distribution network. This would bring an element of free-market know-how to the warehouse and likely result in more efficiency but would still have the state in the distribution business. Virginia’s ABC uses this approach.
The time for a change is now lest another distribution snafu like in 2020 leave a hangover with retailers and customers.
