Local distillers say DABC’s retail system needs some ‘human intervention’

(Photo courtesy of Hammer Spring Distillers) Perky Cowgirl Coffee Liqueur

A Utah company released two different distilled spirits May 2.

Five Husbands — a limited-edition vodka celebrating Utah’s 2019 Pride Festival — was placed in liquor stores throughout Utah and, as of this week, has sold more than 800 cases, said Steve Conlin, CEO of Ogden’s Own Distillery.

Porter’s Rye 95, a small-batch whiskey, has a different story. It sat in the state warehouse for nearly 11 weeks before it finally reached liquor store shelves July 16. It was stocked in only two stores — Murray and Orem — and, so far, has sold 14 bottles.

“It’s a tale of two products," Conlin told members of the state liquor commission Tuesday. “If Porter’s Rye had been introduced in an efficient manner, it possibly could be selling as much as our Five Husbands brand.”

During the same time, Conlin said later, Ogden’s Own sold 52 cases at the distillery’s on-site store.

The story illustrates a problem that Conlin and other Utah distillers have with the new retail technology system the Utah Department of Alcoholic Beverage Control uses to determine what products are placed on the shelves in its state-run liquor stores.

The Symphony System uses algorithms based on what consumers buy and how much they spend. One store may have more higher priced wines, because that’s what the computer shows shoppers are purchasing. Another store may have more affordable liquors.

Symphony replaces a controversial centralized order program that often created a lack of selection and availability in stores. The problems were especially noticeable during the busy holiday season, when stores would run out of Baileys Irish Cream at Christmas or certain brands of champagne on New Year’s Eve.

While those issues have mostly been solved, distillers say Symphony now favors large national manufacturers, with high volume, at the expense of smaller Utah companies.

Some “human intervention” by the DABC is needed to ensure that Utah businesses get their products on the shelves, said Conlin. “I cannot sell what is not available to people."

DABC Deputy Director Cade Meier defended the computer selection system, saying the Ogden’s Own products were treated differently because demand is different.

“Rye [whiskey] doesn’t have the biggest market,” he said.

As for the Symphony System, “it works great,” Meier maintained. “It understands what is going on in the stores.”

The DABC is willing to work with Conlin and other distillers on the issues, Meier added. “But we cannot bend to every single vendor that is out there. If there is not a demand for the product, that is an indicator of future success. We can’t control what people want to buy,”

The DABC may be hampered by U.S. Supreme Court rulings that bar states from favoring residents or local producers over out-of-state businesses.

The most recent case involved former Salt Lake City residents who moved to Tennessee to open a liquor store. To qualify for a retail liquor license in Tennessee, a person had to be a resident for at least two years. To renew the license, they had to have lived in the state for at least 10 years.

In June, the Supreme Court ruled that the residency requirement was unconstitutional under the dormant Commerce Clause. The doctrine forbids states from creating unfair barriers that hinder interstate commerce.

Lawyers in the Tennessee case used, as precedent, a 2005 U.S.Supreme Court case involving Michigan and New York. Laws in those states, which favored local producers, also were deemed unconstitutional.

J.P. Bernier, the owner of Hammer Spring Distillers in Salt Lake City, has been unable to get some of his products on liquor stores shelves.

The distiller’s Perky Cowgirl Coffee Liqueur was never purchased by the DABC. The only place to buy it is at its distillery, 3697 W. 1987 South, Salt Lake City, he said.

The company’s potato vodka — the only potato vodka distilled in Utah — was put in more than a dozen liquor stores in 2018.

“We were really excited 18 months ago to get the bottles in DABC stores,” he said.

Then — shortly after the Symphony program took hold across the state — the product was “delisted" and removed from many stores. “I was told by DABC officials to start considering out-of-state sales."

For the boutique distillery to succeed, products need to be in several Utah liquor stores, Bernier said. And he doesn’t believe the small distillers should be held to the same sales requirements as large national brands.

“The DABC," he said, “wants me to sell as much as Bacardi.”