Archive for the ‘Wine Education’ Category

Wine Tasting Event-Cameron Hughes March 21st 7pm

March 5, 2013

Cameron Hughes Cork

 

Cameron Hughes Wine Tasting

Thursday March 21st 7PM
Host: Mark-Franklin Liquors
Guests: Roger Warner-Bay State Wine
Christine Zecker-Cameron Hughes Wines

Please Join Us In Our Wine Room As We Taste
Cameron Huges Wines.
This Is A FREE RSVP
Event. Please Contact Us To Save A Seat(S)
508-528-7338
Email:franklinliquors@verizon.net

This Will Be A Biodynamic FLOWER Day.
Great To Taste Wine!

About Cameron Hughes Wines
Cameron Hughes is an American négociant that makes, imports, and distributes ultra-premium wine under five wine labels;
The Lot Series
Hughes Wellman
Cameron Hughes California
Greenlip
Zin Your Face
The wines are nationally distributed and carried in chains, grocery, broad market (fine wine and liquor shops),
on premise (restaurants and hotels) and online.

The company was founded by Cameron Hughes and Jessica Kogan in 2001 for one simple reason –
to bring truly exceptional wine to the market at real world prices.
They do this by partnering with the finest growers and wineries in the world and delivering
consistently high quality wines and the highest degree of service to customers.
The result is Cameron Hughes is one the most trusted wine brands in the industry,
receiving high praise from wine experts and consumers like.

Published critical acclaim for the company comes from the Wine Enthusiast,
Wine Spectator,Robert Parker, Jr., Wall Street Journal, Food & Wine,
New York Times, Rachel Ray, Oprah Magazine, and more.
In 2012, Cameron Hughes was nominated for “Innovator of the Year” by the Wine Enthusiast.

Cameron Hughes Wines

We Are Excited To Bring Back These Wines!
Christine Will “Taste” And Educate You On Some GREAT WINES!

 

Website
http://chwine.com/

Liquor Industry News 3-5-13

March 5, 2013
www.franklinliquors.com

Franklin Liquors

 

Tuesday March 5th 2013

Biodynamic LEAF Day

GS Research – Brown-Forman Corp. (BF__B): Below consensus for 3Q13; remain Sell rated on valuation

 

Source: Goldman Sachs

Mar 4th

 

INVESTMENT LIST MEMBERSHIP: Americas Sell List

COVERAGE VIEW: NEUTRAL

 

What’s changed

BF__B reports 3Q FY13 earnings before market open on Wednesday March 6. We are at $0.65 for the quarter, which is below consensus of $0.70, largely due to lower top-line expectations. Our estimates are unchanged and we remain Sell rated due to high valuation. We do not expect a change to guidance, as we sit near the midpoint of management’s range (GS $2.64 for FY13 vs. guidance of $2.58-$2.70, consensus $2.69).

 

Implications

We are $0.05 below consensus, mainly due to sales expectations – We are forecasting reported gross sales to be up 4.5% vs. consensus of 6.8%, but we expect underlying sales to be up 7.5% (vs. 7.8% in 1H13). The top line should continue to be somewhat noisy given (1) retail and wholesaler inventory de-loading that is still being worked out post the build in 1Q (we expect a -1pt impact to shipments) and (2) this will be the final quarter of the Hopland impact which will shave about 2pt off of sales by our estimate. On an underlying basis, we expect depletions up 4% (estimate 0.5-1pts of retail de-loading still impacting this number) and price/mix of +3.5%, in line with 2Q13.

 

Price/mix to drive gross margin expansion – The gross margin has stepped up nicely in FY13 and we expect this to continue given positive portfolio mix and higher pricing. We forecast gross margins (on net sales) to be up 340 bp year-over-year to 66.7%.

 

Advertising expense expected to step-up given FY12 spend timing – Ad spending was largely 1H loaded last year due to the Tennessee Honey launch so we are forecasting 3Q13 underlying ad spend growth to step up to +9.5% from +6.5% in 1H13.

 

Valuation

Our 12-month, EV/EBITDA-based price target of $62 is unchanged.

 

Key risks

Higher bourbon demand, higher pricing, lower inflation, lower SG&A

 

 

——

BFb: 3Q13 Earnings Pre-Game Primer

 

Source: CITI

Mar 4th

 

Solid Net Sales Growth Expected – In 3Q13, we expect BFB’s reported sales to increase 7.0% YoY (which is essentially in line with the Street’s +7.3% estimate), the result of (i) an easy comp as sales were down slightly in the year-ago period, (ii) the benefit from the company’s 1Q13 price increases, and (iii) the solid volume trends seen in Nielsen-tracked channels (particularly for the Jack Daniel’s and Woodford Reserve brands). We expect that the absence of the agency relationship for the Hopland-based wines (which ended Dec. 31, 2011) will act as a 3-pt drag such that underlying net sales will be up 10% YoY.

 

Margins Should Expand – We expect that BFB will deliver a 48.0% gross margin (+100 bps YoY), driven primarily by the benefits of the Hopland sale, price increases and improving mix-shift. We believe that BFB’s operating margin will expand to 23.1% (+160 bps), as the company’s gross margin savings will be complemented by lower ad spending and SG&A expenses (as a percentage of sales). Our estimate is 90 bps ahead of consensus.

 

EPS Growth Expected – In 3Q13, we expect that BFB will deliver EPS of $0.72, which represents 15.7% earnings growth YoY, and is two cents above consensus.

 

What We’ll Be Interested in Hearing About – An update on bourbon pricing following the recent developments with BEAM’s Maker’s Mark brand; management’s expectations for the international tax environment over the remainder of 2013; additional detail regarding the decision to take over distribution in France beginning in 2014; color on the introduction of a number of flavored line extensions for the Canadian Mist brand; and BFB’s outlook for the EU.

 

Conference Call Details – Wednesday, Mar. 6, at 10:00 am ET. Dial-in: 888-624-9285 (domestic) and 706-679-3410 (international). No password is required.

 

 

——

Hidden Billionaire Garavoglia Pouring Campari Fortune

 

Source: Bloomberg

By Kambiz Foroohar & Zohair Siraj

Mar 4, 2013

 

Jillkerry Ward, a 37-year-old bartender at upscale French restaurant Le Cirque in New York, grabbed a glass Friday night and poured a negroni: two parts gin, a splash of sweet vermouth and two shots of Campari.

 

“We probably pour 10 to 15 of these every night,” she said, garnishing the cocktail with an orange. “It’s a classic.”

 

Davide Campari-Milano SpA (CPR), which sells the bitter aperitif and is Italy’s largest maker of alcoholic beverages, has doubled in value in the last five years and reached a record in October as demand for Campari in Italy increased. Thirst for the company’s other brands, such as Skyy vodka and Wild Turkey bourbon, has expanded in the U.S. and Brazil as well.

 

The surge has made 79-year-old Rosa Anna Magno Garavoglia Italy’s oldest known female billionaire. Garavoglia, who controls a 31 percent economic interest in the company, has a net worth of at least $1.5 billion, according to the Bloomberg Billionaires Index. She has never appeared on an international wealth ranking.

 

The company, based in Milan, had revenue of 1.3 billion euros ($1.7 billion) in revenue in the last 12 months, up 30 percent over its fiscal year 2009 sales. It controls more than 45 brands in 190 countries, including the rights to produce and distribute Jagermeister liqueur and Glenfiddich Scotch whisky.

 

The company has been on a buying binge, spending more than $1 billion since 2007 to acquire eight beverage companies in the U.S., Europe and emerging markets such as Brazil and Jamaica. More than three-quarters of its sales come from spirits, according to data compiled by Bloomberg.

 

Red Passion

 

“Campari has taken positive steps to get products that have credibility with the connoisseurs and have mass appeal,” Josh Harris, co-founder of The Bon Vivants, a San Francisco- based company that consults for liquor brands, said by phone Feb. 28. “What they are doing is phenomenal.”

 

Garavoglia controls 60 percent of Milan-based Alicros SpA, a family holding company, according to Italian regulatory filings. Alicros owns 51 percent of Davide Campari-Milano, the documents show. She inherited the stake from her late husband, Domenico Garavoglia, a Campari executive who received it from company’s last living heir in 1982.

 

Two of Garavoglia’s three children — Campari chairman Luca Garavoglia, 44, and Alessandra Garavoglia Forloni — split a fortune valued at more than $900 million. Chiarra Bressani, head of group communications at Campari, said the family declined to comment on their net worth and does not grant interviews.

 

Loyalty Reward

 

Campari traces its roots to Novara, a city 34 miles (55 kilometers) northwest of Milan, where Gaspare Campari opened a cafe in 1860, according to the company’s website. He began developing his own drink concoctions, the most famous of which was the aperitif that eventually adorned the family name. Campari’s son, Davide, began selling the beverage, which was nicknamed Red Passion

 

Domenico Garavoglia, who held a degree in industrial chemistry, joined the company in 1952. Nine years later, he was put in charge of the Red Passion recipe, which is still a closely-guarded secret, according to Campari’s website.

 

Angiola Maria Migliavacca, the last heir of the Campari family, retired and made Garavoglia managing director in 1976. The company passed to Garavoglia six years later as a reward for his loyalty. He died in 1992.

 

His son, Luca, became chairman in 1994. A year later, he bought the Italian soft drinks portfolio of Utrecht, Netherlands-based Royal Wessanen NV for 35 percent of Campari. The company sold shares in an initial public offering in 2001, leaving the family with 51 percent of the equity.

 

Skyy Vodka

 

At the time, Garavoglia’s eldest daughter, Maddalena Garavoglia, accused her family in Milan civil court of forcing her out of the company. A judge sided with Maddalena in 2006, forcing her mother and two siblings to pay her 100 million euros.

 

The family has since diversified its holdings beyond Campari. Alicros acquired 50.4 percent of Trevisan Cometal SpA, a Verona, Italy-based aluminum engineering operation, for 95.5 million euros in 2007. The company went into bankruptcy two years later after failing to renegotiate its debt.

 

Alicros also owns real estate companies Immobiliere San Gottardo, Roma and Lubita, which are valued at about 56 million euros, according to the company’s annual report.

 

Campari bought an 8.9 percent stake in San Francisco-based Skyy Spirits LLC, the maker of Skyy Vodka, in 1998. It acquired another 50 percent of Skyy for $239 million about two years later, and another 30 percent for $156 million in 2005.

 

Buying Spree

 

The company’s expansion into the U.S. continued with the 2009 purchase of the Wild Turkey brand of Kentucky bourbon for $575 million from from Paris-based Pernod Ricard (RI) SA. Campari Chief Executive Officer Bob Kunze-Concewitz said in August 2011 that the company will continue to make acquisitions to expand.

 

That month it spent $26 million to buy Sao Paolo-based Sagatiba Brasil, producer of a sugar-based spirit called cachaca, which used to make caipirinha cocktails. The company bought Lascelles DeMercado & Co., the Jamaican maker of Appleton rum, last September in a deal valued at $414.8 million.

 

Still, about a third of Compari’s sales are generated in Italy, where the economy, saddled with $2.6 trillion in debt, has contracted for 18 straight months. Italian political instability, after last week’s election ended in a four-way split, threatens to reignite concern about the deepening of its debt crisis.

 

Campari missed earnings estimates in November, which Kunze- Concewitz blamed on the country’s economic woes. Its annual sales growth has dropped to 4.8 percent from 15.3 percent in 2010, according to data compiled by Bloomberg.

 

‘Increasingly Complex’

 

More analysts are bearish on the stock than bullish. Six analysts have a buy rating on Campari, and 16 analysts have hold or sell ratings, according to data compiled by Bloomberg. The average 12-month target price for the company by those 22 analysts is 5.79 euros, 3.75 percent lower than yesterday’s closing price in Milan.

 

“The company has made many deals in the past decade, with the portfolio now increasingly complex and containing too many brands that don’t have strong growth profiles,” said Samar Chand, an analyst at Barclays in London in a telephone interview. He downgraded the stock to an ‘Underweight’ in November “Apart from Wild Turkey, nothing else has sustainable traction.”

 

 

——

Exane BNP Paribas equity research : CAMPARI GROUP (=): FY 12 Results on 7 March  

 

Source: Exane BNP

Mar 4th

 

TP: EUR5.8 . Downside: 4%

Beverages (-) . Italy . Price (01 Mar. 13): EUR6.0

 

Italy to be the key driver of Q4 performance

A sudden deterioration from September translated into a 10% organic contraction in Q3 sales from Italy. Since then, consumer confidence and unemployment have deteriorated further whilst political uncertainty has prevailed (see Friday drinks – Mamma mia!). As this tough environment is compounded by destocking from Q4, we expect Italian Q4 sales to be down 14% (-5.4% in FY12 vs. management guidance of -2%).

 

Some upside risk in the US?

We expect a recovery in Germany (relisting at a key retailer) and stronger trading in Russia, leaving FY12 sales growth in Europe ex Italy only marginally in the red (-0.3%). In the US, there might be upside risk to our 9% organic growth estimate in FY12 – which factors in some promotional activity for vodkas – since all other key competitors had a strong year-end.

 

Outlook for 2013

We anticipate organic sales growth of 4.4% in FY13e but don’t expect management to give any quantified guidance for the year given the very poor visibility in Italy. On the positive side, latest NABCA data continues to show the strength (both volume and price) of the US spirits market.

 

Conference call Thu 7 Mar. 2013 at 1:00 pm CET (12:00 pm UK time) on +44 1212 818003

 

 

——

Constellation seeks to reassure Modelo’s U.S. beer distributors

 

Source: Reuters

Mon, Mar 4 2013

 

Constellation Brands Inc sought to reassure the U.S. distributors of Grupo Modelo’s beers on Monday that the brand will continue to grow in the United States after the wine company takes it over.

 

Constellation Chief Executive Officer Rob Sands said in a letter that the company’s experience in “producing and moving hundreds of millions of cases of beverage alcohol annually” will help it to successfully own and run the Piedras Negras brewery in Mexico, near the U.S. border.

 

Constellation would acquire the brewery as part of a revised deal by which Anheuser-Busch InBev SA would buy out Modelo. Constellation already owns half of Crown Imports, Modelo’s U.S. distributor. In addition to buying the factory, Constellation would take full control of Crown.

 

“Constellation and Crown are completely aligned on goals, strategies and investments for this business, including our strategy of continuing to gain market share by growing the business organically and adding new products to the portfolio,” Sands said in the letter, a copy of which was seen by Reuters.

 

 

——

Carlsberg in Chongqing takeover offer

 

Source: FT

By Louise Lucas, Consumer Industries Editor

Mar 4th

 

Carlsberg is ramping up its bet on China, just weeks after issuing a profit warning on the back of falling share in Russia, by launching a takeover offer for up to 30.29 per cent of the shares in Chongqing Brewery Company for Rmb2.9bn ($465.6m).

 

Chongqing, in which Carlsberg already has just below 30 per cent, offers one of the few remaining midsized Chinese brewers on the block. The move comes one month after SABMiller agreed to pay Rmb5.38bn to acquire China’s lossmaking Kingway .

 

Chongqing has proved something of a rollercoaster ride for Carlsberg. The Danish brewer took its initial stake in June 2010, paying Rmb40.22 a share, and saw its stake double in value some 16 months later.

 

But just a month or so later the shares went into meltdown, triggered by a statement from the company that was interpreted by the market as suggesting failed results from the trial of a new hepatitis B vaccine, conducted by its biotech arm, Chongqing Jiachen Biotechnology.

 

Shareholder action, which included Carlsberg pushing for independent accountants to audit Chongqing Brewery, ensued amid a fall in the share price that erased some $5bn of market value.

 

Carlsberg, which inherited its initial stake in Chongqing Brewery through its takeover of UK’s Scottish and Newcastle and boosted its stake in the Chinese company in 2010 to become its biggest shareholder, is paying Rmb20 a share for its latest stake, 25 per cent above Chongqing’s pre-suspension close last week.

 

Following the deal, Asia’s contribution to Carlsberg’s earnings before interest and tax will rise to about 20 per cent, compared with Russia’s dominant 40 per cent.

 

Although China offers meagre profitability compared with other beer markets – largely a reflection of the low retail prices – analysts broadly welcomed the news.

 

Carlsberg said the purchase price equated to 15.7 times future earnings before interest, tax, depreciation and amortisation and is expected to be accretive to earnings per share in the first year. However, Carlsberg said the requirement for Chinese regulatory approval, which could take up to 12 months, meant the deal would only have an impact next year.

 

On inheriting the biotech arm, a spokesman said: “Biotech is not a core competency for Carlsberg. However, we will continue to manage this investment professionally and diligently and have nothing further to add at this stage re future plans.”

 

Jørgen Buhl Rasmussen, Carlsberg’s chief executive, said: “Our Asian business is very important for our long-term growth strategy and we are very pleased that we now can take this important step forward in China.”

 

Shares in Carlsberg rose 1.1 per cent to DKr594.5.

 

 

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Korea’s KT&G Considers Bidding for Oriental Brewery

 

Source: WSJ

By PRUDENCE HO And CYNTHIA KOONS

Mar 4th

 

KT&G Corp. 033780.SE -0.79% is considering making a bid that could be valued at up to $3 billion for Oriental Brewery Co., people familiar with the matter said, as the South Korean tobacco maker weighs expanding its portfolio in the country beyond cigarettes.

 

There was no guarantee KT&G would bid as it was still in the early stages of considering a deal, the people said. But if KT&G pushes ahead, the company likely would join with another fund or funds to buy South Korea’s top brewery by sales, one of the people said.

 

KT&G said it wasn’t considering bidding for Oriental Brewery, which is owned by private-equity firm Kohlberg Kravis Roberts KKR +1.04% & Co. A KKR representative declined to comment. Oriental Brewery said it had no knowledge of the matter.

 

Oriental Brewery products are stacked at a store in Ilsan, South Korea. KT&G is considering buying Oriental, brewer of the popular Cass beer.

 

Oriental Brewery came to the spotlight in 2009 when the KKR bought the maker of South Korea’s No. 2 beer, OB, from Anheuser-Busch InBev NV BUD -0.01% for $1.8 billion. The deal is Asia’s biggest leveraged buyout since the financial crisis, according to Dealogic.

 

KKR hasn’t begun a formal sales process. But Oriental Brewery, which also sells Cass beer, is an attractive target. The company in 2011 became South Korea’s top brewer, with about 50% of the market, ahead of longtime top brewer Hite-Jinro Co., 000080.SE +0.15% according to Daiwa Securities. Imported brands make up just 5% of the beer sold in South Korea.

 

Oriental Brewery is estimated to be valued at between $2.5 billion and $3 billion, one of the people familiar with the matter said.

 

KT&G, formerly known as Korea Tobacco & Ginseng Corp., was established in 1987. Although KT&G also sells red ginseng and other health foods, buying Oriental Brewery would diversify the company’s focus beyond cigarettes, which it sells under the Esse, Pine and Raison brands.

 

One possible obstacle to a deal is AB InBev’s right to buy Oriental Brewery back within five years of its 2009 agreement with KKR. The people familiar with the matter said AB InBev has the right to buy back the stake it sold for about 11 times Oriental Brewery’s estimated earnings before interest, depreciation and amortization. It wouldn’t be surprising if KKR sought more, given the multiples on recent deals. Heineken NV’s HEIA.AE +0.51% purchase of the stake it didn’t already own in Asia Pacific Breweries Ltd., which brews the popular Tiger beer, was made at 16.8 times Ebitda.

 

KT&G reported 2012 net profit of 725 billion won (US$669 million), down 11% from a year earlier, because of sluggish results at its red-ginseng division. Net sales rose 7% to 3.985 trillion won.

 

 

——

Remy denies plasticizers

 

Source: Peoples Daily

March 05, 2013

 

Remy Cointreau, the French producer of cognac brand Remy Martin, said Sunday that it was preparing the necessary documents for its products to clear Chinese customs, denying earlier media reports which said that customs had barred their entry for containing excessive levels of plasticizers.

 

“The new regulation increased the complexity of customs clearance; we are preparing the needed documents for all of our products,” the company said in a statement.

 

Containers of three French cognac brands including Remy Martin were recently blocked from entering China’s market for excessive levels of plasticizers harmful to human health, the Shenzhen-based Securities Times reported over the weekend citing French media.

 

Starting February 1, Chinese regulators have required all distributors of imported distilled liquor to submit a third-party plasticizer test report for each batch of imports.

 

 

——

Vijay Mallya loses crown; Pernod Ricard now India’s most profitable spirits firm

 

Source: Economic Times

Mar 5th

 

French firm Pernod Ricard has overtaken Vijay Mallya’s United SpiritsBSE 2.77 % to become the country’s most profitable spirits marketer last year, thanks to Indian consumers’ increasing appetite for premium drinks.

 

The maker of Absolut Vodka and Chivas Regal Scotch whisky crossed the $1-billion sales mark in the country in 2011-12 when its sales rose 34% to Rs 5,941 crore, making India the fourth-largest market for Pernod Ricard. Its net profit soared 77% to Rs 593 crore during the period, according to the Registrar of Companies, where it filed the financial results in January, making India the fifth-largest contributor to the French firm’s worldwide profits.

 

In comparison, United Spirits reported a net profit of Rs 343 crore on standalone sales of Rs 7,763 crore last fiscal. On a consolidated basis, United Spirits’ sales during the fiscal year 2012 stood at Rs 9,356 crore and net profit amounted to Rs 187.2 crore.

 

While Pernod Ricard has been earning higher profit at an operating level compared with United Spirits since the past two years, this is the first time the maker of Blenders Pride and Royal Stag whiskies raked in higher profit at the net level. “Pernod’s success in India demonstrates that it is possible for an MNC to run a highly profitable spirits business in India,” Arnab Mitra and Akshay Saxena of Credit Suisse said in an investor note. “The other key takeaway from Pernod’s success in India is that its business is not built around the company’s global brands, but around local brands it acquired from Seagram’s in India,” the note added. Pernod’s volumes have jumped from 1 million cases in 2000 to 22 million cases in 2011.

 

This is still less than one-fifth of United Spirits’ volumes, which controls 55% of the 250-million-case Indian spirits market. One key reason for Pernod’s high profitability is its growing heft in the premium Indian-Made Foreign Liquor, or IMFL, space as Indians guzzlers move up the price ladder with the brand they drink becoming a status symbol or lifestyle statement. “For consumers, higher personal income and growing brand awareness is driving the trend of up-trading from regular to premium IMFL,” said Sudip Sinha, beverage analyst at Rabobank Group India. “For supply side, premiumisation is seen as an indispensable strategy given companies are unable to raise prices either in response to changing raw material cost or consumer demand during the year because of rigid control on pricing and potential impact on demand due to progressive taxation,” Sinha said.

 

Pernod Ricard’s margins in India are some three times that of United Spirits. For every case it sells, United Spirits earns over Rs 70 in profits and over Rs 720 in sales. In contrast, Pernod’s profit per case is Rs 320 while its average sales value is Rs 1,760, an industry insider said. A global report by Credit Suisse said that in 2012, Pernod Ricard’s organic growth in India was 26% – faster than any other major market and slightly ahead of China’s 24% growth. Three IMFL brands – Royal Stag, Blenders Pride and Imperial Blue – make up for over 98% of Pernod’s volumes in India. In 2012, it sold 12 million cases of Royal Stag, a prestige whisky,while United Spirits sold 16.9 million cases of McDowellBSE 4.90 % No.1 in the same segment. In the premium segment, while Pernod Ricard sold over 3 million cases of Blenders Pride, United Spirits sold around 6 million cases across brands such as Antiquity, Royal Challenge and Signature.

 

 

——

SABMiller’s Exit From Molson Coors Partnership Provides Opportunity for Improved Canadian On-Premise Beer Position

 

Source: MarketWire

Mar 4th

 

“SABMiller is putting its own team on the ice now,” says Chuck Ellis of SABMiller’s prospects now that the company has dissolved its Canadian partnership with Molson Coors. Ellis is President of Restaurant Sciences LLC (Newton, MA), which tracks on-premise food and beverage sales in the U.S. and Canada. “Our Q4 2012 sample of more $30MM in beer sales for Canadian restaurants and bars looked at brand distribution. We were surprised by the depth of brand diversity in spite of AB-Inbev and Molson Coors’ control of a combined 80 percent market share.”

 

The chart below shows the Top-25 brands for Q4 of 2012:

 

http://www.marketwire.com/press-release/SABMillers-Exit-From-Molson-Coors-Partnership-Provides-Opportunity-Improved-Canadian-1763864.htm

 

 

——

A Look At Worldwide Alcohol Consumption

 

Source: Red Orbit

March 4, 2013

 

When examining the history of alcohol, we find it runs parallel to much of recorded human history. Throughout time, the use of alcohol has played an important role in religion and worship. Additionally, its use has provided nutrients and provided medicinal, antiseptic and analgesic properties.

 

In early Egyptian culture, both beer and wine were deified and presented to their gods. Cellars and winepresses were represented by a deity whose hieroglyph was a winepress. And alcohol wasn’t only to be enjoyed in this plane of existence. The use of alcohol for funerary purposes involved the storage of the beverage in the tomb of the dearly departed so they might use it in the after-life.

 

Individual enjoyment of alcohol has also been recognized. Whether consumed as a social lubricant or as an accompaniment to a fine meal, the benefits of drinking have long been documented. Misuse of alcohol, while also very well documented, typically only refers to a minority of drinkers.

 

In fact, in ancient times, the practice of habitual drunkenness was a rarity. This is not to say, however, that over-imbibing at banquets and festivals was unusual. One such event, known as the symposium, was a gathering of Greek men for an evening of conversation, entertainment and drinking. The evening typically culminated in the intoxication of the attendees. By 425 BC, however, warnings against intemperance, especially at symposia, had increased in their weight and frequency.

 

Despite the importance of temperance and moderation held by early cultures, it has been pointed out that historical accounts of alcohol and its moderate users are often overshadowed by their more boisterous counterparts who added a certain color to history. Therefore, those individuals who regularly enjoyed the drink typically received a disproportionate amount of attention. The abuse of alcohol can be problematic, on both the personal and societal level. Inebriates, through their actions, are highly visible characters and their exploits have often led to the implementation of legislation across different times and cultures. Conversely, the moderate drinker tends not to draw the ire of the community and, therefore, has been overlooked by the writers of history.

 

While alcohol, with all of its benefits and ills, has been around for most all of human history, a new study, conducted by the Centre for Addiction and Mental Health (CAMH) out of Canada, reports alcohol is now the third leading cause of both disease and injury worldwide. These findings were reached despite the fact most adults actually abstain from drinking.

 

Kevin Shield, lead author of the study, and colleagues published their findings, a part of the 2010 Global Burden of Disease study, in this month’s issue of the journal Addiction. The study showed Canadians, in particular, drank more than 50 percent above what is considered the global average.

 

“Alcohol consumption has been found to cause more than 200 different diseases and injuries,” said Shield. “These include not only well-known outcomes of drinking such as liver cirrhosis or traffic accidents, but also several types of cancer, such as female breast cancer.”

 

To arrive at their findings, the team calculated a 2010 estimate based upon the amount and patterns of alcohol consumption by country from a 2005 study. What they were able to determine was there are vast differences by geographical region in the numbers of people who consume alcohol, the amount they drink and the general pattern of drinking.

 

For instance, Shield and colleagues determined the hardest drinkers reside in Europe and Sub-Saharan Africa. Alcohol drinkers in these areas also consume alcohol in what is considered to be an unhealthy manner, often binge drinking to complete intoxication irrespective of whether a meal was consumed or not.

 

Northern Africans, along with those living in the Middle East and South Asia were the most temperate drinkers on Earth. This may be a result of strong religious and cultural mores that frown on, and even punish, drunkenness.

 

On our own continent, as mentioned above, the team determined we are very liberal with our libation consumption. Our patterns of drinking have been noted as being fairly detrimental, especially since one recurrent pattern was that of excessive binge drinking.

 

Worldwide, the global burden of disease and injury associated with the use of alcohol is sizeable. The team states, for the year 2010, alcohol was responsible for 5.5 percent of the overall global burden. This places alcohol use in third place, just behind high blood pressure and tobacco use. In all, the Global Burden of Disease and Injury evaluates 67 total risk factors.

 

It is important to note that Shield’s study is a compiled summary of the results from multiple population surveys, sales and production data, and additional data on alcohol consumption that is not covered in official records. Their research covered every country, territory and region on the planet.

 

One particularly interesting aspect of the 2005 study showed nearly 30 percent of alcohol consumed was categorized as “unrecorded” alcohol. This designation refers to alcohol that was not intended for consumption, along with home-brewed and illegally produced alcohols. There are some regions on the globe where this unrecorded alcohol accounted for greater than half of all alcohol consumed in the area.

 

“The amount of unrecorded alcohol consumed is a particular problem, as its consumption is not impacted by public health alcohol policies, such as taxation, which can moderate consumption,” said Dr. Jürgen Rehm, a study author and director of CAMH’s Social and Epidemiological Research Department.

 

“Improving alcohol control policies presents one of the greatest opportunities to prevent much of the health burden caused by alcohol consumption,” said Shield “To improve these policies, information on how much alcohol people are consuming, and how people are consuming alcohol is necessary, and that is exactly the information this article presents.”

 

Throughout the course of human history, there has always been a minority that finds just too much enjoyment in the drink. This minority, however, has not deterred the occasional use by the majority who have clearly found benefit in beers, Bordeaux’s and bourbons. It was the founding Director of the National Institute on Alcohol Abuse and Alcoholism who said, “.alcohol has existed longer than all human memory. It has outlived generations, nations, epochs and ages. It is a part of us, and that is fortunate indeed. For although alcohol will always be master of some, for most of us it will continue to be the servant of man.”

 

 

——

New Mexico: House approves alcohol ban on interlock users

 

Source: KOB Eyewitness News 4

By: Stuart Dyson

03/04/2013

 

How about this for a DWI crackdown?

 

You get convicted of drunk driving, you get your ignition interlock, you get an interlock license – you can’t buy any booze.

 

The state House of Representatives overwhelmingly passed a bill Monday afternoon that would outlaw liquor sales to people with interlock licenses. The bill’s sponsor got the idea from something he saw with his own two eyeballs at a Santa Fe convenience store.

 

Rep. Brian Egolf was gassing up his car when he saw a man come out of the store with a 20 ounce bottle of Coca Cola and two miniatures of Jack Daniels whiskey. The man got in his car, dumped the whiskey into the Coke, but he didn’t take a drink. Not yet.

 

“This guy starts his car with an interlock,” Egolf said. “He drives a few miles, then drives the rest of the way home, or to his destination, drinking a Jack and Coke – with an interlock there in his car! I thought, ‘This is absolutely unbelievable!’”

 

It’s pretty easy for a clerk or a bartender to spot an interlock license – they’re vertical – just like licenses for people under 21

 

The bill passed in the House on a 59 to 5 vote. It now goes to the state Senate, where lawmakers say it should be popular. This one could go all the way to the state law books.

 

 

——

‘Beer goggles’ just a myth: expert

 

Source: Economic Times

March 4th

 

‘Beer goggles’, the phenomenon that a few drinks can make you see even plain faces as more attractive than they are, is just a myth, a brain expert has claimed.

 

Dr Amanda Ellison’s book ‘Getting Your Head Around the Brain’, which pulls together a range of research into how alcohol affects the brain, argues that men and women do not see each other any differently after alcohol.

 

“The area of the brain that makes us want to mate keeps functioning, no matter how much we drink, meaning that people can still assess how visually-appealing others are,” said Ellison, senior lecturer in the Department of Psychology at Durham University.

 

“We still see others basically as they are. There is no imagined physical transformation – just more desire,” she said.

 

Ellison has found that a fluke of nature sees alcohol closing down the section of the mind that stops us acting on impulse long before it deadens the ‘reptilian’ part responsible for our urges, The Telegraph reported. “The area of the brain that makes us want to mate is the oldest part – and located so far down that it keeps functioning however much we drink – until we are ready to pass out,” she said.

 

But after as little as half a pint of beer, alcohol starts bonding with the receptors of the upper lobes which control decision-making. The more primitive section of the brain in the cortex below which governs our drive is carrying on unaffected. Normally, this part of the brain is kept in check by the upper lobes.

 

Hangovers are caused by dehydration – the brain shrinks and tugs on the meninges which causes the headache, she said.

 

“But before that, alcohol switches off the rational and decision making areas of the brain while leaving the areas to do with desire relatively intact, and so this explains beer goggles,” she added.

 

 

——

GuestMetrics: Despite a pressured consumer environment, premiumization taking place in the wine category

 

Source: GuestMetrics

Mar 4th

 

According to GuestMetrics, based on its POS database of over $8 billion in sales, despite the consumer base in the United States remaining under significant economic pressure, the wine category in on-premise displayed a strong premiumization trend in 2012.

 

“In analyzing the four price segments within the wine category, the top two segments gained share at the expense of the bottom two in 2012,” said Bill Pecoriello, CEO of GuestMetrics LLC. “Based on our data, in comparing the change in share of the wine category in 2012 versus the prior year, the Ultra Premium segment gained 180 basis points in 2012 and the Super Premium segment gained about 40 basis points, while the Popular Premium and Economy segments each lost about 110 basis points of share.  As we wrote about back in January, consumers traded down from wine-by-the-bottle to wine-by-the-glass, but despite this trend, they actually traded up to more expensive wines.”  

 

“Specifically looking at the roughly 60% of sales in the wine category that comes from wine sold by the glass, Ultra Premium gained nearly 2 points of share and Super Premium about 1.5 points of share at the expense of the less expensive price segments,” said Peter Reidhead, VP of Strategy and Insights at GuestMetrics.  “Conversely, looking at the 40% of sales that comes from wine sold by the bottle, the Ultra Premium segment gained even more share, about 2.5 points.”  Based on data from GuestMetrics, given the large differential in pricing across the four segments, while Ultra Premium makes up approximately 7% of units sold in both wine-by-the-glass and wine-by-the-bottle, it now accounts for 12% of total sales by the glass and nearly 22% of sales by the bottle.

 

“In our minds, this underscores the importance of restaurant operators having an up-to-date understanding of the economic pressures the consumer is facing and the trade-offs they are making to deal with those pressures,” said Brian Barrett, President of GuestMetrics. “Even though consumers are currently purchasing wine more often by the glass instead of by the bottle, it is important restaurants offer an attractive assortment of high end wines to meet consumers’ evolving tastes.”       

 

 

——

Extra lots unveiled for El Bulli auction

 

Source: Decanter

by Richard Woodard

Monday 4 March 2013

Bidders at an auction of wines from famed Catalan restaurant El Bulli will now also have the chance to secure lunch with chef Ferran Adria and a selection of memorabilia.

 

Auction house Sotheby’s has announced a number of additional lots for the sales, due to be held in Hong Kong on 3 April and New York on 26 April, on top of the 8,800-plus wines from the Spanish restaurant’s extensive cellars.

 

As well as lunch with Adria – with an opening bid of US$5,000 – new lots include four El Bulli chef’s jackets signed by him (opening bid: $1,000) and a set of El Bulli knives ($5,000).

 

There’s also a large selection of menus, wine lists and assorted stationery (from $250 each), various mesh, corrugated and Baroque metal trays and even ‘crockery for spherical olives’ ($150 each).

 

Sotheby’s hopes to raise well over $1.5m from the auctions, with wines including magnums of Chateau Latour 2005, rare sherries and a selection of Burgundies from Domaine de la Romanee-Conti.

 

Each bottle will be adorned with a specially designed El Bulli sticker, and many will be signed by Adria and business partner Juli Soler.

 

The money raised will go to the El Bulli Foundation, a gastronomic research and innovation organisation set up by Adria after he closed the restaurant in July 2011.

 

 

——

New England: Horizon Beverage Group Reorganizes Its Senior Management Team

 

Source: Horizon Beverage Group

Mar 4th

 

Horizon Beverage Group is pleased to announce upcoming senior management changes.  Effective March 11th, 2013 an Executive Committee will be created to assume all top line managerial responsibilities across the five state New England region.   Jim Tsiumis, Senior Vice President, has been added to the Executive Committee and will spearhead corporate strategy.  In addition, a Sales Operating Group will be created to manage day-to-day sales operations for all Core Business Units.  The Sales Operating Group will report directly to the Executive Committee.

 

The newly created Sales Operating Group consists of eight executives each responsible for a specific core area of the business.  Joe Bramanti has been promoted to President, Premium CBU.  Jim Merrill has been promoted to President, Coastal CBU.  Steve Ziner has been promoted to President, Wine CBU.  Angelo Collins has been promoted to President, Rhode Island CBU.  Joe LaRocca has been promoted to President, Control State CBU.  Seth Kurlinski has been promoted to General Manager of the Alliance Business Group.  Jim Hogan, Vice President, will continue to oversee the growing National Account universe across the region.  Bill Ehrhardt, Vice President, will continue to oversee the independent regional account business.

 

“We are extremely pleased to make these organizational changes as we continue to reinforce our sales capabilities, providing industry leading service to our retail customers across the region” says Robert Epstein, Co-Chairman, Horizon Beverage Group.  “This structure better aligns our organization with our supplier partners, allows for a quicker decision making process and more clearly defines corporate governance.”

 

“It is a talented group of people that will raise our level of sales capabilities and lead our company into the future,” adds Jim Rubenstein, Co-Chairman Horizon Beverage Group.  “As we move into our 4th generation of family ownership, this structure establishes distinct lines of authority and integrates long term future growth plans with bolt-on flexibility allowing us to adapt to a rapidly changing industry.”

 

 

——

Publix posts same-store sales increase of 2.2% for fiscal 2012

 

Source: RT

By Michael Johnsen

March 1, 2013

 

Publix on Friday recorded fiscal 2012 sales of $27.5 billion, up 1.9%. However, 2012 year-end sales included a 52-week period, versus 2011 year-end sales that were tracked over a 53-week period. Excluding that extra week, sales for 2012 would have been up by 3.8%. Same-store sales were up 2.2% for the year.

 

“I’m pleased with the improvement in our operating results for 2012, a 52-week year, as compared with 2011, a 53-week year,” stated Publix CEO Ed Crenshaw. “As a result of our associates’ efforts, our stock price reached a new all-time high after considering stock splits.”

 

Net earnings for 2012, a 52-week year, were $1.6 billion, a 4% increase. Earnings per share increased to $1.98 for 2012, up from $1.90 per share in 2011.

 

Publix’s sales for the fourth quarter of 2012, a 13-week period, were $7 billion, a 3.6% decrease from last year’s $7.2 billion, a 14-week period. Excluding the additional week in the fourth quarter of 2011, sales for the fourth quarter of 2012 would have increased by 3.4%. Comparable store sales for the fourth quarter of 2012 increased 1.2%.

 

Effective March 1, 2013, Publix’s stock price increased $0.70 from $22.50 per share to $23.20 per share. Publix stock is not publicly traded and is made available for sale only to current Publix associates and members of its board of directors.

 

 

——

Supervalu restructures executive, banner leadership

 

Source: RT

March 4, 2013

 

Supervalu has named new leadership at the executive and banner retail level. According to the company, the move is part of its plans to move forward with a focus on serving wholesale grocery operators, growing its hard discount format and running a smaller, more efficient retail operation following the close of its previously announced transaction with AB Acquisition LLC. That transaction is expected to be completed the week of March 18.

 

Mark Van Buskirk has been named EVP merchandising and marketing for Supervalu, where he will be responsible for overseeing companywide retail merchandising and marketing efforts, along with directing Supervalu’s private brand offerings and retail pharmacy teams. He spent the past 20 years in leadership positions with Kroger, most recently serving as vice president, meat and seafood merchandising and procurement.

 

Rob Woseth has been named EVP chief strategy officer. In addition to overseeing real estate and corporate development, Woseth will focus on identifying strategic growth opportunities that support independent grocers, as well as working with banner leadership to build and maximize the company’s traditional and discount retail businesses. He spent the past 10 years in business development, strategy and leadership positions with Albertsons Inc. and Albertsons LLC.

 

Steve Fox has joined Supervalu in the role of senior vice president, food merchandising, reporting to Van Buskirk. He comes to Supervalu after spending 41 years in retail leadership positions with Fred Meyer, a division of Kroger. During his tenure with Fred Meyer, Fox spent 10 years as VP produce merchandising/procurement and 11 years as vice president of grocery merchandising/procurement.

 

All three appointments are effective immediately.

 

Duncan also announced a leadership change at the company’s hard discount retail chain, appointing Ritchie Casteel as president and CEO of Save-A-Lot, effective immediately. Ritchie has more than 40 years of experience in retail, including over 30 years in a variety of leadership positions with the original Albertsons Inc, where he finished his tenure as VP operations for Albertsons’ Intermountain West Division.

 

Casteel also served as director of sales and operations for Grocery Outlet from 2005 to 2009 where he worked closely with independent owner operators to improve sales, margin, shrink, marketing, expense controls and financial balance. Casteel replaces Santiago Roces who will remain with the company over the next several weeks to assist Casteel in ensuring a smooth and efficient transition.

 

Following the transaction, Supervalu will retain five strong regional retail banners: CUB Foods based in Minnesota; Hornbacher’s in North Dakota; Farm Fresh in Virginia; Shop ‘N Save in St. Louis; and Shoppers in Baltimore/Washington DC. Together these banners operate 191 traditional retail grocery stores and represent slightly more than 25% of the company’s anticipated revenues after the banner sale is complete. The five banner presidents will report directly to Duncan and serve on his leadership team.

 

Those appointments include:

 

Eric Hymas has been named president of Shop ‘N Save, replacing Marlene Gebhard who will remain with the company over the next several weeks to assist Hymas in ensuring a smooth and efficient transition. Hymas most recently served as senior vice president of merchandising for Supervalu, which included responsibility for all categories across center store, as well as beverages, fuel and convenience, and fresh departments. Hymas has more than 30 years of experience in grocery retail having started his career in an Albertsons store in Idaho Falls, Idaho.

 

Bill Parker has been named president, Farm Fresh, after serving for the past seven months in the role of interim president. His appointment is effective immediately.

 

Brian Audette will continue as president of CUB Foods.

 

Matt Leiseth will continue as president of Hornbacher’s.

 

Bob Bly will continue as president of Shoppers.

 

Commenting on today’s announcement Duncan said, “We have much work to do, both today, and after the transaction closes, but I am pleased with the new leadership team we are assembling and know together we will work tirelessly to improve our business and increase shareholder value. I am energized by what I have seen every day and believe this company will be successful going forward.”

 

Duncan will name additional members of his leadership team in the near future. Today’s announcement also includes news of several current executives who will depart the company upon completion of the transaction. They include:

 

Kevin Holt – president, Supervalu retail

 

Tim Lowe – EVP merchandising

 

Michael Moore – EVP and chief marketer officer

 

“I thank Kevin for his leadership over our retail teams, as well as Tim and Michael for the work they have done leading our retail merchandising and marketing efforts, respectively,” said Duncan. “They have helped ready the business for the future and I appreciate all they have done to ensure a smooth transition. I wish each of them well with their future endeavors.”

 

 

——

New York: Cuomo creates one-stop shop for beer and wine manufacturers

 

Source: Albany Watch

Mar 4th

 

Gov. Andrew Cuomo announced today the creation of a one stop shop to provide the state’s wine, beer and spirits manufacturers with a single government contact for assistance with business regulations, Gannett’s Haley Viccaro reports.

 

The new system is in response to producers’ concerns about the number of state agencies they deal with for business and compliance issues. This problem was discussed during Cuomo’s Wine, Beer, and Spirits Summit in October 2012.

 

“With this one-stop shop, the days when our state’s beverage producers have to navigate a complicated bureaucratic process to find answers to their questions are coming to an end,” Cuomo said in a statement.

 

Small businesses in particular have found it difficult to collaborate with many state agencies, Cuomo said. The one-stop shop will allow manufacturers to speak with a single contact for business assistance.

 

“These businesses, many of whom are small and do not have access to additional resources to assist in the process, do not know what agency they must deal with for a particular issue and therefore can be unnecessarily subject to avoidable fines,” said Kenneth Adams, president of Empire State Development, in a statement.

 

The goal of the system is to partner with the industry to help facilitate growth and job creation by allowing a single contact for questions regarding regulations, licensing, incentives and issues within the industry.

 

The one-stop shop will consist of representatives from state agencies including the State Liquor Authority, Department of Agriculture & Markets, Tax and Finance Department, Labor Department, and others.

 

“Over the past two years, we have sought to transform state government into an entrepreneurial government that is a true partner to the private sector and can help facilitate innovation, industry growth, and job creation,” Cuomo said in a statement.

 

 

——

New Mexico: Total Wine & More makes city debut

 

Source: ABQ Journal

By Rosalie Rayburn

Mar 4, 2013

 

Wines from France, Italy, Spain, California, Australia and many other well-known growing regions line the shelves, the walls, the chilled areas – and that’s not all at Total Wine & More.

 

The newly opened store at 10420 Coors Bypass NW lives up to its name, with more than 20,000 square feet of floor space devoted to thousands of wines, beers and spirits from all over the world.

 

The West Side location near Cottonwood Mall is the 89th store for the Delaware-based chain and the first in New Mexico. A second store is in the works for the Uptown area of Albuquerque.

“We are not the corner liquor store,” Edward Cooper, vice president of public affairs and community relations, said in a phone interview.

 

Store aisles feature wines by style with labels like “Bubbly and festive” or “Big and Robust,” or place of origin, including New Mexico. Selections range from low-cost party wines at around $2 per bottle to connoisseur vintages like a Chateau Lafite Rothschild 2006 with a $1,000-plus price tag.

 

Beer lovers can indulge themselves too with a choice of domestic and imported mass-market beers, and craft brews produced by small enterprises like Marble Brewery and La Cumbre Brewing Co. in Albuquerque.

 

Customers can sample wines and beers at in-store tasting stands. A classroom at the back of the store will provide opportunities to learn more about individual producers and production methods, said Bill Tice, the Total Wine district manager who gave the Journal a tour of the store.

 

Even non-drinkers will find something to their taste at Total Wine. The store carries an extensive selection of gourmet snacks, glassware and gift items. There is also a walk-in humidor with an extensive range of cigars.

 

The new store will have about 40 employees, most of them full-time jobs, Cooper said. All employees undergo comprehensive training to ensure they are knowledgeable about store products, he said.

 

 

——

Nebraska: Nebraska lawmakers consider increasing beer tax

 

Source: The Independent

March 4, 2013

 

A Nebraska lawmaker said alcohol problems in Whiteclay inspired him to propose a bill Monday that would increase a beer excise tax by 5 cents per gallon.

 

The increase would generate about $2.3 million over each of the next two years, Sen. Al Davis of Hyannis told the Legislature’s General Affairs Committee. The panel took no action on the bill.

 

The money would be split evenly between the State Patrol Cash Fund and county law enforcement agencies. Davis said the money would allow law enforcement agencies to hire workers to combat alcohol-related crimes. Counties would be given the extra tax only from alcohol purchases in their area.

 

Whiteclay, a northwestern Nebraska town that borders the Pine Ridge Indian Reservation, has only about a dozen residents but four beer stores. Last year, the Whiteclay stores sold about 4.3 million cans of beer. Tribal leaders have blamed Whiteclay beer stores for alcohol abuse on the reservation.

 

“Dealing with alcohol-related crimes can be overwhelming for local police force out there,” Davis said. “I don’t think it will deter consumption much, but it will provide revenue to law enforcement.”

 

Nebraska’s current beer tax is 31 cents per gallon, which is higher than in all bordering states. South Dakota taxes 27 cents per gallon of beer, while Wyoming taxes just 2 cents per gallon of beer. Davis said the proposed increase in Nebraska would amount to about a nickel per 12 pack of beer.

 

Nebraska breweries, the Nebraska Grocery Association and the Nebraska Licensed Beverage Association oppose the bill. Davis said he expected the opposition and that he would be willing to consider exempting Nebraska brew pubs from the excise tax.

 

Jason Payne, president of the Nebraska Craft Brewers Guild, said the group opposes the increase. He said it would hurt local breweries, including his own Lucky Bucket Brewing Co. in La Vista. Nebraska has 18 craft breweries, eight of which have been established in the past two years, Payne said.

 

“Speaking as a small-business owner in Nebraska, a suggested tax increase from 31 cents a gallon to 36 cents a gallon would be a determinate to an exciting and growing segment in Nebraska’s economy,” he said.

 

Thomas Wilmoth, co-owner of Zipline Brewing Co., said the bill would not only slow the growth of his year-old brewery in Lincoln, but also increase the cost of beer for consumers.

 

He noted that Nebraska’s craft brewing industry actually grew during the recession, unlike many sectors of the state’s economy. He said states with lower excise taxes, such as Colorado, have more breweries.

 

No one testified in support of the bill, but the Nebraska Association of County Officials and Project Extra Mile, a group that works to stop underage drinking, submitted supporting letters.

 

Project Extra Mile said a review of 72 studies printed in the Journal of Preventive Medicine shows a link between increased alcohol taxes and a decrease in alcohol consumption.

 

“Young people are particularly sensitive to price changes, and the literature is clear that as price increases, youth access to alcohol decreases,” said Nicole Carritt, Project Extra Mile executive director.

 

Davis asked the committee to keep in mind he crafted the legislation to combat alcohol problems in Whiteclay.

 

“I don’t think we are going to be losing customers to other states,” Davis said. “I don’t think we are going to be impacting significantly anything except funneling revenue back to our law enforcement where it needs to be.”

 

 

——

Tennessee: Wine-in-grocery-stores debate: claims vs. facts

 

Source: WBIR 10

By Josh Brown, The Tennessean

Mar 4, 2013   

 

To hear one side tell it, if the state’s grocery stores sell wine, Tennessee will see more alcoholics, more underage drinking and the collapse of countless small liquor stores.

 

The other camp predicts an economic shot in the arm, stoking wine sales to new highs and making Tennessee the purchasing destination for wine lovers who live near state borders.

 

State lawmakers are debating yet again legislation that would allow food sellers to also sell wine. A bill cleared a state Senate committee last week – the most progress one has made since supporters began their most recent push.

 

That bill still faces hurdles: a win in another Senate committee before heading to the Senate floor, approval from the state House, the governor’s signature. Then counties already selling wine in liquor stores and restaurants would hold referendums on whether groceries could sell it.

 

Supporters and opponents are making their breathless arguments in the public eye. Here’s what they’re saying, and what fact-checking revealed.

 

. Sales of wine in grocery stores will lead to more alcoholism.

 

Last week, Vanderbilt University psychiatry professor Peter Martin testified to senators that allowing grocery and convenience stores to sell wine would ultimately increase the rate of alcoholism in the state.

 

“The major issue here is people want to sell alcohol because they’re hoping to make more money, and of course, they’re only going to make more money if they sell more,” he said.

 

Martin, who directs the division of addiction psychiatry at the medical school, drew a straight line from higher sales of wine to higher consumption of the beverage.

 

“If you increase per capita consumption, you increase the number of people who are addicted to alcohol,” he said.

 

While Martin acknowledged at the meeting that he knew of no studies comparing alcoholism in states that allow wine sales in grocery stores and in states that don’t, he pointed to studies that have found cheaper alcohol has been associated with higher rates of addiction. He declined to give a follow-up interview.

 

But Martin’s view isn’t universal in the field of addiction psychiatry. Mike Baron, a Nashville psychiatrist who specializes in addiction, said the measure would have little to no impact on alcoholism in Tennessee.

 

“It’s not going to make any difference,” Baron said. “I have never heard or never seen any literature that those states that have wine in the grocery store have a higher relapse rate or a higher alcoholism rate.”

 

Recovering alcoholics will have little problem from increased availability of alcohol, Baron said.

 

“If they’re going to want to drink, they’re going to plan it out and get alcohol,” he said. “Generally those alcoholics who don’t want to look at beer or want to avoid it, they just won’t go down that aisle. And they’ll do the same with the wine aisle.”

 

. Convenience and grocery stores aren’t as diligent in checking identification, so selling wine there will increase underage drinking.

 

In recent months, Madison County Sheriff David Woolfork has been outspoken against bringing wine sales to food stores.

 

Woolfork said his officers have seen firsthand the impact alcohol can have on underage drinkers. He believes the measure would worsen the problem.

 

“The fact that you have more convenience stores selling more wine,” he said, “the more underage are going to be drinking.”

 

Woolfork worries that convenience store clerks aren’t as diligent in checking IDs as other alcohol sellers.

 

“Convenience stores have such a tremendous turnover,” he said. “Two words come to my mind, and that’s convenience versus public safety.”

 

But Madison County wine and spirits stores appear to be cited at a higher rate than food sellers, according to a comparison of citation figures provided by law enforcement and state alcohol officials.

 

Since 2009, county narcotics officers have handed out 59 citations to grocery and convenience stores, of which there are 250 in the county. That translates to a rate of roughly 23.6 percent. In the same time period, state alcohol control officials gave five citations to liquor stores, of which there are a dozen in the county. That translates to a rate of roughly 41.6 percent.

 

The data don’t reflect where agents choose to focus their attention or whether stores had multiple citations, which could affect the rates.

 

Law enforcement officers in Virginia have found no correlation between underage drinking and sales of wine in grocery stores, said Dana Schrad, executive director of the Virginia Association of Chiefs of Police.

 

“We don’t have a problem with that coming out of the grocery stores, because they do diligently check IDs,” she said. “And the thing about grocery stores is that they do have better surveillance systems.”

 

. If shoppers are allowed to buy wine at the same time as their food, then wine and spirits stores will lose money and be forced to close.

 

“It would be devastating,” said Bard Quillman, owner of Red Dog Wine & Spirits in Franklin. “I can’t tell you exactly what I’m going to lose, but I can tell you I’m going to lose.”

 

Quillman, who serves on the board of the Tennessee Wine & Spirits Retailers Association, said if people buy more wine, it also could hurt sales of other goods.

 

“If people buy more wine, that purchase comes out of their discretionary income,” he said. “If I choose to buy a bottle of wine, then I will choose to not buy something else. I won’t buy a movie ticket. I won’t go out to dinner.”

 

Other wine store owners acknowledge some changes could allow them to survive if the measure passes.

 

Brent Barnett, general manager of McScrooge’s Wines & Spirits in Knoxville, wrote a letter to a lawmaker urging changes to allow stores like his to sell items other than high-alcohol beverages. “We would welcome the ability to sell beer, glassware, apparel and any other items,” he wrote.

 

Barnett also wants lawmakers to let liquor store operators own multiple locations and stay open 365 days a year – instead of being closed on Sundays and certain holidays.

 

“These legal changes may bring the opportunity to create stronger, retail stores that will, in the end, create more jobs, in addition to revenue for local citizens, the city and the state,” he wrote.

 

Jayson Butler, who owns Highway 64 Liquor Store in Giles County, has arrived at the same conclusion.

 

“I’m definitely not ready for the grocery stores being able to sell the wine,” he said. “I don’t want to go into this thing empty-handed. If it passes with nothing else, it’s going to be bad.”

 

Butler also wants more freedom to expand the items he sells, such as accessories – like wine stoppers and corkscrews – and low-alcohol beer.

 

“That never really made any sense to me, not being able to sell low-gravity beer,” he said. “But that’s the way it was, and I played by the rules.”

 

. Tennessee is losing tax revenue from shoppers who live near the border with states that allow grocery stores to sell wine.

 

If shoppers don’t live far from wine-selling groceries across state borders, they will drive a little farther and spend their money out of state, the grocery lobby contends.

 

There’s anecdotal evidence that really happens. In recent years, Costco Wholesale Corp. opened one of its large retail stores just over the state line in Georgia near Chattanooga. Ron Harr, head of Chattanooga Area Chamber of Commerce, said that since the store opened, Chattanooga residents have streamed across the state line to shop.

 

“Our concern is the loss of the tax revenue,” he said. “People are not only buying their wine there, but they’re buying their groceries. We’d rather they keep that tax revenue in Tennessee.”

 

But it’s likely factors other than convenience of buying wine and food at the same time are prompting the longer drive.

 

A check Friday showed that at that Costco store across the Georgia line, a bottle of St. Francis cabernet sauvignon was $14.99 plus 7 percent sales tax. The same bottle at Riverside Wine, Spirits and Beverages in Chattanooga was $19.99 plus 9.25 percent tax. An Erath pinot noir cost $14.99 at the big-box store, $19.99 at the wine store.

New Wine In Our Dispenser To Try-2010 Breca Garnacha

March 2, 2013

Breca 2010

New Wine In Our Dispenser To Try

2010 Breca Old Vine Garnacha

100% Old Vine Garnacha

94 Points – Wine Advocate 91 Points – International Wine Cellar

“It may be the most amazing wine I have ever tasted at this price in over three decades.” – Robert Parker

Breca Parker

Founded in 2005 by Jorge Ordonez, Bodegas Breca is 650 acre estate boasting old vine Grenache planted between 1925 and 1968. The vineyards, planted in decomposed slate and gravelly clay soil, are situated high on the hillsides between Sierra de Pardos and Sierra de Pena Blanca.

Matured for twenty-one months in French oak barrels, Bodegas Breca “Breca” Old Vine Garnacha displays intense aromas of blackberry, raspberry and violet, accented by notes of anise and mineral. Concentrated flavors of dark berry, wildflowers, lavender and vanilla merge with a lively hint of peppery spice on the impressively long finish.

Product of Spain Alcohol by Volume: 15.5%

Reviews:

Mark(Franklin Liquors): Having heard the press it was a wine we had to try. On the nose slight coco and coffee… This opens up in time and reveals interesting aromas and flavors. Medium-Heavy wieght and GREAT food wine.

Breca Cork

Characteristics: Oh lord! This is a dark horse of a black red wine –I might mistake this beast as an elegant Port for its cavalcade of deep, dark, ripe fruit plum and cherry fruit, brown spices, floral fragrance, and then the palate. Ripe and round like ripe plums whose sweet flesh are thrown into relief by their tart and zippy skins and yet for all its density this is still dynamic and engaging, alive and flexing. This is enormous. 15.5% Wine review by Nicholas Livingston, January 2013

Expert Review  Wine Advocate, October, 2012 94 Points – “The estate’s oldest vines are utilized for the 2010 Breca, also 100% Garnacha from vines that were planted between 1925 and 1945 in decomposed slate and gravelly clay soils. Yields were less than one ton of fruit per acre, and the wine was aged in old large French oak foudres. This is an amazing terroir of steep hillsides and ancient head-pruned vines. Black raspberry, truffle, kirsch, lavender and liquid rock-like characteristics emerge from this astonishing wine. Frankly, I was at a loss for words when I tasted it. It may be the most amazing wine I have ever tasted at this price in over three decades. The wine world is changing, and Jorge Ordonez and his associates deserve a huge amount of credit for producing something this remarkable at this price point. Consumers should fill their trunks with these beauties.

Just when you think you’ve tasted the wine world’s greatest values, along comes the Bodegas Breca. Founded in 2005 by Jorge Ordonez, this bodegas has 650 acres, mostly old vine Grenache vineyards planted on hillsides at an altitude of 2,850 to 3,000 feet. All the vines were planted between 1925 and 1968, and yields average between 0.4 and one ton of fruit per acre.” – wine review by Robert Parker

 Breca 2

750ml $16.99

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Liquor Industry News 2-28-13

February 28, 2013
www.franklinliquors.com

Franklin Liquors

 

Thursday February 28th 2013

Today Is A Biodynamic ROOT Day.

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Australia’s Treasury Wine upbeat on H2; shares jump

 

Source: Reuters

Wed, Feb 27 2013

 

Australia’s Treasury Wine Estates Ltd, the world’s second-largest wine company, expects a significant recovery in the second half driven by sales of luxury and popular prestige wines, particularly in Asia.

 

Treasury Wine, the maker of Penfolds, Beringer and Wolf Blass, said Thursday it is betting on higher sales of middle- and up-market wines to drive second-half earnings, especially in the growth markets of Asia, after higher costs and poor 2011 vintages contributed to a 23 percent fall in first-half profit.

 

Chief executive David Dearie said the company remained committed to the overall guidance of “mid-single digit” growth in earnings before interest and tax in fiscal-year 2013, with the outlook brightened by “extremely good” vintages in key regions such as California and New Zealand.

 

The Melbourne-based company said its first-half net profit after tax and before one-off items was A$45.0 million ($45.9 million), compared with A$58.6 million a year earlier.

 

Earnings before interest and tax were down 20 percent to A$73.4 million from a year ago.

 

Last October, Treasury Wine had warned its first-half earnings would slide 20 percent, blaming poor weather for denting production of premium wines and higher corporate costs.

 

Treasury Wine’s shares jumped 5.5 percent to A$5.17 by 0121 GMT, compared with a 0.7 gain on the ASX index.

 

The company is trading at a price-to-earnings ratio of 35.28, significantly higher than a sector average of 14.72, which analysts said indicated the market was anticipating either a huge earnings upgrade or a takeover transaction.

 

ASIA PUSH

 

In a briefing after the results, Dearie said Treasury Wine would continue to invest in Asia, particularly China, a region that outperformed in its first-half results.

 

Asia contributed 12.5 percent of EBIT growth in the period, while most other regions declined.

 

China has become a key market for Treasury Wine, which has been losing ground in the larger U.S. market to its bigger rival, Constellation Brands.

 

 

——

Treasury Wine Profit Beats Estimates on Higher Asia Sales

 

Source: Bloomberg

By David Fickling

Feb 28, 2013

 

Treasury Wine Estates Ltd. (TWE), Australia’s largest winemaker, posted first-half profit that beat analyst estimates as rising Asian sales and cost-cutting limited negative currency movements. The shares surged.

 

Net income rose 31 percent to A$52 million ($53 million) in the six months ended December from A$40 million a year earlier, the Melbourne-based company said in a statement today. That exceeded the A$47 million median estimate of six analysts surveyed by Bloomberg News.

 

Better availability of luxury and premium wines over the next six months should support demand for higher-value labels that make up as much as 70 percent of operating profit, Chief Executive Officer David Dearie told an investor call. Treasury has been buying land and planting new vines to develop higher- margin wines as the strong Australian dollar makes cheaper labels less profitable.

 

“Treasury Wine has performed better than the branded Australian market,” Stuart Jackson, an analyst at JPMorgan Chase & Co. in Sydney, wrote in a note to clients Feb. 5. Asian growth was “extremely robust,” he wrote.

 

Treasury shares rose 8.2 percent to close at A$5.30 in Sydney, their best performance since July 2011 and a four-month high. The move capped a 36 percent gain over the past year that’s outpaced the 20 percent advance in the benchmark S&P/ASX 200 index.

 

Forecast Earnings

 

The winemaker is counting on luxury and high-end products to boost earnings as the strength of the Australian dollar makes lower-priced export labels unprofitable and domestic liquor chains push for cheaper products under their own labels.

 

The dollar means it’s “hard to compete at more commercial or popular price points,” Dearie said in the investor call. A lack of investment in rebranding Australian wines was exacerbating this effect and the country’s federal and state governments need to do more to support the industry, he said.

 

The global wine industry is “edging ever closer to supply and demand balance,” Dearie said in a statement, reaffirming a forecast that Treasury’s earnings would grow this year in the “mid-single digits”.

 

Strong Dollar

 

The earnings measure excludes interest, tax, and adjustments for the value of vineyards, and assumes no move in exchange rates. The Australian dollar rose 1.4 percent against the U.S. dollar during the six-month period, and ended the year up about 15 percent from its level three years earlier.

 

Oversupplies of wine have depressed industry profits in recent years.

 

Global stocks of wine declined by nearly four billion liters between 2006 and 2011 to at least a 10-year low as production slipped below consumption, according to an October report by Rabobank International.

 

Treasury’s sales during the period declined 1.4 percent to A$851 million as volumes fell 2.5 percent to 16.5 million nine- liter cases.

 

Treasury, spun off from Fosters Group Ltd. in 2011 before the brewer was taken over by SABMiller Plc (SAB), has posted profit increases in three consecutive semi-annual periods, according to data compiled by Bloomberg.

 

Earnings before interest, tax, one-time items and adjustments for the values of its vineyards dropped 20 percent to A$73 million as a result of the strengthening of the Australian dollar, the company said.

 

Overseas sales accounted for about 65 percent of total revenue during the year ended June 2012.

 

 

——

Molson Sues SABMiller Over Canadian Distribution

 

Source: WSJ

By JOHN KELL

Feb 27th

 

Molson Coors Brewing Co. TAP -0.47% and SABMiller SAB.LN -0.02% PLC, two of the world’s largest brewers, are fighting over the terms of a licensing agreement in Canada that the latter company is aiming to terminate this summer.

 

SABMiller is planning to end a licensing pact in July that gave Molson the exclusive rights to distribute its products in Canada. Though Miller brands make up only a small percentage of Molson’s Canadian sales, SABMiller believes there are opportunities for the brands to perform better in that market.

 

Canada is an important market for Molson, a region where it is the second-largest brewer by volume and commands 39% of the market. Roughly 15% of Molson’s total world-wide volume was derived from Canada last year, though the company doesn’t break out how much of those sales were tied to SABMiller’s brands.

 

The companies also work together in the U.S. market, through a joint venture called MillerCoors.

 

But Molson’s Canadian results were disappointing last year. Volume slid 3.9% in 2012, hurt by a beer excise tax increase in Quebec and the National Hockey League lockout, which ended in January.

 

The Canadian beer market is highly competitive, as large and smaller brewers fight for market share in a mature market where overall volume is falling. Canadians have shown a stronger preference in other alcoholic beverages, like spirits. Large events, like the recent Winter Olympics in Vancouver, provide only a short-term jolt to beer demand.

 

Molson-which makes Coors Light and Carling-has claimed SABMiller sought to end the pact after it failed to meet certain volume targets. The company has filed a lawsuit in Canada, seeking an injunction to prevent SABMiller from terminating the licensing agreement, which began in 2003.

 

Spokesmen from both companies declined to comment on the litigation.

 

SABMiller disagrees with Molson claims that SABMiller’s written notice warning of plans to terminate the pact breached the license agreement. SABMiller “maintains its right to terminate” the licensing agreement with Molson, saying that it gave the necessary six-month notice of termination.

 

SABMiller also said it is exploring other options for import and distribution of Miller Lite and other beers in Canada.

 

SABMiller said Wednesday its decision to terminate the pact “reflects our belief that there exists the opportunity to grow Miller’s brands in Canada.”

 

“We see Canada as a country with a rich tradition of beer appreciation,” said Paul Gurr, SABMiller’s managing director for Canada, in the news release. “And believe we can better serve Canadians’ needs through this transition.”

 

 

——

Lawsuit Says Anheuser-Busch Beers Are Even More Watered Down Than You Think (Additional Coverage)

 

Source: TIME

By Brad Tuttle

Feb. 27, 2013

 

Have Budweiser drinkers been getting less buzzed? Former employees at Anheuser-Busch breweries say that they routinely watered down popular beers such as Budweiser, Michelob, Natural Ice, and Bud Light Platinum. Class-action lawsuits have been filed in three states accusing the brewery giant of selling beers that overstated the amount of alcohol they contained.

 

This week, lawyers filed suits in New Jersey, Pennsylvania, and California on the behalf of drinkers who may have purchased beers that packed less punch, alcohol-wise, than their labels led consumers to believe. Each of the three suits is seeking damages of more than $5 million, and more lawsuits are expected to be filed against Anheuser-Busch, specifically in Ohio and Colorado. Lawyers say that the watering down of beers can result in beers that contain 3% to 8% less alcohol than their labels indicate.

 

“There are no impediments – economic, practical or legal – to (A-B) accurately labeling its products to reflect their true alcohol content,” the lead suit, filed in California, claims, according to the St. Louis Post-Dispatch. “Nevertheless, (A-B) uniformly misrepresents and overstates that content.”

 

The claims are apparently based on statements from former brewery workers around the country, who say that the breweries routinely added extra water just before bottling to 11 beers, including Bud Ice, Bud Light Platinum, Bud Light Lime, Hurricane High Gravity Lager, Michelob, Michelob Ultra, regular old Budweiser, and even the new brew, Black Crown. What’s especially noteworthy is that Black Crown and Bud Light Platinum are new products that have been marketed specifically as richer, higher-alcohol beers-6% by volume, compared to 4.2% for Bud Light.

 

“AB’s customers are overcharged for watered-down beer and AB is unjustly enriched by the additional volume it can sell,” lawyers stated in a Philadelphia court, per Bloomberg News.

 

In San Francisco, lead attorney Josh Boxer, said, “Consumers are paying good money for beer that they think has a certain quality and characteristic that it doesn’t have.”

 

The suit alleges that Anheuser-Busch increasingly watered down its beers after the company merged with InBev in 2008, creating the world’s largest beer company. “Following the merger, AB vigorously accelerated the deceptive practices,” the suit states, “sacrificing the quality products once produced by Anheuser-Busch in order to reduce costs.”

 

Budweiser is still the third most popular beer in the U.S., but sales have been slumping for more than two decades, due at least partly to the rise of richer, tastier, higher-alcohol craft beers. Things have gotten to the point that the 2011 decrease of “just” 4.4% in Bud sales was considered a success for the company.

 

While the statements of former brewery employees make Anheuser-Busch look bad, the plaintiffs haven’t had the beverages independently tested for alcohol content to see how watered-down the beers truly were-if at all. Anheuser-Busch will surely point out this lack of proof when the time comes. The company also released a strongly worded statement, from vice president of brewing and supply Peter Kraemer:

 

“The claims against Anheuser-Busch are completely false, and these lawsuits are groundless . Our beers are in full compliance with all alcohol labeling laws.”

 

 

——

AB InBev: lacking fizz

 

Brewer reliant on higher prices to push up profits

 

Source: FT / Lex                                                                             

Feb 27th

 

How do you ruin results day for a brewer? Accuse them of watering down the beer. Disgruntled drinkers have launched a US lawsuit accusing AB InBev of watering down brands such as Budweiser. AB InBev denies the claims, but at least they might have distracted attention from the cautious outlook for the start of 2013, with carnival timing hitting sales in Brazil and hard up consumers drinking less in the US.

 

The longer term perspective is only slightly brighter. AB InBev is one of the most efficient brewers in the business, with a profit margin at the level of earnings before interest, tax, depreciation and amortisation of 39 per cent. Of the other big global brewers, only SABMiller comes close with a margin of 32 per cent. But margin improvement has slowed after healthy increases in 2010 and 2011, leaving AB InBev relying on revenues to push profits. With volumes flat, that growth has to come from higher prices. AB InBev has done well here. It sold beer at an average price of 87 cents per litre in 2009 but by 2012 that had increased to 99 cents per litre. However, even with innovations such as Budweiser Black Crown and bow tie shaped cans, price increases cannot go on forever.

 

That conundrum is one reason why AB InBev is so keen to get its hands on Mexico’s Grupo Modelo. As well as the extra sales, there is the chance to improve Modelo’s 29 per cent ebitda margin and invent a crate full of new, more highly priced versions of Corona.

 

AB InBev’s enterprise value is just under 11 times forecast ebitda. Historically, that has been a lousy rating at which to buy the shares – the last time they hit that level, they lost a fifth of their value in the next 10 months. True, it is a discount to SABMiller on 14 times, and the company is healthy enough to keep the acquisitions coming. But buying here requires faith in AB InBev’s ability to deliver organic growth.

 

 

——

AB InBev warns on US and Brazil beer sales

 

Source: FT

By James Fontanella-Khan in Brussels

Feb 27th

 

Anheuser-Busch InBev, the world’s largest brewer by sales, reported strong profits in the last three months of 2012 but warned that revenues in the first part of this year could be hit by lower beer volumes in key markets such as the US and Brazil.

 

The Belgian group behind the Budweiser, Stella Artois and Becks labels said on Wednesday that pressure on US consumers’ disposable income, an earlier than usual carnival festival in Brazil this year as well as tough weather in both countries would hit volumes.

 

The brewer, which has offered to offload assets and licences in an attempt to win regulatory approval for its $20bn takeover of Mexico’s Grupo Modelo, said that it was still awaiting regulatory approval for the deal. The US Department of Justice had initially blocked the takeover on antitrust grounds.

 

Slower business activity in the US and Brazil, where AB InBev makes more than 60 per cent of its revenues, is expected to be partially offset by a return to solid volume growth in China in 2013 after a disastrous last quarter of 2012 in Asia’s largest economy. Volumes in China dropped 12 per cent at the end of last year because of extreme weather conditions.

 

The company said: “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 conservative outlook is in sharp contrast to the group’s robust performance in the quarter ending on December 31.

 

The Leuven-based brewer said that in the fourth quarter of 2012, earnings before interest, tax, amortisation and depreciation rose 10 per cent to $4.39bn compared with the same period a year earlier.

 

The strong quarterly result was also reflected in the Brussels-listed group’s 2012 annual results, in which ebitda rose 8.5 per cent to $12.77bn compared with $12.61bn in 2012, driven by strong sales in the US and Brazil, which offset a drastic fall in sales in central Europe.

 

Carlos Brito, AB InBev chief executive, said: “2012 was an important turning point after three years of very soft markets.”

 

Although AB InBev’s market in the US remained unchanged, its beer-only revenues per hectolitre grew 4.9 per cent in 2012 thanks to the successful introduction into the market of Bud Light Platinum and Bud Light Lime-A-Rita, a margarita drink.

 

In Brazil, beer revenue per hectolitre grew 9.6 per cent in 2012, including 10.9 per cent in the last quarter, as Budweiser became the largest consumed international beer in the country despite an increase in prices. Meanwhile, beer volumes in China in 2012 rose 1.9 per cent.

 

The only markets to suffer sharp falls were western and central Europe, where beer sales per hectolitre fell 4.2 per cent and 11.3 per cent respectively, as demand was affected by a tough competitive environment.

 

Anthony Bucalo, an analyst at Santander, said: “The company closed out 2012 well in its key North American and Latin America North markets and we think this will be taken as a positive.”

 

AB InBev shares rose 0.9 per cent to ?70.40 by lunchtime in Brussels, reversing an earlier 1.5 per cent drop.

 

——

You can expect to hear a lot more about this company in the years ahead

 

ThaiBev 2012 profit up 137%

 

Source: Today

Feb 28th

 

Thai Beverage booked a 137-per cent on-year jump in 2012 net profit to 28.5 billion baht, or about US$955 million.

 

In a statement on the Singapore Exchange, ThaiBev attributed the growth to an increase in contributions from the spirits, non-alcoholic beverages and F&N operating results.

 

The increase in those businesses helped to offset a 12.7 per cent wider loss from its beer business and a 38 per cent fall in net profit from food.

 

Total sales for the 12 months to 31 December 2012 rose 21.8 per cent to 132 billion baht, with revenue gains recorded by all divisions.

 

ThaiBev’s international business reported sales growth of 28 per cent with better performances in all geographic areas.

 

Asia, excluding China, saw the sharpest growth in revenue of 78 per cent, driven by Chang Beer sales in the ASEAN market.

 

 

——

Competition panel clears USL-Diageo deal: sources

 

Source: Hindu Business Line

Bindu D. Menon

Feb. 27th

 

In a breather for liquor baron Vijay Mallya, the Competition Commission of India is understood to have given its approval to the Rs 11,167-crore United Spirits-Diageo Plc deal.

 

Official and lawyer sources confirmed that the deal, which needed the fair trade regulator’s approval, has been cleared on Wednesday.

 

The Commission did not comment on the development.

 

The country’s largest spirits company USL is part of Mallya’s UB Group, whose aviation venture — Kingfisher Airlines – is in a financial mess. The conclusion of the deal could provide a life-line to the now grounded Kingfisher Airlines, which owes Rs 7,000 crore to a consortium of 17 banks.

 

“The Commission went through the clarification submitted by the parties and has given its formal approval and an order on the same will be issued shortly,” sources told Business Line.

 

As part of the deal, British liquor major Diageo would acquire 27.4 per cent stake for Rs 5,725.4 crore through a combination of share purchase from existing promoters and preferential allotment of shares.

 

In addition, it had offered to acquire an additional 26 per cent stake for Rs 5,441.07 crore through an open offer for public shareholders. The Commission had earlier asked USL-Diageo to rework the ambiguous parts and make the deal more “definitive” in nature.

 

Besides this, the fair trade regulator had also asked the companies to provide key information including prices and shares of the company’s products and those of its rivals

 

The anti-monopoly watchdog had also said that it was not comfortable with the deal terms that provided for the existing promoters of United Spirits Ltd giving a preferential treatment to Diageo, if it fails to get the required number of shares from public shareholders through an open offer. USL controls over half of India’s 250 million cases liquor market and owns brands such as McDowell’s No.1 and Bagpiper.

 

The CCI had sought additional details to ensure that the deal does not create monopoly in the market.

 

The two companies had entered into a deal in November last.

 

Earlier, capital markets regulator Securities and Exchange Board of India, on January 31, approved Diageo’s open offer for acquiring 26 per cent stake in USL.

 

The offer is part of the overall deal.

 

 

——

Monster Beverage 4th-Quarter Profit Up 5.3%, Revenue Short of Expectations

 

Source: Dow Jones

By Nathalie Tadena

Feb 27th

 

Monster Beverage Corp.’s (MNST) fourth-quarter earnings rose 5.3% as the energy-drink maker’s revenue continued to improve, though sales growth fell short of analyst expectations.

 

Shares sank 7.6% to $45.95 after-hours Wednesday. The stock is down 6.1% since the start of the year.

 

“While the growth of the energy drink market in the United States has softened from previous quarters, the Monster Energy brand continues to grow in excess of market growth,” said Chief Executive Rodney Sacks.

 

Monster, which has built a strong brand in the U.S. and is expanding aggressively in international markets, had enjoyed sales growth of over 20% for six quarters, before reporting 14% revenue growth in the third quarter. Revenue growth in the latest period, however, was slightly better than revenue growth in the third quarter.

 

Shares in the company have been volatile for months amid rising regulatory and investor scrutiny of energy drinks, which are growing more quickly than traditional carbonated soft drinks and promise consumers an energy lift through caffeine and other ingredients such as taurine and ginseng.

 

Monster faces continued scrutiny over the health impact of its highly caffeinated drinks. In October, the Food and Drug Administration said it is investigating reports that five people since 2009 may have died after consuming Monster’s energy beverages. The agency has cautioned that there was no evidence linking the deaths to the beverage, and Monster has defended the safety of its drinks. Monster recently said it would change the labeling for its energy drinks to begin listing the amount of caffeine in the drinks.

 

Mr. Sacks reiterated Wednesday that the company’s energy drinks are safe “based on both the company’s and the industry’s long successful track record and the scientific evidence supporting the safety of Monster Energy’s ingredients.”

 

For the latest period, Monster reported a profit of $68 million, or 39 cents a share, up from $64.5 million, or 35 cents a share, a year earlier. Revenue rose 15% to $471.5 million.

 

Analysts polled by Thomson Reuters had expected per-share earnings of 41 cents on revenue of $484 million.

 

Gross margin narrowed to 51.7% from 52.3%.

 

 

——

MNST: 4Q12 EPS Falls Short; 2013 Off to a Slow Start

 

Source: CITI

Feb 27th

 

Target Price Change

Estimate Change

 

4Q12 EPS Falls Short of Expectations – MNST reported 4Q12 EPS of $0.39 (+11% YoY), which was 4 cents below our estimate and 2 cents below consensus. Net sales increased 15% (vs. our forecast for +17%), with gross sales +14% in the U.S. and +30% outside the U.S. Gross margin fell 60 bps YoY owing to negative geographic mix and more promotional spending, although U.S. gross margins were up YoY.

 

2013 Seems to Be Off to a Slow Start – MNST stated that in January 2013, gross sales were up 9.5% YoY. While January 2012 was an unusually strong month (sales up 30%+), January 2013 sales also benefitted a bit from MNST’s new distributor relationship in Brazil. While this look into early trends for the quarter is interesting, we highlight in Figure 1 of this note that the 1-month data generally offered by MNST at the time of their earnings release has proven to be an inaccurate way to forecast the actual quarter’s results. What we do know for sure is that MNST faces very tough YoY comps for gross sales growth in each of 1Q13 and 2Q13 (of +27% and +29%, respectively).

 

Anecdotal Commentary Not So Encouraging – Two comments from mgmt on the call that concerned us were (i) that Rehab sales were down YoY in 4Q, suggesting that this big innovation has not proved to be sustainable in terms of driving incremental growth and (ii) that with the current share repo program now done, mgmt is unsure about their future share repo plans, stating “we just spent a lot of money” buying back stock. While we presume that on Friday (the date of the next Board meeting), the Board will in fact authorize a new share repo program, we take mgmt’s comments to suggest that they may not actually step in to buyback stock in the near term.

 

Lowering Estimates and Target Price – Given the shortfall to our estimates in 4Q and given our expectations for continued sluggish growth in the category, we lower our 2013 EPS estimate to $2.30 (+24% YoY) and our 2014 EPS estimate to $2.69 (+17% YoY). As we roll forward our valuation to 2014, given our assertion that MNST should trade at 20x our 2014 EPS estimate, we revise our target price from $60 to $54. As this represents only ~9% upside from current levels, we maintain our Neutral rating.

 

 

——

WSWA URGES DEFERENCE TO STRONG AND SAFE STATE-BASED ALCOHOL REGULATION AS USTR PURSUES NEW TRADE DEALS

 

Source: WSWA

Feb 27th

 

The U.S. wine and spirits industry and its state-based regulatory system, supported by the federal government, have delivered an unmatched record of safety and effective oversight under the 21st Amendment. This structure must not be weakened as the U.S. pursues global trade deals, the Wine & Spirits Wholesalers of American (WSWA) told the Office of the United States Trade Representative (USTR) in comments filed this week.

 

“In the 80 years since the end of Prohibition, the U.S. beverage alcohol regulatory system has delivered an unparalleled record of consumer safety and diversity of products-produced and delivered in a well regulated and responsible manner,” WSWA President and CEO Craig Wolf said. “This structure provides a predictable stream of tax revenue to government while ensuring the highest standards for consumer protection.”

 

Wolf added, “The United States should tread cautiously when considering international pressure to deregulate the distribution of beverage alcohol.  Nothing should be done to erode state authority over the distribution of beverage alcohol guaranteed by the 21st Amendment.  The last thing we want to do is place the American consumer at risk for adulterated and counterfeit product-a problem that has proliferated in many other countries, as a result of their failure to adopt the type of accountable system of distribution that exists here in the United States.”

 

WSWA cited a recent Financial Times article which stated an estimated 75 percent of alcohol consumed in Africa is sold illicitly with similarly shocking numbers elsewhere: 69 percent in Southeast Asia, 25 percent in the European Union, and 10 percent in the United Kingdom. The U.S. record of safety is far superior, WSWA pointed out, largely because product is regulated by those closest to it, at the state level, with federal support.

 

Comments filed by WSWA deal with proposed global trade deals including those with Europe mentioned by President Obama during his recent State of the Union Address.  USTR has previously recognized the important distinction between alcohol and other consumer goods under the existing General Agreement on Trade in Services by excepting distribution and retail of beverage alcohol because of constitutional state prerogatives. WSWA’s comments were filed in response to Docket USTR-2013-0001.

 

WSWA is a national trade association representing the wholesale tier of the wine and spirits industry. With 350 member companies across all 50 states and the District of Columbia, WSWA is the voice for wholesalers in Congress, the administration, the courts, with the news media and in communities across America.

 

 

——

United Kingdom: Alcohol pricing flawed, say officials

 

David Cameron’s plans for a minimum price for alcohol will “penalise” responsible consumers without reducing problem drinking, according to the officials who would be expected to enforce the rules.

 

Source: Daily Telegraph

By James Kirkup

27 Feb 2013

 

Licensing officers and lawyers dealing with the sale of alcohol have raised more doubts about the Coalition’s plans to restrict the sale of drinks in England and Wales.

 

Driven by the Prime Minister, the Government has proposed a minimum legal price for a unit of alcohol sold, to be set at 45p, pushing up the cost of some drinks. Some discounts would also be banned.

 

Mr Cameron has suggested that his curbs on drinks sales will reduce problem drinking.

 

But that claim has been challenged by the Institute of Licensing, which represents licensing officers, lawyers and police officers dealing with alcohol.

 

In a response a Government consultation on its plans, the institute said many of its members do not believe Mr Cameron’s changes would address the problems he has identified.

 

“Social attitudes have enormous influence on behaviour and society at present is overly tolerant of excessive drinking,” it said. “These plans are not balanced in any way by proposals aimed at encouraging a cultural shift towards drinking lower strength or less alcohol or changing social tolerance towards binge drinking as a whole.”

 

It also questioned whether alcoholics and anti-social drinkers will not be affected: “Problem drinkers will source alcohol no matter what the price.”

 

The licensing officers’ doubts are the latest blow the minimum alcohol price scheme, which is privately opposed by several senior Conservative ministers and Government officials.

 

A Scottish minimum price is currently the subject of a legal challenge, and the institute suggested that the English plans be at least postponed until that case is concluded.

 

The officers also questioned whether ministers were genuinely open to alternative views on the policy, since the Prime Minister has already said he is “committed” to a minimum price.

 

The Home Office has also suggested outlawing “multibuy” discounts including promotions where customers are given a discount of they buy six or more bottles of wine.

 

The licensing officers cast doubts on that plan, suggesting it is impractical and unfair.

 

“It is difficult to see the benefit to the proposed ‘ban’ as set out” the institute said. “For every banned promotion, there is a way for the retailer to make the overall purchase cost the same.”

 

It added: “The proposed multi-buy promotion ban as suggested will affect sensible drinkers and penalise a significant part of the population of England and Wales.”

 

The Government’s prices are strongly opposed by the alcohol industry. Miles Beale of the Wine and Spirit Trade Association, said: “The Institute is just the latest in a long line of organisations telling the Prime Minister not to go ahead with his plan to hike up alcohol prices.

 

“Consumers are absolutely clear as well. They think it is unfair that responsible drinkers will have to pay more because of the actions of a minority of irresponsible drinkers.”

 

 

——

AdVini buys Le Clos des Paulilles in Rousillon

 

Source: Decanter

by Chris Mercer

Wednesday 27 February 2013

AdVini-owned Maison Cazes has acquired Le Clos des Paulilles, the largest estate in the Collioure and Banyuls appellations.

 

The 90 ha estate, Le Clos des Paulilles, known for its vintage Banyuls, has been up for sale since 2011 and AdVini has acquired the property from the Dauré family, who have owned it since 1975.

 

Lionel Lavail, president of Rivesaltes-based Maison Cazes, said that the group’s immediate plans are to replant the estate’s Grenache and to open a restaurant and shop. Financial details were not disclosed.

 

Collioure is a popular tourist destination on Roussillon’s Côte Vermeille, and the region’s wines have begun to gain greater recognition of late.

 

‘With this recent acquisition, Cazes has broadened its range of top wines from the Roussillon,’ Lavail told Decanter.com. He said the deal was an ‘unmissable opportunity’.

 

Clos des Paulilles is located close to the Mediterranean in the protected geographical area of the Paulilles Bay. Cazes said that the area’s poor schist soils, dry, sunny climate, low yields and proximity to the cooling influences of the sea make it a perfect terroir for Syrah, Grenache and Mourvèdre.

 

The estate produces Collioure red, white and rosé, as well as Banyuls Rimage (vintage) and Banyuls Traditionnel.

 

——

$24.5 million deal to protect 20,000-acre Sonoma County forest

 

Source: THE PRESS DEMOCRAT

By BRETT WILKISON

Tuesday, February 26, 2013

 

A national conservation group has reached an agreement to buy nearly 20,000 acres of timberland in northwestern Sonoma County, a move that derails the long-disputed, forest-to-vineyards conversion project pushed by CalPERS, the giant state workers pension fund.

 

The $24.5 million purchase of the so-called Preservation Ranch, to be completed by the end of May, is led by The Conservation Fund, based in Virginia. It would contribute up to $6 million toward the purchase.

 

Funding partners include the California Coastal Conservancy, which could contribute up to $10 million, Sonoma County’s Agricultural Preservation and Open Space District, which could add up to $4 million to the deal, and the Sonoma Land Trust.

 

It would be the largest conservation purchase by acreage in county history and one of the largest along the North Coast in years.

 

“It’s a big, big, big deal,” said Bill Keene, general manager of the county’s Open Space District. The property, located near Annapolis, spans a vast and rugged landscape of second- and third-growth redwood and Douglas fir, oak woodlands and salmon and steelhead streams.

 

Keene called it “a critical piece of land for us to protect.”

 

Public access could result from the deal, but the property would remain in private ownership and on the tax roll.

 

The Conservation Fund owns and manages 55,000 acres of forest in Mendocino County and would use the new property for sustainable timber production and possibly for the sale of carbon credits.

 

The purchase would eliminate the threat of subdivision for rural estates and commercial vineyard development. It also would put greater focus on forest health and wildlife habitat restoration, said Chris Kelly, California program director for The Conservation Fund.

 

After the sale, the group would own nearly 75,000 acres on the North Coast — “the largest permanently protected working forest in California,” according to Kelly.

 

The project pushed by CalPERS called for clearing up to 1,769 acres of the 19,652-acre property for vineyards.

 

It became one of the hottest land-use fights in Wine Country, sparking national media coverage and a debate about the spread of vineyards into remote North Coast forests. The general issue, and Preservation Ranch in particular, has factored in local elections and triggered county efforts to strengthen local oversight of forest conversions.

 

The proposal was headed for what was certain to be a bruising process of hearings and public input, including a final say by the county Board of Supervisors and possible court challenges.

 

The mounting cost of studies — said last year to be more than $2 million — and the risks and controversy associated with the project likely pushed CalPERS to consider other options, sources said.

 

CalPERS officials declined to comment Tuesday on the sale agreement.

 

The transaction reflects the growing role of private groups in large deals to protect local open space, especially former commercial forests. Public agencies, while partners in those deals, are increasingly unable or unwilling to buy and manage those lands on their own.

 

The political ripples of the purchase could bolster the cause of environmental interests, who established a majority recently on the county’s Board of Supervisors. Several environmental leaders on Tuesday greeted news of the closely guarded deal with jubilation.

 

“Wow,” said Bill Kortum, a former Sonoma County supervisor and veteran advocate for open space and coastal protection. “What better news is there to dance to?”

 

It also could improve the political prospects of county Supervisor Efren Carrillo, who represents the area and is said to be considering a bid for a seat in the state Legislature. With the sale, he will not have to vote on the controversial Preservation Ranch proposal.

 

While he never publicly revealed his stance, opponents suspected he favored the project, a position that could have dogged him in any regional campaign. Opponents flooded his office and those of other county representatives with more than 90,000 emails and letters on the issue in recent years.

 

Several conservation insiders, however, credited Carrillo with being a driving force behind the purchase agreement, which evolved out of talks between CalPERS and The Conservation Fund over the past year.

 

Carrillo called it a “unique opportunity” that would protect one of the largest single landholdings left in the county and link to other public and private conservation properties in the area.

 

“This really builds on the work we’ve seen on the North Coast already,” Carrillo said. Asked how it could play into his rumored interest in the Legislature, he said he was still undecided about that “option.”

 

The Preservation Ranch property includes ancestral grounds used by Pomo tribes, several of which voiced strong opposition to forest clearance for vineyards.

 

The property previously was held in small ranches and then used by commercial timber outfits before being considered for wine grapes more than a decade ago.

 

CalPERS, the $253 billion state workers pension fund, has controlled Preservation Ranch for nearly a decade. The ownership was through a Napa-based vineyard development firm that bought the property in 2004 for $28.5 million.

 

The pension fund severed its ties with the Napa firm in late 2011 but retained control of the land and the project.

 

Pension officials said in February 2012 that they intended to continue with the land conversion. Along with vineyards, the project would have set aside 15,000 acres for timber operations, dedicated 2,700 acres for a private wildlife preserve and donated 220 acres for a public park expansion.

 

But work on a draft environmental study slowed last year, with no new funds being allocated by CalPERS to the county for the project, said David Schiltgen, the county planner overseeing Preservation Ranch.

 

Talks with The Conservation Fund started early last year and led to a purchase agreement in October. The deal was covered under a confidentiality agreement that expired Feb. 18. It kept the deal a little-known secret among a relatively small group of open space officials.

 

Money from the county’s taxpayer-funded Open Space District would purchase a conservation easement that eliminates development rights on the property. It takes in 160 parcels, about 60 of which would have been open to future development under the CalPERS proposal.

 

Keene, the Open Space District manager, said an appraisal valued the property at about $26 million, including development potential of about $20 million and timber worth about $6 million. The county contribution, which needs the Board of Supervisors’ approval, of up to $4 million is a “pretty darn good deal,” Keene said.

 

The Conservation Fund and the Coastal Conservancy are expected to provide up to $16 million while Sonoma Land Trust, the nonprofit group that brokered the most expensive conservation purchase in county history — the $36 million, 5,600-acre Jenner Headlands deal — is set to help raise the remaining funds needed.

 

“We just think it’s a fantastic outcome,” said Ralph Benson, Sonoma Land Trust’s executive director.

 

Advocates who have raised concerns about North Coast forest conversions voiced hope Tuesday.

 

“We’re optimistic for the recovery of the watershed and its signature species” — endangered salmon and threatened steelhead trout — said Chris Poehlmann, president of Friends of the Gualala River.

 

He said the deal would give the landscape time to heal.

 

“If you have a broken clock, you don’t throw away any of the parts,” he said. “This would have been a very large part.”

 

 

——

The Winners of the 2012 Beverage Testing Institute Packaging Competitions

      

Source: PR Newswire

Feb 27th

 

In December 2012 the Beverage Testing Institute (BTI) put down their tasting glasses and searched for the best and most innovative wine, beer, and spirits packaging designs from among hundreds of entries from around the world. Trade judges were not just looking for pretty packages, but for designs that excelled in terms of the key categories of creativity, graphic design, style, and functional innovation, as well as practicality and ergonomics that are critical to brand success on-and-off-premise.

 

Here are the Best-of-Category packaging winners:

 

Spirits

 

Best Bottle: AnestasiA Vodka Sensational Spirit

Best Bottle Runner-up: La Hechicera Aged Rum

Best Gift Box: Bacardi “Mix With the Best” Gift Box

Best Gift Box Runner-up: Grey Goose Holiday VAP Gift Box

Best Case: AnestasiA Vodka Sensational Spirit Case

 

Wine

 

Best Bottle: Meier’s Wine Cellars “Sinful” Sangria

Best Bottle Runner-up: The Vibrant Vine 2011 “The Red of Whites” Chardonnay

Best Embossed Label: Pomar Junction 2010 Reserve Late Harvest Viognier

Best Paper Label: Indaba 2012 Chenin Blanc

Best Case: Austerity 2011 Proprietary Red Wine Case

 

Beer

 

Best Bottle: 2012 Samuel Adams Utopias

Best Bottle Runner-up: Rogue Ales Voodoo Doughnut Chocolate, PB & Banana Ale

Best Can: Rogue Ales Yellow Snow IPA

Best Paper Label: Jester King Craft Brewery Funk Metal

Best Case: Frankenmuth Brewery Limited Edition 150 Anniversary Lager

Best Carrier: Sierra Blanca Brewing Company Alien Amber Ale

Best Gift Box: Cervecería Kross “Kross 2,4º” Beer

Best Gift Box Runner-up: Urban Chestnut Brewing Company Variety Pack

NEW CATEGORIES – Best Tap Handle: NOLA Brewing Company Mechahopzilla

Best Tap Handle Runner-up: Sierra Blanca Brewing Company Alien Amber Ale

 

For a complete list of medal winners and images: http://www.tastings.com/bti_news.html?news_id=45

 

About BTI: The Beverage Testing Institute was founded in 1981 as America’s premier source for wine, beer, and spirits reviews for consumers and a boutique, specialty marketing service for the drinks trade. For more information about BTI’s competitions and review services, please visit http://www.tastings.com/trade.html

 

 

——

Target’s slight earnings increase impacted by Canadian costs

 

Source: RT

By Gail Hoffer

February 27, 2013

 

Start-up expenses and other costs related to its Canadian entry reduced Target’s earnings per share for the fourth quarter by approximately 18 cents.

 

The company reported fourth quarter net earnings of $961 million, or $1.47 per share, compared with $1.45 per share for the same period last year. Adjusted earnings per share, a measure the company believes is useful in providing period-to-period comparisons of the results of its U.S. operations, were $1.65 in fourth quarter 2012, up 10.1% from $1.49 in 2011.

 

As previously reported, sales at U.S. stores increased 6.8% to $22.4 billion in fourth quarter 2012 from $20.9 billion last year, reflecting a 0.4% increase in comparable-store sales combined with the contribution from new stores and one additional accounting week.

 

“We’re pleased with Target’s fourth quarter performance, particularly in the face of a highly promotional retail environment and continued consumer uncertainty,” said Gregg Steinhafel, chairman, president, and chief executive officer of Target Corporation. “Outstanding discipline and execution by our team allowed us to achieve our full-year financial and strategic goals in 2012. We believe these results position us well to deliver on significant plans in 2013, including completion of the largest store opening program in our company’s history with 124 stores in Canada and additional Target and CityTarget locations in the U.S., investing in new processes and technology that will improve our guests’ multichannel experience and closing the sale of our credit card receivables.”

 

For fiscal 2013, Target said it expects adjusted EPS of $4.85 to $5.05 and GAAP EPS of $4.70 to $4.90.

 

In first quarter 2013, the Target said it expects adjusted EPS of $1.10 to $1.20 and GAAP EPS of $1.22 to $1.32.

 

 

——

Casual restaurants not adequately leveraging the strength in craft beers

 

Source: GuestMetrics

Feb 27th

 

According to GuestMetrics, based on its POS database of over $8 billion in sales, casual restaurants appear not to be leveraging the strength of craft beers as well as fine dining restaurants and bars.

 

“On pretty much every dimension, casual restaurants are not doing as effective a job as fine dining restaurants or bars in leveraging the growth in craft beers,” said Bill Pecoriello, CEO of GuestMetrics LLC. “Based on our data, craft beers accounted for 20% of beer sales in casual restaurants, versus the 22% in bars and 28% in fine dining restaurants.  Additionally, the average price being charged by casual restaurants for craft beers is only $5.09, compared to $5.53 in bars and $6.16 in fine dining restaurants.  This is a function of differences in brand mix, promotional levels and as well as pricing architecture across the sub-channels. While it may not be feasible for casual restaurants to charge the same amount as fine dining, there should be room for closing the price gap relative to what bars are realizing.”  

 

“In further analyzing the beer category within the different on-premise segments, while craft beers achieved a 7% growth in casual restaurants in 2012 relative to the prior year, this lagged behind the 11% growth in bars and 13% growth in fine dining restaurants,” said Peter Reidhead, VP of Strategy and Insights at GuestMetrics.  “While casual restaurants obviously need to have a balanced offering in the beers they carry, we believe there could be a positive halo effect on overall beer sales from dialing up their focus on craft beers.”

 

“In addition to having a lower share of beer sales and slower growth from craft beers, casual restaurants appear to be leaving additional money on the table by not keeping pace with the price increases in craft beer,” said Brian Barrett, President of GuestMetrics. “While the average price of craft beers in fine dining restaurants and bars increased more than 3% in 2012 relative to the prior year, craft beer pricing in casual restaurants only increased 2%.  Given the tight economics being experienced by casual restaurants right now, optimizing the brand mix, discount levels and pricing architecture within the beer category are key to improving revenue trends.”       

 

About GuestMetrics LLC

GuestMetrics, LLC is revolutionizing how the hospitality industry operates.  Despite the dawn of the Digital Age having begun more than three decades ago, the hospitality industry essentially functions the same way it did centuries before.  GuestMetrics has cracked the code by collecting $8 billion dollars in sales from over 250 million checks from tens of thousands of restaurants, and turning billions of raw transactions into intelligible data that is fundamentally transforming the business operations of everyone from the independently-owned bar/restaurant on the corner, to multi-national chains, to the food & beverage companies that supply them.  Please visit www.GuestMetrics.com for more information and to arrange for a free demonstration.

 

 

——

Pennsylvania: Liquor Control Committee will make changes to privatization plan, chairman promises

 

Source: PA Independent

By Eric Boehm

Feb 26th

 

The Pennsylvania Liquor Control Board had what some hope is its last budget hearing in the state House on Tuesday morning.

 

FIRST STEP: State Rep. John Taylor, R-Philadelphia, holds the key to the future of the liquor privatization plan.

 

House Majority Leader Mike Turzai, R-Allegheny, announced last week that he will be introducing a plan to allow wine and beer to be sold in grocery stores and, but before you start popping those corks over the news that the state-run liquor monopoly is headed for the trash heap, remember the bill has to actually make it through the General Assembly.

 

And even though both the state House and state Senate are controlled by Republicans, it’s no slam dunk.

 

The first major hurdle after the bill gets introduced on March 4 will be the House Liquor Control Committee.  Recent attempts to privatize the liquor stores have stumbled there, in part because the committee’s chairman, state Rep. John Taylor, the lone Republican member of the General Assembly from Philadelphia, has not been on the same page with Turzai and Corbett.

 

Following the budget hearing Tuesday, Taylor said he “might be a cosponsor of (Turzai’s) bill, but you can bet we’re going to change parts of it.”

 

Specifically, Taylor said he wants to examine the timetable, including which parts of the multi-level privatization plan would go into effect immediately and which might have to wait a few years.  He said his goal is to avoid the chaotic process some other states have fallen victim to when they did away with similar liquor monopolies.

 

“It seems like we’re going to agree on most of it, but the speed of what we’re doing is really a big part of it,” Taylor said.

 

But Pennsylvanians have been dealing with the PLCB for some 80 years since the end of Prohibition, so what’s another couple of years in the grand scheme of things, right?

 

For what it’s worth, Turzai’s office confirms they are on the same track with Taylor and open to some changes to the bill.

 

And lawmakers aiming to kill the PLCB and privatize the state liquor stores this year were surely heartened to hear new PLCB Chairman Joseph Brion say he supports privatization from a philosophical point of view – though he made it clear that as long as the state is in the business of selling liquor, he believes it should do so in the most efficient and effective way possible.

 

 

——

Washington: Tacoma’s third Alcohol Impact Area will take effect March 11

 

Source: News Tribune

LEWIS KAMB; Staff writer

Feb. 27, 2013

 

Beginning March 11, the City of Tacoma will ask 37 businesses in the North and West Ends to voluntarily stop selling Hurricane High Gravity, Night Train Express and 43 other cheap, high-alcohol drinks.

 

If those businesses don’t comply within six months, the city can then seek to make the voluntary ban mandatory.

 

By an 8-1 vote Tuesday, Tacoma’s City Council effectively imposed the latest targeted ban on alcohol sales by establishing the new “West End Alcohol Impact Area” – the city’s third zone with a special state designation that aims to curtail public drunkenness and its problems.

 

“Alcohol Impact Areas . have been one of the most successful programs in our city,” Councilwoman Lauren Walker said before the body adopted the measure.

 

Councilman Joe Lonergan cast the lone vote against the measure, saying that creating the new zone will only serve to push chronic public inebriates into South Tacoma – the district he represents.

 

“I remain very concerned about that,” Lonergan said. “… I believe AIAs work; I know we’ve got the evidence for that. But I don’t think I can support this tonight.”

 

The newly created West End zone becomes the city’s largest AIA geographically. The area roughly stretches from Cedar and Alder streets and Commencement Bay on the east to The Narrows on the west; and from 19th and Center streets at the south to Point Defiance at the north.

 

With the measure’s adoption, the city will begin asking and aiding businesses within the zone to stop selling fortified wines, malt liquor and other specified products.

 

The measure also tasks Tacoma police to study the ban’s impacts and report back to the council by Aug. 31. If data show the program isn’t working or businesses aren’t complying with the voluntary ban, the city could then seek a mandatory designation from the state’s liquor control board.

 

Studies have shown the city’s two other AIAs – the Urban Core AIA covering parts of the Hilltop and downtown, and the Lincoln District AIA in parts of the East Side and South End – have drastically decreased alcohol-related emergency calls, detoxification admissions and public drinking reports.

 

After those AIAs effectively pushed public street drunks into the West End, neighborhood, school and other groups asked the city to designate a new West End AIA.

 

Several council members echoed Lonergan’s concerns that the new AIA likely will displace drunks into South Tacoma and other parts of the city not covered by bans on alcohol sales. Councilman Marty Campbell also noted the newest zone is sprawling and far less targeted than Tacoma’s other two AIAs.

 

Nonetheless, the council adopted the measure – in part “to respect the work that citizens have done to date” to impose the new ban, Councilwoman Victoria Woodards said.

 

Michael Transue, executive director of the Washington Beer and Wine Distributors Association, asked the council to forego the vote while his group worked with retail businesses, the city and citizens on an alternative plan to voluntarily prohibit stores from selling three or fewer banned products to a customer between 6 a.m. and 4 p.m.

 

While the state prohibits citywide AIAs, the distributors’ proposal could be enacted across Tacoma and into other jurisdictions as a more regional solution that’s more effective than an outright ban in a defined AIA that “penalizes legitimate retailers and consumers,” Transue said.

 

But council supporters of the West End AIA said its approval won’t preclude the city from working with distributors on a better plan.

 

“Coming up with a comprehensive solution can still happen, even if the ban passes tonight,” Mayor Marilyn Strickland said.

 

 

——

California: Crackdown on alcohol continues in El Cajon

 

Source: UT San Diego

By Karen Pearlman

Feb. 27, 2013

 

Dozens of mom-and-pop liquor store owners from around the city showed up in force at El Cajon’s City Council meeting Tuesday to hear the council weigh in on a problem the city has been trying for years to fix: The sale of alcohol to chronic inebriates and those under 21.

 

The council also expressed concern over the sales of smaller – and cheaper – bottles of single-serve hard liquor and of the sales of “fortified” beer and wine.

 

Because council members concluded that a community-based task force that started in 2011 has not done enough to help curtail those issues, they have been seeking other ways to break the cycle.

 

The council dug deeper Tuesday by unanimously agreeing to craft what is known as a deemed-approved ordinance.

 

Such an ordinance, as it relates to alcohol sales, is used in nearly two dozen cities in California. It would make existing alcohol outlets accountable to a set of performance standards.

 

A draft will be written over the next few weeks by city staff, then presented to the El Cajon Planning Commission, where a public hearing will be held within the next three months, according to City Attorney Morgan Foley. The issue will then go back to the City Council sometime in the summer when another public hearing will be held.

 

“All we’re asking them to do is not sell to the drunks and not sell to the kids, and I am going to do whatever it takes to stop them from doing it,” Kendrick said of the nearly 80 markets around the city. “If it takes coming down hard on them with an ordinance, that’s what we’ll do. If they do it voluntarily, that’s great… but it didn’t work with tobacco.”

 

The 10-member task force that was formed in 2011 included members of the Neighborhood Market Association, Communities Against Substance Abuse, business owners, private citizens, Kendrick and former Councilwoman Jillian Hanson-Cox. The group fell by the wayside after Hanson-Cox resigned from the council nearly a year ago. She is serving a prison sentence in Arizona after pleading guilty to mail fraud and filing false tax returns.

 

CASA Executive Director Dana Stevens gave an audiovisual presentation that pointed out some of the liquor stores that she said were contributing to issues associated with alcohol sales such as petty theft, panhandling, public urination and “the stench of human waste,” she noted.

 

“For 26 years we’ve been trying to prevent problems associated with alcohol and drugs,” Stevens said, also noting that El Cajon has been placed in a moratorium category by the state’s Department of Alcoholic Beverage Control because the city has an overabundance of off-site sale liquor licenses.

 

Mark Paul Arabo, president and CEO of the Neighborhood Market Association, which represents the great majority of the liquor stores in El Cajon, said the group would take a hard-line stance and do what it takes to bring stores in line with that vision.

 

“The NMA will be meeting with the El Cajon Police Department, city staff and city attorney to hopefully come up with objective, measured goals we all can focus on,” Arabo said. “I hope we all could work together with the city of El Cajon for a win-win for all. In addition, we will … help them with community feedback. Our main objective will be public safety, bettering communities we do business in, and creating a solid partnership with the NMA and the city.”

 

Arabo said that the NMA is holding a forum at 6 p.m. Monday at the Royal Palace, 1340 Broadway, that he said will cover “good business practices” and put the pressure on the “one or two bad apples.”

 

“We all want same thing, we want El Cajon to be a beautiful city, and we will work together to fix the problem,” Arabo said.

 

The deemed-approved ordinance will state that if an outlet does not comply with the standards and poses a nuisance, it may be reported to the city and the Police Department.

 

Typically, an outlet would have to comply with rules that control disturbing the peace, illegal drug activity, public drunkenness, public consumption of alcoholic beverages, harassment of passers-by, gambling, prostitution, sale of stolen goods, public urination, theft, assault, battery, vandalism, littering, loitering, graffiti, illegal parking, loud noises, traffic violations, curfew violations, lewd conduct or police detentions and arrests.

 

Outlets that fail to comply after being asked to abate the nuisance would be required to apply for a conditional use permit and can then have conditions placed on their city business permit. The city ultimately can revoke the permit if the business fails to comply.

 

“We want to make El Cajon the most resistant to alcohol abusers,” Kendrick said. “And the kids they sell alcohol to… those are the next generation of homeless. The cycle has to stop.”

 

 

——

Connecticut: Liquor Store Owners Ready For Battle Over Minimum Pricing Plan

 

Operators of small package stores are decrying Connecticut’s proposal to eliminate a law that now protects small liquor stores from their larger competitors.

 

Source: Cheshire Patch

By Eileen McNamara

Feb 27th

 

Aproposal to eliminate the state’s minimum pricing law for retail alcohol sales is getting serious opposition from liquor store owners.

 

The business owners say if the law is repealed, which Gov. Dannel P. Malloy has proposed, many of them would go out of business, crushed by larger competitors who can buy booze in bulk and set much lower prices.

 

Testifying before a legislative panel earlier this week, Carroll Hughes, executive director of the Connecticut Package Stores Association, and himself a package store owner, told a legislative committee that the minimum pricing law was established to help protect small business owners against larger competitors who might otherwise sell alcohol at rock-bottom prices, the Connecticut Post reports.

 

“It’s not a public service, where you sell it at cost,” the newspaper quotes Hughes, who testified in Hartford on Tuesday during a public hearing on the plan. He was one of dozens of package store owners who attended the hearing before the legislature’s Planning and Development Committee.

 

Malloy has said the law should abolished because it goes against free market principles and hurts consumers by propping up higher retail prices of alcohol.

 

“We would not allow the car industry to set a minimum price on cars,” Malloy told reporters Tuesday at the state Capitol, according to the Hartford Courant.

 

“We wouldn’t allow other industries to conspire to set prices. Somehow and some way, we decided it was OK to charge people in Connecticut more for liquor than they are charged in the surrounding states and to defend that system. And for the life of me, I don’t understand it.”

 

Malloy took on the liquor stores association last year when he proposed, and won passage of, legislation to abolish a ban on Sunday alcohol sales, an old law that he said also hurt Connecticut consumers because neighboring states allowed their package stores to open on Sundays.

Liquor Industry News 2-27-13

February 27, 2013
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.

 

 

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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.

Liquor Industry News 2-25-13

February 25, 2013
www.franklinliquors.com

Franklin Liquors

 

News For Monday February 25th 2013

Black market spirits on the rise

 

Source: FT

February 24 2013

 

As the scandal surrounding beef products adulterated with horsemeat spreads, health regulators are also worrying about the growing problem of illicit alcohol. Cash-strapped countries have imposed higher excise taxes on spirits, raising prices and fomenting a thirst for fake tipple.

 

The problem was highlighted last year when 30 people died from drinking tainted rum in the Czech Republic, leading to a temporary ban of liquor sales.

 

The International Center for Alcohol Policies held a seminar in Brussels this week to warn European lawmakers that the illicit alcohol market has serious social and health consequences and represents a fiscal and trade issue. Illicit alcohol sales are spreading in eastern Europe and are pervasive in Asia and Africa.

 

“Clearly there needs to be standards,” says Marjana Martinic, ICAP’s deputy president. “What happened in the horsemeat scandal in the UK was an issue of cross-border trade, where a lot of the meat came from Romania and was counterfeit beef. It’s not dissimilar to what’s happening in the alcohol market.”

 

Illicit spirits made in places such as Latvia, Estonia and Poland are proliferating across Europe as tax increases have fuelled demand for cheaper alternatives in the black market, Dr Martinic says. Companies such as Brown-Forman and Pernod Ricard have been working with regulators to crack down on illicit trade and counterfeit bottles of their spirits. The companies have introduced new technologies such as hologram labels and caps to prevent criminals from refilling the bottles with other types of alcohol.

 

Dr Martinic estimates that 75 per cent of the alcohol consumed in Africa is illicitly sold. Southeast Asia also has a high proportion at 69 per cent, followed by Europe with 25 per cent and the UK with 10 per cent.

 

 

——

Attempted wine scams top £1.5m, UK trade warns

 

Source: Decanter

by Chris Mercer

Friday 22 February 2013

Wine merchant Berry Bros & Rudd warns European trade is being ‘bombarded’ by UK-based wine scams.

 

Wineries across Europe are being scammed out of hundreds of thousands of Euros by conmen impersonating buyers at bona fide wine merchants such as Berry Bros & Rudd.

 

A fraud unit set up by the UK Wine & Spirit Trade Association (WSTA) has tracked attempted wine scams worth an estimated £1.6m since May 2011. Around a third of those have been successful, the trade body has told Decanter.com.

 

‘There are probably more which have not been reported,’ said the WSTA’s David Tromans.

 

Scammers commonly pose as buyers at genuine wine merchants, such as Berry Bros or Bibendum. Recently, a person calling himself Sam Cocks has been emailing wineries, including Bordeaux chateaux, and negociants and posing as an employee from Berry Bros’ marketing department.

 

‘They use headed paper, VAT numbers and Coface insurance,’ said Berry Bros’ Bordeaux buyer, Max Lalondrelle, who has himself been impersonated by fraudsters. ‘If someone doesn’t know us, it’s very easy to get caught out.

 

‘They send the wine to these people, who collect it somewhere in London. Three weeks later, they call us and we have to tell them that we didn’t order any wine from them.’

 

Wine often gets shipped to an address in East London, sometimes to mass storage warehouses. ‘We don’t know what happens to it after that,’ Lalondrelle said.

 

He said he is constantly getting emails from suspicious suppliers. ‘It happens so often. The [scammers] send out the emails in batches, so I get ten to 15 emails every three or four weeks with people asking if it’s really us.’

 

Decanter.com understands that there is frustration in some parts of the wine trade at a lack of police action. However, WSTA has worked with London’s Metropolitan Police to produce guidelines in several European languages on how to avoid becoming a victim of wine scams.

 

It warns wineries and suppliers to check email addresses carefully and be wary of requests for speedy payment or strange delivery addresses.

 

Spelling and grammatical errors are also a giveaway. One scam email passed to Decanter.comrequests ‘Crystal Roederer’ Champagne, instead of ‘Cristal’, and Henri Jayer ‘Richbourg’, which should be spelt ‘Richebourg’.

 

 

——

SABMiller PLC: Getting rich too quickly?

 

Source: Barclays

Feb 25th

 

Stock Rating/Industry View: Equal Weight/Neutral

Price Target: GBP 33.50 (from GBP 31.00)

Price (22-Feb-2013): GBP 32.38

Potential Upside/Downside: +3%

Tickers: SAB LN / SAB.L

 

Our analysis of the Consumer Staples sector over the last 12 months has been focused on the power of steadily compounding TSRs and associated ‘get rich slowly’ characteristics. SABMiller has a long track record of consistent earnings and dividend delivery. We expect this trend to continue, with margin leverage likely to improve further in the years ahead. However, investors have gotten rich quickly over the last three months as SAB shares have moved from a discount rating to its history, to a premium position. Although increased confidence in the deliverability of its business model and a return to sustainable double-digit organic EBITA growth should underpin this current rating, it is tough to argue for further upside. We downgrade to Equal Weight, with a revised price target of 3350p. We believe better returns are likely from Diageo and BAT in the near-term.

 

Earnings upgrades are now required to drive the shares forward: Although we believe momentum remains firmly skewed to the upside, we see little to drive major EPS revisions ahead of the group’s full year results on May 23. In the meantime, we see: 1) a likely weaker ZAR in prospect; 2) uncertainty created by index weighting changes in South Africa; and 3) bid premium optionality more than priced-in.

 

Switch into Diageo (OW, £20.40): Diageo has under-performed SABMiller by -19% since November. With the price/mix story in Spirits and Diageo’s core markets such as the US gathering momentum, and benefits to come from both a H1 13 consumer pick-up in China and the Sterling weakness; there is greater scope for relative upside in Diageo over the next three-months, in our view.

 

 

——

Darden warns on 3Q sales decline at top brands

 

Company estimates sales fell 4.5 percent at Red Lobster, Olive Garden, LongHorn Steakhouse

 

Source: NRN

Erin Dostal

Feb. 22, 2013

 

Darden Restaurants Inc. warned Tuesday that U.S. same-store sales are estimated to have declined 4.5 percent across its top three brands – Red Lobster, Olive Garden and LongHorn Steakhouse – during the third quarter of 2013.

 

In a statement, the company blamed bad winter weather and economic pressure on consumers for the decline.

 

The company estimates U.S. same-store sales fell 1.5 percent at LongHorn Steakhouse, 4 percent at Olive Garden and 7 percent at Red Lobster locations for the third quarter.

 

Conversely, Darden reported that it expects same-store sales for its Specialty Restaurant Group, which includes Seasons 52, Eddie V’s and The Capital Grille, to rise 2 percent for the quarter.

 

“Our priority is reestablishing same-restaurant traffic momentum at our three largest brands,” said Darden chairman and chief executive Clarence Otis in a statement.

 

Otis cited payroll tax increases and rising gasoline prices as two macroeconomic difficulties that “put meaningful pressure on the discretionary purchasing power of our guests” during the third quarter.

 

“We recognize there is still more to do to further address affordability and to improve other important aspects of the guest experiences we provide,” he said. “We are confident, however, that we are taking the right steps for our guests and that these will result in same-restaurant traffic improvement as we move forward.”

 

As a result of the estimates, Darden updated its outlook for fiscal 2013. Total sales for the year should increase between 6 percent and 7 percent, the company said in a statement. Blended same-store sales at LongHorn, Red Lobster and Olive Garden are now expected to decrease 1.5 percent to 2.5 percent for the year.

 

Darden has struggled in recent quarters to gain a foothold for its three largest brands. During the company’s last earnings call, president and chief operating officer Andrew H. Madsen said the chains must respond more aggressively to guests’ need for affordable options.

 

During the second quarter of 2013, U.S. same-store sales fell 3.2 percent at Olive Garden, dropped 2.7 percent at Red Lobster and decreased 0.8 percent at LongHorn Steakhouse. Darden’s Specialty Restaurant Group reported a same-store sales increase of 0.8 percent during the same period.

 

Darden also announced three big executive moves during the third quarter. Will Setliff, formerly executive vice president of Darden’s Specialty Restaurant Group, was named senior vice president and chief marketing officer; David George, formerly president of LongHorn Steakhouse, was named president of Olive Garden; and Valerie Insignares, formerly Darden’s chief restaurant operations officer, was named president of LongHorn Steakhouse.

 

The third-quarter earnings warning comes just before the company’s analyst and investor meeting, which will be held Feb. 25-26 in Orlando, Fla., where Darden is based. The company plans to hold its official third-quarter earnings call on March 22.

 

Darden operates more than 2,000 company-owned restaurants systemwide.

 

 

——

(DRI): First Take: DRI pre-announces 3Q12, driven by February deceleration

 

Source: Goldman Sachs

Feb 22nd

 

News

DRI preannounced worse than expected fiscal 3Q13 (Dec-Feb) results. EPS are now expected to be in the $1.00-$1.02 range, which compares to the $1.12 consensus and is below our $1.03 Street-low estimate. DRI lowered its full year EPS outlook to $3.15-$3.31 from its prior $3.38-$3.58 estimate. Lower than expected SSS, and the associated de-leverage, drive the miss.

 

Analysis

The blended SSS figure for Olive Garden/Red Lobster/Longhorn was -4.5% for the quarter. February was the worst month with Olive Garden -9.5%, Red Lobster -8% and Longhorn -3%. The company noted -90bp to SSS from winter weather, but attributed the majority of shortfall from macro headwinds including the payroll tax increase and rising gas prices.

 

It is notable that traffic declines made up the bulk of the SSS declines, but that check was also down 2-3% at both Olive Garden and Red Lobster suggesting that the company’s efforts to drive traffic through value may not be effective in the face of the current macro backdrop.

 

The company updated its FY SSS estimate for its 3 major concepts to -1.5%-2.5%, the midpoint of which implies -2% SSS in the company’s upcoming Mar-May fiscal 4Q. On margins, the company’s sales vs. EPS guidance suggests 8.5-9.0% operating margins versus Street estimates of 9.9% with de-leverage from the lower SSS presumably driving the delta.

 

Implications

We expect DRI shares to trade off on the news; however, downside is likely to be limited by its strong dividend support. It is currently trading at a 4.4% yield and $40 would represent a 5.0% yield. While the company’s Capex spending plans may be at risk, we do not believe its dividend is.

 

Our estimate and price target are under review.

 

 

——

Two Chinese liquor giants fined for price fixing

 

Source: New Kerala

Feb 23

 

China’s top two liquor makers, Kweichew Moutai and Wu Liangye, were fined a total of 449 million yuan($71.41 million) for price fixing, according to price regulators.

 

The Guizhou-based Moutai and Sichuan-based Wu Liangye were ordered to pay 247 and 202 million yuan in fines, respectively, according to statements from price regulators Friday.

 

It marked the harshest fines since the implementation of China’s anti-monopoly laws in 2008, reported Xinhua.

 

The statements said that the companies had restricted the lowest prices on its liquor products for resale at their distributors, with whom they had made vertical monopoly agreements.

 

The punishments have shown that the government makes no exception for any company when handling antitrust cases, as the two businesses that were fined are both state-owned, said Wang Xiaoye, a professor at Graduate School of Chinese Academy of Social Sciences.

 

But the fines were relatively light, Wang said, citing that they only accounted for 1 percent of the total revenue the two companies recorded last year. The figure can reach as high as 10 percent according to Chinese anti-monopoly laws.

 

The punishment added to the plight of the two liquor giants, as a recent government frugality campaign is expected to have a sizeable impact on sales of their products, which mainly target high-end consumers.

 

The penalties follow similar fines to Samsung, LG and four Taiwanese LED makers in January.

 

 

——

Orff with Diageo’s head!

 

Source: Sunday Times

By OLIVER SHAH

Feb 24th

 

IT DOESN’T do to take the royal name in vain – just ask Booker prize-winning author Hilary Mantel. Drinks giant Diageo must be hoping it will escape a similar fate after a perplexing attempt to register the phrase “Royal Household” as a trademark in Britain. Insiders at the Guinness owner insisted it related to a whisky brand sold in Japan, with the application withdrawn due to an “error” in the submission documents. It was categorically not a brazen attempt to cash in on the royal name.

 

Either way, we are not amused.

 

 

——

Diageo may remove put option from USL deal

 

Source: Money Control

Kritika Saxena, Reporter, CNBC-TV18

Feb 22nd

 

On the January 31, CNBC-TV18 reported that Securities and Exchange Board of India (Sebi) had released its final observation on Diageo-UB group deal. Sources indicated that Sebi had asked for some changes, specifically in the put option clause in the share purchases agreement.

 

Diageo executives are in India currently as part of the United Kingdom (UK) Prime Minister’s delegation. Sources say that there has been an ongoing conversation between United Spirits Limited  (USL) and Diageo. They are currently thinking over removing the put option clause.

 

Essentially, there is a put option clause in the share purchase agreement, which allows Diageo to buy out United Breweries (UB) Group’s stake within a span of around seven years. Now, according to Sebi, this violates the takeover norms, considering this is a forward contract.

 

Besides that, the market has been slightly edgy about the price of Rs 1,440 per share. Sebi hasn’t really asked for details on the pricing trajectory and hasn’t really asked for any major changes. The pricing may pretty much remain the same.

 

Also, Diageo is looking to discuss the issues that KFA lenders have with the deal. CNBC-TV18 had earlier reported that lenders may not probably want to go ahead with the open offer issue and that could actually create hiccup in the deal.

 

Diageo is looking to discussing this issue with lenders to understand their concerns to ensure that the open offer goes through or rather there is no hiccup in the open offer.

 

 

——

Buckfast firm takes legal action over police campaign

 

The distributors of Buckfast have started legal action against Scottish police after complaining the controversial tonic wine was being subjected to a “form of ethnic cleansing”.

 

Source: Daily Telegraph

By Simon Johnson, Scottish Political Editor

22 Feb 2013

 

J Chandler & Co lodged a case with the Court of Session in Edinburgh calling for Strathclyde Police to be barred from adding anti-crime labels to bottles of the beverage.

 

The tamper-proof stickers allow officers to trace bottles associated with crime to the store from which they were purchased. Buckfast, which contains caffeine, has been linked to youth disorder particularly in the west of Scotland.

 

However, the distributors argued yesterday that the police are stigmatising their product and illegally ordering retailers to withdraw it if they refuse to use the stickers.

 

In 2010, the force said the tonic wine, which is made by monks in Devon, had been mentioned in more than 5,000 crime reports over the previous three years.

 

Jim Wilson, of J Chandler & Co, said yesterday: “If they were doing it to all bottle, to all products of an alcoholic origin then that would be fair.

 

“We have the feeling that it’s a form of ethnic cleansing of brands of alcohol that police and politicians don’t like.”

 

He said Buckfast was only mentioned in 0.04 per cent of incidents reported to the police and they include incidents where a bottle has been stolen.

 

The firm has applied to the court for an interdict preventing police marking Buckfast bottles. If the force refuses, the distributors plan to “go to a full-blown court case”.

 

It became aware of the stickers after being contacted by a disgruntled shop owner, although police sources insisted they are voluntary.

 

The 15 per cent alcohol beverage recorded a record £39 million sales in the 2011/12 tax year, with Mr Wilson estimating that around half the bottles produced are sold north of the Border.

 

Strathclyde Police said they were unable to comment before receiving a court summons but Les Gray, the former head of the Scottish Police Federation, said the drink was viewed as a “badge of honour” among young hooligans.

 

“Buckfast, the distributors and the lawyers who act on behalf of the monks refuse, point blank, to take any responsibility for the anti-social behaviour that’s caused by the distribution and the consumption of Buckfast,” he said.

 

“Buckfast is a scourge on the young folk, they drink it to excess because of the alcohol content the caffeine content and basically it drives them crazy. They spend half the night running amok, engaging in anti-social behaviour.”

 

Willie Rennie, the Scottish Liberal Democrat leader, said: “Buckfast’s distributors need to call off the dogs and accept responsibility for the damaging effect their product has on local communities.

 

“Bullying the police force tasked with cleaning up the mess of anti-social behaviour caused by binge drinking stands in total opposition with the spirit of the Benedictine monks who founded the tonic wine.”

 

 

——

Wells Fargo’s Weekly Economic & Financial Commentary

 

Source: Wells Fargo

Feb 22nd

 

U.S.

.         Housing starts were a bit disappointing in January, but the number of permits, an indicator of future starts, increased.

.         Furthermore, existing home sales were better than expected and home prices are up more than 12% since January 2012.

.         Inflation remains low, allowing the Fed to maintain its accommodative policy.

.         However, some Fed members suggest a reduction in asset purchases as early as mid-2013.

.         The accommodative monetary policy that has been assisting the housing and stock market has not been providing the same boost to the manufacturing sector.

.         Several manufacturing indicators suggest a potential disappointment to 1Q13 investment spending.

 

International

.         The German GDP contraction in 4Q12 was driven primarily by a decline in exports; domestic demand actually expanded, growing 0.8%.

.         Despite weakness in the rest of the world, German consumers remain somewhat optimistic.

.         Recent data points suggest the German economy is back to growth in 1Q13.

.         Investor sentiment improved while the Ifo Index of Business Sentiment was stronger than expected.

.         Unfortunately, economic growth in other areas of the Eurozone appears to be muted.

.         Real GDP growth in Brazil remains limited, but inflation concerns may force the central bank to increase interest rates.

 

 

——

Don’t turn up your nose: Blender lets wine ‘breathe’ faster

 

Source: NBC

By Douglas Main

Feb 22nd

 

Decanting wine is a common tactic among some oenophiles, and involves pouring the drink through an aerator or into a special container to let it “breathe.” But inventor and amateur chef Nathan Myhrvold has an even better and faster way: Put it in the blender.

 

This agitates the wine and makes it react with air more quickly, performing the same role as decanting but faster, Myhrvold said in a speech here at the annual meeting of the American Association for the Advancement of Science on last Saturday.

 

But the real reason to do it? “The looks on people’s faces,” Myhrvold said. “If you do this with a wine expert in the room – it’s as if you committed some deeply unnatural act.”

 

“But it’s food,” he continued. “Why is it OK with daiquiris and not with Bordeaux?”

 

There are several possible explanations for why decanting, or blending, improves the taste, said Myhrvold, who holds nearly 250 technology-related patents and recently wrote a tome about the science of cooking, titled “Modernist Cuisine: The Art and Science of Cooking” (The Cooking Lab, 2011). The practice could lead to the oxidization of certain flavor compounds, vent pent-up gases such as sulfur dioxide or release other volatile components from the wine, he said. [Science You Can Eat: 10 Odd Facts About Food]

 

Myhrvold performed his magic for a Spanish duke, one of the top winemakers in Spain, throwing the royal’s favorite red wine into the blender. The duke did a blind taste test and preferred the blended one, but didn’t believe Myhrvold afterward. If he’d “been a duke from years of old he would have run me through with his sword right there,” said Myhrvold, who was once the chief technology officer for Microsoft and now chief executive officer of the patent company Intellectual Ventures.

 

 

——

‘Wine is not like shares or cash’

 

Source: Daily Telegraph

By Emma Wall

24 Feb 2013

 

When Sunday Telegraph reader Chris Unwin was promised an annual return of 13pc from the wine investment company DS Vintners, he immediately called his bank to look into freeing up the funds.

 

The pensioner from Surrey was fed up with the paltry return he was being offered in cash, and, not surprisingly, was attracted to such inflation-busting returns.

 

Though the scheme normally requires a minimum investment of £15,000, Mr Unwin (right) was offered a deal that would allow him access these potential returns for the smaller deposit of £5,000.

 

“I don’t have very much to invest and, in contrast to the marginal return you can get on cash at the moment, 13pc sounded very attractive,” the former loans clerk said. “I use my cash Isa allowance but have no hope of ever earning that substantial amount from a savings account.”

 

Luckily for him, the cashier at Lloyds was a touch more cautious and advised Mr Unwin to delve a little deeper before signing up, so he held off and contacted The Sunday Telegraph.

 

Mr Unwin’s tale is not one of fraud – DS Vintner know their wines – but a warning to investors not to turn a blind eye to the risks involved in chasing such high returns.

 

It’s not hard to see why these offers are now so tempting: before the credit crisis those in retirement could have earned 6pc plus on a high street bank account without taking undue risks with their capital. Today, the best they can hope for in a cash Isa – where the amount you can save is severely limited – is just 3pc.

 

For returns of 5pc or more, investors have been forced to “move up the risk scale” – with those holding cash now buying bonds, bondholders now turning to shares, and those who have always invested in blue-chip British companies now taking a punt on corporations based in Asian and emerging market countries.

 

It is hardly surprising that consumers are turning to investments they would never have previously considered.

 

An investment with DS Vintner may well return 13pc annually, but only on exit after the recommended investment period of 5-10 years. A spokesman also said DS Vintners would not store or insure the wine it bought on your behalf, which means investors have to pay these additional annual charges, further denting returns.

 

For experienced investors with a large diversified portfolio of shares, bonds and cash, alternative assets like wine can be a high-risk, high-return bet. Traders such as DS Vintners can fashion a portfolio that can increase in value over time. They can also fall, and as wine is an unregulated investment, none of your capital is protected.

 

But in haste to boost their income back to pre-credit crisis levels, savers are failing to consider these risks, and finding themselves in wholly unsuitable investments.

 

“Bottles of wine are not investments,” said Rick Ealing, head of investment solutions at Sanlam UK.

 

“Investments are supposed to earn you money, and yet wine pays no dividends, interest or rent. In fact, it has heavy storage costs. People invest in businesses expecting them to grow over time, yet all wine eventually peaks and decays. You’re at risk of counterfeiting, theft and fire. You will enjoy few, if any, of the protections offered to investors in regulated funds.

 

“If you love wine, know a great deal about it and have money that you are happy to place at considerable risk, then by all means own some wine ‘on the side’. But dusty glass bottles are no substitute for a proper portfolio of assets like shares, bonds, cash and property.”

 

Wine is not the only alternative asset to be packaged up as investments and promoted to savers desperate to make a decent return on their money. In recent years, stamp specialists Stanley Gibbons has marketed its unregulated investment plan under which investors could “easily earn returns of 698pc or more”.

 

At the time, financial advisers pointed out that they would not be able to make such claims about regulated investment plans.

 

Also at the time, Ian Lowes, the managing director of Lowes Financial Management, a firm of independent financial advisers, said: “Reading the marketing material made me shiver. It highlights how careful investors have to be when buying unregulated products – like stamps and other collectables.”

 

As he pointed out, many of these firms don’t always clearly explain the risks, or detail potential downsides, like early exit charges. “The direct marketing techniques used can lure consumers into making long-term investments that are highly unsuitable for them.”

 

This isn’t to say that such collectables won’t make you money. Many of these assets have risen in value in recent years but, as with any market, investors need to know what they are buying. For every bottle, stamp or antique that has quadrupled in value, there are likely to be less desirable items that will only lose you money.

 

One advantage of wine as an alternative investment is that supplies of past vintages invariably dwindle over time, pushing up prices of the remaining items.

 

While it is in the bottle your investment is improving all the time as more is being uncorked to drink. “Wine, like art, tends to be less correlated with other assets. This means that prices won’t automatically fall in the event of a stock market crash, for example. In the crisis of 2008, people realised that financial assets, like shares and bonds, were much more correlated than they thought,” said Victoria Rock of Coutts.

 

But only a very few investment grade Bordeaux wines increase in value exponentially, and these can’t be accessed with £5,000 – the kind of money that our reader was hoping to invest.

 

First-time wine investors are best leaving the bottle selection to the experts. Wine merchants such as Berry Bros & Rudd (bbr.com) or Bordeaux Index (bordeauxindex.com) will tailor a portfolio for you depending on how much you want to invest, your risk profile and how long you want to invest.

 

 

——

CHRISTIE’S RESULTS: Fine & Rare Wines, 21 February 2013

 

Source: Christie’s

Feb 22nd

 

London – Christie’s sale of Fine & Rare Wines, held on the 21 February 2013 was sold 97% by lot and value.

 

The top lot was Château Lafite Rothschild, vintage 1982, 12 bottles, which fetched £34,500/$52,371 /?39,468

 

Chris Munro, Head of Wine department, London: “The first Fine and Rare Wines sale of 2013 realised tremendous results selling 97% by lot and by value, demonstrating the continuing strength of the market. The high demand for classic wine of Bordeaux and Burgundy that was witnessed during the second half of 2012 remains buoyant. The top lot of the sale was formed of 12 bottles of Château Lafite Rothschild, vintage 1982, which fetched £34,500, far exceeding its pre-sale estimate. We were also delighted with the performance of the 2011 magnums ‘Y d’Yquem’, directly consigned from the Château. Further highlights of the sale were five magnums of Château Lafite Rothschild 1947 that realised £20,700 against an estimate of £3,000-4,000. We look forward to our next London sale of Fine & Rare Wines including a Superb Private Collection of Rare Large Formats, which will be held on 21 March 2013.”

 

 

——

Champagne in China Seen Failing to Match Cognac Cachet

 

Source: Bloomberg

By Clementine Fletcher

Feb 24, 2013

 

As global champagne consumption goes flat, makers of bubbly are turning to China to make up the difference. After all, cognac has become a huge hit there, and the country now accounts for 22 percent of worldwide shipments, up from 5 percent in 2000.

 

“We think China could change the champagne market in the coming years,” said Charles-Armand de Belenet, head of marketing for the champagne division of Pernod Ricard SA. (RI) China is the second-biggest export market for Pernod’s Mumm brand and No. 3 for sister label Perrier Jouet.

 

Bottles of Perrier Jouet, left, and Dom Perignon champagne are seen at an All Bar One bar in London. Champagne is an expensive passion in China, with bottles selling for three times what they command in Europe due to import fees and hefty markups at bars, according to Mintel. Photographer: Chris Ratcliffe/Bloomberg

 

There’s a problem with that plan: champagne doesn’t have the staying power of cognac, its fellow French export. The fizzy drink has to be consumed immediately after opening. Cognac, by contrast, can be kept for years and offered to special guests when the occasion warrants, said Paul French, an analyst with researcher Mintel in Shanghai.

 

Most Chinese sales of cognac come around the just-finished Lunar New Year holiday, when Chinese often give friends and business contacts expensive bottles of cognac or baijiu — a local white spirit.

 

These gifts are displayed “on a shelf, like a vase,” said French. “There’s a massive over-expectation about China” among makers of bubbly, he said. “Champagne is quite a hard product to push.”

 

Global sales of the sparkling wine slid 4.4 percent in 2012, according to industry association CIVC. The decline was led by France, the world’s largest market with more than half of global consumption. In China, sales have jumped 33 percent on average in each of the past three years, according to market researcher Euromonitor.

 

Hermes Handbags

 

As the world’s top luxury consumers, accounting for one- quarter of spending on high-end goods, according to consultants Bain & Co., the Chinese could in theory make up for lost sales in Europe. They’re no stranger to fashionable French wares, from Chanel sunglasses to Hermes (RMS) handbags.

 

Chinese cognac sales have fueled profits and buoyed the shares of Pernod and Remy Cointreau SA (RCO), maker of Remy Martin cognac, with both stocks outpacing the Bloomberg Beverages Index (BWBEVG) over the past year. Pernod said Feb. 4 it’s in talks to buy another producer, adding to its Martell brand, and Remy in December agreed to buy cognac maker Larsen.

 

Unlike cognac, which was first exported to China in 1859, champagne has only recently started gaining popularity in the nation’s $132.1 billion drinks market. While the Chinese are still getting used to its mineral taste and fizziness, there’s a strong appetite for the drink’s European cachet.

 

Champagne Bathtub

 

“Chinese people love France — the sophistication, the luxury that comes out of the country,” said Martin Riley, marketing director at Pernod Ricard. “It’s something quite deep-seated and puts products like cognac and champagne in a fantastic position. It’s a way of drinking the luxury lifestyle.”

 

That lifestyle is on full display nightly at Bar Rouge on Shanghai’s Bund, the colonial-era waterfront boulevard. There, champagne bottles are served with sparklers, and the bar offers a 10,000 yuan ($1,600) package of six liters of champagne, a three-liter bottle of vodka and soft drinks, carried out in a tub of ice by six employees accompanied by dancers.

 

“Even people who are not willing to drink champagne are willing to pay the money just to get the bathtub and the show,” said Mathieu Brauer, chief executive officer of Visual Orient Limited, the bar’s owner.

 

Saber Opening

 

Despite such conspicuous displays, champagne drinking remains far behind cognac sipping. Drinkers in China bought 900,000 liters of champagne in 2011, according to Euromonitor, while cognac hit 25.5 million liters.

 

To lure more drinkers, brands use endorsements from local celebrities, sponsorship of exclusive parties and even iPhone apps to educate consumers on what they call the “protocols of champagne.” Mumm, owned by Pernod, holds tastings where consumers learn to choose and serve champagne. Brand representatives even demonstrate the art of “sabrage” — or whacking a bottle open with a saber.

 

Champagne is an expensive passion in China, with bottles selling for three times what they command in Europe due to import fees and hefty markups at bars, according to Mintel. Growth in spending on luxury goods in China is set to slow from 30 percent in 2011 to 7 percent this year, Bain & Co. estimates, as economic expansion weakens. And unlike, say, vodka, which features new flavors every year, there’s less opportunity to innovate with champagne because of tight controls on how it’s made.

 

Champagne’s slow progress in China is not unprecedented. Other Western luxury items with a short history in China, like fragrant perfumes, have still not been embraced.

 

Champagne “is growing, but it’s off a tiny base,” said Trevor Stirling, an analyst at Sanford C. Bernstein in London. “There are many French products Chinese consumers don’t love.”

 

 

——

Liquor Barn co-founder Irving Rosenstein dies

 

Source: Kentucky.com

February 22, 2013

 

Irving Rosenstein, a shopping center developer who helped found what would become Liquor Barn, died Friday. He was 90.

 

Nicknamed “Chief” by his family, Mr. Rosenstein helped develop shopping centers including those at the corner of Reynolds and Nicholasville roads and Versailles Road at Village Drive, said his son, Rob Rosenstein.

 

“He had a great vision of what could come because so much of Lexington was undeveloped at that time,” added his daughter, Ann Rosenstein Giles.

 

Around 1970, Mr. Rosenstein helped found Shoppers Village Liquors, the forerunners to today’s Liquor Barns, and opened them in some of his shopping centers.

 

Roger Leasor went to work for Mr. Rosenstein a year after the first store opened.

 

“I think my hair was halfway down to my waist, and I was wearing cowboy boots,” Leasor said. “Over the next few years, he was just so patient with me, as he was with everybody. That’s just the way he was.

 

“He turned me into a pretend businessman. And it wasn’t just me. There were hundreds of individuals over the years that you saw become bigger and better by being around him.”

 

Leasor is now director of community affairs for the company, which was sold to a Canadian firm in 2009.

 

“He had the amazing gift of valuing all work,” Leasor said of Mr. Rosenstein. “Whether you emptied the trash cans that day or you brought in carts or you created a newspaper ad or you negotiated a deal on a new store, it was all work that he valued.”

 

As Shoppers Village Liquors grew, Mr. Rosenstein handed over operation of the company to his son, Rob, who helped grow it into the Liquor Barn concept.

 

Mr. Rosenstein was also involved with organizations including Temple Adath Israel, Triangle Park, KET and Junior Achievement.

 

He is survived by his wife, Irma S.; daughter, Ann Giles; and son Rob Rosenstein; and grandchildren.

 

Visitation will be from 2-4 p.m. Sunday at Temple Adath Israel. Services will be at 9:30 a.m. Monday at Temple Adath Israel.

 

 

——

Willy Cellucci, 57: General manager of Atlanta Palm restaurant

 

Source: The Atlanta Journal-Constitution

By Michelle E. Shaw

Feb 21st

 

Friends of Willy Cellucci loved to hear him tell stories. And it didn’t matter if it was his story, or someone else’s. It was going to be epic.

 

“He’d tell his story, and it’d be the best you ever heard,” said Lance Jaglarski, a friend and colleague. “But then he could take one of your stories and tell it, and it’d be the best you ever heard. He could make anything sound good.”

 

For the past 16 years, Cellucci was general manager of the Atlanta Palm, the steakhouse he opened in the former Swissotel, now the Westin Buckhead.

 

Jaglarski, who is also general manager and has had the title for about a year, said he still hasn’t settled into it.

 

“I don’t know if I’ll ever really feel like the general manager here,” he said. “The Palm in Atlanta will always be Willy’s.”

 

William Joseph Cellucci, known as Willy by all, died Sunday from complications of laryngeal cancer. He was 57.

 

A memorial service is planned for 2 p.m. Feb. 24 at the East Lake Golf Club, Atlanta. H.M. Patterson & Son, Oglethorpe Hill, is in charge of the cremation.

 

Cellucci couldn’t stay away from his birthplace of Los Angeles. His parents moved to the Northeast when he was child, but when they divorced he went back to LA with his mother. He traveled to France and attended what was then called the American College of Paris, then returned to the U.S. and enrolled at George Washington University in Washington, D.C., where he graduated with a bachelor’s degree in English, according to his corporate profile on the Palm website.

 

Cellucci learned the restaurant business the old-fashioned way. While in Paris he worked at a restaurant to pay off a bar tab he’d racked up during a pinball tournament. And in D.C., Cellucci started bartending.

 

“In the old days, that’s how restaurant people got started,” said his wife, Jonelle Cellucci. “They go to culinary school now, but (back) then they often started as bartenders and waiters and that sort of thing.”

 

After graduation he managed a few small restaurants in D.C. and then New York. He came back to D.C. and went to work at the Prime Rib, where he remained until joining the staff at Morton’s, his wife said. His career with Morton’s took him back to his beloved Los Angeles, where he stayed until he had an opportunity to open the Atlanta Palm, just in time for the 1996 Olympics.

 

Cellucci’s larger-than-life presence will always linger in the kitchen, dining room and nooks and crannies of the Atlanta Palm, his co-workers said. And his name will likely be called several times a night as his famous cocktail, “Willy’s Pinky,” lives on. Its recipe? A shot of orange Stoli and cranberry juice.

 

“Willy’s overwhelming goal was to make sure everyone who walked through those doors had a good time,” said Jeff Phillips, chief operating officer of the Palm Restaurant Group. “He defined the word ‘host.’”

 

In addition to his wife, Cellucci is survived by his sons, Daniel Cellucci of Ithaca, N.Y., and Jack Cellucci of Athens; and sister, Constance Borde of Paris.

 

 

——

Strong performance by steak in table service restaurants  in 2012, driven by higher priced ribeye, filet, and veal

 

Source: GuestMetrics

February 25, 2013

 

According to GuestMetrics, based on its proprietary database of POS transactions of over $8 billion dollars in transactions and over 250 million checks from restaurants and bars across the United States, steak achieved one of the largest share gains in the food category in 2012, only behind chicken wings, pizza, burgers, and tacos.

 

“In analyzing the 64% of table service restaurant sales that come from food, we see that steak had a strong year in 2012,” said Bill Pecoriello, CEO of GuestMetrics LLC. “Based on our data, steak revenues were up about 3%, the net result of the number of steaks ordered being up 1% despite prices being 2% higher than 2011 levels, likely at least partially due to the drought last year.  Given steak has one of the highest average price points of any food item, the uptick in steak sales should be particularly beneficial to restaurant operators.”  According to data from GuestMetrics, the average price for steak in restaurants is $23, which is only behind lamb ($33), halibut ($32), duck ($27) and lobster ($24), all of which saw their sales contract in 2012.

 

“In further analyzing the steak category, the top three types sold in on-premise in terms of their share were sirloin at 19% of steak revenues, ribeye at 17%, and filet at 16%,” said Peter Reidhead, VP of Strategy and Insights at GuestMetrics.  “However, in terms of the growth seen in the steak category in 2012, this was driven almost exclusively by strength among ribeye, filet, and veal, while sirloin sales actually contracted from levels seen in 2011.”

 

“Additionally, given the fact the average price of those three types of steak are well above the overall steak average with ribeye at $29, filet at $35, and veal at $36, dialing up the focus on these steaks should be an especially attractive value proposition for restaurant operators to consider,” said Brian Barrett, President of GuestMetrics. “The only types of mainstream steak that have a materially higher average price point in on-premise are ossobuco at $37 and porterhouse at $51.  Given steak prices were up 5% in December against the prior year, we will be monitoring closely the impact this has on overall steak sales as we progress further into 2013.”

 

About GuestMetrics LLC

GuestMetrics, LLC is revolutionizing how the hospitality industry operates.  Despite the dawn of the Digital Age having begun more than three decades ago, the hospitality industry essentially functions the same way it did centuries before.  GuestMetrics has cracked the code by collecting data from tens of thousands of restaurants and turning billions of raw transactions into intelligible data that is fundamentally transforming the business operations of everyone from the independently-owned bar/restaurant on the corner, to multi-national chains, to the food & beverage companies that supply them.  Please visit www.GuestMetrics.com for more information and to arrange for a free demonstration.

 

 

——

BLMN: Moderating with the industry, but SSS still best-in-class; retain Buy

 

Source: Goldman Sachs

Feb 24th

 

What’s changed

We raise our 2013/2014 EPS estimates to $1.08/$1.25 and introduce a 2015 estimate of $1.46. Our upward revisions reflect lower sales assumptions, which are more than offset by reduced interest expense and taxes.

 

Implications

We retain our Buy rating on BLMN shares as we believe the company is the best positioned Casual Diner in the group. While numbers are not as robust as previously expected, they are fawr outperforming their peers.

 

(1) BLMN SSS are running in the +0-1% range in 1Q13, +1-2% excluding the impact of leap year. This is far in excess of the down mid-single digit current industry average, suggesting BLMN’s concepts continue to take a meaningful amount of market share. It has strong future drivers in place with remodels, its ongoing lunch roll-out and increases in ad impressions.

 

(2) We see the potential for solid EBITDA margin expansion from cost cuts and fixed cost leverage. On the former, BLMN has demonstrated ability to reduce costs by $50mn+ a year and seems to have a solid project pipeline. On the latter, once the impact of weather clears, we think BLMN SSS are likely to rebound to 2-3%+, which is enough to leverage rent and labor.

 

(3) BLMN has a FCF conversation rate of over 100%. This allows for strong cash deployment towards remodels, new unit builds and debt reduction. In the future, we believe BLMN may also have room to institute a dividend and/or buyback shares. While its P/E may be modestly above some peers, its FCF yield is at parity, despite what we view as superior fundamentals.

 

Valuation

We retain our $19 P/E and DCF-based 12-month price target.

 

Key risks

Risks include a further deterioration of Casual Dining trends, a reduced pace of market share gains or renewed commodity inflation.

 

 

——

Harris Teeter Said to Draw Interest From Retailer Ahold

 

Source: Bloomberg

By David Welch

February 22, 2013

 

Harris Teeter Supermarkets Inc. (HTSI), the Matthews, North Carolina-based grocery chain exploring a sale, has attracted interest from Royal Ahold NV (AH), the Dutch owner of Stop & Shop stores, said people with knowledge of the matter.

 

Ahold has contacted JPMorgan Chase & Co., retained by Harris Teeter to evaluate options, and is seeking more information on the sale process, said one of the people, who asked not to be named because the negotiations are private. Ahold hasn’t made a formal bid, according to that person.

 

“We regard Harris Teeter as a likely deal for Ahold,” Patrick Roquas, an analyst at Rabobank, wrote in a report today. A transaction wouldn’t hurt Ahold’s stock as it’s unlikely that the Amsterdam-based company is willing to put its “credible track record at risk” by paying too much.

 

Harris Teeter’s market value tops $2 billion. Buying the chain would help Ahold expand further in the southern U.S. and Washington, D.C., and its acquisition history and previous expansions position the Dutch chain as a probable bidder, said BMO Capital Markets analyst Karen Short.

 

Ahold “appears to have more than adequate capacity on its balance sheet to complete a transaction,” she said in a Feb. 20 research note. She also listed Lakeland, Florida-based Publix Super Markets Inc. (PUSH) and Cincinnati’s Kroger Co. (KR) as possible suitors.

Ahold Stock

 

Harris Teeter shares advanced (HTSI) 1.5 percent to $42.12, the highest price in more than six months, at the close yesterday in New York. Ahold rose as much as 0.3 percent to 11.01 euros and was trading up 0.2 percent at 12:11 p.m. in Amsterdam. The stock has gained 8.5 percent this year.

 

Harris Teeter disclosed this month that it hired JPMorgan after receiving advances from two private-equity firms, which the company didn’t name. Representatives at Harris Teeter, JPMorgan and Publix declined to comment, while a spokesman for Ahold said the company doesn’t comment on market rumors. An official at Kroger didn’t immediately return a call seeking comment.

 

Harris Teeter was co-founded in 1960 by two North Carolina grocers, according to its website. It has more than 200 stores in North Carolina, South Carolina, Virginia, Georgia, Tennessee, Maryland, Delaware, Florida and Washington, D.C. The company reported $4.54 billion in revenue for the year ended Oct. 2, 2012.

Value Indication

 

Earnings before interest, taxes, depreciation and amortization over the same period amounted to $306.5 million, according to data compiled by Bloomberg. Grocery companies typically sell at 7 to 10 times Ebitda, said one of the people familiar with the situation, indicating Harris Teeter’s sale value could be as much as $3.1 billion.

 

About 60 percent of Ahold’s sales come from the U.S., where it also owns Giant stores, according to data compiled by Bloomberg. The company has sold assets in the country over the last 10 years after an accounting fraud at an acquired business in the U.S. This month the Dutch company said it agreed to sell its 60 percent stake in Swedish grocery chain ICA for more than $3 billion.

 

Some brokerages including Barclays expressed skepticism that Ahold would buy all of Harris Teeter, suggesting that returning proceeds from the ICA deal to shareholders would be a better option than buying a grocer that competes against grocers including Wal-Mart Stores Inc. (WMT)

 

“We have already assumed in our model that Ahold will return the ICA proceeds to shareholders in the second half via a share consolidation,” Barclays analysts, including James Anstead in London, said in a note. “If the cash was instead spent on significantly increasing Ahold’s exposure to an industry which is undoubtedly competitive, then we would expect shareholders to be unimpressed.”

 

 

——

Pennsylvania: Making liquor convenient comes at a cost

 

Washington state recently privatized state stores, providing lesson for Pennsylvania

 

Source: The Morning Call

By Scott Kraus

February 24, 2013

 

A year ago, if Tom Dieker wanted to pick up a bottle of Stolichnaya vodka, he had to drive to one of the small state stores near his suburban Seattle home.

 

Now, almost eight months after Washington state sold off those stores, chances are he can find it at his local Safeway supermarket, one of roughly 1,700 private retailers now selling liquor in the state.

 

“If you want just sort of a popular brand, you can find it at grocery stores now,” said Dieker, 46, vice president of sales for a consulting firm. “If you want a really nice bottle of scotch, something not so run-of-the-mill, there are some nice wine and liquor stores.”

 

It’s a level of convenience Pennsylvania consumers can only imagine, but not one without drawbacks. Average liquor prices have increased in Washington, small business owners have struggled to compete with large retailers, and reports of shoplifting have law enforcement officials calling for better liquor theft tracking.

 

Prices tick up

 

According to the Washington State Department of Revenue, the average retail price of a liter of liquor was up $2.64 in December compared with a year ago, when the state stores were the only game in town. The higher prices have prompted some residents to go over the border to Idaho and Oregon.

 

With an average price per liter that is more than $5 lower than in southern Washington, the 12 Oregon liquor stores on Washington’s border, operated by private contractors paid a commission by the state, have seen a 34 percent increase in sales since Washington privatized, said Oregon Liquor Commission spokeswoman Christi Scott.

 

That hasn’t dampened sales in Washington. With the number of liquor outlets more than quadrupling, overall liquor sales are up slightly, said Liquor Control Board spokesman Brian Smith. It’s a matter of availability, he said.

 

“You have more volume, you went from 329 to 1,700-plus stores,” Smith noted.

 

That has meant increased liquor tax revenue to supplement the $31 million the state raised by auctioning off the rights to operate its state stores to private owners. Smith said the state expects to more than break even.

 

Privatization supporters attribute the higher average prices to Washington’s high liquor taxes, which were left untouched, and a combined 27 percent in new fees levied on gross sales at the wholesale and retail levels. Those fees will drop to 22 percent in two years.

 

Washington’s privatization push began in 2010 but faltered when voters – worried about the potential loss of state revenue and the prospect of Jack Daniels bottles displayed next to the Ruffles at every 7-Eleven – defeated a privatization initiative at the polls.

 

The plan was reworked by Costco and food retailers in 2011 to limit liquor sales to stores with 10,000 or more square feet of retail space. It was put back on the ballot and coupled with a massive ad campaign funded primarily by Costco. The new plan left the state’s liquor tax structure in place and added surcharges of 10 percent at the wholesale and 17 percent at the retail level to prevent a decline in state revenue.

 

Voters passed the new initiative in November 2011, and by last April, the state had auctioned off the rights to operate its 329 state liquor stores and issued more than 1,000 additional licenses to retailers like Costco, Safeway and Trader Joe’s to sell liquor at their locations. In June, the system went live.

 

There are some key differences between Washington and Pennsylvania. While Washington once controlled the sale of spirits like whiskey and gin, residents in the state that is home to Starbucks and Microsoft have been able to buy wine and beer at supermarkets and other retailers for decades.

 

Liquor in Washington is taxed at a rate of 20.5 percent, plus $3.77 per liter. Its state stores collected a 51.9 percent markup on liquor before privatization. Now the state imposes 27 percent in new fees at the wholesale and retail level to recoup those profits. Retailers and wholesalers tack on their profit on top of that amount.

 

In Pennsylvania, consumers pay an 18 percent Johnstown Flood Tax in addition to a 6 percent sales tax and various smaller levies. State stores collect a 30 percent markup that contributes to an annual profit the system contributes to state revenues each year.

 

Unlike Washington, Corbett has no plan to impose new fees on wholesale and retail dealers to make up for that profit. Instead, his plan proposes making up for the revenue with flat annual license renewal fees.

 

Corbett took Washington’s experience and that of other states into consideration in putting his plan together, said spokesman Eric Shirk.

 

Corbett’s plan would replace the state stores with 1,200 licensed private wine and spirits retailers. It would also expand beer and/or wine sales to convenience stores, drug stores, supermarkets and big box retailers. Legislation implementing the plan is expected to be introduced in the House in March, and would need to pass the House and Senate.

 

Privatization is working for Washington consumers, said Ed Cooper, spokesman for Total Wine & More, a national chain that has opened three superstores in Washington and plans to open 10 more. If they shop around, they can find cheaper prices, he said. Like any other product, liquor is offered at different prices by different retailers, making the average price somewhat irrelevant.

 

“If they are after convenience, they may pick it up in their grocery store,” Cooper said. “The products may be more expensive in a grocery store than they would be in a specialty store like ours. It’s all about understanding retail prices.”

 

The chain is one of several eyeing Pennsylvania as a potential market if the state stores are eliminated.

 

University of Washington graduate student Colin Sowder said his buying habits have changed dramatically since privatization. He now buys most of his liquor at Fred Meyer, a combination supermarket and general merchandiser whose products include televisions, lawn furniture, breakfast cereal and now, Bacardi rum.

 

If he’s looking for something basic, Sowder, 27, of Seattle, said he typically buys whatever is on sale. That’s new because before privatization, the state had uniform pricing.

 

If he’s looking for something special, chances are Fred Meyer doesn’t stock it, so he’s still forced to make a special trip to a smaller, privately owned liquor store.

 

“If I went to my store – the old state store – and was looking for Four Roses bourbon, they generally had it,” Sowder said.

 

Selection varies. While the old state stores carried about 1,500 products, supermarkets, drug stores and all-purpose retailers will stock several hundred varieties while retailers like Total Wine stock a few thousand.

 

Specialty products, especially those produced by local distilleries, have become more readily available in some areas of the state, said Noriko Kaji, a 36-year-old entertainment company worker from Seattle. “The local stuff you can get at supermarkets,” she said. “A lot of the Seattle grocery stores, the high-end grocery stores, have focused on the local distillers.”

 

But small liquor store owners who paid tens or hundreds of thousands of dollars for licenses to take over the old state stores say they can’t compete with large grocery stores and chains like Costco, which sells liquor the way it sells everything else, discounted and in large volumes.

 

Dieker’s local state store in the small town of Sammamish, for example, was taken over by private owners, who won the right to open Plateau Wine and Spirits at the same address.

 

But they, like many shop owners, are struggling to compete with supermarkets and big box stores, said Michael Cho, co-founder of the Washington Liquor Store Association, a newly formed trade group that looks out for small store owners. “It has been an absolute disaster for local liquor store owners who bought their licenses from the state,” Cho said.

 

They are losing money because customers have turned to more convenient options for their everyday purchases, he said, and many are talking about shutting their doors.

 

Some 25 closed within the first six months, Smith said.

 

They’re also facing competition from liquor superstores like Total Wine & More and Bev-Mo, mega-retailers that offer volume pricing along with a huge selection of wine, beer and liquor.

 

Reviews on websites like Yelp show these adult beverage theme parks are wowing customers. “Every superlative word applies here. Pick your jaw off the shiny clean floor,” gushed Sharon H. of Seattle about Total Wine’s Bellevue, Wash., store.

 

Easier to steal

 

Anecdotal evidence that bottles of hard liquor have been walking out of supermarkets and into the hands of teenagers was enough to prompt the Washington Association of Sheriffs and Police Chiefs to push for a law to force retailers to report liquor theft losses. Supermarkets have balked at the request.

 

Wine and beer have been in supermarkets for years, said Mitch Barker, the association’s executive director, but they’re less attractive to shoplifters.

 

With liquor now displayed on the end of supermarket aisles, near exits and at self-service checkout kiosks, the association would like to know how much is being shoplifted.

 

“Sliding a bottle of hard liquor up your sleeve is a lot easier than boosting a couple of cases for the high school party,” Barker said. Organized rings of thieves have popped up in some places, shoplifting liquor for sale to teenagers at a sizable markup, he said.

 

Shirk pointed out that under Corbett’s plan, grocery stores would not be permitted to sell hard liquor in Pennsylvania.

 

Spokane resident Daniel Hall, a 38-year-old father of two small children, doesn’t like that the supermarkets are full of heavily promoted hard liquor that draws his kids’ curiosity. His wife, who works at a local supermarket, says they’re having a huge problem with shoplifters.

 

Hard liquor is suddenly ubiquitous, appearing in supermarket circulars and beckoning across the store as you pick out a steak for the grill, he said.

 

“Every grocery store has it. Now there are all these independent liquor stores that are popping up,” he said. “It is just more readily available now. I’m just not sure that is a good thing or a bad thing.”

 

 

——

Pennsylvania: CAN YOU TRUST GOV. CORBETT ON PRIVATIZATION?

 

Source: Ufcwpawineandspiritscouncil

Feb 23rd

 

Just as we learned that Governor Corbett couldn’t be trusted when he said his Lottery privatization plan was legal, we now know that we can’t trust what the Governor says about his scheme to dismantle the PLCB to help his corporate backers make more money.

 

The Corbett Book of Lies doesn’t change the true facts: Jobs will be lost. Prices will increase. Convenience will suffer. State revenues will fall.  Your constituents will pay the price. The state could lose as much as $400 million on the deal, according to Tom Corbett’s own math.

 

We simply can’t trust this Governor to tell the truth about PLCB privatization.

 

LIE #1: Money will fall from the sky for our public schools.

Gov. Corbett says, “We will raise $1 billion over 4 years.”

 

FACT: The wild estimates from an auction of licenses keep dropping and dropping. Corbett’s own revised study, conducted by Public Financial Management, Inc. (PFM), issued last month, is down significantly from the $1.3 – $1.9 billion promised in the initial PFM report issued just two years ago.

 

FACT: Gov. Corbett’s $1 billion calculation doesn’t take into account the PFM study’s estimated $1.4 billion in transition costs over five years, including unemployment compensation for laid off workers, expenses related to increased licensing and enforcement demands, and other costs to phase-out and liquidate the current system. (Page 186)

 

More Facts:

 

PFM calculates that about $112.5 million will come from 750 of PA’s 1,100 beer distributors willing to pay $150,000 for an ‘enhanced’ license.  But the beer distributors adamantly oppose this bill. The Malt Beverage Distributors Association (MBDA) and newspaper articles from across the state say that very few beer distributors can afford a $150,000 license fee.

 

The original Corbett PFM report calculates that there will be over $64 million in unemployment compensation costs over the course of four years. They also calculate there will be an additional $14 million in paid leave costs for displaced employees. (Page 181-182).

 

PFM’s original report also estimates that there will be other residual PLCB costs including police enforcement funding, controller operations, and transfers to Department of Health. This will be another $27-$35 million a year in costs. (Page 182)

 

FACT: Gov. Corbett’s $1 billion revenue calculation does not take into account additional social costs and the negative multiplier effect, which also will have detrimental impacts.  These impacts should be considered in any transition cost.

 

PFM claims there is not enough evidence to evaluate if there will be a negative financial cost due to social impact. Yet the independent U.S. Centers for Disease Control and Prevention found that there will be increases in excessive consumption and other detrimental social impacts with any further privatization of alcohol sales. On a per capita basis, the economic impact in the U.S. is approximately $746 per person (2011 American Journal of Preventive Medicine Study, peer-reviewed).

 

PFM also dances around pricing the impact of the negative multiplier effect of over 2,300 PLCB employees who will go on unemployment, by PFM’s own admission. They claim “while definitive judgment of multiplier effects of a privatized system cannot be made without additional information, it is likely that direct and indirect effects will depend on levels of retail activity compared to the current system.” (Page 212)  In other words, what PFM really means is “yes, there will be a negative multiplier effect, but the Governor did not want us to price it.”

 

FACT: Gov. Corbett’s privatization plan creates an annual $408 million gap in revenues for the state.

The PFM report estimates that $408 million is needed each year to make privatization fiscally neutral for the state, but provides no details on how that gap would be filled. (Page 7-8).

 

 

LIE #2: Your constituents will have more convenience.

Gov. Corbett says, “Why don’t we have convenience like 48 other states?”

 

FACT:  The Governor cites South Carolina, a state where he vacations, as a model. But do we want to be South Carolina? That state does not permit the sale of spirits past 7:00 p.m. any night of the week or on Sundays. In 39 of the state’s 46 counties, the sale of wine and beer is also prohibited on Sundays.

 

More facts:

There are 16 other “control states” that have government control of the wholesale and/or retail sale of alcohol and 11 of these have state-run or state-contracted liquor stores.

Nine states (eight of which are “private states”) restrict the sale of liquor on Sundays (affecting about 66 million people – 21% of Americans). Pennsylvania does not. There are also laws and rules put in place in other states and counties that restrict the sale of wine and beer on Sunday as well.

In at least 15 states, consumers cannot purchase beer, wine, and liquor in the same store, restrictions that affect 122 million people or 40% of our nation.

 

LIE #3: Your constituents will pay lower prices and will have more selection.

Gov. Corbett says that in a private market, prices will go down. [Corbett Press Conference, 1/30/13]

 

FACT: Corbett’s PFM study shows that prices will increase in many parts of the state, and other states that have privatized recently have experienced price hikes.

After Iowa privatized, “Price increases were gradual and totaled 7.4 percent above what they would have been if the State had retained its stores”. (Page 235)

Voters in Washington State are paying anywhere from 10 percent to 30 percent more for wine and spirits since that state privatized last year. [Huffington Post, 6/2/12]

The private wholesale markup in WA has been as high as 72% – more than double the PLCB. [Reuters, 6/2/12]

Corbett’s plan will eliminate the buying power of the PLCB. This will lead to higher acquisition prices for private wholesalers.

Corbett’s plan would impose a private wholesale markup, the 18% liquor tax, and a private retail markup on your constituents.

Gov. Ridge’s 1997 Price Waterhouse Study projected the combined wholesale and retail markups under a privatized system to be at least 49% for wine and 44% for spirits. Those markups are significantly higher than the 30% markup under the current system.

 

FACT:  Some stores in our border states don’t even carry many of the 50 most popular brands your constituents currently enjoy. [Testimony of Wendell Young, House Liquor Control Committee, 8/11/11]

The average PA Wine and Spirits store stocks between 3,000 to 5,000 items; the smallest stores stock at least 1,000 items.  [Pennsylvania Liquor Control Board]

Store selections are much more limited in privatized states. For example, Costco, the leading proponent of privatization in Washington State, stocks only 140 wines and 32 spirits on its shelves. [Testimony of Auditor General Jack Wagner before the PA House Liquor Control Committee, November 30, 2011]

Nowhere in the “other 48 states” do consumers have the selection and service available in Pennsylvania. Why do we want to be like those other 48 states?

 

LIE #4: The Wine and Spirits stores make no money for the state of Pennsylvania.

“Right now, our retail system is not making money, it is being completely subsidized by the wholesale system.” [Harrisburg Patriot News, 2/20/13]

 

FACT: This is one of the strangest lies of them all, as the Wine and Spirits stores profitability has continued to grow year after year.

The Wine and Spirits stores continue to show incredible agency-wide profit for the PLCB. The Net Income Percentage for Retail Operations has grown from 10.0% in FY ’10-’11 to 13.3% in FY ’11-’12. [Pennsylvania Liquor Control Board]

 

The mid-year financials of the Wine and Spirits stores show a 14.8% Net Income Percentage, even higher then the previous two years. [Pennsylvania Liquor Control Board]

The agency as a whole, the retail and the wholesale, contributed over $530 million to the state of Pennsylvania from taxes and profits. This revenue has continued to trend upward for the past decade. [Pennsylvania Liquor Control Board]

 

The PLCB’s mid-year financials for ’12-’13 show that the PLCB is on pace to shatter its record contribution to the state, which helps fund valuable services for the taxpayers of Pennsylvania. [Pennsylvania Liquor Control Board]

 

LIE #5: Nobody will lose their jobs.

Gov. Corbett promises jobs and “a smooth transition” for those working in the current system. The fact is that more than 2,000 PLCB workers and as many as 10,000 beer distributor employees could lose their jobs.

 

FACT: Thousands of jobs will be lost.

Corbett’s own study, released by Public Financial Management, Inc. (PFM), states that:

Minimal workforce will be hired by existing retailers, who will make up the majority of the licensees.

2,302 full-time equivalent employees who work for the PLCB will go on unemployment. (page 179)

“Employees in rural counties will have fewer opportunities for state reemployment”. (page 201)

Big box/large grocers . “have sufficient existing employees to manage the registers will tend to reallocate store space.” (page 178)

Drug Store/Convenience . “will also reallocate store space and therefore hire additional minimal staff”. (page 179)

Small retailers. “will also be unlikely to create a large number of jobs”. (page 179)

Other/Miscellaneous outlets . “will also be unlikely to create a large number of jobs”. (page 179)

“Since PLCB currently contracts out the majority of wholesale operations, the number of net jobs created is likely to be minimal”. (page 179)

 

LIE #6: “I have not had one person . . . tell me this is a mistake.” [Philadelphia Inquirer, 1/31/13]

FACT:  There is a chorus of voices telling Corbett that privatization is a mistake. Here are just a few.

 

An independent U.S. Centers for Disease Control and Prevention Task Force recommended against privatization because it encourages binge drinking and negatively affects public health. [U.S. Centers for Disease Control and Prevention (CDC), Task Force on Community Preventive Services, April, 2011]

Monongahela beer distributor Adam Cox said the Corbett plan “would probably ruin our business and many of the smaller family-owned businesses.” [Tribune Review, 2/20/13]

 

Rostraver beer distributor Brian Campbell said: “The 1,200 distributors in this state – this would ruin them. Eventually it would bleed us out and kill all our businesses. . . They’re destroying two industries – state stores and distributors – and won’t create one extra job.” [Tribune Review, 2/20/13]

 

Pennsylvania consumer Diane Mellish said: “I’ve lived in Texas, Delaware, New Jersey and Pennsylvania, and I find I enjoy shopping at the Pennsylvania liquor stores more. Why? The service is comparable, and the prices are competitive, if not better . . . By privatizing we give up lots of buying power, which is a much more significant price discounter than what we would gain from privatization. Gov. Corbett is trying to bribe us with education givebacks, but he is only taking away from Peter to pay Paul. In the long term, our taxes will have to make up the difference.”   [Allentown Morning Call, 2/11/13]

 

 

——

Connecticut: Liquor Law Shakeup: Plan To Alter Minimum Pricing Worries Some Package Store Owners

 

Source: The Hartford Courant

By BRIAN DOWLING

February 23, 2013

 

The brisk wind of competition could be ripping through Connecticut package stores again this spring.

 

That competition could result from a change in the state’s minimum bottle pricing system, which now sets the lowest price that can be charged for a single bottle of alcohol, whether it’s bought by itself or a case.

 

The law protects small stores, which often buy single bottles, from the purchasing power of larger stores that buy in bulk. But state officials and some experts say it hampers competition.

 

“Connecticut has a minimum pricing system unlike any in the country,” said Brian Durand, the governor’s deputy chief of staff.

 

The new law would alter the minimum pricing system, allowing lower prices. “We’re doing this to benefit consumers,” Durand said.

 

At risk is the careful pricing balance between large and small stores, say critics of the change, while advocates see an estimated $2.6 million in taxes to the state from customers who now head over the border to states with lower prices, especially Massachusetts.

 

The critics say it could mean fewer small mom-and-pop shops, who would see their profit margins shrink, and less choice among the shops that survive. Those shops may limit inventory, or try to distinguish themselves with personalized service or events, such as wine tastings, that woo customers.

 

Carroll Hughes, head of the Connecticut Package Store Association, said it’s commonplace for stores in this state to carry seven different labels of Polish vodka, for instance, or 13 types of Irish whiskey. “In many [other] states you might find three, maybe four,” he said.

 

“Stores like me will not be able to compete in that market,” said Greg Nemergut, owner of West Side Wine & Spirits on Raymond Road in West Hartford. “It’s going to impact selection.”

 

Overall, the package store owners association is skeptical about the governor’s proposal, especially given the results of another liquor-store measure last year.

 

The march to a more liberal, less-regulated business environment for beer, wine and spirits began in May 2012, when Connecticut finally eliminated the ban on Sunday and holiday sales. There were expectations that it would increase revenue and sales, but, so far, the increases have been small.

 

If the measure to alter minimum pricing is passed, the new competition could attract big-box stores to the state that have a higher tolerance for low prices because they can sell more to offset losses from selling lower, said Mike Bradley, manager of Crazy Bruce’s Liquors in West Hartford.

 

“They’ll be like the Home Depots and the CVS’s,” Bradley said, adding that they could edge out smaller operations.

 

Bradley said expects that Malloy’s proposed change will result in lower prices for core brands but that higher-end labels could go up in price. “You have to make your money somewhere,” he said.

 

William Rubenstein, commissioner of the state Department of Consumer Protection, which regulates alcohol sales in Connecticut, said the new measure would be plus for consumers overall.

 

“It’s one small piece that’s needed, but it’s a very significant one, freeing up retailers to decide how they want to compete with each other,” Rubenstein said.

 

As an example of a possible change under the new proposal, a case of Maker’s Mark bourbon – with six bottles – cost $293.46 in February, said Jim Ransford, owner of CT Beverage Mart on Hartford Road in New Britain. At the case price, each bottle costs $48.91, but the state’s minimum bottle pricing law dictates that Ransford can’t sell it for lower than what it costs to buy a single bottle, which is $51.99.

 

The proposed law would change all that. The floor for pricing on wine and spirits would no longer be the bottle price – it would be simply the bottle’s cost, plus delivery, regardless of whether the store owner acquired it as a single bottle or in a case. Beer is already sold this way.

 

For Ransford, it means he – and all his competitors – could sell the Maker’s Mark for closer to $48.91 a bottle. “The guy down the street will definitely lower his prices,” Ransford said, “and I will have to lower mine.”

 

That means lower margins for big stores like his, Ransford said, which is already stressed after Sunday sales failed to raise profits.

 

But for the hundreds of smaller package stores that purchase more often by the bottle, the impacts will be deeper.

 

Those smaller stores that now buy single bottles of Maker’s Mark for $51.99 – because they don’t sell enough to buy the bourbon by the case – will have to compete with larger stores that buy cases and can sell for a significantly lower price.

 

“The big stores are interested in the large volume items,” said Gary Dunn, who owns Spiritus Wine Store in Hartford. “They have the deep pockets to purchase in large volumes and sell on very low margins to squeeze out some of the competition.”

 

Malloy’s battle to capture sales from Connecticut residents who drive north for cheaper alcohol is an uphill one, said Hughes of the state’s package store association. Massachusetts lacks a sales tax on alcohol, immediately putting Connecticut 6.35 percent higher, retail prices aside. For all types of alcohol, Massachusetts has lower excise taxes as well.

 

But the conversation that circles around prices, case and bottle purchasing, and product offerings seems to ignore things customers value other than price: service and convenience.

 

Some retailers might be able to maintain their customer base, selling a diverse supply of wine and spirits that are still bought by the bottle. These stores might be able to sell the value of tasting events and employees that can offer personal help. In short, the box store across town might sell for a dollar or two less, but that’s not the deciding factor.

 

“That will keep a few medium or larger sized stores in business,” said Patrick Monteleone, owner of Harry’s Wine & Liquor on Post Road in Fairfield. “You may keep a few bodegas in business because they’re hyper-local and people are passing by them.”

 

 

——

Connecticut: Mixed Results on Sunday Alcohol Sales

 

Supermarkets Pleased, Package Stores Not

 

Source: Hartford Courant

By CHRISTOPHER KEATING

February 24, 2013

 

Nine months after the controversial Sunday alcohol sales proposal became law, supermarket operators are pleased and package store owners are not – just as critics predicted last year.

 

Consumers, who were at the heart of the legislation, have been pulling beer off the supermarket shelves at an increased pace with the added convenience of 10 a.m. to 5 p.m. on Sundays and summer holidays.

 

Stan Sorkin, the president of an association that represents about 300 supermarkets statewide, said beer sales are up about 8 percent overall statewide in their stores.

 

“Stores near the border are up approximately 20 percent,” Sorkin said. “For us, it’s worked out the way we thought it would. . To tell the consumer you can’t buy beer on a Sunday is a very negative connotation. That was a very backward policy.”

 

But most of the state’s package store owners are not pleased, saying they aren’t seeing the same increase. They say they have failed to make any substantial profits and essentially have broken even since the new law took effect last May 20.

 

“If there was an increase in beer [sales], it didn’t go to my people,” said Carroll Hughes, chief lobbyist for the Connecticut Package Stores Association.

 

Instead, Hughes said, the retailers have seen higher costs and not much in the way of increased sales on Sunday, according to a survey he conducted after the busy Christmas and New Year’s season.

 

“They don’t feel they did anything more with this noble experiment of Sunday sales,” Hughes said. “They’re telling me they broke even. I’m not surprised on the conclusions of my people. Even if you break even, you’ve increased your expenses.”

 

In a compromise after decades of avoiding Sunday sales, the package stores agreed not to fight the legislation last year after Gov. Dannel P. Malloy made a major push for changes in the liquor industry. Malloy had wanted a series of other changes, but the compromise was 52 Sunday openings, plus the Memorial Day, Fourth of July and Labor Day holidays that Hughes noted were sunny, warm days with brisk sales.

 

Since Sunday sales are still optional, Hughes said about 50 of the state’s 1,150 package stores have chosen to remain closed that day. The increased sales on Sunday, he said, clearly went to supermarkets, which are allowed by law to sell beer but not wine or hard liquor.

 

“It all went to the supermarkets, which is where people are on Sunday,” Hughes said. “It didn’t cost the food stores a penny to get an extra two percent of the business. . We said all along that the people are in the supermarkets on Saturday and Sunday.”

 

Dominic Alaimo, who operates an Enfield package store that is two miles south of the Massachusetts border, has a completely different view. For years, Alaimo has been the most outspoken supporter of Sunday sales among package store owners – refusing to join Hughes’ association or pay dues.

 

“For me, it’s been going fantastic,” Alaimo said in an interview. “I’d like them to add more hours to Sunday as an option – two more hours.”

 

Alaimo rejects the complaint from other retailers that paying for utilities on Sundays is an issue, saying overhead at his small store is minimal.

 

“The utilities are running even when I’m not there,” he said. “The coolers are on.”

 

Alaimo predicts that, on a full-year basis, he could generate an additional $100,000 per year in gross sales, about $2,000 for each Sunday.

 

Noting that his Route 5 store is a straight shot down the road from the Massachusetts border, Alaimo concedes that the success or failure of Sunday sales is often reliant on geography.

 

Some officials say nine months is not enough time to draw firm conclusions.

 

Ben Jenkins, a spokesman for the national Distilled Spirits Council of the United States, said his group would need at least a full year of data in order to analyze the results. Known as DISCUS, the group has testified consistently in favor of Sunday sales in Connecticut and around the country. Along with the Connecticut Food Association, which represents supermarkets, DISCUS paid for full-page newspaper advertisements to push for Sunday sales.

 

Sorkin, the president of the supermarket association, agreed that a year’s worth of data would be more conclusive.

 

“A lot of these guys were not happy with the law,” Sorkin said. “They didn’t aggressively go after the Sunday sales business. We’re also in a bad economy. I think you’ve got to cycle a year.”

 

Statistics from the state Department of Revenue Services show that the number of gallons of beer sold increased by 3.11 percent from May through the end of November to nearly 33 million gallons. The gallons of wine went up by 2.25 percent, and distilled liquor went up by 4.89 percent. In addition to the extra gallons sold, the overall taxes collected on alcoholic beverages went up by 4.65 percent through the end of January, according to the tax department. The additional tax collected is $2.169 million, which some officials attribute largely to Sunday sales. The highest revenue came in June, followed by November and December.

 

Brian Durand, Malloy’s deputy chief of staff and chief aide on liquor issues, said that even the package stores have increased sales under the new law.

 

“Connecticut retailers sold more wine and beer and spirits in 2012 than they did in 2011,” Durand said in an interview. “If you look at the gallonage, you can’t buy wine and spirits at supermarkets. It can only be bought at our package stores.”

 

He added, “From our perspective, the numbers point to a success for Connecticut and for retailers. This was an effort to increase consumer convenience. It did what we hoped it would do – keep people in Connecticut stores” and discourage them from crossing the border.

 

But some of the biggest liquor retailers in the Greater Hartford region say that Sunday sales have not been profitable for them.

 

“My customer count went up, but my average transaction went down, which caused my sales to go down,” said Mike Bradley, the operator of Crazy Bruce’s Liquors in West Hartford. “People do not have to keep an inventory in their house anymore because we’re always open. When people had the inventory in their house, they drank more.”

 

Jim Ransford, the owner of the large Connecticut Beverage Mart in New Britain near the Westfarms mall, said Sunday sales have backfired.

 

“Since we’re open on Sunday, our Saturday sales are a joke,” said Ransford, who has 33 years in the business. “We get more sales on Friday than Saturday. It’s simple economics of supply and demand. . No one would believe us. Sunday is our slowest day of the week. All these grand promises last year. People coming in from all over the country making promises. Where are you guys now?”

 

He added, “A lot of the stores on the shore are closed on Sundays now. They gave up. Summertime for them is like Christmas-time for us. When the sales down there didn’t happen on Sunday, we said, ‘This is not good.’ . I hope Sundays work out to be the greatest thing ever, but right now, it isn’t. And that’s fact. That’s in red ink on my paper. I would switch in a heartbeat” back to six days per week.

 

Both Ransford and Hughes said that some package stores are afraid to close on Sunday because they fear they would lose even more business.

 

“The 1,100 stores spent $7 million and did minuscule business, but few plan to change anything,” Hughes said.

 

Alaimo agreed with Hughes that he has not made much money on the extra new items that have been permitted for sale, including lemons and limes.

 

“There’s not big money in that, plus they go bad,” he said. “You’ve got to refrigerate them.”

 

“The money is in potato chips, Slim Jims, beer nuts,” Alaimo said. “If you come into my store, you can’t buy potato chips. But if you go into Stop and Shop, you can buy all the chips and beer you want. Does that make sense?”

 

 

——

Maine: Maine Voices: Liquor deal’s critics look to undercut lucrative public-private partnership

 

Under Maine Beverage, the growth of the state’s liquor business has far exceeded original projections.

 

Source: Portland Press Herald

By MICHAEL PETERS

2/23/13

 

The 2003 decision to lease Maine’s liquor business was both bold and smart.

 

Today, that debate is raging again. Some politicians suggest the decision was unwise and ask whether we should do it again. It is obvious to me that today’s criticisms of this decision and the company holding the liquor contract are unfair.

 

Prior to 2003, the state’s liquor business was a mess with an uncertain future.

 

Projections of future revenue, based upon past performance, did not look good. Agency stores complained about lack of deliveries, shortages and poor selection. Although the business was bringing in about $26 million per year, it was underperforming and growing slowly.

 

In 2003, Gov. John Baldacci took office facing a nationwide recession and a $1.3 billion budget deficit. Baldacci was committed to balancing our budget without raising broad-based taxes, while avoiding taking an ax to necessary services.

 

To do this, he moved to enact a long-discussed idea — lease the state liquor business for 10 years.

 

His decision, made with the blessing of the Legislature, not only provided needed money quickly, but it also allowed the state to maintain ownership of the asset. The competitive bidding process that followed was hard-fought between four companies with significant resources.

 

After an exhaustive vetting process, the state awarded the bid to Martignetti Cos., a company with a 70-year history in the liquor business, because it offered the best deal for Maine taxpayers.

 

That deal — which required Martignetti to pay $125 million up front — also had the most lucrative revenue-sharing offer of all the competitors, splitting annual revenues with the state for each year of the contract.

 

This has turned out to be a good deal for Maine. It has helped grow state revenue and avoid tax increases and cuts to important programs while modernizing the liquor business.

 

Today, there are folks, looking to win the next contract or seeking political gain, who are saying this was a bad deal. They’re wrong.

 

Since it was privatized in 2003, Maine’s liquor business has grown rapidly, far outpacing original projections. The number of agency stores has grown from 260 to more than 480. The number of deliveries has grown by 85 percent. The number of cases sold is up nearly 25 percent to 940,000 per year, and the annual revenue-sharing payment to the state has grown from $1.2 million to approaching $9 million.

 

The reason is straightforward. Martignetti, which formed the Maine Beverage Co. to run the state liquor business in partnership with some of its initial competitors, is a skilled corporate partner that provides quality private-sector jobs for more than 150 Mainers while bringing a new level of customer service and expertise to work for Maine.

 

We should be celebrating the success of this public-private partnership, not attacking it.

 

Experience counts. The company has made the state’s asset more valuable for whoever runs it for the next 10 years.

 

Here is the bottom line. I’ve served on the Maine Liquor and Lottery Commission for the past seven years. From a front-row seat, I’ve seen not only this transformation, but also the professional way the company has managed our state’s business and its own affairs. The misleading political attacks on Maine Beverage are disappointing and an attempt to gain an unfair advantage.

 

In considering this contract, the Legislature should recall the clause that allows for a renewal negotiation, a result of the competitive and transparent original request-for-proposal process.

 

Our Legislature should also consider requiring an up-front payment of at least $20 million, while requiring that any bidder have 20 years of superior and demonstrable performance in the liquor business.

 

No one can truly know what would have happened to the state’s liquor business had it not been leased. Today’s critics suggest that the state would have somehow miraculously become good at the liquor business. Not without Maine Beverage.

 

The 2003 decision gave the state the financial options it needed. And today the state is on the verge of capitalizing on the enhanced value of its asset, to bring in needed revenue to address our budget challenges. That’s a record we can be proud of.

 

Michael Peters is the former chairman of the Maine Liquor and Lottery Commission.

 

 

——

Michigan: Bill would end some Michigan alcohol regulations

 

Source: Battle Creek Enquirer

Feb 22, 2013

 

Legislation in the Michigan Senate would overhaul regulation of the state’s alcohol industry.

 

Sen. Howard Walker said Thursday the bill he introduced this week would eliminate outdated regulations and increase the size of the industry. The Traverse City Republican wants to let microbrewers have off-site tasting rooms and to allow more resort liquor licenses and beer and wine festivals.

 

One change would make it harder to prosecute those who sell alcohol to someone who’s intoxicated. The bill says stores and bartenders would have to “knowingly allow” an intoxicated person to be served rather than simply “allow” it.

 

The legislation incorporates many recommendations unveiled last summer by Gov. Rick Snyder’s Office of Regulatory Reinvention.

 

Beverage producers and police and school groups opposed some changes.

Liquor Industry News 2-21-13

February 21, 2013
www.franklinliquors.com

Franklin Liquors

 

Today Is A Biodynamic FLOWER Day

Great To Taste Or Drink Wine!!

January, 2013, Control State Results

 

Source: NABCA

Feb 19th

 

During January, nine-liter spirits case sales in the control states grew 8.7% compared to same month last year sales. Rolling-twelve month volumes were up 4.0% compared to December’s 3.6%. Alabama, Iowa, Idaho, Montgomery County Maryland, Maine, Michigan, Mississippi, Montana, North Carolina, Ohio, Utah, Virginia, Vermont, West Virginia, and Wyoming reported monthly growth rates exceeding their twelve month trends.

 

Control state spirits shelf dollars were up 12.3% during January while trending at 6.9% during the past twelve months. Alabama, Iowa, Idaho, Montgomery County Maryland, Maine, Michigan, Mississippi, Montana, North Carolina, Ohio, Utah, Virginia, Vermont, West Virginia, and Wyoming reported growth rates exceeding their twelve month trends.

 

Price/Mix for January is 3.6% compared to December’s 2.7%.

 

Control State spirits sales appeared to be robust during January. When analyzing these results, consider:

 

Michigan, with 16% of the Control States’ spirits and dollars volume, reported five weeks of sales this January against four weeks last year, artificially inflating sales and skewing Control States results. Michigan had seven more selling days-26% more-during this year’s January compared to last year’s. Utah, with 2% of Control State spirits volume, reported five weeks of sales against four weeks the previous year: there were 5 more selling days-22% more-during this year’s January. After normalizing nine-liter spirits case sales for Michigan and Utah, January’s nine-liter case growth is 4.5%, and rolling-twelve month volumes show an increase of 3.7%. Likewise, after normalizing shelf dollars, January’s control state shelf dollar growth rate is 7.6%, and its twelve-month trend is 6.5%. January’s normalized Price/Mix is 3.1%.  

 

The January, 2012, calendar had four Sundays compared to five this year. Retail outlets in six control jurisdictions-Alabama, Montana, Mississippi, North Carolina, Utah, West Virginia-are closed on Sundays. The New Year holiday during 2012 was celebrated on Sunday; the 2013 New Year was celebrated on Tuesday. Many retail outlets in the Control States are closed on New Year’s Day. January, 2013, had eight fewer selling days because of New Year’s position in the Calendar relative to 2012.

 

During January, Irish Whiskey, with 0.8% share of the control states spirits market, was the fastest growing category with 22.9% growth reported and a twelve month growth trend of 19.8%. Vodka, with 35% share, grew during the same periods at 9.0% and 5.4%. January growth rates reported for Brandy/Cognac, Canadian Whiskey, Cordials, Domestic Whiskey, Gin, Irish Whiskey, Rum, Scotch, Tequila, and Vodka exceeded their twelve-month trends.

 

January’s nine-liter wine case sales growth rate was 3.3%. Pennsylvania, New Hampshire, Utah, Mississippi, Montgomery County Maryland, and Wyoming reported -1.7%, 2.4%, 39.3%, 3.5%, 12.7%, and 3.0%, respectively. January’s rolling-twelve month wine volume growth, 4.3%, is up slightly from December’s 4.2%.

 

 

——

Anheuser-Busch and U.S. in Talks to Resolve Antitrust Concerns

 

Source: New York Times

By MICHAEL J. DE LA MERCED

Fbe 20th

 

The purchase of Grupo Modelo, the maker of Corona beer, would give Anheuser-Busch InBev greater access to emerging markets like Mexico.Associated PressThe purchase of Grupo Modelo, the maker of Corona beer, would give Anheuser-Busch InBev greater access to emerging markets like Mexico.

 

Anheuser-Busch InBev and the Justice Department said on Wednesday that they were in talks to resolve antitrust concerns over the beer maker’s planned deal with Grupo Modelo, the maker of Corona beer and other brands.

 

The parties said they had jointly requested a temporary stay of an antitrust suit filed by the Justice Department while they work through the options.

 

Last year, Anheuser-Busch InBev offered $20.1 billion to buy the part of Grupo Modelo that it did not already own. The deal, one of the biggest in the beverage industry, was meant to cap years of deal-making that transformed a small Brazilian brewer into a juggernaut that eventually swallowed the maker of Budweiser.

 

The Grupo Modelo deal is a vital merger for Anheuser-Busch InBev, which has been seeking greater access to emerging markets. Buying Grupo Modelo, a Mexican brewer, is meant to solidify its footprint in attractive markets in Mexico and elsewhere in Latin America.

 

But the Obama administration filed suit on Jan. 31, seeking to block the deal on antitrust grounds. United States authorities said the original merger proposal would increase Anheuser-Busch InBev’s control of the American beer market, letting it raise prices while reducing choice for local consumers.

 

Grupo Modelo is the third-largest beer company in the United States. Anheuser-Busch InBev is the largest, ahead of MillerCoors.

 

Despite robust competition from microbrewers and other brands, analysts say the craft beer market makes up just 6 percent of beer sales. The biggest brewer in the market, Anheuser, has regularly raised its prices every year, with MillerCoors following suit, the Justice Department said.

 

Anheuser-Busch InBev first countered that the government’s lawsuit was based on faulty assumptions, since the company that determined Grupo Modelo’s prices in the United States was Grupo Modelo’s importer, Crown Imports.

 

Then, last week, Anheuser-Busch InBev offered broad concessions, saying it would sell the rights to Corona and other Grupo Modelo brands in the United States to Constellation Brands, one of the world’s largest wine companies, for $2.9 billion. Constellation already owns half of Crown Imports, alongside Grupo Modelo.

 

The new agreement would also include the sale of a brewery close to the United States-Mexico border that is owned by Grupo Modelo, as well as the perpetual licensing rights to Grupo Modelo’s brands in the United States.

 

In a statement on Wednesday, the Justice Department and the companies involved in the talks jointly requested a delay until March 19. Anheuser-Busch InBev and Grupo Modelo reiterated their contention that the “revised transaction resolves the concerns raised” by the antitrust suit.

 

The proposed deal for Grupo Modelo would be the second-largest takeover in the beer industry after the $52 billion merger that created Anheuser-Busch InBev, according to Thomson Reuters.

 

 

——

Beer Map: Two Giant Brewers, 210 Brands

 

Source: NPR

by Caitlin Kenney

February 19, 2013

 

In the past decade, a few big beer companies went on a buying spree, spending some $195 billion to buy up brewers around the world, according to Bloomberg.

 

Beer drinkers can be excused for not noticing. Unlike, say, airlines, which fold their acquisitions into one big, global brand, big beer companies tend to keep the brands they buy in the market.

 

As a result, the two biggest beer companies on the planet – Anheuser-Busch InBev and SABMiller – now own more than 200 brands based in 42 countries (including 18 in the U.S. alone). We’ve put together this handy guide so you can know whose beer you’re really drinking.

 

See the map: http://www.npr.org/blogs/money/2013/02/19/172323211/beer-map-two-giant-brewers-210-brands

 

The story of Anheuser-Busch InBev’s rise to global dominance is all about consolidation. Inbev was born out of a merger of Belgian brewer, Interbrew, and Latin American brewer, Companhia de Bebidas das Américas aka AmBev, in 2004. That same year, Anheuser-Busch grew by acquiring one of China’s biggest brewers, Harbin. The company we know today came about when InBev bought the American/Chinese powerhouse, Anheuser-Busch, for $52 billion dollars in 2008.

 

SAB Miller, the number two global brewer, got its name in 2002 after South African Breweries bought Miller. Just a couple years later, the firm grew by buying up the second largest brewer in South America, Bavaria. Two years later, they launched a joint venture in the U.S. with MolsonCoors* to create MillerCoors. In 2011, they bought Australia’s biggest brewer, Foster’s, and took a big stake in Russia’s second biggest brewer, Efes.

 

These days, the beer market is increasingly about the world outside the United States. The fastest growing beer market in the world right now is China, and several South American markets are growing rapidly as well. That’s why brewing giants like ABI are trying to snap up brewing operations all over the globe. Just last April, ABI paid $1.2 billion for a big stake in Cerveceria Nacional Dominicana, the Dominancan Republic national brewer, which brews Presidente beer.

 

That’s why Anheuser-Busch InBev (ABI), the world’s largest brewer, wants to buy the world’s seventh largest brewer, the Mexican brewer, Grupo Modelo.

 

The buyout offer would give ABI control of 46 percent of the U.S. beer market (it has 39 percent of the U.S. beer market and Grupo Modelo has 7 percent). That alarmed the Department of Justice’s antitrust division so much they sued to stop the merger.

 

But ABI really wants to make this deal happen. The company even agreed to sell off the right to sell Corona in the U.S. The move is an attempt to appease U.S. regulators, but it hints at something larger – ABI’s interest in the market outside the U.S.

 

“The AB InBev and Grupo Modelo transaction has always been about Mexico and making Corona more global in all markets other than the U.S.,” the company said in a recent press release.

 

*Clarification: The MillerCoors joint venture applies to the U.S. MolsonCoors still has sole ownership of Blue Moon and Coors Light outside the U.S.*

 

 

——

Anheuser-Busch Outsources Production of 4 Goose Island Beers

 

Source: The Daily Meal

Feb 20, 2013

 

When Anheuser-Busch InBev purchased Chicago craft brewery Goose Island in 2011, the companies were vocal about the fact that not much would change. Goose Island founder John Hall maintained oversight of operations, and brewing was still in the hands of brewmaster Brett Porter. However, two years later, the other shoe has dropped.

 

Anheusher-Busch has announced it will move production of Goose Island IPA, 312 Urban Wheat, Honker’s Ale, and Mild Winter to A-B facilities in Fort Collins, Colo., and Baldwinsville, N.Y.. The change is necessary in order to ensure supply meets demand, says the company, because these four brews are now available nationwide. Production of limited distribution, high-end specialty brews like Sofie, Matilda, and Bourbon County Brand Stout will stay at the original Fulton Street Brewery.

 

The A-B Goose Island buyout takeover was emblematic of the push by macro-brewers to keep craft upstarts from taking too much market share away from big beers – see also Budweiser’s recent launch of Black Crown. The Brewers Association highlighted the trend in the much-discussed essay, “Craft vs. Crafty.”

 

According to a rep, Brett Porter will still oversee all production of Goose Island labels, even the ones offsite, but it remains to be seen if there is any discernible degradation in quality or flavor of the outsourced brews. (It seems especially ironic that 312 Urban Wheat is one of those leaving its city of origin, since it is named after the downtown Chicago area code.)

 

If they are good, the benefit of the change will be more drinkers with access to Goose Island beer. Have you had a chance to compare the new and the old Goose Island offerings?

 

 

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Boston Beer Fourth-Quarter Net Down 5.1% as Margins Drop

 

Source: Dow Jones

By John Kell

Feb 20th

 

Boston Beer Co.’s (SAM) fourth-quarter profit fell 5.1% as margins slid and prior-year results included a tax-settlement gain, masking strong demand for Sam Adams seasonal brews and newer products like Angry Orchard ciders.

 

Boston Beer, along with Craft Brew Alliance Inc. (BREW), are the two largest U.S.-listed beer companies that focus exclusively on the craft-beer industry. That segment of the market makes up a small percentage of the total U.S. beer business, though demand in the higher-priced segment is growing rapidly as seasonal blends and other new flavors appeal to more consumers.

 

But competition in the space has intensified as big brewers aggressively push their craft brands. Boston Beer has beefed up its salesforce and has spent more on ads and local marketing, in part reacting to the challenge by smaller and larger brewers.

 

Overall, Boston Beer reported a profit of $16.9 million, or $1.25 a share, down from $17.8 million, or $1.33 a share, a year earlier. Net revenue climbed 7.7% to $153 million. The latest results had one fewer week than the prior-year period, which also had a 16-cent gain related to a state income-tax settlement.

 

Analysts surveyed by Thomson Reuters expected a profit of $1.25 per share on revenue of $152 million.

 

Gross margin narrowed to 52.1% from 56.4%.

 

Core shipment volume, or beer shipped to distributors and wholesalers, grew 9% to about 729,000 barrels. The amount sold by those distributors and wholesalers, known as depletions, increased 16%–primarily due to growth for Angry Orchard ciders, Twisted Tea malts and Sam Adams seasonals.

 

Ad, promotional and selling expenses dropped 6.7% in the latest quarter, primarily as a result of having one less week in the quarter, though costs for ads and local marketing increased.

 

For the new year, Boston Beer sees a full-year profit of $4.70 to $5.10 a share, compared with Wall Street’s projection of $5.05 a share. The company projects depletions and shipments to grow between 10% to 15% and is targeting price increases per barrel of between 1% to 2% to help offset high costs for barley, packaging and other ingredients.

 

Boston Beer’s shares fell 1.6% to $150.51 after hours.

 

 

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SAM: Solid Growth Expected to Continue in 2013

 

Source: CITI

Feb 19th

 

Target Price Change

Estimate Change

 

EPS In Line with Consensus – After the market’s close, SAM reported 4Q12 GAAP EPS of $1.25 (down 6% YoY, including the impact of a favorable tax settlement in 2011 and one extra week in 4Q11), which was in line with consensus, but 10 cents below our estimate, as full-year earnings of $4.39 came in at the lower end of management’s upwardly-revised full-year guidance for EPS of $4.30-$4.60.

 

Can Launch Confirmed – SAM management confirmed that they hope to launch Sam Adams cans in mid-2013, though they continue to work through the logistics. The introduction of cans, when fully scaled from a manufacturing perspective, should be slightly gross margin accretive, though it remains to be seen how long it will take to achieve full manufacturing efficiencies. Management does not expect the launch will be cannibalistic from a shelf-space perspective.

 

2013 Outlook – For 2013, SAM expects to deliver the following:

 

o        Shipments & Depletions: +10-15% (unchanged vs. mid-Dec, up from HSD mid-Nov),

o        Revenue per Barrel: +1%-2% (unchanged vs. mid-Nov guidance),

o        Gross Margin: 53%-55% (unchanged vs. mid-Nov guidance),

o        Incremental Investment Spending: +$18-$26mm (vs. +$6-$12mm in mid-Nov),

o        EPS: $4.70-$5.10 (+7%-16%), vs. consensus of $5.05 and Citi at $5.06.

 

Updating Our Estimates and Target Price – Reflecting today’s results and management’s updated guidance, we are adjusting our estimates as follows: FY13 to $5.06 (from $5.31), FY14 to $5.65 (from $6.07) and FY15 to $6.27 (from $6.76). We assert that SAM should trade at a 27x multiple (up from 25x previously) which takes into account (i) the continued outsized growth of craft beer, and (ii) the benefit of SAM’s investment spending to maintain its preeminent position in the category. Given our FY14 EPS estimate, we derive a $153 target price on SAM (up from $152) and maintain our Neutral rating on the stock.

 

 

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Molson Coors Tough Ship to Right

 

Source: UBS

Feb 19th  

 

Robust Volume Declines Across all Regions – Lowering Numbers

4Q marked the second consecutive quarter with volume declines in every region.  While the first few weeks of 2013 have showed positive volume growth in Canada and Europe, we believe this is indicative of timing benefits compared to the prior year (pricing), rather than a true reversal of trends.  We are lowering our 2013 and 2014 EPSe on continued volume declines and greater than expected COGS inflation (+3.2% v prior est +2.7%).  Our EPSe for 2013 and 2014 are $3.96 and $4.13, respectively (from $4.04/$4.33). Our price target, at 11x 2014e, is now $45.

 

Components of 2013 Numbers

In 2013 we expect volumes to be down 0.6% in Canada, -0.7% in United Kingdom, and +0.6% in Central Europe. 1Q13 volumes outside the US will benefit from lapping price increases last year.  At MillerCoors, we expect volumes to remain negative (-1%) with less pricing than seen in 2013 (+2% v +3%). We expect consolidated EBIT to be up 6.5%, but offset by higher y/y interest expense.

 

Investment Thesis: Remain Neutral – Topline Unlikely to Inflect

Volumes throughout the regions continue to be weak. Improvements would generate significant operating leverage, but consumer headwinds and competitive dynamics, particularly in the c-store channel, make an inflection unlikely. Central Europe will need to show volume growth before we become more constructive on the deal. A +3.1% dividend yield should help provide downside support.

 

Valuation: Neutral; Price Target  to $45

Our $45 price target is based on 11-times our new 2014e EPS of $4.13.

 

 

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The world’s most expensive drinks

 

Source: the drinks business

by Andy Young

19th February, 2013

 

From a US$1 million vodka to a US$2m Cognac, here’s a look at some of the world’s most expensive drinks.

 

Recession, what recession? As Melbourne’s Joel Heffernan recently showed when he set a new world record for the most expensive cocktail, pricey drinks have become increasingly commonplace in the drinks industry.

 

Whether it is for age, rarity or packaging reasons, the drinks featured over the following pages are the most expensive on the planet.

 

What’s more, there appears to be a ready supply of people willing to pay for them.

 

How many, if any, would appear on your lottery wish-list?

 

http://www.thedrinksbusiness.com/2013/02/the-worlds-most-expensive-drinks/

 

 

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Pennsylvania: State Patty’s Day – Bars, Beer Shops Paid To Not Serve Alcohol

 

Source: Huff Post

By GENARO C. ARMAS

02/20/13

 

Nearly three dozen downtown bars, restaurants and beer shops have agreed to halt alcohol sales to counter an early St. Patrick’s Day celebration created by Penn State students, the most aggressive effort yet to curb drinking for the unofficial holiday known as State Patty’s Day.

 

In exchange, each business will receive a $5,000 subsidy to help account for lost revenue. A committee composed of university and community leaders announced the plan Tuesday and listed 34 businesses that it said supported this Saturday’s “alcohol-free zone.”

 

Every downtown establishment that sells alcohol will refrain from doing so Saturday, said Damon Sims, university vice president of student affairs and co-chairman of a committee known as the Partnership: Campus & Community United Against Dangerous Drinking. The majority of the funds to pay for the subsidies to businesses would come from campus parking fees collected during previous State Patty’s Day weekends, he said.

 

State Patty’s Day was created in 2007 to celebrate St. Patrick’s Day when it fell on spring break that year. But the holiday no longer falls during the break, and school administrators, student leaders and community residents have grown weary of a weekend that has become synonymous with excessive drinking and property damage.

 

Besides that, the last thing Penn State needs as it seeks to redeem its reputation after the Jerry Sandusky child abuse scandal is more negative attention.

 

Other schools have similar unofficial holidays, but Sims said he thought no other university community had gone to the extent of getting establishments to go alcohol-free.

 

“Everyone in the partnership really wanted this to go away. … This became one of the few things that we thought of that we hadn’t tried,” Sims said in a phone interview. “Perhaps we can find more headway than in the past.”

 

The weekend in recent years has also sparked talk on social media, which authorities have said has contributed to a spike in out-of-town revelers.

 

“This is an outside-the-box solution that businesses, the borough, student leaders and the University have embraced,” Tom Fountaine, borough manager and committee cochairman, said in a statement that included declarations of support from student and business leaders.

 

Police, along with community, school and student groups, have ramped up efforts in recent years to counter the excessive drinking that marks State Patty’s Day. Fraternities and sororities banned parties for Friday and all social functions Saturday. Volunteer opportunities have also been promoted as alternative activities in a day of service.

 

Last year, authorities said arrests dropped by about 13 percent to roughly 300.

 

“I don’t think it’s a bad idea. If you ask me, State Patty’s Day is pretty dumb,” fourth-year senior Nick Stuchlak said about the no-alcohol zone. After meeting fellow senior Nick Mattise at the university’s main gate downtown, Stuchlak said he doesn’t do anything special for the day, which he equated to just an excuse to drink.

 

But Stuchlak and Mattise both questioned how the move would affect how non-Penn State visitors would act.

 

“I think we’ve learned better in the past year how to act, but people from out of town – this isn’t their town,” said Stuchlak, of Scranton. “They actually have no stock in acting correctly.”

 

Said Mattise, also of Scranton: “It’s gotten out of hand with the out-of-town people.”

 

The change is targeted especially at discouraging out-of-town guests from visiting for the purpose of excessive drinking, Sims said. “If it makes it a less inviting place, then it would achieve” the goal.

 

State Patty’s Day this year falls on the weekend after the annual student-organized Dance Marathon, an event that generates positive publicity for the university. Students raised a record $12.3 million this year for pediatric cancer research and care.

 

Jennifer Zangrilli, director of operations at Dante’s Restaurants Inc. and president of the Tavern Owner’s Association, said the association was “excited and proud” to support the alcohol-free zone. “Our collective desire is to see our community and downtown not only grow but thrive,” she said.

 

Food and non-alcoholic drinks will still be offered by establishments to appeal to “responsible visitors.” Penn State’s two campus hotels also planned to cut off alcohol sales Saturday.

 

Freshman Jeremy Smith, of Lansdale, remained a little skeptical. He said he doesn’t plan on participating, but like Stuchlak noted that alcohol could still be purchased away from downtown.

 

“I don’t know if it will have as big an impact as they think,” Smith said. “There are so many places you can get things … They would have to really, really go big scale to damper everything.”

 

It was unclear how the initiative would affect establishments that weren’t downtown. In previous years, state liquor stores closed early for the day.

 

Making downtown alcohol-free means the stepped-up police presence can focus on cracking down on house parties or otherwise unlicensed establishments, Sims said.

 

 

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NBWA Applauds Introduction of Legislation to Reauthorize the STOP Underage Drinking Act

 

Source: NBWA

Feb 20th

 

The National Beer Wholesalers Association (NBWA) applauds the introduction of H.R. 498, legislation to reauthorize the Sober Truth on Preventing (STOP) Underage Drinking Act, by Rep. Lucille Roybal-Allard (CA) along with Reps. Frank Wolf (VA) and Rosa DeLauro (CT).  

 

“The STOP Act is an integral part of the fight against underage drinking because it ensures that federal, state and local governments have tools and information they need to prevent alcohol purchase and consumption by those who are not of legal drinking age,” said NBWA President & CEO Craig Purser.  “Reauthorization of the STOP Act is necessary to increase and better coordinate federal support for state efforts in the fight against underage drinking and to reaffirm the effective state-based regulation of alcohol.”

 

The STOP Act, which became law in 2006 with NBWA’s support, notes that alcohol is different than other consumer products and is best regulated by the states, consistent with the 21st Amendment:

 

Alcohol is a unique product and should be regulated differently than other products by the States and Federal Government. States have primary authority to regulate alcohol distribution and sale, and the Federal Government should support and supplement these State efforts.

 

Additionally, the STOP Act highlights health and safety concerns related to underage drinking and provides funding for state initiatives to address such problems.  The legislation authorized a national media campaign, new grant programs and research to combat underage drinking.  It also formally established and funded the federal Interagency Coordinating Committee on the Prevention of Underage Drinking (ICCPUD), chaired by the U.S. Department of Health and Human Services, to help coordinate the various federal agencies involved in alcohol issues.

 

The STOP Act has received broad bipartisan support, and it marked the first time in recent history that Congress and the executive branch joined together to coordinate activities to fight underage drinking.  When it was originally introduced in 2006, STOP was supported by the licensed beverage industry, alcohol control organizations and the public health community.

 

“The STOP Act is a solid example of the great things that can be accomplished when groups with different agendas work together to achieve a common goal,” added Purser.  

 

 

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India: Allied Blenders sees consolidation rising with Diageo entry

 

Source: DNA

By Nupur Anand

Thursday, Feb 21, 2013

 

Deepak Roy, executive vice-chairman & CEO of Allied Blenders & Distillers, maker of Officer’s Choice whiskey & Jolly Roger rum, says that challenging times for the liquor industry continue as consumers continue to downtrade. As consolidation and brand-building picks up, the liquor industry will only be a big boys’ game, he tells Nupur Anand. Excerpts from the interview.

 

Have consumers started drinking more or is the slowdown continuing?

Two years back, the industry was growing at an average of 11-12%; last year it slipped to 7.5%, and this year till December the growth was only 4%. The reason for the slowdown has been steep increase in prices not led by manufacturers but by excise department, making it prohibitively expensive for consumers. Also, the increased cost of companies on account of high raw material had led to companies reducing investments in brands.

 

Does that mean that people are increasingly opting for cheaper variants?

Yes, the downtrading trend has become stronger and is more apparent in the mass segment. The premium segment is still growing. But in the mass whiskey segment, there are very clear downtrading trends. A lot of people in the segment have moved to cheap whiskey or country liquor, depending on which state you are talking about. So the popular whiskey segment is growing about 2% lesser than last year.

 

What about the other spirits category?

Vodka growth has slowed down. In fact I think its only 1-1.5%. Brandy is growing well at about 18-20%, driven by growth in South India. And in this the premium and semi-premium is doing well. If you look at rum, it has not been growing in the last two years.

 

Are you using this slowdown period to expand?

Yes, we are closer to implementing some of our expansion plans. We are creating a back-end manufacturing facility in Andhra Pradesh. We are also close to acquiring a bottling plant in West Bengal. We are also looking at a bottling unit in Rajasthan and distillery in Maharashtra. With this capacity addition, we should be good for the next three years, considering we are aiming a growth of 20% plus.

 

There have been reports that you have been scouting for funds…

Yes, we are looking at a private equity funding right now. We have engaged someone who is helping us with the valuation of the business. We are looking at raising about `500-600 crore. This money will be used to fund our expansion plans for the next three years. We are hoping to raise it in the next three to six months.

 

Are you planning to introduce any new brands or products?

We have some plans but we can’t disclose that but we are very ambitious on the product plans. Our past launches have also been very successful. For instance, in Officers Choice Blue, a launch in the semi- premium segment, we have crossed a million cases in ten-and-a-half months. And that too when we are not present in several states which are very big markets.

 

Are you looking at premiumising your portfolio?

Yes, we are clearly looking at the premium segment because margins are anyway thin, and with inflation hitting us very badly if you want to remain profitable you will have to turn the focus on the premium segment.

 

There have been reports that several companies are looking at acquisitions…

Yes, going ahead there will be further consolidation in the market. And especially now that the industry is dominated by two giants– Diageo and Pernod Ricard– so competing with them is very difficult. With consolidation there will be more control on prices and this will, in turn, have a better control on raw material.

 

Are you also scouting for acquisitions?

Yes, we are also on a lookout for good brands if we get them at a good price.

 

Does Diageo entering the market means more competition?

Well, we are glad they are coming in. It will make the market better in terms of pricing and also more transparent, a good crop of people will come in.

 

What brand-building exercises are we likely to see going ahead?

Since direct advertisement is banned, we will continue to see more surrogate advertisement. The activity in clubs and bars will increase dramatically. Also, association with events will become a big thing in liquor business and therefore it will become a big boys’ game, smaller players will not be able to match up.

 

 

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Deadline Extended for ULTIMATE SPIRITS CHALLENGE® to Friday, March 1, 2013

 

Source: U-BC

Feb 19th

 

3 Tangible Benefits to Suppliers Who Enter ULTIMATE SPIRITS CHALLENGE:

 

1.       All spirits rated 85 and higher receive concise, descriptive TASTING NOTES.

 

2.       UBC results are distributed to over 60,000 retailers, restaurateurs, beverage buyers, and bartenders via Beverage Media’s ULTIMATE BEVERAGE CHALLENGE BUYING GUIDE that will appear in the October 2013 issue of Beverage Media publications.

 

3.       Spirits with excellent price/value ratios receive GREAT VALUE recognition.

Invest in your brands.

 

 

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Castle Brands Announces Fiscal 2013 Third Quarter Results

 

Source: Business Wire

Feb 14th

 

Castle Brands Inc. (NYSE MKT: ROX), a developer and international marketer of premium and super-premium branded spirits, today reported financial results for the three and nine month periods ended December 31, 2012.

 

Operating highlights for the quarter ended December 31, 2012:

 

    Net sales increased 21.8% to $10.6 million for the quarter ended December 31, 2012, as compared to $8.7 million for the comparable prior-year period

    Total case sales of beverage alcohol products increased 19.4% to 96,599 cases compared to 80,888 cases in the prior-year period

    Strong growth of the Jefferson’s bourbons and rye lead to a 66.4% increase in whiskey revenues from the prior-year period

    Gosling’s Black Seal Rum exceeded 100,000 cases sold in the U.S. for the 12 months ended December 31, 2012

    Gosling’s Stormy Ginger Beer case sales increased 79.7% to 55,074 cases compared to 30,644 cases in the prior-year period

    EBITDA, as adjusted, improved by 78.6% to a loss of ($0.1) million, compared to a loss of ($0.5) million for the three months ended December 31, 2011

 

“Castle Brands continued to deliver on the key elements of our plan. Case sales and revenues from our spirits brands increased strongly for the quarter and the year-to-date, well ahead of industry average. Cost containment continued to cause our operating margins to improve. As a result, cash consumed by operations, as measured by EBITDA, as adjusted, declined significantly,” stated Richard J. Lampen, President and Chief Executive Officer of Castle Brands.

 

“This is an exciting time for Castle Brands. We are particularly pleased with the increased penetration that Gosling’s Rums and Jefferson’s Bourbons continue to gain in key U.S. markets and we plan to boost the marketing programs, event sponsorships and promotions for these brands throughout the year. Furthermore, during the last nine months, our Irish portfolio, including our Irish whiskeys and Brady’s Irish Cream, achieved double digit year-over-year growth,” stated John Glover, Chief Operating Officer of Castle Brands. “During our fourth quarter, we will introduce Castello Mio, our new Sambuca, strengthening our liqueur portfolio.”

 

The Company had net sales of $10.6 million in the third quarter of fiscal 2013, an increase of 21.8% from $8.7 million in the comparable prior-year period. This sales growth was driven by increased rum and whiskey sales in the U.S. and international markets. Loss from operations was ($0.4) million for the three months ended December 31, 2012, an improvement of 44.3% from a loss of ($0.8) million for the comparable fiscal 2012 period. Including the ($0.2) million dividend accrued under the terms of the Series A Preferred Stock, the Company had a net loss attributable to common shareholders of ($0.8) million, or $(0.01) per basic and diluted share, in the fiscal 2013 third quarter, compared to a net loss attributable to common shareholders of ($1.4) million or $(0.01) per basic and diluted share, in the comparable fiscal 2012 period.

 

EBITDA, as adjusted, for the third quarter of fiscal 2013 improved to a loss of ($0.1) million, compared to a loss of ($0.5) million for the prior-year period.

 

For the nine months ended December 31, 2012, the Company had net sales of $30.6 million, a 20.2% increase from $25.5 million in the prior-year period. Loss from operations was ($1.7) million for the nine months ended December 31, 2012, an improvement of 40.9% from a loss of ($2.9) million for the comparable fiscal 2012 period. Including the ($0.6) million dividend accrued under the terms of the Series A Preferred Stock, the Company had a net loss attributable to common shareholders of ($2.9) million, or $(0.03) per basic and diluted share, in the first nine months of fiscal, compared to a net loss attributable to common shareholders of ($4.5) million or $(0.04) per basic and diluted share, in the comparable fiscal 2012 period.

 

EBITDA, as adjusted, for the nine months ended December 31, 2012 improved to a loss of ($0.7) million, compared to a loss of ($2.1) million for the prior-year period.

 

 

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Bordeaux chateaux ‘don’t know how to sell’ wine – Philippe Magrez

 

Source: Decanter

by Chris Mercer

Wednesday 20 February 2013

Too many Bordeaux chateau owners rely on negociants and prestige, warns Philippe Magrez.

 

Too many Bordeaux chateaux ‘don’t know how to sell’ wine and several estates are being hampered by disputes among members of their owning families, says Philippe Magrez.

 

Speaking to Decanter.com in London this week, Magrez said that Bordeaux chateaux are storing up problems in an increasingly competitive world wine market, because they remain too removed from the sales process.

 

His comments reignite a long-standing debate around Bordeaux’s negociant system, which critics claim separates wine producers from consumers.  

 

‘If I’m a negociant, my problem is not to push your brand, it is to sell your stock. Many many chateau owners don’t know how to sell, and this is a big problem,’ said Magrez, who runs Magrez Group alongside his sister, Cécile Daquin, and father, Bernard.

 

He warned that a younger generation of wine drinkers have a ‘different dream’ to Bordeaux and are more willing to consume wines from all over the world; meaning the Bordelais must redouble marketing efforts.

 

‘I’m not sure that all the negociants will exist in 20 years, and the same for the small chateaux. Many small chateaux just exist because there is a French bank named Credit Agricole.’

 

Magrez also said that some top Bordeaux estates are hamstrung by family disagreements. ‘I could give you five or six names of chateaux who could do the same as us, but they don’t,’ he said, referring to the Magrez Group’s efforts to build a 40-estate empire in Bordeaux and beyond.

 

‘The less people from the same family you have in a company, the better,’ he said.

 

Despite this, Magrez said he has a good working relationship with his father and sister. ‘A lot of people say it’s impossible to work with Bernard Magrez, but it’s easy. My father says, no problem, ‘I write the rules of your job, my job and of your sister’s’. Sometimes we have small fights, but in the end we are all thinking about the consumer.

 

‘Bernard is 77 years old, but he’s in the company as if he’s 40.’

 

When asked whether the Magrez Group is in the market for more wine estates, nothing is being ruled out. The firm is open to opportunities, whether it’s in southern England, Italy or elsewhere. ‘It depends on the market,’ he said, but adding that ‘our main business is Bordeaux’.   

 

Last year, Bernard Magrez purchased Clos Haut-Peyraguey, making him and his self-built business the owner of four Grands Crus Classés spanning Sauternes, Graves, Saint-Emilion and Médoc.

 

 

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Champagne shipments down -8.8% in December, all regions declined

 

Source: Barclays

Feb 19th

 

CIVC global shipments declined by -8.8% in December, a deterioration from the -7% reported in November and declined -4.4% for the full year 2012. This comes despite an easy comparable of -8.5% in December 2011 and confirms the challenges the industry faces as November and December are the biggest months in the year accounting for close to 30% of annual shipments. France was down by -8.8% on an easy comparable (-5.9% in December 2011). European volumes were down by -13.3%, compared to -20.9% a year before. Shipments to other countries (19% of volumes) declined by -0.2%. For the full year industry shipments continued to show weak trends, down -4.4%, with a -5.6% decline in France, -7.1% in rest of Europe and +3.2% in other countries.

We reiterate our negative stance on the champagne sector. With austerity measures increasing in many of the core European markets and with an additional 1,700 kilo per hectare of grape supply due to hit the market (a 25% increase in supply on 2011 following the yield restrictions imposed by the industry in 2009), category pricing appears vulnerable. We believe the risks remain skewed to the downside. We maintain our UW ratings on Laurent-Perrier and Lanson-BCC, and EW rating on Vranken-Pommery. Our preferred pick in the European Beverages space remains Pernod Ricard (OW, PT EUR 105) given its superior emerging market, Brown Spirits exposure.

 

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Natural wine is more than ‘ticking boxes’ 

 

Source: Decanter

by Chris Mercer

Wednesday 20 February 2013

There’s no point being too dogmatic about natural wines, says Real Wine Fair organiser Doug Wregg.

 

The Real Wine Fair organiser has argued that ‘natural wines’ don’t need a strict definition, as divisions in the sector re-emerge ahead of fresh exhibitions.

 

Wregg defended the Real Wine Fair’s decision not to ‘establish a charter’ for natural wines.

 

‘We are quite inclusive,’ he told Decanter.com. ‘There’s a broad spectrum of wines that are low intervention. Sulphur is not such an important issue,’ he said.  

 

Real Wine Fair has faced criticism from some corners of the natural wine movement over its relatively liberal approach.

 

This year’s Real Wine Fair will take place over March 17th and 18th, rather than clashing with rival UK fair RAW in May, as it did last year.

 

Wregg didn’t directly criticise RAW when speaking to Decanter.com, but he did say that natural wine should be about more than ‘ticking certain boxes’.

 

‘I don’t think there’s any point in being dogmatic about it,’ he said. ‘If you do, you get into legal definition, which leads to bureaucracy, which means people paying to join the club, and then you get splinter groups. Some growers then won’t value it as a term, because it doesn’t go far enough. Keeping it loose is keeping it strong.’

 

However, some worry that the concept of natural wines remains too vague.

 

‘We think a tighter definition of natural wine would be good, because consumers are hearing the word regularly in the media, and the lack of definition creates confusion,’ said John Beveridge, of Organic wine merchant Vintage Roots.

 

‘In lieu of certification, we are moving towards increased and clearer labelling, such as marking wines as low sulphur or no added sulphur, biodynamic, vegan etc.’ In January, the three most popular wines at Vintage Roots were all ‘no added sulphur,’ he added.

 

Vintage Roots won’t be attending Real Wine Fair, but will visit RAW, where two of its listed producers, Meinklang and Clos de Caveau, hope to exhibit their wines.

 

Wregg said that this year’s Real Wine Fair is in a better venue, in Wapping’s Tobacco Dock, and will include a boutique wine shop run by Roberson, as well as a host of pop-up restaurants from well-known players on the London scene, such as Fifteen, Modern Pantry, Galvin and Club & Cellar Gascon.

 

Commenting on the date change, he said it’s better if Real and RAW don’t compete directly. ‘We also asked the growers, and they said they’re always really knackered by the time it comes to the end of May’.

 

 

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Coastal & Pacific Wine & Spirits Announces the Appointments of Lewis Kenrick and Fred Fox to its California Leadership Team

 

Southern’s California Division Announces the Appointment of Aki Toumasis to its Newly-Established Inside Sales and Direct Marketing Leadership Role

 

Source: Business Wire

Feb 19th

 

Pacific Wine & Spirits (PWS) of California, a division of Southern Wine & Spirits of America, Inc. (Southern)-the nation’s largest wine and spirits distributor with current operations in 35 states-is proud to announce two new appointments to its California leadership team. Coastal & Pacific Wine & Spirits Executive Vice President, General Manager Gerry Rivero announces the PWS appointments of Lewis Kenrick to the role of Vice President, General Manager and Fred Fox to the role of Vice President, General Sales Manager Southern California. Concurrently, Southern Wine & Spirits of California’s Senior Vice President, Sales & Marketing Patrick Daul announces the appointment of Aki Toumasis as Vice President, Inside Sales & Direct Marketing for Southern across the State of California.

 

“Aki’s extensive industry experience along with his outstanding knowledge of the California marketplace will be a tremendous asset to our supplier partners in his leadership of the new Inside Sales and Direct Marketing Division.”

 

Lewis Kenrick & Fred Fox

 

Kenrick-who previously held the position of PWS Vice President, Chains-will assume the role of PWS Vice President, General Manager for the State of California. Commenting on his appointment, Rivero said, “Lewis has delivered strong commercial results and demonstrated exemplary leadership with his team, his customers and with our supplier partners in his previous chain leadership role. I am confident he will bring that same level of passion and focus to his new role as the PWS General Manager for California.” Prior to joining Pacific Wine & Spirits five years ago, Kenrick spent eight years with a major supplier partner in various roles of increasing responsibility.

 

Regarding Fox’ appointment, Rivero added, “Fred started with Southern Wine & Spirits in 1989 as a Sales Rep in Fort Lauderdale, and, throughout his 24-year career, has excelled in a variety of high-profile roles in South Florida. In 2003, Fred became a founding member of the Coastal Wine & Spirits (CWS) of Florida team, and has spent the past 10 years leading the on-premise division for CWS in South Florida. We are excited to have Fred join the PWS team as the leader in Southern California.”

 

In announcing these new appointments, Rivero concluded, “The proven track record of strategic leadership, supplier collaboration and strong business results of these two individuals will accelerate PWS’ transformation to the next level of world-class selling.”

 

Aki Toumasis

 

As Aki Toumasis assumes his role as Vice President, Inside Sales & Direct Marketing, Daul commented, “Aki started his career at Southern in 1996, and, for the past five years, he has been the Vice President, General Sales Manager for PWS of Southern California.” Daul continued, “Aki’s extensive industry experience along with his outstanding knowledge of the California marketplace will be a tremendous asset to our supplier partners in his leadership of the new Inside Sales and Direct Marketing Division.”

 

These appointments are all effective March 1, 2013.

 

 

——

Phusion Projects Names Matthew Dornauer General Counsel

 

Source: Phusion Projects

February 20, 2013

 

Phusion Projects today announced the hiring of Matthew Dornauer as the company’s first general counsel.  In this role, he will be responsible for the company’s worldwide legal matters and government affairs.

 

Prior to joining Phusion Projects, Dornauer was at the Chicago office of Sidley Austin LLP, an international law firm, where he worked with Phusion since 2009.  At Sidley, he was a member of the general litigation group and his practice included a diverse range of litigation, regulatory and transactional matters.

“We’re thrilled to welcome Dornauer to our executive team.  Given his understanding of our company, this will be a seamless transition,” said Jaisen Freeman, co-founder and managing partner of Phusion Projects. “His background and experience are a perfect fit for us, particularly at a time when we are experiencing solid growth.”

 

Dornauer received his J.D., cum laude, from the University of Notre Dame Law School and his B.A., summa cum laude, with distinction in Political Science from The Ohio State University.  He is a member of the Illinois Bar and resides in Chicago.

 

 

——

BJ’s 4Q profit drops 29% as consumers pull back

 

Source: NRN

Lisa Jennings   

Feb. 20, 2013

 

BJ’s Restaurants Inc. reported a 29-percent decrease in profit for the fourth quarter Tuesday, saying sales trends are softening as consumers pull back on dining out in light of payroll tax increases and other pressures.

 

The company reported that the decline in net income was largely due to one-time pre-tax charges during the quarter that ended Jan. 1 and an additional operating week the prior year. However, in an earnings call with analysts following the report, Greg Levin, BJ’s chief financial officer, said the chain saw “a lot of choppiness” in the fourth quarter and noted that same-store sales were negative going into the new fiscal year.

 

For the first seven weeks of the first quarter in January and February, same-store sales fell 0.5 percent, compared with an increase of 4 percent for the same period last year, he said.

 

Consumers appear to “need a catalyst or an event to dine out,” said Levin, and they are also generally pulling back on dining out midweek. “In fact, the first quarter feels a lot like 2008, in which the middle of the week has become soft with weekends and special events holding up relatively well,” he said.

 

Levin predicted it would take about two quarters for consumers to adjust to the “new reality” of “a little less jingling in their pockets” as a result of higher payroll taxes and other changes in tax regulation this year.

 

The fourth-quarter report was the “final watch” for retiring chief executive Jerry Deitchle and the first earnings report for his replacement Greg Trojan, who stepped into the CEO chair earlier this month.

 

Raising brand awareness

 

The company is targeting several areas for improvement, including raising awareness of the brand in all markets, according to Trojan.

 

“We need to refine our brand positioning and look to spend efficient marketing dollars to drive even more traffic into our restaurants,” he said, noting that one of BJ’s strengths is the diversity of guests and the reasons they visit.

 

“How do we communicate what we do and what BJ’s is to such a varied constituency when it represents quite different experiences to so many?” he continued. “A difficult mission, but essential to fully realizing our potential in my mind.”

 

Trojan said the chain will also work on its plan for future development, rethinking the traditional 8,500-square-foot footprint for BJ’s restaurants.

 

“I’m convinced that we need more flexibility in the box that we are building,” he said. “We need to be able to fit in smaller places in older established real estate constrained markets, like the Northeast, for example. A smaller footprint will also make us more competitive in smaller markets, which dictate a lower upfront investment.”

 

In addition, Trojan plans to work on the chain’s human resources strategies with the goal of becoming “the company of choice to work for at all levels of our team,” he said. “Given the challenges laid out by health care reform and other regulations, we will look for opportunities to manage these changes in a way which widens our competitive advantages.”

 

Meanwhile, BJ’s is increasing its marketing spending and promotions during the first quarter. The chain is expanding a test of TV advertising in six small markets, covering about 28 restaurants.

 

In addition, Levin said BJ’s will be “very prudent” on menu pricing this year, focusing on “everyday affordability.” Menu prices will likely increase 2 percent for the year, including a 3-percent increase during the first quarter and 2-percent increases for the second and third quarters.

 

The company expects commodity costs to increase about 2.5 percent to 3 percent for 2013.

 

Net income for the quarter was $7 million, or 24 cents per share, compared with $9.9 million, or 34 cents per share, a year ago, which included an extra operating week that contributed about 6 cents per share.

 

During the fourth quarter that ended Jan. 1, the company also saw pre-tax charges totaling about $1.4 million, or about 4 cents per share, related to the cost of a California sales tax audit and one-time costs associated with the chief executive transition.

 

The same-store sales increase of 3 percent reflected the benefit of menu price increases and a favorable mix that offset a 0.9-percent decrease in traffic.

 

“In our view, maintaining 99 percent of our guest traffic in our comparable restaurant sales base was really a solid achievement for the fourth quarter in light of all the headwinds we faced,” said Levin, crediting the chain’s steak-and-seafood entrée platform and the two-dine-for-$14.95 lunch special promotion.

 

Revenue for the quarter increased 8 percent to $184.8 million, compared with $171.8 million a year ago, including an extra operating week in fiscal 2011 that contributed about $13.9 million in sales. Excluding the extra week, revenue would have risen 17 percent for the quarter.

 

For the entire year, BJ’s said revenue increased 14 percent to $708.3 million, compared with $620.9 million in fiscal 2011. Same-store sales increased 3.2 percent for the year.

 

Net income for the year was $31.4 million, or $1.09 per share, including pre-tax charges of about $2 million, compared with $31.6 million, or $1.08 per share, the year prior.

 

BJ’s said 16 restaurants opened in fiscal 2012, including five during the fourth quarter. Another 17 openings are scheduled for fiscal 2013, including the relocation of a smaller format restaurant in Oregon to a larger “Brewhouse” unit.

 

Based in Huntington Beach, Calif., BJ’s ended the year with 130 casual-dining restaurants under the BJ’s Restaurant & Brewery, BJ’s Restaurant & Brewhouse, BJ’s Pizza & Grill, and BJ’s Grill brand names.

 

 

——

Nevada:  Booze Bonds Seen Overcoming Worst Housing Slump

 

Source: Bloomberg

By Amanda J. Crawford

Feb 18, 2013

 

Nevada Governor Brian Sandoval, whose borrowing ability has withered as the state suffered the nation’s biggest drop in property values, wants to tap a revenue stream that emerged from the recession unscathed: liquor taxes.

 

Levies on alcoholic beverages rose in seven of the past eight years, even as property taxes have suffered, state data show. The Republican governor proposed $58 million in general- obligation bonds to repair state buildings in his 2013-2015 budget proposal, and his administration is considering using revenue from existing booze levies to back the debt. It’s an opportune time to borrow, as signs of an economic rebound lead investors to ask for less extra yield on Nevada securities.

 

Sandoval, 49, is seeking a way to borrow at municipal interest rates close to four-decade lows. The property tax revenue that traditionally funds the state’s general-obligation debt service has been falling since 2010. As a result, Nevada is unlikely to be able to issue new debt backed by those taxes until 2020, according to the state treasurer.

 

“What we need is a very predictable, reliable funding stream,” said Jeff Mohlenkamp, director of the state’s Department of Administration in Carson City.

Recession Hit

 

In Nevada, the recession that ended in 2009 hit harder than elsewhere in the nation. The jobless rate peaked at 14 percent in 2010, the highest since at least 1976. While it fell to 10.2 percent in December, that tied the state with Rhode Island for the nation’s highest level, data compiled by Bloomberg show. Nationwide, the rate was 7.8 percent.

 

Nevada is one of 11 states without a prediction for when tax collections will return to peak levels, according to the National Conference of State Legislatures. It wouldn’t be the first to turn to alcohol sales to bolster its finances.

 

Last month, a private entity created by Ohio Governor John Kasich to spur job growth sold $1.5 billion in debt backed by profits from the state’s wholesale liquor distribution system. In 2009, the state issued taxable Build America Bonds with a similar backing of liquor profits.

 

While Sandoval is still weighing options for a dedicated funding source for the debt, such as the tax on slot machines, the liquor levy on licensed importers and wholesalers has emerged as the most probable choice, Mohlenkamp said.

 

Alcohol Advance

 

Revenue from that source has surpassed pre-recession levels, rising every year except one since fiscal 2005. It will probably keep climbing over the next three years, according to the state’s Economic Forum, the entity charged by the legislature with estimating general-fund revenue.

 

Meanwhile, state property tax collected to repay general- obligation bonds is projected to decline to $129.8 million in fiscal 2013 from $186.7 million in 2010, according to the treasurer’s General Obligation Debt Capacity and Affordability Report. Property-tax revenue generally trails changes in home values.

 

The proposed bonds, which would need approval from the legislature as part of Sandoval’s $6.6 billion budget plan, would probably be structured so the debt is backed secondarily by the state’s general fund, Mohlenkamp said. If approved, the same mechanism could be used for more bonds in the next biennium, he said.

Funding Promise

 

The promise of stable, dedicated funding may alleviate some concern that the housing market may not have bottomed, said Michael E. Johnson, managing partner in Solana Beach, California, at Gurtin Fixed Income Management LLC.

 

“It is something we could be interested in,” said Johnson, whose firm handles $4 billion in munis. “Traditionally, liquor revenues across the country are relatively stable. I tend to like that part of it.”

 

Last month, Nevada, which has about $2 billion of debt, issued tax-exempt general obligations. The refinancing sale showed the state shrank its relative borrowing costs in the past year.

 

Five-year tax-exempt debt sold last month yielded 1.18 percent, or about 0.33 percentage point above benchmark bonds, data compiled by Bloomberg show. That extra yield is down from about 0.5 percentage point for similar-maturity debt at a Nevada offer in March. The securities were rated AA by Standard & Poor’s, the third-highest level.

 

Premium Push

 

Before the sale, state officials worked to reduce what they call the “Nevada premium” resulting from the state’s fiscal travails, said Chief Deputy Treasurer Mark Mathers.

 

“During the financial crisis, Nevada was in the news for its high foreclosure rate and high unemployment rate,” Mathers said in an interview. “The headlines left our bonds, despite being AA, trading at a higher spread than other AA-rated states.”

 

There have been signs of a turnaround in Nevada, the fastest-growing state in the last decade.

 

Home values in Las Vegas, Nevada’s largest city, rose about 10 percent in November from a year earlier, the fifth-best annual gain in the 20-city S&P/Case-Shiller index. Prices fell 61 percent from February 2007 to March 2012 — the most of any American city.

 

Home prices in Nevada remained 52 percent lower in December than they were at their peak in March 2006, the largest drop of any U.S. state, according to CoreLogic, an Irvine, California- based data provider.

 

States’ Quest

 

Nevada joins states investigating alternative funding to expand debt capacity as traditional revenue streams stagnate, said Emily Raimes, an analyst at Moody’s Investors Service.

 

“There are a lot of discussions going on in the states on the best way to fund the transportation and capital programs they want to fund,” Raimes said from New York. “Nevada is not very unusual in that it is looking at other funding sources.”

 

While the state isn’t required to identify a dedicated funding stream for its general-obligation debt, the treasurer’s office has recommended the step to reassure investors, Mohlenkamp said.

 

“They have recommended we identify a direct funding stream to provide a little more certainty, a little more structure to the bond purchasers,” he said.

 

 

——

Washington: Tacoma’s West End may become ‘Alcohol Impact Area’

 

Source: 13 Fox

By Kate Burgess

Feb 21st

 

Parts of Tacoma are seeing an increase in alcohol-related crimes, so the city is working to ban some forms of fortified wines and malt liquor in the worst-hit areas.

 

The West End Neighborhood Council is pushing to make their community an “alcohol impact area” and ban the sale of highly alcoholic drinks.

 

Some in the West End say public drunkenness is becoming a major problem. So the neighborhood council is working to make its area the third AIA in the city of Tacoma.

 

If the City Council adopts the ban, more than 45 wines and malt liquors would be pulled from the shelves, including Colt 45, Steel Reserve and Thunderbird wines.

 

Stores north of Highway 16 and west of 19th Street would be affected. Some business owners are worried it could hurt their bottom line.

 

But police say these drinks have an extremely high-alcohol content that contributes to chronic public drunkenness, which affects the whole community.

 

Tacoma police Lt. Daniel Still said those who abuse alcohol “go into our parks and they defecate. They scare the neighbors; they scare the kids in school ground areas. They keep the citizens from enjoying the parks; the parents won’t come by with their children and play. You’ll have alley ways that are littered with broken bottles and crushed cans of specifically these products.

 

“Some businesses have actually reported to us that they’ve increased their bottom line; their business is actually increasing. You’ll have less chronic public inebriants and illegal activity, unsavory activity happening around their stores,” he said.

 

If the City Council approves the temporary ban, store owners would have six months to get rid of their leftover product, and the city will look at new data and crime statistics later to see if the ban worked.

 

If it does, the drinks might be banned permanently.

 

The City Council will vote on the proposed temporary ban Tuesday.

Liquor Industry News 2-20-13

February 20, 2013
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Todays Industry News

 

Pernod says no to Cuervo but declares interest in craft spirits

 

Source: the drinks business

by Ron Emler

19th February, 2013

 

Pernod Ricard is not about to do a deal with the Beckman family and take Jose Cuervo, the world’s best selling tequila, into its portfolio, but its next foray in the mergers and acquisition market could be in the craft spirits sector.

 

Pierre Pringuet hinted that the dynamic craft spirits sector, especially in the US, was attractive.

 

Deputy chairman and chief executive Pierre Pringuet said in London yesterday that he had been surprised by reports from Paris last week that he wanted Jose Cuervo to fill the tequila gap in his portfolio. “I was asked if it [Cuervo] is a desirable brand – and it is – but there are no on-going discussions about it,” he said.

 

Diageo, which distributes Cuervo until a distribution agreement with the Beckman’s runs out in the summer, wanted to buy the brand but walked away from it late last year when the Beckmans declined to sell. A Beckman subsidiary will take over distribution in the dominant US market.

 

Pringuet reaffirmed that Pernod Ricard too does not wish to enter distribution agreements for brands it does not own. “Distribution on its own is not enough,” he said. And while he confirmed that the French group would not be making a “transformational” acquisition within the next couple of years, he said that “tactical” purchases were an option.

 

He hinted that the dynamic craft spirits sector, especially in the US, was attractive and said: “You may see some activity in that sector quite soon.”

 

Craft spirits, which sell at premium and super-premium prices, have attracted much attention and growing consumer interest in the US. But finding a company or brand with the right growth potential will not be easy, although Pringuet hinted that he may soon be about to announce that he has done so.

 

“It’s all about size. Is there a specific recipe with distinctive packaging that makes a product stand out from major brands?” he said. The key question for Pernod Ricard was whether any craft product had the potential to be developed into a significant part of the Pernod Ricard portfolio, first in its home market and later globally. “All brands started small,” he said.

 

One company not in Pringuet’s sights is the troubled French group Belvedere, which has Sobieski vodka and Scotch brand William Peel in its portfolio. US film star Bruce Willis is among its shareholders with about 3% of the equity. Pringuet says Belvedere’s brands do not interest him.

 

Earlier this week, the administrator of French spirits group warned of “industrial and social disaster” if Belvedere’s shareholders don’t approve a debt restructuring that would see their stakes drastically diluted.

 

After four years of legal wrangling, Belvedere struck a deal with its creditors last September but it has had to call a second shareholder meeting on the plan because the minimum number of votes was not achieved at a meeting on Tuesday.

 

Belvedere, which was founded in 1991, went into administration in 2008 to protect itself from creditors demanding early reimbursement of ?375m (£320m) of debt the company had issued in 2006 to buy Marie Brizard liquors.

 

Since then, the company has been “at war” with its creditors, especially Oaktree Capital Management, its main creditor and owner of rival Stock Spirits, which makes Poland’s Orzel vodka.

 

“There is no alternative plan,” the administrator said about the proposal to convert ?629m of debt into equity.

 

“The consequences of the rejection of Belvedere’s plan would be an industrial and social disaster,” Frederic Abitbol said, referring to the company’s brands, and 3,315 staff worldwide, including 713 in France and 1,903 in Poland.

 

He said that if the If the present plan is defeated by shareholders, the commercial court overseeing the case will probably decide to liquidate Belvedere at a hearing on March 11.

 

In 2011, Belvedere made a loss of ?55m.

 

 

—— 

ThaiBev: Elephant in the boom

 

One of the world’s top five spirits producers enters a new era

 

Source: FT

Feb 19th

 

Take four-fifths of the spirits market in a large and growing economy. Add a decent soft drinks business and a strong distribution network to what is already one of the top five spirits producers in the world by sales volume – and you have the new, improved Thai Beverage. The takeover of Fraser and Neave by ThaiBev’s controlling shareholder has officially closed. Now to see what ThaiBev gets from it.

 

Since Thai billionaire Charoen Sirivadhanabhakdi launched his bid for Singapore’s F&N in September through TCC, his private vehicle, ThaiBev’s shares have rallied by two-thirds. The first question is how he will split the group. Assuming Mr Charoen wants F&N’s property portfolio for TCC, the tidiest solution for the drinks unit would be for ThaiBev to sell its 29 per cent in F&N to the company and use the funds to purchase the drinks business for, say, the S$2.7bn that Kirin wanted to pay for it. That leaves ThaiBev S$1.2bn to pay down the debt it took on to buy the stake.

 

Assuming that happens, the next question is what the F&N unit brings to one of the most profitable drinks businesses in the world. ThaiBev’s 80 per cent of the spirits market in Thailand means the division’s operating margin of 20 per cent beats Diageo’s in the region, according to CIMB, although some is lost covering for losses at Chang (elephant) beer. Still, synergies with F&N look genuine. F&N’s soft drinks can be sold into Thailand, whose population is double that of its current market of Singapore, Malaysia and Brunei. And F&N’s heft outside Thailand should be able to boost Chang sales.

 

The most entertaining synergy would be if ThaiBev’s newly expanded reach could lift support for Everton, its Chang-sponsored UK premiership football team, currently ranked sixth. But some deal effects really are too hard to quantify.

 

 

——

Barclays Consumer Equity Research: Spirits Scanner Scoop

 

Source: Barclays

Feb 19th

 

This report contains a high-level review of the latest Nielsen Spirits Scanner data released this morning (data through February 2, 2013), ordered by company (with a look at a few key categories), highlighting some metrics (sales, volume, price/mix growth) within a chronological context. Keep in mind that Nielsen captures a relatively small portion of the US Spirits category, even with the recent addition of Wal-Mart, Club, Dollar & Military outlets, and our data excludes the impact of the channel shift in Washington State. In the latest Nielsen spirits scanner data for the period ending February 2, 2013:

 

Distilled spirits industry sales growth slowed to +3.1% in the 4 weeks ending 2/2/13, likely reflecting some calendar/timing factors after the category grew +6.0% in the prior month. On a 12-week basis, the industry grew +4.2%, a touch faster than the +4.0% growth of the prior 12 weeks but below +5.1% rate of the past year. Importantly, spirits pricing remains solid, as almost all of this month’s sales growth was a result of better price/mix – up +2.9% compared to +2.8% in the last 12 weeks and +2.3% in the prior 12 weeks.

 

Industry volume was up +0.2% this month, decelerating from +2.7% last month and +1.3% in the past 12 weeks. Vodka grew roughly in line with the industry (+0.5%) but with more modest price/mix (+1.9%). Bourbon volume slowed a bit (+4.7% versus +5.5% in the last 12 weeks), but remains considerably stronger than other major categories, as it gained +0.6 points of dollar share with solid +3.2% price/mix. Prepared cocktails volume fell -9.0% down from -6.1% in the last 12 weeks and Rum was also weak (-1.5%). Tequila volume remained positive at +1.6%, but slowed from +4.1% in the prior 12 weeks.

 

As industry prices continued to improve on a 12-week basis, Beam’s sales outperformed this month (+4.3% versus +3.1% for the sector) and over the past 12 weeks (+5.8% compared to +4.2%) after lagging the industry in the prior 12 weeks (+3.4% versus +4.0%). Brown-Forman’s price/mix has yet to significantly improve at retail, up +1.9% including a modest +1.6% for Jack Daniel’s Tennessee Whiskey. Diageo’s sales decelerated to +0.8% from +2.0% last month and +1.1% in the rolling 12 weeks, as the company led major players on pricing (price/mix up 4.4%). Pernod Ricard’s sales growth also slowed a bit to +2.1% this month from +2.8% last month, while price/mix was up +2.6%.

 

 

——

Loan recall, corp guarantees may derail USL-Diageo deal

 

Source: MoneyControl

Feb 19th

 

The USL – Diageo deal may be in jeopardy after banks have recalled loans given to Kingfisher Airlines . Bankers told CNBC-TV18 that they could invoke the corporate guarantee of UB Holdings and file for liquidation of the company. This could endanger the transfer of USL shares owned by UB Holdings to Diageo, reports CNBC-TV18′s Gopika Gopakumar.

 

The recall of loans given to Kingfisher Airlines by consortium of banks can actually put the entire USL -Diageo deal in jeopardy. Lenders state that they can also invoke corporate guarantees given by UB Holdings as collateral for Kingfisher Airlines.

 

In the first step of invoking this guarantee, banks will send a legal notice to the guarantor-  UB Holdings- to repay the entire debt of Kingfisher Airlines which is around Rs 7,000 crore. In the event UB Holdings is unable to repay the debt in the stipulated time-period banks can then file a liquidation suit in the court which could then prevent UB Holdings from alienating any of its assets.

 

So UB Holdings could be prevented from transferring its shares in USL to Diageo as part of the deal. And this could throw spanner in the works of the USL-Diageo deal. However, Diageo can save the deal if it enters into an out-of-court negotiation or settlement with the consortium of banks.

 

However, banks also hold USL shares pledged by UB Holdings as collateral for Kingfisher Airlines but banks are unwilling to sell these shares to Diageo because the current market price is much higher than the open offer price set by Diageo. So, unless Diageo looks at revising the open offer-price, banks will not look at selling those shares to Diageo.

 

The consortium of banks is a bit miffed because the Kingfisher management is unwilling to commit to infuse any funds from the USL-Diageo deal. All these factors will work against the conclusion of the USL-Diageo deal unless Diageo decides to enter into a settlement with the banks.

 

 

——

Underage US drinkers prefer Bud Light, Smirnoff, Budweiser: Study

 

Source: Beverage Daily

By Ben Bouckley

19-Feb-2013

 

Bud Light, Smirnoff malt beverages and Budweiser were the brands most widely consumed by by 1000+ underage US drinkers over a 30-day period, according to the authors of a new study who claim to be the first to assess nationwide data.

 

Writing in the February issue of Alcoholism: Clinical and Experimental Research, lead author Professor Michael Siegel (Boston University School of Public Health) and colleagues claimed to be the first to collect national data on brandspecific alcohol consumption among US youth.

 

They said their work could prompt a public health focus targeting specific brands via prevention policies, and new research on the impact of alcohol advertising on youth brand preference.

 

Explaining the basis for their research, the academics said that underage drinking was a major public health concern in the US, since more than 70% of high school students had drunk alcohol, while around 22% engaged in heavy episodic drinking (Eaton et al. 2012).

 

“Existing national surveys of alcohol use among underage youth have collected data at the level of the alcoholic beverage type (beer, spirits, wine, etc.), but never at the level of alcohol brand (Bud Light beer, Grey Goose vodka, Bacardi rum, etc.) or even liquor subtype,” Siegel et al. wrote.

 

Relatively small brand pool

 

A 2004 National Academy of Sciences report recommended that the federal government collect data on brand preference among underage drinkers – to determine the influence of alcohol marketing on youth – Siegel et al., said, but no such work had been done.

 

1032 underage youths (13-20) responded to Siegel et al. last year via online questionnaires that assessed their consumption of 898 alcohol brands among 16 alcoholic beverage types over the previous 30 days, including the frequency and amount of each brand consumed.

 

The team said its “major finding” was that, although alcohol consumption was spread out over a number of beverage types, it was grouped among a relatively small number of brands.

 

The top 25 brands consumed (all household names) accounted for around half of all alcohol consumption by volume, they found.

 

Bud Light was the brand drunk by most respondents (27.9%; 6.4% market share) then Smirnoff malt beverages (17%; 2.9% share) and Budweiser (14.6%; 3%); Smirnoff vodkas (12.7%; 1.4%), Coors Light (12.7%; 2%) and Jack Daniel’s Bourbon (11.4%; 1.6%).

 

Most popular alcoholic drink types

The most common alcohol beverage types among underage drinkers were beer (68.9%) and spirits (69.7%), followed by flavored alcoholic beverages (49.9%), then wine (31.6%).

 

The market share figures (glossed briefly two pars above, tabulated in the study) reflect consumption frequency vis-a-vis other brands: the total number of times subjects drank a given brand over 30 days, divided by the total number of drinks consumed for all brands.

 

Siegel et al. said that response rates of 43% for 18-20 year olds and 44% for 13-17 year old lent the possibility of non-response bias, with fewer responses from Black and lower-income youth.

 

Thus, the academics weighted survey responses from these respondents more heavily, to address possible brand and market bias towards White, middle- and upper-income youth.

 

“Non-response bias does not threaten the validity of our basic finding that underage alcohol use is concentrated among a relatively small number of brands,” Siegel et al. added.

 

http://www.beveragedaily.com/content/view/print/743719

 

——

Former liquor producer buys Boothbay CC

 

Source: Portland Press Herald

Feb 20th

 

Boothbay Country Club was bought by Paul Coulombe of Southport, who has hired Harris Golf of Bath to manage it.

 

The course was in foreclosure. Coulombe, former owner of White Rock Distilleries of Lewiston, has long supported endeavors in the Boothbay region.

 

“It’s worth saving,” said Coulombe in a press release. “I feel the club is a critical component of our community that attracts both out-of-state visitors and Maine residents.”

 

Harris Golf owned the course from 1995 to 2008.

 

“Boothbay Country Club is steeped in history,” said Jeff Harris of Harris Golf.

 

Francis Ouimet, winner of the 1913 U.S. Open, held the course record at Boothbay CC for years.

 

“I’ll encourage youth programs for children of all ages in the Boothbay area and will provide qualified PGA pros to teach the game,” Coulombe said.

 

 

——

SAM: 4Q12 Earnings Pre-Game Primer

 

Source: CITI

Feb 19th

 

Sales Should Increase – In 4Q12, we expect that SAM’s net sales (excluding excise taxes) will increase 12.2% YoY, a deceleration relative to the 23.5% growth seen in 3Q12 (partially due to a difficult comp as sales in 4Q11 were up 22.7% YoY). Our estimate is 490 bps ahead of the Street, given the outsized growth trends seen for SAM in 4Q12 in Nielsen-tracked channels (+17% in c-stores and +10% in the xAOC channels).

 

Margins Should Be Mixed – We anticipate that SAM will deliver a 56.4% gross margin (unchanged YoY). Meanwhile, we expect that SAM will post an 18.4% operating margin (-20 bps YoY) driven by a modest increase in other SG&A expenses (i.e., those other than advertising, promotional and selling expenses), offset by our expectation for healthy fixed cost leverage given our forecast for robust top-line growth. The Street is forecasting an operating margin of 17.0%.

 

EPS Should Increase – In 4Q12, we expect that SAM will deliver EPS of $1.35, which represents 13.0% earnings growth YoY, and is ten cents above consensus.

 

What We’ll Be Interested in Hearing About – Management’s outlook for the craft beer category given the introduction of lower-priced offerings; additional information regarding SAM’s introduction of canned beer; color regarding the company’s 2013 depletion forecast; and further detail on SAM’s 2013 gross margin outlook.

 

Conference Call Details – Wednesday, February 20, at 5:00 pm ET. Dial-in: 1-877-760-2165. The passcode for the call is 95839765.

 

 

——

SABMiller CEO’s successor to get less boost from deals

 

Source: Chicago Tribune

February 20, 2013

 

One of the biggest challenges facing the incoming chief executive of SABMiller Plc will be continuing to grow the business as strongly in a world with fewer acquisitions to make, according to its outgoing chief executive.

 

With the global beer industry undergoing a wave of consolidation over the last two decades, brewers can no longer count on much of a boost from mergers and acquisitions – deals that helped transition SABMiller from a regional South African brewer to the world’s second-biggest, with over 200 brands ranging from Miller Lite to Peroni to Grolsch.

 

“The opportunity to bring on new businesses, integrate them and derive earnings … that opportunity is diminishing,” said SABMiller CEO Graham Mackay in an interview on Tuesday. “Everywhere we are relying more on organic growth. And that’s a lot easier in some markets than in others.”

 

That will be one issue facing Alan Clark, who will take the reins at SAB this summer.

 

“How to drive organic growth is one that he’s going to face particularly keenly,” Mackay said on the sidelines of the Consumer Analyst Group of New York conference in Boca Raton, Florida.

 

SABMiller recently announced a deal in China through a local joint venture. Sales volume in the country declined in the most recent period, however, after the coldest winter there in 28 years.

 

“China is a long-term growth market, no question,” Mackay said. “It’s never been a particularly profitable market. The margins are low because prices are very low. They still look set to be at pretty low levels for some time to come.”

 

By contrast, Mackay said growth was “extremely profitable” in Africa, where per capita consumption is much lower, but prices are higher. Africans, who have a cultural proclivity to drink beer, still only drink about one-tenth the amount, on average, as their American counterparts.

 

SABMiller generates half of its revenue and nearly two-thirds of its profits from Latin America and Africa.

 

Mergers and acquisitions have “gotten stickier,” Mackay said, because of fewer available assets and high price expectations. He said SAB’s appetite for acquisitions has not changed from what it has been, even if its balance sheet is a bit more extended as a result of the 2011 acquisition of Fosters.

 

BEER DEALS

 

The biggest beer deal on the agenda right now is Anheuser Busch InBev SA’s pending takeover of Mexico’s Grupo Modelo . The world leader last week revised its $20.1 billion deal to satisfy antitrust concerns that led the U.S. government to sue to block the deal.

 

Mackay said he would expect the deal to ultimately get done.

 

“I would be personally surprised if ABI doesn’t get this thing through one way or the other,” Mackay said. “Whether the major concession they made recently is enough to get it across the line, I have no inside knowledge. There’s lots of commentary, but I’m not sure I can really add to it.”

 

He did however question the government’s use of the argument regarding “coordinated price action.”

 

The DOJ has argued that if AB InBev owned Modelo – even if Constellation Brands Inc owned the U.S. distributor Crown Imports as planned – it would become less likely to buck pricing trends set out by AB InBev or Miller Coors, the U.S. joint venture of SABMiller and Molson Coors Brewing Co . To satisfy that concern, AB InBev revised its deal to include the sale to Constellation of the Piedras Negras brewery, which supplies the Modelo beer destined for the United States.

 

As for the ultimate end-game in beer consolidation – the often speculated on possible takeover of SABMiller by AB InBev – Mackay said the choice was not his to make.

 

“The decision of whether to do that or not is obviously not going to be mine,” he said. “It’d be a huge and very expensive deal. Our job, as I’ve always said, is to make our business as expensive to buy as possible and that’s it.”

 

The company’s market capitalization is about $80 billion, plus it has about $17 billion of debt, Mackay said.

 

“It would be a very expensive deal for them,” he added. “Of course they’d have to pay, I think, a fairly high premium on whatever our price was at the time.”

 

LEGACY

 

Mackay is preparing to step down from his current role, some 35 years after he joined South African Breweries Ltd.

 

He became group managing director in 1997 and chief executive of South African Breweries Plc when it listed on the London Stock Exchange in 1999. In 2012, he was appointed executive chairman, with plans to become non-executive chairman at the 2013 annual general meeting.

 

During his tenure, the company underwent aggressive international expansion, moved its primary listing from Johannesburg to London and acquired Miller Brewing in the United States.

 

“I’ve been extraordinarily lucky because I happen to have been running the show at the time when it was without doubt the most exciting period in the world beer industry that there’s ever been and it can’t happen again either,” he said.

 

“The new guys are much cleverer than I am … but it will get harder to drive out growth because the consolidation phase has passed its first flush.”

 

Clark, who is taking over at this year’s general meeting, joined South African Breweries in 1990 and became COO last year.

 

When asked what he was most proud of, the 63-year-old Mackay cited getting rid of SAB’s other interests in South Africa to focus on beer and moving to London.

 

“That was a seminal decision,” he said. “I obviously didn’t take it on my own, but that worked.”

 

On the flip side, Mackay said there are also things he “should have done if I’d been cleverer, more energetic or could be everywhere.”

 

“I don’t regret any of the transactions we did. I suppose there are some we turned our noses up at, that with hindsight we might have been more accommodating about,” he said.

 

He declined to be more specific.

 

As for Mackay’s own plans, he expects to play a bit more tennis.

 

He also will keep his seats on the boards of SABMiller, Reckitt Benckiser Group Plc and Philip Morris International Inc .

 

“That’s kind of enough to keep me out of mischief for a bit,” he added.

 

 

——

King Rex dethroned from local liquor shelves

 

Source: The Times-Picayune

February 19, 2013

 

King Rex no longer reigns, at least not on local store shelves. In a settlement with the Rex organization, which brought suit claiming trademark infringement, the redundantly named Los Angeles liquor distributor has agreed to stop producing products with that name and remove them from shelves in Louisiana, Mississippi and Alabama.

 

The company, King Rex Spirits, also agreed to stop using the Rex organization’s imagery, traditions and history in marketing its products, said Andrew Rinker, the lead attorney for the king of Carnival’s krewe.

 

It also signed over to the Rex organization all of its federally registered King Rex trademarks, Rinker said Tuesday, thereby ensuring that no one will be able to use them again.

 

To soften the economic blow to the company, the settlement lets King Rex Spirits sell the vodka for the next year in the states not covered by the agreement, and for the next 18 months elsewhere.

 

Even though King Rex Spirits has to give up the right to sell its namesake vodka, “I think the settlement is a great settlement,” said Sal Ortiz, King Rex Spirits’ president and chief executive officer.

 

Ortiz, who said he had not heard of the Rex organization before the suit, said he spoke favorably about the settlement because it shows neither side bears any ill will toward the other side.

 

King Rex’s attorney proposed the settlement during a trial Friday before U.S. District Judge Jane Triche Milazzo, Rinker said.

 

“We’re very happy to have it all resolved,” he said.

 

No money changed hands in the settlement, Rinker said, but King Rex Spirits agreed to donate $1,000 to the Pro Bono Publico Foundation, a Rex organization initiative that supports charter schools. The foundation takes its name from the krewe’s motto, which means “for the public good.”

 

“The important thing,” Rinker said, “is that Rex was able to establish its international rights to its trademarks, trade rights and trade names when connected to Mardi Gras activities.”

 

“We have no ill will toward the Rex organization,” Ortiz said, adding that he realized that the krewe had to sue to protect its trademarks.

 

“They were covering their backs,” he said.

 

Initially, 800 cases of King Rex vodka had been ordered locally, he said, but when the Rex organization filed suit last month, 650 cases were sent back.

 

 

——

French study finds pesticide residues in 90% of wines

 

Source: Decanter

by Jane Anson in Bordeaux

Tuesday 19 February 2013

 

Pesticide residues were found in the vast majority of 300 French wines tested, say researchers.

 

A study of more than 300 French wines has found that only 10% of those tested were clean of any traces of chemicals used during vine treatments.

 

Pascal Chatonnet and the EXCELL laboratory in Bordeaux tested wines from the 2009 and 2010 vintages of Bordeaux, the Rhone, and the wider Aquitaine region, including appellations such as Madiran and Gaillac.

 

Wines were tested for 50 different molecules found in a range of vine treatments, such as pesticides and fungicides.

 

Some wines contained up to nine separate molecules, with ‘anti-rot’ fungicides the most commonly found. These are often applied late in the growing season.

 

‘Even though the individual molecules were below threshold levels of toxicity,’ Chatonnet told Decanter.com, ‘there is a worrying lack of research into the accumulation effect, and how the molecules interact with each other.

 

‘It is possible that the presence of several molecules combined is more harmful than a higher level of a single molecule,’ he said.

 

Vineyards represent just 3% of agricultural land in France, but the wine industry accounts for 20% of phytosanitary product volumes, and 80% of fungicide use specifically.  

 

Since 2008, France’s Ecophyto national plan (involving the study of the ways in which organisms are adapted to their environment) has sought to cut pesticide use by 50% by 2018.

 

‘By 2012, there had been no reduction at all, even a small rise of 2.7% between 2010 and 2011,’ said Stéphane Boutou, also of EXCELL.  

 

While EU rules limit pesticide residues on grapes to 250 molecules, there are no limits set for wine.

 

‘Some molecules will break down during the process of fermentation, and we need more research into what they synthesise into, and more traceability in place,’ Chatonnet said.  

 

‘But we should not forget that it is not the consumers who are most impacted by this, it is the vineyard workers who are applying the treatments.’

 

In May 2012, the French government officially recognised a link between pesticides and Parkinson’s disease in agricultural workers.

 

 

——

Decanter launches on iPhone as brand reaches record digital audience

 

Source: Decanter

Tuesday 19 February 2013

 

Decanter magazine has launched a new digital version on the iPhone, and is now available on all major smartphones and tablet devices.

 

From this week, iPhone users can download Decanter magazine from the Apple Newsstand, or by searching for Decanter in the Apple app store. Users can subscribe to receive the magazine every month, or buy single issues of Decanter magazine.

 

This follows the release of Decanter in Apple Newsstand for the iPad in 2012.

 

Existing magazine print subscribers can access both the iPhone, iPad and iPod touch versions by downloading the app and authenticating their subscriptions, at no extra cost.

 

In addition, Decanter is also available for download on all major smartphones and tablets via Zinio, Google Play, Kindle Fire and Barnes and Noble Nook, by searching for Decanter in each device’s app store.

 

To date, 18% of Decanter magazine’s print subscribers have activated their subscription on an iPad.

 

The launch of the iPhone version comes as newly released figures show traffic to Decanter.com doubled during 2012.

 

Yearly unique users rose from 1.7m in 2011 to 3.5m in 2012, whilst Decanter.com‘s average monthly unique users in 2013 now stand at 425,000.

 

In addition, the site drew visitors from 214 countries in 2012, with 38% of traffic coming from Europe, 37% from Asia and 20% from the Americas.

 

Decanter.com editor John Abbott said: ‘We’re really pleased to be engaging with the largest number of wine lovers we ever have been, right across the Decanter brand – and we’re committed to serving our international audiences on whatever platform they prefer to interact with us on.’

 

‘Launching on the iPhone is only one of a number of steps we’re taking towards improving our overall multi-platform offering, so expect more developments from Decanter very soon.’

 

Decanter magazine was first published in the UK in 1975, and today is read in over 90 countries.

 

The Decanter brand consists of Decanter magazine, Decanter.com, Decanter Events, Decanter World Wine Awards, DecanterChina.com and Decanter Asia Wine Awards.

 

 

——

Rioja enjoys record export highs

 

Source: Harpers

Written by Carol Emmas   

Tuesday, 19 February 2013

 

The DOCa Rioja has kept its sales over 355 million bottles for the third year in a row, with exports growing by 5.5%, offsetting the decline in sales in Spain.

 

This has been attributed to a continued rise in demand in export markets, with record export sales close to 100 million litres – almost four out of 10 bottles sold by the wine region.

 

China continues to show the largest growth, rising to seventh place among importers of Rioja, with the UK standing above the rest accounting for one-third of total exports – totalling 32.7 million litres in 2012, a growth of 6.8%.

 

In 2012, Rioja exports maintained the positive trend of the two previous years, with successive sales record figures totalling 34% growth in three years, bringing it very close to achieving the current 100 million-litre target.

 

Despite today’s difficult economic climate, Rioja continues to make inroads in its strategic markets, which account for over 80% of global wine consumption – where Rioja is the undisputed leader among Spanish wine regions.

 

Crianza red is the best-selling Rioja, closely followed by reds with a generic label. Reserva wines are also on the rise in foreign markets and export sales figures (26 million litres) are almost double those in the domestic market (16 million litres). The overall proportion of barrel-aged wines surpasses 60% of total red wine sales. This is thanks to a specialisation strategy that has required significant investments by wineries, but has allowed Rioja to achieve a better position than its competitors in added-value segments.

 

 

——

Accolade Wines sues Cath Kidston

 

Source: Decanter

by Chris Mercer

Tuesday 19 February 2013

Accolade Wines has accused popular accessories and homeware brand Cath Kidston of illegally copying Babycham’s deer logo.

 

Accolade Wines has issued a High Court writ against Cath Kidston for an alleged infringement of copyright after it used a cartoon deer, similar to Babycham’s leaping, ribbon-clad mascot, on its Christmas 2012 homeware range.

 

‘We are most concerned that the use of a similar image risks bringing the brand into disrepute by using alcohol-related imagery on material designed for children,’ a spokesperson for the Hardys winemaker said.

 

‘The company’s initial attempts to resolve the dispute had been unsuccessful, leaving no option other than to go to court.’

 

Cath Kidston denied that there are any ‘substantial similarities’ between the two deer logos. ‘We have been advised that Babycham’s action is without merit,’ a spokesperson said. ‘We will fight these claims accordingly.’

 

Babycham, technically a sparkling perry, was first launched 60 years ago, in 1953.

 

 

——

Knight Michael Robbins 

 

Source: St. Helena Star

February 14, 2013

 

Knight Michael Robbins was a member of a vanishing Napa Valley pioneer breed who came to the valley in the early 1960s with a big dream: to make the finest wines and put the Napa Valley on the wine map of the world. He founded Spring Mountain Vineyards, the 16th winery in the valley. His acclaimed 1968-69 cabernet was his first release of 33 vintages, many of which were highly regarded, placing in the top tiers in prestigious wine competitions.

 

Michael passed away at his home in St. Helena on Jan. 29, 2013, at age 89. He was born in Des Moines, Iowa, on July 5, 1923. His father died when Michael was 3. To help his mother, Michael started working at a young age. His strong work ethic and drive to succeed stayed with him throughout his life.

 

After high school, Michael enlisted in the Navy, was appointed to the United States Naval Academy and graduated in 1948. His time at Annapolis was formative with its rigorous academics and disciplined routine. Michael could still “sit” at a table with no chair well into his 70s. At Annapolis, he met the young Grace Kelly, who remained a friend of his throughout her life. Michael served three tours in the Korean War.

 

After the Navy, Michael worked in real estate, leasing the Alcoa Building in San Francisco and Century City Towers in Los Angeles. From his project in Los Angeles, he commuted back to his home in St. Helena every weekend to pursue winemaking. During this time, he also attended night school, eventually earning a law degree from the University of San Francisco.

 

Michael did not have his first glass of wine until age 31, but once he discovered his passion for wine, he pursued it intensely. He envisioned creating a wine estate in the image of the great French chateaux, but he also wanted to challenge French wine tradition and help put Napa Valley on the fine-wine map. His Spring Mountain wines were represented at the famous 1976 Paris Tasting.

 

In 1963, Michael bought and restored the Victorian house on Highway 29 that is known today as St. Clement Vineyards. It became the original home property of Spring Mountain Vineyards. In 1974, Michael purchased the old Tiburcio Parrott estate on Spring Mountain Road, near St. Helena. He painstakingly restored the large villa to its historic beauty and then set about designing and constructing the winery buildings, which were completed in 1977. No detail was too small for his attention. He even designed the stained glass for the winery’s “Spring Mountain,” “Chardonnay” and “Cabernet Sauvignon” windows.

 

Michael’s own interest in the Napa Valley was sparked in part by seeing the movie “This Earth is Mine” in 1959. In 1982, the producer of the “The Waltons” approached Michael to film a television pilot at Spring Mountain. This pilot became the long-running series “Falcon Crest.” The show featured some of Michael’s favorite 1940s movie stars, but its unexpected popularity overwhelmed the private estate winery with fans. The series brought many visitors to the valley, particularly international tourists.

 

Throughout this period, Spring Mountain Vineyards continued to make elegant, cellar-worthy wines. The Robbins family left Spring Mountain in 1992, with Michael refocusing his passion on golf, 49ers football and the potential of a new winemaking challenge in Virginia.

 

Michael founded an extraordinary wine estate and was a recognizable character in the wine world. He will be deeply missed by his beloved wife of 33 years, Susan; his children, Grant and Matthew Robbins; his stepdaughter, Sarah Richards-Gansa (Andrew); and his grandchildren, Luca and Renzo.

 

A memorial service celebrating Michael’s life will be held at St. Helena Catholic Church on Friday, Feb. 15, at 1 p.m. In lieu of flowers, contributions may be made to the St. Helena Fire Department and Hospice Napa Valley.

 

 

——

TESCO VOTED THE WORST SUPERMARKET IN THE UK

 

Source: Daily Mail

Feb 20th

 

ITS slogan says ‘every little helps’. But shoppers appear to think Tesco should be doing a lot more.

 

The supermarket has been voted the worst in the UK by consumers.

 

Of the nine major chains, it came bottom of the table in an annual poll of 11,000 shoppers by Which?

 

It received poor marks for its pricing, store environment, quality of fresh produce and customer service giving it a a customer satisfaction rating of just 45 per cent.

 

At the other end of the scale, Waitrose received a score of 82 per cent, including five-star ratings for its customer service and the quality of its fresh produce.

 

Shoppers rated the supermarkets on customer satisfaction and the likelihood they would recommend the store to a friend.

 

Discount supermarkets Aldi and Lidl came second and third with scores of 74 per cent and 69 per cent respectively, beating bigger rivals Morrisons, Sainsbury’s and Asda.

 

The budget chains were the only ones to get four-star ratings for their pricing.

 

A Tesco spokesman said: ‘We have made a £1billion commitment to make Tesco better for our UK customers since this survey in October 2012.’

 

 

——

Restaurant sales drop as consumers cut spending

 

Consumers ordered fewer premium entrées in January, the NRN-MillerPulse survey finds

 

Source: NRN

Charlie Duerr    

Feb. 19, 2013

 

Restaurant industry same-store sales declined in January due to pullback from consumers, according to the latest NRN-MillerPulse survey.

 

Contributing to the same-store sales dip at restaurants is a significant drop in premium entrée orders, possibly due to consumer frugality after increases in the payroll tax, according to MillerPulse.

 

MillerPulse, an operator survey exclusive to Nation’s Restaurant News, questioned operators from 53 restaurants in February regarding January sales, profit trends, performance and outlook. Respondents included operators from all regions of the country that represent the quick-service, casual-dining, fine-dining and fast-casual segments. Those surveyed in January represented restaurants that booked about 18 percent of industry sales.

 

Overall, industry same-store sales rose 1.1 percent in January, a significant drop from the 2.4-percent increase reported in December, with both main segments contributing to the results. Quick-service restaurants, which include both fast-food and fast-casual brands, reported a 1.6-percent increase in sales in January compared with a 2.5-percent increase the month prior. Sales at full-service restaurants, which include both casual-dining and fine-dining brands, rose 0.6 percent in January, compared with the 2.2-percent increase in December, the survey found.

 

“Operators are unsure of what the cause of the slowdown was,” said Larry Miller, restaurant securities analyst at RBC Capital Markets and creator of the monthly MillerPulse surveys. “They cited a laundry list of reasons, including weather, holiday shifts, gas prices and tax refund delays.”

 

Miller believes one key factor may be the increased payroll tax, which took effect at the beginning of the year. Of the operators surveyed in February, 35.9 percent said that the tax had an impact on same-store sales or average check, 25.6 percent said it did not and 38.5 percent said it was “unclear” at the moment.

 

The tax has the potential to dampen traffic and sales, he added, and if it proves to have an impact, it is one that is not likely to go away anytime soon. “If the payroll tax is indeed hurting sales, the impact could be longer lasting,” he said. “Potentially all of 2013.”

 

Consumers may be responding to the impact of the tax by ordering fewer premium entrée orders, a trend that has occurred since May 2012. And while an uptick happened in December, perhaps from consumers splurging during the holiday season, the survey found that the net percentage of operators surveyed in February experiencing a softer trend in premium entrées was the highest it has been since the summer of 2011, when the U.S. debt rating was downgraded.

 

“I think it speaks to larger trend of pricing power being more limited in 2013,” Miller said. “This stems from the rise in promotions and discounting to maintain traffic level, which aren’t growing as fast as the number of restaurants.”

 

Still, there were a few bright spots in this month’s report. After showing a significant decline in January, consumer spending plans were stronger at every restaurant segment in February, and operators were optimistic about February same-store sales. A net 9 percent of operators believed that February sales would be better than January, the survey found. That number was calculated by subtracting the 24 percent of operators who thought sales would be worse in February from the 33 percent that believed things would be better. For the next six months, however, the outlook remains split, with quick-service restaurants expecting positive results and full-service restaurants expecting tough times to continue.

 

The survey found that while the industry as a whole is generally optimistic about the future, operators have serious concerns. “Operators are significantly worried about guest traffic,” Miller said, “which leaped to the number one concern for the first time since 2009.”

 

 

——

Red Robin earnings doubled over 2011, and it expects sales to increase

 

Source: Dow Jones

By Annie Gasparro and Melodie Warner

Feb 20th

 

Red Robin Gourmet Burgers Inc.’s fourth-quarter earnings doubled over the same period in 2011 as the restaurant chain attracted more customers, and it expects them to spend more on their meals this year.

 

Greenwood Village-based Red Robin’s shares rose 18.9 percent Tuesday to close at $43.33, as the company gave an upbeat outlook and seems to be avoiding the fate of its rivals amid a struggling economy.

 

“Economic headwinds will continue to impact casual dining,” said chief financial officer Stuart Brown on a conference call. But Red Robin is confident its initiatives, which proved successful in the last quarter, will help it steal customers from rivals, without heavy discounts that hurt profitability.

 

“We remain cautious regarding consumer discretionary spending,” Brown said. “The consumer was volatile last quarter; it was volatile the quarter before; it’s going to continue to be volatile in 2013.”

 

For 2013, Red Robin forecast that sales at its established locations will increase 2.5 percent to 3 percent, of which approximately 2 percent will be from price increases to offset inflation.

 

For the fourth quarter, Red Robin reported a profit of $6.49 million, or 45 cents a share, up from $2.91 million, or 20 cents, a year earlier. Adjusted earnings rose to 59 cents a share from 28 cents. Revenue jumped 17 percent to $240.7 million.

 

Analysts polled by Thomson Reuters had most recently forecast per-share earnings of 44 cents on revenue of $232 million.

 

Restaurant-level operating margin at company-owned restaurants improved to 20.6 percen from 19.9 percent.

 

Same-restaurant sales rose 1.4 percent as guest counts edged up 0.3 percent and the average guest check increased 1.1j percent.

 

 

——

Kentucky: Appeal of KY Ruling on Wine and Spirits in Grocery Stores Under Way

 

Source: Wine & Spirits Daily

FEBRUARY 19, 2013

 

The appeal of Judge John Heyburn’s declaration that Kentucky’s long-standing law forbidding certain grocery stores and gas stations from selling wine and spirits unconstitutional is underway. Four opening briefs have been filed, three that move to overturn the ruling and one in support.

 

KENTUCKY’S ARGUMENT: The Department of Alcohol Beverage Control in Kentucky (the state) believes the judge’s ruling should be reversed because 1) the Twenty-First Amendment technically gives the state the authority to regulate “where, when, how to whom and in whose presence” alcohol may be sold, 2) the court’s analysis was inconsistent and 3) because the court put the burden of proof on the state rather than the plaintiffs.

 

The state’s official legal brief leans primarily on the Twenty-First Amendment. It argues the alcohol law in question is a proper use of their Twenty-First Amendment authority and “treats all Kentucky businesses equally.” It believes the judge made a mistake by “[dismissing] one of the greatest sources of Constitutional authority granted to the States [the Twenty-First Amendment], in favor of the least of any protected interest under the Fourteenth Amendment,” according to the brief.

 

The state cited two different district court cases where a judge ruled states may classify and treat businesses differently to permit certain kinds of alcohol sales at one type of business, but not another, and treat alcohol businesses differently based on their sales of a product as a percentage of their total gross sales. The state claims these decision are ultimately inconsistent with the ruling on this case, which concludes basically the opposite.

 

PARTY SOURCE ARGUMENT: Intervening defendant Party Source liquor store supported the state’s Twenty-First Amendment argument, claiming the district court failed to apply the Twenty-First Amendment to this case and failed to balance that Amendment with the Equal Protection Clause.” Party Source also claimed the court’s opinion violates the separation of powers by usurping the state’s power to act on behalf of its citizens.

 

Party Source writes that the district court “ignores that its ruling is not just about grocery stores versus drug stores” and “failed to consider sales restrictions” in its analysis. They continued: “Any retailer selling staple groceries above 10% of its sales cannot hold a package liquor license. As a result, drug stores (and package liquor stores) could never compete with grocery stores in staple grocery business without losing their liquor license.” Thus, a drug store is not defined as a “staple grocery store” that unfairly gets a statutory exception to sell distilled spirits.

 

AMERICAN BEVERAGE LICENSEES ARGUMENT: Not to be left out, national independent alcohol retailer organization The American Beverage Licensees (ABL) also filed a brief on behalf of the original law. ABL claims the state has “no obligation” to give evidence to support its rationality behind the law, and once again because the Twenty-First Amendment “is just as much a part of the Constitution as is the Equal Protection clause.”

 

PLAINTIFF ARGUMENT: In response, plaintiffs Maxwell’s Pic-Pac and the Wine with Food Coalition (The Grocers) make two arguments on their behalf. First, challenging the “rational basis” for a law that allows a retailer like Rite-Aid to be licensed to sell wine and cheese in the same transaction but not a retailer like ValuMarket. “While the Kentucky laws that discriminate in this manner… limit the number of potential wine and liquor sellers, they do so arbitrarily,” which violates the equal protection clause, writes The Grocers.

 

“The fact that the State and Party Source both chose to ground their briefs in extolling the strength of the 21st Amendment, instead of offering a rational basis for the classification at issue, confirms that there is no rational basis for the classification,” they continued.

 

Their second argument is that the terms “staple groceries” and “substantial part of the commercial transaction” are “unconstitutionally vague.” The Grocers claims a law “so vague, indefinite and uncertain that the courts are unable, by accepted rules of construction, to determine… will be declared inoperative and void.”

 

Meanwhile, the Kentucky legislature is in the process of vetting a proposed bill that would essentially maintain the controversial provisions in the original law. We’re guessing this situation is only going to get more complex with so many different parties involved. We’ll keep you updated as it continues to develop.

 

 

——

Oregon: Responsible Retailing Forum and Oregon Liquor Control Commission to test new strategy to reduce underage alcohol sales

 

Source: RRForum

Feb 19th

 

The Responsible Retailing Forum (RRForum) and the Oregon Liquor Control Commission (OLCC) are partnering to examine a new approach to support alcohol beverage licensee compliance with underage sales laws to minors: Mystery Shopper programs.

 

OLCC and other regulatory and enforcement agencies conduct compliance checks in which the licensee and staff are both cited if underage decoys are sold or served alcohol. Mystery Shop programs use young, legal-age inspectors who attempt to purchase age-restricted products for the sole purpose of providing feedback to licensees on actual staff age-verification conduct. Unlike law enforcement inspections, licensees and staff face no legal penalties for failing to check the ID of someone young enough to trigger an ID check but not under age 21. Mystery Shops have proven effective with large national chains. Researchers working with RRForum hypothesize that they will similarly improve staff performance for independently owned and operated licensees.

 

To test this, RRForum researchers will partner with the Oregon Liquor Control Commission to conduct 13 monthly Mystery Shops in 24 Oregon communities. In eight communities, licensees will receive on-the-spot feedback and follow-up reports; in eight others, they will receive reports on aggregate community-level performance and Responsible Retailing best practices; and the remaining eight communities will serve as controls.

 

“This is an extraordinary opportunity to partner with the Responsible Retailing Forum on this research project,” said Rudy Williams, OLCC Public Safety Program Director. “If proven effective, Mystery Shops will provide us with a low-cost tool to help licensees and the community reduce underage alcohol sales.”

 

The research project is funded by an award from the federal Office of Juvenile Justice / Delinquency Prevention to RRF Field Services LLC, RRForum’s research and technical services arm.

 

Contact:

RRF                                                            OLCC

Brad Krevor, Ph.D                                                Rudy Williams

President                                                    Director, Public Safety Program

503-872-5191                                                      503-872-5017

krevor@rrforum.org                                                rudy.williams@state.or.us

 

 

——-

Connecticut: End State’s Liquor Price Restrictions

 

Governor is trying to cut costs for consumers, level playing field with Massachusetts

 

Source: Hartford Courant

February 15, 2013

 

Once again, Gov. Dannel P. Malloy is attempting to bring in extra state revenue by giving consumers more reason to buy alcoholic beverages in Connecticut, thereby keeping both the sales and excise taxes in-state. His two-year battle with the well-entrenched package store lobby has seen some success, but so far the big prize – lowering prices – has eluded him.

 

If he wins this time, liquor purchasers and taxpayers will both benefit.

 

Last year, the state legislature approved Sunday sales of alcoholic beverages. Many package store owners grumble that the change meant no extra income, even a loss of revenue, and some are probably right: For many customers, six days’ purchases were simply spread over seven days.

 

But allowing Sunday sales did slow the Sabbath exodus to nearby states, thus keeping more tax money here. And opponents of the law never convincingly explained why liquor retailers should be given a competitive break when other mom-and-pop operations have no such protection.

 

The major issue, however, remains price, not convenience.

 

Liquor manufacturers set suggested retail prices; in Connecticut, no store may sell below those prices. The law benefits small package stores by making it no cheaper to buy at big-box outlets.

 

Mr. Malloy wants to change that. Under his proposal, alcoholic beverage retailers, if they wish, may sell spirits and wine at the wholesale price plus delivery costs. That could cut the per-bottle price by several dollars, making it much more attractive to buy in Connecticut. (Beer is not included in the plan; it should be.)

 

Connecticut’s main foe in liquor sales is Massachusetts, which has no minimum pricing, no sales tax on alcohol, and a lower excise tax. Plus, it’s right next door – as untold consumers have found. To keep liquor sales here, our state must be more competitive.

 

 

——

Turkey: Turkey’s Creeping Alcohol Ban Reaches New Heights

 

Source: Al-Monitor

By: Kadri Gursel

February 19

 

The neo-Islamist Justice and Development Party (AKP) that has ruled Turkey for more than 10 years, parallel to boosting its strength and effectiveness, has for a while also been pursuing a multi-phase campaign to exclude alcohol consumption from public life and make it invisible.

 

None of the underhanded alcohol bans systematically expanded over the years were ever justified on religious grounds. Rather, the justification for banning alcohol sales and consumption has always been to protect public health and public order.

 

The latest example of these stealthy moves comes as the national Turkish Airlines (THY) stops serving alcoholic drinks in all its domestic business-class flights, apart from those to six particluar destinations. Alcohol was already unavailable on domestic economy-class flights.

 

As usual, the latest ban was justified by officials on non-religious grounds. The chairman of the THY executive board, Hamdi Topcu, said in a statement published by Radikal on Feb. 19 that abolishing alcohol service was “purely for economic reasons.” A communiqué issued by THY on Feb. 13 had announced that alcohol service in business-class flights was being eliminated because of “low demand and logistical reasons.”

 

Of 36 domestic flights, 16 offer business-class service. The destinations of 10 out of the 16 flights now without alcohol service are conservative Anatolian cities where alcohol has been practically banned for a long time.

 

Alongside the alcohol ban in domestic flights, it was announced that the number of THY international flights that will not serve alcohol have increased from two to eight since the beginning of the year. The first two countries were Iran and Saudi Arabia, where there is a strict ban on alcohol. To these two countries were added the destinations of Karachi and Islamabad in Pakistan, Cairo and Alexandria in Egypt, Baghdad and Erbil in Iraq, Mogadishu in Somalia, Dakar in Senegal and Niamey in Niger. THY gave the reason for expanding the list as a “‘requests by concerned countries.”

 

Alcohol is freely available in some of these countries, fully banned in some and partially banned in others.

 

In Turkey, there is no question of banning the sale of alcohol and its consumption in all parts of the country. No such move is to be expected anytime soon. But since the AKP took over power in the central government and local administrations, it has been implementing a gradual “salami-slice” strategy against the sale and consumption of alcohol in public spaces.

 

A citizen of the Turkish Republic who enjoys shooting the breeze over a couple glasses of wine or raki with friends after work now has a diminishing number of locations and even towns where he can do that.

 

Turkey has had alcohol-free provincial towns for a long time. In the Black Sea region and inland towns governed by local AKP administrations, there is no question of alcohol sales in public spaces. You can drink only in bars and restaurants of five-star hotels. One reason for this is the social pressure imposed by conservative circles, and the other is the bureaucratic pressure applied by the AKP, which utilizes public-administration tools and privileges to curb alcohol consumption.

 

For the first time, in 2011, just before the month of Ramadan, Istanbul banned pubs and restaurants from serving alcohol in the city’s cosmopolitan leisure center Beyoglu (formerly Pera) from putting tables on sidewalks, under the pretext of obstructing pedestrian and vehicle traffic. This was a step to make alcohol consumption invisible during Ramadan.

 

In April 2012, for the first time ever, the governor of the inland province of Afyon issued an edict declaring consumption of alcohol in spaces open to the public “indefinitely prohibited.” Only after the public’s reaction was the step scaled back, applying “only to parks.”

 

Forcing alcohol-serving facilities to move to outside of Anatolian towns was already a widespread practice. In 2012, we witnessed the ban of alcoholic-beverage sales in the restaurant of the Grand National Assembly. In 2012 sale of alcohol and its consumption were banned in university campuses. In July, beer sales in a music festival sponsored by a beer company at an Istanbul university campus were banned shortly before the festival was to begin, through direct intervention by the government.

 

Government officials admit that there is no alcoholism problem in Turkey. Nevertheless, it is impossible to justify the government’s persistence in trying to declare it an illegal commodity as an effort to protect public health. Protecting public health has nothing to do with stopping serving of alcoholic drinks in official state functions and at high-level diplomatic receptions.

 

It is all about the government and the state’s new Islamist/conservative masters imposing their politicized beliefs on others and thus building a new exclusionist and intolerant political culture.

 

The same goes for banning alcohol in most of THY’s domestic flights, but there is also a socio-economic dimension to this. Social pressure is now working on business-class travel.

 

It is generally the AKP elite who uses the business-class in flights to Turkey’s stiffly conservative cities, where it is impossible to drink in public spaces. This elite is the AKP ministers, members of parliament, provincial party heads, governors, senior officials and businessmen of the conservative bourgeoisie, who are labeled “Anatolian tigers.”

 

These powerful people who support alcohol bans or approve of them in their towns tend to become visibly irritated if a passenger sitting next them asks for a glass of wine and begins to sip it. Complaints and even direct interventions are common. Social pressure works because this intolerance corresponds to the conservative political culture that is prevailing in the country.

 

The six THY flights on which alcohol is still served are to Istanbul, Ankara, Izmir, Antalya, Bodrum and Dalaman. These are the cities and regions that are open to the world and to tourism, without serious problems with a liberal lifestyle. The powers that be do not yet have the power to ban alcohol on these flights, but THY no longer deserves to use its “Globally Yours” slogan on all its flights.

FRANKLIN LIQUORS LOGO

Grady Family Vineyards Wine Tasting 2-21-13 7PM

February 19, 2013

 

Logo

Please Reserve Your Seat(s)

As We Welcom Back To Franklin Liquors

The Grady’s!!

Grady Family Vineyards
Wine Tasting
February 21st 7PM

This Is A Free Sit Down Tasting In Our Wine Room.
Host: Mark-Franklin Liquors
Guests: Heather-Gilbert Distributors
Jim And Beth Grady-Grady Family V

Wine #1
Celtic Chardonnay
Crisp, Fresh And Fruit Forward With Layers Of Green Apple
And Pear With A Hint Of Oak On The Finish

Chardonnay

750ml $13.99

Wine #2
Shenanigans Pinot Grigio
Aromas Of Peach And Apple Blossoms Lead To Crisp
Fruit Flavors Including Melon And Apricot Nuances With A Soft Elegant Finish

Pinot Grigio

750ml $12.99

Wine #3
Pinot Noir
The Claddagh Is A Traditional Irish Symbol Dating Back To The 16th century.
The Heart Of The Claddagh Symbolizes Love, The Hands Mean Friendship,
And The Crown Represents Loyalty. May You Always Have Loyal Friends
And Loved Ones To Share This Fine Wine.
Only 48 cases produced

Pinot Noir

750ml $19.99

Wine #4
Fine Irish Cabernet Sauvignon
Carefully Crafted From Clone 337 Cabernet Grapes And Aged 19 Months
In French Oak Barrels To Produce Rich Layers Of Plum, Dark Cherry And
Black Currant Fruit Flavors Up Front Lead To Soft Tannins And A Hint Of Vanilla On The Finish

Irish Cab

750ml $13.99

Wine #5
Grady Reserve Cabernet Sauvignon
Abundant, More Complex Layers Of Black Currants,
Cherries And Plums With A Luscious Mouth Feel And Elegant
Tannins With A Long Satisfying Finish From 16 Months Aging In 100% French Oak

Reserve Cab

750ml $15.99

Wine #6
Old Vine Zinfandel
A Wide Range Of Big Jammy Berry Flavors.
It Is A Full Bodied And Well Balanced Wine With A Pallet Of Flavors Ranging From Raspberry
To Blackberry With Hints Of Spice And Pepper On The Finish.
Soft Tannins Make For A Wine That Will Age Well.
Perfect By Itself Or With Any Meat Or Pasta Dish.

Zin

750ml $15.99

These Wines Make Great St Patrick’s Day Wine

Come To The Tasting And Get You Irish Wine On!

10% Off On 6 20% Off On 12. You Can Mix.

 
  
 

 

Liquor Industry News 2-19-13

February 19, 2013
www.franklinliquors.com

Franklin Liquors

 

GLAZER’S, INC. APPOINTS ORMAN ANDERSON SENIOR VICE PRESIDENT, MERGERS & ACQUISITIONS

 

Source: Glazer’s

February 18, 2013

 

Glazer’s today announces the appointment of Orman Anderson as Senior Vice President, Mergers & Acquisitions. Mr. Anderson will lead Glazer’s acquisition effort and will report to Glazer’s Executive Vice President and CFO Thomas Greenlee.

 

Mr. Anderson was previously Executive Director of Mid-Cap Investment Banking at J.P. Morgan, in Dallas, where he was responsible for originating and executing M&A and capital market transactions for a variety of companies. Prior to joining J.P. Morgan, Mr. Anderson was a Managing Director in the Investment Banking Group at Bear, Stearns & Co. Inc. in New York and Dallas. Mr. Anderson began his career at Price Waterhouse. Mr. Anderson received a Bachelor of Science in Accounting from Brigham Young University and a Master of Business Administration from the Wharton School at the University of Pennsylvania.

 

Glazer’s President and CEO, Sheldon “Shelly” Stein, commented, “We are pleased to add a senior deal maker of Orman’s caliber to our team. I have worked extensively with Orman at Bear Stearns and at J.P. Morgan, and know that his transaction skills and international M & A experience will allow us to successfully seek out joint ventures and acquisitions around the world.”

 

Glazer’s Executive Vice President and CFO Thomas Greenlee added, “We are excited for Orman to join us to drive our M&A effort. Glazer’s is committed to expanding our footprint, both domestically and internationally, and we are confident that Orman will help us accelerate this growth.”

 

Glazer’s, one of the country’s largest privately held companies, currently operates in 14 states and the Caribbean, and is one of the nation’s largest distributors of wine, spirits and malt beverage products. The company has operations in Alabama, Arizona, Arkansas, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Ohio, Oklahoma, Tennessee, Texas and the U.S. Virgin Islands. The third-generation family business was founded in Dallas in 1933. For more information, please visit our website at www.glazers.com.

 

 

——

I’ll drink to that! New ‘alcohol busting’ drug that sobers you up in seconds being developed by MIT scientists

 

Source: Daily Mail

By Helen Pow

18 February 2013

 

Party animals could soon be able to sober up in an instant just by popping a pill.

 

Researchers have developed a cocktail of alcohol metabolizing enzymes that speedily reduces blood alcohol levels in drunk mice.

 

The treatment, which has been compared to having ‘millions of liver cells inside your stomach,’ could have far-reaching implications for drinkers.

 

Yunfeng Lu, a professor of chemical and biomolecular engineering at UCLA, and Cheng Ji, a professor of biochemical and molecular biology at the University of Southern California injected the intoxicated mice with nanocapsules containing two enzymes.

 

One of the enzymes, Oxidase, comes with an unfortunate by-product of hydrogen peroxide, which can be harmful.

 

As such, it needs to work in concert with another enzyme that decomposes the hydrogen peroxide.

 

The findings showed the party mice that received the injection sobered up much quicker compared to those that didn’t get the enzyme treatment.

 

The breakthrough is still in its early stages and is not ready to be tested on humans.

 

But Lu said it could lead to a new class of drugs that act as an alcohol ‘antidote.’

 

He envisages the medicine could be taken in such simple form as a pill.

 

The scientist said the nanocapsules work as a sort of booze buster in your gut.

 

It would ‘almost be like having millions of liver cell units inside your stomach or in your intestine, helping you to digest alcohol,’ Lu said.

 

In the meantime, the researchers are working on other enzyme drugs.

 

One, which would be almost as popular as the booze-busting pill, relies on nanocapsules to deliver an enzyme that destroys the substance that causes male-pattern baldness.

 

Read more: http://www.dailymail.co.uk/news/article-2280254/New-alcohol-busting-drug-sobers-seconds-developed.html#ixzz2LKzYGNEg

 

 

——

Bourbon’s share gain at the expense of Vodka accelerated at the end of 2012 in On-Premise Channel.

 

Source: GuestMetrics

February 19, 2013
According to GuestMetrics, based on its proprietary database of POS transactions of over $8 billion dollars in transactions and over 250 million checks from restaurants and bars across the United States, brown spirits took market share throughout 2012 and finished the year on a strong note.  

 

“In analyzing the over 3,000 spirits brands sold in on-premise, brown spirits took about a point of share from clear spirits in 2012 versus 2011,” said Bill Pecoriello, CEO of GuestMetrics LLC. “Based on our data, sales of brown spirits were up about 5%, while clear spirits were only up about 0.5%.  They both took prices up about 2%, but the number of brown spirits drinks sold were up about 3% while drinks with clear spirits were down about 1.5%, indicating a meaningful difference in pricing power between brown and clear spirits right now,” continued Pecoriello.  According to data from GuestMetrics, compared to the prior year, sales of brown spirits were up 4.5% in the first quarter, accelerated to 5% for the next two quarters, and closed out the final quarter of the year at 5.5%, while clear spirits sales were up 1% for the first three quarters and slightly negative in 4Q12.

 

“In analyzing the gains experienced by brown spirits, the gains were led by Bourbons & Blends, which gained about 120 basis points in share, followed by Irish and Scotch with share gains of 50 basis points and 20 basis points, respectively,” said Peter Reidhead, VP of Strategy and Insights at GuestMetrics.  “On the flipside, for clear spirits, the largest share loss was experienced by Vodka, which lost about 90 basis points in share, followed by Rum and Cordials with share losses of 40 basis points and 35 basis points, respectively.  Looking specifically at the quarters within the year, the share gain by Bourbons & Blends and share loss by Vodka both accelerated during the final quarter of the year, so we will be closely monitoring whether that momentum continues into 2013.”

 

“In our minds, this underscores the importance of restaurant operators having an up-to-date understanding of the fastest growing spirits types so they can adjust their menus accordingly, which is particularly important given the fairly rapid shift in consumer tastes taking place in the spirits category right now,” said Brian Barrett, President of GuestMetrics.  “Additionally, given the average price of $7.97 for a drink with brown spirits is about a 5% premium over the $7.63 average price for a drink with clear spirits, dialing up the focus on brown spirits on menus could be an especially attractive value proposition for restaurant operators to consider.”   

 

About GuestMetrics LLC

GuestMetrics, LLC is revolutionizing how the hospitality industry operates.  Despite the dawn of the Digital Age having begun more than three decades ago, the hospitality industry essentially functions the same way it did centuries before.  GuestMetrics has cracked the code by collecting data from tens of thousands of restaurants and turning billions of raw transactions into intelligible data that is fundamentally transforming the business operations of everyone from the independently-owned bar/restaurant on the corner, to multi-national chains, to the food & beverage companies that supply them.  Please visit www.GuestMetrics.com for more information and to arrange for a free demonstration.

 

 

——

Turkish competition board to investigate Diageo unit Mey Icki

 

Source: Reuters

Feb 18 2013

 

Turkey’s Competition Board said on Monday it had opened an investigation into Diageo’s Turkish spirits group Mey Icki on the grounds that it breached competition principles by preventing the sale of competitors’ products in stores.

 

Diageo PLC bought Mey Icki from TPG Capital LP and local private equity group Actera in 2011 for $2.1 billion.

 

 

——

Diageo CEO continues to reduce stake

 

Source: Sharecast

Mon 18 Feb 2013

 

The Chief Executive Officer of Diageo, the FTSE 100 drinks giant, has continued to reduce his stake in the company, this time selling 75,000 shares.

 

Paul Walsh, who was appointed to the role of CEO in 2000, now holds 654,614 shares in the group.

 

The shares were traded in at 1,935.00p a time, earning him £1.45m before tax.

 

The sale comes just a few weeks after Diageo unveiled its results for the final six months of 2012. The company, whose brands include Guinness, Smirnoff and Johnnie, reported a 9.0% organic operating profit growth for the half year ended December 31st.

 

Earnings per share for pre-exceptional items rose 9.0% to 60.9p per share. Organic net sales growth climbed 5.0% with 1.0% organic volume growth. The group reported a 110 basis points of organic operating margin expansion.

 

Walsh said the results were driven by the strong performance of the company’s alcoholic spirits in the US.

 

 

——

Oaktree Loses Bottle Over £590m Stock Sale

 

Buyout firms Oaktree and Pamplona fail to reach an agreement over a £600m deal for spirits group Stock, Sky News learns.

 

Source: Sky News

By Mark Kleinman, City Editor

Monday 18 February 2013

 

Talks about a sale of the biggest spirits producer in eastern Europe have collapsed after a disagreement over price between the seller and a fund backed by one of Russia’s richest oligarchs.

 

I understand that discussions that would have seen Pamplona Capital, a private equity firm, acquiring control of Stock Spirits Group, fell apart last week.

 

People close to the deal said that Oaktree Capital Management, Stock Spirits’ current owner, had become uncomfortable with the roughly-£590m price-tag for which it had agreed to sell the company.

 

The collapse of the talks represents the second time that Oaktree has failed to offload Stock Spirits following an earlier attempt to float the business on the stock market.

 

It is unclear whether Oaktree will now attempt to run a further auction process. The buyout firm was unavailable for comment.

 

Pamplona’s backers include Alfa Group, a company headed by Mikhail Fridman and one of the members of the AAR alliance which last year agreed to end its conflict-plagued joint venture with BP in Russia by selling out to Rosneft, the Kremlin-controlled energy giant. The deal netted Mr Fridman and his partners at least $7bn each.

 

Stock, which is based in Britain, has been owned by Oaktree since 2007. Sky News revealed its talks with Pamplona last month.

 

The drinks company traces its roots back to the Austro-Hungarian empire of the late 19th century, and now claims to be the biggest spirits producer by volume in the Czech Republic and Poland. It is also a major player in markets such as Croatia, Italy, Slovakia and Slovenia.

 

Among its major brands are Stock 84 brandy and Fernet Stock bitter, as well as vodkas such as Wodka Zoladkowa and Orzel. Some of the products are distributed in the UK through big supermarkets, although Britain accounts for only a tiny proportion of the company’s sales.

 

Stock is chaired by Jack Keenan, a former executive at Diageo, and run by Chris Heath, the former chief financial officer of Gondola Holdings, the parent company of restaurant chains including Pizza Express, ASK and Zizzi.

 

Pamplona declined to comment on the collapse of the talks.

 

 

——

Carlsberg: fools Russian

 

Danish brewer overexposed to Russia and underexposed to other emerging markets

 

Source: FT

Feb 18th

 

There is always one that gets carried away at a party. But for Carlsberg all of its shareholders were overdoing it. Shares in the brewer have gained 18 per cent over the past six months – the most among all peers except Heineken. The hope was that things in Carlsberg’s second-biggest market, Russia, which had been wracked by temperamental barley harvests and regulation, were finally stabilising. Yet forecasts given during Thursday’s 2012 results announcement proved a bit of a party pooper. Shares fell 7 per cent.

 

Granted, Carlsberg’s net profit picked up 6 per cent in 2012 on 3 per cent growth in organic sales. But the Danish brewer finally ditched its medium term operating margin targets for Russia of 26-29 per cent. This is some form of admission that the region, which makes up two-fifths of Carlsberg’s operating profit, is still volatile. High taxes on beer and new sales and marketing restrictions ensure that the environment remains a challenge. In 2012, Carlsberg’s operating profit margin fell for the third consecutive year in Russia to 21 per cent.

 

Thus a problem is Carlsberg’s lack of big exposure to other emerging markets. Although Asia has done well (net revenue grew by one-third in 2012), fast growing regions still make up just 17 per cent of the brewer’s operating profit, compared with 70 per cent at SABMiller, for example. And while Carlsberg is investing heavily over the next three years to improve its supply chain in Europe, this is not expected to feed through to margins until 2014.

 

As a result, Carlsberg shares are cheap versus peers. On 13 times forward earnings, the Danish brewer now trades at a one-fifth discount to Heineken and a one-third discount to SABMiller and ABInBev. Carlsberg may now be under-promising to curb the enthusiasm of overexcited investors. It will need to over-deliver in order to narrow that gap.

 

 

——

Russian Taxes Test Carlsberg

 

Source: WSJ

By CLEMENS BOMSDORF

Feb 18th

 

A challenging Western European beer market and unpredictable conditions in Russia have led Danish brewer Carlsberg A/S CARL-A.KO +0.69% to adjust its near-term outlook and seek growth in emerging markets.

 

The Danish brewer bought the 50% it didn’t already own in Baltika Breweries, the market leader in Russia, as part of a deal with Heineken NV HEIA.AE +0.99% of the Netherlands to take over and split up Scottish & Newcastle PLC in 2008.

 

But Carlsberg’s big bet on Russia is under pressure as government officials there look to control alcohol use by restricting advertising and availability, such as by moving away from sales at street kiosks.

 

Carlsberg shipments in Eastern Europe, including Russia-its second-largest market by volume after Western Europe-fell 6% in 2012 and market share in Russia was flat over the year.

 

Carlsberg on Monday said it swung to a fourth-quarter net profit after losing money a year earlier, and revenue increased during the quarter.

 

Chief Executive Jorgen Buhl Rasmussen pointed to Asia as a bright spot where “we continue to deliver impressive growth and strengthen our market positions.”

 

Still, Mr. Rasmussen said the company’s fortunes in Russia could be set to improve even if regulatory hurdles and fierce competition make the near-term picture murky.

 

“The forced closure of beer sales at street kiosks should only impact demand negatively in the short run, as people find their way to other stores,” Mr. Rasmussen said in an interview. He hopes to increase market share in Russia this year and “we see a chance that people in the longer run will shift from harder drinks like vodka to beer.”

 

Mr. Rasmussen also noted that the company’s Somersby cider brand hasn’t been launched in Russia, though he declined to comment on when that product will go on sale.

 

Sydbank analyst Morten Imsgard said there are two reasons to be concerned about Carlsberg’s Russian performance: volatile raw materials prices and tighter government regulation.

 

He said a Jan. 1 tax increase of three rubles (10 U.S. cents) on a liter of beer translates into a 25% price rise, and he expects additional taxes of similar levels in the years to come.

 

The company made a fourth-quarter net profit of 192 million Danish kroner ($34.4 million) compared with a loss of 85 million kroner a year earlier, when the company booked restructuring charges and paid more in tax. Revenue increased 7.3% to 15.93 billion kroner.

 

Operating profit rose 17% to 2.15 billion kroner, slightly below analyst expectations, and was 9.79 billion kroner for the full year, down from 9.82 billion kroner in 2011. The company said it expects 2013 operating profit of around 10 billion kroner, disappointing analysts.

 

The results come just weeks after the company revealed plans to expand in Myanmar in order to bolster its presence in emerging markets as growth slows in recession-hit Western Europe. It will spend about 275 million Danish kroner on a brewery and marketing push in the country.

 

Carlsberg has sold beer in Myanmar for decades, and has now decided to take advantage of the long-isolated nation’s more open conditions to set up brewing operations in a joint venture with privately owned Myanmar Golden Star Breweries.

 

Asia is particularly important to the beer industry’s biggest players because it is the world’s largest regional beer market, accounting for 35% of global consumption, and one of the fastest-growing.

 

Mr. Rasmussen said earlier this year that the average annual beer consumption per capita in Myanmar is 4 liters, compared with around 30 liters in the wider region.

 

“We therefore see a huge growth potential,” Mr. Rasmussen said, adding that Carlsberg may increase the amount of beer imported to Myanmar in the time leading up to the new brewery coming online.

 

 

——

Carlsberg AS-B: What matters – Not another Staple?

 

Source: Barclays

Feb 18th

 

Stock Rating/Industry View: Equal Weight/Neutral

Price Target: DKK 525.00

Price (18-Feb-2013): DKK 567.50

Potential Upside/Downside: -7%

Tickers: CARLB DC / CARLb.CO

 

What to do – low earnings certainty justifies discount: A poor Q4 delivery and a revision and downgrading of 2013 guidance expectations has proven to us once again that Carlsberg deserves to trade at a meaningful discount to its wider Staples peers. With consistent earnings delivery a requirement for any sustained re-rating and given the lack of positive earnings momentum in the near-term (Q1 headwinds from French destock and Russian kiosk ban) we see little reason to change our fundamental investment case on the name for now. We downgrade our F13e EPS by 6% and maintain our Equal Weight recommendation, with a DKK525 price target.

 

What’s next – short-term risks remain: We expect 1H trading to remain challenged in both NW Europe and Eastern Europe, with the significant French excise increase (both the destock and higher market price effect) and the introduction of the kiosk ban in Russia to impact. The kiosk ban in isolation will reduce volumes by c.2%, constraining market growth once again in Russia. Further, with price/mix to offset the COGS/HL inflation and with higher restructuring costs (DKK300mn-400mn), the company has minimal levers to offset the volume weakness in the short-term. Subsequently, we see little reason for the shares to find support through 1H13.

 

What we learnt – guidance disappointed: The F12 result was full of moving parts but after adjusting for one-offs, net income was in-line with company consensus. F12 EBIT missed by 1.5% with softer margins in NW Europe (lower volumes and higher inputs) but both interest and tax were slightly better. However, it was management’s guidance that disappointed with only a 2% improvement expected in Group EBIT and a mid-single digit lift in adjusted net income. Consensus prior to the result assumed at least a double digit lift in net income. Despite a lower guided coupon (down 50bps-75bps), the lower EBIT expectation and a higher minority charge has led to the lower earnings outlook.

 

What’s changed – reining back expectations: We downgrade our F13e EPS by 6% and F14e by 5%, implying a C13 PE of 14.5x, a fair 18% discount to peers in our view given Carlsberg’s lower relative growth outlook (EBIT +5% vs. peers at +8%). We assume NWEUR margins rise by only 20bps (constrained volumes and upfront restructuring costs); Eastern Europe +40bps (+7% top-line leverage) and Asian margins should be flat.

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

 

 

——

New Year cheer as Cognac rebounds – figures (Excerpt)

 

Source: Just-Drinks

By Andy Morton

18 February 2013

 

China’s Cognac shipments are back on track as Chinese New Year sales have kicked- in, according to new figures.

 

Direct shipments to the country last month jumped by 72% year-on-year, analyst UBS said citing Bureau National Interprofessionnel du Cognac (BNIC) data. The jump pushed China’s six-month rolling volumes average to +1.3% year-on-year, up from -5.4% in December, according to the figures.

 

 

——

It’s Scotch, but the Owners Live Elsewhere

 

Source: New York Times

By STEPHEN CASTLE

Feb 15th

 

George S. Grant markets malt whisky made in the shadow of the snow-capped Ben Rinnes, the same spot where, five generations ago, his family bought a distillery in 1865 for £511.

 

Nowadays the family’s Glenfarclas malt is produced in a modern, highly automated plant, and is exported to the United States, Taiwan and other countries. But the profit returns here to the valley of the River Spey in the heart of Scotland’s whisky country. And that repatriated money is what makes Glenfarclas such a rarity.

 

“Within a 20-mile radius of where we are now, there are 35 distilleries,” said Mr. Grant, the director of sales at Glenfarclas. But only a handful of the operations within that 30-kilometer radius remain in Scottish hands. The rest are owned by big multinationals – most notably Diageo, based in London, and the French company Pernod Ricard – which book their profits and employ many of their staff members elsewhere.

 

In fact Mr. Grant, 36, says he knows of no other whisky maker apart from Glenfarclas that has its sales and marketing operation based at the distillery in this scenic part of Scotland. Though he says relations with the big non-Scottish players are good – they buy some of Glenfarclas’s output for their blended whiskies, after all – Mr. Grant notes that what sets his family’s company apart is its place in the community and the fact that “we’ve been here forever.”

 

To be sold as Scotch whisky, the liquor must be produced in Scotland. The rest of the business can be elsewhere, though, and it often is.

 

Non-Scottish companies control about four-fifths of the £4.2 billion, or $6.5 billion, global market for Scotch, which is being driven by growth from emerging markets. The United States is still the biggest export market by value, at £600 million last year. But Scotch whisky exports to Brazil grew 48 percent last year, those to Taiwan 45 percent and to Venezuela 33 percent, according to the Scotch Whisky Association.

 

John Kay, a prominent economist and former economic adviser to the Scottish government, says that too little of the money from those exports ends up in the Scottish economy.

 

He has proposed a £1 “bottle tax,” levied on all Scotch production, which would be paid by the distillers. The precise value of such a tax is hard to predict, but the Scotch Whisky Association says that about 1.3 billion bottles were exported last year, representing about 95 percent of total production.

 

But much of the monetary benefit goes to governments that impose duties on the product wherever it is sold.

 

“A lot of money is being made out of this product by foreign governments and foreign companies,” Mr. Kay said. The bottle tax, he said, would be a way to keep some of that money in Scotland.

 

With a referendum looming next year on Scottish independence, the idea has prompted a new debate about the country’s economic assets. It has even prompted comparisons between the North Sea natural gas and oil extracted from Scotland’s coastal waters and the Scotch distilled on its heather-covered moorlands and windswept islands.

 

Whisky supports about 10,000 jobs in Scotland, including those of people working in bottling plants, and in total about 36,000 in Britain across the whole of the economy, including haulers and packaging companies, the Scotch Whisky Association says. But the distilleries themselves are not big job creators. Although the most modern ones operate 24 hours a day, they tend to employ no more than a dozen people.

 

Patrick Harvie, a member of the Scottish Parliament for Glasgow who is responsible for enterprise for the Scottish Green party, said it was “good to see others starting to question the benefits to Scotland of allowing our national assets to be controlled by global corporations.”

 

Mr. Harvie drew a parallel with a debate over the tax liability of companies, like Starbucks, that use their multinational status to reduce corporate tax bills. Diageo says that it pays about 18 percent of tax on its profit on average but does not say where those taxes are paid.

 

“Our most famous whisky brands are registered abroad and the owners’ tax arrangements are less than clear,” Mr. Harvie said.

 

For all that, though, there is little indication that the Scottish government plans to adopt the bottle tax. For one thing, it is already fighting legal challenges to a plan to place minimum prices on alcohol as a way of discouraging binge drinking.

 

A bottle tax plan would very likely set off a separate, titanic legal and political fight with one of Scotland’s biggest industries. The tax idea “only has merit for those who wish to undermine the Scotch whisky industry’s competitiveness in the global market and undermine its growth prospects,” said Campbell Evans, director of government and consumer affairs at the Scotch Whisky Association.

 

“Apart, perhaps, from the oil and gas sector, nobody else is investing in Scotland” as this industry is, Mr. Evans said.

 

Big companies like Diageo and Chivas Brothers, owned by Pernod Ricard, are happy to show off their investments in Speyside and argue that the economic effects are felt beyond distillery payrolls.

 

Diageo’s ultramodern Roseisle plant, which produces each year about 10 million liters, or 2.6 million gallons, of spirit – the alcohol from which whisky is made – employs only about 10 frontline staff members to keep operations running continuously at its five-story complex.

 

But the company points to wider economic benefits: to farmers who provide barley, to local contractors who help equip and service the plant, and to small businesses that benefit from the tens of thousands of tourists who visit distilleries in the region each year.

 

“Diageo sustains over 4,000 direct jobs in the Scottish economy across 50 sites, many of which are in remote and rural areas of Scotland,” Peter Lederer, director of Diageo in Scotland, said in a statement.

 

“We also make a major indirect contribution to the Scottish economy,” he added, saying that Diageo was the biggest single purchaser of grain from Scottish farmers and purchased £400 million of goods from each year from suppliers based in Scotland.

 

A bottle tax, he said, would be “potentially deeply damaging to the industry and to the prospects for investment and growth in the future.”

 

At Glenfarclas, which produces about 3.5 million liters of spirit a year, Mr. Grant argues that a £1 bottle tax would hit Scottish-owned operations as much as foreign ones.

 

For him, the big multinationals are both a blessing and a curse. On the one hand they use their sheer size to negotiate better deals with suppliers and retailers, driving down their own costs in ways Glenfarclas does not have the clout to match, and dominating British supermarket shelves.

 

But Glenfarclas also sells some of its production to the multinationals, which they use for blended whisky – a mix of malt whisky, made from malted barley, with whisky that can be made from wheat or other grains.

 

The big companies have also helped to open new export markets, promoting whisky to a younger generation of drinkers in Asia and Latin America and enabling smaller distilleries to capitalize on a boom they never could have created on their own.

 

So far, swimming nimbly with the big fish has enabled Glenfarclas to remain a family firm. And despite blank-check offers from multinationals, Mr. Grant said, the operation is not for sale.

 

This article has been revised to reflect the following correction:

 

Correction: February 18, 2013

 

Because of editing errors, a previous version of this article contained an inaccurate currency conversion: £4.2 billion is $6.5 billion, not $5.6 billion. A sentence in the article also implied that the Scottish Parliament was in Glasgow. Patrick Harvie is a member of the Scottish Parliament who represents Glasgow. The Parliament itself is in Edinburgh.

 

 

——

Boris Johnson condemns David Cameron’s minimum alcohol price plans

 

Source: Daily Telegraph

By Rowena Mason, Political Correspondent

18 Feb 2013

 

The Mayor of London said the flagship policy championed by the Prime Minister will hit poor people but fail to tackle the problem of excessive drinking.

 

The proposals for a minimum 45p per unit price on alcohol are meant to target those who those who consume excessive amounts of cheap drink and cause anti-social behaviour.

 

However, Mr Johnson told The Evening Standard that there are better ways of dealing with the blight of drunken revellers on Britain’s high streets.

 

“I think there are better ways of dealing with this. It’s very regressive. It hits poorest people hardest,” he said.

 

Mr Cameron’s plans for a 45p minimum unit price could add 70p to the price of a bottle of cheap supermarket wine and £2 to a bottle of gin or whisky.

 

The Prime Minister, a champion of minimum alcohol pricing, has insisted this “wouldn’t really affect family budgets, but would deal with this problem of very aggressive deep discounting and some binge drinking”.

 

However, he is facing opposition over the plans from a number of senior Tories, who fear it will hit moderate middle-class drinkers with higher prices. Some Liberal Democrats also see the plan as “illiberal”.

 

There are also fears it could run into legal difficulties with the European Commission, which has raised concerns about Scotland’s plans to introduce similar measures.

 

The Home Office is still officially consulting on the plans but the Government appears to have been slightly cooling on the idea, amid persistent worries about the cost of living.

 

Even though Mr Cameron has publicly backed the policy, it is still possible that the price per unit could be revised downwards or scrapped entirely and replaced with voluntary agreements with industry.

 

Miles Beale, chief executive of the Wine and Spirit Trade Association, said the Mayor is right to point out problems with the plans.

 

“Under the Government’s plans to set higher alcohol prices through minimum unit pricing it will be the majority of responsible drinkers who will be asked to pay more,” he said.

 

“Pushing up prices to deal with the actions of a reckless minority is unfair. Ordinary people looking for value for money in their weekly shop should not be labelled as binge drinkers.”

 

Research carried out by Sheffield University for the Government has showed that a 45p minimum would reduce the consumption of alcohol by 4.3 per cent, leading to 2,000 fewer deaths and 66,000 hospital admissions after 10 years.

 

The number of crimes would drop by 24,000 a year as well, the research suggested.

 

However, the alcohol industry has disputed these findings. A new report by the Centre for Economics and Business Research, commissioned by the industry, claimed the official figures are unreliable and based on old data from 2006 which have already been proved wrong.

 

 

——

Trends in Wine: Out-Innovated By Beer, Under-Indexing With Hispanics

 

Despite Growing Availability, Wine Faces Some Ominous Trends

 

Source: Ad Age

By: E.J. Schultz

February 18, 2013

 

Is wine losing its buzz?

 

Lately the category has been out-innovated by brewers, who have flooded the market with new beer flavors, brands and line extensions, fueling a resurgence that’s coming at the expense of wine.

 

Wine volume sales grew 1.5% in 2012, slowing from a 4% increase in 2011, according to Nielsen. By contrast, beer and other malt beverages grew 2%, reversing a 0.8% slide in 2011. Liquor also jumped 2%.

 

The hottest wine varietals — moscato and malbec — have lost some momentum, and nothing has come along to fill the gap, said Danny Brager, VP-group client director for Nielsen’s beverage-alcohol team. “I keep saying, “What is the next big thing?’” he said. “And I don’t know what the magical answer is.” But it “feels like there is a need for something because beer and spirits are doing a lot [innovation] right now and I think that’s helping them.”

 

Some 44% of beer’s incremental sales growth at bars and restaurants last year came from innovation and new brands, compared to 32% for wine, according to hospitality-industry analyst GuestMetrics. The danger for beer is that it will become too much like wine — so that styles are more important than brands, a risk that brewers call “winefication.”

 

For wine, there are some bright spots, including growing availability at Starbucks, Walgreens and even dollar stores. But other trends are ominous, including underperformance with Hispanics. Here’s a closer look at the category:

 

WHAT’S HOT?

New Zealand wine volume sales jumped 23.5% in the 52 weeks ended Jan. 5, according to Nielsen. Kim Crawford Wines sales jumped 23% in 2012, according to trade publication Shanken News Daily, citing Impact Databank. Meanwhile, the sweet-tasting moscato varietal, while slowing, continues to post impressive numbers — sales were up 30.9% in the year ending Jan. 5, according to Nielsen.

 

WHAT’S NOT?

Australian wines are struggling, with volume falling 1.6% in the 52 weeks ending Jan. 5, Nielsen reported. Mr. Brager blamed large surpluses in recent years, which led to cheaper prices that caused the category to lose its “premium-quality image.” In response, government-run Wine Australia has launched a marketing effort called “Next Chapter” that spotlights mid-tier and regional Aussie wines at trade shows such as one recently held in San Francisco.

 

WINE IS EVERYWHERE

Wine is popping up in new places. Walgreens and Dollar General have been particularly aggressive, while Family Dollar is testing wine. Chipotle, Starbucks and Noodles & Co. are adding wine to draw more customers and increase check prices. All told, there are more than 500,000 wine-selling locations in the U.S., a 50,000-spot jump from five years ago, per Nielsen.

 

IS IT A WINE OR A BEER?

Talk about mixed drinks. Some brewers are blending wine grapes into beer, creating concoctions like Blue Moon’s Vintage Blond Ale and Allagash’s Victor Ale, made from red grapes. Absolut is selling Absolut Tune, which mixes vodka and sauvignon blanc.

 

TROUBLE WITH DEMOGRAPHICS

Wine continues to under-index with Hispanics, according to Nielsen. “Is it because Hispanics don’t embrace wine or is it because the wine community doesn’t embrace Hispanics?” Mr. Brager said, noting that it’s probably a combination of both. Marketers must get Hispanics to make wine more of an “everyday beverage,” rather than for special occasions, said Elizabeth Barrutia, president of Baru Advertising in Los Angeles, which ran an Hispanic campaign for Beringer in 2010.

 

 

——

Facebook Steps Into the Wine Business

 

Source: Hispanic Business

Cathy Bussewitz

February 18, 2013

 

It was only a few years ago that you actually had to check a calendar to remember the birthday of a distant friend or in-law. Then, Facebook came along and changed everything, jostling its 1 billion users to bestow birthday wishes on all of their Facebook friends, including nearly-forgotten acquaintances and classmates they last saw two decades ago.

 

Now, Facebook is trying to capitalize on that ubiquitous feature that so many of us rely on. It has opened a new gift store, encouraging its U.S. customers to send real, physical gifts to each other on the website so many check every day.

 

North Coast wineries are taking notice of the opportunity to convert their social media efforts into direct sales on the world’s biggest social networking site. Several have placed their products among the dozen or so wines you can now send to a friend on Facebook.

 

“It’s working really well, and we’re excited to see where it could go,” said Dwight Harrington, operations director at Blackbird Vineyards in Napa, one of the first wineries to be featured in Facebook’s gifts section. “Just the potential that we could have with them, the amount of reach that they have, is tremendous — only probably a third of the world.”

 

But whether Facebook’s latest attempt to monetize its massive user base will prove profitable for wineries, or for Facebook itself, remains to be seen.

 

The Menlo Park company’s stock has had a rocky ride since its initial public offering in May, as analysts have speculated whether it will be able to produce sustained revenue growth. Increasingly, customers are accessing Facebook from their smartphones, where there are fewer advertisements and opportunities for revenue. The gifts section is available on the Facebook app for both the iOS and Android platforms.

 

“There’s lots of potential, but I don’t think it’s a near-term or 12- or 24-month material opportunity for the company, and they said so in their last earnings call,” said Carlos Kirjner, an analyst at Bernstein Research in New York, who downgraded Facebook’s stock last week. “It’s unclear the extent to which people will buy goods and services through Facebook.”

 

In its latest quarterly report, Facebook warned shareholders that it may not succeed in generating meaningful revenue from its gift service, and that it may not be able to recover the cost it incurred developing the product.

 

“This is a brand new product, a brand new behavior on Facebook that people have never done before, so we need to make sure we’re making the user experience as easy as possible,” said Alex Hollander, Facebook spokeswoman. “That can take some time, but we’re continuing to invest a lot into making this product successful.”

 

Facebook’s gift section, which became more visible to users last week when many were prompted to send their friends a Starbuck’s gift card, has been rolling out gradually since September. The company added wines to its gift store in mid-December.

 

Once the order is placed, the lucky recipient gets an email message or a notice on their Facebook wall. If they accept the gift and share their mailing address with Facebook, the gift arrives at their door several days later.

 

The company has an in-house merchandising team that curates a selection of gifts to celebrate the millions of birthdays, new homes, and other occasions announced on Facebook every day, Hollander said.

 

“They’ve tried to focus in on having good price points, since a lot of the users tend to be a younger type of audience, and they don’t want to just have $95 bottles of cab,” said Milton Cornwell, acting general manager of Copper Peak Logistics, which ships some of Facebook’s wine orders from its warehouse in American Canyon.

 

While hopes are high among vendors featured on the gift section, and among stockholders who have seen their share price decline after the company’s IPO, there are no guarantees that Facebook will be able to successfully monetize its massive user base.

 

“Truthfully, Facebook is a place where you would give a gift to a casual friend, not to a close friend,” said Michael Pachter, an analyst with Wedbush Securities, adding that his wife would not be happy if he sent her a bouquet of flowers that way.

 

“It’s kind of an impersonal way to send a gift if you do it through Facebook,” Pachter said. “I don’t expect that we’re going to see really meaningful, expensive wines given. … I think the guys who sell $10 wine will fly, but the guys who sell $100 wines are probably not going to be that successful because you would actually do that outside of Facebook.”

 

Among the brands now available on Facebook are Clos du Bois, Wild Horse and Robert Mondavi, all owned by beverage giant Constellation, and offerings from smaller wineries like Titus Vineyards in St. Helena, which generally produces less than 10,000 cases of wine per year.

 

While orders are placed through Facebook, each sale is funneled through ShipCompliant, which provides software to companies to help navigate complicated direct shipping rules. Wineries then approve the sale and can ship to those states where they are licensed. Depending on the winery, it can be shipped to as few as 16 states or more than 30.

 

“Facebook to us is just another amazing opportunity to be able to be where the customer is, and offer the right product at the right time to the right person,” said Stacy Bennett, vice president of digital marketing for J Vineyards and Winery.

 

“The power, it’s incredible,” Bennett continued. “Your friend’s birthday is today, and they happen to have liked a specific product on their timeline, and what a perfect opportunity to give them a gift of something they like. And they open it three seconds later. It’s mind boggling.”

 

J is not yet selling wine on Facebook, but it is in the process of getting on board with the company, Bennett said.

 

So far, wineries enrolled in the Facebook program have yet to see the kind of sales that would make a significant impact on their bottom line.

 

“It’s off to a little bit of a slow start,” said Victoria Amato, marketing manager of Blackbird Vineyards in Napa. “I think a lot of companies, not just wineries, that are selling gifts higher than the $5 to $10 price point are seeing slower sales than they expected.”

 

Blackbird has been selling three or four orders of wine per day through Facebook, with orders generally ranging from one to three bottles, said Dwight Harrington, operations director. In the best case scenario, that’s about 1 percent of the winery’s 10,000 cases per year.

 

The winery originally planned to sell on Amazon.com but eventually decided not to because Amazon would have discounted its wines, and those lower prices would be easily searchable online, Harrington said.

 

“They’re so price driven. So we would have to offer our wines to them at a much lower rate, and they might offer them at a lower retail value” than their regular price, Harrington said. “Whereas Facebook, it’s the same standard retail price that we have, so it’s more fair.”

 

Prices for the wines range from about $15 to $100, and shipping is an additional cost. Facebook, the winery and ShipCompliant all get a percentage of the sale, but the share that each receive is not publicly disclosed, sources said.

 

“Social media is a very hot issue in the wine industry right now, as we’re all trying to connect with the elusive Gen X and Millenials,” said Christophe Smith, director of sales and marketing at Titus Vineyards in St. Helena, and chair of the social media committee for the Napa Valley Vintners. “So what better way than to work with Facebook? It’s really a huge exposure opportunity.”

 

 

——

CapRock Winery Sold

 

Monty Paulsen slated to be CapRock’s new winemaker

 

Source: WineBusiness.com

by David Furer

Feb 18th

 

Texas’s CapRock Winery has been sold, the second time in three years. The sale of one of Texas’s largest wineries was finalized Friday to Gary Sowder (pictured, right) and Matt Hess (left), owners of Florida’s Vineyard Agent company, from San Antonio’s Jim and Cathy Bodenstedt, operators of MUY Brands of Texas and New Mexico.

 

The Bodenstedts had acquired it in 2010 via an auction held following the previous owners’ having filed for bankruptcy in 2009, then a controversial offer made by New Mexico’s Gruet winery.

 

Vineyard Agent had been actively researching Texas since 2010, calling it “a wine region we have been highly interested in. We were seeking a large-scale winery with the capacity of CapRock,” Sowder told winebusiness.com.

 

With one of its major competitors in Texas the only one selling outside its border, when asked if he’d consider ‘exporting’ to other states Sowder said, “We are currently considering options of selling wine made of Texas fruit to other parts of the US. As wine consumption grows throughout the US, we think consumers will become much more willing to try wines from regions less known.”

 

Napa Valley’s Monty Paulsen is slated to be CapRock’s new winemaker. Paulsen will continue to produce his Pat Paulsen Vineyards brand in Sonoma while assuming his duties at CapRock. Texas’s Tom Sessi, previously with Gallo, Constellation Wines and Palm Bay International, will lead its sales programs.

 

Sowder’s background is founded in creating startup companies in real estate and property developments before establishing Vineyard Agent as a full-service vineyard brokerage and marketing agency with its brand now associated with over $100 million of winery vineyard properties for sale in the U.S. Hess’s background stems primarily in marketing and advertising in the wood products industry and real estate.

 

 

——

The New Master of Affordable White Burgundies

 

Source: WSJ

By LETTIE TEAGUE

Feb 15th

 

IT’S NOT OFTEN that a winemaker’s genius can be detected in a bottle of basic Bourgogne. It would be like finding one of the world’s greatest speeches written on the back of an envelope. And yet, when I tasted the 2010 Bourgogne Blanc from Pierre-Yves Colin-Morey almost a year ago, it was like discovering the vinous equivalent of the Gettysburg Address. The wine was so good-possessed of an elegance, complexity and finesse far beyond its humble provenance (and $24 price tag)-that I immediately bought six additional bottles.

 

Over the next several months, I sought out more Pierre-Yves Colin-Morey white Burgundies-and there is a wide range, from “simple” St. Aubins to stylish, rich grand crus. I also discovered more retailers who were big fans, with an equally dedicated PYCM following among their clientele.

 

At Chambers Street Wines in New York, wine buyer John Truax told me the owners buy “as many Pierre-Yves Colin-Morey wines as they can,” although the quantities are always limited, and the wines quickly sell out. A recent Chambers Street offering of Pierre-Yves Colin-Morey St. Aubins, for example, was nearly gone within hours, said Mr. Truax.

 

It was more than a year after encountering that seminal bottle that I finally met Pierre-Yves Colin in person. (The “Morey” part of his winery’s name belongs to his wife, Caroline Morey, daughter of famed winemaker Jean-Marc Morey.) It was in Burgundy, of course, since Mr. Colin rarely leaves his headquarters in Chassagne-Montrachet. (“My work is in the vineyard,” he said more than once on the day that we met.)

 

We’d arranged to meet at his office at 11 a.m., and although I was more than half an hour early for the appointment, Mr. Colin, a tall, slightly lanky 40-year-old man, was completely prepared. He’d poured samples of both newly released and yet-to-be-released wines from the 2011 vintage into 15 small bottles arranged on a side table. (The precise arrangement of the bottles was a visual reminder of Mr. Colin’s precise winemaking style.)

 

We talked a bit about the vintage, which Mr. Colin had initially feared would be reminiscent of 2003, a famously hot vintage all over Europe. “Everything was very fast. There was ripe fruit,” Mr. Colin recalled. But unlike those of 2003, the wines of 2011 turned out to be “very fresh and elegant,” although they had “a little less acidity than the wines of 2010.” The 2010 vintage was an especially good one for the white wines of Burgundy-was the 2011 vintage as good? “I think it will be-it’s too early to compare. And, of course, it is the vintage that we are selling,” added Mr. Colin with a businessman’s smile.

 

Mr. Colin has become a successful businessman in recent years, although when he left his father’s estate, Domaine Marc Colin, in 2005, his future looked anything but assured. The younger Mr. Colin had been the winemaker at Domaine Marc Colin for 10 years, but he wanted to work on his own. At the time, he had about 6 acres of land from his parents but little money to buy grapes. (He got a bank loan.) “I don’t know if I would do it today-it was a bit crazy,” he said.

 

Fortunately, Mr. Colin began with some very good vintages (2005, 2006), as well as some very good friends, and he was able to buy grapes from some top vineyards. (In Burgundy, the names Colin and Morey have great resonance.) Several years later, he gained access to the Colin family vineyards as well.

 

The Colin family owns parcels in Chassagne-Montrachet as well as some of the best vineyards in St. Aubin (En Remilly, Chatenière). All of these St. Aubin vineyards are located on hillsides, Mr. Colin was quick to point out. This was important to understand as most St. Aubin wines are made from vineyards on flat ground, and the wines aren’t nearly as interesting or complex. (Although St. Aubin borders Chassagne-Montrachet and Puligny-Montrachet, it has been considered a lesser appellation until recently.)

 

Our tasting began with the single-vineyard St. Aubins, all beautiful wines marked by an almost shimmering intensity and savory minerality. They seemed more Puligny-Montrachet than St. Aubin, particularly the Chatenière bottling. And yet, “very few people understand St. Aubin,” lamented Mr. Colin, whose portfolio is about 60% St. Aubin. (He makes about 6,000 cases of wine a year altogether.)

 

We progressed to the grand and premier cru Burgundies; Mr. Colin makes tiny amounts of wine from many parcels, including some of the best premier cru and grand cru vineyards in Meursault, Chassagne-Montrachet and Puligny-Montrachet. His Les Chenevottes Chassagne-Montrachet and Les Folatières Puligny-Montrachet were particularly stunning-wines of great precision and definition. Mr. Colin is even able to buy grapes from grand cru vineyards like Bâtard-Montrachet and Corton-Charlemagne-a nearly impossible feat. And it all happens with a handshake; there are no contracts between Burgundians.

 

Did Mr. Colin ever worry about losing access, that the growers might sell their grapes to somebody else? And what of the stigma attached to négociants? There has long been snobbery about winemakers who don’t own (all of) their own vineyards.

 

Perhaps in France there was more prejudice against négociants, Mr. Colin noted, answering the second question first. But it wasn’t true of the American market, where buyers were “more open, less classique. People from the United States see quality,” he said. (The U.S. is the largest export market for Pierre-Yves Colin-Morey, comprising 20% to 25% of the domaine’s sales.)

 

As to the challenges of buying grapes, Mr. Colin had already encountered difficulties in 2012. The harvest was widely deemed disastrous and yields were quite small. Some domaines made half as much wine as they usually did-and some made even less. There was great hail damage in Puligny, for example; the harvest was down by 75%. The 2012 vintage might determine the fate of many in Burgundy, speculated Mr. Colin. “I think some people will sell their vineyards,” he said.

 

Would Mr. Colin be buying vineyards? He couldn’t say. Vineyard land is very expensive in Burgundy, after all. (In 2012, an executive from Macau reportedly paid $10 million for a rundown Burgundy domaine and 5 acres of vineyards.) As Mr. Colin said, “I think Burgundy is becoming a little bit crazy.” Right now, at least, Mr. Colin has no inclination to expand or make any big changes planned. He might do a bit of fine-tuning and maybe even take a small trip or two. (There are many places Mr. Colin would like to visit-Italy’s Piedmont is currently at the top of the list.)

 

A few weeks after I returned, Mr. Colin’s importer, Daniel Johnnes, told me the story of how he and Mr. Colin had met. He’d courted the winemaker for many years-they’d met back when Mr. Colin was still working at Domaine Marc Colin. The wines had impressed Mr. Johnnes, but so had Mr. Colin. “You could see the intensity in his eyes,” Mr. Johnnes recalled. “You see that in the eyes of a great winemaker.” For his part, Mr. Johnnes believes that Mr. Colin is “a superstar in waiting,” just below some of the most famous Burgundy names, like Coche-Dury and Domaine Roulot.

 

When the rest of the Pierre-Yves Colin-Morey 2011 white Burgundies are released later this year, the waiting may officially end.

 

 

——

Beam operations boss to retire

 

Source: Drinks International

By Lucy Britner

18 February, 2013

 

Beam has announced the retirement of Ian Gourlay, the company’s senior vice president of global operations & supply chain, effective April 1.

 

Gourlay came to Beam in 2005 with the acquisition of a number of Allied Domecq brands.

 

“Gourlay was instrumental in the integration of the brands and production we’ve acquired over the past eight years, including six of our seven Power Brands,” said Matt Shattock, president and chief executive officer of Beam. “Over that time, our manufacturing footprint has grown from five facilities to 15.”

 

Gourlay added: “Now that we have integrated the acquisition of Pinnacle Vodka and determined the brand’s future production model in Frankfort, I’ve decided this is a logical point to step back and retire.”

 

Beam is looking for a successor.

 

 

——

US business hits out at ‘Obamacare’ costs

 

Source: FT

By Barney Jopson in New York and Alan Rappeport in Washington

Feb 18th

 

US retailers and restaurants chains that employ millions of low-wage workers are considering cutting working hours or paying fines rather than enrolling employees in health insurance plans under Barack Obama’s landmark healthcare law.

 

Employers are concerned that the law increases the cost of insuring employees on existing plans, partly by broadening the range of benefits. It also requires companies to insure some employees not previously covered.

 

David Dillon, chief executive of the Kroger supermarket chain, told the Financial Times that some companies might opt to pay a government-mandated penalty for not providing insurance because it was cheaper than the cost of coverage.

 

Nigel Travis, head of Dunkin’ Brands, said his doughnut chain was lobbying to change the definition of “full-time” employees eligible for coverage from those working at least 30 hours a week to 40 hours a week.

 

Some restaurants, including Wendy’s and Taco Bell franchises, have explored slashing worker hours so fewer employees qualify for health insurance, arguing that they cannot afford the additional healthcare costs. Other businesses are deliberately keeping headcounts below 50.

 

Mr Dillon said Kroger intended to continue covering all full-time employees but maintained that parts of the law were “simply not workable”.

 

“If you look through the economics of the penalty the companies pay versus the cost to provide coverage, the penalty’s too low, or the cost of coverage is too high, or the combination is wrong,” he said.

 

“If [policy makers] get those things too far out of balance, everybody will have to reconsider their position on that point, including us. But we’re going to wait and see how that all develops.”

 

The penalty for not providing coverage is $2,000 per worker. According to the Kaiser Family Foundation, a non-partisan policy group, the average annual cost to employers of insurance is $4,664 for a single worker and $11,429 for a family.

 

Companies with more than 50 workers have to pay a penalty if they do not provide full-time employees with health insurance. The employees can instead buy private coverage subsidised by the government on new insurance exchanges.

 

Darden, a US restaurant chain, last year said it was considering slashing its workers’ weekly hours to below the 30-hour threshold but later retreated from the plan after a backlash.

 

The Obama administration maintains that the law, known as the Affordable Care Act, will improve access to insurance while reducing healthcare costs. A spokeswoman for the government’s health department said that non-partisan studies showed it would have a negligible effect on the labour market.

 

 

——

Kentucky: Kentucky grocery stores fighting proposed ban on sales of liquor, wine

 

Source: Kentucky.com

By Jack Brammer

February 18, 2013

 

Kentucky grocery stores are fighting a proposal in this year’s state legislature that would block their longtime goal of selling wine and liquor alongside other groceries.

 

Some stores are distributing fliers to customers, urging them to tell their lawmakers to oppose House Bill 310. A consortium of grocers also ran full-page ads during the weekend against the legislation in newspapers in Lexington, Louisville, Ashland and Owensboro.

 

The flurry of activity comes after the measure cleared the House Licensing and Occupations Committee on Thursday with only one “no” vote. It now awaits action by the House.

 

Pushing the bill is a group formed late last year by independent liquor stores called Fighting Alcohol Consumption by Teens, or FACT.

 

It says alcohol products such as vodka, whiskey and wine should not be sold in stores that allow children and teenagers on the premises. It also wants to protect the so-called “mom-and-pop” liquor stores that would find it difficult to compete against large grocery stores such as Kroger and Meijer.

 

This latest battle over who may sell booze in Kentucky stems from a federal judge’s ruling last summer.

 

U.S. District Judge John G. Heyburn II of Louisville ruled that a Kentucky law prohibiting grocery and convenience stores from selling wine and distilled spirits was unconstitutional. Heyburn, however, suspended his ruling temporarily, giving state lawmakers an opportunity to deal with the issue.

 

Heyburn said state law “violates the U.S. Constitution’s Equal Protection Clause in that it prohibits certain grocery stores, gas stations and others … from obtaining a license to sell package liquor and wine.”

 

Under current law, grocery stores in areas where alcohol sales are legal may sell beer but not wine or spirits. Grocery stores, however, may get a license to sell wine and liquor if they provide a separate entrance to that part of the store, where minors are not allowed to work. A store employee of legal age is required to conduct alcohol sales.

 

Such requirements do not apply to Kentucky drugstores, which are allowed to sell wine and liquor in wet localities. The legal distinction between pharmacies and grocery stores dates to Prohibition, when prescriptions could be obtained to buy alcohol at drugstores. After Prohibition, sales were restricted in grocery stores over concerns that minors often patronize them and should not be exposed to liquor.

 

HB 310, sponsored by Democratic state Rep. Dennis Keene of Wilder, would make Heyburn’s ruling a moot point.

 

Under the bill, grocery stores and newly-built pharmacies could sell wine and liquor only if they had a separate entrance to an adjoined structure. Pharmacies that already sell wine and liquor could continue to do so.

 

The measure also specifies that those stores may not allow persons younger than 21 to enter a premises selling distilled spirits or wine unless accompanied by a parent or guardian.

 

The proposal is co-sponsored by a bipartisan group of 13 House members, including House Speaker Pro Tem Larry Clark, D-Louisville.

 

Keene was not available for comment Monday, but Gary Gerdemann, a spokesman for FACT, said he thought the bill had “a very good chance” to become law.

 

He said the judge’s ruling, if it stands, would let “any retailer who can qualify for a license sell alcohol – gas stations, truck stops, dollar stores, pawn shops, telephone stores, on and on.”

 

“The question is not only do you want grocery stores to sell wine and liquor but do you want any retailer who can qualify to sell this,” Gerdemann said. “We believe this would create the largest expansion of alcohol sales in Kentucky history.”

 

There are nearly 600 liquor licenses available for purchase in Kentucky, including 62 in Fayette County, he said.

 

Without HB 310, those would be “snapped up,” Gerdemann said, noting that the only standard for getting a license is the applicant must not be a felon and must own the business location.

 

Gerdemann also said his group does not have the money for “the type of Wall Street ad extravaganza” the grocery stores are running.

 

Ted Mason, executive director of the 350-member Kentucky Grocers Association and Kentucky Association of Convenience Stores, said Gerdemann was incorrect in predicting a huge expansion of alcohol sales without HB 310.

 

“Throughout the years, all kinds of retailers could have obtained a liquor license, but we’ve not seen that,” Mason said. “We simply believe retailers like grocery stores should have the option to sell wines and spirits in Kentucky as they do in 35 other states. It’s a matter of fairness.”

 

In its newspaper ads, the consortium of grocery stores presented the issue as a question of convenience.

 

“Wine or spirits with dinner tonight? You might like to pick up your favorite bottle of wine or spirits as you shop at your local grocery store but you can’t,” read the ads. “Kentucky remains one of the few states where beer is the only alcohol choice available for grocery shoppers.”

 

 

——

Pennsylvania: Improvement not guaranteed with liquor privatization

 

Source: PhillyBurbs.com

February 17, 2013

 

I am writing in response to the Feb. 11 letter from Mr. Paul Fanelli with the headline, “McIlhinney opposes governor’s liquor plan.” Mr. Fanelli needs to understand there are better ways to get more consumer choice and convenience without trashing the entire system in Pennsylvania. Sen. McIlhinney is absolutely right when he said about his plan: “It’s a more achievable way to move toward better access, better selection, than to throw our hands up and sell everything everywhere.”

 

What seems to have been overlooked by those pushing to privatize throughout the early debate are the small local business, beer distributors and taverns, rooted deep in our communities. These businesses, many of them family-owned and operated, have been in existence for decades,  giving back more than just revenues to their local communities all over the commonwealth. These are family businesses with real jobs.

 

The governor’s plan allows for large, out-of-state corporations to buy up the new licenses at a discount compared with what current licensees are being asked to pay, and dominate the marketplace, shutting down the family-owned distributors and taverns and in turn devaluing their current licenses and funneling the revenues out of state and out of the local communities.

 

We would like to remind everyone that lower prices and increased selection cannot be guaranteed through privatization efforts, as we’ve all witnessed in Washington state. There, prices have increased and selection has pretty much stayed the same. In Washington, they have reverse border bleed: Washingtonians actually crossing into Oregon and Idaho, two control states, to buy their alcohol at lower prices.

 

We at the Pennsylvania Beer Alliance believe those legislators like Sen. McIlhinney, interested in and working on modernization efforts of our current system, need a longer look and some real attention, as the grass is not always greener on the other side – as those in Washington found out the hard way. Once you’ve privatized, you can’t get back what you sell off cheaply.

 

The PBA commends the governor for leading the discussion on consumer choice and convenience, but we ask that he slow down and understand the consequences of such a dramatic change. If his plan is adopted, instead of getting more choice, convenience and lower prices, we may all end up with less choice for the average Pennsylvanian, a proliferation of locations to buy alcohol and ultimately higher prices, especially in rural areas of the state. The Beer Alliance welcomes the discussion on modernization set forth by Sen. McIlhinney and plans to play a vital role as we move forward.

 

Jay Wiederhold, president

Pennsylvania Beer Alliance

Harrisburg

 

 

——

Texas: Total Wine & More to debut in San Antonio, Texas

 

Source: DBR

19 February 2013

 

American alcohol retailer Total Wine & More is all set to unveil its first San Antonio store at La Plaza Del Norte shopping center this spring.

 

The independent retailer of fine wine currently operates over 85 superstores across 14 states in the US.

 

Each typical store of the retailer carries more than 8,000 different wines from every wine-producing region in the world, more than 2,500 beers from America’s popular beers to hard-to-find microbrews and imports, and more than 3,000 different spirits from every price range and category, according to the company’s website.

 

Endura Advisory Group, which handles leasing for La Plaza Del Norte, principal Nick Altomare told mysanantonio.com: “It’s been kind of difficult to attract retailers the past few years with the economy and everything else going on. After the last three to four years of retail being real stagnant, it’s refreshing that new retailers are looking and expanding into San Antonio and have recognized the opportunity for success here.”

 

 

——

Washington: Bill tackles alcohol poisoning among underage drinkers

 

A bill in the Legislature aims to reduce alcohol-poisoning cases by exempting underage drinkers and their friends from minor-in-possession charges if they report the alcohol poisoning to hospitals or 911.

 

Source: Seattle Times

By Amelia Dickson

Feb 18th

 

Cmdr. Steve Rittereiser said his University of Washington Police Department officers are familiar with the scene: a late-night party where someone under 21 drinks way too much and passes out.

 

Less-intoxicated students mill around or try to revive the drinker. If the situation is bad enough, someone might call for help. But most partygoers flee before the ambulancearrives.

 

Those who stick around are reluctant to answer questions.

 

“They’re afraid they’re going to get in trouble just by being there,” Rittereiser said. “And it makes it hard to figure out what happened.”

 

Legislation in Olympia aims to encourage underage partyers to seek help more quickly in cases of binge drinking and possible alcohol poisoning.

 

If House Bill 1404 is enacted, minors suffering from alcohol poisoning would not be prosecuted for minor-in-possession charges if they need medical attention. Minors helping alcohol-poisoning victims also would be exempt from prosecution.

 

“This doesn’t excuse you from any other liability, and you won’t be excused from anything if you don’t call 911,” said Rep. Marko Liias, D-Edmonds, who sponsored the bill. “The message of this bill is not ‘please go binge drink.’?”

 

The bill is modeled after a state law protecting from prosecution people seeking medical attention for drug overdoses. The 2010 law, nicknamed the “911 good Samaritan” law, was passed almost unanimously by the Senate and by a healthy majority in the House. Liias is confident his bill will be successful, too.

 

Rittereiser said the legislation could be especially helpful on college campuses where alcohol poisoning in minors is underreported. Underage drinkers who fear punishment from police or university officials are reluctant to seek help.

 

Alcohol poisoning “is not unusual in the age group we’re dealing with, because there’s obviously a lot of binge drinking, for one reason or another,” Rittereiser said. “When we see these things, our first priority is safety so we’re getting the medical folks involved right away.”

 

Because of privacy laws, university officials are unable to track the number of students with alcohol poisoning, but Seattle medical experts see a large number of alcohol-poisoning cases each year. According to the Drug Abuse Warning Network, more than 2,100 underage drinkers were hospitalized in 2010.

 

Steve Hansen, assistant chief of the Washington State University Police Department, said his officers have had similar experiences. Students don’t report the issue, and police usually discover alcohol poisoning while investigating other alcohol-related incidents, such as assaults and loud parties.

 

But some local organizations worry that the bill will normalize underage drinking, leading to an increase in alcohol poisoning.

 

Amy Ezzo, spokeswoman for the Washington chapter of Mothers Against Drunk Driving, said legislators should focus on ensuring minors don’t drink at all. She argued that decreasing the number of underage drinkers is the best means of preventing alcohol-related deaths in minors.

 

“Our message is pretty strong,” Ezzo said. “The drinking age is 21, and you shouldn’t drink before then.”

 

 

——

New Mexico: Lawmakers squash liquor tax bill

 

Source: The New Mexican

Julie Ann Grimm

Monday, February 18, 2013

 

It’s been more than 20 years since the state Legislature allowed voters in McKinley County to decide whether to increase taxes on alcohol to help pay for substance abuse treatment programs. Six times since then, voters there have opted to leave the tax in place.

 

But state laws don’t allow voters in other New Mexico counties to have the same debate: Would adding 4 cents to the cost of a bottle of beer be worth an increase in funds to help rehabilitate substance abusers?

 

A measure proposing a local-option liquor excise tax has once again died in the New Mexico House of Representatives. The House Taxation and Revenue Committee last week tabled House Bill 212 on a late-night vote, and the proposal is unlikely to see the light of day again during this legislative session.

 

Year after year, county and city officials – including Santa Fe city councilors and county commissioners – have asked for the local taxing authority that McKinley County already has. They want to raise more revenue to provide steady funding for alcohol and substance abuse prevention and treatment. But the result has been predictably similar: State lawmakers aren’t going for it.

 

The New Mexico Municipal League and the New Mexico Association of Counties, along with representatives from Lee, Union, Rio Arriba and San Juan counties, have advocated for the bill. But lobbyists for the liquor and restaurant industries as well as some business leaders have spoken against it.

 

Santa Fe City Councilor Patti Bushee skipped a regularly scheduled City Council meeting last week to spend the day at the Roundhouse and attend the committee hearing on the bill, which did not conclude until after 10 p.m. She said this year’s outcome was a blow to the city of Santa Fe in particular because two representatives from Santa Fe area voted against it. A third was absent from the committee hearing.

 

“To have two of our Santa Fe representatives beholden to the liquor industry is disturbing,” Bushee said in an interview Monday. “We’ve been trying to do this for a while. I expected at a certain point that they would listen to the constituents rather than the liquor lobby.”

 

Santa Fe’s alcohol treatment options are severely limited, she said, noting that the only public sobering center, run by Christus St. Vincent Regional Medical Center, has about a dozen beds but regularly needs more than twice that number. A steady infusion of tax money would help local officials get a handle on public inebriation and related social issues, she said.

 

“There is a problem in Santa Fe, and they are tying our hands, basically,” the councilor said, noting that she believes such a local-option tax would pass muster with Santa Fe voters.

 

Rep. Jim Trujillo, D-Santa Fe, said he objected to the law because it would put an “undue burden” on liquor distributors who would have to change computer systems to charge different tax rates in different counties. Excise taxes are tacked on to delivery invoices, he said, not at the cash register. The other reason he cited for rejecting the proposal was that it would increase the cost of alcohol to the point where people would stop buying it in stores.

 

“Moonshine is being made, and we are not getting any revenues from that,” Trujillo said at the hearing. “The more expensive it is, the more moonshine you are going to see being made in homes.”

 

To attack the issue from another angle, however, Trujillo is sponsoring a measure that calls for the state to divert less of the current revenues from statewide liquor excise tax to the general fund and use more of the revenue for treatment and prevention of substance abuse.

 

Freshman Rep. Carl Trujillo, D-Santa Fe, also voted with the majority of the committee to table the bill. Rep. Stephen Easley, D-Santa Fe, did not attend the committee hearing.

 

McKinley County, which includes the city of Gallup and part of the Navajo Nation, had the worst alcohol-related death rate in the nation when state lawmakers allowed the county commission there to approve a ballot initiative. Assistant Attorney General Phil Baca said voters there have approved the tax by a 3-1 ratio or better each time it’s been on the ballot, and the county has effectively cut its alcohol-related death rate in half.

 

 

——

Indiana: Arrests of minors with alcohol up 37 percent

 

Source: WISH

18 Feb 2013

 

The Indiana State Excise Police released its 2012 annual report. It reveals the success of a new program as well as continuing concerns about minors and alcohol.

 

One of the biggest successes in 2012 was the start of the Intensified College Enforcement program. Taking place on six college campuses, ICE saw a 53.4% decrease in alcohol-related crashes involving 15-20 year old drunk drivers from the year before.

 

“Where the success lies is in the reduced numbers of young people who are injured because of alcohol related car crashes and other things that go along with that,” said Corporal Travis Thickstun, with the State Excise Police.

 

However concerns remain with underage drinking in Indiana. Arrests of minors for possession and consumption rose 37 percent from 2011 to 2012, and arrests made of those who provided alcohol to minors rose 46.2 percent.

 

Thickstun understands the numbers could seem alarming, but he credits to increase to officers sending a message that will eventually lead to a decrease.

 

“The goal of the ICE program is not to increase numbers of arrests but it is certainly a part of it. If it takes arresting people and issuing tickets to change behavior and to reduce alcohol crash rates among minors, reduce binge drinking rates among minors, then that’s what we’re going to do,” said Thickstun.

 

For a link to the complete 2012 Indiana State Excise Police Annual Report, go to www.in.gov/isep.   

 

 

——

New Zealand: Independent Liquor tipped as Mill buyer

 

Source: NZ Herald

By Christopher Adams

Feb 19, 2013

 

Speculation is growing in the drinks industry that Auckland’s Independent Liquor is looking to make a move into retail through buying one of the largest bottle store operators, The Mill.

 

Sources say rumours are afoot that the Papakura-based manufacturer – which brews international beer brands such as Carlsberg and Kingfisher under licence but is best known for pioneering the development of Australasia’s RTD market – is in talks about acquiring the retailer, or that a deal may have already been struck.

 

Independent chief executive Julian Davidson said he “wouldn’t like to comment” on whether the company was in the process of buying The Mill, but that no sale had taken place.

 

According to its website, The Mill is the largest independent liquor retailer, with 35 stores from Whangarei to Dunedin plus an online shop.

 

Independent, which is at the centre of a stoush over the $1.5 billion price tag Japanese brewer Asahi paid for the business in 2011, was scoping a range of acquisition opportunities, particularly in the craft beer space, Davidson said.

 

“We’re looking at lots of things in the market, but I wouldn’t like to comment specifically on [The Mill].”

 

Davidson would not rule out the prospect of the company moving into retail.

 

“Anything is possible,” he said.

 

The Mill is owned by New Plymouth-based Christopher and Nyall Simkin, according to the Companies Office.

 

Its website says the firm opened its first store in Taranaki in 1993 and the business had been successful as a result of low overheads and reduced prices.

 

Asked about the acquisition speculation yesterday, Nyall Simkin said “there’s nothing to talk about at the moment at all”.

 

One source said The Mill was a big discounter and if the acquisition took place Independent’s customers – other retailers – might not be happy with the manufacturer stepping on to their turf and undercutting their prices.

 

“You would be seeing a heavy discount producer getting together with a heavy discount retailer, which seems like a nasty cocktail.”

 

Local brewing giant Lion owns the Liquor King chain of bottle stores.

 

The fact that Independent – which bought a small Nelson craft brewery just before Christmas – continues to express an interest in local acquisitions shows Asahi has not been put off by the alleged “deceptive conduct” it says took place when it bought Independent.

 

 

——

Australia: Beer margins ‘finally on the agenda’

 

Source: TheShout

By James Atkinson

Mon, 18/02/2013

 

Independent liquor retailers have welcomed what they say is long overdue acknowledgment from one of their national competitors that profit margins on mainstream beer are unsustainable.

 

In a recent report by Fairfax, Coles confirmed it had moved to reduce “unsustainable price discounting” on beer – a stance further underlined by the company in its half-yearly results last week.

 

The article quoted from a recent report by Merrill Lynch retail analyst David Errington, who said the gross margin for a retailer on a case of Victoria Bitter sold off-promotion was under five per cent, “well below the cost of doing business on our estimates of 15 per cent”.

 

Independent retailers contacted by TheShout said that while 15 per cent of turnover is a reasonable benchmark for an average store’s operating costs, some outlets have overheads as high as 18 per cent.

 

Following the February 1 price rise, they report their margins on a case of 24 x 375 ml stubbies as 4.5 per cent for Victoria Bitter, 5.2 per cent on XXXX Gold and 6 per cent on Tooheys New.

 

“Any beer we sell, we’re going backwards,” said one banner group boss.

 

“That’s why independents want higher margin categories like wine, cider and ready-to-drink to continue to grow.”

 

Another banner group head said it is little wonder why private label beer continues to grow when it attracts margins two to three times higher than branded mainstream beer.

 

“Private label and parallel beer is subsidising branded product for margin and also has enough to invest above the line,” he said.

 

Another retailer said that in fairness, margins on mainstream beer need to be amortised across the brewers’ entire portfolios of products, which include higher margin premium and craft beers and more profitable formats, such as six-packs.

 

But this has less relevance for liquor stores in highly competitive areas where a typical beer purchase rarely deviates from a case of Victoria Bitter or Tooheys New.

 

A Lion spokeswoman said: “As a matter of practice we don’t comment on pricing matters.”

 

Carlton & United Breweries did not respond to a request for comment.

 


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