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10/23/2011

David Trone: A Man with A Plan, and He´s Executing; #1 Alc Bev Retailer Shakin´ It Up

Retailer extraordinaire, prexy David Trone of Total Wine & More, gave whirlwind presentation to CLE Intl Wine, Beer & Spirits Law mtg recently in Boston. Trone started with beer retail shops in Pennsy in late 80s, won series of legal challenges over pricing, ads, licensing issues. Eventually left Pa's "antiquated" biz when leases ran out due to "too much politics and too much liquor law." Moved on to build biggest pure play retail alc bev biz in US, now with 78 shops in 11 states, most in 20-25,000 sq-ft range, some bigger. Revs this yr will "crack" $1 bil, David said, far surpassing next biggest chains, ABC in Fla and BevMo in Calif/Ariz, each in $550-600 mil range. (Costco at $2.5 bil.) Avg rev gain last 5 yrs: +$123 mil, +19%. Next yr: Hello Dallas and NM.

Typical Total Wine outlet boasts 8000 wine skus, 3000 spirit skus and 2500 beer skus. Tho Trone started pushin' price and selection back in PA, has since switched focus to customer service, choice, and education, while still offering best prices. Craft biz "on fire right now" in his stores, David said: up 40% excluding biggest brands like Sam Adams, Sierra. "We're killing craft beer." On other end, he also noted increasing move to private label, tho he's not interested in selling other retailers' house brands.

David has history of being litigious, back to when Pennsy regulators didn't like him advertising price, up through 4 trips to fed ct in Md case (10-yr TFWS extravaganza) and so on. Tho philosophy was originally to simply follow laws in jurisdictions where he did biz, that's evolved to hiring best lawyers and best lobbyists to focus on "driving change in legal landscape and politics." Stores also aim to be part of community, with major charity involvement (over $1 mil last yr). "We're part of the community, legislators know us, know what we do with non profits" and build long-term relationships. David is "big supporter" of 3-tier system, he said, tho relationship tuff at times (he's also big fan of quantity discounts). He's focused on improving communications with both suppliers and wholesalers to develop programs to drive more biz, and so far "making great headway."

Plan ain't just to expand biz. David showed slide of states Total sells in, with legislative achievements so far and to-do list. Done: Sunday sales in Del; quantity discounts in Del, Md; high-strength beers in NC and SC; tastings in several states. To do: expanding # of licenses in Del, Ga, Md, SC; legalize coupons in Ga; privatize VA, NC; expand tastings/ QDs/move product between stores in several states, etc. He did not call that central warehousing, or mention Costco; tho biz models different, some of their goals align.

David doesn't see as big an oppy in retailers shipping across state lines as others do. Why? Too much local politics, too much opposition, wineries already shipping more and more direct on their own: "I don't see it happening." But he's strongly behind efforts to privatize control states, especially in Va and his old stomping grounds in Pennsy. In Va last yr, "the bill stunk" because it "dumped on restaurants" and didn't replace rev current control system brings in. But "governor got religion," Trone folks helped write bill that is revenue neutral to state, but taxes will increase, he acknowledged. Tho "it's still a crapshoot…. Virginia has a shot." Key goin' forward: "If one [control] state goes," they'll all go over time, David believes. The "cards are right," with deficits and Repubs in majority. Political leadership supports privatization in Pennsy too, he said, but needs to develop "all-encompassing bill to bring everyone in," including distillers, distribs, retailers. (Editor's Note: some beer interests want in, some don't.) If effort splintered or unilateral, it will be "a waste of time. It has to be collaboration." Meanwhile, 12.6 mil residents of Pennsy, sez David, "have a disaster."

Publishing Info

  • Year: 2011
  • Volume: 42
  • Issue #: 20
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