I also believe it is important to note that Michigan has two regulatory systems in place for the distribution of alcohol: the three-tier system for beer and wine and a controlled state model for distributing liquor.
In the three-tier system, a supplier sells to a distributor who in turn sells to a retailer. In the controlled state model, the state of Michigan serves as the wholesaler for spirits and contracts ADAs to provide warehousing and delivery.
Imperial Beverage, which has been operating as a beer and wine distributor under the three-tier system since 1933, became the state’s third ADA in 2017 after beginning the process in 2011. It took us six years to perfect our systems and make sure they would integrate with the state of Michigan system without any issue.
The issues impacting RNDC are an isolated incident involving one ADA, and in no way speak to the effectiveness of Michigan’s controlled state system. The other two ADAs have continued to deliver products on time, just as our customers and suppliers have come to expect.
The requirements placed on an ADA are important to the strength of the controlled state model and benefit retailers, consumers, and suppliers alike. The controlled state model ensures a level playing field for all retailers and suppliers, regardless of their size, by promoting choice and competition.
There are 10,600 spirits items available in the state of Michigan, a variety that is made possible because of the controlled state model, which gives both smaller craft distilleries and larger suppliers equal access to the market.
At Imperial Beverage, we had our own major software change earlier this year which integrated with the Michigan Liquor Control Commission’s system.
We pushed our go live date back from October to February to avoid the busiest time of year. Before going live we vetted the system in a test environment for several months and then, once live, ran dual systems for six months to assure there wouldn’t be any interruptions to service for our retailers.
There are, no doubt, lessons to be learned from the current situation. Software changes and warehouse moves should be timed to avoid the busy holiday season. Both types of changes should be run in a dual environment, and the MLCC should continue to provide oversight whenever any of their ADAs have major changes that could impact the system as a whole.
The control system, where the state is the wholesaler of record, is as strong and effective now as it has ever been. It provides good service to retailers, variety, convenience and competitive prices to consumers and tax revenue to the state.