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Vodka Maker Not Ready To Toast A1’s Restructuring Deal
By Matt Chiappardi
March 26, 2013
Polish vodka producer Central European Distribution Corp. on Tuesday rebuffed a prepackaged restructuring deal offer from the Russian investment group A1, despite the alcohol firm having missed a $258 million debt payment March 15.
CEDC on Tuesday seemed unimpressed with a $280 million cash offer floated by a consortium of A1, SPI Group – which owns Stolichnaya vodka – and Mark Kaufman of Monaco, saying the offer doesn’t address 2013 bondholders whose notes matured last week, and upon which the company missed payment, according to SEC filings. CEDC produces Royal, Parliament and Absowent brand vodkas.
In a letter to CEDC’s board of directors made public Monday, A1, a trading company of Alfa Group, offered the Polish company $280 million cash under its bankruptcy plan – $230 million of which would go to 2016 bondholders – and $630 million in new notes, according to filings with the U.S. Securities and Exchange Commission. In return, A1 would get all of the reorganized equity, the letter states.
“We are surprised to see that after being provided detailed comments on a range of significant points related to your proposal, the consortium has resubmitted an almost identical proposal, with marginally improved economic terms, that fails to address any of the concerns previously raised,” CEDC’s letter states. “These points are not trivial and go to the heart of whether the consortium is prepared to offer a real and viable alternative to the restructuring transaction presently supported by CEDC.”
The Polish company, which is incorporated in Delaware and has an office in Mount Laurel, N.J., is also fielding a restructuring offer from Russian spirits importer Roust Inc., which owns $102 million of those 2013 notes, according to SEC filings.
That plan, proposed in February, would see Roust offer CEDC $172 million in cash. A vote is scheduled for April 4.
Roust’s owner, billionaire Roustam Tariko, is also chairman of CEDC, a company that has been beleaguered since 2011.
In March of that year, CEDC announced that results for fiscal year 2010 fell significantly below management projections.
That downturn was attributed to the revelation that the company’s important Polish vodka brands had suffered a $131 million impairment from its newly launched Zubrowka Biala line, according to a lawsuit filed against the company by a shareholder in December.
That suit, brought in Delaware Chancery Court, demanded access to CEDC’s books by shareholder Joseph Z. Khakshour, who alleged the company had been mismanaged.
It claimed that CEDC did not appropriately pay Russian excise taxes, which wound up shuttering the main production plant in Russia for two weeks.
That closing not only led to a drop in supply, but also forced the company to offer significant rebates to customers, the suit alleged.
CEDC since had announced the resignation of its chief executive and financial officers while an audit committee’s accounting investigation, completed in October, revealed that net sales for 2010 and 2011 were overstated by $57.4 million and accounts receivable were inflated by $100.7 million, according to the suit.
Representatives from CEDC did not return a request for comment Tuesday.
The company is one of Eastern Europe’s leading vodka producers and liquor importer, with most of its business taking place in Hungary, Poland and Russia.
Diageo set for United Spirits open offer after RBI nod
The acquisition of stakes by Diageo would enable funds to flow into United Spirits as well as to its promoter, Vijay Mallya, whose aviation business is in trouble.
Source: Times of India
B PRADEEP NAIR
Mar 27, 2013
India’s central bank has cleared the acquisition of United Spirits by British drinks giant Diageo, removing a major hurdle for the $2.1 billion deal announced about four months ago.
The Reserve Bank of India’s nod was the last regulatory approval required for the deal to go through.
A few weeks ago, the deal had received approvals from Competition Commission of India and market regulator, the Securities and Exchange Board of India.
In November, Diageo announced to buy 27.4% stake in United Spirits through a combination of share purchase from existing promoters (19%) and preferential allotment of shares (8%).
The latest development would enable funds to flow into United Spirits as well as to its promoter, Vijay Mallya, whose aviation business is in trouble. It also paves the way for Diageo to launch an open offer to increase its stake to 53.5% in India’s largest whisky maker.
The offer, expected to open in the next 10 days, is priced at Rs 1,440 a share, which is quite lower to its Tuesday market price of Rs 1885 on BSE. Though minority investors have expressed unhappiness over the open offer price, Diageo, is said to be not interested in upping its offer.
Diageo to Sell China White Liquor in Spain, Middle East
Source: Bloomberg News
March 27, 2013
Diageo Plc (DGE), the world’s largest liquor company, will expand sales of the Shuijingfang white spirit to Italy, Spain and the Middle East this year to reduce reliance on the liquor’s home market by tapping Chinese abroad.
Overseas sales may rise to 40 percent of the company’s total as early as 2016, from about 10 percent now, said James Rice, general manager at Sichuan Swellfun Co. (600779), the Diageo unit making the white spirit, or baijiu. Chinese travelers and overseas Chinese will be the core foreign buyers of the sorghum- based liquor in the short to medium term, he said from Chengdu, western China, without giving a more specific timeframe.
“Westerners can acquire a taste for baijiu” in the longer term, Rice said in a phone interview on March 22. “Baijiu is the best drink to go with Chinese food. It’s a perfect match.”
The international expansion by the maker of Smirnoff vodka and Johnnie Walker Scotch whisky comes amid Chinese President Xi Jinping’s curbs on extravagant spending by government officials. The crackdown has hurt sales of high-end goods including baijiu from Swellfun and Kweichow Moutai (600519) Co.
“Swellfun should target the Chinese population overseas as a starting point,” said Jessie Guo, head of Asia consumer research at Jefferies Hong Kong Ltd. “Non-Chinese may find it hard to accept the taste, so the market potential for white liquor overseas may be limited.”
About 50 million people of Chinese origin live outside China, Li Haifeng, former director of the State Council’s overseas Chinese affairs office, said March 12.
Diageo will leverage its global network to expand marketing of Shuijingfang outside China, with sales starting in Italy, Qatar, Spain and the United Arab Emirates this year, Rice said. The liquor, originating from a 600-year-old distillery, is already sold in 42 airports and as well as stores in markets such as South Korea.
Swellfun is about 40 percent owned by Sichuan Chengdu Quanxing Group Co., which is 53 percent controlled by Diageo. The London-based distiller has said it would like to increase its stake at some point, Lisa Crane, a spokeswoman, said in an e-mail on March 25.
Diageo has risen 13 percent this year in London trading, outperforming the benchmark FTSE 100 Index, which has gained 8.5 percent. Swellfun dropped 2.9 percent to 16.16 yuan as of 1:36 p.m. in Shanghai trading and has fallen 17 percent this year.
In Chinese tradition, baijiu is synonymous with lavish banquets and is favored by the wealthy and government officials as holiday gifts. A one-liter bottle of Shuijingfang with 54 percent alcohol content in a gift box sells for 2,899 yuan ($467) on Amazon’s China website.
A same-sized bottle of 106-proof alcohol from Kweichow Moutai, China’s largest baijiu producer by market value, is priced at 799 yuan, according to amazon.cn. Kweichow Moutai sells its white liquor overseas through a distribution partnership with French cognac maker Camus.
Sales of baijiu are forecast to rise 4.9 percent in 2013, unchanged from the past two years, according to Euromonitor International. An estimated 98 percent of China’s sales of spirits, which include vodka and whisky, were made up of baijiu last year, according to the market researcher.
Diageo plans to hold baijiu-tasting sessions at top restaurants overseas, and introduce chefs from Chengdu who will show diners how to pair the liquor with food, Rice said. The company also plans to host a baijiu cocktail-making competition this year to expand consumption of the spirit beyond the dining table, he said.
President Xi’s austerity drive among government officials helped push down prices on some high-end spirits by about 30 percent over the Lunar New Year holiday in February, according to Ministry of Commerce figures.
Rice said he expects the impact on the baijiu industry to be limited to the short term. With longer term growth in mind, Diageo is looking to create other premium white-spirit brands, he said.
“Baijiu’s not going to leave the Chinese dining table,” Rice said. “It’s just going to be sold through different channels and different consumers.”
Carlsberg, Anheuser Bush being probed over price fixing by German regulators
26 March 2013
Danish brewer Carlsberg today said that the German Federal Cartel Office has launched an investigation into alleged price fixing.
The Copenhagen-based company acknowledged that it was under a probe after German weekly magazine Focus last week reported that Carlsberg, along with Anheuser Bush Inbev SA and some local companies had formed a cartel and could be slapped with millions of euros in fines.
According to Focus, apart from Carlsberg and Anheuser Bush Inbev, others being investigated are German brewers Warsteiner, Krombacher, Erdinger and Bitburger, and retailer Oetker Group.
The magazine said these companies control nearly half of Germany’s beer market and the regulator is probing whether they artificially inflated the price of about 24 brands of beer including Beck’s, Holsten, Jever and Warsteiner.
Carlsberg, Warsteiner and Bitburger have confirmed that they were under investigation, but refused to comment any further.
A spokesperson for the German Federal Cartel Office said that the probe was launched in September 2012 and is currently in its final stages.
STOCK SPIRITS GROUP 2012 FULL YEAR RESULTS
Continued strong performance in a challenging market
Source: FTI Consulting
Stock Spirits Group (SSG or the Group), Central Europe’s leading branded spirits and liqueurs business, is pleased to announce its full year results for the twelve months ended 31st December 2012.
Profit growth against tough market backdrop
. Record EBITDA, with growth of 6.8% to ?68.8m on a like-for-like basis (2011: ?64.3m)
. Revenue of ?292.4m, just slightly down on a like-for-like basis (2011: ?295.1m)
. EBITDA margin per litre has grown by 11.3%
. Strong cash flow generated
. This strong performance against the backdrop of the Czech illegal alcohol crisis in September 2012
Margins improved in Poland and market leading positions maintained in key markets
. Further strengthened spirits market leadership in Poland with increased overall vodka market share of 36%, substantially benefiting from the market recovery in 2012
. Strengthened market leadership position in the Czech Republic, growing overall spirits share in the off trade from 38.0 to 39.6%
. Consolidated market share in Italy within a very challenging market, growing share in the brandy and vodka categories
Continued to successfully grow business footprint in the region through targeted acquisitions and the sale of non-core assets
. In December 2012, SSG announced the acquisition of leading Slovakian spirits company Imperator
. In December 2012, SSG announced the acquisition of the assets of Novel Ferm, a high quality ethanol manufacturing business located near Rostock in North Eastern Germany
. In October 2012, SSG announced the sale of Stock USA and the Gran Gala brand to Sazerac Company
Significant brand & NPD investment during the year to continue portfolio expansion
. Met consumer demand for new flavoured vodkas through strong growth in Lubelska, for example launch of lime and mint variant
. Strengthened the Keglevich brand franchise amongst younger consumers with the innovative and successful launch of vodka, ginseng and guarana based Keglevich K-Guar in Italy
. Led development of the flavoured vodka market in the Czech Republic and Slovakia, introducing Amundsen Peach and Amundsen Lime and Mint. Achieved significant growth despite the Czech methanol crisis
. Expanded usage of the popular Bozkov brand in the Czech Republic through new coffee flavoured range extension Bozkov Special
. Entered the cream liqueurs market with Stock Crema
. Market conditions slowly improving across central Europe, particularly Poland
. With leading brands in key spirits categories, the SSG Board is confident that the Group is well positioned to take full advantage of future growth
Chris Heath, Chief Executive Officer of Stock Spirits Group said:
“I am delighted that we have been able to deliver another very strong set of results in 2012, continuing an unbroken record of profit growth each year since the formation of the Group. Faced with on-going difficult economic conditions, significant input cost increases, and the temporary spirits ban in the Czech Republic, we were well positioned in 2012 to capitalise on the strength of our brands and distribution platform to deliver superior results by taking the lead on market pricing and managing our product and marketing mix to deliver strong margin growth.”
“We are particularly pleased to have extended the leading positions for most of our core brands in our key markets, and to have continued with our successful track record of launching new products across the region.”
“We remain confident that the Group is well placed to take advantage of opportunities to grow the business further in 2013 and beyond”
Beer and Africa: A Recipe for Profit?
By: Matt Clinch
25 Mar 2013
Africa maybe the world’s poorest and most undeveloped continent, but its abundance of natural resources and a surging population makes it an attractive prospect for investors.
One sector that is yet to be truly tapped is the brewing industry, according to research firm Bernstein Research, which believes Africa is probably the most attractive region for long-term profit growth for global brewers.
Spirit and beer maker Diageo agrees, telling CNBC.com that they are “long term investors” in Africa. Despite a long list of challenges, the continent offers tremendous opportunities to work with local governments and grow local communities, the firm says.
Logistics, a lack of infrastructure, water and energy and a limited skilled workforce are just some of the hurdles Diageo highlights. Additionally, illicit consumption of home-brewed alcohol is prevalent in Africa. Diageo’s own research suggests that around 50 percent of consumption in Kenya is either informal (not recorded) or unlisted (i.e. illicit).
Despite this, the continent’s huge population, over 1 billion according to the United Nations, with a 26 percent increase over the last decade, means Africa (along with emerging Asia) offers the highest long-term upside to investment in beer consumption, Bernstein Research said.
“African [profit] margins have more headroom and better (very) long-term growth prospects,” it said in a research note.
“We note countries such as Nigeria, DRC (Democratic Republic of the Congo) and Ethiopia have very large populations and low per capita consumption. Therefore, we believe there is little doubt that Africa will be one of the engines of growth for the beer category in the next decades.”
But it may not be good news for all brewers waiting to venture into the emerging market. Bernstein says incumbents are likely to benefit from any potential upside as operational challenges make it very difficult for new entrants.
And according to Bernstein’s data those incumbents are SABMiller, which controls 38 percent of regional Beer EBIT (earnings before interest and taxes) on an equity-adjusted basis, Castel (25 percent), Heineken (18 percent) and Diageo.
“As the region is likely to continue to grow fast, so will its relative importance to those brewers’ earnings,” it said.
SABMiller announced a $40 million investment this month in a new brewery in Namibia as part of its strategy to expand its operations across Africa. Eight days later the company announced the launch of a new beer called Eagle in Ghana, made from the cassava plant, to complement its Impala beer, unveiled in Mozambique 18 months ago.
“Part of our strategy across Africa is to make high quality beer which is affordable for low-income consumers while simultaneously creating opportunities for smallholder farmers in our markets. The launch of Eagle in Ghana ticks both these boxes,” Mark Bowman, managing director of SABMiller Africa, said in the press release.
Diageo has also made big announcements. Ghana’s first cassava beer, Ruut Extra Premium Beer, was announced at the start of the year and a Diageo spokesperson James Crampton told CNBC.com that the firm likes to “innovate” in the affordable sector.
“We have a brand for every motivation or occasion,” Crampton said, and detailed that policy making in the region has also led to taxes being waived by governments who are keen for brewers to work with local farmers and communities.
The profitable side of creativity (Excerpt)
Source: Insigniam Quarterly
Highly creative companies like Disney, Apple, Nike, Chrysler and consumer-goods upstart Method all reported increases in profitability in 2012. Their mutual strong performance and growth were all complemented by enigmatic leaders, the expected unexpected new ideas, great decisions, product design-and, highly creative, customer-tuned cultures.
Over the last decade, companies once known as highly creative industry leaders have waded into the waters of poor performance or irrelevance, some slipping away entirely. Among these are Kmart, Kodak, Digital Equipment to name a few and narrowly escaping, possibly, JC Penney and HP.
So, what is the difference? Creativity as a shared attribute across leadership teams is a critical missing ingredient. If you don’t value or foster creativity as a C-suite executive, the warning signs of irrelevance can develop slowly. You risk leaving a legacy of unintentional outcomes – a stalled balance sheet, battered egos, disenchanted customers, late- to-market products and eroding brand equity.
Expanding EBITDA, 12% year-over-year growth
In the consumer goods distribution business, Glazer’s Distributors, a $3.8 billion (U.S.) company, hired maverick President and CEO Sheldon “Shelly” Stein in 2010 to make big changes.
This former investment banker’s challenge was to tackle opportunities from a new perspective to differentiate the brand amongst many old-line, family-owned dominant distributors. Glazer’s is now the fourth largest in its category.
“If I were starting from scratch, how would I do this . what is the best way to run this business?” was Stein’s first application of creative thinking. He stepped back, asked questions and moved away from the typical systems in this market, adding that many executives aren’t willing to “not know the answer,” quoting a former mentor of his as saying that a bad executive is one “who thinks his or her own body odor smells like perfume.” The point being you have to be willing to be wrong or naïve and entertain alternatives to your beliefs to harness creativity.
“Creativity is thinking outside the norm, knowing what really matters in making your company win, and finding a better way to do it,” Stein says.
Glazer’s growth has been astounding. The company has seen 12 percent year-over-year growth since 2010 and, going into 2013, expects more.This growth is underscored by expanding EBITDA.
However, you can’t drive creative solutions by just starting at the balance sheet. Stein attributes some of his success to:
His belief in his team
An open-door policy
Staying aware that asking the most senior people their opinions means junior employees will never give you the real answer.
From ‘no’ to ‘yes’
You have to drop the attitude, get out there, and talk to employees and customers in a meaningful way.
Stein was asked for an example of alternative thinking and creative problem solving to overcome a “no” to get to a “yes.” His answer was, “I have about 20 of them.” He went on to describe how a leader had said the current sales and account management process could not be redesigned to save money and make customers happy at the same time (it had been that way for 50 years).
His employees and leaders, who are free to express their feelings and make mistakes, quickly went to work and designed a new approach. Since that change, profits have doubled.
When you hear Stein speak, you immediately hear the spark, the energy, and the passion. He creates comfort without losing a very aggressive edge. On the topic of assertion versus aggression in pushing creative ideas, Stein says that creativity and being aggressive go hand in hand. Otherwise taking “no” for an answer and dealing with basic, safe assertions will rule.
When asked if a COO and a CFO can be creative, he says, “I wouldn’t hire one who wasn’t, so I do not see why they can’t be.” Whether it is working on the front lines, in the distribution center, or fostering employee opinion, Glazer’s executives think differently about how to lead and the results are showing.
Oregon: Wine growler bill heads to Oregon Senate floor for final vote
Source: The Oregonian
By Harry Esteve
March 26, 2013
A proposal to sell wine in refillable “growlers,” much like brewpubs have been doing for years, continued its march through the Legislature on Tuesday.
A Senate panel approved House Bill 2443, sending it to the Senate for a final vote. Passage is likely. Within weeks, it’s possible that Oregon wine lovers will be able to bring refillable containers to stores and restaurants and bring home up to two gallons of their favorite vintage.
“I bet it will catch on like wild fire,” said Wynne Peterson-Nedry, winemaker at Chehalem winery in Newberg, after the Senate Business and Transportation Committee gave the bill unanimous support. “Sales will be spurred along by this.”
The House already passed the bill.
Wineries already can sell wine in refillable containers. The bill would allow the practice at grocery stores and restaurants, and would apply to beer and cider as well.
Peterson-Nedry said the practice is as common in France and Europe as buying “a baguette of bread and carrying it home from the market.”
Kara Olmo, owner of Wooldridge Creek Vineyard and Winery in Grants Pass, told the committee that growler sales are less expensive and more environmentally friendly. Instead of filling bottles, the winery fills an airtight keg with the wine, which is then tapped to dispense into the refillable containers.
Olmo said a single keg saves 39 bottles. She said a bottle of her wine that retails at $26 sold for $18 when it is put in a growler.
“It’s a lot cheaper to sell from the keg,” and it can help ensure quality, she said. She said her wineries keg sales to restaurants have been doubling every year.
New Zealand hails ‘vintage of a lifetime’
Source: the drinks business
by Gabriel Savage
26th March, 2013
With New Zealand’s 2013 grape harvest now well advanced, many producers are speaking about one of the best vintages in the country’s history.
While the warm, dry summer has caused problems for the country’s sheep farmers, New Zealand Winegrowers’ CEO Philip Gregan described conditions as “absolutely perfect for growing and ripening grapes.”
With NZWG having shaken off earlier concerns about a potential grape glut, Gregan continued: “As we move into autumn, still with warm days and now slightly cooler nights prevailing, the prospect is for an outstanding vintage in all our grape growing regions.”
This optimism is being echoed by an increasing number of winemakers. Predicting that 2013 looks set to be remembered as the “vintage of a lifetime,” Esk Valley winemaker Gordon Russell pointed to an ideal combination of weather conditions.
“Not only are our grapes ripening perfectly under constantly blue skies, but cooler nights are helping retain acidity and ultimately enrich the wines with a vitality not normally seen in drought seasons,” he reported.
Craggy Range chief winemaker Matt Stafford offered a similarly positive outlook, saying: “Best? Greatest? It is difficult to put a statement on the quality we have in the vineyards with many weather fronts still to pass but there is a great sense of excitement of what is in store and we may need to come up with some new superlatives following this one.”
These upbeat predictions for 2013 came as wine writers Matthew Jukes and Tyson Stelzer unveiled their sixth edition of The Great New Zealand Pinot Noir Classification.
Featuring “a record number” of 120 estates from among the country’s 484 Pinot Noir producers, the classification includes 23 estates for the first time, with Rippon Vineyard joining Ata Rangi, Bell Hill, Felton Road and Mount Difficulty in the highest five star classification.
“We have never witnessed a jump in the standard of New Zealand Pinot Noir across all price points as dramatic as that of the past 12 months,” remarked Jukes and Stelzer, who base the annual classification on an average assessment of producers’ previous five vintages.
Attributing this in part to maturing vines, they added: “growers and makers are embracing a new sensitivity in drawing out the unique personality of their region. New Zealand Pinot Noir has never spoken more articulately of the character of its place.”
For more on New Zealand, look out for April’s issue of the drinks business.
Bulk versus bottle dilemma for South African wine
By Tosin Sulaiman
Tue, Mar 26 2013
At South Africa’s Rostberg and Co., green bottles filled with a ruby liquid clink as they march along a conveyor belt, destined for wine-lovers from Paris to Shanghai.
But if a trend toward bulk shipping continues, the music of the Rostberg bottling plant may be about to stop.
Set in lush vineyards in Stellenbosch, one of South Africa’s most famous wine communities, Rostberg has been operating below capacity for the past two years due to a shift to shipping wine in 24,000-litre polypropylene “flexitanks”.
The trend has spread through other “New World” wine-producing countries like Chile, Argentina, Australia and New Zealand, which all have distant markets and, in the latter two cases at least, relatively strong currencies that are forcing them to cut costs to stay competitive.
Bottlers in South Africa are frantic about the likely loss of jobs. But another concern for some industry experts and government officials is the potential impact on South Africa’s brand: when wine is bottled outside the country, winemakers lose control of a key part of the production process.
These are big concerns for South Africa, where the wine industry plays an outsized role in reshaping the country’s image after years under apartheid, which ended in 1994.
“Wine has a tremendously important role to play in the development of Brand South Africa,” said Anthony Budd, managing director of Cape Town-based wine exporter Diverse Flavours. “Wine is that much more romantic and seen as premium and coming from a beautiful location.”
The number of people working directly or indirectly in South Africa’s wine industry has risen to more than 275,000 people from just under 160,000 in 2000, and now represents 1.5 percent of the workforce in an economy dominated by natural resources.
The industry has made huge inroads as a producer of high-quality wines since overseas markets opened up after apartheid, said Michael Fridjhon, visiting professor of wine business at the University of Cape Town’s business school.
“In 1994, we were the darling of the world,” he said. “Everybody wanted to do something for the ‘Rainbow Nation’… Since then, we’ve been on a steep learning curve.”
Exports have soared more than 700 percent to a record 409 million liters in 2012. Now the country’s biggest agricultural export earner, wine sets South Africa apart from other sub-Saharan African countries known for exporting predominantly raw materials.
Seventy percent of the 26 billion rand ($2.8 billion) it contributes to the national economy is focused on the Western Cape province, which boasts ideal conditions for wine-making with its Mediterranean climate, mountain slopes and valleys, and sea breezes from the Atlantic and Indian Oceans. The Western Cape is also where the majority of bottlers are located.
Nearly half of all wine from South Africa, Australia, New Zealand, Chile and Argentina is shipped in bulk, up from around a fifth a decade before, according to a report published last year by Dutch bank Rabobank entitled ‘The Incredible Bulk. The Rise in the Global Bulk Wine Trade’.
As recently as 2009, just over 61 percent of South African wine exports were bottled domestically but that share dropped to 40 percent last year, according to industry export and promotion group Wines of South Africa (WOSA).
Bulk exports overtook bottled shipments in Australia for the first time in January 2011, industry group Wine Australia said. Major Australian producers like Jacob’s Creek are now bottling in Britain, the world’s largest wine import market.
Bevan Newton Johnson, managing director at First Cape, the largest South African wine brand in Britain, said the company mothballed its own bottling facility nearly two years ago, laying off around 40 people.
“Our products were not profitable in the overseas markets,” he said.
The South African government is concerned about the effect on employment. Close to 1,000 jobs were lost due to the shift to bulk as of the end of 2011, according to the Department of Trade and Industry, and industry representatives said the trend suggests that more cuts are coming.
In South Africa, where the unemployment rate has remained at 25 percent for years, that has a multiplier effect – the country has one of the highest “dependency ratios” in the world at an average of three non-working people supported by every worker, according to a January 2013 report by the South African Institute of Race Relations.
Two bottling plants in Stellenbosch have closed since 2010. Consol Glass, South Africa’s biggest glass manufacturer, is preparing to cut production this year because of the sharp fall in demand for wine bottles. Its wine sector business, which accounts for a quarter of revenues, has declined by more than 20 percent over the last three years.
Rostberg, located on the Rust en Vrede wine estate which produced the wine served at former President Nelson Mandela’s Nobel Peace Prize dinner, had to shut down one bottling line in 2010, and was forced to lay off 35 staff, half its workforce.
“The only way we can create more jobs is if we could bottle our wine locally,” said Leo Burger, Rostberg’s managing director.
The government has threatened to retaliate against the UK, the world’s biggest market for imported wine, by importing bulk whisky from Britain for bottling in South Africa.
“The big winners in this trend are the bottlers who operate in the UK and the EU,” said Stephen Hanival, director of agro-processing at the Department of Trade and Industry. “Jobs and capacity have been lost in developing countries like South Africa.”
Bottlers and the wine industry are trying to counter the growth in bulk exports by diversifying to China, Japan and other parts of Africa, where the demand for premium wine is growing.
South Africa exported 5.5 million liters of packaged wine to China in the year to February 2013, a 24 percent increase from the previous year.
A big factor in the shift to bulk is the growing influence of supermarkets.
Retailers in Europe have been able to squeeze pricing from their suppliers to attract customers recovering from the recession, said Stephen Rannekleiv, Rabobank’s executive director of food and agribusiness research.
Some have created competing private label wine brands using foreign-sourced bulk wine.
Fraser Thompson, head of the IPL Wine subsidiary at Asda, the British arm of U.S. retailer Walmart, said countries like South Africa have had no choice but to shift to bulk to stay competitive. Asda has increased its sourcing from South Africa in recent years, partly thanks to UK bottling, he said.
“South Africa is competing on a global stage with every other wine-producing nation,” he said. “Without shipping in bulk there’s a danger that South Africa would lose considerable export trade to the UK and across the world.”
Around a third of the wine imported by Asda is now bottled in the UK, where it set up its own bottling plant in December 2011 in Snetterton, Norfolk.
South African industry and government officials have expressed concern about what happens to the wine after it leaves the polypropylene tanks.
Hanival was particularly worried about the potential for South African wine to be blended with a lower quality wine and marketed as South African, which could have consequences for its hard-won reputation for high quality at the right price.
“In the past the UK consumer saw South African wine as moderate-to-low quality but at a very low price point,” he said. “These days South African wine is seen as of moderate-to-good quality, still at a good price point … I think we have managed to lose that label of cheap and cheerful, relatively low-quality wine.”
A spokeswoman at Asda strongly denied any trans-national blending took place at Asda. Tesco and Sainsbury’s, the two other big supermarket chains in Britain, did not respond to requests for comment on this story.
Bottling in South Africa includes a trackable certification seal, with various guarantees for the consumer, Rostberg said.
“Our wine certification system ensures the origin, cultivar (grape variety) and vintage only up to the harbor when it is exported in bulk, but no further,” he said.
The reputational risk around the possibility of blending is uncomfortably high, some in the industry say.
“Odds are that it will adversely affect the reputation (of South African wine),” said Fridjhon. “Effectively what you’re doing is turning wine into a commodity.”
REPUBLIC NATIONAL DISTRIBUTING COMPANY APPOINTS BILL CAMPION EXECUTIVE VICE PRESIDENT OF RNDC SOUTH CAROLINA
Republic National Distributing Company (RNDC), the nation’s second largest premium wine and spirits distributor, today announced the appointment of Bill Campion as executive vice president of RNDC South Carolina. In his role, Campion will have responsibility for leading all sales and operations for the business unit.
“We are very fortunate to have Bill’s leadership in this important role,” said Bob Hendrickson, executive vice president, Republic National Distributing Company. “He possesses a strong track record of success delivering best-in-industry service to our customers and suppliers while ensuring our business practices are executed to the highest standards. The South Carolina market will benefit greatly from his appointment.”
Campion brings more than 20 years of industry experience to his role. Most recently, Campion served as executive vice president of RNDC Pensacola where he made a tremendous impact positioning RNDC as a formidable and profitable distributor of choice in the Northwest Florida market. He also played an instrumental role in leading the RNDC Pensacola team through the RNDC purchase of the N. Goldring Company and its subsequent transition.
In 2008, Campion joined the leadership team at RNDC Pensacola as vice president of Sales. Prior to that, he served as vice president of Sales and Marketing for N. Goldring Company in Pensacola. He also previously held the position of On-Premise District Manager for the company.
Campion will report directly to Tom White, region president, and will be based in Columbia, S.C.
Virginia: ABC Adds a New Member to their Executive Leadership Team
Virginia ABC has hired John L. Shiffer as Director of Marketing for the agency’s newly created marketing division.
The decision to create a marketing division is one step toward an effective business strategy aimed at helping the agency realize best practices in their product placement and marketing efforts. As marketing director, Shiffer will oversee the development and management of the agency’s marketing and promotions functions in areas that include promotions planning and analysis, store branding, and product planning and performance. The marketing division will also provide vital support for the agency’s revenue growth objectives as well as to its service improvement strategies.
“By recognizing and responding to the business needs of the agency, Virginia ABC will continue to operate as a competitive retailer, which aligns with our mission of control, service and revenue,” said Chairman Neal Insley. “We’re pleased to welcome John as a member of our management team.”
Shiffer earned an M.B.A. in marketing and finance from the University of Chicago and has more than 20 years experience in strategic marketing and new product development. His professional experience includes employment with Virginia Lottery and Reynolds Consumer Products.
“I am excited to serve ABC in my new position,” said Shiffer. “And I look forward to building relationships with industry partners and better serving our retail customers with innovative marketing strategies.”
Tennessee: On its last leg, TN wine bill adds Sunday liquor sales
Source: The Tennessean
Mar. 27, 2013
Liquor stores could open on Sundays, and they would be allowed to sell items other than alcohol under a wine-in-grocery-stores bill now being weighed in the state Senate.
The Senate Finance Committee approved amendments Tuesday that would loosen restrictions on liquor stores in a bid to break the impasse over new alcohol legislation.
But the committee put off a final vote on the bill for a week amid signs that the changes still were not enough to get the measure to the Senate floor.
“People are thinking we’re up here talking about putting wine in a grocery store,” said Sen. Jim Kyle, D-Memphis. “This bill today changes the entire distribution system of alcoholic beverages in this state, and I think we’ve moved awfully quickly.”
Still, the question of whether any such legislation has a glimmer of hope for this year rests largely on the other side of the Capitol.
The senators’ counterparts in the state House earlier this month appeared to drop the issue for the year, but senators have pressed ahead with Senate Bill 837, which would let voters at the county level decide through referendums whether to allow wine sales in local grocery stores.
Lt. Gov. Ron Ramsey, R-Blountville, has said he would like to get the bill through the Finance Committee, a move that might pressure the House to reconsider or could set the framework for a final deal next year.
The Senate Finance Committee attached about half a dozen amendments to the bill, in some cases by one-vote margins. The changes appeared to be intended to win liquor stores and distributors – or at least some of their supporters in the legislature – over to the measure.
Nonetheless, the bill’s sponsor, state Sen. Bill Ketron, asked committee members to put off a vote on the bill itself. The Murfreesboro Republican told reporters later that he wanted to secure a couple of more votes on the 11-member panel before pressing ahead.
“Next Tuesday we’re running the bill,” he said.
Indiana: Indiana might soon blaze its own bourbon trail
Legislation that could foster creation of craft micro-distilleries in state will head to governor
Mar 26, 2013
The Indiana Senate passed legislation Tuesday on a 38-9 vote that advocates believe could lead to the creation of the state’s own bourbon trail.
Senate Bill 1296 would allow craft micro-distilleries to operate in Indiana. Businesses could sell hard alcohol on-site or serve samples. Few distilleries exist in Indiana, and they can produce hard alcohol only for wholesale distribution to retailers.
Like the ban on the sale of alcohol in stores on Sundays, the restriction on distilleries is a blue law throwback to Prohibition. Michigan, Ohio and Illinois already allow distilleries to sell alcohol on-site. Kentucky is home to the world-famous bourbon trail.
Indiana businesses see the change in law as a potential boon for tourism. Popular local brewery Sun King, Munster beer brewer Three Floyds Brewing and Huber’s Orchard, Vineyard and Winery in Starlight, near Louisville, Ky., all plan to open micro-distilleries. They plan a mix of homemade bourbons, vodkas and whiskeys.
Other entrepreneurs who want to start distilleries had complained the bill picked favorites after it passed the House. The bill would have allowed permits to be issued only if applicants had been operating a winery or brewery for at least three years – a way to ensure businesses had responsible records. Start-ups would have been forced to apply for a distillery permit and then begin a three-year waiting period.
The Senate changed the bill to give start-ups time to avoid the three-year waiting period. The start-ups, however, would face stricter regulations on serving alcohol for their first three years.
The Senate approved the bill 38-9. The author, Rep. Ed Clere, R-New Albany, will not protest the changes made in the Senate. That means the bill will head to Gov. Mike Pence’s desk.
The federal government already enforces tighter restrictions on distilleries than on breweries and wineries, including FBI background checks on applicants.
Kentucky: Bill to allow alcohol sales on Election Day passed by Kentucky legislature (Excerpt)
Source: Courier Journal
Mar 26, 2013
Kentucky’s longstanding ban on alcohol sales while polls are open could be coming to an end.
The House in the final hours of the 2013 session approved Senate Bill 13, sponsored by Sen. John Schickel, R-Union, that would allow alcohol sales during elections in places where alcohol sales are allowed otherwise. If signed by Gov. Steve Beshear, only South Carolina would prohibit sales when polls are open.
Local governments could still pass restrictions on Election Day sales.
The House vote was 50-46.
Senate Bill 13 also included language from other liquor bills, including House Bill 300, the legislation filed by Rep. Dennis Keene, D-Wilder, that included the recommendations of Beshear’s alcohol regulation task force.
The Senate also approved the bill to send it to Beshear. A comment on whether Beshear would sign the bill or veto any part of it was not immediately available.
Pennsylvania: Redesigned liquor stores offered as alternative to privatizing Pennsylvania alcohol sales
Source: Pittsburgh Tribune-Review
By Kari Andren
Wednesday, March 27, 2013
A redesigned wine and spirits store could offer lawmakers and others who favor modernizing stores, rather than privatizing them, more ammunition as they debate how and where Pennsylvanians can buy wine and liquor.
The 10,000-square-foot Fine Wine & Good Spirits store, which opened Tuesday in the Village at Pine shopping center in Pine, is the first in the Pittsburgh region to feature the new shelving, frosted glass signs and pendant lights.
A center island houses cash registers, educational information and a tasting bar. Bob Tirk, a full-time retail wine specialist, said he will be in the store most days to help customers.
Still, not all consumers are won over by the concept.
Patty Walker of Gibsonia praised the store as “beautiful and user-friendly” as she browsed a wall of wines with her sister.
“However, as nice as this is, there would be many more like this if there were privatization,” Walker said. “In other states, a lot of stores are like this and have been for years.”
“We designed this store with the consumer in mind,” said board member Bob Marcus of Indiana. “Rebranded” stores throughout the state have had sales increase 20 percent to 35 percent because the new layout and design encourages shoppers to browse longer, he said.
“That will ultimately benefit the taxpayers of Pennsylvania through the agency’s transfer to the General Fund,” Marcus said.
The new look and higher sales figures could bolster the position of lawmakers, particularly in the Senate, who have said they want to modernize the state’s system, not dismantle it.
“It wouldn’t shock me if you hear this in a speech on the floor of the Senate or a speech in the Law and Justice Committee,” said G. Terry Madonna, a political scientist at Franklin & Marshall College in Lancaster. But for privatization supporters, “this is a philosophic question. … It doesn’t matter what you modernize. It’s whether (selling alcohol) is a core function of government.”
The state House approved a privatization plan last week that would phase out 600 state stores and allow wine sales in grocery stores, along with beer, if the store has a restaurant license. It would give beer distributors the first chance to purchase 1,200 licenses that would allow them to sell beer, wine and liquor.
Shoppers browsing the revamped store, roughly double the size of the one it replaces in the Wexford Plaza Shopping Center, praised the new look.
“This is the nicest selection of wine anywhere. You could never find this in a grocery store,” said Linda Fitterer of McCandless. “Please, governor, think about what you’re doing with the wine stores. It would be a great loss for everyone who loves wine to lose this.”
The LCB spent about $150,000 on new fixtures, such as shelves and the center island. Other upgrade costs were built into the store lease agreement, said Stacy Kriedeman, an LCB spokeswoman.
The redesigned stores are “a paradigm shift,” said John Eld, a member of the American Wine Society’s Pittsburgh chapter. He said he remembers when customers chose products from a catalog at the state store and a man behind the counter brought it out.
“It’s like going from a crank telephone to an iPad,” Eld said of the new design.
About 21 stores have been revamped, Kriedeman said. One more redesigned store is set to open in Monroeville at the end of April, and the agency is working to finalize a lease agreement for a new store to be built on Blue Spruce Way in Murrysville, replacing the store on William Penn Highway.
Anheuser-Busch News Stirs Talk of Sweep
By Christopher M. Matthews
The news Tuesday that Anheuser-Busch InBev NV is being investigated by the SEC had some Foreign Corrupt Practices Act aficionados muttering a popular FCPA catch phrase: “Industry-wide sweep.” Are booze makers the latest industry to draw the gaze of law enforcement?
AB InBev is now the second alcoholic beverage company to come under FCPA scrutiny in India. Bourbon maker Beam Inc. disclosed in October it was reviewing its business in India for compliance with the FCPA, which prohibits bribes to foreign officials. Meanwhile, vodka maker Central European Distribution Corp. disclosed in October that it had violated the FCPA, and Diageo PLC paid $16 million in 2011 to settle an FCPA case.
The SEC has previously canvassed entire industries for their compliance with the FCPA. For example, the SEC sent letters to a handful of banks and asset managers about their dealings with sovereign-wealth funds in 2011 after regulators became suspicious that financial institutions’ FCPA compliance wasn’t up to snuff. The recipients of the letters were not accused of any crime, and the probe, one of several industry wide sweeps, hasn’t resulted in any charges thus far.
If the alcohol industry is facing a sweep, it could be painful. Critics of the approach call it a fishing expedition, in which regulators ask companies to undergo costly internal investigations on sometimes flimsy evidence. Kara Brockmeyer, who heads the SEC’s FCPA unit, bristles at that characterization. At a recent conference, she said sweeps require high-level approval and are only granted when they see pervasive wrongdoing. “It’s not something we undertake lightly,” Brockmeyer said.
Nathaniel Edmonds, a former official on the DOJ FCPA squad, said “problematic third parties” used across an industry often spark a sweep. But Edmonds, now a partner at Paul Hastings LLP, said it was too early to say the liquor industry is facing a sweep. “Rather, the public disclosures indicate that many companies in the industry are facing similar challenges,” he said. The SEC didn’t respond to a request for comment.
Crown Royal Maker Sues Over ‘Crown Club’ Whiskey
Source: Law 360
By Bill Donahue
March 27, 2013
The makers of Crown Royal whiskey claim a smaller rival is selling liquor that illegally copies the name and distinctive velvet bag packaging of the well-known Canadian whiskey, according to a lawsuit filed Tuesday in Texas federal court.
The U.S. subsidiary of global beverage giant Diageo PLC says Texas liquor distributor Mexcor Inc. is misleading consumers by selling “Crown Club” whiskey in small bags that are similar to the purple drawstring sacks used to package Crown Royal.
Mexcor is reportedly selling its whiskey with Southern state names – Texas Crown Club, South Carolina Crown Club and so on – and in drawstring bags based on the design of each state’s flag. As a result, consumers are going to be duped into thinking the rival whiskeys are state-themed versions of Crown Royal, Diageo says.
“When exposed to defendants’ whiskies in the marketplace, consumers are likely to mistakenly believe that defendants’ whiskies are affiliated with, sponsored by, approved by, or associated with Crown Royal … or [that they] are regional variations or novelty line extensions of Crown Royal,” the complaint says.
Further, Diageo claims that Mexcor is purposefully sowing the alleged confusion – also using similar label fonts and emphasizing the term “Crown” – to leech off the success of Crown Royal.
“Defendants have deliberately and in bad faith embarked on a nationwide scheme to trade on the enormous popularity, goodwill and consumer recognition of plaintiff’s Crown Royal brand and the … purple bag trademarks for their own commercial benefit,” the suit says.
Diageo – a multibillion-dollar global drink company that also sells Johnnie Walker brand Scotch whisky and Smirnoff vodka – lists seven separate claims against, including federal, state and common law infringement, dilution and unfair competition. The company wants a preliminary injunction barring Crown Club from store shelves, punitive damages and a ruling that cancels Mexcor’s own trademarks for the whiskey.
Mexcor didn’t immediately return a request for comment on Wednesday.
Wednesday’s complaint came just over a month after Diageo hit Mexcor with a separate lawsuit in New York federal court for airing attack advertisements against Crown Royal.
That suit said Mexcor was running a series of unauthorized commercials that describe an unnamed competing whiskey – adorned in packaging that resembles Crown Royal’s trademarked purple bag – as “poison” that it is unfit for Texans.
“Defendant’s commercial intentionally and unambiguously misleads, confuses, necessarily implies and deceives consumers … into believing that Crown Royal whiskey is a harmful, unsafe or substandard product,” the Feb. 11 complaint said.
The advertisement allegedly feature a barmaid in an Old West saloon ordering a round of Mexcor’s Texas Crown Club whiskey for a group of grizzled cowboys. When a “strange cowboy” ambles into the bar brandishing an unmarked bottle in a purple, drawstring pouch, the woman jeers, “We don’t drink that poison in this neck of the woods,” the suit said.
After the cowboy is tossed out of the saloon, the camera pans to a bottle of Texas Crown Club and shows a second bottle, in a pouch that resembles the Texas state flag, slammed down on the bar next to the first bottle, according to the complaint.
The first case is still pending.
Diageo is represented by Linda L. Addison of Fulbright & Jaworski LLP.
Counsel information wasn’t immediately available for Mexcor and holding company EJMV Investments LLC, which was also named as a defendant.
The case is Diageo North America Inc. v. Mexcor Inc. et al., case number 4:13-cv-00856, in the U.S. District Court for the Southern District of Texas.
AB InBev admits new Grupo Modelo suit could derail $20.1bn deal
Source: Beverage Daily
By Ben Bouckley
ABInBev says it will ‘vigorously defend’ itself against a new consumer class action seeking to prevent its full $20.1bn buyout of Mexican brewer Grupo Modelo, but admits the suit could halt the deal.
An earlier January 31 action filed in Washington D.C by the US Department of Justice to halt the deal has been delayed until April 9. Reports suggest the two sides are nearing an agreement.
But in its annual report filed with the US Security and Exchange Commission (SEC) the world’s biggest brewer Anheuser-Busch InBev revealed that a new private complaint was filed on March 22 in the US District court,
Northern District of California, against AB InBev and Grupo Modelo.
BeverageDaily.com has seen a copy of the complaint, whereby nine disgruntled consumers bring a class action on behalf of all US beer consumers that seeks to stop AB InBev acquiring the Grupo Modelo shares it does not already own.
Edstrom et al. argue that the $20.1bn deal, inked on June 28 2012, would end aggressive competition that had led to lower US beer prices and innovation, enhance AB’s market power and “facilitate coordinated pricing between AB InBev and the next largest brewer, MillerCoors”.
New action could ‘enjoin or delay’ buyout
AB InBev said in its Monday SEC filing: “Even if we, Grupo Modelo, Constellation and Crown Imports resolve the litigation with the DOJ, the court in this private action could enjoin the parties from completing the combination with Grupo Modelo, or could further delay it. We intend to defend against it vigorously.” AB InBev said.
The action claims that the proposed deal violates Section 7 of the Clayton Antitrust Act, since it “may, and most probably will, substantially lessen competition, and/or tend to create a monopoly in the production, distribution and sale of beer in the United States”.
As the world’s most profitable beer market, the US was dominated by two firms (AB InBev and MillerCoors) accounting for circa. 80% of sales, the claim states, adding that any merger could damage consumers via higher
prices, lower product quality, less innovation, destruction of choice.
The suit claims that the US beer market was “substantially more” than simply ‘highly concentrated’ under the Herfindahl Hersch Index (HHI) where 1800 points earns this appellation. The index grades market concentration by
adding up squared market share percentages of each market competitor.
An additional 100 points caused antitrust enforcers great concern, the plaintiffs add, stating that the post-transaction US beer market HHI would be 2800, “plainly a market ripe for probable if not collusion and a galloping tendency towards monopoly”.
For the sake of (pricing) ‘momentum’.
Edstrom et al. said that AB and Miller Coors found it more profitable to follow each other’s prices – typically initiated by AB in the expectation Miller would follow – than to cut prices in order to win share, but that Modelo had provided a competitive brake on both firms.
Modelo had narrowed the price gap with AB’s premium domestic brands such as Bud and Bud Light under its post-2008 ‘Momentum Plan’, the suit claims, and thus put pressure on AB InBev and MillerCoors to lower prices to dissuade consumers from ‘trading up’ to Modelo brands.
AB InBev’s further move, subject to approval of its Modelo purchase, to sell 50% of the latter’s interest in Crown Imports to joint owner Constellation Brands, is also targeted by the suit.
The plaintiffs state this would create a “façade of competition” between AB and its importer (Constellation) but that Constellation would acquire no Modelo brands or brewing facilities under this arrangement, and would depend on AB for its Modelo-branded beer supply.
However, this seems to overlook a further deal agreed by AB InBev and Constellation in mid-February seeking to head off US Department of Justice legal action aimed at halting the deal upon this basis.
Beer fight brewing over taxes
Source: The Hill
By Kevin Bogardus
There’s a tax fight brewing between large beer companies and their smaller craft brethren on Capitol Hill.
The Beer Institute, which includes member companies such as Anheuser-Busch and MillerCoors, plans to “actively oppose” the Small Brewer Reinvestment and Expanding Workforce, or Small BREW Act, this year.
The Brewers Association – essentially the trade group for craft brewers – is lobbying for the bill, which would reduce the federal excise tax on beer from small producers.
Chris Thorne, vice president of communications for the Beer Institute, says his trade group has dropped its neutral stance on the legislation because it divides the industry.
“We are going to actively oppose this legislation,” Thorne said. “If the entire industry is unified and has one ask, we stand a far better chance of succeeding than when we have multiple bills to push.”
Thorne said his group opposes any tax increase on beer, but that all of the industry should unite behind one bill: the Brewer’s Employment and Excise Relief (BEER) Act, which is expected to be introduced later this year and would reduce excise taxes on beer produced by brewers large and small.
Bob Pease, chief operating officer for the Brewers Association, said the Beer Institute has been uncomfortable with his group’s preferred legislation in the past.
“That’s disappointing but not altogether unexpected,” Pease said. “They expressed discomfort in the past about various components in the bill so that’s why it doesn’t come as a total shock.”
If enacted, the Small BREW Act would cut the federal excise tax on beer from $7 a barrel to $3.50, which is placed on a small brewer’s first 60,000 barrels produced per year. After that initial 60,000 barrels, small brewers must pay $18 per barrel, which would be lowered to $16 under the bill.
In addition, the bill would expand the tax code definition for a small brewer. Right now, brewers who produce up to 2 million barrels of beer per year are considered small brewers. The legislation would raise the limit to 6 million barrels per year.
The Beer Institute said the bill amounts to a “giveaway” for a handful of profitable brewers.
“We can’t support a policy that amounts to a giveaway to a handful of brewers that each are worth more than a billion dollars,” Thorne said. “If this bill was a pathway to market, why would you need this for a business that sells millions of cases a year?”
The Brewers Association has microbreweries among its roughly 1,750 members, including well-known national brands like Brooklyn Brewery and The Boston Beer Co., which makes Samuel Adams. Those two companies are also part of the Beer Institute, reflecting the overlapping membership lists of the two groups.
Small brewers argue that adjusting the excise tax would lead to another $60 million per year for a quintessentially American industry.
“Our industry is an example of small, main-street American businesses creating jobs – manufacturing jobs in the United States, making an American product, putting Americans to work for the product that is by and large consumed in the United States,” Pease said.
The Small BREW Act was introduced last month by Rep. Jim Gerlach (R-Pa.) and already has 61 co-sponsors from both parties, according to congressional records.
The BEER Act would create a bigger tax cut for the industry at large. Thorne said past versions of the bill would have reduced the beer excise tax from $18 per barrel to $9 for large brewers while also cutting the tax for small brewers from $7 per barrel to $3.50.
The legislation has yet to be introduced this Congress, but Thorne said his group would be working to have the bill offered again this year.
“Our intent is to seed introduction of the BEER Act at some point,” Thorne said. “We expect that members of Congress that have historically been there for us in the past will be there for us again.”
Pease said he saw that bill as “a defensive measure” meant to “forestall an excise tax increase.”
“We certainly do not oppose it. We would favor that bill, but we support our bill, and we are actively working for passage of our legislation,” Pease said.
The industry feuding comes as lawmakers are working on comprehensive tax reform. Trade associations for beer and other alcoholic beverages are worried that Capitol Hill will hike the excise tax to raise revenue to help ease budget problems.
“There’s not a big appetite on Capitol Hill to give a tax break to a wildly successful industry that already gets a tax break. There’s a risk because they are drawing attention to themselves when Congress is looking for revenue-raisers,” Thorne said about the small brewers.
Others expressed concerns about the Small BREW Act as well.
“While we oppose any increase in taxes on beer because they are regressive and are paid primarily by working men and women, we have concerns about any legislation that would seek a tax cut in the current fiscal environment,” said Mike Johnson, chief lobbyist for the National Beer Wholesalers Association, in a statement.
Lobbyists for spirits-makers said it’s the wrong time to push Congress on the excise tax.
“Given the budgetary circumstances, we didn’t think it was worth going to the Hill to talk about rolling back federal alcohol excise taxes,” said Mark Gorman, senior vice president for government relations for the Distilled Spirits Council of the United States.
But others are seeing opportunity. Pease said he met with House Ways and Means Committee Chairman Dave Camp (R-Mich.) last year at a small Michigan brewery and they talked comprehensive tax reform.
“He mentioned that comprehensive tax reform was certainly his priority. He thought that could be one way for our issue to get addressed,” Pease said. “What we have been told for the last two or three years is that we need a vehicle to attach our provision to. If that’s comprehensive tax reform, that would be great.”
Pease said he has met with other panel members and the trade group plans to submit comments to the committee on tax reform.
Small brewers are also actively lobbying during their annual craft brewer conference, which is in Washington this year. On Tuesday, Pease helped lead what he called his trade group’s biggest-ever lobby day on Capitol Hill – 250 brewery owners from 45 states were scheduled to meet with staff in 90 Senate offices and about 250 House offices.
Pease said brewers would be working to build relationships with their representatives, perhaps even strong enough to have a beer back home together.
“Even more importantly, get the lawmaker to go to the brewery,” Pease said. “When they get into a brewery, they get the manufacturing angle. You can see it.”
Anheuser Busch-Inbev brews up De Master’s bid
Source: This Is Money
By Geoff Foster
27 March 2013
Thirsty punters woke up and smelt the coffee as rumours of a multi-billion euro drinks deal did the rounds. Shares of De Master Blenders, the Amsterdam-based international coffee and tea company, which was spun out of US food conglomerate Sara Lee last summer, frothed ?0.03 higher to ?9.55 amid speculation that Anheuser Busch-Inbev, the world’s largest brewer, wants to add the Douwe Egberts-to-Saseo branded company to its burgeoning portfolio.
Dealers heard that Inbev has approached two of De Master Blenders major shareholders to name a price for their stakes, prior to launching a full-scale takeover bid in the region of ?12.50 a share.
Joh.A.Benckiser, an investment firm run by former Reckitt Benckiser boss Burt Becht, owns 15 per cent, while investment group JAB, majority owner of US cosmetics group Coty Inc, holds 12.9 per cent. Both coincidentally also have interests in Inbev.
Since its flotation last June, De Master Blenders has had a difficult time. In August, its shares plummeted after the coffee maker said it would restate earnings because of accounting irregularities in Brazil. After fourth-quarter results in October, analysts downgraded forecasts as the figures failed to match expectations.
Michiel Herkemij, a former Heineken executive, brought in to run the newly standalone company, quit in December over a clash of opinion after only 12 months in charge.
Jan Bennink, interim chief executive, is now trying to revive its fortunes. As an independent coffee company De Master Blenders wants to take on its bigger rivals such as Nestle and Kraft, by expanding into new countries. With giant Inbev lurking, it probably will not get the chance.
Cognac exports stay strong despite slower volumes growth – figures (Excerpt)
By Andy Morton
27 March 2013
Cognac export volumes slowed last year but raced ahead in value, new figures have shown.
In 2012, Cognac exports increased by 3.2% in volume to a record 168m bottles, and by 16.7% in value, according to Bureau National Interprofessionnel du Cognac (BNIC) data released this week. “These figures reflect the strength of the Cognac category particularly in the export markets of Europe, Asia and North America,” the trade body said.
‘Le binge-drinking’ takes hold of France as alcohol-related hospital admissions rise by 30%
Source: Daily Mail
By Ian Sparks
Short term admissions for binge drinking symptoms up 80%
Latest figures show drinking killed 49,000 people in France in 2009
40% of the deaths were people under the age of 65
Many blame the UK for the rise of binge drinking among young French
France has seen a sharp rise in the number of people being hospitalised for alcohol-related conditions.
Around 400,000 people out of a population of 65 million are admitted to French hospitals every year for conditions like comas, hepatitis and liver cirrhosis, a rise of 30 per cent compared with three years ago.
In addition, short term hospital admissions for binge drinking symptoms are up by a staggering 80per cent.
Despite being one of the world’s key producers of wine and spirits, the French are often perceived to have a healthy attitude towards alcohol with most drinking done at mealtimes and rarely to excess.
According to the French Society for Alcohol abuse hospital admissions for drink related diseases , particularly amongst young people, are now twice as numerous as those for common complains like diabetes or cardio vascular disease.
‘We are seeing more and more young people arriving at accident and emergency clinics in drunken states who remain in hospital for one or two days to be sobered up.
We are also seeing young patients whose health is already seriously affected due to pancreas or liver diseases like cirrhosis which previously did not show until much later in life’, said Dr Damien Labarrière, a specialist based in Orleans in a radio interview.
Professor Michel Reynaud, addiction specialist in the Paris area, co author of the report, added that young French women are turning more and more to binge drinking in order to show off to their friends.
‘It is particularly worrying that large numbers of young girls see getting drunk as a form of glory’ he said.
‘This is a health emergency. We have no longer government money to cope with this problem. When one considers the rising scale of it it is hard to see how it can be stopped’, he said.
Professor Reynaud blamed the ‘banalisation ‘of alcohol for the Gallic rise of binge-drinking and legalisation of Internet advertising for drink.
‘Social networks have democratised consumption of alcohol and proclaimed drunkeness as a status symbol’, he said.
‘Le Binge-drinking’ has now become a familiar expression in the French language and many blame the UK for its rise in France.
Hortense Dormoy a journalist for women’s magazine Marie-Claire described binge-drinking as consuming alcohol ‘over a short period of time to reach a drunken state and complete loss of control’ and ‘drinking six glasses or more for men and five or more for women’.
She claimed the phenomenon ‘originated from England where young people take advantage of “happy hours” to drink as much as possible in as short a time’.
The magazine revealed that 2.3 per cent of French 17-year-olds had recourse to bingeing at least ten times a month.
Paradoxically alcohol consumption over the past 50 years has actually declined by 50 per cent in the country which is the world’s number one tourist destination and produces champagne, cognac and some of the finest wines on the planet, alcohol in France still remains a prolific serial killer due to ‘le binge-drinking’.
Figures for 2009 revealed this month that drinking killed 49,000 people in France of whom 40 per cent were under the age of 65.
36,500 of the French victims were men with alcohol accounting for 13 per cent of total male deaths and 12,500 were women representing 5 per cent of female deaths.
The 13 per cent of total male deaths due to alcohol abuse compares with 5 per cent in Switzerland , 3 per cent in Italy and 1 per cent in Denmark.
The 5per cent French female deaths due to drinking are also higher than Italy (2per cent) and Denmark (1per cent).
‘Alcohol is a major cause of premature death being responsible for 22 per cent of deaths in the 15 to 34 age group, 18 per cent between 35 and 64 and 7 per cent of people over 65. Deaths due alcohol are caused mainly by cancer and heart disease ‘, statistics revealed.
In France scientific tests on rats revealed that young rodents fed large doses of alcohol became twice as likely to become dependent on drink when they reached maturity.
Leading researcher Mickael Naassila revealed that ‘We noticed that the animals literally lost control of their alcohol intake and were able to consume between 5 and 6 grammes perkilo of their weight, which is a huge amount’.
Bompas & Parr create drinkable ‘whisky tornado’
Source: The Spirits Business
by Becky Paskin
27th March, 2013
A group of artists and scientists have created the world’s first “whisky tornado” – a swirling mist of whisky vapour that can be breathed in through a straw.
The art installation, which has been showcased at King’s College London’s Festival of Food and Ideas last week, uses industrial-size humidifiers to generate a vapour of Talisker single malt, which swirls within a giant bell jar.
Scotch drinkers looking for a new way to enjoy their favourite tipple are invited to dip a straw into the mist and breathe the whisky in, resulting in a new taste experience and hit of alcohol directly to the lungs.
Rather than simply a new way to consume a dram, the artwork is designed as a metaphor for the “impact the Scottish weather has on flavour formation in whisky”.
“Many things go into creating the flavours of a whisky,” said Sam Bompas. “We thought it would be interesting to look at the meteorological elements. Sunlight, temperature, rainfall and humidity all contributed to the distinctive aromatics.”
Developed in conjunction with scientists at King’s College, the tornado is now being transferred to Leeds Gallery.
Dr Mark Freeman, senior lecturer in economic and social history at the University of Glasgow, added: “Whisky is shaped by the landscape in which it is distilled and matured, and part of Scotland’s distinctiveness in this respect is its weather.
“The weather affects the type of barley that can be grown, the amount and quality of water for making whisky, and the environment in which whisky barrels spend their many years of maturation. Some highland whiskies are made largely from snow-melt water, and some say that this has a pronounced effect.
“Sometimes the water can be in danger of drying up, and some distilleries have even employed water diviners to help them to find new sources of pure water for making their whisky.
“Some whisky writers argue that whiskies in the casks take flavour from the atmosphere around them, and it is easy to believe this when watching the windswept seas battering the coastlines of the islands on which many single malts are distilled and matured. Battling the elements is part of the romance of the whisky-making story.”
Brazil Government Officially Recognizes Bourbon and Tennessee Whiskey As “Distinctive Products” of the United States
The Distilled Spirits Council said today Brazil has officially recognized Bourbon and Tennessee Whiskey as distinctive products of the United States. This action by Brazil follows the U.S. announcement of the recognition of Cachaça as a distinctive product of Brazil last month.
“Today’s announcement by the Brazilian government ensures that only Bourbon and Tennessee Whiskey produced in the U.S. according to official U.S. standards may be sold in Brazil,” said Distilled Spirits Council of the United States President Peter H. Cressy. “Our whiskey exports to Brazil are growing rapidly, and this will ensure the integrity of our products in this expanding market.”
U.S. Bourbon and Tennessee Whiskey exports to Brazil shot up 519% from 2001 to 2011, and increased a further 17.9% to reach nearly $3.8 million in 2012. The new recognition is expected to help U.S. Bourbon and Tennessee Whiskey exports continue to expand in this dynamic and growing market.
The United States and Brazil reached an agreement to recognize one another’s distinctive spirits in April 2012, and today’s announcement is the culmination of that agreement.
“We wish to thank the Office of the United States Trade Representative and the Tax and Trade Bureau for their tireless efforts to secure Brazil’s recognition of America’s distinctive spirits — Bourbon and Tennessee Whiskey,” Cressy concluded.
Concha y Toro Falls in Chile as Profit Trails Estimates
By Eduardo Thomson
Mar 27, 2013
Vina Concha y Toro SA, Chile’s largest wine exporter, fell to its lowest level in two months after reporting profits that trailed analyst estimates.
Concha y Toro declined 0.2 percent to 963.4 pesos at 1:51 p.m. in Santiago and earlier slid to 936.8 pesos, its lowest intraday price since Jan. 30. The Ipsa (IPSA) benchmark index retreated 0.4 percent.
The company reported annual profit of 30 billion pesos ($64 million), below an average estimate of 35.6 billion pesos, according to a Bloomberg survey of four analysts. It said earnings before interest, tax, depreciation and amortization, or Ebitda, reached 53.4 billion pesos, versus an estimate of 58.8 billion pesos.
Concha y Toro’s margins contracted in the period as the peso strengthened versus the Brazilian real and the euro and as bulk grape prices rose, Banchile Inversiones said in an e-mailed note today.
“Administrative costs also rose, as the company opened new commercial offices,” Banchile said. “We can’t rule out downward pressure on the stock.”
Fine whine? Billionaire cries foul in vintage sale
As experts can testify, super sleuths in the wine business must study the cork, glass, sediment, wrapping, labels and how full a bottle of wine is to ascertain whether it’s the real deal. And as two uber-wealthy wine collectors can tell you as they square off in federal court over some questionable bottles, even that sometimes is not enough.
Testimony began Wednesday in a civil trial six years after Florida energy maven William Koch, a yachtsman and collector, sued onetime-billionaire California businessman Eric Greenberg in U.S. District Court in Manhattan over $320,000 he spent in 2005 on two dozen bottles of wine that turned out to be duds.
The trial threatens to pop the cork on the dirty secrets of the wine auction world, which like the art market has been stung in recent years by a proliferation of fakes.
At the opening, there was plenty of talk of how difficult it is to be sure a bottle is real and how good a fake can be. It’s heartbreaking for a true collector to learn that wine is inauthentic because it’s more than just a bottle and a flavor, Koch’s attorney John Hueston said.
“Koch will say these are links to history,” he said, adding that great wines transport people to another era. “It’s not just the juice in the package.”
Greenberg – a former billionaire who built two Internet consulting companies before the 2000 collapse of those stocks reportedly reduced his net worth by as much as 90 percent – asserted his innocence as he took the stand as one of the trial’s first witnesses.
“I wouldn’t sell a fake wine,” he said. “I’ve never intentionally sold fake wine in my life.”
Koch, the brother of famous industrialists and conservative political supporters David and Charles Koch, is seeking compensation for the $320,000, along with unspecified damages. The trial may yet end in a settlement.
Greenberg years ago capitalized on the growing interest in the sale of alcohol for investment purposes, becoming one of the world’s top owners of vintage wine, with a collection of more than 70,000 bottles.
According to court documents, Greenberg earned about $9 million when he sold 17,000 bottles of wine at the sale where Koch made his purchases, reducing his collection by about a quarter.
Koch was duped by an auction brochure that promised buyers the “greatest wines of all time” and “extremely rare” bottles dating to the early 1800s, Hueston said.
Koch paid as much as $30,000 for some bottles, including several purported to be from the 1800s. Those included a $22,542 bottle of Chateau Lafite Rothschild from 1805, a $29,172 bottle of Chateau Lafite Rothschild from 1811 and a $33,150 magnum of Chateau Lafite Rothschild from 1870. The oldest bottles are no longer part of the court case.
Unscrupulous wine dealers have been known to put fine-vintage labels on cheaper bottles and try to pass them off as the real thing. Greenberg is not alleged to have done that himself, but Koch’s lawyers say he should have known something was amiss.
An investigation revealed that Greenberg had been warned by experts that bottles in his collection were not authentic and decided to push them on unwitting buyers at his auction rather than toss them, Hueston said.
Greenberg is not to blame for any bad bottles of wine Koch bought, said Arthur Shartsis, one of the defendant’s lawyers.
A catalog for the sale warned buyers that the wine was being sold “as is” without any promises as to its authenticity.
Further, Greenberg tried to remove bogus bottles himself before the sale and he exposed the corks on bottles so buyers could examine them prior to the sale, Shartsis said. He also used an established auction house with a good reputation that inspected the bottles to aid the pursuit of authenticity, the lawyer said.
On the stand, Greenberg explained how he quickly refunded money to a buyer once who claimed he had sold fake wine.
“I stood behind my wine as I always do and gave them a refund,” Greenberg said. “I have nothing to hide.”
Greenberg maintains through his lawyers that the ultimate test is to taste the wine itself, a luxury that also can devalue bottles that can cost thousands of dollars.
“The only way to know … is to taste what’s inside the bottle,” Shartsis said.
Shartsis was not permitted to tell jurors that Koch is a billionaire, but he dropped some hints.
He noted that Koch spent $3.7 million buying 2,600 bottles of wine from Greenberg and paid a man more than $75,000 daily for two days to make his bids for him at the auction. He criticized Koch for failing to hire people to inspect the bottles he intended to purchase before the auction.
The dangers of trading in rare wines was already apparent to Koch, who learned in 2005 that four bottles of French wine he believed had been once owned by Thomas Jefferson were fake.
Since then, he’s been on a bit of a crusade against wine fakery, having sued wine companies, auction houses and Greenberg, saying in court papers that counterfeiters for years “have duped wine collectors into paying millions of dollars for near worthless bottles of wine.”
Climate change rewrites world wine list
Source: Channel News Asia
28 March 2013
It’s circa 2050 and shoppers are stopping off at Ikea to buy fine wine made in Sweden.
A Nordic fantasy? Not according to climate experts who say the Earth’s warming phase is already driving a wave of change through the world of wine.
As new frontiers for grape growing open up, the viability of some traditional production areas is under threat from scorching temperatures and prolonged droughts.
And in between the two extremes, some long-established styles are being transformed. Some whites once renowned for being light and crisp are getting fatter and more floral while medium-bodied reds are morphing into heavyweight bruisers.
“Some people are alarmists, I prefer to be an optimist,” says Fernando Zamora, oenology researcher and professor at Rovira i Virgili University in Tarragona, Spain.
“I have no doubt that we will still have vineyards in traditional regions, but we have to think of new strategies. And we will also have new zones for vineyards. That’s for sure.
“Already in Germany they are making fine red wine where it used to be very difficult. And in Denmark, now they’ve started making wine.”
Climatologists working with the wine industry around the planet predict temperatures will rise by one to two degrees Celsius from now until 2050, a trend that is expected to be accompanied by an increase in the incidence of extreme weather events.
“Can any region continue to grow the exact same varieties and make the exact same style of wines? If what we know today is correct, that is highly unlikely,” said Gregory Jones, oenology professor at Southern Oregon University.
New vineyard projects in northern Europe will be risky given the increased unpredictability of the weather and the potential for one cold snap to destroy an entire crop.
So it may be that the biggest change will come in the range of wines produced in areas that, until recently, have struggled to ripen some varieties.
Tasmania, parts of New Zealand, southern Chile, Ontario and other parts of Canada, England and the Mosel and Rhine areas in Germany are among the regions that could benefit.
“You can look anywhere in the world where there are relatively cool climate regions that today are much more suitable than they were 30, 40, 50 years ago, because the climates were too cold then. People couldn’t ripen fruit,” added Jones.
Like Zamora, Jones forms part of an international committee for the agriculture and forestry climate change programme (ACCAF) run by France’s research institute INRA.
They are tasked with formulating strategies for helping everything from the plant to legislators cope with climate change.
While wine grapes might not be necessary to feed the Earth’s population, the grape vine is more sensitive to climate than plants like rice, corn and soyabeans, which could provide valuable insight for essential future food supplies.
Vitis vinifera, the plant that gives us fine wine grape varieties, is a prolific wanderer that has a fine-tuned sense of the right place to take root and grow perfect grapes.
Water stress, temperature change, inopportune downpours and frosts are just a few of the variables that have profound effects on the balance of sugar and acidity, the ripeness of tannins, and the palette of aromas.
“In Alsace (northeastern France), climate change is already a problem, because it’s changing the aromatic profile, the balance of sugar and acidity. If the consumers accept the changes, it’s not a problem. If they don’t, it is,” said Jean-Marc Touzard, a co-coordinator of ACCAF.
Producers of Beaujolais meanwhile see warmer weather improving the quality of their product in a region where winemakers have sometimes had to add sugar to bolster alcohol levels in their quaffable reds.
“In 2003 (when France suffered a severe summer heatwave), our wines tasted more like Cote du Rhone,” said Jean Bourjade of the growers group Inter Beaujolais.
“Beaujolais has seen that they can make better wine in a warmer climate, so there is a benefit. But is there a limit to that benefit? Does it go on forever?” said Jones.
“For ten years, they’ll be happy. Then they’ll have problems,” predicted Touzard.
The Languedoc region around the Mediterranean already faces these problems. Hotter, dryer weather is making the area’s already-robust wines more full-bodied and more alcoholic, at the expense, some say, of finesse.
But all is far from lost.
“In the Languedoc, the growers have already begun adapting — planting at a higher altitude and on different soils,” said Touzard.
Another solution is to change the grape varieties legally allowed under Europe’s strict appellation laws, sourcing the indigenous varieties from hot weather climes like Sicily, Greece, Spain and Portugal.
Researchers also say that once these grapes have been genetically decoded, they could be used for plant breeding.
Portugal alone has between 100 to 150 indigenous varieties that we know virtually nothing about, according to Jones.
“Some of the more southern, really warm places that have genetic material could be a real hotbed for dealing with heat tolerance in the future,” said Jones.
Record numbers from around the world visited ProWein 2013
Written by Elinor Zuke
27 March 2013
More international visitors than ever before visited the largest ever ProWein this week. The three day fair hosted 4,783 exhibitors from 48 countries and more than 44,000 trade visitors, up from 40,667 last year.
Organisers said the proportion of international visitors to the show rose by 6% to account for 40%, with particularly strong increases in visitor numbers from the UK, Scandinavia, Benelux, France, Spain and Italy.
Retailers, wholesalers and those in specialist trades accounted for almost half of the visitors, followed by members of the restaurant and hotel trade. 70% of visitors held management positions.
“In combination with the large number of decision-makers coming to Düsseldorf this development confirms ProWein’s leading position as an international meeting point and central orders platform for the world’s wine and spirits sector,” said Hans Werner Reinhard, deputy managing director at show organiser Messe Düsseldorf.
Over 300 events including lectures and food and wine matchings were held at the fair, while almost 400 exhibitors presented specialities from the spirits sector.
Some 96% of visitors polled on the final day said they had achieved their goals and were satisfied or very satisfied with their visit to ProWein.
Messe Düsseldorf said its first ProWine China show, which will be held in Shanghai from 13 to 15 November, has generated a lot of interest with the majority of exhibition space already sold. The 20th ProWein will be held 23 to 25 March 2014.
ProWein seals reputation as show to do business
Source: Drinks International
By Hamish Smith
27 March, 2013
As ProWein closes the doors on its 2013 show, exhibitors championed the event as the “place to do business”, ahead of its rivals, Vinexpo, LIWF and Vinitaly.
Roque Cunha Ferreira, export manager of JP Ramos, said the show was “the biggest event of the year” and said its March-timing and central European location offered “a great opportunity to present the latest vintages”.
Joel Masoliver of Beveland Distillers said 70% of his appointments were with established partners and 30% new business, but that there was a good opportunity to meet new visitors, especially from Eastern Europe.
Markus Eser, premium wine manager at Accolade Wines said he had seen many English retailers at the show and that big companies are eschewing LIWF, despite London being a traditional wine-buying maket.
Bruno Castro-Almeida, product manager of the Vinho Verde Commision described the show as “the most international” and “very well organised” yet “less expensive to exhibit than Vinexpo” and “three-to-four times less expensive than LIWF”. “It’s a fair price for this fair,” he said.
General manager and chief winemaker of Cono Sur, Adolfo Hurtado, said the show was important for his company but its one drawback was the number of Asian visitors, compared to Vinexpo.
Domaine Jacques Selosse burgled
Source: the drinks business
by Rupert Millar
27th March, 2013
Champagne house Jacques Selosse was burgled last week with thieves making off with thousands of bottles.
In what has been described as a “professional” job, a team of burglars broke into the cellars of Anselme Selosse’s winery in the early hours of Friday morning last week and made off with 3,700 bottles.
According to local paper l’Union, the gang even used alcoholic sprays to eliminate any traces of DNA.
A total of eight pallets, seven of which were wrapped and destined for the US and Japan were stolen.
Speaking to the drinks business, Selosse said that the cuvées stolen were: the brut “Initial”; the single vineyard blanc de blancs “Substance”; another blanc de blancs “Version Originale”; the rosé and the demi-sec “Exquise”.
He stressed however that the theft had not made a dent in his stocks, “in business terms its nothing,” he said.
He added too that the wines bound for the US had the necessary back label and those for the US and Japan bore the name of the intended importer to both countries.
Selling the bottles on will therefore prove difficult.
Of greater concern is the fact that the thieves also made off with 16,000 labels and 12,000 neck collars.
“We suspect that they wish to make fakes,” he added.
However, here too the thieves may find passing off fake Champagne a problem.
“We are the only producer that uses black glass,” said Selosse. “If anyone sees our labels used on the usual green bottles then they are fakes.”
Selosse is not the only high profile winery to be targeted by thieves recently. Château Palmer was recently broken into and had 300 bottles stolen.
However, the thieves were petty local criminals and were soon arrested and the wine recovered.
ALLIANCE BEVERAGE OF ALABAMA AND MISSISSIPPI ANNOUNCES JEFFREY ANDERSON APPOINTED SENIOR VICE PRESIDENT SALES
Alliance Beverage of Mississippi and Alliance Beverage of Alabama, today announce that Jeffrey Anderson has been promoted to Senior Vice President Sales, effective April 1, 2013. Anderson will be responsible for the performance of the Alliance Sales organization in both states. Anderson will report to Scott Rawlings, Glazer’s Regional President for Alabama, Arkansas, Mississippi, Oklahoma and Tennessee.
Alliance Beverage is the joint venture between Glazer’s, who owns 50%, and The Charmer Sunbelt Group and General Wholesale in the two states.
Jeffrey Anderson started his career with Glazer’s in 1986 and accepted a position with Strauss Distributors in 1987. Anderson advanced through the sales organization with Strauss and, when Glazer’s acquired Strauss in 1995, he moved into a District Manager role. He has held the positions of Director of Sales, General Sales Manager and Branch Manager in Louisiana. Anderson attended Louisiana State University at Shreveport.
Scott Rawlings said, “We are excited that Jeff is assuming a leadership role in Mississippi and Alabama. We have growth opportunities in both of these states and look forward to Jeff driving our sales initiatives.”
Supervalu planning major job cuts
By Marianne Wilson
March 26, 2013
Supervalu announced plans to eliminate about 1,100 positions nationwide, or about 3% of its national workforce. The reductions include both current positions and open jobs that will not be filled.
The news comes less than a week after Supervalu completed the sale of five of its grocery banners, including Albertson’s and Shaws/Star Markets. The company said the sale of the five chains means that the remaining business will need “significantly fewer” corporate and store support roles and functions.
“The decision to reduce our workforce, although difficult because of the impacts to our people, is the necessary next step in the rebuilding of our business,” said Sam Duncan, Supervalu’s president and chief executive officer. “This move is an important part of our strategy to be more focused and efficient in our operations, including how we staff and support our three business units going forward.”
West Virginia: Legislation leaves old liquor laws in the past
Source: Daily Mail
by Jared Hunt
One of West Virginia’s so-called “blue laws” would come off the books under a bill advancing in the House of Delegates.
The House Judiciary Committee on Monday advanced a bill that would repeal the state’s longstanding prohibition on Sunday retail liquor sales. The measure also would roll back the time retailers can begin selling alcohol on Sunday from the current 1 p.m. to 10 a.m.
That start time would apply to retailers, restaurants, bars and private clubs.
Bridget Lambert, president of the West Virginia Retailers Association, said several business groups in the state were pushing for the change.
“It was actually a bill that we worked with several different groups to pursue,” Lambert said.
She said her group has been working with the West Virginia Hospitality and Travel Association – which represents food service, lodging and convention and visitors bureaus – as well as several small, in-state wineries and distilleries to lobby for the change.
The bill was originally intended to simply roll back the Sunday sales start time.
Lambert said the local groups in particular were interested in moving back the 1 p.m. Sunday sales limit to accommodate golf course and brunch events whose organizers wished to offer alcohol.
But when the bill came before the House Judiciary Committee Monday, lawmakers decided to expand it to allow for Sunday liquor sales.
While lawmakers preserved the state’s ban on liquor sales on Christmas, the change repeals a Sunday sales ban that has been on the books since the state’s founding.
Lawmakers have discussed allowing Sunday liquor sales for many years, but it never has received serious attention.
While the bill still has a long way to go before passage, Lambert hopes lawmakers will continue to push for the change.
“We just view it as an antiquated law,” she said.
West Virginia is one of just 12 states to ban Sunday retail liquor sales.
It’s a part of the state’s so-called “blue laws,” which limit alcohol purchases. Until 2011, the state was one of a handful that still barred retail liquor sales on election days.
Most of these laws are relics of a bygone era.
Louisiana: Help Save Tujaugue’s!
Source: Tales of the Cocktail
Dear Mr. Latter,
Let me start by saying how sorry I am about the recent loss of your brother, Steve. In the time I got to know him through my work with Tales of the Cocktail and the New Orleans Cocktail Tour two things always stood out– his dry wit and his love for New Orleans. He clearly had a deep respect for the history and culture of our great city with the way he ran Tujague’s for more than 30 years.
Now, I don’t claim to be a real estate expert so I can’t speak to getting the most out of your investment. But as the founder of New Orleans Culinary and Cocktail Preservation Society, I do know about our city’s rich history of dining and drinks. Tujaque’s is the place that continued the legacy of Madame Begue’s legendary brunches and where the Grasshopper cocktail was invented. It’s the home of brisket and horseradish and the beautiful long standup bar that takes you back in time when you order a drink. It breaks my heart to picture the doorway of this landmark littered with Drunk 1 and Drunk 2 t-shirts.
This city is in the midst of a renaissance– one that’s met with both excitement and fear. Every day brings progress that New Orleans hasn’t seen in decades. But the great fear, one that’s generations old, is that with progress comes a cleansing of the culture that makes this place not a just a great place to visit but, more importantly, a great place to live. Culture doesn’t just disappear in a day. Here one day, gone tomorrow. It erodes slowly as people put the bottom line ahead of everything else. But it doesn’t have to be that way. With what you choose to do with the Tujague’s building, you can stand for the peaceful coexistence between progress and culture.
I know business is business. But sometimes selling to the highest bidder comes with costs that can’t be counted in dollars and cents. Like losing yet another of our beloved restaurants and a piece of the living history that makes New Orleans so special. If you sell the Tujague’s building to the wrong person, the rest of us will be the ones paying for it. So please, Mr. Latter, respect our history, respect our culture and respect the legacy your brother worked his life to build.
Ann Tuennerman, Founder of Tales of the Cocktail
Maine: Committee members want new draft of liquor bill
Source: Portland Press Herald
By Jessica Hall
Throw out competing proposals for awarding the next state liquor contract and draft a new bill that draws on the best features of both measures.
That’s the latest thinking of members of the Legislature’s Veterans and Legal Affairs Committee who agreed Wednesday that a so-called committee bill would be the best way to resolve the partisan dispute.
“That’s what I’m leaning towards,” Sen. John Tuttle, D-Sanford, co-chairman of the committee, said at the conclusion of a work session.
Rep. Robert Saucier, D-Presque Isle, echoed the sentiment, saying “I’m really, really ready now. I’m willing to do one bill.”
The committee will meet again Friday.
Both of the competing bills tie the state liquor contract to repayment of debt to the state’s 39 hospitals, which are owed $484 million in overdue Medicaid reimbursements. The state owes about one-third of the amount but must pay its share before the federal government will release matching funds.
Several lawmakers on Wednesday appeared to support aspects of Gov. Paul LePage’s proposal, L.D. 239. It would award a 10-year contract for managing the state’s liquor operations, leaving the state to use annual profits to repay a revenue bond that would be used to retire the hospital debt.
The competing bill, L.D. 644, proposed by Senate Majority Leader Seth Goodall, D-Richmond, would collect an upfront payment of $200 million from the chosen vendor, allowing the state to repay hospitals without borrowing money. Under the proposal, the state also would share a portion of annual profits that exceed a reasonable return for the vendor.
Sen. Garrett Mason, R-Lisbon Falls, said he believed the state could borrow money through a revenue bond at a lower rate than a vendor would charge to finance the upfront $200 million payment.
“There is a cost to borrowing money. That cost is going to be factored into an upfront payment. My money is on the fact that it will be more expensive than what the state can borrow at,” Mason said.
Rep. Louis Luchini, D-Ellsworth, co-chairman of the committee, said “a lot of the hesitance of the upfront payment is the cost of money.”
Goodall said there were many similarities in the competing bills, such as revenue-sharing with the state, having one vendor operate the liquor business and giving incentives for the vendor to boost the business.
“It really appears this is boiling down to one central issue — the risk,” Goodall said. “Getting the money upfront is worth more to you than getting it over time.”
He said the LePage proposal forces the state to take a risk in getting money over 10 years, while his measure would collect the money upfront.
Despite continuing disagreement over the best approach for collecting liquor revenues, Goodall sounded upbeat about Wednesday’s session. “We are much closer to resolving this than we were a few weeks ago,” he told the committee.
GS Research – Americas: Beverages: Nielsen Notables: Softer trends in beverages as we lap warm 1Q12
Source: Goldman Sachs
LRB category slightly softer in March with flat volume
For the four weeks ending March 16th, 2013, LRB sales in AOC (excludes c-store) declined -1.4%, on flat volume and -1.5% price/mix decline. KO sales declined -1.8%, a sequential and YoY deceleration, driven by -1.6% volume and -0.2% price/mix. PEP sales were down -2.0% this period, in-line with last period but with softer volume (-5.9% vs. -4.4%) and greater price/mix (+2.6% vs. +4.1%). DPS sales declined -3.2%, slightly below last period (-2.8%) and year-ago (+0.6%). Beverage trends remain broadly tepid as we lap more favorable 1Q12 weather.
CSD category decelerates to -3.4% on weaker volume
CSD sales declined -3.4% driven by -5.2% volume and +1.9% price/mix, a sequential and year-over-year deceleration and below 52-wk trends. Smoothing out calendar noise, it appears that CSD category has seen volume decline remain steady at around -4%, which is somewhat discouraging given more modest pricing. KO sales/volume/price was weaker at -2.5%/-2.9%/+0.5. DPS CSD trends roughly mirrored KO, with sales and volume down -2.4%/-2.9% respectively. Both are below recent trends. PEP CSD sales were disappointing, down -4.0% on -7.4% volume, despite easy volume compares.
Energy category slower +0.5%; MNST leads and Red Bull flat
Energy category sales grew only +0.5% against a tough +16.4% year-ago comp. MNST sales grew +2.9% on +4.4% volume against particularly tough year-ago comps (sales/volume up +26.7%/+29.4%). MNST gained 80bp of share this period as the category remains softer than recent trends.
Beer industry slower at +0.8%; St. Patty timing adds some noise
Beer industry sales grew +0.8% this period, on -0.7% volume and +1.6% price/mix, below last period’s rate and 52-wk trends. SAM beer sales grew only +0.5% on -0.1% volume decline. Weakness in the seasonal offerings (down -17.9%) was the key driver of softer sales. TAP sales were slightly below trend, with sales/volume down -1.4%/-2.1%. We note that this period ends March 16th, while St. Patrick’s Day, a large beer-drinking occasion, is March 17th. STZ led the beer category with +4.7% sales growth, driven by +5.4% volume change. STZ wine sales were also strong, up +8.4% (on +9.2% volume and -0.7% price/mix)
US All-Channel Scanner Data: Sequential Slowdown
Source: Morgan Stanley
Nielsen data covers all outlets ex. gas/convenience (includes FDM channels and enhanced coverage of dollar/club/military/Wal-Mart).
Conclusion: The key takeaways from US scanner data for the 3/16 period were: (1) branded CSD volume decelerated sequentially; (2) KO gained share in CSDs; (3) beer trends decelerated sequentially, and share losses to wine/spirits persist; and (4) STZ’s wine market share increased on lower pricing.
CSDs – Sales Growth Still Tepid: KO’s sales (all categories) decreased -1.6% y-o-y (+0.2% 2-yr avg.) vs. +1.1% in the prior 12-weeks, PEP was +0.4% (flat 2-yr avg.) vs. +1.0% in the prior 12 weeks, and DPS was -1.9% (-1.0% 2-yr avg.) vs. -0.7% in the prior 12 weeks. CSD category volume was muted at -5.2% (vs. -2.7% YoY comp), with KO -2.9% (vs. +0.6% comp), PEP -7.4% (vs. -8.0% comp), and DPS -2.8% (vs. +0.1% comp). CSD price/mix increased +1.9%, driven by strong +3.7% PEP pricing, vs. +1.6% in the prior 12-weeks. Elsewhere, bottled water, isotonics, energy drinks, and RTD teas all decelerated vs. the previous twelve-week trend (see summary table).
Beer – Sequential Deceleration: Beer category sales increased +1.0% y-o-y (2-yr. avg. of +2.5%), down from +2.8% in the prior 12-weeks (2-yr. avg of +3.6%), on price/mix up +2.6% and volumes down -1.6%. ABI and TAP’s dollar share decreased 90 and 45 bps, respectively, while Crown gained 30 bps.
Wine – STZ Share Gains on Lower Price/Mix. Wine category sales increased +7.8% (+7.0% on a 2-yr avg. basis), above +5.0% in the prior 12-weeks (+5.3% on a 2-yr avg. basis). STZ gained ~10 bps of $ share on +8.4% sales growth, partially owed to lower price/mix of -0.7% vs. +3.6% for the category.
China’s anti-corruption drive is really hitting Scottish Whisky
Xi Jinping makes problems for luxury goods.
Source: New Statesman
By Emily Neil
28 March 2013
A more unusual, but strong, market force is at work in China: an anti-corruption drive led by the new president, Xi Jinping. The giving of expensive luxury items to government officials has been a standard part of bureaucratic and business life in China, and has contributed in part to the dramatic growth in revenues and profits for multinational luxury goods companies operating in the country. Mr Xi however has swept in with a determination to stamp out showy bureaucracy and waste, and high end restaurants have suffered as official banquets have been cancelled and luxury local liquor makers have seen demand drop significantly.
All this will send a shiver through Scotch whisky makers, as well as other luxury goods companies in the UK and Europe. The most recent evidence comes from Pernod Ricard, owner of the Chivas Regal brand, which has seen sales of its Scotch whisky fall by a double digit rate over the critical Chinese New Year period.
Canadean’s local team are also reporting a slowdown in the sales value of red wine, as China’s wine drinkers switch to mid-range brands and the extraordinary growth in demand for top level labels such as Lafite, is finally checked.
Is this a short term blip or a sign of things to come? This partly depends on the strength of will of Mr Xi, and how long his commitment to the anti-corruption campaign lasts. For now, the luxury goods makers who have enjoyed this source of almost unfettered demand, will need to look to the rising income of the average Chinese consumer to drive growth – thus aligning with the government’s aim of middle class enrichment as the next phase of China’s economic growth.
Consortium Withdraws $280M Bid For Vodka Maker CEDC
By Matt Chiappardi
March 28, 2013
A consortium led by one of the largest private investment firms in Russia and the makers of Stolichnaya vodka on Thursday withdrew its proposal to woo Polish vodka producer Central European Distribution Corp. into a prepackaged restructuring deal, according to the CEDC.
The move follows an exchange of letters between the boards of directors for CEDC and A1, a trading company of the Russian Alfa Group, earlier this week, in which the struggling Polish company rebuffed the deal, which would have offered $280 million in cash, according to filings with the U.S. Securities and Exchange Commission.
That deal, floated by a consortium of A1, SPI Group and Mark Kaufman of Monaco, was proposed as an alternative to another offer on the table from Russian spirits importer Roust Inc., owned by CEDC Chairman Roustam Tariko.
Now, the Polish company says it wants to move ahead with the Roust bargain.
“CEDC notes the withdrawal of the consortium proposal and confirms that it has not received any further alternative proposals from third parties.” the company said in a statement released late Thursday. “CEDC reaffirms its support of the (Roust) proposal.”
The Roust plan, proposed in February, offers the Polish vodka maker $173 million in cash.
Roust’s owner already owns $102 million in CEDC bonds scheduled to mature this year. CEDC missed $258 million in payments on those bonds March 15, according to SEC filings.
CEDC says the Roust plan already has the support of the committee of holders of the 2013 bonds and the committee of bondholders of notes scheduled to mature in 2016.
A vote is scheduled for April 4.
“CEDC continues to believe that a successful restructuring will improve its financial strength and flexibility and enable it to focus on maximizing the value of its strong brands and market position,” the company said in a statement. “The restructuring is expected to have no effect on CEDC’s operations in Poland, Russia, Hungary or Ukraine, all of which will continue doing business as usual.”
On Tuesday, CEDC balked at the consortium’s package in a letter to the board of directors of A1, saying it was surprised the offer did not address 2013 bondholders, according to SEC filings.
The plan did offer $230 million of the total $280 million cash to the 2016 bondholders, as well as $630 million in new notes, according to SEC filings.
Members of the consortium could not be reached Thursday for comment.
CEDC is incorporated in the United States in Delaware and has an office in Mount Laurel, N.J.
It produces Royal, Parliament and Absowent brand vodkas, but has been facing troubles since 2011.
In March of that year, CEDC announced that results for fiscal year 2010 fell significantly below management projections. That downturn was attributed to the revelation that the company’s important Polish vodka brands had suffered a $131 million impairment from its newly launched Zubrowka Biala line, according to a lawsuit filed against the company by a shareholder in December.
The suit, brought in Delaware Chancery Court, demanded access to CEDC’s books by shareholder Joseph Z. Khakshour, who alleged the company had been mismanaged.
It claimed that CEDC did not appropriately pay Russian excise taxes, which wound up shuttering the main production plant in Russia for two weeks.
That closing not only led to a drop in supply, but also forced the company to offer significant rebates to customers, the suit alleged.
CEDC since had announced the resignation of its chief executive and financial officers while an audit committee’s accounting investigation, completed in October, revealed that net sales for 2010 and 2011 were overstated by $57.4 million and accounts receivable were inflated by $100.7 million, according to the suit.
Jinro world’s top spirit, Emperador now 2nd
Source: Drinks International
By Hamish Smith
28 March, 2013
Hite-Jinro’s soju brand, Jinro, remains the world’s best selling spirit after growing sales 6% to 65.3 9-litre cases last year, according to DI’s soon-to-be-published The Millionaires’ Club 2013.
After announcing itself as the world’s biggest brandy brand in last year’s list, the Philippines’ Emperador has jumped from fourth to second place in the overall ranking, following growth of 54%.
The brandy climbed from sales of 20.1m cases in 2011 to 31m cases in 2012.
Diageo’s Smirnoff drops to third place despite 4% year-on-year growth to 25.8m cases.
The word’s fourth largest spirit is the soju Lotte Liquor, which grew 6% to 25.4m cases and in fifth place, usurping Bacardi, is the Phillipines-based gin Ginebra San Miguel which sold an estimated 23m cases.
The Millionaires’ Club magazine – the data from which was supplied by spirits research agency Intellima – will launch alongside the May issue of Drinks International and will be available to download on Drinksint.com in May.
China’s Tsingtao 2012 net profit up 1.2 pct, lags estimates
Wed, Mar 27
Tsingtao Brewery Co Ltd , China’s second-biggest brewer by volume, on Wednesday said its 2012 net profit rose 1.2 percent in its slowest growth since 1999, as higher production costs offset a rise in beer sales.
Tsingtao, in which Japan’s Asahi Breweries Ltd holds a stake of about 19 percent, said net profit rose to a record 1.76 billion yuan in the year ended December, up from 1.74 billion yuan profit in 2011.
The result lagged an estimate of 1.8 billion yuan, according to Thomson Reuters I/B/E/S.
Revenues increased 11.3 percent to 25.78 billion yuan from 23.16 billion yuan in 2011.
A slowdown in China’s economy and cold and wet weather had hit the beer industry production, while rising raw material and labour costs further squeezed margins, analysts said.
The Chinese brewer posted fourth-quarter profit of 80 million yuan in the three months ended December, compared with 73.8 million yuan profit in the year earlier period, Tsingtao said. That lags a forecast of 120 million yuan.
Sales growth was hampered by rising costs of labour, packaging and raw materials including barley, analysts said.
Tsingtao’s Hong Kong-listed shares have risen 5 percent so far this year, outpacing a 0.8 percent fall in the benchmark Hang Seng Index.
Idaho: House scuttles bill to restrict beer brewer ownership
Source: Idaho Reporter
by Austin Hill
March 28, 2013
The Idaho House on Thursday scuttled a bill that would have prohibited beer brewers from having an ownership or financial interest in a beer dealer or wholesaler’s business. The action came after the House State Affairs Committee agreed to advance the bill to the House floor for amendments.
“Above all, please keep in mind at all times we are talking about alcohol policy,” noted Jeremy Pisca, of the Risch Pisca Law Firm, as he spoke before the committee about Senate Bill 1118. “The opponents to this legislation are two multinational, the two biggest multinational, brewing companies in the world. They are no longer American brewers, they are multinational corporations.”
Senate Bill 1118 sought to forbid a “brewer, directly or indirectly, or through an affiliate, subsidiary, officer, director, agent or employee to have any financial interest in any licensed wholesaler’s or dealer’s business, or to own or control any real property upon which a licensed dealer or wholesaler conducts business.”
Arguing in favor of the bill, which passed unanimously in the Senate, Pisca described those who support it, saying “you have the Idaho Beer and Wine Distributors Association. These are business people that live in Idaho, work in Idaho, who are the fabric of the community in Idaho. We are in every single corner of the state of Idaho.”
Rep. Gayle Batt, R-Wilder, commented to Pisca: “You had made a comment that right now there are no brewery-owned retail branches in Idaho. But I’ve been told that in the history of the state, that actually Coors Miller brewing did at one time own a distributorship and the world didn’t end.”
Pisca responded, “We are not dealing with the same companies that we dealt with many years ago. Coors was an independent brewery, it did not have very many distributorships, Miller and Coors merged, and it is now a Canadian company. It was not part of Miller’s business plan to have brewery-owned branches, so they divested of those. That is an absolutely factual statement, Coors distributing did operate in the Boise area, probably 10 year ago before they divested. But again, to underscore, there are no brewery-owned branches today.”
Another lobbyist, Ken McClure, representing Anheuser-Busch, spoke in opposition to the legislation. “This is a solution searching for a problem,” he said. “This legislation takes away a right that we very seldom use, but when we need it it’s important, and we cannot willingly have this right taken away from us. So they have instructed me to speak to you in opposition to the legislation.”
“I actually don’t really drink beer, so I’m just here representing the free market,” testified Wayne Hoffman, executive director of the Idaho Freedom Foundation. “Regulations that prohibit the free market drive up the costs of products, which result in the creation of indirect taxes that are paid by your constituents. With regard to this particular bill, it is a restriction on business and it is not a new thing for this Legislature. As businesses evolve in the new economy, the Legislature is asked to step in and maintain the status quo. This is to the detriment of businesses and employees and consumers.”
Despite the overwhelming support of the bill in the Senate, the House State Affairs Committee voted to send the bill to the House amending order, where the full House can consider amendments. But once the measure landed in the House, the chamber agreed unanimously to send the measure back to the House State Affairs Committee, most likely killing it for the remainder of the session.
Pennsylvania: LCB poll – 45% of Pa. liquor buyers are ‘bootleggers’
Melissa Daniels, PA INDEPENDENT
March 27, 2013
The Keystone State’s Prohibition-era liquor laws encourage some residents to buy alcohol from other states and bring it back to Pennsylvania.
It used to be called bootlegging, which refers to the illegal manufacture, sale or distribution of alcohol. Yet Pennsylvania has a criminal statute that still prohibits the practice.
The past few weeks have featured rampant discussion on the pros and cons of the state’s alcoholic beverage control system as the state House passed House Bill 790, which would sell off the state system and create a private liquor business.
Peppering the discussion was talk of “border bleed”- Pennsylvanians who drive to other states to buy alcohol.
Those who get caught are hit with fines of $10 per container of beer or malt beverage, and $25 for other types of alcohol. The goods are also confiscated.
But the likelihood of getting hit with these fines is slim. Major John Lutz, who runs the State Police Bureau of Liquor Control Enforcement, said enforcing the out-of-state-purchase laws is less of a priority than it was several years ago.
The main reason, Lutz said, is the bureau underwent staffing cuts and had to re-prioritize its details. Essentially, the bureau doesn’t enforce the law for individuals – Pennsylvanians-as-bootleggers are generally left alone.
“We’re not looking for people buying two bottles on the way to the shore,” he said.
If there is a crackdown, the bureau is more concerned with “a loaded pickup truck stacked with wine and spirits,” or a licensee who should be buying wholesale out of the state system.
But if the state system was sold and licensees could buy products from the private sector, that issue would no longer be a concern. HB 790 removes the criminal penalties for out-of-state purchases.
Lutz said the most obvious form of border bleed happens in Delaware, which has no sales tax.
“People are going down there to be lots of things,” he said. “I don’t think (border bleed) is being done for the purpose of selection, I think it’s being down for the pure economics of it, if people can save money.”
A 2011 online survey from the Pennsylvania Liquor Control Board examined where Pennsylvanians buy their booze.
While 55 percent of respondents exclusively bought alcohol in-state, 32 percent were “opportunistic buyers,” who might buy alcohol out-of-state, if convenient. An additional 8 percent were “destination buyers,” or people who make specific trips out-of-state to buy alcohol but also shop at state stores. The remaining 5 percent exclusively purchased alcohol out-of-state.
Privatization supporters often point to border bleed as evidence that consumers are dissatisfied with the state store system, and they argue a private system would recapture lost sales tax. The state levies a total 24 percent tax on alcohol, 18 percent from the Johnstown flood tax and a 6 percent sales tax.
During a meeting on the bill, House Appropriations Committee analyst Ritchie LaFaver said the state could see as much as $17 million from these taxes if the state system was fully divested.
“Assuming that those sales are going to be brought back into the commonwealth, you’re actually going to see an increase in sales taxes because there’s more sales,” he told lawmakers.
The Public Finance Management report from 2011 commissioned by the Corbett administration suggests bootlegging behavior would end with privatization. It says PLCB’s lost sales to other states could be anywhere from 10 percent to 30 percent of total sales.
“If the private system is able to recapture a portion of these sales it should improve system profitability and create jobs to replace some of those displaced by PLCB store closures,” reads the report.
Wendell Young IV, president of the United Food and Commercial Workers Local 1776 representing the state store employees, testified before lawmakers, saying the reasons Pennsylvanians cross the border won’t change after privatization.
“People drive to Delaware to shop for everything. Clothing, furniture, food and, yes, alcohol. Why? Because there are no state taxes. That will not change,” Young told lawmakers in 2011. “Some people might drive to Maryland, but that’s because Maryland has a very modest excise tax on liquor. That will not change.”
But if lawmakers eliminated the criminal statute one way or the other, these border-crossing Pennsylvanians wouldn’t be bootleggers. They would simply be consumers.
Oregon Billboard: Pot safer than alcohol
Source: KOIN 6
Hundreds of people in Oregon and Washington die each year from alcohol and related diseases. It’s hard to find out whether anyone has died from too much marijuana.
That’s the argument behind a billboard on Southwest 13th Avenue and Alder Street in downtown Portland.
The billboard shows a glass of beer, a glass of wine and a marijuana leaf. The text reads: “Beer. Wine. Safer. Don’t just drink. Think.”
The Marijuana Policy Project, a national group that works on changing state laws to legalize pot, paid thousands of dollars for the billboard. It’s designed to spark a conversation in Oregon about legalization.
“If you are in a situation where you can choose between alcohol and pot, society wants you to choose alcohol, even if it’s bad for you and makes you violent in some cases,” said Roy Kaufman with the Marijuana Policy Project. “If we are going to encourage and promote the use of alcohol by adults, at a minimum we need to be making sure that adults are aware pot is demonstrably safer than alcohol. It is less harmful to the individual, the community, public costs and safety.”
The billboard is across the street from a treatment clinic that helps people with addictions with alcohol and drugs, including marijuana.
Opponents of legalizing pot say one reason alcohol might be considered more dangerous is that it’s more available and consumed more often. Some doctors disagree marijuana is a safer choice.
“I would have to say marijuana is not safe, alcohol is not safe. They all have significant health risks,” Dr. Kelli Westcott of the Portland Adventist Medical Center told KOIN 6 News. “I see dozens of patients come in each week severely ill from using alcohol and pot. Plenty of both.”
The billboard went up just before the Spring Beer & Wine Fest at the Oregon Convention Center begins Friday. The founder of the festival, Steve Woolard, supports the sign.
“We are a tourist industry and if it gets legalized and we can sell it as one of our fine products, all the better,” he said.
Oregon pot supporters tried but failed to get marijuana legalized in the November election, though Washington did legalize it. This billboard is part of a campaign to put another legalization measure on the ballot in 2016.
Australia: Health groups warn of harm
Source: The West Australian
Cathy O’Leary Medical Editor
March 28, 2013
Health groups have warned that any relaxation of WA’s liquor laws, including allowing restaurants to serve drinks without a meal, would lead to more alcohol-fuelled harm.
Many have argued in submissions to a review of the Liquor Control Act that health concerns need to be considered above industry demands for wider availability of alcohol.
WA’s public health executive director Tarun Weeramanthri warned against allowing restaurant patrons to routinely drink without having a meal.
He said current restrictions helped stop people getting drunk because food slowed alcohol absorption and reduced the risk of intoxication.
During the State election campaign, the Liberal Party pledged to legislate to allow seated patrons to buy alcohol without a meal at restaurants that held fewer than 120 people.
But Dr Weeramanthri said current restrictions should still apply, with venues having to apply individually for a permit to serve alcohol without a meal.
He said alcohol-related conditions cost WA hospitals more than $100 million a year.
The National Drug Research Institute said in its submission that new liquor licences should have to be considered in the light of the number of existing outlets.
It also called for a rethink of the legal drinking age, arguing that while it would be unpalatable to some people, research showed that having a drinking age of 21 reduced road traffic injuries and deaths.
The Foundation for Alcohol Research and Education said in its submission that WA laws were outdated and failed to protect people from alcohol-related harm.
The foundation’s chief executive Michael Thorn also criticised what he said was the review’s narrow and selective focus.
“What’s required now is not tinkering around the edges but bold policy reforms that address price, availability and promotion based on the best evidence available,” he said.
His group called for the introduction of “saturation zones” in areas that had many liquor licences and a risk-based licensing fee structure based on the likelihood of a venue causing harm from alcohol.
Researcher Kyp Kypri from the University of Newcastle, who was in Perth this week, said many people felt laws that liberalised access to alcohol had swung too far in the way of industry.
“This review seems to be about creating more access rather than less, and allowing more smaller venues, not to replace the bigger ones but to be in addition to them,” Professor Kypri, a specialist in alcohol-related injury, said.
TTB Announcement: TTB Ruling 2013 – 1 Malt Beverages Sold Exclusively in Interstate Commerce
TTB Issues Ruling 2013 – 1 Malt Beverages Sold Exclusively in Intrastate Commerce
On March 27, 2013, TTB issued Ruling 2013-1 Malt Beverages Sold Exclusively in Intrastate Commerce TTB Ruling 2013-1 provides that the regulations implementing the Federal Alcohol Administration Act (FAA Act) do not require brewers to obtain a certificate of label approval in order to bottle or pack malt beverages that will not be shipped or delivered for sale or shipment into an other State.
The regulations do not require a brewer to obtain either a certificate of label approval or a certificate of exemption for a domestically bottled malt beverage that will be sold exclusively in the State in which it was bottled.
The ruling al so holds that regardless of whether a domestically bottled malt beverage will be sold in intrastate commerce, brewers must comply with all applicable marking, branding, and labeling requirements under regulations implementing the Internal Revenue Code of 1986 for all beer removed from the premises, and must comply with the health warning statement requirements imposed by the Alcoholic Beverage Labeling Act with regard to alcoholic beverages manufactured or bottled for sale or distribution in the United States.
Businessman accused of selling fake vintage wine lashes out at foe’s legal team
Source: NEW YORK DAILY NEWS
By Rich Schapiro
Thursday, March 28, 2013
The court battle over the sale of bogus Bordeaux turned bitter Thursday when the broad-shouldered businessman accused of peddling phony wine ripped into his foe’s legal team.
A combative Eric Greenberg attacked lawyers representing his rival, Florida energy magnate William Koch, on the second day of the Manhattan Federal Court trial.
“Your firm has been found by the courts to have falsified data and have destroyed data,” Greenberg blurted out while under questioning by Koch’s lawyer, John Hueston.
Hueston ignored the outburst, but at a break, he asked Judge Paul Oetken to “sanction” Greenberg “if it happens again.”
Greenberg, a dot-com millionaire from California, later needled Hueston over what he described as vague questioning.
“This reminds me of ‘My Cousin Vinny’ right now,” Greenberg said, referencing the hit 1992 film comedy.
Koch sued Greenberg over $320,000 worth of vintage wine he purchased at auction in 2004 and 2005.
Koch says that Greenberg put the rare wines on the chopping block even though some experts had declared them counterfeit.
Major port houses set to declare 2011
by Chris Mercer
Thursday 28 March 2013
Most major port houses are expected to declare the highly-anticipated 2011 vintage over the coming weeks, with Sogrape Vinhos the first to show its hand.
Sogrape has declared 2011 for Ferreira, Offley and Sandeman Ports. It has not declared a vintage since that of 2007 and its announcement, which comes several weeks early by historical standards, reflects strong optimism in the Douro for 2011.
‘2011 has allowed us to create vintage wines with never-before-seen levels of colour, structure and complexity,’ said Luís Sottomayor, winemaker responsible for Ferreira, Offley and Sandeman.
The wines ‘have a greater potential for aging than any vintage we have ever seen’, he said.
Anticipation around the 2011 vintage has been building since almost the first days of harvest.
Symington Family Estates, owner of Cockburn’s, Graham’s, Warre’s and Dow’s among others, have yet to declare 2011, but were impressed enough to bring still-fermenting samples to a port tasting in October of the same year.
Sarah Ahmed, of The Wine Detective blog, a Decanter contributor and Portugal expert, said she ‘absolutely’ expects more declarations for 2011.
‘This is a long-haul vintage with clout and finesse,’ she said of a Sogrape and Ramos Pinto 2011 preview tasting held in November last year. ‘The colour, aroma, tannin structure and freshness of the wines was flawless.’
‘2011 is looking very exciting for a broad and outstanding-quality Port declaration,’ added Danny Cameron, MD of the annual Big Fortified Tasting. ‘So much so, that the BFT [London, April 24] will have a Port Wine Institute-sponsored, separate free-pour room for cask samples from this vintage.’
He said that he also expects 2011 to produce a ‘halo effect’ for other premium ports.
Liv-ex releases its latest 1855 Classification
by Adam Lechmere
Thursday 28 March 2013
Fine wine exchange Liv-ex has recalculated the 1855 Classification with its price-based ranking of the Bordeaux classed growths, an exercise it last did in 2011.
Under the new listing Chateau Latour and Chateau Lafite take the top two spots, a reversal from the 2011 listing, with an average case price of £7,060 and £6.760 respectively.
Chateau Margaux (£4,777), Mouton Rothschild (£4,465) and Haut Brion (£4.370) retain their third, fourth and fifth places.
La Mission Haut Brion holds its 2011 position of first growth, while Leoville Poyferre and Smith-Haut-Lafitte have climbed from third growth status to second growth.
Duhart Milon and Beychevelle have dropped from second to third growth.
Chateau Palmer (average price £1,787) remains at the top of the second growth table while Pontet Canet jumps from its 1855 rank of fifth growth to second growth, with an average case price of £987.
Just as the classification was calculated in 1855, Liv-ex bases its rankings wholly on price. Wines have to be from the left bank, and must be produced in quantities of more than 2000 cases.
Qualifying wines are assessed on average wholesale case prices for the vintages 2007-2011, and, as in 1855, split according to price band, with first growths requiring a price of £2,600 a case and above, second growths £700-£2,599, third growths £450-£699 and so on.
Liv-ex has also put the second wines, none of which existed in 1855, through the same system.
Thirteen would be included in the new classification. For the first time Petit Lion de las Cases, introduced by Leoville Las Cases in 2007, features – as a fourth growth.
Carruades de Lafite has dropped from first growth to a second, and Petit Mouton and Pavillon Rouge have switched places: in 2011 Pavillon had a higher average price.
Reserve de la Comtesse,the second wine of Pichon Comtesse, has fallen to the bottom of the table – in 2011 it was the 9th most expensive of the second wines, now it is the 13th.
When it comes to right bank wines, there are few surprises. Ausone, Cheval Blanc, Lafleur, Le Pin and Petrus are all first growths, while Angelus, Clos Fourtet, Conseillante, Eglise Clinet, Evangile, Figeac, Fleur Petrus, Pavie, Troplong Mondot and Vieux Chateau Certan are seconds.
Chateau Pavie is at the most expensive end of the spectrum with an average price of £2,002.
Sheila Stanziale Leaving DGUSA
Source: Beer Business Daily
Diageo-Guinness USA (DGUSA) has just announced that president Sheila Stanziale is leaving the company to pursue other opportunities. Tom Looney, who is currently chief commercial officer at Diageo, will fill her role, effective April 1.
Sheila oversaw the launch of a number of new products at DGUSA, including Parrot Bay and Smirnoff pouches, Guinness Black Lager, Smirnoff Screwdriver and most recently the market test of Guinness slim keg.
“I wish Sheila the best in her future endeavors,” said Larry Schwartz, president, Diageo North America. Guinness is a great global brand and I know Tom will be focused on helping us get the brand where we need it to be in the US.” Currently DGUSA is re-launching Smirnoff Ice with Peach Bellini.
In his role as chief commercial officer, Tom oversaw the pricing strategy, business analytics and commercial marketing functions across spirits, beer and wine for North America. Previously, he held roles in sales, finance, strategy and customer marketing.
Jeff Ivey, currently svp of route to market strategy, will take Tom’s place as chief commercial officer. Jeff will continue to lead the route to market team as well as Diageo’s business analytics, pricing and commercial marketing activities in North America. Jeff has overseen the implementation of Diageo’s distributor realignment in North America over the past three years, and previously served as svp of commercial strategy.
Tesco explores options for Fresh & Easy exit
Tesco chief executive Philip Clarke will travel to the US after the Easter weekend to try to strike a deal to allow the supermarket group to exit its loss-making Fresh & Easy business.
Source: Daily Telegraph
By Graham Ruddick
28 Mar 2013
The retailer is understood to have held talks with rivals Aldi and Trader Joe’s about selling Fresh & Easy, however a break-up of the business is considered the most likely option.
Tesco, the world’s third-largest retailer, opened Fresh & Easy in 2007 but it has been dogged by the financial crisis and criticism over its offering.
Mr Clarke effectively put the business up for sale in December when he initiated a strategic review of Fresh & Easy and hired Greenhill to advise Tesco.
Mr Clarke has pledged to update the market on the progress of the strategic review on April 17, when the retailer posts its full-year results.
Tesco has invested more than £1bn into the California-based chain and faces a loss of hundreds of millions of pounds upon leaving the US business.
The options for Tesco include selling Fresh & Easy to a rival, selling off a stake in the business, or closing the business and disposing of the assets piecemeal. Tesco has already started to sell Fresh & Easy refrigeration units, and the retailer’s 220 East Coast stores and distribution centre could be attractive to property developers.
A spokesman for Tesco said: “We don’t comment on speculation. We’re carrying out a strategic review, as announced in December, and will update in April.”
Tesco’s arrival in the US was the most ambitious part of Sir Terry Leahy’s international expansion drive while chief executive. In his book, Management in 10 Words, Sir Terry said he would accept responsibility if Fresh & Easy failed.
“If they [the critics of Fresh & Easy] are proved right, it will have been my responsibility as CEO and a clear example that goals are easy to set, incredibly difficult to achieve and must carry a clear accountability,” he wrote.
Shares in Tesco have rise by almost 15pc since Mr Clarke announced the review of Fresh & Easy.
The shares have been supported by an improvement in Tesco’s UK performance, with the company reporting a 1.8pc increase in like-for-like sales over the vital Christmas trading period.
Analysts at Deutsche Bank have forecast that Tesco will report a fall in annual profits from £3.84bn to £3.43bn for the year to the end of February.
The shares rose 3.4 to 381.1p.
Is the New Supervalu a Stronger Supervalu?
Source: Retail Wire
By George Anderson
March 28, 2013
Now that Supervalu has completed the sale of Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores – and related Osco and Sav-on in-store pharmacies – to AB Acquisition, the question is: what comes next?
The company, which had shifted most of its focus to retail operations in recent years, has now returned to its roots in grocery wholesaling.
“As we move forward, Supervalu will continue as one of the largest wholesale grocery providers in America serving nearly 2,000 independent retailers in 43 states; we plan to continue growing our hard discount Save-A-Lot format that includes over 1,300 stores nationwide; and we will operate five, strong regional retail banners,” said Sam Duncan, Supervalu’s president and chief executive officer, in a statement last week. “I am pleased to be leading Supervalu during this time of change and strongly believe there is an exciting future ahead for us.”
In keeping with its focus on wholesale operations, Supervalu plans to form an advisory council of retailers it supplies to meet three or four times a year, reports Supermarket News.
Among the changes already taking place at Supervalu are job reductions. The company announced it would eliminate roughly 1,100 positions, affecting nearly all its offices and spreading across most departments. Store-level workers and employees at Save-A-Lot, Supervalu’s limited assortment grocery format, will not be affected.
“The decision to reduce our workforce, although difficult because of the impacts to our people, is the necessary next step in the rebuilding of our business,” Mr. Duncan said. “This move is an important part of our strategy to be more focused and efficient in our operations, including how we staff and support our three business units going forward.”
Texas: Craft beer bills pass out of the Senate
Source: Houston Chronicle
Thursday, March 28, 2013
The Texas Senate voted Monday to give craft brewers and brewpubs new opportunities to sell their beer.
“To see that happen was amazing,” said Scott Metzger, a San Antonio brewpub owner who worked with other brewers, legislators and wholesalers in negotiating a compromise.
Brock Wagner, owner of Houston’s Saint Arnold Brewing, called it a critical step toward passage of the state’s most significant beer-related legislation in 20 years.
“We still have a path to follow,” he said.
Metzger watched via his office computer at Freetail Brewing as the Senate voted 31-0 to approve two bills promoted by the Texas Craft Brewers Guild. An economic impact study Metzger prepared for the guild predicts the measures will spark even stronger growth for the state’s burgeoning craft beer industry.
Rick Donley, president of the Beer Alliance of Texas distributors group, which supported SB 515 and 518 from the beginning, called it “a good day for the craft-brewing industry,” including manufacturers and wholesalers.
As Metzger noted, SBs 516 and 517 were not taken up because the Senate can only vote on so many bills on a single day at this point in the session. They were subsequently passed unanimously on Wednesday. SB639, the Carona bill, was also approved after some modifications were made that settled most of the objections to it. All bills now await hearings in the House, and signs look good for passage. Put some beer in the fridge in anticipation of it finally happening.
New Jersey: Free N.J.’s market for liquor: Opinion
By AJ Sabath
March 28, 2013
Lack of competition and egregious monopolies have plagued the liquor industry in New Jersey for far too long. In his March 10 column (“Competition’s not on the menu for restaurant group”), Paul Mulshine’s comparison to Cuba’s open liquor market is a sad, and unfortunately true, contrast to what is occurring here in New Jersey.
While Mulshine exposes the Restaurant Association, other special interest liquor lobbies – such as liquor retailers and alcohol beverage wholesalers – have also maintained a tight grip around the neck of the alcoholic beverage industry. This grip has suffocated other New Jersey businesses and has perpetuated inequality within the industry.
New Jersey’s liquor laws have not been updated since John Kennedy was in the White House – 1962. So while over the past 50 years man has walked on the moon, the Berlin Wall has fallen, the internet has invaded every facet of our lives and the United States has elected its first African-American president, New Jersey still has not modernized its outdated and monopolistic liquor laws.
Because monopolies are better suited for board games, New Jersey supermarket and convenience stores have formed a coalition, Retailers for Responsible Liquor Licensing, which advocates for greater consumer choice in the purchasing of beer, wine and spirits.
Current law prevents a company from owning more than two retail liquor licenses. RRLL is pushing legislation that would increase the number of retail liquor licenses to 10.
This change would occur gradually over 10 years. Under this legislation, the total number of state licenses would remain the same.
Special interest liquor lobbies have vehemently opposed change to New Jersey liquor laws for years, whining that such a move would open up the market and put small stores out of business. This is simply false, and the evidence is clear.
According to a 2011 study of New Jersey’s liquor marketplace, there are many independent liquor stores where food retailers also sell liquor. The study found that no independent liquor stores closed because of food retailers selling liquor. In Paramus, there are more than 25 independent liquor stores within a 3-mile radius of two supermarkets that also sell alcohol.
These special interest liquor lobbies have prevented other retail stores from owning more than two licenses by lobbying to protect the status quo. Yet while local Joe cannot own a third license, liquor giants have spent decades perfecting ways to play the system so that Joe Canals and Buy-Rites can hold dozens of licenses.
Even if supermarkets were able to obtain 10 licenses under this proposal, the retailers represented by the liquor lobbies would still have far more licenses throughout New Jersey – Joe Canal’s (15 stores), Bottle King (15 stores), Spirits Unlimited (25 stores) and Buy-Rite (47 stores).
These modern-day robber barons and tycoons hold dozens of licenses by working the system to their advantage. Meanwhile, consumers are inconvenienced and subjected to high prices due to the lack of competition.
Forty-six states offer customers freedom, choice and ease to buy a bottle of wine or a six-pack when stopping at the local market for eggs and a gallon of milk. But the New Jersey special interest liquor lobbies have fought to keep New Jersey out of that count because, as Mulshine stated, “as for the consumer, no one gives a heck about him.”
It’s time to “give a heck” about New Jersey consumers by providing good old-fashioned American competition. If Rockefeller and Carnegie were able to survive the dissolution of their monopolies, I think the liquor lobbies will do just fine in the American open market.
Special interest liquor lobbies need to wake up and smell the millennium. It’s time the Garden State moved into the 21st century and changed its liquor laws to reflect the times in which we live.