Liquor Industry News 3-6-13

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Franklin Liquors

 

Stolichnaya-owner says in talks on rival vodka maker CEDC

 

Source: Reuters

Tue, Mar 5 2013

 

Stolichnaya Vodka-owner SPI Group said on Tuesday it was holding talks with Russian financial interests regarding Poland’s indebted Central European Distribution Corp (CEDC.O: Quote, Profile, Research, Stock Buzz), one of the world’s largest vodka producers.

 

Shares in Nasdaq-listed CEDC have plunged by over 80 percent so far this year to $0.67, hit by financial problems, the resignation of its chief executive and recent battles with shareholders over control of the company.

 

The most pressing problem for CEDC, which makes Absolwent and Parliament vodka, is that it has $258 million in convertible loan notes maturing on March 15 and last week it was reported in a U.S. regulatory filing that the A1 investment arm of Russia’s Alfa Group was interested in putting together a rescue consortium that would involve CEDC’s two biggest shareholders.

 

Russian billionaire and CEDC chairman Roustam Tariko holds a 20.2 percent stake via his Moscow-based vodka to financial services conglomerate Russian Standard Corporation, according to Thomson Reuters data, while CEDC’s second biggest shareholder is Mark Kaufman, with 9.22 percent.

 

SPI, which holds 2013 and 2016 loan notes in CEDC, said on Tuesday it has appointed Nomura (9716.T: Quote, Profile, Research, Stock Buzz) to “evaluate alternatives” with regards to CEDC but did not elaborate on what those alternatives were.

 

“We are carefully observing the situation around CEDC,” said Val Mendeleev, chief executive of SPI in an emailed statement. “We have already begun preliminary discussions with a few strong financial players in Russia who could be interested in considering the CEDC business together with us.”

 

A representative for SPI declined to comment further and no one at SPI’s office in Luxembourg had any immediate comment. It was not immediately clear whether SPI and Tariko were acting together in a possible debt-for-equity swap.

 

CEDC, which has a leading share of the vodka markets in Russia, Hungary and Poland, said in a filing that it was reviewing a proposal from Tariko and certain beneficial owners of its notes, but these were not identified.

 

 

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Diageo Reformulating Popov and Relska Vodkas

 

Source: Wine & Spirits Daily

Mar 5th

 

Rising commodity costs and the associated pressures have increased in recent years and it’s impacting spirits companies worldwide. As a result of these pressures, some spirits companies are actively pursuing “creative ways to reduce the adverse impacts of these costs,” wrote Steve Rannekleiv in the Rabobank Global Beverage Outlook for 2013.

 

Diageo can be counted among these companies, as WSD recently learned it is reformulating vodka brands Popov and Relska – presumably to save costs. As of press time Diageo has not responded to information requests, but here’s what we do know. In a COLA filed to the TTB on February 19 Popov is labeled as a “vodka specialty spirit,” whereas the former label said “Popov Premium Vodka.” You may recall since the consumer swing back toward premiumization Popov’s performance has been very weak. For the 4 weeks ending January 27 Popov’s sales were down -19%, while volumes fared even worse at -24%, per SymphonyIRI scan data.

 

Relska is a similar story; the label previously had the word “vodka” in big blue lettering, but in the COLA filed February 19 where “vodka” once sat is the statement: “80 proof, premium blend” and “vodka specialty spirits.” We should note that neither brand is being diluted. Relska will maintain its 40% abv and Popov will stay at 50%. The status for both vodkas was approved on February 25.

 

“I’m not surprised by the news from Diageo. With rising commodity costs, beverage companies need to innovate to find ways to respond to consumer priorities,” Steve Rannekleiv told WSD. “Brands like Popov are highly price sensitive. To maintain margins, spirits companies seem to be increasingly seeking innovation in their inputs and sourcing strategies as a means to control input costs.”

 

You may recall that Beam also made a very similar move to reformulate Wolfschmidt (now owned by Luxco) and Kamchatka vodka brands last year by adding wine (+49%) and sugar (+10%). The move reduced the costs, but technically made the brands liqueurs. The new liquid formulation “delivers the same value and taste profile consumers of these products already love. Vodka is still the base, blended with a high-proof liqueur,” Beam’s svp of corporate communications Clarkson Hine told WSD last year.

 

Rabobank believes the commodity pressures are likely to persist in 2013, so we would not be surprised to see other brands follow suit. Some industry members worry that this strategy will allow producers to sell the brands at a lower cost and may bring new levels of competition to the already competitive vodka category. We’ll have to wait and see.

 

 

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After luxury toys, will Mallya lose precious Diageo deal too?

 

Source: FirstPost Business

by FP Staff

Mar 6, 2013

 

Even as UB Group chairman Vijay Mallya claims funds transfer from United Spirits to Kingfisher Airlines was on track, bankers to his debt-laden airline have played spoilsport to the deal.

 

Despite getting most of the clearances for the proposed takeover of United Spirits by British liquor giant Diageo, Mallya may yet receive another blow as its top lenders, PSU banks, seem to have lost faith in the Kingfisher chief and are talking of selling United Spirits shares pledged with them as collateral.

 

According to a report in the Economic Times, lenders are open to selling the shares for the best price. It could either in the market or at a higher price to outsiders. Getting their money back is the number one priority and since Mallya has failed to come up with a viable revival plan for his dying airline, it is likely that the lenders will sell shares as a last resort option.

 

“If the lenders don’t release the 2% stake for sale to Diageo, Mallya and the UB Group will be forced to find extra shares in order to complete the deal. In normal circumstances that shouldn’t be difficult, but in this case nearly 98% of the promoter stake of 27.5% in USL is pledged,” said the ET report.

 

Shares of United Spirits were down 0.66 percent this morning at Rs 1844, while the Sensex was up around 0.54 percent at 19245.

 

Already Kingfisher’s  parent company, United Breweries Holdings, is  in the eye of a storm with its auditors raising concerns over its significant financial exposure of Rs 13,500 crore to Kingfisher.

 

Last month, lenders started the process to recover dues of over Rs 7,500 crore. Being the Chiarman of UP Group, Mallya as pledged his precious assets, including the Kingfisher Villa in Goa, Kingfisher House in Mumbai and the Kingfisher brand.

 

According to a report in the Business Standard, Mallya’s  biggest ‘showpiece collection’, the Indian Empress – a 95-metre mega-yacht bought from the Qatari Sheikh in 2006- was sold by Mallya in 2011. Moreover, the several islands that were reported to have been snapped up by Malya for around Rs 750 crore has been denied by the company. Even his private aircraft Boeing 727 and Gulfstream  have been sold, with Mallya only flying  a leased Airbus 319 CJ and a Hawker 700 owned by Shaw Wallace, in which Mallya holds 54 percent.

 

What’s worse is the brand value of Kingfisher is now down to zero from Rs 2,500 crore two years ago.

 

The beleaguered airline has dues towards payment of service tax, income tax, as also Provident Fund of employees and dues of the oil companies. Besides, it has to pay huge amounts to the lessors of its aircraft and service providers like the Airports Authority of India.

 

Kingfisher, which has over Rs 15,000 crore in the form of debt, accumulated losses and various dues, has remained grounded since October 1 last year and its flying licence, suspended that month, expired on December 31.

 

Meanwhile,the government will make it easier for leasing and financial firms to take back planes used by Kingfisher. Civil aviation ministry officials on Monday  said a decision had been taken to make the process of repossessing aircraft by leasing firms easier.

 

Director-general of civil aviation Arun Mishra said he hoped for an amicable solution of the issue between Kingfisher and the lessors. Earlier this year, US-based International Lease Finance Corp had sent a team to repossess planes from Kingfisher over unpaid bills. The planes remained stranded because of administrative hurdles.

 

Germany’s DVB Bank SE has also sued Kingfisher and the DGCA seeking deregistration of two aircraft funded by it and the permission to fly them out of India.

 

 

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STZ: Distributor Letter Points to Market Share Motivation

 

Source: CITI

Mar 5th

 

Distributor Letter Points to Market Share Strategy – Yesterday, STZ management reached out to their distributors regarding STZ’s pending acquisition of the outstanding stake in Crown Imports. Interestingly, STZ specifically noted that they aim to continue gaining market share in the beer category. On some level this comes as little surprise, given that this aligns with the goals of their distributors. That said, it does raise the question that the DOJ mulled over – will STZ focus on aggressive pricing to promote market share gains, or focus on price increases to drive margins higher (after Crown has posted nearly five consecutive years of operating margin contraction)?

 

Muted Pricing Has Been a Key Driver of Success – Over the last five years, we have seen the Crown portfolio of beers gain notable share of the U.S. beer category. In part, this has been driven by aggressive pricing to drive volume growth as Crown’s price premium has fallen from 159% in 2005, to 135% in calendar 2012. Over that same time frame, Crown’s Nielsen volumes have grown at an impressive 3.6% average annual rate (resulting in 60 bps of share gains, to 5.8%).

 

Higher Ad Spending Comes With the Territory – To be fair, higher A&P spending has also played a role here, as Crown’s SG&A as a percentage of sales has risen ~300 bps since fiscal 2009, but that also just reflects the higher cost of competition as ad spending across the beer category has also been on the rise (with ABI’s ad spending having grown at a 5% CAGR over the last five years). Looking ahead, we see no sign of easing on this front, as we expect ABI’s ad spending in the U.S. to be +8% YoY in 2013.

 

Letter is Likely Music to the DOJ’s Ears – A continued focus on share gains could dampen the margin expansion opportunity for the Crown business in the near term. That said, it can’t hurt in terms of moving towards a resolution with the DOJ, as this was exactly what they’d been hoping for. And, thankfully for STZ, the company will experience a notable benefit to gross margins from the acquisition of the Piedras Negras facility, which will give them some flex to hold pricing and/or step up investments, given the significant amount of accretion that STZ will see from the deal.

 

 

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Restaurants: 4Q12 Review

 

Source: Goldman Sachs

Mar 5th

 

4Q12 earnings season:

 

Revenues soft: SSS decelerated in both the US and International divisions. 50% of concepts missed SSS in the quarter. Notable call-outs are SBUX/DPZ which out-grew Fast Casuals CMG/PNRA in the quarter, and DRI which had the lowest SSS.

 

Margins held up: Profitability modestly surprised to the upside, in part from lower food inflation. This positive offset meant only 38% of companies missed EPS despite broader SSS misses.

 

1Q13 guidance light: Most companies commented on soft 1Q13 quarter-to-date trends (though many held FY guidance). DRI and YUM were the notable exceptions, both reducing EPS expectations by 10-20%.

 

FCF deployment robust: DPZ/DIN introduced new dividends and DNKN/THI each raised theirs by 20-30%

 

Shares tracked the S&P – Restaurants kept up with the S&P 500 despite some soft fundamentals. High multiple stocks, QSRs and franchised companies outperformed. Casual Dining short interest has ticked up.

 

Looking forward:

1. Revenues: We expect 1Q13 SSS to come in flat, below the +2% rate in 4Q12 and the +MSD run rate of the past three years. We see the potential for a positive derivative turn thereafter as weather compares moderate and tax rebate checks reach consumers.

 

2. Margins: We expect muted 0-2% food inflation for Restaurants in 2013. Margins are therefore likely to be dependent on leverage/de-leverage on sales growth. SBUX is a positive call-out given coffee costs are 50% off prior peak.

 

GS Recommendations

CL-Buy DPZ: International expansion, US share gains, structural margin expansion, inexpensive at a 6% forward FCF yield

CL-Buy SBUX: Solidly growing in the US, expanding into emerging markets, single serve growth and coffee cost deflation

Buy BLMN: Strong SSS despite Casual Dining softness, margin expansion from cost cuts, and highly FCF generative

Sell WEN: Traffic negative, little margin leverage given muted revenue growth, turnaround driven by remodels taking too long

Sell THI: Traffic negative in Canada driven by the macro, competitive pressures and possibly early stage saturation

Sell SYY: Tepid industry growth is driving pricing pressures and steady margin declines, restructuring effort behind schedule

 

 

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RUM FOR ALL Visits New York, Chicago, Denver, and Kansas City through August 2013!

 

More Cities and Events Planned For Autumn

 

Source: Spirit Journal, Inc.

Mar 5th

 

After attracting standing-room-only audiences in seven cities and two countries in 2012, Rum For All’s second full year of operation is in high gear. Founded in 2011 by Spirit Journal, Inc. and directed by independent spirits journalists Paul Pacult and Sean Ludford, Rum For All is pleased to announce major events scheduled in four prime U.S. markets through August 2013, with at least three more RFA events being planned for the autumn.

 

Here are the first four RFA events inked in for 2013:

 

1)      Saturday, April 13 – NEW YORK CITY  Event Focus: Consumers.

Location: ASTOR CENTER/ASTOR Wines & Spirits

This exciting day at state-of-the-art Astor Center will be RFA’s first event geared directly to consumers, including a mid-afternoon seminar/blind tasting and a late afternoon cocktail party and rum-tasting walk-around. The cocktail party will reach up to 160 consumers, who will then be able to purchase rums downstairs at Astor Wine & Spirits.

 

2)      Tuesday, April 23 – CHICAGO  Event Focus: Trade/Bartenders/Media.

Location: Carmichael’s Chicago Steak House

Carmichael’s provides the ideal setting for this intimate by-invitation-only RFA seminar/blind tasting event to which Midwestern media and Chicagoland bartenders, retailers and other trade will be invited.

 

3)      Tuesday, June 25 – DENVER  Event Focus: Trade/Bartenders/Media.

Location: The Squeaky Bean

Trendy The Squeaky Bean will be the backdrop for this by-invitation-only RFA seminar/blind tasting event to which Colorado and greater Denver/Boulder media and bartenders, retailers and other trade will be invited.

 

4)      Saturday, August 24 – KANSAS CITY Paris on the Plains Festival.    Event Focus: Consumers/Media/Trade

Celebrating its second year in bustling Kansas City, Doug Frost’s Paris on the Plains Festival is the perfect place for RFA to host a seminar/blind tasting geared for POPFEST attendees, which will include media, consumers, bartenders, retailers, and trade executives.

 

Said Rum For All co-director Paul Pacult of the designated cities, “Using input from many RFA Members, we’ve fashioned an exciting, multi-regional schedule through August. It’s an ambitious schedule that concentrates on key markets, both on the east coast and in the nation’s heartland, where the cocktail and spirits culture is dramatically exploding.”

 

Added co-director Sean Ludford, “With the first half of 2013 plotted out, we’re in the planning stage right now for the fall of this year to bring the vibrancy and timeliness of Rum For All’s message to Washington, D.C., Boston, and the Pacific Northwest. Rum as a category is growing in the U.S., especially at the premium and super-premium levels. Rum For All is the perfect initiative to communicate Rum’s versatility and place as a real-deal world-class spirit of elegance and historical importance.”

 

For more information and/or to subscribe to the monthly Rum For All newsletter, please log onto www.rumforall.com. You can also like Rum For All on FaceBook.

 

About Spirit Journal, Inc.  Founded in 1991 by F. Paul Pacult and Sue Woodley, Spirit Journal, Inc. is a leading publisher, events producer and consulting firm to the beverage industry. For more information, please email mail@spiritjournal.com or call 845-895-8910.

 

 

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Will Minimum Pricing Reduce Alcohol Deaths? (Excerpt)

 

Source: Stats.org

Rebecca Goldin, Ph.D.

February 28, 2013

 

Public health advocates are hailing a new Canadian study that claims minimum pricing could slash deaths from alcohol. But a close look at their statistical methods and data sourcing raise more questions than answers

 

stockedWould raising the price of alcohol by setting a minimum price reduce alcohol related death? Off the top of your head, you might think so: cost goes up, demand goes down – unless, of course, the kind of people who are the most likely to die from abusing alcohol are highly resistant to changes in price, in which case all the government does is collect more money, and possibly deter moderate drinkers.

 

But the world of alcohol policy was recently shaken by a new Canadian study that seemed to nail the data. As Reuters reported, “Increasing the minimum price of alcohol by 10 percent can lead to immediate and significant drops in drink-related deaths and may also have long-term beneficial health effects.”

 

And one of the study authors, Dr. Tim Stockwell, who is director of the University of Victoria’s Centre for Addictions Research of British Columbia, told the BBC: “This study adds to the scientific evidence that, despite popular opinion to the contrary, even the heaviest drinkers reduce their consumption when minimum alcohol prices increase. It is hard otherwise to explain the significant changes in alcohol-related deaths observed in British Columbia.”

 

Yet the observation that heavy drinkers are less sensitive to price than moderate or light drinkers has been confirmed through a variety of means – so the Canadian evidence would really have to be strong to call this conclusion into question.

 

http://www.stats.org/stories/2012/Alcohol_Pricing_feb26_13.html

 

 

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Alcohol dependence pill approved in EU

 

Source: RSC.org

Andrew Turley

5 March 2013

 

Danish drug maker Lundbeck has been granted European marketing approval for Selincro (nalmefene) tablets to treat alcohol dependence.

 

‘Selincro represents the first major innovation in the treatment of alcohol dependence in many years,’ said Lundbeck executive vice president Anders Gersel Pedersen. ‘The approval of Selincro is exciting news for the many patients with alcohol dependence who otherwise may not seek treatment.’ The company expects to launch the product in mid-2013.

 

According to Lundbeck, more than 90% of the 14 million patients with alcohol dependence in Europe are currently untreated.

 

Nalmefene is an opioid receptor antagonist – it is designed to bind to the receptor and effectively deactivate it so that it cannot be triggered by the natural opioids produced during drinking. It is intended for use on an ‘as needed’ basis, with one tablet taken each day when the patient feels a risk of drinking.

 

Nalmefene is similar in structure and reactivity to another drug, naltrexone, which has been marketed for treatment of alcohol problems for several years.

 

 

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New top Chianti Classico category announced

 

Source: Decanter

by Anne Krebiehl

Tuesday 5 March 2013

Chianti Classico DOCG will have a new classification above Riserva wines called ‘Gran Selezione’, it has been announced.

 

Wines in the new top band within the Chianti Classico DOCG appellation must be produced solely from estate-grown grapes and can only be sold 30 months after harvest, with a minimum of three months’ bottle age.?

 

Sergio Zingarelli, president of the Chianti Classico Consorzio, said: ‘The Gran Selezione will not obscure the potential and the characteristics of the Chianti Classico Riservas, but give more emphasis to the top-quality wines which are already produced inside the Chianti Classico denomination.’

 

However, a leading buyer of Italian wines has dismissed the new classification as ‘more of a whimper’ and ‘bureaucratic tinkering’.

 

The comments in a blog by David Berry Green, Italian buyer with London wine merchant Berry Brothers & Rudd, label the move as ‘bureaucratic tinkering without adding any real value to a product [the producers have] slavishly refined over the years’.?

 

Describing the announcement as a ‘more of a whimper’, Green said producers were already calling Gran Selezione a ‘Grand Casino’ (‘big mess’), even though the quality of Chianti Classico wines had ‘never been higher’.

 

He added: ‘The Consorzio are not offering a dramatic delimitation of vineyards, nor an unprecedented classification of Grand or Premier Cru/Vigna sites, nor even of a study of the unique geological terroir that are (sic) at the heart of the stylistical differences between Chianti Classico villages.’

 

Awaiting final approval by the Ministry of Agriculture, the Chianti Classico Cosorzio expects the new law to come into effect later this year. Unreleased wines from the 2010 vintage will then qualify as Gran Selezione.

 

 

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Wine, grape industry accounts for $6.8bn in Canadian economy: Report

 

Source: DBR

06 March 2013

 

Wine and grape industry in Canada accounts for $6.8bn in the country’s economy, according to a research Canada’s Wine Economy – Ripe Robust Remarkable commissioned by Canadian Vintners Association, the Winery & Grower Alliance of Ontario, the British Columbia Wine Institute and the Winery Association of Nova Scotia.

 

Conducted by an international accounting and research firm – Frank, Rimerman + Co, the research also found that the wine industry annually generates around $1.2bn in federal and provincial tax revenue, around $1.2bn in tourism revenue and creates over 31,000 jobs in the country.

 

The increase in economy is mainly supported by Canadian winemakers, who also support related industries through investments, job creations and market opportunities in rural communities across the country.

 

According to the report, Canadian wines accounts for only 30% of total wine sales in the country and imported wines account for 70%, which shows Canadian wines have more potential to build the country’s economy.

 

Canadian Vintners Association president Dan Paszkowski said the findings show the impact of the Canadian wine industry on the national economy.

 

“The impacts are both direct and indirect, from job creation and tourism to tax generation and agricultural growth, the wine industry benefits multiple business sectors across the entire Canadian economy,” he added.

 

 

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Lawmakers introduce bill to raise federal minimum wage

 

Source: NRN

Paul Frumkin

Mar. 5, 2013

 

Two lawmakers, flanked by a restaurant owner and two quick-service employees, held a press conference Tuesday to jointly introduce a bill seeking to raise the federal minimum wage by nearly 40 percent.

 

The measure would increase the minimum wage from the current $7.25 per hour to $10.10 by 2016. After that, it would be indexed to inflation, which would provide for automatic adjustments every year, according to Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., the lawmakers who introduced the bill.

 

In his State of the Union address three weeks ago, President Barack Obama called for the minimum wage to be increased to $9 an hour. Rob Green, president of the National Council of Chain Restaurants, said Harkin and Miller told President Obama, “We’ll see you and we’ll raise you.”

 

Congress last raised the minimum wage in 2007, when it boosted it to its current level from $5.15.

 

Speaking at the press conference in Washington, D.C., Harkin disputed arguments that a hike in the hourly federal wage would damage the country’s fragile economy and force businesses to lay off workers. He said it was “a myth that every time we raise the minimum wage people get put out of work. There’s no empirical data to support that.” Instead, he added, “Every time we raise the minimum wage, the economy gets stronger.”

 

Also speaking at the press conference, Anas “Andy” Shallal, owner of the Busboys and Poets restaurants in the Washington, D.C., area, agreed with Harkin, noting that Washington’s minimum hourly wage is higher than the national rate, yet restaurants are opening all the time. However, he said, he has watched as industry wages have remained stagnant.

 

“I want our business to provide career opportunities. This is not working for anybody – it’s not good for workers or society. I would love to see [this bill pass],” Shallal said.

 

Amy Crawford, who works for an unidentified quick-service restaurant in Chicago, also joined Harkin and Miller to support the measure, saying that even though she was hired at the Illinois hourly minimum wage of $8.25, “that is not enough to live on. I worry about paying the rent, having enough food.buying clothes for my kids.”

 

She added that she has received only one 50-cent raise since taking the job and has found almost no opportunities to move into a management position.

 

The authors of the bill also say indexing the minimum wage to inflation will help protect workers in the future. “It’s a significant change,” Miller said. “Without indexing we fall behind.”

 

Harkin said the measure would also enable workers who rely on tipped income to make 70 percent of the full minimum wage per hour.

 

 

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Texas: Craft Brew Bills Raise Questions Over Alcohol Code

 

Source: Texas Tribune

by Elena Schneider

March 5, 2013

 

The Senate Business and Commerce Committee on Tuesday acted as legislative referee over bills that would allow craft breweries to sell on their premises and self-distribute in Texas, but critics said the legislation would hurt the state’s system of alcohol production and distribution.

 

“It’s two different visions of where the beer industry in Texas needs to go,” said Rick Donley, president of the Texas Beer Alliance.

 

State Sen. Kevin Eltife, R-Tyler, filed a package of bills in February that would make significant reforms to the Texas Alcoholic Beverage code and the state’s three-tiered system that regulates the production, distribution and retail sales of beer separately, dating to the end of Prohibition.

 

Eltife said the legislation also puts Texas brewers “on a level playing field with other states” in their treatment under the law. The change is strongly supported by the Texas Beer Alliance, which lobbies for major-brand beer distributors and some craft brews. Donley said the legislation supports the growth of craft breweries and addresses lawsuits surrounding the Commerce Clause.

 

Senate Bill 515 would raise the annual barrels a brewpub could produce from 5,000 to 10,000, grants a limited right to self-distribute to retailers and allows retail sales through distributors. SB 516 and SB 517 raise the annual production limit used to determine which small ale brewers and beer manufacturers can participate in self-distribution. SB 518 allows small brewpubs to sell their beer to customers on their premises and sets tasting room hours of operation.

 

“It creates a nice steppingstone for when a brewery starts out small and grows larger into a production brewer,” said Scott Metzger, owner of Freetail Brewing in San Antonio and legislative chairman of the Craft Brewers Guild. “It becomes a pathway.”

 

Currently, brewpubs, which can only sell to directly to consumers, cannot make the transition to become production breweries, which sells to wholesalers, Metzger said.

 

The Texas Beer Alliance did not always champion these changes, but craft breweries have recently become the industry’s gold mine. “It is the only segment in the industry to show growth in the last four years,” Donley said.

 

But Eltife’s bills are being challenged by Senate Bill 639, filed by state Sen. John Carona, R-Dallas, and supported by the Wholesale Beer Distributors, which presents a host of complex changes to the code, centered on severability, reach-back pricing and distribution – problems that Carona’s staff argues go unaddressed in Eltife’s bills.

 

“For whatever reason, the working groups didn’t anticipate the issues that you find in 639,” said Steven Polunsky, Carona’s committee director. “If passing craft beer was easy, it would’ve been passed three sessions ago.”

 

Polunsky said Carona’s bill forces the issues into the public, “where you can have this discussion and then have it move forward.”

 

In testimony on Tuesday, Randall Yarbrough, a lobbyist for the Wholesale Beer Distributors, left the door open for further negotiations. “If we can accomplish this in other ways, we’re willing to continue to work to find other language,” he said.

 

Opponents of Carona’s bill say the legislation distracts from the productive changes put forth by Eltife’s package.

 

“They’re afraid of change,” said Metzger, who testified in favor of Eltife’s bills. “The status quo has been very beneficial to them for a long time, and we need to come to the table and explain that these changes aren’t designed to tear away what these business owners have built, but rather grow the market.”

 

The Wholesale Beer Distributors did not immediately return requests for comment.

 

Carona, chairman of the Senate Business and Commerce Committee, set a Monday deadline for the parties to make a deal. “If you don’t meet that deadline, I’m pushing this legislation to the very end of the session,” he said at the end of the public testimony Tuesday.

 

But Donley said that the groups “did not make a lot of progress” at a negotiation Tuesday afternoon.

 

 

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Pennsylvania: House bill would shut Pa. liquor stores, open sales to groceries and pharmacies

 

Governor’s proposal may get makeover

 

Source: Post-Gazette

By Karen Langley / Post-Gazette Harrisburg Bureau

March 6, 2013

 

For the first time since Gov. Tom Corbett unveiled his plan to disband state-run alcohol sales, privatization is headed for a vote. But with the chairman of the House Liquor Control Committee developing an extensive amendment, the forthcoming bill may not mirror the governor’s proposal.

 

House Majority Leader Mike Turzai, who has led privatization efforts in the Legislature, on Tuesday introduced legislation to implement the governor’s plan, which would shutter state wine and liquor stores while opening sales to sites such as groceries and pharmacies. Mr. Turzai, R-Bradford Woods, said he expects a House panel to clear the legislation March 18, with a vote by the full House two days later.

 

But the head of the House liquor committee, Rep. John Taylor, R-Philadelphia, objects to several aspects of the Republican governor’s plan and is developing a set of changes he plans to bring to a vote. Mr. Taylor said he believes his amendment, when finalized, would allow privatization to pass his panel and the House, although he said it is possible that Mr. Corbett’s plan also could win committee approval if called to a vote.

 

“Maybe it can, but I think [there are] some parts of the proposal I’m not personally for,” Mr. Taylor said, explaining that he believes the governor’s plan would unfairly disadvantage beer distributors and make beer too readily available. “I’m from Philadelphia. I’m really not looking to have beer in every corner store.”

 

Mr. Corbett would replace about 600 state wine and liquor stores with 1,200 licenses distributed through auction. He would allow distributors, currently restricted to selling beer by the case, to sell six-packs and to bid for a wine and spirits license. Mr. Taylor said he wants to give beer distributors the first chance at licenses.

 

The governor’s plan would allow grocery stores and pharmacies to sell six-packs and wine to go, and convenience stores to sell single six-packs. Mr. Taylor said he feared that the proposal would make beer too prevalent, but he said his amendment would provide sales opportunities to convenience stores, bars and taverns and groceries with licenses.

 

Where Mr. Corbett would sell off the retail stores within 31/2 years and wholesale operations in the following six months, Mr. Taylor said he wants to tie the closing of state stores to the opening of private retail facilities in surrounding areas. He said his proposal for shuttering the state stores could take more time, or less, than the governor proposes.

 

“If you’re a Pennsylvanian who cares about the philosophy of us being in the business, this is not going to make you happy,” Mr. Taylor said. “But if you care about consumer choice, there’s really no harm in having the two coexist for a certain period until the private markets are up and running.”

 

Asked about the proposal Mr. Taylor is developing, Mr. Turzai said he would move forward with what the committee produces.

 

“A plan that moves us forward to the sale of wine and spirits in the private sector is privatization,” he said. “I think the governor’s proposal, which built upon our previous proposal, is very strong. We’re going to let the committee work it out, and then we’re going to move a bill to the floor.”

 

Mr. Turzai described selling off the state stores immediately or simply adding private-sector competition as different paths to the same endpoint.

 

“In my mind, once the private sector gets the opportunity to sell wine and spirits, the state stores are — over time they’re not going to be able to compete,” he said. “They’ll be phased out by the market. You move to a private sector distribution; it’s just a matter of time.”

 

Mr. Corbett, who has touted his proposal’s promise to raise $1 billion for education grants, wants to end state involvement, a spokesman said.

 

“The governor’s plan is based on increasing consumer choice and convenience, getting the state completely out of the liquor business and raising $1 billion for education while remaining fiscally neutral,” spokesman Eric Shirk said in a statement. “We will continue working with Chairman Taylor and we are optimistic that what comes out of committee will reflect those principles.”

 

Wendell W. Young IV, president of United Food and Commercial Workers Local 1776, which represents liquor store employees, said lawmakers should be prepared to reject all proposals to dismantle the Pennsylvania Liquor Control Board.

 

“Mike Turzai made it clear today that he wants to tear apart this public asset any way he can,” Mr. Young said in a statement. “He is going to try and sneak a bill through the committee before the public can have any say, before lawmakers can have any input.”

 

The House minority leader, Rep. Frank Dermody, D-Oakmont, also charged that Republicans are moving too quickly.

 

“Leader Turzai is pushing for a vote on his liquor bill before almost any discussion takes place,” Mr. Dermody said in a statement. “The more complicated his plan becomes, the faster he wants to vote on it with no committee hearings. That should be a big flashing sign that something is wrong.”

 

In the Senate, a bill with the support of President Pro Tem Joe Scarnati, R-Jefferson, among others, would maintain the state wholesale purchasing system while expanding retail sales of wine and spirits and allowing beer distributors to obtain additional licenses.

 

 

——

South Dakota: S. Dakota’s Pine Ridge tribe is at ‘breaking point’ over alcohol

 

Source: LA Times

By John M. Glionna

March 5, 2013

 

Every time she drives into Whiteclay, Neb., over the border from the Pine Ridge Reservation in South Dakota, Natalie Hand sees the images that turn her stomach.

 

Countless people passed out on the side of the road, drunk. Women willing to sell their bodies for a bottle of beer.

 

They’ll all Native Americans, members of her Oglala Lakota tribe.

 

While alcohol is banned on the reservation, booze shacks like those in Whiteclay, run by non-Indians, have long done a demon’s business along the border, selling alcohol to Native Americans, even minors, ignoring the fact that the tribe has a collective drinking problem, tribal members say.

 

It’s not only capitalism at its most perverse, the members say, it violates a treaty elders signed with the federal government to keep alcohol outside a 10-mile buffer area.

 

For years, the tribe has fought back with protests and a lawsuit, to no avail. That activism continued in recent days via a series of protests outside the four liquor outlets in Whiteclay. These protests have raised the ire of the local sheriff, who rallied deputies to push activists back onto the reservation, across the Nebraska-South Dakota border.

 

“We’ve reached a breaking point,” Hand, a tribal activist, told the Los Angeles Times. “We’re tired of the issue of Whiteclay.”

The tribe has been joined by activists from the American Indian Movement,  as well as the nonprofit Alcohol Justice.

 

“The liquor has been there for generations, taunting the people of the tribe,” Jorge Castillo, advocacy director for Alcohol Justice, told The Times. “These stores need to be investigated for illegal activity. They sell to minors and to clearly intoxicated people. Indian mothers take their welfare checks there, and the stores allow them to run tabs.”

 

In the summer, he says, as many as 50 people line the roadways, loitering and drinking for days, after making the walk south from the reservation’s population centers. Castillo says the sales have become a plague on Pine Ridge: 25% of tribal youths there suffer from fetal alcohol syndrome and 75% of adults suffer from alcoholism.

 

And yet the sales continue unhindered by the Nebraska state alcohol board or the federal government.

 

“These licenses should be revoked,” he said.

 

Pine Ridge is one of the nation’s largest Indian reservations – nearly 3,500 square miles. Horses roam and the sky is an endless expanse. The census lists the population as 18,800. The tribe says it’s closer to 40,000.

 

The most recent protests began last week, when a busload of 100 Native Americans arrived in Whiteclay from a celebration of the 40th anniversary of the tribe’s occupation of the Wounded Knee site, where Indians were slaughtered by the U.S. Cavalry in 1890.

 

In the ensuing days, the tribal members returned three more times, on each occasion their numbers swelling, prompting a response by the Sheridan County sheriff’s office in Nebraska.

 

Activists say that Sheriff Terry Robbins threatened to arrest the protesters if they set foot in Nebraska.

 

Hand said that a treaty signed with the U.S. government in 1868 at Fort Laramie, in present-day Wyoming, established a 10-mile buffer zone outside the reservation in which alcohol was forbidden.

 

“Now there are four liquor stores in the unincorporated hamlet of Whiteclay, selling more beer than in any other city in Nebraska within walking distance from Pine Ridge Village on the reservation,” she told The Times.

 

Alex White Plume, a spokesman for the Black Hills Sioux Nation Treaty Council, said the bars in Whiteclay had remained opened for years despite protests from the tribes.

 

In June, 150 tribal members marched into Whiteclay and placed large eviction banners on the liquor stores. Two months later they returned with environmental activists who blocked traffic into town. Sheriff’s deputies ushered them into a horse trailer and hauled them away.

 

“We have a treaty behind us — when we ask them to leave, they should leave,” White Plume told The Times. “Sheriff Robbins is trying to follow the white man’s laws in Indian country. He needs to make a moral decision.”

 

The Sheridan County sheriff’s office did not return calls seeking comment.

 

Castillo said that the tribe sought to negotiate a settlement, with the U.S. Department of Justice serving as mediator, but tribal officials eventually voted down an offer to impose a 1% tax on all alcohol sales — money that could be used for alcohol-related treatment. The money, tribal elders say, would have amounted to a drop in the bucket.

 

Castillo told The Times that federal officials seemed more interested in maintaining alcohol sales at their current levels than observing the treaty the government signed with the tribe.

 

“The DOJ asked the Oglala Lakota activists at the mediation meeting to stop their protest as a sign of a good faith effort in the ongoing talks. The activists did not agree to stop their nonviolent actions because there was nothing offered by the liquor store establishments that seemed to mediate the harm caused by the illegal alcohol activity going on at Whiteclay,” Castillo said.

 

“In fact, the only agreement that the liquor stores owners made was to not sell alcohol to minors, not trade alcohol for sex, not sell to intoxicated people, which should not be taking place anyway,” he said.

 

Activists, led by White Plume, on each visit conducted the Lakota tradition of “counting coup” on each of the liquor stores, touching them with their hands or an eagle feather staff.

 

The Lakota believe that when you count coup on an enemy, death soon follows. They believe that this act will essentially kill the liquor stores, Castillo said.

 

Last year, the tribe sued in federal court against the liquor stores and beer makers, arguing that the stores and manufacturers knew, or should have known, that alcohol purchased in Whiteclay would end up illegally smuggled onto Pine Ridge.

 

The federal judge hearing the case acknowledged a problem. In his order, U.S. District Judge John M. Gerrard wrote, “There is, in fact, little question that alcohol sold in Whiteclay contributes significantly to tragic conditions on the reservation.” He added, “And it may well be that the defendants could, or should, do more to try and improve those conditions for members of the tribe.”

 

But Gerrard said he did not have the jurisdiction to take the case.

 

Anheuser-Busch, which produces Budweiser and was named in the suit, has said it is advocating for legislation to increase liquor law enforcement personnel in Nebraska.

 

Hand said the protests would go on until the alcohol sales stopped.

 

“I’m a grandmother,” she said. “I don’t want my grandkids to have to take up this fight. I don’t want them to see what I see when I drive through Whiteclay.”

 

 

——

Canada: Privacy commissioner orders LCBO to stop collecting personal info

 

Source: The Globe and Mail

Jill Mahoney

Tuesday, Mar. 05 2013

 

Ontario’s privacy commissioner has ordered the LCBO to stop collecting personal information from people who buy alcohol through wine clubs.

 

Ann Cavoukian’s decision came after the Vin de Garde wine club complained that the Liquor Control Board of Ontario required it to provide the names, addresses, phone numbers and selections of everyone taking part in its bulk orders.

 

The LCBO said it needed the information to prevent wine club members from illegally reselling alcohol, to help with product recalls and to audit orders. However, Ms. Cavoukian rejected the claims.

 

“The LCBO has not provided my office with much more than anecdotal or hypothetical evidence to support its position that the illegal resale of liquor by wine clubs in this province is so problematic that it necessitates the collection of the personal information of club members who purchase wine through their clubs,” she wrote last week.

 

Ms. Cavoukian also ordered the LCBO to destroy all personal information collected from club members. She asked the LCBO to provide proof it is following the order by May 28.

 

The LCBO is reviewing the decision and will “consider our next steps,” spokeswoman Heather MacGregor said in an e-mail. In the meantime, it is temporarily suspending new wine club orders.

 

The LCBO has a private ordering department that wine, spirit and beer clubs use to make large orders on behalf of their members. Such clubs often allow people to buy alcohol that is not available on regular store shelves.

 

Vin de Garde argued that the requirement to provide personal details allowed the LCBO to collect information about individuals’ consumption habits while robbing them of the same level of privacy as shoppers who buy alcohol off the shelf.

 

“Any time you don’t have to start divulging all your information all over the place you shouldn’t,” said Warren Porter, president of the club, which he said has thousands of members in Ontario.

 

Mr. Porter said the LCBO began refusing to fill the club’s orders last March unless it provided detailed member information. The club suspended operations in December, but Mr. Porter plans to start accepting orders again as soon as the LCBO changes its policy.

 

“We see this as a major benefit of having an entity like the privacy commissioner on our side because without that avenue, we would have had to shut down because we simply cannot afford to fight the government,” he said.

 

Ms. Cavoukian said she doesn’t have any issue with the LCBO requiring personal information for wine club members who are picking up their orders directly from the retailer, saying it is necessary to administer such sales. Her ban on collecting such data applies to situations where clubs take delivery of large orders on behalf of members.

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