Liquor store operators around the country have confronted a host of challenges in recent years, but for the largest liquor-store chain in Alaska, those troubles are small when compared to the ever-present challenges of weather and the state’s topography. Snow, rain, and making product available to customers in Alaska’s vast wilderness are all part of a day’s work at Anchorage-based Brown Jug. “Weather here can be a bigger challenge than a competitor,” says Ana Fisk, president of Afognak Commercial Group, LLC, which oversees Liquor Stores USA North (dba Brown Jug).

Still, Brown Jug has endured it all and after nearly 90 years in business, the chain continues to handily serve its customers and tourists in southern Alaska, as well as ensuring orders arrive efficiently to consumers and businesses in the state’s rural areas. Indeed, since its acquisition by a local corporation four years ago, Liquor Stores USA North (LSUN) has acquired and opened new stores, updated others, put a greater emphasis on its digital capabilities, and a bigger spotlight on the in-store experience. The chain comprises 24 stores, including the recently acquired Gold Rush location in Anchorage, and employs some 230 workers. Spirits account for 41% of sales at Brown Jug, followed by beer at 30%, wine at 15%, and all other merchandise at 14%.

According to Bruce Abbott, recently named president of LSUN, while store sales last year were affected by inflation and the economic uncertainty that confronted most retail businesses, “Brown Jug fared much better than others, thanks to our strategic locations, management, and excellent pricing.” While the company declines to disclose annual sales, Fisk confirms that a reported $80 million in sales revenue in 2020 is accurate, but that it’s considerably more today. 

Storied Past

Brown Jug was founded as an operator of taverns and roadhouses in 1937 by the O’Neill family, who owned the company for more than 50 years. By the ’60s, the business had expanded into liquor stores, and for the next few decades, more locations were added, including in Wasilla, Eagle River, and as far north as Fairbanks. In 2008, Brown Jug, by then owned by partners Ed O’Neill and Lowell Shinn, was sold to Alcanna, the operator of liquor stores in Canada. Then, in 2020, the chain was acquired by Afognak Commercial, a subsidiary of Afognak Native Corp. Last year, the single-unit, 25,000-square-foot Gold Rush was added to the portfolio.

Afognak is an Alaskan Native Corp., formed under the 1971 Alaska Native Claims Settlement Act, and represents over 1,000 shareholders descended from the Village of Afognak. Its diversified subsidiaries include Alutiiq LLC, which, in addition to other capabilities, provides security services for federal entities, and Afognak Commercial. According to Fisk, the acquisition of the liquor store chain has provided the organization with “a strong foothold in the Alaska business community, given the brand’s long-standing history and contributions across the state.” The fact that beverage alcohol retailing is highly regulated made for an “ideal fit,” continues Fisk, citing Afognak’s reputation for strong regulatory compliance. “We have certainly learned a great deal about the innerworkings of retail operations and regulations” in the four years since the deal, she says, crediting Brown Jug’s management team for providing the necessary expertise to make the transition seamless.

Similar to other states, liquor stores in Alaska compete with other trade channels, including grocery and big box stores, for beer, wine, and spirits sales. But a unique service that the stores provide is the sale and shipment of product to remote areas of the state, often towns and villages with no network of roads, requiring that product be shipped by modes such as freight carrier. “A significant portion of Alaska’s population resides in rural communities inaccessible by road,” explains Fisk. “There are also many remote lodges in operation catering to tourists, especially during summer months, that need support and supplies to their businesses. Brown Jug and Gold Rush provide rural orders that maintain strict compliance with Alaska’s complex laws.” Among those complexities are the many dry areas in rural Alaska, restrictions on frequency of shipping, and adherence to the state’s prohibition on sales to certain individuals. When product is shipped to a remote area, it’s not delivered to a home, but to a “will call” location, such as a local post office, where proof of age is checked.

Recently enacted legislation, however, is designed to update and modernize the way Alaska retailers, wholesalers, and suppliers go to market. Fisk says that among the changes is the way retailers perform rural orders; she’s hopeful that the revisions will streamline the process. Other changes include the ability for retailers to offer in-store wine and spirits sampling, events that at press time Brown Jug and Gold Rush were preparing to offer.

‘High-Water Mark’

Brown Jug stores run the gamut in size—from 1,400 square-foot “convenience” locations to the 40,000 square-foot warehouse on Old Seward Highway in Anchorage. Among the stores’ features are beer growler stations and large cigar humidors. At the newest Brown Jug in south Anchorage, opened in 2023, a section labeled “The Cache” offers rare and exclusive wines and spirits.

The chain stocks 3,500 spirits SKUs, priced from $10 a 750-ml. of Calypso Gold rum to $9,000 for the 40-year-old Balvenie single malt. Top-selling brands include Rich & Rare Canadian whisky ($12) and Smirnoff vodka ($15). According to Abbott, rising prices are beginning to impact some spirits sectors. “We believe that whisk(e)y has reached a high-water mark in our market,” he says. “As rising costs have cut consumer spending and price increases continue, we expect to see consolidation in the high-end Bourbon segment as customers are priced out of the category.” Similarly, Abbott is seeing customers trade down in vodka, with Smirnoff the big beneficiary. But in other categories, consumers continue to splurge, he notes, such as luxury Tequila and cordials and liqueurs, where products like Five Farms Irish cream ($35) are gaining. The chain has offered single-barrel spirits for more than 20 years, Abbott says, and the program continues to grow, with dozens of picks released last year alone. Among the brands Brown Jug has partnered with on single barrels are W.L. Weller, Eagle Rare, Four Roses, and Yellowstone.

Brown Jug stocks 1,600 beer SKUs systemwide, generally priced from $6 a 6-pack of Steel Reserve to $22 for Weihenstephaner pilsner. The average store features 15 cooler doors, and top-selling labels include Coors Light, Corona Extra, Denali Twister Creek IPA, and Twisted Tea Hard Iced Tea. “We’ve seen a decline in domestic beer and an increase in FMBs, mostly fueled by Twisted Tea,” says beer category manager Nicole Pearce. “Local craft beer continues to grow, but not at the rates we’ve seen in the past.” 

More than 3,000 wine SKUs are offered at Brown Jug, priced from $7 a 750-ml. for Cul de Sac Cabernet Sauvignon to $1,000 for the 1934 Meneres Colheita Port. “Alaska is a very strong box-wine market,” says Abbott, “with 3-liter boxes making up a significant portion of our wine business,” led by Bota Box ($20). Among varietals, he points to Sauvignon Blanc, especially from New Zealand, along with domestic Sangiovese and Grenache, as growth areas. But Abbott expresses concern about the impact that changing demographics are having on the wine category. “Newer drinkers aren’t making wine their beverage of choice like previous generations did,” he says. “This is an issue that will affect all wine retailers, distributors, and suppliers.”

Brown Jug boasts the only certified cigar sommelier in Alaska in Whitney Hillman, the company’s category manager for non-alcoholic and tobacco products. With nearly 90 SKUs in its humidors, the stores focus on exclusive and limited-edition products, she says, with prices ranging from $7 a stick to $100 and more.

Digital Diligence

While Brown Jug continues to utilize traditional advertising tactics such as television, radio, and printed mailers, the chain has been quick to shift to the digital space. According to digital marketing and events manager Kellen Pierce, Brown Jug leverages platforms like Facebook, Google, and YouTube, as well as email and text messaging to reach consumers. “Our direct contact database makes up about 5% of the entire state population,” he says. A new app with the capability for rural ordering and a loyalty program are planned to launch this year. “Using consumer data to better deliver relevant promotional offers are key goals for our digital marketing efforts in 2024,” says marketing and proposal manager Daryl Griggs.

In- and out-of-store events have also featured prominently for Brown Jug in recent years. “The jewel in our events crown is ‘Weekends of Whiskey,’” Griggs notes, held every year in September, with events such as tasting dinners, bottle releases, and bottle signings staged at the stores and at local on-premise venues. “This event generates significant revenue for Brown Jug and brings hundreds of customers to our stores,” says Fisk. The chain’s wine-tasting dinner series, meanwhile, is staged at venues in Anchorage and Fairbanks and features multi-course dinners with wine pairings, led by Abbott. For his part, Abbott is excited about the ability to now sample products in store. “It will be a game changer for retailers in the state,” he says.

Brown Jug vice president Leo Abate is particularly proud of the chain’s continued support of community organizations. “Our brand identity is ‘locally owned and community minded,’” he says. Among the local causes the chain and its parent company have aided are the Food Bank of Alaska, Alaska Native Heritage Center, and Covenant House Alaska.

Looking ahead, Abbott believes that digital inroads are the immediate route to growth for Brown Jug. “Innovation in the digital realm will be where expansion activities occur, and as a statewide retailer, it’s vital to our business to think about all our customers across the state,” he says. There aren’t any immediate plans to add stores; rather, Brown Jug is focusing on further driving the contributions of its existing stores. “We’re pretty happy with where we’re at now,” Abbott notes. “We’re just interested in improving the performance of the current group of stores and the experience for the customer who comes in.”