A Match Made in Washington

When BevMo!, a 124-store chain based in California, opens a new store, it goes all out.

Generally, the opening festivities last all weekend, from free coffee and breakfast goodies before the ribbon-cutting ceremony, to tastings and demonstrations from both local and international wineries, breweries and distillers, free tastings of cheese and other snacks, and gift bags filled with items such as barware, mixers, snacks and bartending books, valued at over $50, for the first 500 customers.

But BevMo! outdid itself when it opened its third Washington State store, in Tukwila, just south of downtown Seattle, in September.

For that opening, BevMo! hosted its first-ever wedding. Local residents Dean Kittelson and Roni Brock were married on a stage in front of the store, complete with flowers and cake, with Alan Johnson, BevMo!’€™s CEO, officiating. Family, friends and over 500 BevMo! customers then toasted the happy couple.

Johnson said, in a statement, ‘€œIn the word BevMo!, the exclamation translates to celebration ‘€“ the celebration of beverages. We love what we do and can’€™t wait to offer Washingtonians the unique BevMo! experience for the first time.’€

Newly ‘€œOpen’€

Washington State is a brand-new market for BevMo! and for other liquor retailers. On June 1st, the state switched from being a ‘€œcontrol state’€ to an ‘€œopen state.’€ As a control state, the state government of Washington acted as the sole distributor and retailer of liquor in the state, running a warehouse operation and 331 state stores to do so. That has all changed. Private distributors now handle liquor, the state stores have been auctioned off to private retailers, and stores that are at least 10,000 square-feet in size, such as supermarkets, Costco and, now, BevMo!, can sell liquor as well as wine, beer and other products.

Technically, BevMo! could have opened stores in the state that sold wine and beer but not spirits, even while Washington was still a control state. ‘€œWashington is one of the top markets in the country,’€ said Francesca Schuler, BevMo!’€™s chief marketing officer. ‘€œAll the grocery stores sell wine and beer, there are private wine shops and ‘€˜bottle shops’€™ that sell just beer. But spirits are a very important part of our mix.’€

Since the law change regarding spirits, BevMo! has opened three stores in Washington. In addition to the Tukwila store, opened in September, the chain opened a store in Tacoma and one in Silverdale in July. It plans to open to two more, in Bellevue and Northgate, communities north of Seattle, by this November.

‘€œWe are a California chain on the move,’€ said Schuler. ‘€œWe are still growing in other areas, including in California.’€

Founded in 1994

BevMo!, headquartered in Concord, CA, was founded in 1994, opening six stores in the San Francisco Bay area that year. In 2006, it branched out into Arizona, where it currently has 10 stores.

BevMo! likes to describe its stores, which average 10,000 square feet in size, as ‘€œcandy stores for adults.’€ Originally named ‘€œBeverages & More,’€ the chain adopted a nickname, BevMo!, that customers gave it. The ‘€œ& More’€ part of its product selection includes specialty foods, mixers, cigars, glassware and bar accessories.

Though the stores carry large selections ‘€“ more than 1,800 wines, more than 1,400 spirits and more than 1,400 beers ‘€“ the chain considers itself a specialty retailer, not a superstore. Rather than carry every possible product in every category at the lowest possible price, BevMo! prides itself on carrying ‘€œ’€™the best of’€™ in every category, across price points,’€ explained Schuler. ‘€œWe carry the best of the big brands and we also carry the best of the local brands that are most relevant for that local market. Our selection is thoughtful. This category is all we do and our team has over 240 years of merchandising experience in it.’€

BevMo! also prides itself on its knowledgeable customer service. Every store is staffed with a sommelier who has completed at least level one of the process of becoming a master sommelier with the Court of Master Sommeliers.

Tasting Bars, Growler Stations

Stores are equipped with tasting bars for wine, and in Arizona and Washington, where the practice is legal, with growler stations, where customers can buy refillable containers called growlers and fill them from a selection of microbrewed draft beers, allowing off-premise customers to buy beers that are not available in bottles, in quantities smaller than a keg.

BevMo! offers three kinds of online ordering. Customers in any state where direct shipment is legal can buy from BevMo’€™s website (bevmo.com). Customers in Arizona, California and Washington can call in an order, for example, for a party, and can pick up that order, which will be chilled, if necessary, at their local store in one hour. If the order is over $500, BevMo! will deliver the order for free. And recently, BevMo! has launched a new service specifically for weddings, bevmoweddings.com. (See sidebar.) BevMo!, of course, is not the only retailer entering the newly changed Washington market. The ballot initiative, 1183, that became the new law was nicknamed ‘€œthe Costco law’€ by Washington State residents because that retailer was a major backer of it. ‘€œWe have to give a lot of credit to Costco,’€ said Schuler. ‘€œWith the new law, it’€™s the customer that’€™s going to win in the end.’€

The Washington Market

In addition to Costco, any retailer whose store is at least 10,000 square feet in size, such as a supermarket or a grocery store, can apply to sell liquor as well as beer and wine. Meanwhile, the state did auction off its state stores and other alcohol licenses for smaller liquor retailers. And at least one other large out-of-state chain has come to Washington. Total Wine & More, based in Potomac, MD, which bills itself as ‘€œAmerica’€™s Wine Superstore,’€ known for its huge selection of wine, beer and spirits. It has more than 80 stores in 13 states and has opened Washington stores in Belluvue and Tukwila, with another to open soon in Spokane. Another major player in the market is the local Wine World & Spirits, based in Wallingford, WA. It opened its 23,000-square-foot store, to sell beer and wine, at the end of 2010, and since the law changed, has added spirits. Price has been a major concern in Washington. When it still operated its control system, Washington had some of the highest liquor prices in the country. When the state was the sole distributor and retailer of distilled spirits, its profits and its taxes on liquor (21% sales tax and a $3.77 per liter excise tax) went to the state budget. In an attempt to keep some of the revenue the state had grown to depend on, Initiative 1183 kept the state’€™s liquor taxes the same ‘€“ and added fees on the distributors (10%) and retailers (17%). According to a recent Wall Street Journal article, liquor prices increased an average of 17% since privatization. Wine and beer remained the same.

‘€œPrices at the register, with the taxes added, have been a little higher than the average customer expected,’€ admitted Schuler, ‘€œbut all the retailers, us included, are focused on making the customer happy. That’€™s what we always want.’€

There was also definitely a learning curve for everyone once the law changed. ‘€œWhen the state, as the exclusive distributor of spirits, closed its doors, there were companies all trying to be distributors, at the same time that all these new retailers were opening,’€ explained Jim Root, BevMo!’€™s Washington district manager. ‘€œThere was a lot of change in the entire industry; the whole foundation had changed. That was definitely the most challenging part.’€

Root is a Washington native with experience as a district manager for two major retailers, Payless Shoe Stores and Best Buy. Hiring locally is important to BevMo! but so is retaining its own internal culture. Root reports that 85 to 90% of all the chain’€™s hires are local. ‘€œBut some people came from California or Arizona, which was a good thing, to keep that internal knowledge,’€ he said. ‘€œAlso, we invested a lot in training.’€ Root himself, who started with the company in February, spent a lot of time learning the BevMo! ropes in California.

‘€œHiring locally is important because we want to be part of the community,’€ said Schuler. ‘€œAt the same time, relocating some people can be good for two reasons: it accelerates the learning curve and our culture is important; it is a big part of BevMo!’€

Part of the Community

Having its stores be part of their community is very important to BevMo!, which positions its stores as ‘€œthe neighborhood beverage store.’€ When looking for locations, Schuler said, the chain looks for communities with a neighborhood feel. ‘€œAnd we take pride in being good neighbors,’€ she said. ‘€œWe don’€™t sell cigarettes or lottery tickets and we don’€™t have ATM machines.’€

To add to the assistance its wedding service can provide, and also to promote the Tukwila store, BevMo! held a special bridal mixer event with Seattle Bride magazine the evening before the store’€™s official opening. The chain invited several local wedding professionals, including photographers, wedding-dress designers and cake makers. ‘€œWhen people register with us for their wedding, it’€™s great for us to be able to refer them to the other things they will need,’€ said Schuler.

BevMo! also hosted an event with the Seattle Girl Power Hour, a networking group for women that holds monthly meetings. ‘€œWe invited senior female executives from our industry to be speakers at the event,’€ said Schuler.

And BevMo’€™s first Washington State store, the one in Tacoma, opened in July has already been a main sponsor of a beloved local event, ‘€œTaste of Tacoma.’€

Selling Local Products

Chainwide, BevMo! has always prided itself on its attention to local products, the offerings from wineries, craft breweries and micro-distillers near each location. Nowhere is this perhaps more appreciated than in Washington State, home to many acclaimed wineries, breweries and a growing number of specialty distillers. The Washington stores have a special eight-foot display section devoted just to locally produced distilled spirits products.

BevMo! executives are pleased and excited about the response to their stores in Washington. ‘€œThere are a lot of people in Washington who knew and really loved our stores; many are transplants from California, and they have been talking about us coming to Washington for years,’€ said Kris Mulkey, BevMo! spokesperson. In the stores themselves, Root reported, ‘€œI get asked several times a day, ‘€˜When are you going to come to my neighborhood?’€™’€

The most common comment on BevMo’€™s Twitter and Facebook accounts is about when the chain will open more new stores in more communities. In fact, one recent comment from a customer anticipating the latest store opening declared, ‘€œThis is better than Christmas!’€

BevMo! has been a good catch for Washington State.

Reason To Celebrate

‘€œOne of our biggest successes of the year has been the launch of BevMo! Weddings,’€ declared Francesca Schuler, BevMo!’€™s chief marketing officer.

For years, of course, people had shopped at BevMo! stores for their wedding receptions. ‘€œBut it was on a kind of ad hoc basis,’€ Schuler said.

Now, customers planning their weddings can register on BevMo’€™s special website, bevmoweddings.com. Once they register, a BevMo! staff member will contact them within 72 hours to arrange a private tasting for them at the nearest store. BevMo! will help them choose their wines, offering a variation of the chain’€™s famous 5-cent wine sale prices, and can help set up special beverage options for the celebration, such as signature cocktails, including special his and her ones, and tasting bars, such as ones for Martinis, Bloody Marys, Champagne and Mimosas or tequila tastings. BevMo! can advise on amounts to order, glassware and even cigars.

BevMo! also networks with other kinds of companies offering wedding services. Currently, for instance, it is offering discounts on wedding dressers from designer, Kirstie Kelly.

Couples can also see announcements for bridal-planning events being held by BevMo! and other wedding industry companies in their area on the BevMo! Wedding website.

‘€œEveryone wants something really special and personalized for their wedding, without breaking the bank,’€ said Schuler. ‘€œWe’€™ve already had hundreds and hundreds of couples register.’€

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