RALEIGH — The North Carolina Office of the State Auditor has released a performance audit of the vendor that handles warehousing and statewide delivery of liquor for the Alcoholic Beverage Control Commission.
“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,” State Auditor Dave Boliek said in a statement on the report.
“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,” said Boliek.
The March 2026 report examined LB&B Associates, which has managed the state’s liquor distribution under contract since 2004. The current contract runs through 2031 and cost $21.9 million in state fiscal year 2025.
Distillers ship liquor to two state-owned warehouses in Raleigh and Clayton. LB&B receives those shipments, stores the inventory, and delivers it to the 452 local ABC stores operated by 171 local boards.
North Carolina is one of 17 states that control and regulate the sale and distribution of alcoholic beverages.
Auditors reviewed five contractually required key performance indicators for the eight quarters in fiscal years 2024 and 2025.
LB&B met the targets for cost metrics, order accuracy and safety reporting in every quarter. Invoices and fees were accurate and timely, orders were filled with 99% accuracy and safety reports were submitted on time.
The audit found the vendor did not meet the on-time delivery standard in any quarter.
The contract requires 99% of deliveries to local stores to arrive within 30 minutes of the scheduled time in fiscal 2024 and within one hour in fiscal 2025. Actual on-time performance averaged 96.4% across the two years, ranging from 96.3% to 98.1% in individual quarters.
Most delays were caused by driver shortages, mechanical problems with vehicles and severe weather.
LB&B also missed the fill-rate target in one of the eight quarters.
The contract calls for a minimum of 165,000 cases shipped each week. The single shortfall occurred during a period of lower seasonal demand after the holidays. In the other quarters, weekly shipments ranged from 166,000 to 189,000 cases.
The audit also summarized revenue generated by liquor sales.
In fiscal 2024, the system distributed $713 million in public funds. In fiscal 2025, it distributed $696 million. Combined, the two years produced more than $1.4 billion.
Roughly $1.1 billion went to the state’s General Fund, $243.9 million to counties and municipalities, $29.4 million to local law enforcement, $38.3 million to alcohol education, $8.4 million to county rehabilitation programs and $5.1 million to the Department of Health and Human Services.
Tito’s Handmade Vodka was the top-selling product in both years, with more than 300,000 cases sold.
The five local boards with the highest gross sales in fiscal 2025 were Mecklenburg County ($280 million), Wake County ($222 million), Greensboro ($81 million), New Hanover County ($73 million) and Triad Municipal ($66 million).
The audit made four recommendations to the ABC Commission:
- Continue working with LB&B to address the root causes of late deliveries, including contingency plans for fleet maintenance, driver availability and severe weather.
- Focus on route-level improvements for deliveries that are frequently late.
- Use historical data to plan for seasonal changes in demand, and adjust staffing and routes accordingly.
- Strengthen KPI tracking with real-time tools and require quarterly improvement plans when targets are missed.
In its response letter, the ABC Commission accepted the findings and said it is already taking steps to improve performance, such as substituting vehicles from a transfer fleet during mechanical breakdowns, using on-call drivers and coordinating with local boards during inclement weather.
The commission also plans to use trend analysis on recurring late routes, combine routes during slow periods and hold quarterly operational reviews with LB&B.
The full report, including appendices on local board revenues, top-selling products and rare items, is available at tinyurl.com/NSJ-ABCAudit.
