6-Attch B DABS Market Study SOW 2026 Final.docx

Utah Department of Alcoholic Beverage Services – 2026 Market Study — Statement of Work Attachment B

UTAH DEPARTMENT OF ALCOHOLIC BEVERAGE SERVICES

STATEMENT OF WORK

2026 Statewide Market Study

Part I — Introduction The Utah Department of Alcoholic Beverage Services (DABS) is seeking a qualified contractor to conduct a comprehensive, statewide market study for 2026. The objective of this project is to:

• analyze the current and projected need for alcoholic beverage retail access across the State of Utah from the Idaho border to the Arizona border and from the Nevada border to the Colorado border;

• evaluate the use and placement of package agency operations under Utah Code Title 32B, Chapter 2, Part 6, Package Agency;

• assess the capacity and operational sustainability of DABS distribution infrastructure, including the potential need for a secondary distribution center off the Wasatch Front;

• analyze how DABS’s forthcoming e-commerce platform will influence retail demand patterns, distribution operations, and access to alcoholic beverages statewide;

• identify the locations of any new state-owned stores warranted by growth;

• examine lease-versus-build financial incentives; and

• provide a comprehensive analysis of state-owned store performance and operational efficiency.

The successful completion of this project will result in a comprehensive market study that informs DABS executive leadership’s strategic real estate, retail access, and operational decisions for the coming years.

Part II — Background Statutory Authority In accordance with Utah Code § 32B-2-505, DABS is required to conduct a market survey every two years to inform its five-year building plan for state liquor stores that sell alcoholic beverages for off-premise consumption. Growth in demand for new liquor stores generally stems from organic population growth and migration from other states, increased consumption among current residents, and the tourism and convention industry. State law allows a maximum of one state liquor store per 48,000 persons.

Utah Code § 32B-2-601 governs the authority to issue package agencies and establishes a statewide cap: the total number of package agencies in operation may not exceed the state population divided by 18,000. Additionally, Utah Code § 32B-2-603 establishes specific criteria that the Alcoholic Beverage Services Commission must consider before issuing any package agency, including locality characteristics, access to the public, demographics, proximity to existing outlets, and the applicant’s operational capacity.

The previous market study was completed by Zions Public Finance, Inc. in July 2024. As the state continues to grow, DABS is looking to update its prioritization models and expand its analysis to include full border-to-border geographic coverage, consider package agency placement and distribution center capacity, the operational impact of a forthcoming e-commerce platform, and physical building conditions to ensure equitable access and operational efficiency statewide.

Distribution All DABS retail stores and package agencies are currently served by a single distribution center located on the Wasatch Front. As the state’s population grows and retail locations continue to expand into rural, southern, and eastern Utah, the logistics cost, delivery lead times, and safety risks associated with single-point distribution increase materially. This study must formally evaluate whether the existing distribution center can continue to serve statewide demand efficiently, and whether a secondary distribution facility off the Wasatch Front or additional distribution support at the current location is warranted to support service delivery.

Part III — Scope of Work The contractor is expected to provide a comprehensive market study that includes, but is not limited to, the following objectives. All analysis must be conducted on a statewide basis — border-to-border — with explicit attention to rural, frontier, border, and non-Wasatch Front communities.

3.1 Statewide Retail Demand Analysis

Determine priority market areas for new state liquor stores by analyzing demographic and performance data across all regions of the state.

• Analyze current and projected population using the Gardner Policy Institute, the U.S. Census Bureau, and the American Community Survey data, disaggregated by county, municipality, and rural unincorporated area.

• Apply the statutory one-store-per-48,000-persons metric (Utah Code § 32B-2-501) to identify all areas where unmet demand may exist.

• Evaluate store performance metrics, including bottles per labor hour, transactions per capita, sales per square foot, and sales per capita to rank current stores and identify priority expansion markets.

• Conduct border-to-border geographic coverage analysis, including rural and frontier counties that are frequently omitted from Wasatch Front-centric models.

• Identify cross-state draw demand: areas where Utah consumers regularly cross state lines to purchase alcohol, indicating unmet in-state access needs.

Analytical standard: Geographic analysis must use GIS-based drive-time and service area modeling. The contractor must define and document the drive-time threshold used (e.g., 30-minute, 45-minute) as the basis for access adequacy determinations.

3.2 Alcohol Desert Analysis

Conduct a border-to-border geographic and demographic analysis of the entire state of Utah to identify ‘alcohol deserts’ — defined as areas where consumers lack reasonable geographic access to any licensed retail outlet (state store, package agency, or off-premise beer retailer). As a foundational deliverable of this section, the contractor shall develop and propose a definition of ‘reasonable access’ tailored to Utah’s geographic and demographic conditions. This definition must be accompanied by a documented breakdown of the criteria used, including at a minimum: drive-time thresholds, population density weighting, road network conditions, and proximity to existing retail options. The proposed definition and criteria shall be presented to DABS executive leadership for review and approval prior to conducting the full analysis.

• Map all existing retail access points (state stores, package agencies, off-premise beer retailers) using current licensee data.

• Apply drive-time service area analysis at defined thresholds (e.g., 30-minute and 45-minute drive time) to identify underserved population clusters.

• Disaggregate results by rural vs. urban classification, tribal lands, and border communities.

• Quantify the population residing in identified alcohol deserts by county and region.

• Recommend the most appropriate access solution for each desert area (new state store, package agency, e-commerce fulfillment, or will-call location).

3.3 Package Agency Analysis (Utah Code Title 32B, Chapter 2, Part 6) Conduct an evaluation of existing package agency operations and provide recommendations for future package agency placements.

3.3.1 Statutory Cap Analysis and Recommendations

The contractor shall map geographic distribution of remaining cap capacity (state population / 18,000 per Utah Code § 32B-2-601) relative to unmet demand areas identified in the alcohol desert analysis and deliver a ranked placement recommendation list with supporting rationale for each recommended location to DABS executive leadership as part of the final briefing.

3.3.4 Border and Rural Community Analysis

• Specifically evaluate placement needs in border communities (communities adjacent to state lines) where cross-state purchasing is likely.

• Identify rural communities where a package agency — rather than a state store — represents the most cost-effective and operationally appropriate access solution.

3.4 Distribution Center Analysis

Conduct an analysis of DABS distribution infrastructure to determine whether the current distribution center can sustain projected statewide demand and whether a secondary off-Wasatch-Front facility is warranted.

3.4.1 Current Distribution Center Capacity Assessment

• Evaluate current distribution center square footage, racking capacity, throughput volume (cases per day/week/month), staffing levels, and hours of operation.

• Analyze historical capacity utilization trends and identify peak-demand stress periods.

• Assess safety conditions, facility age, and physical plant adequacy using DFCM condition data or equivalent third-party assessment.

• Evaluate order processing lead times and delivery frequency by region (Wasatch Front vs. rural/southern/eastern Utah).

• Document current delivery route structures and associated transportation costs by geographic zone.

3.4.2 Projected Demand Modeling

• Model distribution demand growth from present through 2030 and 2035 based on projected store count increases, package agency growth, e-commerce fulfillment volume, and will-call site additions.

• Identify the threshold (store count, SKU count, or volume) at which the existing facility would reach capacity under projected growth scenarios.

• Assess whether any planned store additions in the near-term planning horizon (2026–2028) would push the existing facility to or beyond practical capacity.

3.4.3 Secondary Distribution Center Feasibility

• Evaluate the feasibility and economic rationale for a secondary DABS distribution center located off the Wasatch Front, with particular attention to southern Utah (e.g., Washington County/St. George corridor), central Utah (e.g., Sevier County), and eastern Utah (e.g., Carbon/Emery County corridor).

• Analyze optimal secondary facility location using a gravity model or equivalent site selection methodology, accounting for delivery route coverage, road infrastructure, labor availability, land costs, and proximity to existing or planned retail locations.

• Develop a cost-benefit comparison: expanded primary facility vs. secondary distribution center vs. contracted third-party logistics solution.

• Estimate capital cost ranges for each option (land, construction/lease, racking, equipment, staffing).

• Model projected delivery cost savings, reduced lead times, and improved inventory reliability that would result from each option.

• Provide a recommendation matrix with a preferred option and sensitivity analysis across key cost and growth assumptions.

3.4.4 Distribution Center Expansion Project Evaluation

Evaluate whether the current t distribution center project’s design achieves its intended goals, including:

• Efficiency improvements in warehouse operations and order fulfillment.

• Service level expectations and success metrics.

• Improvement in picking accuracy.

• Safety and compliance standards.

• Trusted and timely delivery to all retail locations and package agencies.

• E-commerce fulfillment capacity and readiness.

Field assessment: The contractor must conduct at least one on-site visit to the existing DABS distribution center and must document findings with photographic evidence and a written condition assessment. Site visits to proposed secondary facility locations are encouraged.

3.5 Relocation and Expansion Analysis

Use total transactions, transactions per capita, sales per square foot, and sales per capita to rank existing state stores in terms of need for relocation or expansion. Determine specifically if a store expansion is necessary to keep pace with localized population and economic growth.

• Rank all current state stores on a composite performance and need-for-expansion score.

• Identify stores where physical constraints (square footage, parking, layout) are limiting revenue performance.

• Cross-reference expansion needs rankings against building condition scores from Section 4.6.

3.6 Building Condition Assessment

Physical building condition, based on DFCM facility condition reports, shall serve as a primary weighted factor in the contractor’s recommended market strategy. The contractor shall integrate building condition data alongside demand metrics and population growth projections to produce a unified, vendor-driven recommendation on whether each state store location should be replaced, remodeled, or expanded. Building condition findings shall be reflected directly in the contractor’s final recommendations to DABS executive leadership.

• Utilize DFCM facility condition reports as the authoritative data source for building condition assessment for all state-owned or state-leased DABS retail locations.

• Develop a standardized building condition scorecard (Poor / Fair / Good / Excellent) for each location based on DFCM report findings.

• Weight building condition score alongside performance metrics and population growth data in generating replacement, remodel, and expansion recommendations.

• Flag any locations with safety concerns, ADA compliance deficiencies, or structural deficiencies for priority capital action in the recommended market strategy.

3.7 Lease vs. Build Analysis

Analyze the relative benefits to the State of leasing versus acquiring or constructing new stores, evaluated against current Utah real estate market conditions.

• Benchmark current lease rates for DABS locations against market comparables in each region.

• Model net present value (NPV) of lease vs. build scenarios for high-priority new store locations.

• Account for DFCM design and construction timelines, land acquisition costs, and financing assumptions.

• Provide a decision framework for categorizing new locations as lease-preferred, build-preferred, or analysis-required.

3.8 Fiscal Impact Evaluation

Evaluate retail sales, economic impacts, and fiscal impacts — including generated sales tax revenues — to the local communities that host liquor outlets.

• Quantify local and state sales tax revenue generated by each current outlet.

• Estimate the incremental fiscal impact of proposed new stores, package agencies, or will-call locations.

• Assess economic multiplier effects on proximate businesses for proposed new locations.

3.9 E-Commerce Operational Impact Analysis

DABS is launching a new e-commerce platform that will enable consumers and licensees to place orders online for fulfillment through state distribution and retail infrastructure. The contractor shall analyze how the anticipated demand generated by this platform will influence DABS operations, including distribution center capacity, physical store performance, staffing requirements, and statewide access patterns. This section does not evaluate whether to launch the platform — that decision has been made. The study’s purpose is to quantify and plan for the operational implications of the new channel.

3.9.1 E-Commerce Demand Estimation

• Develop demand projections for e-commerce order volume from present through 2030, incorporating comparable state control board e-commerce adoption data (e.g., Pennsylvania PLCB, Virginia ABC, New Hampshire Liquor Commission) and Utah-specific demographic and consumption characteristics.

• Model adoption scenarios (conservative, base, optimistic) to establish a planning range for operational capacity needs.

• Identify which consumer segments and geographic areas are most likely to drive early adoption, and assess whether e-commerce demand will be additive to physical retail demand or partially substitutive.

3.9.2 Impact on Distribution Center Operations

• Model the additional throughput load that projected e-commerce order volume will place on the existing DABS distribution center, layered on top of current and projected store replenishment and licensee delivery demand.

• Identify the order pick, pack, and staging requirements specific to e-commerce fulfillment and assess whether the current facility layout and staffing can accommodate them.

• Determine whether e-commerce fulfillment volume materially accelerates the timeline at which the existing distribution center reaches practical capacity, and incorporate this finding into the secondary distribution center feasibility analysis (Section 3.4.3).

• Evaluate how last-mile delivery logistics for e-commerce orders — including potential third-party delivery partnerships — interact with existing delivery route structures and transportation costs.

3.9.3 Impact on Physical Store Demand and Staffing

• Assess the degree to which e-commerce volume (particularly in-store pickup) will redirect consumer traffic within existing stores and create new demand peaks at specific locations.

• Identify stores where e-commerce pickup volume is likely to be highest, and evaluate whether current square footage, layout, and staffing can accommodate the additional operational demands.

• Analyze whether e-commerce home delivery will meaningfully reduce foot traffic at high-volume stores, and whether this creates any opportunity for operational efficiency or deferred expansion at those locations.

• Incorporate e-commerce pickup demand projections into the relocation and expansion ranking methodology (Section 3.5).

3.9.4 Impact on Licensee Access and Will-Call Operations

• Evaluate how a licensee-facing digital ordering channel will affect the volume and geographic distribution of will-call demand at existing will-call sites.

• Identify licensee concentrations where digital ordering is likely to reduce pressure on physical will-call locations, and where physical site additions may still be warranted despite the digital channel.

• Model the net distribution demand impact of shifting licensee ordering to a digital channel, and connect this finding to the distribution center analysis (Section 3.4).

3.9.5 Impact on Statewide Access Patterns

• Identify rural, frontier, and border communities where e-commerce delivery may serve as a viable access supplement to physical retail, and model the logistics cost and lead time implications of serving those areas.

• Incorporate e-commerce access findings into the alcohol desert analysis (Section 3.2) to ensure access solution recommendations reflect the full range of delivery modalities available under the new platform.

Part IV — Technical Requirements and Methodological Standards Proposals must demonstrate compliance with the following technical standards. Any deviation from these standards must be explained and justified in the proposal’s methodology section.

4.1 Geographic Information Systems (GIS)

• All geographic analysis must be performed using industry-standard GIS software (e.g., Esri ArcGIS, QGIS, or equivalent).

• Deliverables must include GIS-ready shapefiles or geodatabases for all mapped analysis layers, including: service area polygons, alcohol desert boundaries, proposed package agency placement areas, current outlet locations, distribution routes, and population density overlays.

• Drive-time and service area analyses must use current road network data (UDOT or equivalent) and must account for rural road conditions in non-Wasatch-Front areas.

• All GIS data must be delivered in the Utah State Plane Coordinate System or WGS84, clearly documented.

4.2 Demographic Data Standards

• Population and demographic data must be drawn from the U.S. Census Bureau (Decennial Census and American Community Survey), the Kem C. Gardner Policy Institute, or the Utah Governor’s Office of Planning & Budget projections. All sources must be cited with the vintage year.

• Population projections used in the model must extend to at least 2030, with 2035 projections recommended.

• Demographic analysis must include: total population, population by age cohort (21+, 21–34, 35–54, 55+), median household income, tourism volume (where applicable), and residential density.

4.3 Analytical Methodology

• Retail demand modeling must use a gravity model or equivalent spatial demand allocation methodology, clearly documented.

• All priority rankings (stores for expansion, package agency placements, new store locations) must be produced using a documented weighted scoring matrix. Weights must be disclosed and justified.

• Sensitivity analysis must be provided for all major recommendations, testing the impact of ±10% and ±20% variation in key input assumptions (population growth rate, demand elasticity, construction cost).

• Distribution center analysis must use a formal site selection or hub-and-spoke optimization methodology.

• E-commerce operational impact modeling must distinguish among demand scenarios (conservative, base, optimistic) and must integrate projected e-commerce volume with distribution center capacity modeling (Section 4.4) and physical store analysis (Section 4.5).

3.4 Data Integration

• The contractor must integrate DABS-provided operational data (sales, transactions, bottle volumes, package agency data, DC throughput) with all external demographic and real estate data.

• The contractor must document all data cleaning, normalization, and imputation decisions in a data appendix.

• The contractor must flag any data quality concerns or gaps identified during the study Part V — Minimum Contractor Qualifications Proposals must demonstrate the following minimum qualifications. Failure to address each qualification area may result in disqualification. Qualifications should be documented with references, project descriptions, and key staff CVs.

Proposals must include at a minimum three (3) references from comparable public-sector engagements completed within the last seven (7) years. At least one reference must involve analysis of distribution logistics or warehouse capacity.

Part VI — Responsibilities and Requirements

6.1 Contractor Responsibilities

The contractor must furnish all labor, software, GIS tools, analytical resources, and facilities necessary to conduct all elements of the scope of work. Specific responsibilities include:

• Provide all GIS software, licensing, and data to conduct the spatial analysis described in Part IV.

• Conduct a minimum of one on-site visit to the DABS distribution center and prepare a written condition assessment.

• Either conduct direct site visits to DABS retail locations or utilize DFCM condition report data to assess building conditions; the methodology chosen must be disclosed and applied consistently.

• Conduct all demographic and e-commerce modeling and integrate external data sources with DABS-provided data.

• Submit bi-weekly written status updates to the DABS project manager via email or virtual meeting.

• Attend all required milestone meetings and deliver the final executive leadership briefing as specified in Part VII.

6.2 DABS Responsibilities

DABS will provide the contractor with timely access to all data and reference materials enumerated in Part X of this SOW.DABS will also make appropriate staff available for data clarification meetings as reasonably requested by the contractor throughout the engagement.

Part VII — Project Deliverables The contractor must provide all of the following deliverables. Deliverables not meeting format or completeness standards will be returned for revision within the project timeline.

7.1 Draft Market Study Report

A comprehensive draft document (Word and PDF formats) detailing all findings from every element of the Scope of Work, submitted for DABS review and comment. The draft must include all ranked lists, scoring matrices, maps, preliminary recommendations, and the proposed definition of ‘reasonable access’ with a criteria breakdown.

7.2 Executive Leadership Briefing

The primary final deliverable is an executive-level briefing document incorporating all DABS feedback, delivered in Word and PDF formats and presented in person or virtually to DABS executive leadership. The briefing must be tailored for non-technical decision-makers and must include:

• Executive summary of key findings and prioritized recommendations.

• Proposed definition of ‘reasonable access’ with documented criteria breakdown.

• Full statewide retail analysis, including alcohol desert mapping and access solution recommendations.

• Package agency analysis, statutory cap status, and prioritized placement recommendations.

• Distribution center capacity assessment and secondary facility recommendation.

• Building condition summary and capital priority list integrated into the recommended market strategy.

• Lease vs. build recommendations for proposed new locations.

• Fiscal impact estimates.

• E-commerce operational impact analysis: projected demand by order type and region, distribution and staffing implications, and integration with physical retail and access findings.

7.3 Data Appendices

Digital files (Excel or CSV format) containing:

• Raw data and intermediate calculations supporting all rankings and recommendations.

• GIS mapping shapefiles or geodatabases for all spatial analysis layers.

• Building condition scorecards for all assessed locations.

• Package agency placement analysis and ranked recommendation workbook.

• Distribution center capacity model and secondary facility cost-benefit workbook.

• E-commerce demand and operational impact model with scenario projections by order type and geographic region.

Part VIII — Project Timeline

Timelines are targets. DABS reserves the right to adjust milestone dates by mutual written agreement. Any delays attributable to late DABS data provision will result in a proportional schedule extension.

Part IX — Project Budget The total contract award for this engagement may not exceed $300,000 (three hundred thousand dollars). This figure represents the maximum compensation available under any resulting contract, inclusive of all labor, subcontractor costs, data licensing, software, travel, site visits, and any other direct or indirect costs associated with the performance of this Statement of Work. Proposals that exceed this cap will not be considered.

Proposers must submit a detailed cost proposal that itemizes costs by scope element, at a minimum distinguishing among the following work streams:

• Statewide retail demand and alcohol desert analysis (Section 3.1–3.2)

• Package agency analysis and placement recommendations (Section 3.3)

• Distribution center capacity assessment and secondary facility feasibility (Section 3.4)

• Relocation, expansion, and building condition analysis (Section 3.5–3.6)

• Lease vs. build and fiscal impact analysis (Section 3.7–3.8)

• E-commerce operational impact analysis (Section 3.9)

• GIS data development, mapping, and deliverable production

• Reporting, executive briefing, and project management

The budget cap is provided for planning purposes and does not constitute a guarantee of award at any specific amount. DABS reserves the right to award a contract below the ceiling amount based on proposal merit and negotiated scope.

Part X — Reference Documents The following documents will be provided to the contractor to support the project. The contractor should review all reference documents prior to the project kick-off meeting and identify any additional data needs at that time.

• 2024 DABS Master Plan (Zions Public Finance, Inc., July 2024)

• Current DABS Liquor Store Roster and Financial Performance Data (March 2024 — Current)

• Current Package Agency Roster and Operational Data

• Distribution Center Capacities, Throughput Data, Delivery Routes, and Turns Data

• DFCM Facility Condition Reports, Lease Agreements, and Facility Maintenance Records

• Current DABS Licensee (Will-Call Customer) Roster and Geographic Data

• Historical Sales Data by Store and Package Agency (minimum five-year period)

• Bottle Volumes and Transaction Metrics by Location

• Kem C. GGardner Policy Institute — Utah Long-Term Population Projections (most current vintage)

• Any other data required to support the completion of the study, as mutually agreed at kick-off

Part XI — Approval and Authorization This Statement of Work has been reviewed and approved for release by the following DABS officials:

Deputy Director

Executive Director

Distribution: This document is a working draft intended for internal DABS review and comment prior to procurement release. It should not be distributed externally without authorization from the DABS Executive Director.

DABS — Confidential Working Draft Page 1 of 2