Liquor Industry News 2-27-13

www.franklinliquors.com

Franklin Liquors

Todays News

Beer lovers sue Anheuser-Busch for watering down brews

 

Source: Fox News / AP

February 26, 2013

 

Beer lovers across the U.S. have accused Anheuser-Busch of watering down its Budweiser, Michelob and other brands, in class-action suits seeking millions in damages.

 

The suits, filed in Pennsylvania, California and other states, claim consumers have been cheated out of the alcohol content stated on labels. Budweiser and Michelob each boast of being 5 percent alcohol, while some “light” versions are said to be just over 4 percent.

 

The lawsuits are based on information from former employees at the company’s 13 U.S. breweries, some in high-level plant positions, according to lead lawyer Josh Boxer of San Rafael, Calif.

 

“Our information comes from former employees at Anheuser-Busch, who have informed us that as a matter of corporate practice, all of their products mentioned (in the lawsuit) are watered down,” Boxer said. “It’s a simple cost-saving measure, and it’s very significant.”

 

The excess water is added just before bottling and cuts the stated alcohol content by 3 percent to 8 percent, he said.

 

Anheuser-Busch InBev called the claims “groundless” and said its beers fully comply with labeling laws.

 

“Our beers are in full compliance with all alcohol labeling laws. We proudly adhere to the highest standards in brewing our beers, which have made them the best-selling in the U.S. and the world,” Peter Kraemer, vice president of brewing and supply, said in a statement.

 

The suit involves 10 Anheuser-Busch products: Budweiser, Bud Ice, Bud Light Platinum, Michelob, Michelob Ultra, Hurricane High Gravity Lager, King Cobra, Busch Ice, Natural Ice and Bud Light Lime.

 

Anheuser-Busch, based in St. Louis, Mo., merged with InBev in 2008 to form the world’s largest alcohol producer, headquartered in Belgium. In 2011, the company produced 10 billion gallons of malt beverages, 3 billion of them in the U.S., and reported $22 billion in profits from that category, the lawsuit said.

 

According to the lawsuit, the company has sophisticated equipment that measures the alcohol content throughout the brewing process and is accurate to within one-hundredth of a percent. But after the merger, the company increasingly chose to dilute its popular brands of beer, the lawsuit alleged.

 

“Following the merger, AB vigorously accelerated the deceptive practices described below, sacrificing the quality products once produced by Anheuser-Busch in order to reduce costs,” said the lead lawsuit, filed Friday in federal court in San Francisco on behalf of consumers in the lower 48 states.

 

Companion suits are being filed this week in Pennsylvania, New Jersey and elsewhere. Each seeks at least $5 million in damages.

 

The named Pennsylvania plaintiffs, Thomas and Gerald Greenberg of Ambler, said they buy six cases of the affected Anheuser-Busch products a month. They did not immediately return a message Tuesday, and Boxer would not elaborate on their purchases except to say the consumer-protection suit does not involve retailers or bar owners.

 

One of the California plaintiffs, Nina Giampaoli of Sonoma County, said she bought a six-pack of Budweiser every week for the past four years.

 

“I think it’s wrong for huge corporations to lie to their loyal customers — I really feel cheated. No matter what the product is, people should be able to rely on the information companies put on their labels,” Giampaoli said in a news release issued by Boxer’s law firm.

 

Bloomberg News first reported Tuesday on the lawsuits.

 

In a telephone interview with The Associated Press, Boxer said he has evidence to corroborate the former employees’ allegations, but stopped short of saying the beers had been independently tested.

 

“AB (Anheuser-Busch) never intends for the malt beverage to possess the amount of alcohol that is stated on the label. As a result, AB’s customers are overcharged for watered-down beer and AB is unjustly enriched by the additional volume it can sell,” the lawsuit said.

 

 

——

Anheuser-Busch Waters Down Its Beers, Consumers Say

 

Source: Law360

February 26, 2013

 

Anheuser-Busch Cos. LLC is facing a barrage of class claims in California, New Jersey and Pennsylvania alleging that it overstates the amount of alcohol in its beer by adding extra water to the finished product in order to cut costs.

 

Nina Giampaoli and John Elbert were the first to bring those claims in a suit they lodged Friday in California federal court, according to their attorney Josh Boxer of the Mills Law Firm. Similar suits were filed in New Jersey and Pennsylvania federal courts Monday, and Boxer said his team anticipates that additional suits will follow and eventually be consolidated into a multidistrict litigation.

 

The suits allege AB has the means to precisely control the exact alcohol content of its malt beverages to within hundredths of a percent, but chooses to water down those products in order to churn out more units of beer from the same starting batch of ingredients.

 

“There are no impediments – economic, practical or legal – to AB accurately labeling its products to reflect their true alcohol content,” the plaintiffs said. “Nevertheless, AB uniformly misrepresents and overstates that content.”

 

The plaintiffs say AB mislabels the alcohol content for its Budweiser, Bud Ice, Bud Light Platinum, Michelob, Michelob Ultra, Hurricane High Gravity Lager, King Cobra, Busch Ice, Natural Ice, Black Grown and Bud Light Lime beers.

 

“The claims against Anheuser-Busch are completely false, and these lawsuits are groundless,” Peter Kraemer, AB’s Vice President of Brewing and Supply, said in an emailed statement provided to Law360 Tuesday.

 

“Our beers are in full compliance with all alcohol labeling laws,” Kraemer said. “We proudly adhere to the highest standards in brewing our beers, which have made them the best-selling in the U.S. and the world.”

 

In the suits, the plaintiffs allege they had regularly purchased an AB product at retail stores while taking into account the stated alcohol percentages, and that they would not have bought those beers had they known those percentages were false.

 

AB is facing claims that the alleged misrepresentations deceive consumers who rely on the company’s labels and allow it to gain an unfair competitive advantage in violation of various state laws.

 

The California plaintiffs are seeking to represent a class of all consumers in the 48 contiguous states who bought the AB beers at retail stores for personal, family or household purposes within the past five years, as well as a class of consumers who bought the beers at retail stores in California within the past four years.

 

Those plaintiffs say that both of those classes are likely to include millions of people.

 

AB’s parent company Anheuser-Busch InBev NV says it held a leading 47.7 percent share of the U.S. market as of December 2011.

 

The plaintiffs in the California case are represented by Robert W. Mills, Joshua D. Boxer and Corey B. Bennett of the Mills Law Firm and Robert Bramson of Bramson Plutzik Mahler & Birkhaeuser LLP.

 

The plaintiffs in the New Jersey and Pennsylvania cases are represented by David S. Senoff and Lauren C. Fantini of Caroselli Beachler McTiernan & Conboy LLC.

 

Counsel information for the defendant was not immediately available.

 

The case is Giampaoli et al. v. Anheuser-Busch Cos. LLC, case number 3:13-cv-00828, in the U.S. District Court for the Northern District of California.

 

The case is Wilson v. Anheuser-Busch Cos. LLC, case number 1:13-cv-01122, in the U.S. District Court for the District of New Jersey.

 

The case is Greenberg et al. v. Anheuser-Busch Cos. LLC, case number 2:13-cv-01016, in the U.S. District Court for the Eastern District of Pennsylvania.

 

 

——

AB InBev’s Profit Gains on Increased U.S., Brazil Volumes

 

Source: Bloomberg

By Clementine Fletcher

Feb 27, 2013

 

Anheuser-Busch InBev NV (ABI), the beermaker that’s seeking full control of Mexico’s Grupo Modelo SAB, said fourth-quarter profit increased as the company sold more higher-priced beers in the U.S. and Brazil.

 

Earnings before interest, taxation, depreciation and amortization, excluding some items, rose 9.9 percent to $4.39 billion, the Leuven, Belgium-based maker of Budweiser said in a statement. That compares with the $4.36 billion median estimate of nine analysts surveyed by Bloomberg. Excluding acquisitions and currency swings, sales advanced 8.8 percent, topping the 6.2 percent advance anticipated by analysts.

 

In addition to its pursuit of Corona maker Modelo, AB InBev has introduced new beers such as Black Crown, a stronger version of the American classic Budweiser, and stepped up advertising in a bid to win back consumers in the world’s biggest economy. That led to the first volume revival in the U.S. since 2008, it said, the year it bought Anheuser Busch for $52 billion.

 

“While we expect 2013 to be another year of challenge and uncertainty in the global economic environment, we will continue to work for the long-term growth of our business and shareholder value,” the company said.

 

The brewer, which gets most of its profit from the U.S. and Brazil, said volume in the first quarter in the U.S. will be hit by pressure on consumer disposable income, while beer sales in Brazil by that measure will grow by low to mid-single digits in the full year. The company expects revenue per hectoliter to grow ahead of inflation on an organic basis in 2013.

 

Mexican Expansion

 

The world’s biggest beermaker agreed in June last year to buy the remaining 50 percent of Modelo it doesn’t own for $20.1 billion, giving it full ownership of the maker of Corona. After being sued by the U.S. Department of Justice, it amended the terms of its acquisition on Feb. 14 in a bid to appease competition authorities in the U.S. Negotiations between the parties are now headed toward a settlement that will give the brewer antitrust approval, people familiar with the matter said this week.

 

AB InBev fell 1 percent to 69.77 euros in Brussels trading yesterday. That was the third-best performance in the Euro Stoxx 50 Index (SX5E) of Europe’s biggest companies, which slid 3.1 percent. The stock has advanced 6.1 percent this year.

 

Own Beer

 

The volume sold of the company’s own beers slid 0.3 percent in the quarter. Volume declined in each of the previous two quarters after AB InBev raised prices to offset a tax increase in Brazil and sales fell in Europe, led by declines in Russia.

 

Beer volume in Brazil rose 2.9 percent in the fourth quarter, aided by good weather and price promotions, it said, as the government partially postponed a tax increase announced Sept. 28. The company lost 50 basis points of market share in the year, reaching an average 68.5 percent, it said, after it increased prices.

 

U.S. sales to retailers grew 0.9 percent in the quarter, ahead of the market, helping AB InBev grow share for the first time since the second quarter of 2009, aided by sales of Bud Light Platinum and Lime-A-Rita. Ebitda margin, a measure of profitability, declined, weighed down by distribution expenses and increased commodity costs and marketing expenses. The company is “confident” of the potential for margin expansion in the U.S., it said.

 

 

——

BEAM INC Files SEC form 10-K, Annual Report

 

Source: Yahoo

Feb 26th

 

http://biz.yahoo.com/e/130226/beam10-k.html

 

 

——

Vodka Maker CEDC Touts Bond-Equity Swap to Reduce Debt

 

Source: Bloomberg

By Victoria Stilwell

Feb 26, 2013

 

Central European Distribution Corp. (CEDC), the Polish vodka distiller rescued by Russian billionaire Roustam Tariko last year, proposed swapping bonds for equity to cut its debt by more than $750 million.

 

The company, which made a deal in December to get as much as $107 million in new capital from Tariko five months after he bought its debt, extended the offer to bondholders yesterday after convertible notes due next month sank and its stock plunged as much as 65 percent in New York. CEDC, maker of the Zubrowka and Parliament vodka brands, said it’s also considering a pre-packaged bankruptcy plan in Delaware, according to a filing yesterday.

 

Tariko, who owns 19.5 percent of CEDC, signed an agreement Dec. 28 giving him operational control in exchange for the capital after Moody’s Investors Service cut the company’s credit rating on concern over losses for bond investors. Yields on CEDC’s dollar-denominated bonds due 2016 doubled to 33.76 percent between May and November last year, and have fallen 361 basis points since the December deal with Tariko.

 

“The company believes that a successful restructuring of both the convertible senior notes and the senior secured notes will improve its financial strength and flexibility,” Warsaw- based CEDC said in PRNewswire statement issued yesterday. Should the plan not find support among bond and shareholders the company may decide to file for bankruptcy, according to the statement.

 

The offer, which expires March 22, would give holders of CEDC’s 3 percent convertible bonds due next month 8.86 new shares (CDC) in exchange for each $1,000 principal amount of their notes, the company said.

 

Bonds Slide

 

Investors in the 9.125 percent 2016 bonds issued by CEDC Finance Corporation International Inc. will receive 16.52 new shares and $508.21 principal of the company’s 2020 debt. On the 8.875 percent 2016 bonds, holders are being offered 22.18 new shares for each 1,000 euro principal amount and $682.37 principal of the 6.5 percent 2020 bonds, according to the statement.

 

CEDC added 5.1 percent to 65 cents in New York today, paring back yesterday’s record 55 percent drop. Shares in Warsaw sank a third trading day, sliding 42 percent to a record-low 2.18 zloty, or 68 cents. CEDC’s Polish stock fell 20 percent yesterday.

 

The price on the convertible dollar notes due March 15 fell 37 percent to an all-time low of 15 cents on the dollar today, down from as high as 97 cents in July, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

 

Other Alternatives

 

Should the exchange plan fail to win sufficient creditor support, CEDC asked for a vote on a pre-packaged bankruptcy in Delaware that would produce a similar outcome while requiring fewer backers, regulatory filings show.

 

Should both votes fail, “the company may be forced to explore other immediate alternatives,” CEDC said in filings.

 

The company also disclosed alternative proposals yesterday submitted by investors, including one backed by Tariko that would give him and some other creditors 85 percent of the company, and another from shareholder Mark Kaufman offering $75 million to support a different restructuring plan.

 

“The final direction of the restructuring will be based on the outcome of the solicitation process,” CEDC said in yesterday’s statement. “If sufficient notes are tendered in the exchange and shareholders approve the plan, CEDC will consummate the exchange offers.”

 

Executive Resignation

 

James Archbold, CEDC’s head of investor relations, resigned Feb. 22, according to a report posted Feb. 24 by GPWInfoStrefa, a news portal run by the Polish Press Agency in cooperation with the Warsaw Stock Exchange. (GPW) An e-mail sent yesterday to CEDC’s investor relations address wasn’t returned.

 

CEDC erased about 50 percent of its market value in 2012 amid slumping sales, rising liabilities and management transitions. Revenue fell 8.7 percent in the third quarter to $191.3 million, after shrinking in the previous two quarters, data compiled by Bloomberg show. Chief Executive Officer William Carey stepped down in July.

 

Moody’s cut CEDC’s bond rating by one level in January to Caa3, nine steps below investment grade, on concern the company hadn’t secured “adequate financing” to repay the convertible notes maturing next month.

 

 

——

Mao’s $300 Red Army Liquor Suffers Before China Congress: Retail

 

Source: Bloomberg

Feb 26, 2013

 

Kong Guoqing hasn’t seen a quieter Chinese New Year in the 12 years his family has been running their small liquor and tobacco shop in downtown Shanghai.

 

They didn’t sell a single bottle of the high-end spirit made by Kweichow Moutai Co. that has become synonymous with banquets and gift-giving during China’s national holiday. Kong blames the vanished sales on incoming President Xi Jinping’s crackdown on extravagant spending by officials: Moutai’s sorghum spirit can fetch $300 a bottle — about half the average monthly disposable income in China’s financial hub.

 

“Demand for the most expensive liquors and cigarettes this New Year seemed to have just dried up,” said Kong, pointing to red boxes of cigarettes costing about $10 a pack, or more than six times the price of regular brands. “People are afraid to accept gifts.”

 

The austerity campaign helped push down prices on some high-end spirits by about 30 percent over the holiday, the Ministry of Commerce said. Moutai’s shares have fallen 29 percent since Xi announced the clampdown in November, the biggest drop of 996 companies on the Shanghai Composite Index.

 

Moutai was trading 0.4 percent lower at 176.71 yuan at 10.14 a.m. in Shanghai, headed for a third day of losses.

 

The test now is how committed Xi is to rooting out corruption once the new leadership is cemented at the National People’s Congress beginning next week.

 

“Whether it’s a short period as the new leaders are just on board and they’re trying to do something, or whether it’s an ongoing exercise, that will have different impacts,” said Sarah Xing, a Hong Kong-based analyst at Nomura International. “At this point in time, there are some uncertainties.”

 

Slow Recovery

 

Three of 17 analysts covering Moutai cut their 2013 profit outlook for the liquor maker in the past month, according to data compiled by Bloomberg.

 

Public criticism of ostentatious displays of wealth by officials typically peaks when the nation’s elite gather together for the annual congress in Beijing. Xi warned in November that resentment at graft and the enrichment of cadres and their families threatened the Party’s grip on power.

 

The role of Moutai and other liquor in seasonal banquets and gift-giving means distillers are unlikely to see a recovery until at least the mid-autumn festival in September, said Katharine Song, Fortune CLSA’s Shanghai-based analyst.

 

“Last Chinese New Year, the baijiu makers had a splendid sales season, Moutai bottles were selling for more than 2,000 yuan,” said Song, who estimates that Chinese officials account for about a third of high-end liquor consumption. Moutai suspended deliveries for March to encourage distributors to reduce inventory, she said. Prices are falling because “no one would dare to go out and throw lavish dinners and gatherings.”

 

Booze Banquets

 

Cognac and Scotch may also be hurt by the crackdown, with Paris-listed Remy Cointreau SA (RCO) most exposed, said London-based Deutsche Bank analyst Jamie Isenwater.

 

“They will get caught in the crossfire of reduced entertainment and less gift-giving more generally,” Isenwater wrote in a note on Feb. 8, advising investors sell Remy and Pernod Ricard shares.

 

Booze-fueled banquets at which guests are expected to give the host cash-filled envelopes have become one of the biggest ways to earn money, the Party-owned Global Times newspaper reported in December.

 

Credit Suisse on Jan. 28 cut its rating on Moutai to neutral from outperform saying it expects a 25 percent drop in purchases from the government this year and a 40 percent slump in direct orders from the military.

 

Li Hong Fang, Kweichow Moutai’s spokeswoman did not answer two calls by Bloomberg News to her mobile phone.

 

Self Sacrifice

 

Moutai’s nearest rival Wuliangye Yibin Co. (000858) is down by 29 percent on the Shenzhen exchange since November. The Shenzhen bourse has gained about 10 percent in that time.

 

Moutai’s current fortunes mark a reversal for a drink that once embodied the revolutionary virtues of self sacrifice and privation. In Communist Party lore, the 106-proof liquor was used to clean the wounds of soldiers during the Long March, when Chairman Mao Zedong’s soldiers endured immense hardships as they fled over snow-clad mountains and through deadly marshes to evade Chiang Kai-shek’s Nationalist forces.

Acquired Taste

 

As China’s economy boomed following Deng Xiaoping’s market opening in the late 1980s, the fiery spirit — with a taste reminiscent of distilled engine oil — came to symbolize instead the growing wealth and power of the country’s elite. The Guizhou-based company’s market value soared from less than $1 billion a decade ago to peak at $41 billion last year.

 

At about $30 billion today, Moutai remains the third-most valuable distiller, behind London-based Diageo PLC (DGE) and Pernod Ricard (RI) SA in Paris.

 

Xi’s drive is being felt in other parts of consumer spending too.

 

Takings at high-end restaurants have fallen significantly since the government first encouraged austerity, the Ministry of Commerce said last week. Sales at luxury eateries in Beijing fell about 35 percent and 20 percent in Shanghai, it said, without giving exact dates. Demand for shark’s fin and pricey hampers of food plunged over the Chinese New Year season, the ministry said, attributing the drop to Xi’s policy.

 

Greater Scrutiny

 

Consumers also bought fewer watches costing more than HK$100,000 ($12,892) over the Feb. 10-Feb. 17 break, said Karson Choi, chairman of Hong Kong-based luxury watch retailer Halewinner Group, which runs more than 30 branches in the city, mainland China and Macau. Buyers switched to mid-priced timepieces such as Biel, Switzerland-based Swatch Group (UHR) AG’s Omega, Tissot, and Longines, he said.

 

While the government’s greater scrutiny of gift-giving will weigh on China’s luxury goods market for now, the longer term picture is clear: a rising share for private consumption, where sales are driven by personal choice and not the capacity of a gift to curry favor or win business and political allies.

 

“What’s currently causing the decline is gifting, which doesn’t give healthy growth and is not sustainable,” Xing said. “In the short run, we’ll definitely see a negative impact on the high-end, but in the long run, we’ll see consumers with more money who will be trading up to more branded products.”

 

 

——

Russia to drink more Scotch than UK in three years

 

Source: The Spirits Business

by Becky Paskin

26th February, 2013

 

Scotch sales in Russia are set to overtake those in the UK in three years time, placing the emerging nation as the whisky’s third largest consumer in the world.

 

Scotch sales in the world’s emerging markets are beginning to catch up to those in the UK, US and France

 

Scotch consumption in the UK is set to reach six million cases by the end of 2013, according to research commissioned by Vinexpo. However despite the UK currently holding third place in the world’s greatest Scotch whisky drinkers table, a drop in consumption of up to 3% by 2016 means Britain will fall into fourth position.

 

Consumption in Russia however, which is currently earmarked to rise to 4.7 million cases this year, will grow up to 6.5 million cases by 2016, overtaking sales in the UK which are expected to reach 5.6 million cases.

 

Robert Beynat, chief executive of Vinexpo, said: “While consumption of whisky in the UK is falling, exports are booming. The emerging countries with a growing middle class are keen to discover and drink Scotch whisky.”

 

The amount drunk in Brazil, another exciting emerging market alongside Russia, is also set to soar over the next three years to 5.5 million cases.

 

A seperate report by the Scotch Whisky Association (SWA) in October last year revealed that Scotch whisky exports are driven by sales to countries such as Latvia and Estonia – gateways to Russia.

 

France continues to lead the world’s Scotch-drinking economies by leaps with an estimated 14 million case sales this year, and a projected 14.4 million case sales in 2016.

 

The US trails somewhat behind, with an estimated 8.2 million case sales in 2013 and 8.4 million in 2016.

 

 

——

Are you in drink denial? Half of adults down too much alcohol yet barely a quarter admit doing so

 

Source: Daily Mail

By Sophie Borland

26 February 2013

 

Millions of adults fool themselves into thinking they are modest drinkers when they down enough to be classed as ‘bingers’, a study suggests.

 

It found a huge mismatch between the amount of alcohol we say we are consuming and what is actually being bought.

 

When the two figures are compared, 40 per cent of sales are unaccounted for.

 

The study suggests that around half the adult population are binge drinkers.

 

However, only 13 per cent of women and 22 per cent of men admit to being in this category.

 

Using a complicated computer model, academics at University College London tried to estimate the true amount being drunk.

 

They based it on two sets of official data on alcohol consumption – the Health Survey for England and the General Lifestyle Survey – which covered 22,000 adults.

 

Their study – published in the European Journal of Public Health – found that 80 per cent of women and 75 per cent of men who often drank alcohol were binge drinkers.

 

That came to 43 per cent of all women and 51 per cent of men, once teetotallers and those who rarely drink are included.

 

Yet the latest figures compiled by the Government gave figures of just 13 per cent and 22 per cent.

 

The researchers said many people completing the official surveys underestimate, forget or even lie about the amount they drink. As a result, most are thought to drastically underestimate their intake

 

Many of us are consuming far more than we realise and regularly exceed the recommended limits.

 

Guidelines from the Department of Health state that women should drink no more than 14 units of alcohol a week while men should not exceed 21.

 

A unit is a small glass of wine, half a pint of lager or a measure of spirits.

 

The guidelines also classify a binge drinker as a woman who drinks six units at least one day a week or a man who drinks eight units.

 

Sadie Boniface, lead author of the study and based at the department of epidemiology and public health at UCL, said: ‘This study was conducted to show what alcohol consumption would look like when all of what is sold is accounted for, if everyone under-reported equally.

 

‘What is seen in the surveys and sales potentially has enormous implications for public health.’

 

 

——

UW-L professor questions effectiveness of ‘sin taxes’

 

Source: LaCrosse Tribune

February 26, 2013

 

Adam Hoffer knows people who question so-called sin taxes can be stigmatized as “crazy radicals that don’t know what they’re talking about.”

 

But taxing booze, cigarettes and soft drinks isn’t always a great idea, says the assistant professor of economics at the University of Wisconsin-La Crosse.

 

Hoffer co-wrote a column this month for U.S. News and World Report that raises doubts about the effectiveness of taxing tobacco and alcohol.

 

Such taxes heap more costs on low-income families without significantly deterring unhealthy behavior, Hoffer said.

 

Most of the money raised doesn’t go to health or prevention programs. Instead, Hoffer said, it gets lost in the shuffle of public funding.

 

“The policy makers in Madison have an idea of how much they want to spend on health care, regardless,” Hoffer said.

 

However, members of a Wisconsin anti-tobacco group say higher cigarette taxes have, in fact, curbed smoking, and they’re pushing for a similar increase for all tobacco products.

 

In the past six years, Wisconsin’s cigarette tax more than tripled, from 77 cents a pack to $2.52. Combine that with $1.01 for the federal government, and taxes account for well over half the retail price.

 

Politically safe ground

 

Hoffer started studying cigarette taxes as part of his doctoral dissertation at West Virginia University. His column points out a growing trend of lawmakers taxing unhealthy behaviors – expanding excise taxes to products such as candy and soft drinks.

 

Politicians look to sin taxes as a safe way to raise money without upsetting voters, Hoffer said. “You will see pitch forks and torches if some states try to increase their income tax or their sales tax.”

 

Taxing sin paints a rosier picture, he said: Hike the price on cigarettes to deter smokers, then funnel the money into health care and tobacco-prevention programs.

 

The problem is that sin taxes don’t always work as promised, Hoffer said. Nationally, about 20 cents of every dollar raised in cigarette taxes goes to the earmarked purposes.

 

Wisconsin’s cigarette tax goes into the state’s general fund, along with all excise taxes. Taxing cigarettes raised $587.8 million alone for the state in 2012. Less than 1 percent of tobacco taxes are spent on prevention programs.

 

“Lawmakers don’t want to label sources of money,” said Todd Berry, president of the Wisconsin Taxpayers’ Alliance.

 

‘An arms race’

 

Money the state raised from the cigarette tax jumped by about $93 million when lawmakers last raised the rate in 2009, but three years later it had dropped by about $56.5 million. Cigarette sales are on a steady decline.

 

“Especially among youth,” said Laura Smith, a spokeswoman for Health First Wisconsin. “It’s definitely one of the most effective ways to lower smoking rates.”

 

The share of high school students who smoke dropped from 20.7 percent in 2008 to 13.1 percent in 2012, according to the Wisconsin Youth Tobacco Survey.

 

Health First is asking state lawmakers to tax other tobacco products like cigarettes, hoping higher taxes will lead to a similar drop. The group tried unsuccessfully to have Gov. Scott Walker include the measure in his 2013-15 budget proposal, and is asking other state lawmakers for help.

 

Rep. Chris Danou, D-Trempealeau, said he would support such a plan. Tobacco companies roll out cigarette alternatives, and, because taxes are lower on the new products, people make the switch, Danou said.

 

“It’s an arms race,” Danou said.

 

Not a deterrent

 

Cigarette taxes may be a steady source of government revenue, but Berry said there’s little financial benefit in raising taxes on other vices.

 

For instance, the state raised about $9.2 million in 2012 from the excise tax on beer. Wisconsin taxes brewers and importers about 6.5 cents per gallon on beer sold in the state.

 

Even doubling that would pale compared to the $11 billion from income and sales taxes, Berry said.

 

“There’s not a lot of money in beer, wine and liquor,” Berry said.

 

That hasn’t stopped lawmakers in other states from taxing a whole new category of unhealthy products, including candy and soft drinks.

 

The soft drink industry spent $57 million on lobbying efforts in 2009, and “there’s a small army being raised to fight the 32-ounce soft drink ban in New York City,” Hoffer said.

 

Despite claims otherwise, most people paying sin taxes are not easily deterred by higher prices, Hoffer said.

 

“Whenever their price goes up, people hardly change their consumption whatsoever,” Hoffer said.

 

Higher taxes correlate to falling cigarette sales in Wisconsin, but the drop didn’t happen in a vacuum. There’s the 2010 law that prohibited smoking in bars and restaurants, and there’s also out-of-state competition. The cigarette tax is lower per pack in Minnesota, Iowa and Illinois.

 

Meanwhile, Hoffer argues that increasing excise taxes disproportionately affects low-income residents, who are more likely to smoke and more likely to be overweight or obese.

 

“We’re taking away from the people’s ability to spend more on healthy food,” he said.

 

 

——

Liquor.com Launches Expert Contributor Network, DrinkWire

 

Source: Liquor.com

Feb 27th

 

Liquor.com (http://liquor.com), the leading digital media platform focused on cocktails, spirits and the lifestyle of cocktail culture, has launched DrinkWire (http://drinkwire.liquor.com), a new expert contributor network showcasing the best bartenders, professional writers, videographers and bloggers. Featuring recipes, product reviews, personal stories and a variety of entertaining and educational how-to articles and videos, DrinkWire is updated constantly on Liquor.com.

 

“DrinkWire is an exciting new resource aimed at satisfying our readers’ demand for more up-to-the minute content,” says Liquor.com editor-in-chief Noah Rothbaum. “There are a variety of opinions and perspectives provided by the DrinkWire community; everyone from experts and established publications to key influencers and bloggers. They are chosen by Liquor.com for their deep industry knowledge and engaging voices.”

 

Founded in 2009, Liquor.com won accolades for its editorial content at 2012′s Tales of the Cocktail conference, taking home the Spirited Awards for Best Cocktail Writing and Best Cocktail Author.

 

Through DrinkWire, the company’s editorial content will be complemented by new contributors, who apply online to become a part of the community. Their posts are curated and promoted by Liquor.com‘s editors. The best stories and videos can earn additional promotion based on views, votes and social sharing on Facebook and Twitter.

 

“Our goal with DrinkWire is to compliment our award-winning editorial with more premium content with which to engage our audience, while adopting a technology driven approach that would allow us to dramatically scale our content offering,” says Liquor.com CEO and Co-founder Kit Codik. “This innovative approach is what we believe is the future of digital media brands like Liquor.com.”

 

As of February 26, DrinkWire has enrolled more than 110 contributors, who have submitted nearly 700 posts. Contributors include bartending luminary Dale DeGroff, award-winning drinks writer Gary Regan, New York bartender and cocktail cookbook author Brian van Flandern and the talent behind such sites as DrinkSpirits.com, InsideFandB.com, DrinkinginAmerica.com and DrinkoftheWeek.com.

 

DrinkWire is already breaking news: Contributor Tom Fischer of BourbonBlog.com posted an interview with Maker’s Mark COO Rob Samuels the same day the company announced it would be lowering the alcohol content of its bourbon. As the story evolved over the next week and Maker’s Mark reversed its decision, DrinkWire featured up-to-the minute updates of the controversy and reactions around the web.

 

Liquor.com‘s DrinkWire is powered by Tid.al, an innovative social publishing platform that allows brands to syndicate content, as well as engage its community members to request new original contributions. The Tid.al platform is utilized by other major online media outlets including Epicurious.com, Details.com, Lucky.com, TeenVogue.com, BobVila.com, Sony’s PopMarket.com, as well as brands such as Pepsi.

 

In addition to new content streaming in daily, the section will also highlight topical and seasonal roundups, such as 2013 trend predictions, and cocktail suggestions for holidays and occasions like Valentine’s Day. In the coming months, Liquor.com will leverage DrinkWire to expand its local content offering and coverage of local bars and happenings in cities around the country.

 

About Liquor.com

Liquor.com was founded in 2009 with the mission to bring the industry’s leading experts, new media and technology to educate, inspire and enable the world to drink better, smarter and with greater appreciation. In addition to content and technology focused on a variety of cocktails- and spirits-related consumer needs, the platform offers local guides for New York, San Francisco, Los Angeles and Chicago, as well as hosts spirited events around the country. The site is edited by celebrated spirits author Noah Rothbaum and boasts an Advisory Board consisting of a dozen of the world’s foremost bartenders and drinks experts including Dale DeGroff, David Wondrich, Jim Meehan and more. Recent achievements include surpassing 300,000 fans on Facebook and winning the 2012 Tales of the Cocktail Spirited Awards for Best Cocktail Writing and Best Cocktail Author. Liquor.com‘s content reaches over 5 million consumers and top bartenders each month across its various owned and operated and partner channels.

 

 

——

CRIMSON WINE GROUP, LTD. COMPLETES SPIN-OFF FROM LEUCADIA NATIONAL CORPORATION 

 

SOURCE: PR Newswire

Crimson Wine Group, Ltd.

Feb 25th

 

Crimson Wine Group, Ltd. (“Crimson”) announced today that its spin-off from Leucadia National Corporation (“Leucadia”) had been completed.  Crimson, which held all of Leucadia’s wine operations, was distributed to Leucadia’s shareholders through a pro rata dividend of all of the shares of Crimson common stock.

 

Crimson is now a separate public company. Crimson’s common stock is not listed on any securities exchange. Trading in Crimson’s common stock is expected to occur on OTC Link under the symbol “CWGL.”  The CUSIP number for Crimson’s common stock is 22662X 100.

 

Holders of record of Leucadia’s common shares as of the close of business on February 11, 2013, the record date for the spin-off, that did not subsequently trade the entitlement to their shares of Crimson common stock, received one share of Crimson common stock for every 10 Leucadia common shares held on the record date, with cash in lieu of fractional shares to be later distributed.

 

The Crimson spin-off has been structured to qualify as a tax-free distribution to Leucadia and Crimson shareholders for U.S. federal income tax purposes.  Crimson stockholders are urged to consult with their tax advisors with respect to the U.S. federal, state, local and foreign tax consequences of the Crimson spin-off.

 

About Crimson

Crimson, a Delaware corporation, produces and sells premium, ultra-premium and luxury wines.  Crimson is headquartered in Napa, California and through its wholly-owned subsidiaries owns four wineries: Pine Ridge Vineyards, Archery Summit, Chamisal Vineyards and Seghesio Family Vineyards.

 

 

——

Fine wine market in ‘recovery mode’

 

Source: Decanter

by Chris Mercer

Tuesday 26 February 2013

A series of successful auctions and improved fine wine pricing shows that investors are regaining their thirst for top Bordeaux.

 

The Liv-ex 50 fine wine index, which tracks the last ten physical vintages of the five Bordeaux first-growths, is up by around 10% since November last year.

 

Miles Davis, at Wine Asset Managers (WAM), said the rise is ‘significant’ as an indicator of the fine wine market’s health, and shows ‘demand is much stronger’. WAM believes the fine wine market in general is in ‘recovery mode’.

 

The increase in demand, Davis told Decanter.com, is partly driven by a supply shortage among merchants, who are looking to restock. However, he also believes the longer-term investment trend looks positive heading into 2013.

 

‘We’ve just come out of a 30% market correction, so it’s a good time to be buying,’ said Davis. He said Asia continues to be a key source of fine wine investment, but that there is ‘evidence of more American interest creeping back in the past year or so’.

There has been an upbeat tone from auction houses in the past few days.

 

A Sotheby’s auction in New York at the weekend saw 99.4% of lots sold and fetched a total US$1.46m, with most wines exceeding their estimated price tags.

 

This included six bottles of Petrus 1982, which sold to a private buyer in Latin America for just over $30,000, versus an estimated selling price of $15-20,000. A 12-bottle haul of Yquem 2011 went to a Europe-based buyer for $24,500, two-and-a-half times its expected price tag.

 

‘Today’s offerings of Ornellaia, Dom Pérignon, and Yquem were all 100% sold,’ said Jamie Ritchie, the CEO & president of Sotheby’s wine division in the Americas and Asia.

 

A couple of days earlier, Christie’s saw 97% of lots sold in a London auction that fetched £960,000 (US$1.46m); roughly equal to value sales at the Sotheby’s auction and ahead of a top estimate of £904,000.

 

A highlight of the Christie’s auction was a 12-bottle cache of Lafite Rothschild 1982, which sold for £34,500.

 

This week, Acker, Merrall & Condit began its 2013 auction season in New York with US$3.1m in sales and 94% of lots sold. While Acker said it continued to see a ‘Bordeaux renaissance’, with the region accounting for 15 of the top 25 lots sold, it also highlighted buyers’ broadening palates.

 

‘Burgundy’s momentum continued, led by two extraordinary parcels of Raveneau and Liger-Belair that came to us directly from Europe,’ said Acker CEO John Kapon. The auction’s best-selling lot was a three-bottle haul of 2006 Romanee Conti, in an original wooden case, for $27,060.

 

 

——

Gerard Perse sells Chateau Monbousquet stake to pension firm

 

Source: Decanter

by Jane Anson in Bordeaux & Chris Mercer

Tuesday 26 February 2013

Chateau Monbousquet owners Gerard and Chantal Perse sign ‘alliance’ with pensions firm.

 

A French pensions company has acquired an interest in Chateau Monbousquet in Saint Emilion, as part of a succession plan devised by owners Gerard and Chantal Perse.

 

The company, which remains anonymous, has agreed to form an ‘alliance’ with Vignobles Perse, Chantal Perse has confirmed to Decanter.com.

 

No financial details have been disclosed, but it is understood that the deal involves the sale of a minority stake in Monbousquet, the first chateau bought by Chantal and her husband, Gerard, in Saint Emilion in 1993.

 

‘This alliance is to pass on our heritage, the fruit of more than 40 years work, to our children,’ Chantal Perse said. The family also owns Pavie, a Saint Emilion premier grand cru classé A as of 2012, and grand cru classé Pavie-Decesse, plus Clos Lunelles in Castillon.

 

All Monbousquet wines will still be sold via the Bordeaux marketplace, she added.

 

Last week, Gerard Perse was quoted as telling a group of French journalists at the launch of L’Esprit de Pavie in Paris that he was ‘forced to sell’ the stake, to avoid paying French inheritance tax on transferring ownership of the estate to his daughter Angelique and her husband, Henrique da Costa.

 

Chantal Perse declined to comment on the amount of inheritance tax that was owed. However, she said the reported figure of EUR70m is ‘totally unrealistic’.

 

The Perses’ first vintage at Monbousquet was 1993, and the family has been living at the rejuvenated chateau ever since. The estate was promoted to Grand Cru Classé in 2006.

 

 

——

Radico Khaitan sees COO head to Jagatjit Industries (Excerpt)

 

Source: Just Drinks

By Olly Wehring

26 February 2013

 

Radico Khaitan has lined up a management restructure following the recent departure of its long-serving chief operating office.

 

The company, which is India’s second-largest spirits producer, said late last week that Raju Vaziraney, who was with Radico for ten years, has moved to rival firm Jagatjit Industries to become an executive director. Radico’s marketing head, Rahul Gagerna, has subsequently been appointed president of sales and marketing.

 

William & Grant’s former business development manager in India, Ankur Sachdeva, will be looking after Radico’s international division.

 

 

——

DRI: Analyst Day 2: Trying to brand manage through a promotional fight

 

Source: Goldman Sachs

Feb 27th

 

What’s changed

We attended Day 2 of DRI’s analyst day featuring its brand presidents.

 

Implications

We are concerned that DRI may be unwilling to do what it truly takes to stimulate traffic growth in this environment; we do not believe it will be able to “brand manage” its way through a promotional market share fight.

 

(1) Olive Garden – DRI acknowledged that its competitive advantage on value has narrowed, it needs menu work at lunch, its service times are too slow and that it needs to update its image. It is undertaking several projects to address these (and other) issues, but it did not appear willing to invest margins to drive lower prices and thus improve value perceptions.

 

(2) Red Lobster – The brand is focusing on strategies like remodels, fresh fish, updated advertising and tapping into health/wellness; all strategies we view as strategically sound in a “normal” environment. However, its new menu, new ad campaign and ongoing remodels are all currently active, and yet they have shown limited ability to lift SSS in recent months.

 

(3) Longhorn – SSS are negative (from up mid-single digits previously), and DRI indicated price/value scores have fallen. It talked about improving affordability for the customer, but seems more focused on growth. Plus truly improving value may be difficult in the face of 8%-10% beef inflation.

 

Valuation

We lower fiscal 2013-2015 EPS estimates to $3.30/$3.04/$3.14 to reflect lower SSS/margins. 2014 is below guidance as we see limited visibility to traffic growth. We lower our P/E and DCF-based 12-month price target by $3 to $45 to reflect these lower estimates. This is 15x our 2H13/1H14 estimates, up 1pt to reflect our view that DRI’s 4%-5% dividend will provide a floor.

 

Key risks

Upside/downside risks relate to industry growth and DRI share shifts.

 

 

——

Chuy’s plans to grow in new markets

 

40-unit casual-dining chain to enter five new states this year

 

Source: NRN

Ron Ruggless

Feb. 26, 2013

 

Casual-dining chain Chuy’s will expand into five new states this year, parent company Chuy’s Holdings Inc. executives said Monday.

 

The company, which went public last summer, plans to add eight to nine new locations to its 40-unit, Tex-Mex-themed chain this year, executives said in a fourth-quarter earnings call.

 

“A lot of them will be in the Southeast market,” said Chuy’s president and chief executive Steve Hislop. “You will see us actually go into approximately five new states this year, which will be the extension of markets that we are already in.”

 

Hislop said Chuy’s plans to enter the Carolinas from its current Atlanta market and enter Virginia from the Nashville-Knoxville, Tenn., market.

 

“You will see us continue up into Cincinnati from our Louisville- Lexington-Florence, Ky., market,” Hislop added. “And the big one that we will see is we’ll probably enter by the end of the year into the Kansas City, Mo., market, straight up I-35 all the way out of Austin.”

 

Growth beyond the Carolinas includes heading into the Richmond, Va., and into the District of Columbia by 2015, he said.

 

Chuy’s is also seeking to extend its development pipeline to 20 to 24 months, compared with the traditional 18 months. “You will see us do a little backfill, but you will see us entering in all those states and really start penetrating those markets without cannibalizing ourselves,” he noted.

 

The company is considering 55 new sites in all the markets for 2014, he explained. “We expect again we’ll grow physically at that 20-percent level every single year on top of our growth over the prior year,” Hislop said.

 

He added that last year Chuy’s launched a second opening team. “It’s actually easier to open eight [restaurants] last year than it was five three years ago,” he said. “We will never grow faster than our people.”

 

In 2012, Chuy’s opened eight new restaurants, and the company has already opened one in the first quarter of this fiscal year.

 

Chuy’s chief financial officer Jon Howie said the company projects opening costs for each unit in the $350,000 to $400,000 range.

 

On Monday, Chuy’s reported that fourth-quarter net income rose to $2.6 million, or five cents per share, from $300,000 in the same quarter a year ago.

 

Revenue for the quarter, which ended Dec. 30, increased 40.3 percent to $46.7 million, from $33.3 million in the previous year.

 

Same-store sales increased 5.2 percent. However, excluding from the comparison the positive impact of an extra 1.5 operating days because of the Christmas holiday, same-store sales increased 3 percent, the company reported.

 

Austin, Texas-based Chuy’s Holdings currently operates restaurants in eight states.

 

 

——

What a minimum-wage hike could cost restaurants

 

Source: NRN

Mark Brandau

Feb. 26, 2013

 

Restaurant brands’ response to President Obama’s call for a raise in the federal minimum wage thus far has been muted, but industry watchers said the proposal would likely cause labor pains for foodservice companies if it becomes law.

 

In his Feb. 12 State of the Union address, President Obama suggested the federal rate move from $7.25 per hour to $9 per hour. The federal minimum wage was raised to $7.25 in 2009, while the federal tipped minimum wage for servers has remained at $2.13 since 1991. Currently, 19 states have their minimum wages set at both federal levels, while the remaining 31 states and District of Columbia are a patchwork of their own minimum rates, including 10 states that tie their minimum wages to inflation, as the president has proposed for the federal rates.

 

Several public restaurant companies have reported earnings since the president’s address, but leaders of those companies did not directly comment on the proposal during their conference calls and instead voiced concerns over other macroeconomic challenges.

 

Officials for Darden Restaurants Inc., Bloomin’ Brands Inc., CEC Entertainment Inc. and Denny’s Corp. all pointed to rising gasoline prices and the expiration of the payroll tax holiday as more immediate threats to their sales and traffic this year. One chief executive, John Miller of Denny’s, did mention the president’s proposal, but only to say, “We’re also keeping our eye on the minimum-wage discussions going on in Washington.”

 

But while individual restaurant companies so far are mum on a minimum-wage increase that currently is just a proposal, at least one securities analyst has released research on what a raise in the federal rates could do to the labor costs of several large chains.

 

According to projections from Sharon Zackfia of William Blair & Company, brands with a higher percentage of franchised units in their total store counts, as well as those located mainly in high-wage states, would feel less pressure on their labor line – and thus less pressure to raise prices aggressively – if the wage hike goes through.

 

In a recent research note, Zackfia estimated that if the proposed measure takes effect, the rate of inflation to labor costs could rise an average of 18 percent for the eight restaurant companies her company covers: BJ’s Restaurants Inc., Bloomin’ Brands Inc., The Cheesecake Factory Inc., Chipotle Mexican Grill Inc., Dunkin’ Brands Group Inc., Panera Bread Co., Sonic Corp. and Starbucks Corp.

 

“We estimate the overall unit-level labor pressure resulting from a minimum-wage hike could range from as high as roughly 21 percent for Sonic to as low as 14 percent for BJ’s, assuming a $9 federal minimum wage,” she wrote, noting that the estimate also considered a comparable 50-cent increase to the minimum tipped server wage that was not part of Obama’s proposal.

 

The outsized effect Sonic could feel from a minimum wage hike has less to do with its ownership model than with location, Zackfia wrote. Only 12 percent of Sonic’s more than 3,500 locations are company-owned, she noted, but more than 45 percent of them are in Texas, where the minimum wage and minimum tipped wage are both at the lowest possible levels.

 

“While we are encouraged by Sonic’s inflection into consistently positive same-store sales trends over the past 18 months,” she wrote, “we view the company’s ability to digest the proposed increase in minimum wages with concern, given QSR’s value proposition and the potential for such an increase to crimp franchisee profitability.”

 

Zackfia suggested that Sonic would have to take the highest estimated menu price increase, at 6 percent cumulatively by 2015, to maintain its company-owned restaurant-level margins should the proposed minimum-wage increases take effect.

 

If franchise operators’ margins are pressured further, their willingness to expand could recede, Zackfia noted, adding that Sonic’s store count has largely stayed flat since 2009.

 

By contrast, she wrote, Dunkin’ Brands likely would experience the least direct impact because of its virtually 100-percent-franchised business model and the fact that nearly half its restaurants are located in states whose minimum wages exceed the federal rate. Nearly 15 percent of Dunkin’ Donuts locations are in Massachusetts, which has an $8 minimum wage, she noted.

 

“Overall, we view the risk as relatively low as it relates to Dunkin’s franchisees’ appetite to continue to expand,” she wrote, “as other factors, such as falling coffee prices and the implementation of flat systemwide pricing, should more than offset the impact of the potential for higher minimum wages as the concept pushes west.”

 

Starbucks likely would face very little risk as well from increased minimum wages, Zackfia found, estimating that an approximate cumulative price increase of 3 percent by 2015 could offset projected labor-cost pressure.

 

As with Starbucks, “we view the increases as relatively manageable for Chipotle and Panera,” she added, speculating that the fast-casual chains could protect margins with cumulative price increases of 3 percent and 4 percent, respectively.

 

In casual dining, assuming a 50-cent increase in the minimum tipped wage for servers, an estimated 4-percent cumulative price increase likely would offset projected inflation on the labor line for BJ’s, Bloomin’ Brands and The Cheesecake Factory, Zackfia wrote. By comparison, she noted, BJ’s typically has averaged an approximate annual price increase of 3 percent, The Cheesecake Factory has of 2 percent, and Bloomin’ Brands has between 1 percent and 2
percent.

 

Because the proposal is not yet in the legislative phase, industry advocates have not begun to lobby actively against a raise in the federal minimum wage, but they nonetheless have identified the proposed hike as another challenge to profitability if it comes to be.

 

In an email to Nation’s Restaurant News, International Franchise Association chief executive Steve Caldeira said raising the minimum wage would be another incremental cost restaurant franchisees would have to absorb, in addition to challenges like tax increases enacted in this January’s “fiscal cliff” deal, high energy and commodity prices, and ongoing difficulties in accessing growth capital.

 

“When you put this in the aggregate, clearly it affects the ability of small business owners to invest more into their businesses,” Caldeira wrote. “The president is ignoring the real problem, which is how to create more jobs in this country, and is choosing to play politics with an issue that will lead to fewer opportunities on the supply side in the form of employment.”

 

Caldeira added that IFA members would like to see the nation’s political focus on issues like comprehensive tax reform and immigration reform, “two issues that both the White House and business community agree will help grow the economy and create the jobs this country so urgently needs.”

 

In a “Minimum Wage Fact Sheet” distributed to its members, the National Restaurant Association stated that it “strongly believes a mandatory wage hike is not the way to help working Americans” and that “strong economic evidence suggests that increasing the minimum wage results in fewer jobs being created.”

 

The NRA also noted in its brief that only 27 percent of minimum-wage earners in the restaurant industry are classified as the head of their household, and the vast majority of those employees are young and single and work part-time. The average household income of restaurant employees earning the federal minimum wage is slightly more than $62,500, the NRA found.

 

The association said a Wage Task Force, chaired by the immediate past chair of the NRA, Roz Mallet, had been preparing for a proposal such as President Obama’s and soon will convene a coalition of more than 80 trade associations across several industries to lobby against a raise in the federal minimum wage.

 

 

——

Utah: Liquor bill aims to take down ‘Zion curtains’

 

Source: Huff Post

ANNIE KNOX

February 27, 2013

 

Wine spritzers are a favorite at Rovali’s near Salt Lake City. Behind the bar, in full view of patrons, waiters siphon soda and syrup into glasses of ice – then they duck behind a fake olive tree and a barricade to add the chardonnay.

 

Utah’s famously strict liquor laws forbid the restaurant from pouring alcohol in front of customers. The ban is based on the idea that the state should shield the mixing of cocktails and pouring of drinks from children. The so-called “Zion curtains” went up around the state as part of a compromise after lawmakers lifted a mandate in 2010 requiring bars to operate as members-only social clubs.

 

But this year, the curtains may be coming down.

 

Utah lawmakers are considering whether to repeal the requirement, a move that would ease restrictions and encourage new business. Right now, the requirement applies to restaurants that have been in operation for less than three years.

 

Doing away with the curtain would mark yet another small step by the state to relax its liquor laws.

 

Lawmakers have introduced a handful of pending bills this year that would ease Utah liquor regulations, including a measure allowing customers to order a drink before they order food and another to make more liquor licenses available to restaurants.

 

They are scheduled to discuss whether to do away with the curtains Wednesday; the measure has not yet been voted on by either chamber.

 

The Zion curtains have a long history in the state, and its nickname nods to Utah’s legacy as home to The Church of Jesus Christ of Latter-day Saints. The barriers first went up decades ago in the social clubs that existed before bars were legalized in 2009, unmistakable glass walls separating customers from bartenders.

 

Those who oppose the Zion curtains say the law forces restaurant owners to waste money and space on configurations to keep bartenders out of sight of patrons using barriers or strategically positioned service bars. Curtain opponents also say the law hinders tourism by annoying outsiders and reinforcing their perception of Utah as staunchly sober.

 

At Rovali’s, an Italian restaurant in Ogden that opened in 2010, waiters explain the state’s befuddling liquor laws to out-of-towners and, Montanez said, “you see the eye roll.”

 

“That kind of stifles guests,” he said. “They’re a little rankled by these weird laws.”

 

Some lawmakers warn that removing the mandate could encourage underage drinking and influence customers to drink too much.

 

The majority of Utah legislators and residents belong to the Mormon church, which teaches its members to abstain from alcohol.

 

“Alcohol is a drug,” said Sen. John Valentine, R-Orem, who opposes the law. “It has social costs. We have DUIs. We have underage drinkers. We have problems that are caused by drinking.”

 

Valentine said he would consider supporting the proposal if the state promised trade-offs such as bulking up police presence around restaurants and nearby roads, or a measure keeping children from entering restaurants serving liquor.

 

For restaurant owners moving into existing spaces, the law presents a nightmare, said Rep. Ryan Wilcox, R-Ogden. Restaurants sometimes have to cut into floor space, he said, where more tables should be.

 

“It really just hampers the new guys, the little guys,” Wilcox said. “A lot of these guys, too, they’re not large operators. They’ve got one shop: `This is my restaurant. My lifelong dream. I’ve invested everything into this.’”

 

At Rovali’s, Montanez plays sommelier for guests who order wine service, setting off a presentation that underscores the patchwork nature of current laws. Montanez opens the wine at the table and invites guests to sniff the cork. If they purchase the bottle, he can pour and serve the bottle. If they order by the glass, however, he must slip away to pour the drink behind a partition.

 

“Everything we do is show,” Montanez said, likening the visible pouring of drinks to a dessert cart.

 

The display of pastries and sweets bolsters dessert sales at the restaurant by about 15 percent, he said. In comparison, Montanez estimates that removing the curtain would boost wine sales by a similar margin.

 

“You can’t get creative, that’s for sure,” he said of the partition. “You have to stick with the rules.”

 

Melva Sine, president of the Utah Restaurant Association, said the curtain mandate confuses diners and raises eyebrows. Utah should impose one set of rules for all restaurants, regardless of their start date, Sine said.

 

“It lessens consumer confidence: What’s the reason that you’re doing this in the back room?” she said.

 

Sine rejects the notion that the visible flow of liquor would tempt youngsters to drink.

 

“We have got to stop feeling like everyone who drinks alcohol is doing something wrong,” she said. “We all want people to go out and enjoy themselves and be responsible.”

 

 

——

New Jersey: Cherry Hill lifts ban preventing liquor sales at grocery, big-box stores

 

Source: Philly Inquirer

Maddie Hanna

February 27, 2013

 

Cherry Hill has lifted a ban that prevented grocery and big-box stores from selling liquor, expanding the field of potential bidders when it auctions a new liquor license next month.

 

The change, approved Monday night by the township council, has drawn protests from liquor-store owners, who say they will be driven out of business by chain supermarkets.

 

“This is basically our whole livelihood,” said Rich Brooks, who owns Benash Liquors on Route 38. “This is just an SKU [stock-keeping unit] to them.”

 

For years, Cherry Hill has allowed only stand-alone liquor stores. But township officials, who have been preparing for the rare event of auctioning a new liquor license, said they decided to lift the ban to ensure Cherry Hill can compete with communities that don’t have similar restrictions.

 

Brooks and New Jersey Liquor Store Alliance president Paul Santelle, who said they met with Mayor Chuck Cahn on Friday, believe township officials are trying to give a competitive edge to ShopRite, which has two Cherry Hill stores.

 

In a statement, Santelle said Cahn “is willing to step on the backs of the small business owners that own all eight of the township’s current liquor licenses in order to stack the deck in favor of the ShopRite.”

 

Township spokeswoman Bridget Palmer said Santelle’s claims were “patently false.”

 

“This was absolutely not done to target any one specific retailer, by any stretch,” she said. ShopRite officials did not return a message seeking comment.

 

Cahn – a former businessman – doesn’t believe the new rules will hurt small business owners, Palmer said.

 

“We think there’s room for everyone,” she said.

 

The revised ordinance allows liquor to be sold in any store if sales are confined to a separate area that is at least 15,000 square feet and purchases are at designated cash registers – conditions added to the ordinance after review by the township.

 

Any retailer, grocery or otherwise, that possesses a liquor license can sell liquor after meeting those conditions.

 

Santelle said the square-footage requirement discriminates against convenience stores that would be too small to meet the space requirements of the ordinance.

 

Palmer said township officials “have every confidence that what we’ve adopted is legal.”

 

The liquor-license auction is to take place March 26 through sealed bids, a process the township hopes will lead to higher bids.

 

Township officials have said the minimum bid is $425,000.

 

 

——

Connecticut: Liquor law battle at the Capitol  

 

Source: News 8

26 Feb 2013

 

Part two of Governor Malloy’s liquor law battle is underway at the State Capitol.

 

He won round one last year getting allowing liquor sales on Sundays…now he wants to change the state’s complicated pricing policy that he says makes the state uncompetitive with the surrounding states.

 

Since last May, Connecticut consumers have been able to purchase beer, wine and spirits on Sundays and most holidays.

Many store owners say it has not increased business, but part two of the Malloy administration’s liquor law battle is to abolish Connecticut’s minimum pricing rules.

 

The only ones in the nation; rules designed to protect small stores by setting the price for a bottle no matter if you buy one or an entire case it has to be the same.

 

“We feel that the minimum pricing artificially inflates pricing for the consumer,” said Arthur DeSisto, Total Wine & More in Norwalk, “forcing, in many instances, forcing customers to shop neighboring states.”

 

The administration believes in the northern tier of the state, it results in the loss of at least $2.5 million a year in tax revenue as people flock to lower prices in Massachusetts.

Dominic Alaimo, who operates a store on the border in Enfield, says it will help him compete against the so-called big box stores.

 

“If this guy is buying liquor by the case, cheaper than I am, this law will allow me to buy two bottles equal to the price that he pays for 12 bottles,” said Alaimo.

 

However, many small store operators around the state flooded to the Capitol again Tuesday, saying big box liquor retailers will move in and it will force them and the dozen or so small distillers that operate in the state, out of business.

 

“They want to bring the national brands in, sell them at cost basically, and drive all the small guys out,” said Greg Carlon, Castle Wine & Spirits in Westport. “They would drive the small liquor companies out, the small liquor wholesalers out as well.”

 

“The marketplace will change and the small brands will be affected,” said Mike Scalise, CT Small Brand Council, “whether it be shelf space or pricing.”

Some liquor store owners have told News 8 that the state sales tax is another big problem.

Massachusetts does not charge sales tax on beer, wine and liquor.

 

The state tax commissioner told News 8 Tuesday that abolishing the sales tax on beer, wine and liquor could be next year’s battle here.

 

 

——

Tennessee: Wine bill barely advances in Senate committee

 

Source: The Associated Press

By Erik Schelzig

Feb 26th

 

A proposal to allow wine to be sold in Tennessee supermarkets and convenience stores scored its first legislative victory on Tuesday after years of frustration.

 

The Senate State and Local Government Committee voted 5-4 to advance the bill that would allow cities and counties to hold referendums next year to decide whether to expand wine sales beyond the state’s nearly 600 licensed liquor stores.

 

Sen. Bill Ketron, R-Murfreesboro and the bill’s main sponsor, stressed that the wine votes would only be allowed in communities that have previously passed referendums to allow sales of liquor by the drink and retail package stores.

 

“Both of which wouldn’t be in your city or county if it did not get there by referendum,” he said. “All we’re doing with this bill is asking the same opportunity: Let your people vote.”

 

The measure would have to be approved by the Senate Finance Committee before heading for a full floor vote. The House began hearings on the measure on Tuesday, and an initial subcommittee vote could come next week.

 

The proposal has the support of two of the heaviest hitters in the Legislature in Senate Speaker Ron Ramsey of Blountville and House Speaker Beth Harwell of Nashville.

 

Statewide public opinion polls have shown strong support for supermarket wine sales, but opponents have raised fears about wider availability of stronger alcohol and the effect the change would have on existing liquor stores.

 

Under current law, supermarkets can’t sell any alcoholic drinks stronger than beer, while package stores can’t sell anything other than wine, liquor and lottery tickets.

 

Republican Sen. Jack Johnson tried to add a provision to the bill that would allow liquor stores to sell cigarettes, beer, snacks and other items in communities that approve supermarket wine sales.

 

“If we’re going to provide some convenience for folks in a grocery store who want to get a bottle of wine with their pot roast, I think you ought to be able to get a corkscrew with your bottle of wine,” he said.

 

Ketron noted that several businesses around the state have been allowed to “skirt the law” by building both a liquor store and convenience store under the same roof, divided only by a wall or glass divider.

 

“Why not tear down the wall, as Ronald Reagan said,” Ketron said. “Allow them to sell whatever they need to sell. That’s part of what this country is founded on.”

 

“I don’t want to have to drive to Kroger if I can buy my mixers in the liquor store,” he said. “I want to buy some wines and do tastings, I don’t have a problem with that.”

 

That proposed expansion failed by one vote, leading supporters of the overall proposal to fear that the measure would fail by a similar margin. But Democratic Sen. Reginald Tate of Memphis ended up swinging his vote in support of advancing the bill.

 

Tate told reporters later that while he personally opposes wine sales in grocery and convenience stores, he didn’t want to stand in the way of a referendum on the issue.

 

“It was so close that I think it was wrong for me to say no wine in the stores,” he said.

 

Republican Sens. Janice Bowling of Tullahoma and Mark Green of Clarksville joined Ketron, Johnson and Tate in voting for the bill. Voting against the measure were Chairman Ken Yager, R-Harriman; Senate Majority Leader Mark Norris, R-Collierville; Sen. John Stevens, R-Huntingdon; and Sen. Thelma Harper, D-Nashville.

 

The vote was followed by a mass exodus from the committee room, with supporters showing their excitement and opponents retreating to discuss their next steps.

 

“It’s disappointing, very disappointing,” said Chip Christianson, owner of J. Barleycorn’s package store in Nashville and former president of the Tennessee Wine and Spirits Retailers Association. “I don’t know the rationale, but we live to fight another day.”

 

 

——

Australia: No place for wine in supermarkets, say SA pubs and bottleshops

 

Source: TheShout

By Amy Looker

27/02/2013

 

South Australian retailers and hoteliers have launched a campaign against a State Government proposal to allow supermarkets to sell wine.

 

The South Australian Liquor Stores Association (SALSA) and the Australian Hotels Association of South Australia (AHA SA) launched the ‘Let’s Draw The Line’ campaign yesterday, calling for the government and community to consider the proposal’s impact on independent liquor retailers.

 

The proposal provides that supermarkets with a minimum of 400sqm floor space could apply for a licence to sell bottled wine only.

 

This would apply to giants Coles and Woolworths along with Foodland, IGA, and Aldi, and potentially larger service stations and convenience stores.

 

In the discussion paper, released in late January, the South Australian minister for business services and consumers, John Rau, said the proposal has been designed to benefit local wineries and grocery retailers.

 

“Many of our local wineries are unable to compete or meet with the demands placed upon them by some liquor retailers,” Rau said.

 

“This new class of liquor licence will open up new opportunities in the market for these winemakers.”

 

However, Wendy Bevan from the AHA SA said the proposal gives “open slather” to supermarkets to go after wine sales to the detriment of liquor retailers without the promise of ongoing support or benefit to the South Australian wine industry.

 

“This proposal will force the largely independent liquor retailers across the state to close or sack staff to survive,” Bevan said.

 

“These are the specialist wine shops that currently support SA wine. At the same time it must further empower the national chains likes Coles and Woolworth to exercise even greater influence in the marketplace.”

 

SALSA president, Breck Waterman, told TheShout that another concern is the increase in liquor licences across the state, which already has the highest number of licences per capita in the country.

 

“You’re talking about hundreds of licenses across the state. We have more licenses per capita here than any other state or territory in the nation at one for every 224 people,” Waterman said.

 

“The independent bottleshops and the hotel-attached bottleshops support small wine producers – that’s how we compete with the chains and this is really going to hurt our businesses.”

 

“It seems out of whack. What happened to the Aussie battler? When you consider that most territories and governments are trying to tighten up liquor licensing laws, it’s amazing that this government appears to be loosening the laws, going against the national trend.”

 

The closing date for submissions on the proposal is Friday 1 March.

Tags: , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


Follow

Get every new post delivered to your Inbox.

Join 1,658 other followers

%d bloggers like this: