Gov. Glenn Youngkin didn’t have far to look for a new chief executive officer at the struggling Virginia Alcoholic Beverage Control Authority.
Youngkin announced on Tuesday that he is appointing Dale Farino, a retired alcoholic beverage distribution executive whom he named to the ABC Board last month, to lead the authority.
The governor also announced that he is replacing Farino as vice chairman of the board with Mark Stepanian, the former owner and CEO of Loveland Distributing Co., a beer wholesaler based in Richmond, which is now owned by Premium Distributors of Virginia.
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“Dale Farino’s exceptional background in both national and international beverage distribution positions him perfectly to lead the Virginia ABC,” the governor said in a written statement. “His strategic insights and operational expertise are vital as we continue to enhance our services, increase revenues, and enforce the regulations that keep Virginians safe.”
The appointments come as ABC awaits the resolution of a state budget dispute that will determine both its level of independence from the governor’s control and the amount of profit it is expected to generate for the state over the next two years. The authority conceded this year that the state-owned liquor monopoly will produce $110 million less in state profits than the Youngkin administration had required in the budget that the ABC board adopted in August.
Farino, retired executive vice president of Breakthrough Beverage Virginia, made clear in a board meeting last month that he did not see how declining liquor sales could support the 5% annual growth in revenues that ABC included in its budget and the governor used in the five-year revenue forecast that he gave the Governor’s Advisory Council on Revenue Estimates last fall.
“I’m trying to find out where the disconnect was,” he said last March at the first board meeting for him and Lisa Jennings, whom the governor also had just appointed.
Youngkin’s office touted Farino’s experience at Breakthru, as well as previous leadership roles at Tidewater Wholesalers, The Coca-Cola Bottling Co. and as former president of the Wine Wholesalers Association.
“These experiences sharpened his experience in managing large-scale operations and developing strategies that respond effectively to dynamic market needs,” the governor’s announcement states.
ABC is coping with a nationwide trend of declining liquor sales, as consumers seek to save money by buying cheaper brands in smaller bottles and legal cannabis sales cut into the market share for alcoholic beverages.
The previous authority board adopted a revised budget based on 5% annual growth in revenues under pressure from Youngkin and then-Chief Transformation Officer Eric Moeller to slash operating expenses and boost the level of profits that ABC transfers to the state general fund budget.
Subsequently, longtime CEO Travis Hill resigned in November, leaving Tom Kirby, chief of law enforcement at ABC, to lead the authority on an interim basis.
Sales already had begun to decline in July, but the bottom dropped out in January, leading the ABC board to consider a revised forecast that would leave the authority about $5 million short in profits this year, $44 million under forecast in the fiscal year that begins on July 1 and $66 million short in the following year.
The board never adopted the revised forecast, despite pressure from legislators, but Youngkin lowered the profit expectation in the revised budget he submitted to the General Assembly on April 8. The governor and legislature then committed to negotiating a compromise to consider in a special assembly session that will convene on May 13.
“I look forward to leveraging my industry experience to advance ABC’s mission and to serve the citizens of Virginia,” Farino said Tuesday.