New Performance Audit Highlights ABC System Operations, Revenues, Best Sellers

The North Carolina Office of the State Auditor (OSA) has released a performance audit of the Alcoholic Beverage Control Commission (ABC Commission), providing in-depth analysis on vendor performance, along with information on revenue generated from liquor sales, Local ABC Boards, and the top-selling liquors in North Carolina.

North Carolina is one of 17 states in the U.S. that directly regulates the sale, purchase, and distribution of alcoholic beverages. Across the state, 171 local ABC boards operate 452 retail stores, serving both individuals and businesses such as restaurants and bars. Liquor is warehoused in two state-managed facilities in Raleigh and Clayton, with warehousing and distribution managed by LB&B Associates under a state contract. The current contract with LB&B runs through 2031, and payment most recently reached $21.9 million for State Fiscal Year 2025.

"North Carolina's ABC System is a major source of state funding that comes with lots of intricacies, and our performance audit examined and provided layers of data behind that system," said State Auditor Dave Boliek. "With key performance measurements holding the state's alcohol distribution process to a high standard, this report gives a transparent overview of the supply, demand, costs, and where some improvements can be made."

Key Performance Audit Findings

OSA evaluated LB&B in five contractually required Key Performance Indicators (KPIs) for warehousing and distribution. Of the five KPIs, LB&B met requirements for cost metric, outstanding claims, and safety performance for all eight quarters reviewed. LB&B did not consistently meet the KPIs for on-time delivery and fill rate.

• Cost Metric: All bailment and surcharge invoices and fees were accurate and timely.
• Outstanding Claims: Order accuracy was consistently high, with 99% accuracy achieved in all quarters.
• Safety Performance: Safety reports were submitted on time in all quarters.
• On-Time Delivery: The on-time delivery KPI was not met in any quarter, with an average on-time percentage of 96.4% (target was 99% in SFY 2024 and 98% in SFY 2025). Most delays were attributed to driver shortages, mechanical issues, and severe weather.
• Fill Rate: The fill rate KPI (minimum 165,000 cases shipped per week) was not met in one of eight quarters, corresponding with a seasonal reduction in demand after the holidays.

In State Fiscal Years 2024 and 2025, the ABC system generated $713 million and $696 million in public revenue, respectively. These funds were distributed to the State's General Fund, counties and municipalities, alcohol education, law enforcement, rehabilitation, and health services.

Top 5 Local ABC Boards SFY 2025 & SFY 2024 Distributions by Gross Sales:

1. Mecklenburg County: $280,085,705
2. Wake County: $222,276,672
3. Greensboro: $80,819,076
4. New Hanover County: $72,611,286
5. Triad Municipal: $66,066,881

ABC "Best Sellers" data shows that North Carolinians buy Tito's Handmade Vodka far more than any other product sold in ABC stores. In SFY 2024 and SFY 2025, Tito's sold more than 300,000 cases of varying sizes-well ahead of any other brand or spirit type.

The ABC Commission accepted the findings and recommendations included in the audit, noting in its response that, "In addition to its importance to the citizens of our state, this performance audit process helps the ABC Commission team highlight concerns and gain valuable insight into solutions and opportunities for improvement."