WRAL Investigates

Some ABC stores lose money despite N.C.'s booze control

Posted November 2, 2009 6:00 p.m. EST
Updated January 10, 2010 12:28 p.m. EST

— Alcohol is a $720 million a year business in North Carolina, and state law allows North Carolina government to have a monopoly on sales. However, a number of ABC stores across the state are barely surviving or are losing money.

A December 2008 report by the General Assembly’s program evaluation division found that the state’s Alcoholic Beverage Control system is outdated and needs to change if North Carolina wants to stay afloat in the booze business.

North Carolina is one of 18 alcohol control states where the state government is responsible for every aspect of alcohol, including sales, transportation, manufacturing, consumption and possession. This has been law in North Carolina since 1937.

The state technically controls liquor, but the state ABC Commission has very little control over the 161 local boards that run the 411 stores across North Carolina, the study found.

Each local board has a chairman and two to six members appointed by their city, town or county governing authority. They have authority to set policy and adopt rules in compliance with ABC laws and commission rules. Board members are paid and typically receive $50 to $100 per meeting.

County and municipal ABC boards in North Carolina “are local independent political subdivisions of the state and operate as separate entities establishing their own policies and procedures,” according to ABC’s Web site.

Danny Matthews is the general manager of the ABC store in Louisburg in Franklin County.

“We are the No. 1 (ABC) store in the county,” he said, adding that he thinks the system works well. “I’m not against change, minor change, but nothing drastic.”

Profits stay in Louisburg and help with law enforcement and alcohol prevention projects, he said.

Stores in many counties, especially those with a large population, do well, according to the report. However, in rural areas, about 40 ABC stores are struggling and a few are losing money.

“We have ABC boards that lose money. They lose money selling liquor,” said Carol Shaw, who headed up the General Assembly’s study.

Audits showed that the Pembroke ABC store had thousands in cash and liquor missing for five years before the State ABC Commission closed the doors. 

An audit for the fiscal year that ended June 30, 2008 showed more than 3,000 bottles of liquor, valued at more than $20,000, were missing from the store. The store also reported losing almost $35,000 on almost $500,000 in sales.

“They can’t make them operate better. They can’t make them a profit,” Shaw said.

The study also suggests the market is over-saturated with stores. Some counties are considered “dry” and don’t allow alcohol sales, but state law allows 500 voters in those counties to vote for an ABC board to run a store.

Robeson County has six boards for six stores. The study’s researchers said that is too many for the population. 

“And then each town controls the profits and where they go,” Matthews said.

Franklin County is a dry county that works that way. Four boards run four stores. Two stores do well, while the other two struggle. But each town gets to decide how to use its profits. Those stores that lose money sometimes get extra money from their savings account or get help from the county.

The study suggests the state needs to have the power to make boards merge and follow standards.