When Liquor Stores N.A. recently purchased 51 percent of two Joe Canals stores in Lawrenceville and Woodbridge, New Jersey for $15 million it raised a lot of eyebrows. The two iconic New Jersey stores had total sales of over $47 million, with a strong management team. That got the attention of Stephen Bebis, Liquor Stores’ President and CEO.
Liquor Stores is a publicly traded Canadian Company that owns 252 stores in North America, 48 of which are in the United States. Liquor Stores has a business plan that calls for continued growth in Canada and a very strong emphasis on acquisitions throughout the United States. The Company also announced that it had purchased two stores in New England, including a new 16,600 square foot store in Berlin, Massachusetts and a 20,000 square foot store in Norwalk, Connecticut. I recently spoke with Stephen Bebis to discuss Liquor Stores’ future in the U.S. and to discuss trends in the alcohol beverage industry.
BD: The alcohol beverage industry certainly took note when you purchased the Joe Canals stores in Woodbridge and Lawrenceville. What attracted you to these stores and the New Jersey market?
SB: Mark Hutchinson and Ken Coppola built a well-run business. We admired their people in the stores the locations and their financial results. The stores are quite profitable and have high-volume locations. We liked New Jersey a lot because of the sophistication and knowledge of many of their customers when comes to adult beverages.
BD: Do the Joe Canals stores have different wine-centric demographics compared to your stores in Canada, Alaska and Kentucky?
SB: I would say the NJ wine consumer does look for value in wine as in our other markets. However, wine consumption on a per capita basis is higher than in our other markets, which is good for our business. The wine business in both stores was very impressive, particularly at over $20. Alaska and Kentucky are more spirits and beer markets. We are very excited about the wine market and learning from Mark Hutchinson and the team. Their customers often don’t “shop the store,” instead taking employees’ recommendations with great confidence.
BD: Do you see more growth or profit margins in distilled spirits, beer or wine? Which category are you most excited about and why?
SB: We are excited about all categories in adult beverages. Certainly recent trends and consumer’s interest in brown spirits, craft spirits and craft beer have been positive for retailers. We have some exclusive products with wineries and distilleries to create great value (for our consumers), like Flatboat Bourbon from Kentucky.
BD: Will you use your economies of scale bring value to your wine consumers?
SB: Yes, indeed. Our product development team works very closely with some of the best wineries in the world to bring exclusive products to our customers that are delicious and offer great value. Our 252-store network allows us to buy in large quantities and we pass the savings on to our customers.
BD: I understand the next markets you are entering are Connecticut and Massachusetts. What made these markets interesting and are there any details you can offer?
SB: High density and incomes, strong index in wine consumption per capita, and we see an opportunity to bring our quality store model and customer service to consumers. We also want to grow our footprint in Massachusetts and Connecticut, but there are not many licenses available.
BD: How important is purchasing stores as opposed to organic growth?
SB: We like both. Acquisitions are important to our growth and we are seeking them every day. In fact, if any of your reader’s are interested in selling their business to us, please contact me. We are always seeking to buy well-run liquor stores with good people and great locations. Organic growth is important to us and we will continue to do so when the right opportunities arise.
BD: Are there lessons learned from emulating any retailers like Total Wine, Costco, BevMo or Binny’s?
SB: Yes, of course. I always learn lots from our competitors. Particularly from the respected well-run companies you mentioned. Competition makes us better. We would like to be one of the largest retailers in North America of alcohol beverages. There are not many people making acquisitions and we have the capital to make acquisitions at good locations.