Liquor Industry News 2-19-13

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GLAZER’S, INC. APPOINTS ORMAN ANDERSON SENIOR VICE PRESIDENT, MERGERS & ACQUISITIONS

 

Source: Glazer’s

February 18, 2013

 

Glazer’s today announces the appointment of Orman Anderson as Senior Vice President, Mergers & Acquisitions. Mr. Anderson will lead Glazer’s acquisition effort and will report to Glazer’s Executive Vice President and CFO Thomas Greenlee.

 

Mr. Anderson was previously Executive Director of Mid-Cap Investment Banking at J.P. Morgan, in Dallas, where he was responsible for originating and executing M&A and capital market transactions for a variety of companies. Prior to joining J.P. Morgan, Mr. Anderson was a Managing Director in the Investment Banking Group at Bear, Stearns & Co. Inc. in New York and Dallas. Mr. Anderson began his career at Price Waterhouse. Mr. Anderson received a Bachelor of Science in Accounting from Brigham Young University and a Master of Business Administration from the Wharton School at the University of Pennsylvania.

 

Glazer’s President and CEO, Sheldon “Shelly” Stein, commented, “We are pleased to add a senior deal maker of Orman’s caliber to our team. I have worked extensively with Orman at Bear Stearns and at J.P. Morgan, and know that his transaction skills and international M & A experience will allow us to successfully seek out joint ventures and acquisitions around the world.”

 

Glazer’s Executive Vice President and CFO Thomas Greenlee added, “We are excited for Orman to join us to drive our M&A effort. Glazer’s is committed to expanding our footprint, both domestically and internationally, and we are confident that Orman will help us accelerate this growth.”

 

Glazer’s, one of the country’s largest privately held companies, currently operates in 14 states and the Caribbean, and is one of the nation’s largest distributors of wine, spirits and malt beverage products. The company has operations in Alabama, Arizona, Arkansas, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Ohio, Oklahoma, Tennessee, Texas and the U.S. Virgin Islands. The third-generation family business was founded in Dallas in 1933. For more information, please visit our website at www.glazers.com.

 

 

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I’ll drink to that! New ‘alcohol busting’ drug that sobers you up in seconds being developed by MIT scientists

 

Source: Daily Mail

By Helen Pow

18 February 2013

 

Party animals could soon be able to sober up in an instant just by popping a pill.

 

Researchers have developed a cocktail of alcohol metabolizing enzymes that speedily reduces blood alcohol levels in drunk mice.

 

The treatment, which has been compared to having ‘millions of liver cells inside your stomach,’ could have far-reaching implications for drinkers.

 

Yunfeng Lu, a professor of chemical and biomolecular engineering at UCLA, and Cheng Ji, a professor of biochemical and molecular biology at the University of Southern California injected the intoxicated mice with nanocapsules containing two enzymes.

 

One of the enzymes, Oxidase, comes with an unfortunate by-product of hydrogen peroxide, which can be harmful.

 

As such, it needs to work in concert with another enzyme that decomposes the hydrogen peroxide.

 

The findings showed the party mice that received the injection sobered up much quicker compared to those that didn’t get the enzyme treatment.

 

The breakthrough is still in its early stages and is not ready to be tested on humans.

 

But Lu said it could lead to a new class of drugs that act as an alcohol ‘antidote.’

 

He envisages the medicine could be taken in such simple form as a pill.

 

The scientist said the nanocapsules work as a sort of booze buster in your gut.

 

It would ‘almost be like having millions of liver cell units inside your stomach or in your intestine, helping you to digest alcohol,’ Lu said.

 

In the meantime, the researchers are working on other enzyme drugs.

 

One, which would be almost as popular as the booze-busting pill, relies on nanocapsules to deliver an enzyme that destroys the substance that causes male-pattern baldness.

 

Read more: http://www.dailymail.co.uk/news/article-2280254/New-alcohol-busting-drug-sobers-seconds-developed.html#ixzz2LKzYGNEg

 

 

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Bourbon’s share gain at the expense of Vodka accelerated at the end of 2012 in On-Premise Channel.

 

Source: GuestMetrics

February 19, 2013
According to GuestMetrics, based on its proprietary database of POS transactions of over $8 billion dollars in transactions and over 250 million checks from restaurants and bars across the United States, brown spirits took market share throughout 2012 and finished the year on a strong note.  

 

“In analyzing the over 3,000 spirits brands sold in on-premise, brown spirits took about a point of share from clear spirits in 2012 versus 2011,” said Bill Pecoriello, CEO of GuestMetrics LLC. “Based on our data, sales of brown spirits were up about 5%, while clear spirits were only up about 0.5%.  They both took prices up about 2%, but the number of brown spirits drinks sold were up about 3% while drinks with clear spirits were down about 1.5%, indicating a meaningful difference in pricing power between brown and clear spirits right now,” continued Pecoriello.  According to data from GuestMetrics, compared to the prior year, sales of brown spirits were up 4.5% in the first quarter, accelerated to 5% for the next two quarters, and closed out the final quarter of the year at 5.5%, while clear spirits sales were up 1% for the first three quarters and slightly negative in 4Q12.

 

“In analyzing the gains experienced by brown spirits, the gains were led by Bourbons & Blends, which gained about 120 basis points in share, followed by Irish and Scotch with share gains of 50 basis points and 20 basis points, respectively,” said Peter Reidhead, VP of Strategy and Insights at GuestMetrics.  “On the flipside, for clear spirits, the largest share loss was experienced by Vodka, which lost about 90 basis points in share, followed by Rum and Cordials with share losses of 40 basis points and 35 basis points, respectively.  Looking specifically at the quarters within the year, the share gain by Bourbons & Blends and share loss by Vodka both accelerated during the final quarter of the year, so we will be closely monitoring whether that momentum continues into 2013.”

 

“In our minds, this underscores the importance of restaurant operators having an up-to-date understanding of the fastest growing spirits types so they can adjust their menus accordingly, which is particularly important given the fairly rapid shift in consumer tastes taking place in the spirits category right now,” said Brian Barrett, President of GuestMetrics.  “Additionally, given the average price of $7.97 for a drink with brown spirits is about a 5% premium over the $7.63 average price for a drink with clear spirits, dialing up the focus on brown spirits on menus could be an especially attractive value proposition for restaurant operators to consider.”   

 

About GuestMetrics LLC

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

 

 

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Turkish competition board to investigate Diageo unit Mey Icki

 

Source: Reuters

Feb 18 2013

 

Turkey’s Competition Board said on Monday it had opened an investigation into Diageo’s Turkish spirits group Mey Icki on the grounds that it breached competition principles by preventing the sale of competitors’ products in stores.

 

Diageo PLC bought Mey Icki from TPG Capital LP and local private equity group Actera in 2011 for $2.1 billion.

 

 

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Diageo CEO continues to reduce stake

 

Source: Sharecast

Mon 18 Feb 2013

 

The Chief Executive Officer of Diageo, the FTSE 100 drinks giant, has continued to reduce his stake in the company, this time selling 75,000 shares.

 

Paul Walsh, who was appointed to the role of CEO in 2000, now holds 654,614 shares in the group.

 

The shares were traded in at 1,935.00p a time, earning him £1.45m before tax.

 

The sale comes just a few weeks after Diageo unveiled its results for the final six months of 2012. The company, whose brands include Guinness, Smirnoff and Johnnie, reported a 9.0% organic operating profit growth for the half year ended December 31st.

 

Earnings per share for pre-exceptional items rose 9.0% to 60.9p per share. Organic net sales growth climbed 5.0% with 1.0% organic volume growth. The group reported a 110 basis points of organic operating margin expansion.

 

Walsh said the results were driven by the strong performance of the company’s alcoholic spirits in the US.

 

 

——

Oaktree Loses Bottle Over £590m Stock Sale

 

Buyout firms Oaktree and Pamplona fail to reach an agreement over a £600m deal for spirits group Stock, Sky News learns.

 

Source: Sky News

By Mark Kleinman, City Editor

Monday 18 February 2013

 

Talks about a sale of the biggest spirits producer in eastern Europe have collapsed after a disagreement over price between the seller and a fund backed by one of Russia’s richest oligarchs.

 

I understand that discussions that would have seen Pamplona Capital, a private equity firm, acquiring control of Stock Spirits Group, fell apart last week.

 

People close to the deal said that Oaktree Capital Management, Stock Spirits’ current owner, had become uncomfortable with the roughly-£590m price-tag for which it had agreed to sell the company.

 

The collapse of the talks represents the second time that Oaktree has failed to offload Stock Spirits following an earlier attempt to float the business on the stock market.

 

It is unclear whether Oaktree will now attempt to run a further auction process. The buyout firm was unavailable for comment.

 

Pamplona’s backers include Alfa Group, a company headed by Mikhail Fridman and one of the members of the AAR alliance which last year agreed to end its conflict-plagued joint venture with BP in Russia by selling out to Rosneft, the Kremlin-controlled energy giant. The deal netted Mr Fridman and his partners at least $7bn each.

 

Stock, which is based in Britain, has been owned by Oaktree since 2007. Sky News revealed its talks with Pamplona last month.

 

The drinks company traces its roots back to the Austro-Hungarian empire of the late 19th century, and now claims to be the biggest spirits producer by volume in the Czech Republic and Poland. It is also a major player in markets such as Croatia, Italy, Slovakia and Slovenia.

 

Among its major brands are Stock 84 brandy and Fernet Stock bitter, as well as vodkas such as Wodka Zoladkowa and Orzel. Some of the products are distributed in the UK through big supermarkets, although Britain accounts for only a tiny proportion of the company’s sales.

 

Stock is chaired by Jack Keenan, a former executive at Diageo, and run by Chris Heath, the former chief financial officer of Gondola Holdings, the parent company of restaurant chains including Pizza Express, ASK and Zizzi.

 

Pamplona declined to comment on the collapse of the talks.

 

 

——

Carlsberg: fools Russian

 

Danish brewer overexposed to Russia and underexposed to other emerging markets

 

Source: FT

Feb 18th

 

There is always one that gets carried away at a party. But for Carlsberg all of its shareholders were overdoing it. Shares in the brewer have gained 18 per cent over the past six months – the most among all peers except Heineken. The hope was that things in Carlsberg’s second-biggest market, Russia, which had been wracked by temperamental barley harvests and regulation, were finally stabilising. Yet forecasts given during Thursday’s 2012 results announcement proved a bit of a party pooper. Shares fell 7 per cent.

 

Granted, Carlsberg’s net profit picked up 6 per cent in 2012 on 3 per cent growth in organic sales. But the Danish brewer finally ditched its medium term operating margin targets for Russia of 26-29 per cent. This is some form of admission that the region, which makes up two-fifths of Carlsberg’s operating profit, is still volatile. High taxes on beer and new sales and marketing restrictions ensure that the environment remains a challenge. In 2012, Carlsberg’s operating profit margin fell for the third consecutive year in Russia to 21 per cent.

 

Thus a problem is Carlsberg’s lack of big exposure to other emerging markets. Although Asia has done well (net revenue grew by one-third in 2012), fast growing regions still make up just 17 per cent of the brewer’s operating profit, compared with 70 per cent at SABMiller, for example. And while Carlsberg is investing heavily over the next three years to improve its supply chain in Europe, this is not expected to feed through to margins until 2014.

 

As a result, Carlsberg shares are cheap versus peers. On 13 times forward earnings, the Danish brewer now trades at a one-fifth discount to Heineken and a one-third discount to SABMiller and ABInBev. Carlsberg may now be under-promising to curb the enthusiasm of overexcited investors. It will need to over-deliver in order to narrow that gap.

 

 

——

Russian Taxes Test Carlsberg

 

Source: WSJ

By CLEMENS BOMSDORF

Feb 18th

 

A challenging Western European beer market and unpredictable conditions in Russia have led Danish brewer Carlsberg A/S CARL-A.KO +0.69% to adjust its near-term outlook and seek growth in emerging markets.

 

The Danish brewer bought the 50% it didn’t already own in Baltika Breweries, the market leader in Russia, as part of a deal with Heineken NV HEIA.AE +0.99% of the Netherlands to take over and split up Scottish & Newcastle PLC in 2008.

 

But Carlsberg’s big bet on Russia is under pressure as government officials there look to control alcohol use by restricting advertising and availability, such as by moving away from sales at street kiosks.

 

Carlsberg shipments in Eastern Europe, including Russia-its second-largest market by volume after Western Europe-fell 6% in 2012 and market share in Russia was flat over the year.

 

Carlsberg on Monday said it swung to a fourth-quarter net profit after losing money a year earlier, and revenue increased during the quarter.

 

Chief Executive Jorgen Buhl Rasmussen pointed to Asia as a bright spot where “we continue to deliver impressive growth and strengthen our market positions.”

 

Still, Mr. Rasmussen said the company’s fortunes in Russia could be set to improve even if regulatory hurdles and fierce competition make the near-term picture murky.

 

“The forced closure of beer sales at street kiosks should only impact demand negatively in the short run, as people find their way to other stores,” Mr. Rasmussen said in an interview. He hopes to increase market share in Russia this year and “we see a chance that people in the longer run will shift from harder drinks like vodka to beer.”

 

Mr. Rasmussen also noted that the company’s Somersby cider brand hasn’t been launched in Russia, though he declined to comment on when that product will go on sale.

 

Sydbank analyst Morten Imsgard said there are two reasons to be concerned about Carlsberg’s Russian performance: volatile raw materials prices and tighter government regulation.

 

He said a Jan. 1 tax increase of three rubles (10 U.S. cents) on a liter of beer translates into a 25% price rise, and he expects additional taxes of similar levels in the years to come.

 

The company made a fourth-quarter net profit of 192 million Danish kroner ($34.4 million) compared with a loss of 85 million kroner a year earlier, when the company booked restructuring charges and paid more in tax. Revenue increased 7.3% to 15.93 billion kroner.

 

Operating profit rose 17% to 2.15 billion kroner, slightly below analyst expectations, and was 9.79 billion kroner for the full year, down from 9.82 billion kroner in 2011. The company said it expects 2013 operating profit of around 10 billion kroner, disappointing analysts.

 

The results come just weeks after the company revealed plans to expand in Myanmar in order to bolster its presence in emerging markets as growth slows in recession-hit Western Europe. It will spend about 275 million Danish kroner on a brewery and marketing push in the country.

 

Carlsberg has sold beer in Myanmar for decades, and has now decided to take advantage of the long-isolated nation’s more open conditions to set up brewing operations in a joint venture with privately owned Myanmar Golden Star Breweries.

 

Asia is particularly important to the beer industry’s biggest players because it is the world’s largest regional beer market, accounting for 35% of global consumption, and one of the fastest-growing.

 

Mr. Rasmussen said earlier this year that the average annual beer consumption per capita in Myanmar is 4 liters, compared with around 30 liters in the wider region.

 

“We therefore see a huge growth potential,” Mr. Rasmussen said, adding that Carlsberg may increase the amount of beer imported to Myanmar in the time leading up to the new brewery coming online.

 

 

——

Carlsberg AS-B: What matters – Not another Staple?

 

Source: Barclays

Feb 18th

 

Stock Rating/Industry View: Equal Weight/Neutral

Price Target: DKK 525.00

Price (18-Feb-2013): DKK 567.50

Potential Upside/Downside: -7%

Tickers: CARLB DC / CARLb.CO

 

What to do – low earnings certainty justifies discount: A poor Q4 delivery and a revision and downgrading of 2013 guidance expectations has proven to us once again that Carlsberg deserves to trade at a meaningful discount to its wider Staples peers. With consistent earnings delivery a requirement for any sustained re-rating and given the lack of positive earnings momentum in the near-term (Q1 headwinds from French destock and Russian kiosk ban) we see little reason to change our fundamental investment case on the name for now. We downgrade our F13e EPS by 6% and maintain our Equal Weight recommendation, with a DKK525 price target.

 

What’s next – short-term risks remain: We expect 1H trading to remain challenged in both NW Europe and Eastern Europe, with the significant French excise increase (both the destock and higher market price effect) and the introduction of the kiosk ban in Russia to impact. The kiosk ban in isolation will reduce volumes by c.2%, constraining market growth once again in Russia. Further, with price/mix to offset the COGS/HL inflation and with higher restructuring costs (DKK300mn-400mn), the company has minimal levers to offset the volume weakness in the short-term. Subsequently, we see little reason for the shares to find support through 1H13.

 

What we learnt – guidance disappointed: The F12 result was full of moving parts but after adjusting for one-offs, net income was in-line with company consensus. F12 EBIT missed by 1.5% with softer margins in NW Europe (lower volumes and higher inputs) but both interest and tax were slightly better. However, it was management’s guidance that disappointed with only a 2% improvement expected in Group EBIT and a mid-single digit lift in adjusted net income. Consensus prior to the result assumed at least a double digit lift in net income. Despite a lower guided coupon (down 50bps-75bps), the lower EBIT expectation and a higher minority charge has led to the lower earnings outlook.

 

What’s changed – reining back expectations: We downgrade our F13e EPS by 6% and F14e by 5%, implying a C13 PE of 14.5x, a fair 18% discount to peers in our view given Carlsberg’s lower relative growth outlook (EBIT +5% vs. peers at +8%). We assume NWEUR margins rise by only 20bps (constrained volumes and upfront restructuring costs); Eastern Europe +40bps (+7% top-line leverage) and Asian margins should be flat.

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

 

 

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New Year cheer as Cognac rebounds – figures (Excerpt)

 

Source: Just-Drinks

By Andy Morton

18 February 2013

 

China’s Cognac shipments are back on track as Chinese New Year sales have kicked- in, according to new figures.

 

Direct shipments to the country last month jumped by 72% year-on-year, analyst UBS said citing Bureau National Interprofessionnel du Cognac (BNIC) data. The jump pushed China’s six-month rolling volumes average to +1.3% year-on-year, up from -5.4% in December, according to the figures.

 

 

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It’s Scotch, but the Owners Live Elsewhere

 

Source: New York Times

By STEPHEN CASTLE

Feb 15th

 

George S. Grant markets malt whisky made in the shadow of the snow-capped Ben Rinnes, the same spot where, five generations ago, his family bought a distillery in 1865 for £511.

 

Nowadays the family’s Glenfarclas malt is produced in a modern, highly automated plant, and is exported to the United States, Taiwan and other countries. But the profit returns here to the valley of the River Spey in the heart of Scotland’s whisky country. And that repatriated money is what makes Glenfarclas such a rarity.

 

“Within a 20-mile radius of where we are now, there are 35 distilleries,” said Mr. Grant, the director of sales at Glenfarclas. But only a handful of the operations within that 30-kilometer radius remain in Scottish hands. The rest are owned by big multinationals – most notably Diageo, based in London, and the French company Pernod Ricard – which book their profits and employ many of their staff members elsewhere.

 

In fact Mr. Grant, 36, says he knows of no other whisky maker apart from Glenfarclas that has its sales and marketing operation based at the distillery in this scenic part of Scotland. Though he says relations with the big non-Scottish players are good – they buy some of Glenfarclas’s output for their blended whiskies, after all – Mr. Grant notes that what sets his family’s company apart is its place in the community and the fact that “we’ve been here forever.”

 

To be sold as Scotch whisky, the liquor must be produced in Scotland. The rest of the business can be elsewhere, though, and it often is.

 

Non-Scottish companies control about four-fifths of the £4.2 billion, or $6.5 billion, global market for Scotch, which is being driven by growth from emerging markets. The United States is still the biggest export market by value, at £600 million last year. But Scotch whisky exports to Brazil grew 48 percent last year, those to Taiwan 45 percent and to Venezuela 33 percent, according to the Scotch Whisky Association.

 

John Kay, a prominent economist and former economic adviser to the Scottish government, says that too little of the money from those exports ends up in the Scottish economy.

 

He has proposed a £1 “bottle tax,” levied on all Scotch production, which would be paid by the distillers. The precise value of such a tax is hard to predict, but the Scotch Whisky Association says that about 1.3 billion bottles were exported last year, representing about 95 percent of total production.

 

But much of the monetary benefit goes to governments that impose duties on the product wherever it is sold.

 

“A lot of money is being made out of this product by foreign governments and foreign companies,” Mr. Kay said. The bottle tax, he said, would be a way to keep some of that money in Scotland.

 

With a referendum looming next year on Scottish independence, the idea has prompted a new debate about the country’s economic assets. It has even prompted comparisons between the North Sea natural gas and oil extracted from Scotland’s coastal waters and the Scotch distilled on its heather-covered moorlands and windswept islands.

 

Whisky supports about 10,000 jobs in Scotland, including those of people working in bottling plants, and in total about 36,000 in Britain across the whole of the economy, including haulers and packaging companies, the Scotch Whisky Association says. But the distilleries themselves are not big job creators. Although the most modern ones operate 24 hours a day, they tend to employ no more than a dozen people.

 

Patrick Harvie, a member of the Scottish Parliament for Glasgow who is responsible for enterprise for the Scottish Green party, said it was “good to see others starting to question the benefits to Scotland of allowing our national assets to be controlled by global corporations.”

 

Mr. Harvie drew a parallel with a debate over the tax liability of companies, like Starbucks, that use their multinational status to reduce corporate tax bills. Diageo says that it pays about 18 percent of tax on its profit on average but does not say where those taxes are paid.

 

“Our most famous whisky brands are registered abroad and the owners’ tax arrangements are less than clear,” Mr. Harvie said.

 

For all that, though, there is little indication that the Scottish government plans to adopt the bottle tax. For one thing, it is already fighting legal challenges to a plan to place minimum prices on alcohol as a way of discouraging binge drinking.

 

A bottle tax plan would very likely set off a separate, titanic legal and political fight with one of Scotland’s biggest industries. The tax idea “only has merit for those who wish to undermine the Scotch whisky industry’s competitiveness in the global market and undermine its growth prospects,” said Campbell Evans, director of government and consumer affairs at the Scotch Whisky Association.

 

“Apart, perhaps, from the oil and gas sector, nobody else is investing in Scotland” as this industry is, Mr. Evans said.

 

Big companies like Diageo and Chivas Brothers, owned by Pernod Ricard, are happy to show off their investments in Speyside and argue that the economic effects are felt beyond distillery payrolls.

 

Diageo’s ultramodern Roseisle plant, which produces each year about 10 million liters, or 2.6 million gallons, of spirit – the alcohol from which whisky is made – employs only about 10 frontline staff members to keep operations running continuously at its five-story complex.

 

But the company points to wider economic benefits: to farmers who provide barley, to local contractors who help equip and service the plant, and to small businesses that benefit from the tens of thousands of tourists who visit distilleries in the region each year.

 

“Diageo sustains over 4,000 direct jobs in the Scottish economy across 50 sites, many of which are in remote and rural areas of Scotland,” Peter Lederer, director of Diageo in Scotland, said in a statement.

 

“We also make a major indirect contribution to the Scottish economy,” he added, saying that Diageo was the biggest single purchaser of grain from Scottish farmers and purchased £400 million of goods from each year from suppliers based in Scotland.

 

A bottle tax, he said, would be “potentially deeply damaging to the industry and to the prospects for investment and growth in the future.”

 

At Glenfarclas, which produces about 3.5 million liters of spirit a year, Mr. Grant argues that a £1 bottle tax would hit Scottish-owned operations as much as foreign ones.

 

For him, the big multinationals are both a blessing and a curse. On the one hand they use their sheer size to negotiate better deals with suppliers and retailers, driving down their own costs in ways Glenfarclas does not have the clout to match, and dominating British supermarket shelves.

 

But Glenfarclas also sells some of its production to the multinationals, which they use for blended whisky – a mix of malt whisky, made from malted barley, with whisky that can be made from wheat or other grains.

 

The big companies have also helped to open new export markets, promoting whisky to a younger generation of drinkers in Asia and Latin America and enabling smaller distilleries to capitalize on a boom they never could have created on their own.

 

So far, swimming nimbly with the big fish has enabled Glenfarclas to remain a family firm. And despite blank-check offers from multinationals, Mr. Grant said, the operation is not for sale.

 

This article has been revised to reflect the following correction:

 

Correction: February 18, 2013

 

Because of editing errors, a previous version of this article contained an inaccurate currency conversion: £4.2 billion is $6.5 billion, not $5.6 billion. A sentence in the article also implied that the Scottish Parliament was in Glasgow. Patrick Harvie is a member of the Scottish Parliament who represents Glasgow. The Parliament itself is in Edinburgh.

 

 

——

Boris Johnson condemns David Cameron’s minimum alcohol price plans

 

Source: Daily Telegraph

By Rowena Mason, Political Correspondent

18 Feb 2013

 

The Mayor of London said the flagship policy championed by the Prime Minister will hit poor people but fail to tackle the problem of excessive drinking.

 

The proposals for a minimum 45p per unit price on alcohol are meant to target those who those who consume excessive amounts of cheap drink and cause anti-social behaviour.

 

However, Mr Johnson told The Evening Standard that there are better ways of dealing with the blight of drunken revellers on Britain’s high streets.

 

“I think there are better ways of dealing with this. It’s very regressive. It hits poorest people hardest,” he said.

 

Mr Cameron’s plans for a 45p minimum unit price could add 70p to the price of a bottle of cheap supermarket wine and £2 to a bottle of gin or whisky.

 

The Prime Minister, a champion of minimum alcohol pricing, has insisted this “wouldn’t really affect family budgets, but would deal with this problem of very aggressive deep discounting and some binge drinking”.

 

However, he is facing opposition over the plans from a number of senior Tories, who fear it will hit moderate middle-class drinkers with higher prices. Some Liberal Democrats also see the plan as “illiberal”.

 

There are also fears it could run into legal difficulties with the European Commission, which has raised concerns about Scotland’s plans to introduce similar measures.

 

The Home Office is still officially consulting on the plans but the Government appears to have been slightly cooling on the idea, amid persistent worries about the cost of living.

 

Even though Mr Cameron has publicly backed the policy, it is still possible that the price per unit could be revised downwards or scrapped entirely and replaced with voluntary agreements with industry.

 

Miles Beale, chief executive of the Wine and Spirit Trade Association, said the Mayor is right to point out problems with the plans.

 

“Under the Government’s plans to set higher alcohol prices through minimum unit pricing it will be the majority of responsible drinkers who will be asked to pay more,” he said.

 

“Pushing up prices to deal with the actions of a reckless minority is unfair. Ordinary people looking for value for money in their weekly shop should not be labelled as binge drinkers.”

 

Research carried out by Sheffield University for the Government has showed that a 45p minimum would reduce the consumption of alcohol by 4.3 per cent, leading to 2,000 fewer deaths and 66,000 hospital admissions after 10 years.

 

The number of crimes would drop by 24,000 a year as well, the research suggested.

 

However, the alcohol industry has disputed these findings. A new report by the Centre for Economics and Business Research, commissioned by the industry, claimed the official figures are unreliable and based on old data from 2006 which have already been proved wrong.

 

 

——

Trends in Wine: Out-Innovated By Beer, Under-Indexing With Hispanics

 

Despite Growing Availability, Wine Faces Some Ominous Trends

 

Source: Ad Age

By: E.J. Schultz

February 18, 2013

 

Is wine losing its buzz?

 

Lately the category has been out-innovated by brewers, who have flooded the market with new beer flavors, brands and line extensions, fueling a resurgence that’s coming at the expense of wine.

 

Wine volume sales grew 1.5% in 2012, slowing from a 4% increase in 2011, according to Nielsen. By contrast, beer and other malt beverages grew 2%, reversing a 0.8% slide in 2011. Liquor also jumped 2%.

 

The hottest wine varietals — moscato and malbec — have lost some momentum, and nothing has come along to fill the gap, said Danny Brager, VP-group client director for Nielsen’s beverage-alcohol team. “I keep saying, “What is the next big thing?'” he said. “And I don’t know what the magical answer is.” But it “feels like there is a need for something because beer and spirits are doing a lot [innovation] right now and I think that’s helping them.”

 

Some 44% of beer’s incremental sales growth at bars and restaurants last year came from innovation and new brands, compared to 32% for wine, according to hospitality-industry analyst GuestMetrics. The danger for beer is that it will become too much like wine — so that styles are more important than brands, a risk that brewers call “winefication.”

 

For wine, there are some bright spots, including growing availability at Starbucks, Walgreens and even dollar stores. But other trends are ominous, including underperformance with Hispanics. Here’s a closer look at the category:

 

WHAT’S HOT?

New Zealand wine volume sales jumped 23.5% in the 52 weeks ended Jan. 5, according to Nielsen. Kim Crawford Wines sales jumped 23% in 2012, according to trade publication Shanken News Daily, citing Impact Databank. Meanwhile, the sweet-tasting moscato varietal, while slowing, continues to post impressive numbers — sales were up 30.9% in the year ending Jan. 5, according to Nielsen.

 

WHAT’S NOT?

Australian wines are struggling, with volume falling 1.6% in the 52 weeks ending Jan. 5, Nielsen reported. Mr. Brager blamed large surpluses in recent years, which led to cheaper prices that caused the category to lose its “premium-quality image.” In response, government-run Wine Australia has launched a marketing effort called “Next Chapter” that spotlights mid-tier and regional Aussie wines at trade shows such as one recently held in San Francisco.

 

WINE IS EVERYWHERE

Wine is popping up in new places. Walgreens and Dollar General have been particularly aggressive, while Family Dollar is testing wine. Chipotle, Starbucks and Noodles & Co. are adding wine to draw more customers and increase check prices. All told, there are more than 500,000 wine-selling locations in the U.S., a 50,000-spot jump from five years ago, per Nielsen.

 

IS IT A WINE OR A BEER?

Talk about mixed drinks. Some brewers are blending wine grapes into beer, creating concoctions like Blue Moon’s Vintage Blond Ale and Allagash’s Victor Ale, made from red grapes. Absolut is selling Absolut Tune, which mixes vodka and sauvignon blanc.

 

TROUBLE WITH DEMOGRAPHICS

Wine continues to under-index with Hispanics, according to Nielsen. “Is it because Hispanics don’t embrace wine or is it because the wine community doesn’t embrace Hispanics?” Mr. Brager said, noting that it’s probably a combination of both. Marketers must get Hispanics to make wine more of an “everyday beverage,” rather than for special occasions, said Elizabeth Barrutia, president of Baru Advertising in Los Angeles, which ran an Hispanic campaign for Beringer in 2010.

 

 

——

Facebook Steps Into the Wine Business

 

Source: Hispanic Business

Cathy Bussewitz

February 18, 2013

 

It was only a few years ago that you actually had to check a calendar to remember the birthday of a distant friend or in-law. Then, Facebook came along and changed everything, jostling its 1 billion users to bestow birthday wishes on all of their Facebook friends, including nearly-forgotten acquaintances and classmates they last saw two decades ago.

 

Now, Facebook is trying to capitalize on that ubiquitous feature that so many of us rely on. It has opened a new gift store, encouraging its U.S. customers to send real, physical gifts to each other on the website so many check every day.

 

North Coast wineries are taking notice of the opportunity to convert their social media efforts into direct sales on the world’s biggest social networking site. Several have placed their products among the dozen or so wines you can now send to a friend on Facebook.

 

“It’s working really well, and we’re excited to see where it could go,” said Dwight Harrington, operations director at Blackbird Vineyards in Napa, one of the first wineries to be featured in Facebook’s gifts section. “Just the potential that we could have with them, the amount of reach that they have, is tremendous — only probably a third of the world.”

 

But whether Facebook’s latest attempt to monetize its massive user base will prove profitable for wineries, or for Facebook itself, remains to be seen.

 

The Menlo Park company’s stock has had a rocky ride since its initial public offering in May, as analysts have speculated whether it will be able to produce sustained revenue growth. Increasingly, customers are accessing Facebook from their smartphones, where there are fewer advertisements and opportunities for revenue. The gifts section is available on the Facebook app for both the iOS and Android platforms.

 

“There’s lots of potential, but I don’t think it’s a near-term or 12- or 24-month material opportunity for the company, and they said so in their last earnings call,” said Carlos Kirjner, an analyst at Bernstein Research in New York, who downgraded Facebook’s stock last week. “It’s unclear the extent to which people will buy goods and services through Facebook.”

 

In its latest quarterly report, Facebook warned shareholders that it may not succeed in generating meaningful revenue from its gift service, and that it may not be able to recover the cost it incurred developing the product.

 

“This is a brand new product, a brand new behavior on Facebook that people have never done before, so we need to make sure we’re making the user experience as easy as possible,” said Alex Hollander, Facebook spokeswoman. “That can take some time, but we’re continuing to invest a lot into making this product successful.”

 

Facebook’s gift section, which became more visible to users last week when many were prompted to send their friends a Starbuck’s gift card, has been rolling out gradually since September. The company added wines to its gift store in mid-December.

 

Once the order is placed, the lucky recipient gets an email message or a notice on their Facebook wall. If they accept the gift and share their mailing address with Facebook, the gift arrives at their door several days later.

 

The company has an in-house merchandising team that curates a selection of gifts to celebrate the millions of birthdays, new homes, and other occasions announced on Facebook every day, Hollander said.

 

“They’ve tried to focus in on having good price points, since a lot of the users tend to be a younger type of audience, and they don’t want to just have $95 bottles of cab,” said Milton Cornwell, acting general manager of Copper Peak Logistics, which ships some of Facebook’s wine orders from its warehouse in American Canyon.

 

While hopes are high among vendors featured on the gift section, and among stockholders who have seen their share price decline after the company’s IPO, there are no guarantees that Facebook will be able to successfully monetize its massive user base.

 

“Truthfully, Facebook is a place where you would give a gift to a casual friend, not to a close friend,” said Michael Pachter, an analyst with Wedbush Securities, adding that his wife would not be happy if he sent her a bouquet of flowers that way.

 

“It’s kind of an impersonal way to send a gift if you do it through Facebook,” Pachter said. “I don’t expect that we’re going to see really meaningful, expensive wines given. … I think the guys who sell $10 wine will fly, but the guys who sell $100 wines are probably not going to be that successful because you would actually do that outside of Facebook.”

 

Among the brands now available on Facebook are Clos du Bois, Wild Horse and Robert Mondavi, all owned by beverage giant Constellation, and offerings from smaller wineries like Titus Vineyards in St. Helena, which generally produces less than 10,000 cases of wine per year.

 

While orders are placed through Facebook, each sale is funneled through ShipCompliant, which provides software to companies to help navigate complicated direct shipping rules. Wineries then approve the sale and can ship to those states where they are licensed. Depending on the winery, it can be shipped to as few as 16 states or more than 30.

 

“Facebook to us is just another amazing opportunity to be able to be where the customer is, and offer the right product at the right time to the right person,” said Stacy Bennett, vice president of digital marketing for J Vineyards and Winery.

 

“The power, it’s incredible,” Bennett continued. “Your friend’s birthday is today, and they happen to have liked a specific product on their timeline, and what a perfect opportunity to give them a gift of something they like. And they open it three seconds later. It’s mind boggling.”

 

J is not yet selling wine on Facebook, but it is in the process of getting on board with the company, Bennett said.

 

So far, wineries enrolled in the Facebook program have yet to see the kind of sales that would make a significant impact on their bottom line.

 

“It’s off to a little bit of a slow start,” said Victoria Amato, marketing manager of Blackbird Vineyards in Napa. “I think a lot of companies, not just wineries, that are selling gifts higher than the $5 to $10 price point are seeing slower sales than they expected.”

 

Blackbird has been selling three or four orders of wine per day through Facebook, with orders generally ranging from one to three bottles, said Dwight Harrington, operations director. In the best case scenario, that’s about 1 percent of the winery’s 10,000 cases per year.

 

The winery originally planned to sell on Amazon.com but eventually decided not to because Amazon would have discounted its wines, and those lower prices would be easily searchable online, Harrington said.

 

“They’re so price driven. So we would have to offer our wines to them at a much lower rate, and they might offer them at a lower retail value” than their regular price, Harrington said. “Whereas Facebook, it’s the same standard retail price that we have, so it’s more fair.”

 

Prices for the wines range from about $15 to $100, and shipping is an additional cost. Facebook, the winery and ShipCompliant all get a percentage of the sale, but the share that each receive is not publicly disclosed, sources said.

 

“Social media is a very hot issue in the wine industry right now, as we’re all trying to connect with the elusive Gen X and Millenials,” said Christophe Smith, director of sales and marketing at Titus Vineyards in St. Helena, and chair of the social media committee for the Napa Valley Vintners. “So what better way than to work with Facebook? It’s really a huge exposure opportunity.”

 

 

——

CapRock Winery Sold

 

Monty Paulsen slated to be CapRock’s new winemaker

 

Source: WineBusiness.com

by David Furer

Feb 18th

 

Texas’s CapRock Winery has been sold, the second time in three years. The sale of one of Texas’s largest wineries was finalized Friday to Gary Sowder (pictured, right) and Matt Hess (left), owners of Florida’s Vineyard Agent company, from San Antonio’s Jim and Cathy Bodenstedt, operators of MUY Brands of Texas and New Mexico.

 

The Bodenstedts had acquired it in 2010 via an auction held following the previous owners’ having filed for bankruptcy in 2009, then a controversial offer made by New Mexico’s Gruet winery.

 

Vineyard Agent had been actively researching Texas since 2010, calling it “a wine region we have been highly interested in. We were seeking a large-scale winery with the capacity of CapRock,” Sowder told winebusiness.com.

 

With one of its major competitors in Texas the only one selling outside its border, when asked if he’d consider ‘exporting’ to other states Sowder said, “We are currently considering options of selling wine made of Texas fruit to other parts of the US. As wine consumption grows throughout the US, we think consumers will become much more willing to try wines from regions less known.”

 

Napa Valley’s Monty Paulsen is slated to be CapRock’s new winemaker. Paulsen will continue to produce his Pat Paulsen Vineyards brand in Sonoma while assuming his duties at CapRock. Texas’s Tom Sessi, previously with Gallo, Constellation Wines and Palm Bay International, will lead its sales programs.

 

Sowder’s background is founded in creating startup companies in real estate and property developments before establishing Vineyard Agent as a full-service vineyard brokerage and marketing agency with its brand now associated with over $100 million of winery vineyard properties for sale in the U.S. Hess’s background stems primarily in marketing and advertising in the wood products industry and real estate.

 

 

——

The New Master of Affordable White Burgundies

 

Source: WSJ

By LETTIE TEAGUE

Feb 15th

 

IT’S NOT OFTEN that a winemaker’s genius can be detected in a bottle of basic Bourgogne. It would be like finding one of the world’s greatest speeches written on the back of an envelope. And yet, when I tasted the 2010 Bourgogne Blanc from Pierre-Yves Colin-Morey almost a year ago, it was like discovering the vinous equivalent of the Gettysburg Address. The wine was so good-possessed of an elegance, complexity and finesse far beyond its humble provenance (and $24 price tag)-that I immediately bought six additional bottles.

 

Over the next several months, I sought out more Pierre-Yves Colin-Morey white Burgundies-and there is a wide range, from “simple” St. Aubins to stylish, rich grand crus. I also discovered more retailers who were big fans, with an equally dedicated PYCM following among their clientele.

 

At Chambers Street Wines in New York, wine buyer John Truax told me the owners buy “as many Pierre-Yves Colin-Morey wines as they can,” although the quantities are always limited, and the wines quickly sell out. A recent Chambers Street offering of Pierre-Yves Colin-Morey St. Aubins, for example, was nearly gone within hours, said Mr. Truax.

 

It was more than a year after encountering that seminal bottle that I finally met Pierre-Yves Colin in person. (The “Morey” part of his winery’s name belongs to his wife, Caroline Morey, daughter of famed winemaker Jean-Marc Morey.) It was in Burgundy, of course, since Mr. Colin rarely leaves his headquarters in Chassagne-Montrachet. (“My work is in the vineyard,” he said more than once on the day that we met.)

 

We’d arranged to meet at his office at 11 a.m., and although I was more than half an hour early for the appointment, Mr. Colin, a tall, slightly lanky 40-year-old man, was completely prepared. He’d poured samples of both newly released and yet-to-be-released wines from the 2011 vintage into 15 small bottles arranged on a side table. (The precise arrangement of the bottles was a visual reminder of Mr. Colin’s precise winemaking style.)

 

We talked a bit about the vintage, which Mr. Colin had initially feared would be reminiscent of 2003, a famously hot vintage all over Europe. “Everything was very fast. There was ripe fruit,” Mr. Colin recalled. But unlike those of 2003, the wines of 2011 turned out to be “very fresh and elegant,” although they had “a little less acidity than the wines of 2010.” The 2010 vintage was an especially good one for the white wines of Burgundy-was the 2011 vintage as good? “I think it will be-it’s too early to compare. And, of course, it is the vintage that we are selling,” added Mr. Colin with a businessman’s smile.

 

Mr. Colin has become a successful businessman in recent years, although when he left his father’s estate, Domaine Marc Colin, in 2005, his future looked anything but assured. The younger Mr. Colin had been the winemaker at Domaine Marc Colin for 10 years, but he wanted to work on his own. At the time, he had about 6 acres of land from his parents but little money to buy grapes. (He got a bank loan.) “I don’t know if I would do it today-it was a bit crazy,” he said.

 

Fortunately, Mr. Colin began with some very good vintages (2005, 2006), as well as some very good friends, and he was able to buy grapes from some top vineyards. (In Burgundy, the names Colin and Morey have great resonance.) Several years later, he gained access to the Colin family vineyards as well.

 

The Colin family owns parcels in Chassagne-Montrachet as well as some of the best vineyards in St. Aubin (En Remilly, Chatenière). All of these St. Aubin vineyards are located on hillsides, Mr. Colin was quick to point out. This was important to understand as most St. Aubin wines are made from vineyards on flat ground, and the wines aren’t nearly as interesting or complex. (Although St. Aubin borders Chassagne-Montrachet and Puligny-Montrachet, it has been considered a lesser appellation until recently.)

 

Our tasting began with the single-vineyard St. Aubins, all beautiful wines marked by an almost shimmering intensity and savory minerality. They seemed more Puligny-Montrachet than St. Aubin, particularly the Chatenière bottling. And yet, “very few people understand St. Aubin,” lamented Mr. Colin, whose portfolio is about 60% St. Aubin. (He makes about 6,000 cases of wine a year altogether.)

 

We progressed to the grand and premier cru Burgundies; Mr. Colin makes tiny amounts of wine from many parcels, including some of the best premier cru and grand cru vineyards in Meursault, Chassagne-Montrachet and Puligny-Montrachet. His Les Chenevottes Chassagne-Montrachet and Les Folatières Puligny-Montrachet were particularly stunning-wines of great precision and definition. Mr. Colin is even able to buy grapes from grand cru vineyards like Bâtard-Montrachet and Corton-Charlemagne-a nearly impossible feat. And it all happens with a handshake; there are no contracts between Burgundians.

 

Did Mr. Colin ever worry about losing access, that the growers might sell their grapes to somebody else? And what of the stigma attached to négociants? There has long been snobbery about winemakers who don’t own (all of) their own vineyards.

 

Perhaps in France there was more prejudice against négociants, Mr. Colin noted, answering the second question first. But it wasn’t true of the American market, where buyers were “more open, less classique. People from the United States see quality,” he said. (The U.S. is the largest export market for Pierre-Yves Colin-Morey, comprising 20% to 25% of the domaine’s sales.)

 

As to the challenges of buying grapes, Mr. Colin had already encountered difficulties in 2012. The harvest was widely deemed disastrous and yields were quite small. Some domaines made half as much wine as they usually did-and some made even less. There was great hail damage in Puligny, for example; the harvest was down by 75%. The 2012 vintage might determine the fate of many in Burgundy, speculated Mr. Colin. “I think some people will sell their vineyards,” he said.

 

Would Mr. Colin be buying vineyards? He couldn’t say. Vineyard land is very expensive in Burgundy, after all. (In 2012, an executive from Macau reportedly paid $10 million for a rundown Burgundy domaine and 5 acres of vineyards.) As Mr. Colin said, “I think Burgundy is becoming a little bit crazy.” Right now, at least, Mr. Colin has no inclination to expand or make any big changes planned. He might do a bit of fine-tuning and maybe even take a small trip or two. (There are many places Mr. Colin would like to visit-Italy’s Piedmont is currently at the top of the list.)

 

A few weeks after I returned, Mr. Colin’s importer, Daniel Johnnes, told me the story of how he and Mr. Colin had met. He’d courted the winemaker for many years-they’d met back when Mr. Colin was still working at Domaine Marc Colin. The wines had impressed Mr. Johnnes, but so had Mr. Colin. “You could see the intensity in his eyes,” Mr. Johnnes recalled. “You see that in the eyes of a great winemaker.” For his part, Mr. Johnnes believes that Mr. Colin is “a superstar in waiting,” just below some of the most famous Burgundy names, like Coche-Dury and Domaine Roulot.

 

When the rest of the Pierre-Yves Colin-Morey 2011 white Burgundies are released later this year, the waiting may officially end.

 

 

——

Beam operations boss to retire

 

Source: Drinks International

By Lucy Britner

18 February, 2013

 

Beam has announced the retirement of Ian Gourlay, the company’s senior vice president of global operations & supply chain, effective April 1.

 

Gourlay came to Beam in 2005 with the acquisition of a number of Allied Domecq brands.

 

“Gourlay was instrumental in the integration of the brands and production we’ve acquired over the past eight years, including six of our seven Power Brands,” said Matt Shattock, president and chief executive officer of Beam. “Over that time, our manufacturing footprint has grown from five facilities to 15.”

 

Gourlay added: “Now that we have integrated the acquisition of Pinnacle Vodka and determined the brand’s future production model in Frankfort, I’ve decided this is a logical point to step back and retire.”

 

Beam is looking for a successor.

 

 

——

US business hits out at ‘Obamacare’ costs

 

Source: FT

By Barney Jopson in New York and Alan Rappeport in Washington

Feb 18th

 

US retailers and restaurants chains that employ millions of low-wage workers are considering cutting working hours or paying fines rather than enrolling employees in health insurance plans under Barack Obama’s landmark healthcare law.

 

Employers are concerned that the law increases the cost of insuring employees on existing plans, partly by broadening the range of benefits. It also requires companies to insure some employees not previously covered.

 

David Dillon, chief executive of the Kroger supermarket chain, told the Financial Times that some companies might opt to pay a government-mandated penalty for not providing insurance because it was cheaper than the cost of coverage.

 

Nigel Travis, head of Dunkin’ Brands, said his doughnut chain was lobbying to change the definition of “full-time” employees eligible for coverage from those working at least 30 hours a week to 40 hours a week.

 

Some restaurants, including Wendy’s and Taco Bell franchises, have explored slashing worker hours so fewer employees qualify for health insurance, arguing that they cannot afford the additional healthcare costs. Other businesses are deliberately keeping headcounts below 50.

 

Mr Dillon said Kroger intended to continue covering all full-time employees but maintained that parts of the law were “simply not workable”.

 

“If you look through the economics of the penalty the companies pay versus the cost to provide coverage, the penalty’s too low, or the cost of coverage is too high, or the combination is wrong,” he said.

 

“If [policy makers] get those things too far out of balance, everybody will have to reconsider their position on that point, including us. But we’re going to wait and see how that all develops.”

 

The penalty for not providing coverage is $2,000 per worker. According to the Kaiser Family Foundation, a non-partisan policy group, the average annual cost to employers of insurance is $4,664 for a single worker and $11,429 for a family.

 

Companies with more than 50 workers have to pay a penalty if they do not provide full-time employees with health insurance. The employees can instead buy private coverage subsidised by the government on new insurance exchanges.

 

Darden, a US restaurant chain, last year said it was considering slashing its workers’ weekly hours to below the 30-hour threshold but later retreated from the plan after a backlash.

 

The Obama administration maintains that the law, known as the Affordable Care Act, will improve access to insurance while reducing healthcare costs. A spokeswoman for the government’s health department said that non-partisan studies showed it would have a negligible effect on the labour market.

 

 

——

Kentucky: Kentucky grocery stores fighting proposed ban on sales of liquor, wine

 

Source: Kentucky.com

By Jack Brammer

February 18, 2013

 

Kentucky grocery stores are fighting a proposal in this year’s state legislature that would block their longtime goal of selling wine and liquor alongside other groceries.

 

Some stores are distributing fliers to customers, urging them to tell their lawmakers to oppose House Bill 310. A consortium of grocers also ran full-page ads during the weekend against the legislation in newspapers in Lexington, Louisville, Ashland and Owensboro.

 

The flurry of activity comes after the measure cleared the House Licensing and Occupations Committee on Thursday with only one “no” vote. It now awaits action by the House.

 

Pushing the bill is a group formed late last year by independent liquor stores called Fighting Alcohol Consumption by Teens, or FACT.

 

It says alcohol products such as vodka, whiskey and wine should not be sold in stores that allow children and teenagers on the premises. It also wants to protect the so-called “mom-and-pop” liquor stores that would find it difficult to compete against large grocery stores such as Kroger and Meijer.

 

This latest battle over who may sell booze in Kentucky stems from a federal judge’s ruling last summer.

 

U.S. District Judge John G. Heyburn II of Louisville ruled that a Kentucky law prohibiting grocery and convenience stores from selling wine and distilled spirits was unconstitutional. Heyburn, however, suspended his ruling temporarily, giving state lawmakers an opportunity to deal with the issue.

 

Heyburn said state law “violates the U.S. Constitution’s Equal Protection Clause in that it prohibits certain grocery stores, gas stations and others … from obtaining a license to sell package liquor and wine.”

 

Under current law, grocery stores in areas where alcohol sales are legal may sell beer but not wine or spirits. Grocery stores, however, may get a license to sell wine and liquor if they provide a separate entrance to that part of the store, where minors are not allowed to work. A store employee of legal age is required to conduct alcohol sales.

 

Such requirements do not apply to Kentucky drugstores, which are allowed to sell wine and liquor in wet localities. The legal distinction between pharmacies and grocery stores dates to Prohibition, when prescriptions could be obtained to buy alcohol at drugstores. After Prohibition, sales were restricted in grocery stores over concerns that minors often patronize them and should not be exposed to liquor.

 

HB 310, sponsored by Democratic state Rep. Dennis Keene of Wilder, would make Heyburn’s ruling a moot point.

 

Under the bill, grocery stores and newly-built pharmacies could sell wine and liquor only if they had a separate entrance to an adjoined structure. Pharmacies that already sell wine and liquor could continue to do so.

 

The measure also specifies that those stores may not allow persons younger than 21 to enter a premises selling distilled spirits or wine unless accompanied by a parent or guardian.

 

The proposal is co-sponsored by a bipartisan group of 13 House members, including House Speaker Pro Tem Larry Clark, D-Louisville.

 

Keene was not available for comment Monday, but Gary Gerdemann, a spokesman for FACT, said he thought the bill had “a very good chance” to become law.

 

He said the judge’s ruling, if it stands, would let “any retailer who can qualify for a license sell alcohol – gas stations, truck stops, dollar stores, pawn shops, telephone stores, on and on.”

 

“The question is not only do you want grocery stores to sell wine and liquor but do you want any retailer who can qualify to sell this,” Gerdemann said. “We believe this would create the largest expansion of alcohol sales in Kentucky history.”

 

There are nearly 600 liquor licenses available for purchase in Kentucky, including 62 in Fayette County, he said.

 

Without HB 310, those would be “snapped up,” Gerdemann said, noting that the only standard for getting a license is the applicant must not be a felon and must own the business location.

 

Gerdemann also said his group does not have the money for “the type of Wall Street ad extravaganza” the grocery stores are running.

 

Ted Mason, executive director of the 350-member Kentucky Grocers Association and Kentucky Association of Convenience Stores, said Gerdemann was incorrect in predicting a huge expansion of alcohol sales without HB 310.

 

“Throughout the years, all kinds of retailers could have obtained a liquor license, but we’ve not seen that,” Mason said. “We simply believe retailers like grocery stores should have the option to sell wines and spirits in Kentucky as they do in 35 other states. It’s a matter of fairness.”

 

In its newspaper ads, the consortium of grocery stores presented the issue as a question of convenience.

 

“Wine or spirits with dinner tonight? You might like to pick up your favorite bottle of wine or spirits as you shop at your local grocery store but you can’t,” read the ads. “Kentucky remains one of the few states where beer is the only alcohol choice available for grocery shoppers.”

 

 

——

Pennsylvania: Improvement not guaranteed with liquor privatization

 

Source: PhillyBurbs.com

February 17, 2013

 

I am writing in response to the Feb. 11 letter from Mr. Paul Fanelli with the headline, “McIlhinney opposes governor’s liquor plan.” Mr. Fanelli needs to understand there are better ways to get more consumer choice and convenience without trashing the entire system in Pennsylvania. Sen. McIlhinney is absolutely right when he said about his plan: “It’s a more achievable way to move toward better access, better selection, than to throw our hands up and sell everything everywhere.”

 

What seems to have been overlooked by those pushing to privatize throughout the early debate are the small local business, beer distributors and taverns, rooted deep in our communities. These businesses, many of them family-owned and operated, have been in existence for decades,  giving back more than just revenues to their local communities all over the commonwealth. These are family businesses with real jobs.

 

The governor’s plan allows for large, out-of-state corporations to buy up the new licenses at a discount compared with what current licensees are being asked to pay, and dominate the marketplace, shutting down the family-owned distributors and taverns and in turn devaluing their current licenses and funneling the revenues out of state and out of the local communities.

 

We would like to remind everyone that lower prices and increased selection cannot be guaranteed through privatization efforts, as we’ve all witnessed in Washington state. There, prices have increased and selection has pretty much stayed the same. In Washington, they have reverse border bleed: Washingtonians actually crossing into Oregon and Idaho, two control states, to buy their alcohol at lower prices.

 

We at the Pennsylvania Beer Alliance believe those legislators like Sen. McIlhinney, interested in and working on modernization efforts of our current system, need a longer look and some real attention, as the grass is not always greener on the other side – as those in Washington found out the hard way. Once you’ve privatized, you can’t get back what you sell off cheaply.

 

The PBA commends the governor for leading the discussion on consumer choice and convenience, but we ask that he slow down and understand the consequences of such a dramatic change. If his plan is adopted, instead of getting more choice, convenience and lower prices, we may all end up with less choice for the average Pennsylvanian, a proliferation of locations to buy alcohol and ultimately higher prices, especially in rural areas of the state. The Beer Alliance welcomes the discussion on modernization set forth by Sen. McIlhinney and plans to play a vital role as we move forward.

 

Jay Wiederhold, president

Pennsylvania Beer Alliance

Harrisburg

 

 

——

Texas: Total Wine & More to debut in San Antonio, Texas

 

Source: DBR

19 February 2013

 

American alcohol retailer Total Wine & More is all set to unveil its first San Antonio store at La Plaza Del Norte shopping center this spring.

 

The independent retailer of fine wine currently operates over 85 superstores across 14 states in the US.

 

Each typical store of the retailer carries more than 8,000 different wines from every wine-producing region in the world, more than 2,500 beers from America’s popular beers to hard-to-find microbrews and imports, and more than 3,000 different spirits from every price range and category, according to the company’s website.

 

Endura Advisory Group, which handles leasing for La Plaza Del Norte, principal Nick Altomare told mysanantonio.com: “It’s been kind of difficult to attract retailers the past few years with the economy and everything else going on. After the last three to four years of retail being real stagnant, it’s refreshing that new retailers are looking and expanding into San Antonio and have recognized the opportunity for success here.”

 

 

——

Washington: Bill tackles alcohol poisoning among underage drinkers

 

A bill in the Legislature aims to reduce alcohol-poisoning cases by exempting underage drinkers and their friends from minor-in-possession charges if they report the alcohol poisoning to hospitals or 911.

 

Source: Seattle Times

By Amelia Dickson

Feb 18th

 

Cmdr. Steve Rittereiser said his University of Washington Police Department officers are familiar with the scene: a late-night party where someone under 21 drinks way too much and passes out.

 

Less-intoxicated students mill around or try to revive the drinker. If the situation is bad enough, someone might call for help. But most partygoers flee before the ambulancearrives.

 

Those who stick around are reluctant to answer questions.

 

“They’re afraid they’re going to get in trouble just by being there,” Rittereiser said. “And it makes it hard to figure out what happened.”

 

Legislation in Olympia aims to encourage underage partyers to seek help more quickly in cases of binge drinking and possible alcohol poisoning.

 

If House Bill 1404 is enacted, minors suffering from alcohol poisoning would not be prosecuted for minor-in-possession charges if they need medical attention. Minors helping alcohol-poisoning victims also would be exempt from prosecution.

 

“This doesn’t excuse you from any other liability, and you won’t be excused from anything if you don’t call 911,” said Rep. Marko Liias, D-Edmonds, who sponsored the bill. “The message of this bill is not ‘please go binge drink.’?”

 

The bill is modeled after a state law protecting from prosecution people seeking medical attention for drug overdoses. The 2010 law, nicknamed the “911 good Samaritan” law, was passed almost unanimously by the Senate and by a healthy majority in the House. Liias is confident his bill will be successful, too.

 

Rittereiser said the legislation could be especially helpful on college campuses where alcohol poisoning in minors is underreported. Underage drinkers who fear punishment from police or university officials are reluctant to seek help.

 

Alcohol poisoning “is not unusual in the age group we’re dealing with, because there’s obviously a lot of binge drinking, for one reason or another,” Rittereiser said. “When we see these things, our first priority is safety so we’re getting the medical folks involved right away.”

 

Because of privacy laws, university officials are unable to track the number of students with alcohol poisoning, but Seattle medical experts see a large number of alcohol-poisoning cases each year. According to the Drug Abuse Warning Network, more than 2,100 underage drinkers were hospitalized in 2010.

 

Steve Hansen, assistant chief of the Washington State University Police Department, said his officers have had similar experiences. Students don’t report the issue, and police usually discover alcohol poisoning while investigating other alcohol-related incidents, such as assaults and loud parties.

 

But some local organizations worry that the bill will normalize underage drinking, leading to an increase in alcohol poisoning.

 

Amy Ezzo, spokeswoman for the Washington chapter of Mothers Against Drunk Driving, said legislators should focus on ensuring minors don’t drink at all. She argued that decreasing the number of underage drinkers is the best means of preventing alcohol-related deaths in minors.

 

“Our message is pretty strong,” Ezzo said. “The drinking age is 21, and you shouldn’t drink before then.”

 

 

——

New Mexico: Lawmakers squash liquor tax bill

 

Source: The New Mexican

Julie Ann Grimm

Monday, February 18, 2013

 

It’s been more than 20 years since the state Legislature allowed voters in McKinley County to decide whether to increase taxes on alcohol to help pay for substance abuse treatment programs. Six times since then, voters there have opted to leave the tax in place.

 

But state laws don’t allow voters in other New Mexico counties to have the same debate: Would adding 4 cents to the cost of a bottle of beer be worth an increase in funds to help rehabilitate substance abusers?

 

A measure proposing a local-option liquor excise tax has once again died in the New Mexico House of Representatives. The House Taxation and Revenue Committee last week tabled House Bill 212 on a late-night vote, and the proposal is unlikely to see the light of day again during this legislative session.

 

Year after year, county and city officials – including Santa Fe city councilors and county commissioners – have asked for the local taxing authority that McKinley County already has. They want to raise more revenue to provide steady funding for alcohol and substance abuse prevention and treatment. But the result has been predictably similar: State lawmakers aren’t going for it.

 

The New Mexico Municipal League and the New Mexico Association of Counties, along with representatives from Lee, Union, Rio Arriba and San Juan counties, have advocated for the bill. But lobbyists for the liquor and restaurant industries as well as some business leaders have spoken against it.

 

Santa Fe City Councilor Patti Bushee skipped a regularly scheduled City Council meeting last week to spend the day at the Roundhouse and attend the committee hearing on the bill, which did not conclude until after 10 p.m. She said this year’s outcome was a blow to the city of Santa Fe in particular because two representatives from Santa Fe area voted against it. A third was absent from the committee hearing.

 

“To have two of our Santa Fe representatives beholden to the liquor industry is disturbing,” Bushee said in an interview Monday. “We’ve been trying to do this for a while. I expected at a certain point that they would listen to the constituents rather than the liquor lobby.”

 

Santa Fe’s alcohol treatment options are severely limited, she said, noting that the only public sobering center, run by Christus St. Vincent Regional Medical Center, has about a dozen beds but regularly needs more than twice that number. A steady infusion of tax money would help local officials get a handle on public inebriation and related social issues, she said.

 

“There is a problem in Santa Fe, and they are tying our hands, basically,” the councilor said, noting that she believes such a local-option tax would pass muster with Santa Fe voters.

 

Rep. Jim Trujillo, D-Santa Fe, said he objected to the law because it would put an “undue burden” on liquor distributors who would have to change computer systems to charge different tax rates in different counties. Excise taxes are tacked on to delivery invoices, he said, not at the cash register. The other reason he cited for rejecting the proposal was that it would increase the cost of alcohol to the point where people would stop buying it in stores.

 

“Moonshine is being made, and we are not getting any revenues from that,” Trujillo said at the hearing. “The more expensive it is, the more moonshine you are going to see being made in homes.”

 

To attack the issue from another angle, however, Trujillo is sponsoring a measure that calls for the state to divert less of the current revenues from statewide liquor excise tax to the general fund and use more of the revenue for treatment and prevention of substance abuse.

 

Freshman Rep. Carl Trujillo, D-Santa Fe, also voted with the majority of the committee to table the bill. Rep. Stephen Easley, D-Santa Fe, did not attend the committee hearing.

 

McKinley County, which includes the city of Gallup and part of the Navajo Nation, had the worst alcohol-related death rate in the nation when state lawmakers allowed the county commission there to approve a ballot initiative. Assistant Attorney General Phil Baca said voters there have approved the tax by a 3-1 ratio or better each time it’s been on the ballot, and the county has effectively cut its alcohol-related death rate in half.

 

 

——

Indiana: Arrests of minors with alcohol up 37 percent

 

Source: WISH

18 Feb 2013

 

The Indiana State Excise Police released its 2012 annual report. It reveals the success of a new program as well as continuing concerns about minors and alcohol.

 

One of the biggest successes in 2012 was the start of the Intensified College Enforcement program. Taking place on six college campuses, ICE saw a 53.4% decrease in alcohol-related crashes involving 15-20 year old drunk drivers from the year before.

 

“Where the success lies is in the reduced numbers of young people who are injured because of alcohol related car crashes and other things that go along with that,” said Corporal Travis Thickstun, with the State Excise Police.

 

However concerns remain with underage drinking in Indiana. Arrests of minors for possession and consumption rose 37 percent from 2011 to 2012, and arrests made of those who provided alcohol to minors rose 46.2 percent.

 

Thickstun understands the numbers could seem alarming, but he credits to increase to officers sending a message that will eventually lead to a decrease.

 

“The goal of the ICE program is not to increase numbers of arrests but it is certainly a part of it. If it takes arresting people and issuing tickets to change behavior and to reduce alcohol crash rates among minors, reduce binge drinking rates among minors, then that’s what we’re going to do,” said Thickstun.

 

For a link to the complete 2012 Indiana State Excise Police Annual Report, go to www.in.gov/isep.   

 

 

——

New Zealand: Independent Liquor tipped as Mill buyer

 

Source: NZ Herald

By Christopher Adams

Feb 19, 2013

 

Speculation is growing in the drinks industry that Auckland’s Independent Liquor is looking to make a move into retail through buying one of the largest bottle store operators, The Mill.

 

Sources say rumours are afoot that the Papakura-based manufacturer – which brews international beer brands such as Carlsberg and Kingfisher under licence but is best known for pioneering the development of Australasia’s RTD market – is in talks about acquiring the retailer, or that a deal may have already been struck.

 

Independent chief executive Julian Davidson said he “wouldn’t like to comment” on whether the company was in the process of buying The Mill, but that no sale had taken place.

 

According to its website, The Mill is the largest independent liquor retailer, with 35 stores from Whangarei to Dunedin plus an online shop.

 

Independent, which is at the centre of a stoush over the $1.5 billion price tag Japanese brewer Asahi paid for the business in 2011, was scoping a range of acquisition opportunities, particularly in the craft beer space, Davidson said.

 

“We’re looking at lots of things in the market, but I wouldn’t like to comment specifically on [The Mill].”

 

Davidson would not rule out the prospect of the company moving into retail.

 

“Anything is possible,” he said.

 

The Mill is owned by New Plymouth-based Christopher and Nyall Simkin, according to the Companies Office.

 

Its website says the firm opened its first store in Taranaki in 1993 and the business had been successful as a result of low overheads and reduced prices.

 

Asked about the acquisition speculation yesterday, Nyall Simkin said “there’s nothing to talk about at the moment at all”.

 

One source said The Mill was a big discounter and if the acquisition took place Independent’s customers – other retailers – might not be happy with the manufacturer stepping on to their turf and undercutting their prices.

 

“You would be seeing a heavy discount producer getting together with a heavy discount retailer, which seems like a nasty cocktail.”

 

Local brewing giant Lion owns the Liquor King chain of bottle stores.

 

The fact that Independent – which bought a small Nelson craft brewery just before Christmas – continues to express an interest in local acquisitions shows Asahi has not been put off by the alleged “deceptive conduct” it says took place when it bought Independent.

 

 

——

Australia: Beer margins ‘finally on the agenda’

 

Source: TheShout

By James Atkinson

Mon, 18/02/2013

 

Independent liquor retailers have welcomed what they say is long overdue acknowledgment from one of their national competitors that profit margins on mainstream beer are unsustainable.

 

In a recent report by Fairfax, Coles confirmed it had moved to reduce “unsustainable price discounting” on beer – a stance further underlined by the company in its half-yearly results last week.

 

The article quoted from a recent report by Merrill Lynch retail analyst David Errington, who said the gross margin for a retailer on a case of Victoria Bitter sold off-promotion was under five per cent, “well below the cost of doing business on our estimates of 15 per cent”.

 

Independent retailers contacted by TheShout said that while 15 per cent of turnover is a reasonable benchmark for an average store’s operating costs, some outlets have overheads as high as 18 per cent.

 

Following the February 1 price rise, they report their margins on a case of 24 x 375 ml stubbies as 4.5 per cent for Victoria Bitter, 5.2 per cent on XXXX Gold and 6 per cent on Tooheys New.

 

“Any beer we sell, we’re going backwards,” said one banner group boss.

 

“That’s why independents want higher margin categories like wine, cider and ready-to-drink to continue to grow.”

 

Another banner group head said it is little wonder why private label beer continues to grow when it attracts margins two to three times higher than branded mainstream beer.

 

“Private label and parallel beer is subsidising branded product for margin and also has enough to invest above the line,” he said.

 

Another retailer said that in fairness, margins on mainstream beer need to be amortised across the brewers’ entire portfolios of products, which include higher margin premium and craft beers and more profitable formats, such as six-packs.

 

But this has less relevance for liquor stores in highly competitive areas where a typical beer purchase rarely deviates from a case of Victoria Bitter or Tooheys New.

 

A Lion spokeswoman said: “As a matter of practice we don’t comment on pricing matters.”

 

Carlton & United Breweries did not respond to a request for comment.

 

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