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Distribution

Commission grills state’s largest liquor wholesaler over distribution woes

Joe Gigliotti, a regional president for Republic National Distributing Co., told commissioners the company has brought in employees from across the country to handle customer complaints and are in trying to rent 15 additional non-commercial trucks to have salespeople make deliveries.

“The perception that it’s getting worse, I know it’s real,” Gigliotti said. “And that’s why I hesitate to say, ‘Well there’s this working and that working.’ But it’s a results-orientated business.”

Gigliotti sought to assure commissioners that Republic National would get caught up on the accounting backlog.

The Grand Prairie, Texas-based company, which has 584 employees in Livonia, has hired 120-150 temporary workers and brought in 30 company employees from across the country who work in accounting, warehousing and finance, said Steve Rochow, executive vice president of Republic National.

“We’ve brought in talent from all over the country to get at this,” Gigliotti told the commission. “This is the No. 1 priority for the company.”

Since consolidating its distribution under the roof of a new $80 million facility in Livonia, Republic National’s delivery has been plagued with problems that the company blames on computer glitches and difficulty training employees to adapt to a new highly-automated system.

The 500,000-square-foot warehouse near I-275 and I-96 became operational in July when the company began gradually moving its distribution operations there from warehouses in Brownstown Township and Grand Rapids. Because of the distribution glitches, Republic National has moved 20 percent of its business back to the Brownstown Township facility, Gigliotti said.

Republic National, one of three licensed liquor distributors in Michigan, paused taking new orders for three business days the week of Nov. 11 in a bid to get caught up on its delivery backlog. Republic controls 66 percent of the liquor market.

“Would I use the term fixed? No,” Gigliotti said of suspending orders for three days.

On Tuesday, the company shipped a record 300,000 bottles as the Livonia distribution center operates around-the-clock instead of its normal two-shift production, Gigliotti said.

On a typical Tuesday before the holidays, Republic National ships 180,000 to 210,000 bottles through a distribution network that includes crossdock warehouses in Escanaba, Grand Rapids, Saginaw and Traverse City. In January, that figure will fall to about 120,000 bottles, Rochow said.

The Liquor Control Commission has received 762 written complaints about Republic National’s customer service from licensed retailers and bars since Nov. 8 and an additional 85 phone complaints, Hamilton said.

Mike Mitchell, a liquor store owner in Perry in rural Shiawassee County, dismissed Republic National touting that it shipped 300,000 bottles on Tuesday.

“A lot of this is pent-up demand from people who are over-ordering,” said Mitchell, who added the chances of getting orders fulfilled are akin to “winning the lottery.”

Mitchell said two bar owners in Perry called him on Tuesday in search of Captain Morgan spiced rum, one of the state’s best-selling spirits.

“And there wasn’t a drop of Captain Morgan to be found in Perry, Michigan, two days ago,” said Mitchell, retail vice chairman of the Midwest Independent Retailers Association, a multi-state trade group for independent supermarkets and convenience stores.

Mitchell and other liquor store owners told the commission blank shelves with missing popular spirits is causing problems for their businesses and cash-flow, resulting in lost sales for non-alcoholic items.

Liquor control commission chairman Patrick Gagliardi vowed to get the system fixed after one Southfield liquor store owner suggested licensees should bring a class action lawsuit against the state, which buys liquor from producers and sells it to Republic National.

“We hear the frustration, and we hear that it’s getting deeper all of the time,” Gagliardi said. “And we’re trying the best we can to help us get out of this hole.”

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