Newspaper article The Florida Times Union

Liquor Group Finds an Edge; the Successful Alcohol-Distribution Company Bucks System with 'Bailment.'

Newspaper article The Florida Times Union

Liquor Group Finds an Edge; the Successful Alcohol-Distribution Company Bucks System with 'Bailment.'

Article excerpt

Byline: MARK BASCH

In the tightly controlled and highly competitive business of alcohol distribution, C.J. Eiras, chief executive of Liquor Group Wholesale Inc., thinks his company has an edge over others in the industry.

"We don't buy any of the inventory," Eiras said, referring to a "bailment" system of deferring payment for inventory.

"That allows us a tremendous advantage over any other distributor," he said.

Liquor Group is a publicly traded Jacksonville-based company that distributes alcoholic beverages in 33 states. Eiras said his company's bailment system is unique in the industry.

In the U.S., alcoholic beverages are distributed mainly through a three-tier system in which manufactures sell their products to distributors, who in turn sell the products to retailers.

But under the bailment system used by Liquor Group, the company does not pay the manufacturer when it handles a shipment. When a retailer buys products under Liquor Group's control, Liquor Group collects the payment from the retailer, keeps a commission, and sends the rest of the payment on to the manufacturer.

Eiras said the bailment procedure keeps the company from borrowing perhaps millions of dollars it would need to finance inventory if it had to pay the manufacturer when it took possession of products.

"It's a very minimal risk of exposure," he said. "We're not investing our money in someone else's product."

Eiras said Liquor Group's system is unique because of a favorable ruling it received two years ago from the U.S. Alcohol and Tobacco Tax and Trade Bureau on its system. He said the bureau has not approved the system for any other distributor.

A spokesman for the Tax and Trade Bureau said the agency cannot comment on individual companies. But shortly after Liquor Group announced in March 2009 that its bailment system was approved, the agency posted a list of guidelines that companies must follow to operate a bailment system.

The system seems to be paying off. Liquor Group reported net sales of $5.1 million in the fiscal year that ended on Aug. 31, up from $958,775 the previous year. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.