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Texas Titan: Twin Liquors Now Up To 67 Units As In-State Expansion Continues Apace

October 7, 2011

Austin-based Twin Liquors is one of Texas’s beverage alcohol retail giants. The 67-unit chain is run by the brother and sister team of David and Margaret Jabour, who serve as president and executive vice president of the 78-year-old business, which was founded by their grandfather and uncle shortly after Prohibition’s repeal. As third-generation owners, the Jabours take a long-term view, focusing on industry relationships and educating customers. Revenues aren’t made public, but reliable industry sources put Twin Liquors among the top three beverage alcohol retailers in Texas with annual sales of more than $200 million, behind only Houston-based Spec’s and Dallas-based Centennial. Shanken News Daily recently spoke to David and Margaret about trends in Texas, as well as their new interactive marketplace store concept.

SND: Competition for scale in the Texas liquor retail business has intensified since Centennial’s purchase of Majestic last year. It’s my understanding that you’re now neck-and-neck with Centennial.

David: Our 67th location opened about six weeks ago—in Killeen in central Texas. It’s a mini-marketplace concept, with 6,000 square feet of space. We’re currently under construction with two other new stores: a large-format marketplace store in San Antonio, which will be opening in about a month, and another one in College Station.

SND: What’s your marketplace concept all about?

David: It’s a fully interactive concept that’s focused on education—with a classroom and education center that has a full tasting bar with an on-premise feel. We conduct mixology seminars, winemaker dinners and classes there.

SND: How many marketplace stores are you operating currently?

David: The San Antonio store will be our third large-format marketplace store, at 15,000-square-feet.

SND: And you have mini-versions of the concept as well?

Margaret: Yes, those are what we’re focused on now—they’re half the size of the marketplace stores and have the tasting bar and education room. The direction we’re going in is education, education, education.

SND: How many mini-markets are you currently operating?

David: We currently have about six of those concepts.

SND: And how did you determine that this was the best strategy for you going forward?

Margaret: We’ve always believed in education and sought to attract female consumers to elevate the industry. That started when David and I entered our business as the third generation back in the early ‘80s. So it’s not an entirely new concept.

SND: Does this include spirits education as well?

David: It’s wine and spirits, with a big focus on mixology and the cocktail culture.

Margaret: Twin Liquors hosts a 12-week, 12-session mixology class for our customers who want to learn how to make their favorite cocktails. We work in affiliation with a person who does education as part of our team, and customers pay $250 to attend. We also offer a complimentary class called Wine 101 in all our marketplace and mini-marketplace stores.

SND: What’s your position on private label business?

Margaret: We’re not proponents of private label. We’ve built this business around the great relationships we have in the industry. We basically work with our two major distributors (RNDC and Glazer’s) and national labels. Our focus has always been with national labels from major suppliers.

SND: Even with many of the biggest beverage alcohol merchants in the country now doing big private label business to bolster their bottom lines?

David: We just don’t do it. It’s a fundamental philosophy of how we operate.

SND: And you’re still able to operate at margins that work for your company?

David: Thin margins.

Margaret: Not as big as if we were doing private labels.

SND: How has the economy impacted your markets?

David: Consumers have been focused on value, and we’ve continued to find it for them. But people can recognize value at all price points. We’ve done some things with hundred-dollar-plus wines for shoppers who wanted to enjoy wines of that caliber but just didn’t want to pay full price. So we communicated with our suppliers and said, “Do you want to sell some wine or do you want to sit on it?” The consumer is still willing to buy high-end—they just wanted better value.

SND: What is the sweet spot for you in terms of wine pricing?

David: $20 and under. That’s clearly where there’s velocity for us.

SND: In this new marketplace concept of yours, is there any food component? Do you sell food items of any kind?

David: We don’t, primarily because we have a strategic alliance with HEB, a prominent grocer in Texas. The vast majority of our locations are in HEB-anchored centers. So we don’t focus on food. And there’s not a better grocery retailer in the country, in our opinion, than HEB.

Margaret: We take care of the people we do business with. We look out for them first, so we’re building businesses together. So it works very well—HEB will come to us now and definitely want us in their location. Our specialty is wine and distilled spirits.

SND: Market Watch has reported that about 45% of your revenues come from your Class B wholesaling license, which enables you to distribute spirits, wine and beer to the on-premise market. Are you still wholesaling at that level?

David: As we continue to heighten the pace of our retail growth, that percentage has come down to approximately 30%. But we still do a healthy piece of business in the wholesale trade.

SND: How closely do you track the competition?

Margaret: Most retailers look at their competitors and say, “Oh, I’ve got to do this or that.” We have never, from day one, ever looked at the competition. We started out on our own path and conduct business our way. So our competitors can state what they’re doing or how they’re growing, but we know the path we want to pursue—and that’s the Twin Liquors way.

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