Liquor Industry News 2-14-13

www.franklinliquors.com

Franklin Liquors

 

Happy Valentine’s Day!

Crown Royal Maker Sues Rival Over Poison Whiskey Ad

 

Source: Law360

By Jeremy Heallen

February 13, 2013

 

A subsidiary of global beverage giant Diageo PLC hit a Texas whiskey maker with a suit in New York federal court on Monday, alleging the rival makes unlicensed use of Crown Royal’s image to attack it in an advertising campaign.

 

Diageo North America Inc. says Mexcor Inc., which produces Texas Crown Club whiskey, is running a series of unauthorized commercials that describe a competing whiskey adorned in packaging that resembles Crown Royal’s trademarked purple bag as “poison,” and imply 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, that Crown Royal whiskey is inferior to defendant’s Texas Crown Club whiskey, that Crown Royal whiskey is an inappropriate drink for Texans, or simply that Crown Royal whiskey tastes bad,” the complaint said.

 

Representatives for Mexcor were not immediately available for comment Wednesday.

 

Diageo says Mexcor is “unfairly capitalizing” on the popularity and demand for Crown Royal whiskey and the “marks and indicia” associated with it through a national advertising campaign that trashes the Canadian whiskey.

 

The advertisement feature a barmaid in an Old West saloon ordering a round of Mexcor’s Texas Crown Club whiskey for a group of grizzled cowboys, according to Diageo. 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,” Diageo says.

 

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.

 

“[I]n light of the fact that defendant is selling and advertising a directly competitive Canadian whiskey, it is obvious that defendant intended to literally communicate to consumers that the cowboy is carrying Crown Royal whiskey, and that Crown Royal whiskey is the “poison” that the defendant denigrates and tarnishes in its commercial,” the complaint said.

 

Diageo says it never agreed to let Mexcor mimic Crown Royal’s look for the commercial, which it says dilutes the value of its trademarks, and wants the court to bring a stop to it.

 

“Defendant’s foregoing actions have caused and will continue to cause Diageo to suffer damages, including but not limited to lost sales, lost profits and damaged goodwill,” the complaint said.

 

The suit alleges trademark infringement, false advertising and unfair competition, among other things. Diageo is seeking actual damages, punitive damages and injunctive relief.

 

Diageo is represented by Brendan Joseph O’Rourke and Adam David Siegartel of Proskauer Rose LLP.

 

Counsel information for Mexcor was not immediately available Wednesday.

 

The case is Diageo North America Inc. v. Mexcor Inc., case number 1:13-cv-00960, in the U.S. District Court for the Southern District of New York.

 

 

——

Pernod’s Profit Beats Estimates on Emerging Markets, U.S.

 

Source: Bloomberg

By Clementine Fletcher

Feb 14, 2013

 

Pernod Ricard SA, France’s largest distiller, reported first-half earnings that beat estimates as sales in markets including China, Russia and the U.S. offset declines in southern Europe and France.

 

Operating profit excluding some items rose 5.8 percent to 1.46 billion euros ($1.96 billion) in the six months through December from 1.38 billion euros a year earlier, the maker of Absolut vodka said today in a statement. The median estimate of 11 analysts was 1.43 billion euros. Profit advanced 1 percent on a so-called organic basis, compared with a 0.5 percent median estimate.

 

Sales and profitability increased at Pernod’s Asia/Rest of World unit as the company sold more cognac and were only “marginally impacted” by the Chinese New Year delaying shipments. Sales in the Americas rose 6 percent, driven by “solid growth” in the U.S. for its major brands, including Jameson whiskey.

 

“Overall this looks to be a reasonably solid performance,” Phil Carroll, an analyst at Shore Capital, wrote today. “Normally Pernod guidance is particularly cautious and it easily overdelivers, but in the current year we expect 6 percent profit growth to be just that” as tough conditions in France restrict improvements.

 

European Pressure

 

Paris-based Pernod said in October it expects full-year organic earnings growth to decelerate to about 6 percent on waning sales growth in emerging markets and as the company experiences continued pressure in Europe.

 

Pernod’s shares rose as much as 2.7 percent, the biggest intraday increase in five months, and were up 2.3 percent to 96.20 euros at 9:11 a.m. in Paris trading. The stock has added 10 percent this year, giving the distiller a market value of 25.5 billion euros.

 

Sales rose 3 percent excluding acquisitions, disposals and currency fluctuations, compared with an estimated 2.2 percent increase. Sales edged up 1 percent in the second quarter, the company said.

 

Competitor Remy Cointreau SA has said that Asian sales have been “very strong” even as the Chinese New Year fell on a later date this year than in 2012, leading to revenue being booked in a later quarter for them. Whisky sales in Asia slowed, as demand waned in South Korea, Pernod said.

 

China Recovering

 

“We highlighted that the overall environment is not as buoyant as last year, so we keep a certain degree of caution,” Pierre Pringuet, Pernod’s chief executive officer, said today by telephone. “The good point, to me, is that technically for China there’s no longer speculation about a slowdown. It’s recovering.”

 

Sales in Europe showed an ongoing “bipolarization,” Pernod said, as demand improved in Russia while western and southern Europe, including Spain, stayed challenging. Organic sales slid 1 percent. Sales in France, its home market, declined comparatively as a tax increase at the start of 2012 inflated first-half sales a year ago. Eurozone sales represented 20 percent of its revenue this half, the company said.

 

Pringuet said today that he didn’t expect further economic deterioration in Spain, barring another widespread fiscal shock.

 

Diageo Plc, the world’s biggest distiller, has reported profit growth of 9 percent for the six months through December as it shifted away from the depressed economies of Europe.

 

 

——

AB InBev makes offer to seal Modelo deal

 

Source: FT

By Mark Wembridge

Feb 14th

 

Anheuser-Busch InBev has proposed a series of concessions in an effort to convince US regulators to approve its $20bn offer to take full control of Grupo Modelo, the Mexican brewer.

 

The world’s largest brewer by sales has offered to sell a high-tech brewery in Mexico and offload its US perpetual rights over the Corona and Modelo beer brands in response to the US Department of Justice’s lawsuit to prevent the takeover on antitrust grounds.

 

The regulator last month threw one of the biggest cross-border deals of 2012 into doubt when it argued that AB InBev’s acquisition of the remaining 50 per cent stake in Modelo would lead to price increases, harm consumers and deter competition.

 

The DoJ lawsuit followed the intervention by five US senators who sent a letter to the US regulator last October warning about AB InBev’s growing power.

 

AB InBev’s Bud Light is the best-selling beer in the US and Modelo’s Corona Extra is the top import. A combination of the two companies would control 46 per cent of the $80bn a year US beer market.

 

AB InBev, the Brussels-listed company, on Thursday said it would sell its Piedras Negras brewery and dispose of the US perpetual rights over the Corona and Modelo brands to Constellation Brands, the wine company, for $2.9bn.

 

“The sale of the brewery would ensure independence of supply for Crown and provides Constellation with complete control of the production of the Modelo brands for marketing and distribution in the US,” AB InBev said.

 

AB InBev then plans to sell Modelo’s 50 per cent stake in Crown Imports, its US joint venture, to Constellation for $1.85bn.

 

“The revised agreement establishes Crown Imports as the number three producer and marketer of beer in the US through a complete divestiture of Grupo Modelo’s US business,” said AB InBev.

 

“The transaction establishes Crown as a fully-owned entity of Constellation and provides Constellation with independent brewing operations, Modelo’s full profit stream from all US sales and rights in perpetuity to the Grupo Modelo brands distributed by Crown in the US.”

 

AB InBev had previously resisted selling its high-tech bottling plant in Negras Piedras, a Mexican city near the Texas border.

 

The brewer also increased its initial estimate of the annual synergies of the deal from $600m to $1bn.

 

AB Inbev shares rose 6 per cent to ?69.60 in morning trading.

 

 

——

AB InBev Will Sell Corona Unit to Salvage Modelo Takeover

 

Source: Bloomberg

By Celeste Perri

Feb 14, 2013

 

Anheuser-Busch InBev NV, the world’s biggest brewer, offered to cede full control of Corona distribution in the U.S. to Constellation Brands Inc. for $2.9 billion in a bid to salvage its purchase of Grupo Modelo after U.S. regulators sued to block the deal.

 

Constellation will gain Modelo’s brewery in Piedras Negras, which is located in Mexico near the Texas border, and perpetual rights for the Corona and Modelo brands in the U.S., Leuven, Belgium-based AB InBev said today in a statement.

 

Constellation Brands Inc. Corona Extra and Pacifico beers are displayed for sale at a grocery store in New York. Photographer: Scott Eells/Bloomberg

 

The deal is aimed at appeasing U.S. authorities, who sued to block AB InBev’s proposed $20.1 billion purchase of the rest of Modelo on Jan. 31, arguing the merger would hurt competition and lead to higher prices. AB InBev controls almost half the U.S. beer market, while Corona is the country’s biggest imported brand. The complaint triggered plunges in shares of AB InBev, Constellation and Modelo.

 

“Corona in the U.S. was the jewel that they had to sell,” said Trevor Stirling, an analyst at Sanford C. Bernstein. “The real prize was getting access to Mexico.” The terms of the proposed merger of AB InBev and Grupo Modelo are unchanged.

 

The sale to Constellation addresses “all of the concerns” presented by the government, the Budweiser maker said today. Selling the Piedras Negras brewery will ensure independence of supply for Crown Imports LLC, a joint venture between Modelo and Constellation. AB InBev had earlier agreed to sell Modelo’s 50 percent stake in Crown to Constellation for $1.85 billion.

Shares Jump

 

AB InBev shares rose as much as 6.1 percent in Brussels trading, the steepest gain since Aug. 1. The stock was up 5.1 percent at 69.04 euros as of 10:06 a.m., almost back to where it was before the U.S. sued to block the Modelo purchase.

 

Buying the rest of the Mexican brewer will lead to $1 billion of revenue and cost benefits, AB InBev said today, higher than a previous forecast of $600 million.

 

“This is a very positive sign as some had feared that the sale of Piedras Negras would undermine the cost synergy potential for ABI in Mexico,” Melissa Earlam, an analyst at UBS AG in London, said today in a note to clients.

 

The Belgian company agreed to buy the 50 percent of Modelo it didn’t own in June 2012, seeking to increase its penetration of emerging markets. The merger remains subject to the challenge by the U.S. and the revised agreement with Constellation is conditional on that approval.

 

‘About Mexico’

 

“We believe this addresses the Department of Justice’s concerns surrounding the ABI-Modelo deal and thus now expect the deal to go through,” Dirk Van Vlaanderen, an analyst at Jefferies International in London, wrote in a report.

 

Beer sales are rising at a faster pace in Mexico than in developed economies such as the U.S., the world’s second-biggest beer market by volume after China. Mexico is the world’s fourth- biggest profit pool for beer companies.

 

“The AB InBev and Grupo Modelo transaction has always been about Mexico and making Corona more global in all markets other than the U.S.,” AB InBev Chief Executive Officer Carlos Brito said in the statement.

 

Constellation plans to invest about $400 million to expand the Piedras Negras brewery, which produces Corona, Corona Light and Modelo Especial, allowing it to supply all of Crown’s needs for the U.S. market. The new deal also removes an option that AB InBev had to terminate the importer agreement with Crown.

 

“This is a transformational acquisition for our company,” Constellation CEO Rob Sands said in the statement.

 

Acquisition Multiple

 

The price is based on assumed earnings before interest, taxes, depreciation and amortization of $310 million earned in 2012 from manufacturing and licensing the Modelo brands, AB InBev said. That gives an implied purchase multiple of about 9 times, which Jefferies’ Van Vlaanderen described as “fair.”

 

The Belgian brewer’s original agreement to buy the rest of Modelo was at a multiple of 12.9 times Ebitda, reducing to 10.8 times after the sale of the Crown stake and synergy benefits.

 

Constellation has fully committed bridge financing in place, it said. Permanent financing is expected to be a combination of senior notes and term loans, it said. That will bring its ratio of debt to earnings before interest, taxes, depreciation and amortization to between 5 and 5.5 times. The company plans to use its free cash flow to lower that ratio to its target of between 3 and 4 times “as soon as possible.”

 

Lazard acted as adviser to AB InBev.

 

 

——

Asahi suing PEP and Unitas over Independent Liquor purchase

 

Source: Reuters

Wed, Feb 13 2013

 

Japanese brewer Asahi Group Holdings Ltd is suing Pacific Equity Partners and Unitas Capital Pte Ltd, alleging they inflated the earnings of the Independent Liquor business it acquired in 2011 for NZ$1.5 billion ($1.3 billion).

 

Individual directors and investment funds controlled by the two private equity firms are also targeted by the legal action filed by Asahi Holdings Australia and Independent Liquor New Zealand, both Japanese registered subsidiaries of Asahi Group, in Australia’s Federal Court.

 

Asahi, the maker of Japan’s top-selling “Super Dry” beer, is seeking unspecified damages for losses after an internal investigation uncovered what the company claims was misleading and deceptive conduct.

 

Asahi bought Flavoured Beverage Group Holdings Ltd, the parent company of Independent Liquor, from PEP and Unitas at a time Japanese brewers were on a spending spree across Asia and Oceania.

 

The acquisition of Independent Liquor, known for its “Woodstock Bourbon” and “Vodka Cruiser” brands, was part of Asahi’s bid to boost revenue growth amid a shrinking home beer market.

 

“It is very disappointing that PEP and Unitas have engaged in this misconduct,” Asahi Holdings Australia Managing Director Atsushi Katsuki said in an emailed statement.

 

“We conducted due diligence thoroughly and in good faith and relied on the figures provided to us,” he added. “We are seeking maximum recovery of our loss and we have commenced legal proceedings for this purpose.”

 

PEP, Australia’s largest buyout firm, did not immediately return calls seeking comment. Unitas could not immediately be reached.

 

 

——

Asahi Stays on Acquisition Hunt as Profit Rises 3.8%

 

Source: WSJ

By HIROYUKI KACHI

Feb 13th

 

Asahi Group Holdings Ltd.’s 2502.TO +5.83% profit rose 3.8% last year, thanks to earnings from recent purchases, and said its appetite for mergers and acquisitions is unabated.

 

Having acquired a liquor company and four soft-drink makers in Australia and New Zealand, Asahi is turning its gaze to Southeast Asia, where strong economic growth is expected to fuel a jump in the number of middle-income consumers.

 

“We aim to bring our sales in Southeast Asian nations to ¥100 billion [ or about $1 billion] in 2015,” Asahi President Naoki Izumiya said at a news conference Wednesday. “To achieve this, we will conduct M&As and other investments.”

 

Achieving that sales target would put Asahi’s overseas sales at around ¥300 billion in 2015 and lift its overseas sales to 15% of the company’s total from 10% now, Mr. Izumiya said. Asahi had ¥158 billion in overseas sales last year. Asahi books results on the calendar year, in contrast to many other Japanese companies.

 

With domestic demand stagnant as Japan’s population ages and the economy remains moribund, Asahi has expanded abroad. Asahi, one of the country’s leading brewers and beverage makers, in 2011 purchased New Zealand’s Independent Liquor Ltd. for US$1.3 billion.

 

But Asahi’s presence in Southeast Asia has been limited. Sales for Asahi’s Permanis Sdn. Bhd., Malaysia’s second-biggest soft-drink maker, were roughly ¥15.5 billion last year.

 

Asahi has “up to ¥400 billion in terms of anticipated cash flow, and an acceptable debt-to-equity ratio” through 2015 for mergers and acquisitions at home and abroad, though the company wouldn’t necessarily spend that full amount, Mr. Izumiya said.

 

The company forecast profit would increase 15% this year on an 8.9% rise in sales.

 

Asahi said it would return earnings to shareholders by buying back up to 20 million, or 4.29%, of its own shares for as much as ¥30 billion by mid-August.

 

Asahi on Wednesday reported net profit of ¥57.18 billion ($611.7 million) for last year, compared with ¥55.09 billion a year earlier. Operating profit increased 1.2% to ¥108.44 billion.

 

Sales rose 8% to ¥1.579 trillion.

 

Asahi booked a gain from the reduction in its stake in Chinese joint venture Tingyi-Asahi Beverages Holding Co. The increased earnings also reflected a recovery from losses booked last year after the 2011 earthquake and tsunami in Japan.

 

But Asahi booked a loss of ¥8 billion on the value of the Independent Liquor, saying it overpaid for the acquisition.

 

 

——

Heineken’s firm recovery cheers investors

 

Source: FT

By Matt Steinglass in Amsterdam

Feb 13th

 

Shares in Heineken rose after the Dutch brewer beat analysts’ expectations for 2012 earnings with a strong recovery in Europe in the second half of the year.

 

Heineken’s sales were up 7 per cent on the previous year at ?18.4bn, while earnings before interest, tax, exceptional items and amortisation rose 8 per cent to ?2.9bn.

 

Net profits more than doubled to ?2.9bn due to one-off transactions related to the company’s acquiring full control of its Asia Pacific Breweries subsidiary, maker of Tiger beer.

 

Excluding exceptional items, net profits rose 7 per cent year on year to ?1.7bn.

 

The shares were up 4 per cent to ?54.10 in morning trading on the Amsterdam exchange, against a 0.3 per cent drop in the AEX index.

 

The recovery in Europe in the second half of 2012 was partly thanks to strong sales during the Olympics in Britain.

 

But demand in Europe remained generally weak, Jean Francois van Boxmeer, chief executive, told the Financial Times.

 

“Overall beer volumes are under pressure. However, within that, we continuously work to further segment the market [by introducing new brands], to upgrade the market,” he said. “Europe has uncertainties, but we are pretty well used now to working within them.”

 

The company’s broader strategy is to increase its exposure to younger, faster-growing emerging markets in Asia, Africa, eastern Europe and Latin America, which grew to 64 per cent of its volume in 2012.

 

 

——

HeinieSniff’n Dog Toy Doesn’t Infringe Heineken IP, Suit Says

 

Source: Law360

By Stewart Bishop

February 13, 2013

 

A manufacturer of chew toys for dogs asked an Arizona federal judge on Wednesday for a declaratory judgment that its “HeinieSniff’n” rubber squeaky dog toy doesn’t infringe trademarks owned by Dutch beer giant Heineken Brouwerijen BV, saying its product is clearly a parody.

 

After Heineken bristled at VIP Products LLC’s purported infringement to a third-party vendor, VIP brought its declaratory judgment action, saying while it designed the HeinieSniff’n label to incorporate a few elements of Heineken’s trade dress, like the use of a red star on its label, it also included drastic differences from Heineken’s marks to show that it is obviously a spoof, VIP’s complaint says.

 

Phoenix-based VIP says it’s been selling its HeinieSniff’n squeaky toy since 2007, and owns all rights in the toy’s trademark and trade dress.

 

“VIP selected the words ‘HeinieSniff’n’ because they are clearly not ‘Heineken,’ included the humorous phrase ‘Premium Sniffer’ on the toy in two locations and placed two large cartoon dogs on the front label,” VIP contends.

 

Heineken was apparently not amused and in late January it contacted online retailer MainMerch, alleging that the HeinieSniff’n toys infringe on its marks and asked that it remove all pictures of VIP’s parody dog toys from its website, according to VIP.

 

The novelty pet toy company argues that as a matter of law, its HeinieSniff’n chew toy doesn’t infringe or dilute any claimed mark or trade dress Heineken may claim for its beer.

 

Representatives for the parties could not be immediately reached for comment on Wednesday.

 

VIP does business as Mydogtoy.com and sells several lines of chew toys for dogs, including the “Tuffy’s” line of durable soft toys, the “Mighty” line and the “Silly Squeakers” line of rubber squeaky toys, according to the suit and VIP’s website.

 

The dog toy maker’s parody defense is not without oddly specific precedent.

 

In 2007, the Fourth Circuit upheld a district court’s ruling which found that dog chew toy manufacturer Haute Diggity Dog LLC was not liable for trademark infringement in a suit brought by French fashion house Louis Vuitton Malletier SA over the pet company’s “Chewy Vuiton” dog toy.

 

A three-judge panel for the appeals court held that HDD’s use of the Chewy Vuiton mark for dog toys was an effective parody of Louis Vuitton, since it brought to mind the original mark and associated brand-image while at the same time juxtaposing that brand with an irreverent image inconsistent with the Louis Vuitton brand.

 

“The satire is unmistakable. The dog toy is a comment on the rich and famous, on the Louis Vuitton name and related marks, and on conspicuous consumption in general,” the panel wrote. “This parody is enhanced by the fact that ‘Chewy Vuiton’ dog toys are sold with similar parodies of other famous and expensive brands – ‘Chewnel No. 5’ targeting ‘Chanel No. 5’; ‘Dog Perignonn’ targeting ‘Dom Perignon’ and ‘Sniffany & Co.’ targeting ‘Tiffany & Co.'”

 

The panel held there was no infringement since there was no likelihood of confusion among consumers as to the source or sponsorship of HDD’s chew toys. In doing so, the panel acknowledged that while “an effective parody will actually diminish the likelihood of confusion … an ineffective parody does not.”

 

 

——

Outlook for Continued Growth of Flavored Spirits Is Quite Strong, New Study Shows

 

Source: ConsumerEdge Insight

Feb 13th

 

A recent survey of alcohol consumer behaviors in the United States among people who consume any type of alcoholic beverage at least once a week showed that flavored spirits offerings are likely to continue to show strong growth, especially in the rum and vodka categories. The survey asked consumers about their behaviors and preferences for flavored offerings in the rum, vodka, whiskey, and tequila categories.

 

Over 70% of vodka drinkers drink flavored brands at least some of the time, and flavored vodkas appear likely to continue their strong growth. Among flavored vodka drinkers, 42% say they are likely to drink them more often in the future while only 14% say they are getting tired of drinking them.

 

Over 70% of rum drinkers drink flavored brands at least some of the time, and flavored rum brands also appear very likely to continue to grow. Among flavored rum drinkers, 41% of them plan to drink them more often in the future and only 16% say they are getting tired of drinking them.

 

Nearly 45% of whiskey drinkers drink flavored brands at least some of the time. Flavored whiskeys appear likely to continue to grow, although there is a greater degree of fatigue than in other categories. Among flavored whiskey drinkers, 42% of them say they are likely to drink them more often in the future while 24% say they are getting tired of drinking them. Flavored whiskey drinkers are among the most likely among the different flavored spirits categories to say they don’t like the taste of the plain/unflavored version, 27%.

 

About half of tequila drinkers drink flavored brands at least some of the time. Flavored tequilas appear likely to continue to grow, although there is a greater degree of fatigue than in other categories. Among flavored tequila drinkers, 46% of them say they are likely to drink them more often in the future while 28% say they are getting tired of drinking them. Flavored tequila drinkers are the most likely among different flavored spirits categories to say they don’t like the taste of the plain/unflavored version, 32%.

 

“Flavor innovation has been a key source of growth for most spirits categories and the outlook for flavored spirits looks very strong, particularly in vodka and rum,” said David Decker, President of Consumer Edge Insight. “While there are higher signs of fatigue among flavored whiskey and flavored tequila drinkers, we are earlier in the lifespan of flavored brands in those categories and we anticipate that more new product offerings will continue to grow the flavored segment in each of those categories. We will be watching closely as the profile and preferences of flavored spirits drinkers evolve.”

 

ABOUT ALCOHOLIC BEVERAGE DEMANDTRACKER

Alcoholic Beverage DemandTracker provides an in-depth analysis of the key economic and attitudinal factors impacting alcoholic beverage demand. Data for this wave of Alcoholic Beverage DemandTracker was collected in September via an online survey of over 2,000 US consumers, age 21 and over, designed and weighted to be representative of the US adult alcohol-drinking population. Some of the topics addressed include drivers of change in alcohol category consumption, the impact of economic factors and secular trends on overall alcohol consumption and by category, channel behaviors, ways to increase category consumption, and numerous brand metrics. The research covers the beer, spirits, wine, cider, and flavored-malt beverage categories including the largest brands in each category.

 

To learn more, call David Decker at (203) 504-7558 or send an email to ddecker@consumeredgeinsight.com

 

 

——

Diageo Calls on the Alcohol Tax and Trade Bureau (TTB) to Fast Track Serving Fact Information on Beer, Wine and Distilled Spirits Containers

 

Source: Herald Online

By Diageo

February 13, 2013

 

The following statement is for attribution to Guy L. Smith, Executive Vice President, Diageo North America:

 

“Almost ten years ago – in December 2003 – Diageo led the industry when it stood with a coalition of consumer and public health advocates to publically call on US regulators to allow Serving Fact information on beverage alcohol products.  Today, we still cannot legally print this information on bottles and cans of distilled spirits, beer and wine but we are getting closer and we urge the Alcohol Tax and Trade Bureau (TTB) to help us cross the finish line.

 

“Yesterday, the Federal Trade Commission (FTC) recommended that the TTB permit Alcohol Facts panels on some beverage alcohol products.  We applaud the FTC for promoting the modernization of alcohol package labels and urge the TTB to approve such labeling.  Diageo supports voluntary labeling for all beverage alcohol products – beer, wine and spirits – regardless of the serving size.

 

“It is simply common sense that consumers have easy access to this information – after all, alcohol beverages are the only consumable product that has been largely prohibited from including Serving Fact information on all of their labels.  This information is important in helping consumers make informed and responsible decisions.”

 

 

——

Pennsylvania: Total Wine & More owner prepared to enter Pennsylvania liquor market

 

Source: PennLive

Sue Gleiter

February 13, 2013

 

In the world of liquor sales, David Trone is king.

 

He and his younger brother, Robert Trone, own Total Wine & More. For those who have never stepped foot into a Total Wine – and, there are more than 85 stores in 15 states, including Maryland and Delaware, but not Pennsylvania – they are best described as liquor superstores.

 

Total Wine claims to be the nation’s largest independent retailer of wine.

 

“A lot of folks commonly call it a Toys R Us for adults,” said David Trone who stopped by Pennlive’s offices Feb. 13.

 

The 25,000 square-foot stores do the unthinkable in Pennsylvania – they carry wine, liquor and beer under one roof. The inventory? More than 8,000 wines, 3,000 spirits and 2,500 beers.

 

If ever someone could share a potential roadmap for what a privatized liquor system in Pennsylvania might look like, it very well could be Trone.

 

This year, Total Wine expects to earn $1.5 billion in profits and will open 11 new stores including a handful in Washington state which privatized liquor sales last year.

 

Trone grew up in Pennsylvania and owns a home on Lake Meade in Adams County. His first foray into selling booze was operating a beer distributor on 29th Street in Harrisburg.

 

In 1992 Trone was indicted by a Pennsylvania grand jury on charges that he used “straw” companies to control a chain of family-owned beer stores. The indictment later was dropped by Pennsylvania attorney general Ernie Preate, who was later jailed in an unrelated matter.

 

Around that time the Trones opened their first Total Wine in Delaware. It is clear the company has a vested interest in returning to Pennsylvania, although David Trone refuses to speak specifically about plans or the number of stores they would open.

 

He said Total Wine would target metropolitan areas in the state, including the Harrisburg area, but would not open in rural areas.

 

“It’s something I would personally like to get done, and it would be a fantastic business opportunity. It’s a lot easier to open a store in Pennsylvania than Seattle,” Trone said.

 

He makes it no secret about the fact Gov. Tom Corbett’s administration has peppered him with questions about the idea of a privatized system “because we have been around the block.”

 

Last month, Corbett proposed a privatization plan designed to close the state’s liquor stores and open up sales to supermarkets, convenience and big-box stores and beer distributors.

 

Trone called the governor’s initiatives a “fantastic first step to move the dialogue forward.” While Trone praised the plan because it will lead to increased selection and convenience and better prices for consumers, he also said it needs some tweaks.

 

Under Corbett’s proposal beer distributors could sell six-packs of beer, but Trone said they also should be permitted to sell single bottles, which would help the already booming craft beer market. In addition, Trone said licenses should be made available without limits and businesses who hire displaced workers from the state-run stores should receive larger tax credits.

 

As for the state’s beer distributors, many who have voiced concerns about Corbett’s plan, Trone called Corbett’s proposal a home run for distributors who would have the ability to sell beer, wine and liquor.

 

If legislation passes, Trone said he thinks the time table should be aggressive, otherwise bureaucrats will stall on the plan. He noted that in Washington state it took seven months to privatize liquor sales.

 

“I think the governor has put together a fantastic plan … It’s just an audacious plan to change this,” he said.

 

 

——

Pennsylvania: Researchers – Easier access to booze has a downside

 

Experts say making booze easier and cheaper to buy – goals of Corbett’s privatization plan – increases problems like alcoholism, DUIs.

 

Source: The Morning Call

By Scott Kraus

February 11, 2013

 

More liquor stores, more problems.

 

So say public health researchers, who point to a body of evidence that suggests making alcohol easier to purchase and less expensive – goals of Gov. Tom Corbett’s plan to end Pennsylvania’s system of state-owned liquor stores – will lead to more consumption and an increase in a host of social and health problems.

 

“I think in the research world, you never have 100 percent consensus,” said Traci Toomey, a professor with the University of Minnesota’s School of Public Health who sits on the board of Mothers Against Drunk Driving. “But among those of us who do alcohol policy research and alcohol research in general, there is a strong agreement that as we increase availability of alcohol, we see a corresponding increase of a wide range of problems.”

 

The degree varies, but those problems can include alcoholism, drunken driving accidents, alcohol-related health problems, violence and even unsafe sex, she said.

 

The governor’s office has a stack of statistics to counter that argument as the debate heats up over the merits of government versus private control of alcohol sales.

 

Arguments aside, researchers say easier access to alcohol has a downside.

 

“Availability really does matter quite a lot in terms of drinking, problem drinking and alcohol-related harms and other problems,” said William Kerr, senior scientist with the Public Health Institute’s Alcohol Research Group. “You would definitely see problems in Pennsylvania if you move that way.”

 

That consensus is one of the reasons why in 2009, the Centers for Disease Control and Prevention-affiliated Community Preventive Services Task Force recommended reducing or limiting the growth of bars and alcohol retailers as a way to “reduce the harms associated with excessive alcohol consumption.”

 

The task force came to the conclusion after reviewing 88 books and studies that examined the affects of alcohol availability and consumption on health, violence and other societal problems. Four studies that looked at policy changes that increased the density of retail outlets showed “increased excessive alcohol consumption and related harms.”

 

That is a common refrain of privatization opponents and it isn’t lost on the Corbett administration.

 

The governor’s plan would bring Pennsylvania more in line with other states when it comes to the number of places where consumers can purchase alcohol, and those states haven’t collapsed under a hail of alcohol-related problems, said Corbett spokesman Eric Shirk.

 

“Pennsylvania is way under the national average when it comes to retailers that sell alcohol and spirits,” Shirk said. “This proposal will just bring it up to the average. The plan includes increased funding for increased treatment, an annual 75 percent bump in treatment and prevention efforts and $5 million when it comes to enforcement measures.”

 

Shirk said most neighboring states that already have private systems don’t show higher rates of alcohol-related problems such as drunken driving than Pennsylvania, which has had state control of wine and liquor sales for decades. In fact, some neighboring states have lower rates.

 

According to the National Highway Traffic Safety Administration, Pennsylvania’s rate of alcohol-related traffic fatalities in 2011 was 3.1 per 100,000 residents. Of the six states bordering Pennsylvania, only Delaware’s and West Virginia’s rates were higher.

 

A 2011 study by the pro-privatization Commonwealth Foundation showed Pennsylvania’s rate of alcohol-related deaths from all causes was higher than most of its neighbors, all of which have some degree of private liquor sales.

 

Kerr said such broad comparisons are meaningless from a researcher’s perspective because they fail to consider a host of other variables, such as average age, socio-economic level and even something as simple as the number of vehicle miles driven in different states.

 

Corbett’s plan would eliminate the state’s roughly 600 wine and liquor stores, replacing them with 1,200 privately operated stores that could include supermarkets and other large retailers. On top of that, it would offer an unlimited number of wine and beer or beer-only licenses to supermarkets, big-box retailers, convenience stores and drug stores.

 

It has been 20 years since any state in the U.S., besides Washington, which dumped its state-owned liquor stores in mid-2012, dramatically expanded its number of alcohol outlets.

 

But in British Columbia, Canada, the government spent much of the last decade giving the private sector a wider role in liquor sales, allowing the number of stores selling wine, beer and liquor to increase.

 

That’s where University of Victoria researcher Timothy Stockwell and his colleagues have been studying liquor sales data and comparing them to the incidence of a wide variety of health problems. Their conclusion?

 

The data showed that a 20 percent increase in private store density increased local alcohol-related mortality by 3.25 percent. Looked at another way, each additional store per 1,000 residents increased mortality by 27.5 percent.

 

“When we have looked at the local areas where more stores have been put in, consumption has gone up,” Stockwell said. And when that happens, so do alcohol-related health problems, he said.

 

That might seem unlikely to the average person, Stockwell admits. Most people assume their own drinking habits wouldn’t change if the local Walgreens started selling beer and wine. Don’t be so sure, Stockwell said.

 

“Price, how far you have to walk or drive, what are the opening hours, these are huge issues,” Stockwell said. “These are affecting everyone a little bit, every minute of the day. Should I buy alcohol for tonight, how much should I buy? How close; how much money; shall I have that party? All the decisions subtly, without doing it very consciously, we weigh all the things up about convenience and price. But nobody believes they do.”

 

Shirk said Corbett’s plan would prohibit any retailers from selling alcohol between the hours of 2 and 7 a.m. Wine and spirits stores would close at 11 p.m.

 

Duquesne University researcher Antony Davies, a fellow with George Mason University’s Mercatus Center, an economics think tank that emphasizes free markets, said he’s not convinced adding more outlets will result in a decline in public health.

 

There’s an argument to be made that under the current system of inconvenient state-run stores, people simply buy more of the hard stuff to stock up, he said. If beer and wine are more available, they may switch to lower-proof options.

 

And who says it’s necessarily bad to drink more, Davies asked.

 

“Consuming more of it within reason actually makes my life better,” he said.

 

The governor considered the effects of expanding access to wine and liquor, Shirk said, and took steps to address the potential pitfalls, such as requiring sellers to scan the IDs of all purchasers to prevent sales to underage customers.

 

“It’s not something we didn’t think about,” Shirk said. “We wanted to be responsible. But at the same time, getting the state out of the liquor business and letting the Liquor Control Board to focus on their enforcement duties and regulatory side is the way to go.”

 

 

——

Amerigo to buy Le FLAV Spirits assets, intellectual property

 

Source: DBR

14 February 2013

 

Amerigo Energy, a Nevada-based company with business in oil and gas exploration services, has signed a letter of intent to purchase the assets and intellectual property of spirits producer Le FLAV Spirits.

 

The assets include trademarks, contracts, formulas, licenses, inventory and rights to the Le FLAV spirits brands.

 

Le FLAV produces spirits such as vodkas, cognacs, tequila and other premium alcoholic beverages under the Le FLAV Spirits brand. The products include Le FLAV Brooklyn Iced Tea, Chateau Le FLAV, Le FLAV Cocktails, Le FLAV Cognacs, Le FLAV Super Premium Vodka and Flavored Vodkas.

 

The company is associated with an American musician and television personality William Jonathan Drayton, often known by his stage name Flavor Flav, and signs bottles during the brand tours.

 

Le FLAV co-founder Anthony Capomaccio said the company anticipates continued growth in the market for its spirits through its association with Flavor Flav.

 

Amerigo Energy CEO Jason Griffith said, “We believe the addition of Le FLAV® Spirits to our company will provide shareholder value and give the liquor brand the ability to launch globally.”

 

 

——

Nielsen: US Consumers Splurge on their Sweetheart on Valentine’s Day

 

Source: Nielsen

Feb 13th

 

Nielsen research shows that U.S. Consumers love indulging their sweetheart and their sweet tooth on Valentine’s Day:

 

Wine

.         US Consumers Splurge on their Sweetheart: the overall average price point for Sparkling Wine crosses $11, and Rose Sparkling Wine sees its average price point jump eight percent higher during Valentine’s Day.

.         Sweets for my Sweet: Valentine’s Day is the number one week of sales for the year for sweet tasting, Sparkling Moscato.

.         Sales of Italian and Spanish Sparkling Wine Decline this week: “Valentine’s Day is not the time to take chances with the unknown,” says Danny Brager, vice president, beverage alcohol, Nielsen. “Americans stick to tried and true types of Sparkling Wine, staying away from Prosecco and Cava (Italian and Spanish Sparkling Wine). Italian and Spanish Sparkling Wine actually see Valentine’s Day week as their lowest week of sales for the year.”

.         More than 2 million bottles of Sparkling Wine will be sold this week.

.         Over $23 million dollars will be spent on bubbles during this week.

 

 

——

‘Consumers will win’ as record California vintage announced

 

Source: Decanter

by Courtney Humiston in Sonoma

Tuesday 12 February 2013

 

The 2012 harvest in California is a record both in terms of grapes crushed and the prices paid for grapes, resulting in what one consultant called ‘a fantastic market for consumers’.

 

The 2012 Grape Crush Report (Preliminary) was released by the National Agricultural Statistics Service (NASS) last week. It reveals 2012 to be a record year, both for the amount of grapes crushed and the dollar amount paid for those grapes – an unprecedented combination.

 

The total wine grape crush for the state of California was up 13% overall from 2011 at 4.013m tons (4.77m tonnes), with average prices paid for those grapes rising 20% to US$772.09 per ton.

 

Red wine grapes took the lion’s share, with average yields up 19% from the previous year and average prices rising 24%.

 

Chardonnay accounted for the largest single variety percentage of the total crush (16%) followed by Cabernet Sauvignon (11.3) and Zinfandel (10.3).

 

Pinot Noir was the big winner yield-wise in 2012, up 45% across the state overall with significant increase in coastal areas like Sonoma (up 85%) and Santa Barbara (up 88%).

 

Prices were up because of the sparse 2011 crop, which meant that wineries did not get sufficient supply to meet their demand and began fighting over grape contracts early in 2012.

 

According to Nat DiBuduo of Allied Grapegrowers, such was the competition for grapes that wineries ‘were offering growers higher prices for grapes that had been contracted to other wineries.’

 

The competitive environment drove prices to a record high – including a record price of US$5,067 per ton for Napa Valley Cabernet Sauvignon – before a single cluster even appeared on the vine.

 

What record-high yields coupled with record-high grape prices means for the price of wine on the shelf, is difficult to predict.

 

‘Based on pure grape prices alone, higher grape prices in 2012 shouldn’t have a huge effect on wine prices,’ DiBuduo said. He estimated the highest increase, for Napa Cabernet, would only translate to a mere 0.90 cent increase per bottle.

 

Jon Fredrikson of wine consultants Gromberg, Fredrikson and Associates said high demand and high yields would moderate prices

 

‘I don’t think prices are going to change much. There’s going to be a lot of quality wine pouring into the market and I think it will attract a lot of new consumers.’

 

Wineries with surplus wine may opt to sell their excess on the bulk market rather than lower the price of their wines, Fredrikson said. ‘That bulk wine will go through negociant channels, resulting in high quality and inexpensive second labels. It’s a fantastic market for consumers overall.’

 

If nothing else, he predicted ‘2012 will put California Pinot Noir on the map’ due to the abundance and quality of the fruit.

 

DiBuduo believes that in high end regions like Napa and Sonoma, a good year for growers will be a good thing for vineyards as well. ‘We’re seeing new vines being planted in Paso Robles, and vineyards being redeveloped on the North Coast.’

 

 

——

Brad Pitt and Angelina Jolie join forces with Perrin family

 

Source: Decanter

by Jane Anson in Bordeaux

Wednesday 13 February 2013

 

Hollywood stars Brad Pitt and Angelina Jolie have joined forces with the Perrins of Beaucastel to produce wine at their Provence estate.

 

Under the agreement, the Perrin family, long-term owners of Château Beaucastel in Chateauneuf-du-Pape, and one of the most renowned names in the Rhone Valley, are now responsible for both the winemaking and distribution of the Jolie-Pitts’ Château Miraval in Correns.

 

The Perrins began working with the estate from harvest 2012, Marc Perrin told Decanter.com. Mutual friends put the two sides in touch, he said.

 

When the Jolie-Pitts first moved in to Château Miraval they signed a three-year lease to rent the 500-ha estate, but its AOC Côtes de Provence continued to be made by the previous winemaker.

 

They have since purchased the property – reportedly for around US$60m – and have been carrying out extensive renovations.

 

The property covers an entire valley, with 60ha of old vines, at an altitude of 350m. ‘The terroir, the freshness that comes from the altitude, and the exposition of the vines are all incredible,’ said Perrin. ‘For us as winemakers, it’s a wonderful opportunity to work with grapes that we know well, in an environment where striving for quality is the most important thing.’

 

Among the planned changes, Perrin said, is a full geological survey, likely to be carried out by soil expert Claude Bourguignon, and field grafting of some varieties such as Mourvèdre to add complexity to the Cabernet Sauvignon-Syrah blend that is currently used in the red wines. The estate also produces a white, from the Rolle grape, and a Pink Floyd rosé, named because the seminal album The Wall was recorded in a studio at the property.

 

‘The focus will now be more about Miraval itself that any specific cuvée,’ said Perrin. ‘They (the Jolie-Pitts) want to ensure they are making the best Provence wines they can. They were present at the blending sessions this year, and are relooking at everything from the installations in the winery – where we have already switched to stainless steel tanks – to reworking the labels across the range of wines.’

 

The first Perrin-made Miraval rosés should be on the market next month, March 2013, with the white wines arriving at the end of the summer.

 

 

——

MMD to represent Podernuovo a Palazzone wines in US

 

Source: DBR

14 February 2013

 

Maisons Marques & Domaines USA (MMD), a California-based marketer and importer of wines from family-owned wineries, has partnered with a Tuscan estate – Podernuovo a Palazzone – to represent its wines in the US.

 

Effective immediately, MMD will represent Podernuovo’s core Italian wines – Therra and Sotirio – in the US.

 

Located in Tuscany near San Casciano dei Bagni, the 20ha Podernuovo a Palazzone estate is planted with Sangiovese, Montepulciano, Cabernet Franc, Cabernet Sauvignon and Merlot vines, and also incorporates geothermal energy, a photovoltaic system and non-invasive architecture.

 

Podernuovo a Palazzone co-founder Giovanni Bulgari said they are happy to partner with MMD and the Rouzaud family.

 

“We both bring a strong commitment to excellence and an appreciation for quality and beauty while sharing the philosophy that excellence starts in the vineyard and with the terroir,” Bulgari added.

 

MMD president Gregory Balogh said, “Podernuovo a Palazzone produces outstanding wines and is a natural complement to the rest of our portfolio of champagne and fine wines.”

 

Podernuovo joins MMD’s portfolio of other properties such as Roederer Estate, Scharffenberger Cellars, Ramos-Pinto, Delas Freres, Domaines Ott, Chateau Pichon-Longueville Comtesse de Lalande, Chateau de Pez and Chateau Haut-Beausejour.

 

 

——

MNST: Monster Makes a Pre-emptive Strike

 

Source: CITI

Feb 13th

 

MNST Is Set to Change Its Labeling – Beverage Digest has announced this morning that MNST will change its “labeling and ingredient disclosure system” in response to the allegations made that MNST products are somehow not adequately regulated, as they have historically been classified as a dietary supplement and not a food/beverage product. The new labels will include the caffeine content of MNST products, although no ingredients will change.

 

Transition Should Be Smooth – Over the next few months, MNST will transition its packaging as old inventory sells through, simply shipping product with the new labeling. This should be a far more seamless transition as opposed to one where MNST might have recalled old cans and then replaced them with the new, so we expect there will be minimal, if any, disruptions here.

 

What Does this Mean vis a vis the FDA? – We have long suspected that the FDA would ultimately encourage, if not require, MNST to comply with more stringent standards in terms of disclosing its ingredients and its nutritional/caffeine content. We like that MNST appears to be trying to do the “right thing” when it comes to appeasing the FDA and its critics. We believe that there still exists the possibility that the FDA could offer new guidelines with respect to marketing claims, although given that MNST promotes its products mostly with non-traditional marketing methods, any new marketing guidelines would likely not affect MNST all that much.

 

What Does this Mean vis a vis MNST’s Market Share and Category Growth? – We doubt that this change of labeling will lead more consumers to come into the category, as we don’t consider it a meaningful change. That said, Beverage Digest writes that this change in classification from supplement to food will eliminate the taxes that MNST products have been subject to in some states, while it will also enable consumers to now use food stamps to pay for MNST products (as apparently food stamps cannot be used for dietary supplements). While we still fear that Red Bull’s more aggressive marketing and new product activity (of late, and which is expected to continue in 2013) represents more of a competitive threat than MNST has faced over the last few years, perhaps these issues will help MNST hold, if not gain, market share.

 

What Does this Mean vis a vis MNST’s Stock Price? – We believe that the biggest concern in terms of investing in MNST right now should be the achievability of the $2.32 (+23%) consensus 2013 EPS estimate. While this estimate has come down from a peak of ~$2.55 over the last six months, we still think the slowdown in the U.S. category growth rate that we have seen in recent months (from strong mid teens to only mid/high single digits) could lead this estimate lower still. Until we feel more confident in the outlook for 2013, we consider the stock to still be expensive (as it is trading at 21x this 2013 estimate) and maintain our Neutral rating.

 

 

——

Britvic criticises watchdog after failed deal

 

Source: FT

By Louise Lucas, Consumer Industries Editor

Feb 13th

 

Britvic, the soft drinks company, has slammed Britain’s antitrust watchdog after its proposed £1.4bn tie-up with Scottish peer AG Barr unravelled.

 

The deal lapsed on Wednesday after being referred to the Competition Commission. It had already suffered two extensions after the Office of Fair Trading lengthened its probe.

 

“Here we are, two British companies trying to strengthen ourselves against a vast US corporation [Coca-Cola] and being thwarted by the OFT,” fumed Gerald Corbett, Britvic chairman.

 

According to Neilsen data, Coca-Cola dominates the £9bn UK market for soft drinks. Its market share, at 28 per cent, is double that of Britvic and AG Barr combined.

 

“The winners today are cracking open bottles of champagne in Atlanta, Georgia,” he added, in reference to Coca-Cola’s headquarters.

 

Antitrust authorities, however, are concerned about the potential for pricing advantage in specific brands – in this case AG Barr’s Irn-Bru fizzy drink and Britvic’s Tango – and geographies.

 

Scotland is one of the few countries in the world where Coca-Cola is outsold by a local drink – Irn-Bru.

 

The deal had been under discussion for years but came closer to fruition following an approach from AG Barr in September. Details of the planned all-share merger were put to shareholders in November.

 

Paul Moody, chief executive – who has steered Britvic through a difficult period that included a costly recall of its Fruit Shoots drinks – stood down immediately. He had planned to retire when the deal went ahead.

 

Mr Moody is replaced by Simon Litherland, who ran the UK operation and before that the British business of Diageo, the beer and spirits group. Mr Litherland might have been out of a job had the deal proceeded.

 

Britvic is to review the details of the decision when they are released. “We are not going to let this deal go lightly,” said Mr Corbett.

 

The OFT will publish its detailed decision, which the two companies can edit for commercially sensitive information before publication. It could be around six months before the detailed decision is reached.

 

The deal would have created one of Europe’s biggest soft drinks companies. It was billed as a merger, but it was envisaged that AG Barr’s chief executive, Roger White, would take the helm.

 

It is the second drinks deal to be thwarted by antitrust watchdogs in recent weeks after the US Department of Justice in January moved to block AB InBev’s planned acquisition of Mexican beer group Modelo.

 

Protracted negotiations prompted two extensions to Britvic and AG Barr’s deadlines under the takeover code, before it finally lapsed on Wednesday. The proposed shareholder split of 63 per cent for Britvic and 37 per cent for AG Barr shareholders mirrored the market capitalisations of the two groups.

 

The companies unveiled anticipated synergies of £35m rising to £40m from 2016. The merged group, to be called Barr Britvic Soft Drinks, would have had annual sales of more than £1.5bn and employ about 4,300 staff.

 

 

——

Harris Teeter possibly on sales block

 

Source: RT

By Michael Johnsen

February 13, 2013

 

Carolina retailer Harris Teeter may be exploring a sale, the Wall Street Journal reported Tuesday evening.

 

According to the report, Harris Teeter is being advised by JP Morgan. WSJ tabulated Harris Teeter’s market value at $1.8 billion for its 200 supermarkets.

 

Harris Teeter recently reported a sales increase of 3.7% for its first quarter ended Jan. 1 to $1.2 billion. The chain reported that sales increase was driven by an increase in comparable store sales of 2.5% and sales from new stores, partially offset by store closings.  

 

“We continue to focus on driving unit sales and growing our market share,” stated Thomas Dickson, Harris Teeter chairman and CEO at the time first quarter results were announced. “During the first quarter of fiscal 2013, our pricing and promotional strategies were effective in this regard, as evidenced by an increase in the number of active households and number of customer visits we experienced over the prior year. However, aggressive pricing by competitors, low inflation during the period and the generally sluggish retail environment experienced during the holiday season combined to put downward pressure on our gross profit.”

 

 

——

Survey: Restaurant workforce challenges continue in 1Q

 

The People Report Workforce Index showed the biggest dip since the fourth quarter of 2011

 

Source: NRN

Ron Ruggless  

Feb. 13, 2013

 

The People Report Workforce Index, which measures expected market pressures on restaurant employment, fell nearly six points in the first quarter, the biggest dip since the fourth quarter of 2011.

 

The quarterly index still indicated restaurant operators would continue to face recruitment and retention challenges, at least in the first three months of 2013.

 

The Workforce Index is produced by Dallas-based People Report and is based on surveys of restaurant human resources departments and recruiters. It measures from a baseline value of 50, with any results over that level indicating increased pressures on five components: employment levels, recruiting difficulty, vacancies, employment expectations and turnover. Results are based on expectations for the quarter underway.

 

The first-quarter overall Workforce Index stood at 61.1, down from 67 points in the fourth quarter of 2012. The index had nudged upward 2 points in the last quarter.

 

Michael Harms, executive director of operations at People Report/Black Box Intelligence, said that the latest index score “is still indicative of growth and increasing labor pressures in the industry, but it did show a downward trend.”

 

He also noted that the index reflected some uneasiness in the economy. “Obviously, the industry is sensitive to economic changes and we saw a little economic volatility at the end of the year,” he said. “Turnover started to tick up. GDP [gross domestic product] growth was flat to negative. This shows that some of the high expectations we saw going into the fourth quarter, based on the strong third quarter, didn’t quite live up to expectations.”

 

The Workforce Index found its “employment levels” component dropped from 68.2 in the fourth quarter to 62.6 in the first quarter of 2013. The report noted that the U.S. economy added 603,000 jobs during the final three months of 2012, which was a 6-percent increase over the 570,00 jobs added in the same quarter of 2011.

 

“The foodservice industry added 63,900 jobs in Q4 ’12, a significant decrease from the 94,100 jobs added in Q3, and just half of the 119,700 jobs added in Q4 ’11,” the report also noted.

 

The overall index’s changes have been “slow and steady” for the past three years, Harms said. “We’re seeing modest increases in turnover over the last two years, modest job-growth gains, modest increases in recruiting difficulty and the number of vacancies,” he said. “So this really isn’t a spaceship or rocket, it’s just more of a slow increase.”

 

Turnover rates among restaurant operators in the survey have been on a plateau as well, Harms said. “Turnover is tightly related to unemployment,” he explained. “We’ve seen the unemployment rate drop from 10 percent to around 8 percent over the last couple of years. When we started to see that drop, that’s when we started to see turnover really increase. But that rate has been pretty stagnant.”

 

The U.S. employment rate increased a tenth of a percentage point in January, its first increase in a year, to 7.9 percent.

 

Workforce Index readings higher than 60 indicate especially stiff pressures. All four industry segments showed first-quarter index readings decreasing from the fourth quarter:

 

. Quick service: 63.8, falling from 72.8

. Fast casual/family dining: 57.8, falling from 69.6

. Casual dining: 65.2, falling slightly from 65.8?

. Fine dining/high volume: 58.7, falling from 66.5

 

“We’re adding jobs slowly but surely,” Harms said. “Despite rising gas prices and despite the payroll-tax increase that everyone is facing, there is optimism out there that the industry is growing and there is going to be increased demand. People are looking for workers.”

 

 

——

Colorado: Colorado bill for craft beer in grocery stores meets abrupt end

 

Source: Coloradoan

David Young

Feb. 13, 2013

 

A bill that would have allowed craft beer in Colorado grocery stores was killed Tuesday by its own sponsor, who cited a lack of support.

 

Kevin Priola, R-Henderson, had proposed House Bill 1178, which called for allowing grocery and convenience stores and other retailers to sell craft beer. Craft beer is defined as beer with an alcohol content above 3.2 percent by weight or 4 percent alcohol by volume that is manufactured by a craft brewer that produces no more than 6 million barrels per year, according to the bill.

 

Efforts to get full-strength beer onto grocery store shelves dates back to 2009, but this bill was written with Colorado craft breweries in mind.

 

In a House Business, Labor and Economic Workforce Development Committee hearing Tuesday, before any comments were made, Priola asked that the bill be postponed indefinitely after noting that it did not have the support of the craft beer industry or the committee.

 

“I understand the craft beer folks oppose this bill, but it simply amuses me that the same companies they shut out of the market here are the same ones they currently do business with in other states,” Priola said in the hearing.

 

The Colorado Brewers Guild in years past has come out against similar bills on behalf of its independent brewers throughout the state, noting such a bill would fundamentally adversely alter the beer market in Colorado. Liquor stores have opposed similar bills for the same reason.

 

Priola said he hoped to modernize Colorado alcohol retail sales with the bill, noting that more than 40 states allow full-strength beer in grocery stores with no problems, including selling to minors.

 

In the hearing, Priola said he hoped to help stores that have lost revenue due to the Sunday sales law that allowed liquor stores to remain open on Sunday. He noted that the Sunday sales, which started in 2008, didn’t lead to more sales at liquor stores.

 

Currently grocery stores in Colorado can sell beer with an alcohol content of 3.2 percent or less. The bill would not have allowed all grocery stores to sell full-strength beer, but would have allowed four additional licenses per city for grocery stores.

 

Oskar Blues is one of those breweries that does business in other states, such as California, which allows full-strength beer in grocery stores.

 

Chad Melis, Oskar Blues spokesman, wasn’t familiar with this specific bill but said there are pluses and minuses to both sides of the spectrum.

 

While hesitant to take one side or another in the case of full-strength beer in grocery stores, Melis said independent liquor stores in Colorado helped make the brewery what it is today and they want to continue to support them. Selling its beers in 30 states, Oskar Blues has learned to be competitive and do business in both environments and has seen both work, Melis said.

 

 

——

Colorado: Denver Considers Whether To Opt In Or Out Of Amendment 64

 

Source: CBS4

February 12, 2013

 

There’s a chance Denver will opt out of Amendment 64 despite the fact voters in the city overwhelmingly approved legalizing marijuana.

 

Some members of the city council argue that while the majority of Denver voters said yes to the amendment, it was in an effort to decriminilize small amounts. Their intentions may not have been to have a marijuana store in their neighborhood.

 

“There are a lot of safety issues as it relates to that, tremendous safety issues,” Denver Police Chief Richard White told council members at a committee meeting on Monday night.

 

White highlighted the concerns and issues the department has seen in recent years in dealing with medical marijuana. However, he also said Amendment 64 will be looked at as just another ordinace in the city that will come with its own issues.

 

“Are we going to go out and look for people that are violating recreational marijuana in light of all the other challenges we have, I would say that’s not going to be a priority of ours,” White said.

 

White said the city has seen an increase in crime like burglaries since the introduction of medical marijuana.

 

“The trend shows us that there are increased crimes around our city that we have to be prepared for,” White said.

 

Crime is one downfalls, but on the upside, medical marijuana has brought in a lot of revenue in the form of sales tax.

 

 

——

California: City of El Cajon hopes to ban certain types of alcohol, certain container sizes

 

Source: ABC 10 News

Craig Herrera

Feb 12th

 

Store shelves may soon be missing some alcohol in one East County city. The city of El Cajon hopes to ban certain types of alcohol and certain containers.

 

Shelves packed with liquor are a common sight in stores throughout El Cajon.

 

“We have a great number of liquor licenses per capita, the greatest in San Diego County,” said El Cajon City Councilman Gary Kendrick.

 

Seventy-six businesses have a license to sell alcohol. The population in the El Cajon area is just under 100,000.

 

“The state of California has deemed that the city of El Cajon has an over abundance of alcohol outlets,” said Kendrick. “There’s actually a state moratorium on alcohol outlets in El Cajon.”

 

City council members say it is time to do something about it.

 

They voted unanimously to work on an initiative that would ban the sale of small containers of hard alcohol, which are easy to hide, and fortified wines with more than 15 percent alcohol.

 

“It’s called a deem-approved ordinance,” said Kendrick. “This would allow us to put a whole host of new conditions on alcohol outlets.”

 

The hope is to eliminate underage drinking and to keep hard alcohol out of the hands of homeless people and others who may display public drunkenness.

 

“The thrust of this ordinance is to make El Cajon more family-friendly,” said Kendrick.

 

Eleanor Garnica was out shopping with her grandson and she agrees.

 

“I wouldn’t want him to be influenced by those alcohol beverages in small little attractive bottles, no,” said Garnica.

 

It would be the first deemed-approved ordinance of its kind in San Diego County. There are 20 cities in California with similar rules.

 

“It’s proven to be very successful in combating public drunkenness and crime,” said Kendrick.

 

Garnica added, “We have to protect our children and it’s up to us adults to protect them.”

 

The ordinance would not affect restaurants or bars.

 

 

——

Washington: Barkeep: A round of booze hearings

 

Source: Spokesman-Review

Feb. 11, 2013

 

Getting a drink of alcohol in a movie theater, a farmer’s market, even a senior center or a massage,  would be easier under a series of proposals considered Monday by a Senate panel.

 

Getting a taste of that $90 a bottle whiskey or the merlot from an unfamiliar winery selling its wares at a farmers’ market would be possible, too.

 

While that might make consumers happy, it has folks in the substance abuse community worried that relaxing state liquor licensing laws will mean more places where kids will see adults drinking and where recovering addicts will be tempted alcohol. . .

 

To read the rest of this item, or to comment, go inside the blog.

 

The Senate Commerce and Labor Committee had 11 different proposals Monday involving alcohol, most of them to relax different restrictions on consumption. Some movie theaters want the ability to serve beer, wine or distilled spirits, and let patrons take drinks to their seats rather than having to gulp drinks down in a special room during intermission.

 

It may be the only way the small theaters can compete against the multiplexes, owners said.

 

Sen. Karen Keiser, D-Kent, said she’s fine with allowing them to sell beer and wine, but had some reservations about mixed drinks: “I’ve always found martinis particularly lethal.”

 

Sen. Nick Harper, sponsor of the bill that includes distilled spirits in the drinks a theater can serve, said he worked his way through college as a bartender and knows people can be “overserved” on beer and wine just like they can on liquor. The theaters should be able to make a “business decision” on what they want to serve.

 

Retailers, too, want the ability to offer samples of distilled spirits. One new law would allow up to three samples, totalling 1.5 ounces, for a customer to sample different liquors. Washington allowed that type of sampling at state-owned liquor stores for a short period, but when Initiative 1183 took the state out of the liquor business, it wiped out the ability to offer samples of distilled spirits.

 

After I-1183 passed, the consumption of liquor stayed about the same, but the consumption of high-end products went down as the fees and taxes went up. With some products costing as much as $90 a bottle, a buyer may be reluctant to spend that on something he or she never tasted, a lobbyist for retailers said.

 

Farmers markets also had a pilot program for tasting wine and beer three years ago. It was successful and should be expanded to help promote local wineries and microbreweries, Sen. Jeanne Kohl-Welles, D-Seattle, the sponsor, said.

 

Senior centers, too, want an expanded ability to hold events, including fund-raisers, that serve alcohol. Right now, they can hold a limited number, and must file a request 45 days in advance.

 

Day spas want the ability to offer their patrons a glass of wine or beer during a pedicure or after a massage. Some do it right now, even though it’s against the law, Keiser, the bill’s sponsor. said.

 

Having a glass of wine after a massage, then getting in a car and driving sounded like a really bad idea to Mary Ellen Dela Pena of the Washington Association of Substance Abuse and Violence Prevention. Many of the proposal would expand the need of the already stretched Liquor Control Board to do “compliance checks”, to make sure these new locations were following laws on not over serving or allowing minors to be present, she added.

 

“There’s a creep in society about the number of localities where alcohol is served,” Derrick Franklin, president of the association, said. That means fewer and fewer locations where children can go and not be exposed to alcohol consumption.

 

Here’s a list of the liquor bills the Commerce and Labor Committee is considered Monday:

 

    SB 5045- Allowing day spas to offer or supply without charge wine or beer by the individual glass to a customer for consumption on the premises.

    SB 5111- Creating a beer and wine theater license. (Hearing is on the Proposed Substitute.)

    SB 5607- Concerning beer, wine, and spirits theater licenses.

    SB 5238- Concerning recommendations for streamlining reporting requirements for taxes and fees on spirits.

    SB 5261- Prohibiting certain liquor self-checkout machines.

    SB 5303- Concerning the identification of wineries, breweries, and microbreweries on private labels.

    SB 5310- Creating a senior center license.

    SB 5396- Concerning limited on-premise spirits sampling.

    SB 5517- Changing the criteria for the beer and wine tasting endorsement for grocery stores.

    SB 5628- Allowing multiple liquor licenses at the same physical premises.

   SB 5674- Allowing wine and beer sampling at farmers markets.

 

 

——

Indiana: Sunday liquor sales bill will die in Indiana House committee

 

Source: IndyStar

Chris Sikich

Feb 13, 2013

 

Hoosiers who want to buy carry-out alcohol on Sundays will have to wait at least another year. House Public Policy Chairman Bill Davis has decided against holding a committee vote.

 

Hoosiers will have to continue skipping past the beer, wine and spirits section at grocery stores when they go shopping on Sundays.

 

Indiana House Public Policy Committee Chairman Bill Davis has decided against holding a committee vote on legislation to allow Sunday alcohol sales. As chairman, it’s his call.

 

“We have ample opportunities for people to be able to have access to alcohol in the state of Indiana,” he said. “It’s not like we can’t get it six days a week. It’s not an issue that I think is urgent. I think we have time as we go forward to deal with this issue.”

 

Alcohol sales are handled differently in each of the 50 states. But Indiana has the nation’s broadest restrictions on Sunday sales: a ban of beer, wine and liquor sales at grocery and package liquor stores. The blue law has been on the books since Prohibition, initially for religious reasons and later for economic reasons.

 

Most recently, the powerful package liquor store lobby has blocked the change, arguing that allowing Sunday sales would give nationally-owned grocery stores an advantage and drive smaller, locally owned, package liquor stores out of business.

 

Davis’ committee heard three hours of public testimony Jan. 30, mostly from lobbyists for and against the measure. Davis, R-Portland, said he noted members of the broader public were largely absent from the hearing.

 

“I think we need to hear from the public on how they feel about Sunday sales of alcohol,” said Davis. “And I don’t think through the hearing process, there was a clear direction on that either way.”

 

Davis said Sunday sales is not a pressing issue – he pointed toward education and job creation as priorities – and he expected to consider legislation again in 2014.

 

Indiana will continue to lose tax revenue to neighboring states because of the ban, said Grant Monahan, president of the Indiana Retail Council, which represents grocery stores. All of the state’s neighbors allow some level of Sunday sales.

 

John Livengood, president of the Indiana Association of Beverage Retailers, countered that Davis’ decision is good news for consumers. He pointed to a study that package liquor stores would close if sales were expanded. And liquor stores, he said, often have better selections.

Advertisements

Tags: , ,

Leave a Reply

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

WordPress.com Logo

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

Twitter picture

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

Facebook photo

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

Google+ photo

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

Connecting to %s


%d bloggers like this: