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November 30. 2013 11:01PM

Liquor Commission working out kinks in warehouse operations


Excel built the new liquor and wine distribution center on Route 3 in Bow. Exel, a subsidiary of DHL, took over as warehousing and trucking agent for the New Hampshire State Liquor Commission four weeks ago. (DAVID LANE/UNION LEADER)

Steven Clutter, owner of the Hanover Street Chophouse in Manchester, is philosophical about the problems restaurants have experienced as the New Hampshire Liquor Commission changes warehouse operations during the busiest time of year.

"It's like road construction," he said. "It's an investment. It's inconvenient while they are doing the construction, but hopefully once construction is over and the road is smooth, newly paved and well-marked, everything is good."

Clutter is among the NHLC clients with the most charitable perspective on a transition that, by many accounts, has been anything but smooth.

It's been four weeks since Exel, a subsidiary of DHL, took over as warehousing and trucking agent for the Liquor Commission, ending a 40-year relationship between the commission and Law Warehouses of Nashua. After a rocky start, some say the situation has improved, but others say problems remain and need to be resolved quickly.

Chris Pappas, general manager of the Puritan Backroom in Manchester, said he repeatedly experienced ordering glitches in early November, but such missteps have become less frequent lately. Pappas, who represents District 4 on the Executive Council, described the progress as steady and encouraging.

"I'm hopeful that over time we can get this right. This is a very important relationship for the state, and this is a very critical time of the year," Pappas said. "There were a lot of pretty significant issues. Over the last month, the Liquor Commission and Exel have been working through those."

Now that Thanksgiving has passed, the fixes can't come fast enough for some.

"I can only hope that it gets better and is at 100 percent starting for December sales," said Steve Fortune, president of Fortune Wine Brokers in Dover. "It's been very difficult adapting to the new system. It's so different from Law. You miss a lot of the relationships and the ease of reporting that came with Law."

The Liquor Commission is in the middle of a massive transition, in which thousands of cases of wine and spirits have to be transferred from Law Warehouses to the new Exel warehouse in Bow, while new shipments are arriving at Bow from wholesalers and distributors.

Restaurant owners, unable to get their orders filled in time, are stocking their bars by making trips to the state liquor outlets, depleting the shelves of inventory for retail consumers. Truckers complain about having to wait up to a week for appointments to make deliveries or to pick up orders at the Bow warehouse. Some customers have received orders that were incomplete or contained the wrong product.

"I had wine delivered, but there were certain lots of wine missing," Fortune said. "So I have to spend numerous hours tracking and figuring things out. I have to micromanage the situation. It's taking a tremendous amount of time. It's really affecting our overall sales in a negative way."

More effort required

Fortune is among those who say talk of turning the corner is premature. "It's frustrating to hear from our dear accounts that make us a living that they have received mis-picks, meaning the wrong items, and that their orders were incomplete," he said on Tuesday. "This is happening today, so it's not like it's turned around."

Fortune's problems are similar to those reported by others in the liquor and wine business, many of whom asked to remain unidentified out of concern they might disrupt their relationship with Exel or the NHLC.

A major marketer and distributor, Fortune said he spent the better part of two weeks arranging for the Bow warehouse to accept a truckload of wine from California, which required a confirmation number from the warehouse.

"It took me a whole morning of administrative tasks to get that number," he said. "Law required appointments, too, but for smaller loads, it was a lot easier. With Law, you could deliver up to 140 cases at any time. Anything over that, you did need an appointment, but it was a lot easier to get them."

At the retail level, April Provencher, manager at the 900 Degrees pizzeria in Manchester, said the problems have been persistent. "We have not yet seen an improvement," she said on Monday. "It's been taking up to a week for us to get our deliveries, with no communication from the delivery companies or the state. And when they do come, we've gotten a case or two that wasn't meant for us, which is in turn an issue."

Like many restaurateurs, Provencher has been making several trips to local retail liquor outlets, where the NHLC is honoring the wholesale price for licensees. "All the restaurants just keep going to the stores and getting what they need," she said. "We can't just say 'no' to our customers. We have to make it happen regardless."

Signs of improvement

Others in the liquor and wine business say conditions have been improving since the first two weeks of the transition, when the warehouse could not process half-cases or mixed-case orders and trucks idled in the parking lot for hours.

"I have seen some improvement," said Diane Downing, manager and owner of Firefly American Bistro & Bar in Manchester. "It was better last week than it was the first week. We've still had a few trips to the liquor store, of course."

Like other sources interviewed for this story, Downing questioned the timing but expressed optimism about the long term.

"This is a busy time of year for retail and restaurant operations, so it was a bit of an ambitious undertaking with the holidays approaching," she said. "I will say the folks at the Liquor Commission and the (Exel) management in Bow have been very cooperative, and I'm confident they'll iron out the rest of the kinks moving forward."

Randy Barnhart, general manager of Southern Wine and Spirits of New England, said conditions now in New Hampshire are similar to those for a brief time in 2004, when the Maine liquor commission moved its warehouse operations from Portland to August.

"There were disruptions and difficulties then, as well, but very shortly thereafter, that system settled down and worked out very well," he said. "I feel that the people at Exel and the Liquor Commission are working their tails off, working around the clock, but they are replacing a system that's been in place for 40 years with the previous provider. When you do something of that magnitude, there are going to be some disruptions. One year from now, or six months from now, this is going to be a very well-run and efficient system."

Many in the industry wonder why the transition had to take place during a period of peak customer traffic.
NHLC Chairman Joe Mollica said the contract with Law expired in November, although the state did obtain an extension to Dec. 31 to complete the transfer of existing inventory from Nashua to Bow. Mollica said the state expects the transfer to be completed by Dec. 13.
The NHLC has contracted for additional warehouse space in Londonderry so that all transfers from Law can go there until the process is completed and not clog up the loading docks at the Bow warehouse as new inventory arrives.
"Really, there is no opportune time to make a change of this magnitude," Mollica said in an interview at the Bow warehouse. "You have to make the change and work with your business partners to make the transition as smooth as you possibly can."

War of words

Things might have been different if the transition of inventory from the Law Warehouses had begun earlier than mid-October. "It was our hope to begin transitioning product from Law to Exel in mid-September," said Exel spokeswoman Lynn Anderson. "Unfortunately, Law did not agree to begin transferring product until mid-October."

Law spokesman Paul Young said that's simply not the case.

"Law was willing to start the transition process earlier, but the Liquor Commission and Exel did not have a transition plan in place until mid-October," he said. "Only at Law's insistence did they finally come in with a plan very late, and the reality that they are having predictable issues is a sign that they did not plan well for the transition."

Law is continuing its lawsuit over the transition to Exel, claiming the bidding process was rigged, so the war of words is likely to continue, even as the liquor industry tries to move on.

"It saddens me that these avoidable transition issues were not addressed and our many long-term customers are being hurt," said Brian Law, whose father initiated the relationship with the Liquor Commission in the 1970s. "The poor transition is just one of the reasons why we believe we offered the Liquor Commission and the state of New Hampshire the best deal."

dsolomon@unionleader.com



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