Lotteries, Liquor and The Five Wives Controversy
by George Prentice
March 6, 2013
By Jeremy Lanningham
Jeff Anderson knows a thing or two about dual responsibilities. When he was general manager of Boise's KBOI-TV 2, he was also managing the CBS affiliate in Idaho Falls.
"I'm kind of use to having the 'two office' thing," Anderson, 55, told Boise Weekly.
Born in Illinois and raised in northern California, Anderson first stepped foot in a college radio station at Cal State-Chico, launching a broadcast career that ultimately brought him to Idaho in 1996 to oversee KBOI-TV. But in 2006, when ownership wanted to make some changes, Anderson said he was reluctant to leave the Gem State.
"I chose not to go to Cleveland, Tampa or Raleigh, N.C.," he said. "I just couldn't see being two plane trips away from my children."
So the husband, father and grandfather of two decided to seek a position in state government, landing a job as director of the Idaho Lottery in 2007. Little did he know that three years later, in 2010, he would again find himself with dual responsibilities, after Gov. C.L. "Butch" Otter appointed him director of the Idaho State Liquor Division.
While being the director of two significant divisions has more than its share of challenges, are there any advantages to being the manager of both?
Contrary to popular belief, they really are two full-time jobs. But I try to keep balance in my life. I came into state service from the business world. I'm not a career bureaucrat. The concepts are really not that foreign to me. You build good teams, clearly communicate your expectations, hold people accountable and do the work.
The lottery was in really good shape when I came on board. We have about 44 employees.
But you have a significantly greater number of workers in the Liquor Division.
Three hundred and fifty--most of them part-time in the retail locations. We're authorized for 205 full-time-equivalent employees.
How do you manage your days between the two locations?
Mondays and Wednesdays I'm at Liquor. Tuesdays and Thursdays I'm at Lottery, and Fridays are floaters.
I'm presuming that the March 2012 Mega Millions jackpot was very good for last year's overall lottery sales numbers.
In the lottery business, we have a saying: drivers drive golf balls; bus drivers drive buses; jackpots drive lottery sales. Idaho had $175 million in sales last year, and we distributed a $41.5 million dividend.
Is that the best you've ever done?
The best year ever. We've had record years ever since I've been at Lottery.
And liquor sales?
We had a pretty good year there, too. In the Liquor Division, we were dealt a bit of a wild card with the experience of Washington state's dismantling of their liquor control system. We did about $154 million in sales last year. We're forecasting approximately $166 million in sales for this year.
I've heard you say that Washington's privatization drove up sales rather dramatically at one particular store near the border.
Our store in Post Falls is about six miles from the Washington border. A typical store statewide might see anywhere between $1.5 million and $3 million in sales. Post Falls was doing $6.5 million. Take for example a bottle of Patron [tequila]. We sell it for about $48. Out the door, it's probably $51 or $53. In Washington, before Initiative 1183, Patron was about $56. Now it's $70 or $75.
The Post Falls store went nuts. In October we opened another store, nearby, in State Line. The combined stores are pacing 60 to 70 percent ahead of the Post Falls store, just by itself.
Is the Washington experience your strongest argument not to privatize in Idaho?
It's a good example of the consequences of taking a system of liquor distribution, blowing it up and injecting another profit tier for wholesalers and retailers while expecting the same amount of revenue to the state.
This is a reasonable debate to have. And the questions to ask are: Can we change this without doing harm? And how do you define "no harm?" Can we change this and make it better? And how do you define "better?" If more consumption of liquor is OK, then it's probably fine. But responsible people would look at this and say beverage alcohol is not like other products. There is a reason it's regulated in every state in the nation and, in fact, across the world.
Is there a significant push to privatize in Idaho?
The Northwest Grocery Association has a very strong interest in getting product into their stores. I get that. But based on the system we have, it's not a complicated math problem if the state wants to remain whole. Consider that the Liquor Division distributed approximately $63 million to Idaho cities and counties last year.
How many products do you have on your shelves?
We have about 2,400 skews [product lines] in our price book. Keep in mind that there are over 20,000 liquor skews in the United States.
Why is that national number so huge?
Overall alcohol consumption hasn't really changed appreciably in the last decade or two. But spirits have grown from about 25 percent to about 35 percent of the share. Fifteen years ago, you never would have thought of a cupcake- or whipped cream-flavored vodka. More women are entering the space and there has been an introduction of more low-calorie, lower-proof and flavored items.
Let's talk about the Five Wives incident. [In May 2012, Anderson balked at Five Wives Vodka, calling its label featuring women hiking up their skirts offensive. When the Utah-based distiller, Ogden's Own, took its dispute to national media outlets a verbal firestorm erupted, resulting in the Idaho Liquor Division backing down and allowing the vodka to be sold in state-run stores.] Was the label really the main issue?
That was part of it.
But that same label is the current label. Did you need to get past that issue or did it become less of a dispute?
In this instance, I got in trouble by being too honest about the reasons we didn't want something. The product is fine. If you want to spend $20 for Five Wives Vodka, fine. In fact, we just ordered another pallet [approximately 720 bottles].
Is it selling well?
When all the publicity was out there last summer, it sold well. It trailed off and it has settled into a reasonable level of sales.
Was your change of heart based on how hard they pushed back?
There was no point in getting into a protracted fight with Georgetown lawyers over whether or not we're going to give a slot on a shelf for $20 vodka. OK. Uncle. You got me. I'm done.
What's the lesson learned from all of that?
They're very passionate about what they do and believe very deeply in their product. I get it. My surprise was that I never expected a supplier to use those methods to get publicity for their product. But, good for them. It's on the shelf.
When you're ready to relax on a Friday evening, what is your preferred drink?
I'm more of a beer guy.
Pretty much whatever is on sale.