It is said that Washington is a one-industry town, and that Uncle Sam is its chief industrialist. But private business in Washington is also a force to be reckoned with. While neither retail nor wholesale business in the District is without problems, each is experiencing a boomlet. The following is the last in a series of portraits of persons who are in private business in Washington.
Chester C. Carter Jr. lives with the knowledge that his business can either grow a little or shrink a lot. He may deal liquor, but he depends on whim.
"When the guy goes in the store, he has to decide whether it's going to be the $2 stuff or the top of the line," Carter says. "I've read market research stuff till my eyes fell out, and I still don't know why he'll choose one or the other. But that's the challenge."
It is an especially great challenge for Carter. His company, Capitol City Liquor Co., Inc., has a higher percentage of top-of-the-line sales (65) than any other wholesale alcohol company in Washington.
Add to that the fact that Carter has been in business only six and a half years, that he had little previous wholesaling experience and that he is a nice guy, and you have the seeds of failure, right?
Capitol City grossed $10.5 million in 1975 and expects to have hiked that to about $11 million when 1976 figures are totalled. It was the 12th largest black-owned business in the country in 1974, and climbed to 10th in 1975, even though its gross fell by about $500,000.
Capitol City employs 59 people, most of whom make either $6.25 an hour (drivers) or $5.50 an hour (warehousemen). It turns over an inventory worth several million dollars every month. It deals with about 950 Washington liquor stores, bars, restaurants and hotels. Its headquarters at 645 Taylor St. NE cover 54,000 square feet.
So this is big business, Washington-style. If Capitol City is hurting, it is because the District's wholesale liquor tax is now 6 per cent, compared with Maryland's 4. That costs Carter and his four chief competitors an extra $1.50 per gallon, which of course is passed on to the customer, which of course has hurt sales.
But not that badly. "I find at the end of the year that it works out; it averages out," Carter said. "The gy who bought $100,000 last year will buy maybe $101,000, maybe $97,000 this year. You don't have that explosive element in the liquor business. There's always a reasonably good profit."
Particularly if you are Capitol City and you have D.C. distribution rights for Chivas Regal scotch, Seagram's V.O. whiskey, Tanqueray gin and Crown Royal Canadian whiskey, among others.
"The more seasoned drinkers tend to gravitate toward the better brands," Carter said. And both tend to be found in Washington, where cocktail parties are common and the convention business is brisk.
"It's not a matter of everybody here getting bombed every hour of the day," Carter said. "It's just that Washington is class-conscious and quality-conscious."
Washington is unusual in another respect. Whereas 35 per cent of the nation's wholesale liquor business is done with bars and hotels, only 15 per cent of Washington's is. Although he acknowledges the inefficiency of having to service many widely scattered locations, Carter calls it "just the realities of the (Washington) marketplace."
Another reality is the District government. Carter is one of its many critics. He charges that business "is not encouraged enough" by city officials.
"They just have not put business in a priority perspective," Carter said. "The government should be responsive to the people. You can't fault them for that. But business should be just under the people or co-equal with the people."
In a general way, Carter said, the District may be in serious trouble if it does not attract new industry. He said it can do that only by "offering inducements," probably in the form of tax breaks. "I don't think 'y'all come' will do it," he said. "The city is going to have to give something."
Carter, 55, has been a Washingtonian for most of the last 14 years. A lawyer and former deputy U.S. chief of protocol under President Johnson, Carter helped establish the Peace Corps in Africa and later served as deputy assistant secretary of state for congressional relations.
When he left the government in 1968, Carter became an executive with Seagram's Distillery in New York. Two and a half years later, with the help of what he called "private New York capital sources," Carter bought Capitol City, and the Seagram's connection along with it.
The average annual gross was about $13 million at the time, and although it has risen and fallen since, the overall slope of the curve is downward. Moreover, Capitol City was Washington's fifth largest liquor wholesaler in 1970, and it still is.
Carter said, however, that Capitol City has made a profit every year under his leadership. He declined to say how much of one.
It might appear difficult to expand a business like Capitol City. It does no local advertising and cannot increase its sales very much unless the number of retailers expands.
Besides, every name national brand has a long-standing relationship with a local, distributor, and hustling away someone else's business is impossible because of contracts between bottler and distributor. Nor will retailers buy more than they can sell quickly.
The answer, Carter said, is smart marketing and the introduction of new brands.
Vodka, for example, now accounts for 47 per cent of national sales, Carter said. Wolfschmidt's, which he handles and which is relatively new to Washington, is third in local vodka sales behind the established pair of Smirnoff and Gilbey's.
"My competition does better than I do because they've been established longer," Carter said. "There's a lot to be mastered."
His race has not proved to be "a bit of a problem," Carter added. "Nobody's recoiling from me because I'm a black man. If they are, they're very clever at masking it."
The one unusual problem Capitol City has is that it is the city's only liquor wholesaler with unionized salesmen. "The cost of doing business is up 25 per cent since I took over," Carter said. "No question about it, contracts are expensive."
But it is all part of what Carter calls "the opportunities and challenges of doing business here." Will this lawyer and diplomat return to one of those worlds when and if the challenges fade? "I have no interest in doing anything but being in business," he said.