Today Liquor News
Thirst for Jack Daniel’s drives up Brown-Forman profit
By Siddharth Cavale
Wed, Mar 6 2013
* Third-quarter earnings/share $0.73 vs est $0.70
* Third-quarter sales rise 7 pct to $1.03 billion
* Expects full-year earnings/share $2.60-$2.68 vs $2.58-$2.70 earlier
* Emerging markets drive growth, share of U.S. market rises
* CFO says strong sales trend expected to continue
Worldwide demand for its Jack Daniel’s whiskey helped U.S. distiller Brown-Forman Corp to beat Wall Street profit estimates for a third consecutive quarter, and the company said full-year sales would rise.
Cash-strapped Americans are less likely to cut spending on liquor than on groceries, an Ipsos poll for Reuters this month showed. Brown-Forman also reported a surge in sales of whiskey to Russia and other emerging markets over the last nine months.
The Louisville, Kentucky-based company said sales of its flagship Jack Daniel’s whiskeys and liqueurs rose 10 percent in the nine months to Jan. 31. Sales of the Jack Daniel’s Tennessee Honey Liqueur brand alone nearly doubled.
“These rates of growth will continue into the fourth quarter, keeping us on track to deliver high single-digit underlying net sales growth,” Chief Financial Officer Donald Berg said on a post-earnings conference call.
Brown-Forman reported an 18 percent increase in its net profit in the third quarter to Jan. 31. Sales rose 7 percent to $1.03 billion in the period, the company said in a statement.
In the first nine months of the company’s fiscal year, underlying net sales rose 8 percent, driven by premium brands and strong global demand for its North American whiskeys.
Combined, net sales to Turkey and Russia increased by more than 35 percent in the nine months, the company said. It also recorded double-digit percentage growth in sales to Brazil, Mexico, India, Thailand and Indonesia.
Berg said the company’s whiskey business, which includes the Gentleman Jack and Old Forester brands, accounts for almost 60 percent of the cases sold by Brown-Forman around the world.
Brown-Forman said it gained share in its home market, the United States, due to higher prices and strong demand for its whiskeys and its Jack Daniel’s Tennessee Honey Liqueur.
Two-thirds of Americans are spending less as they cope with higher taxes and gasoline prices, the Ipsos poll found. But while 62 percent of respondents said they would cut back on clothing and shoes, and 46 percent would buy fewer groceries, only 39 percent said they would seek to cut their liquor budget.
Brown-Forman, founded by George Garvin Brown in 1870, raised prices on its alcoholic beverages last year to compensate for a spike in the price of corn, which is used to make whiskey. But this did not deter consumers, the company said.
The company said its gross margin in the third quarter rose to 49.4 percent from 47.7 percent a year earlier.
However, fourth-quarter gross margins were likely to be affected by investments in marketing and selling, general and administrative expenses in Europe and Asia, Berg said.
To expand geographically, the company last year struck a deal with Japanese brewer Asahi Group Holdings Ltd to distribute its brands in Japan.
Brown-Forman, which also makes Finlandia vodka and Southern Comfort liqueur, narrowed its full-year profit forecast to $2.60 to $2.68 per share, from $2.58 to $2.70 per share earlier.
Analysts on average were looking for earnings of $2.69 per share for the full year, according to Thomson Reuters I/B/E/S.
Net income rose to $157.6 million, or 73 cents per share, in the quarter ended Jan. 31 from $133.1 million, or 62 cents per share, a year earlier.
Analysts on average expected third-quarter earnings of 70 cents per share.
Brown-Forman’s shares were down marginally at $67.67 on the New York Stock Exchange on Wednesday.
GS Research – Brown-Forman Corp. (BF__B): Fundamental outlook still positive but valuation is lofty; retain Sell
Source: Goldman Sachs
INVESTMENT LIST MEMBERSHIP: Americas Sell List
COVERAGE VIEW: NEUTRAL
BFB reported 3Q FY13 earnings of $0.73 vs. consensus of $0.70; the beat was primarily driven by better gross margins and less of an impact from inventory movement. We revise our estimates to flow through the 3Q beat, lower interest expense, and include the debt redemption charge.
We remain Sell-rated on BFB despite a continued positive fundamental outlook given lofty valuation. BFB shares are trading at 15.5X NTM EV/EBITDA, above its 10-year peak, and our price target only incorporates a move back towards a 90th percentile valuation (using 13.5X).
BFB is effectively balancing volumes and margin. We expect underlying sales to remain in the 8% range over the next few years, and pricing should continue to be accommodative given a tightening supply in the bourbon segment. However, we believe BFB will continue to reinvest in advertising and improvements in emerging market distribution, which limits the profit upside medium term, in our view.
Risks to the upside are mainly on innovation and M&A. On innovation, we do not believe BFB will prove prolific with Jack Daniels line extensions, as they are very cautious on the potential impact to the brand equity. That said, Jack Honey has been a success and the demand for flavored line extensions remains high. We do not believe that M&A activity is likely given the family control/ownership, but with rates low and BFB’s low leverage there could be potential for accretive acquisitions.
We raise our 12-month EV/EBITDA-based price target $2 to $64 on higher EPS and a roll forward to our 12-24 month estimates.
Higher bourbon demand, lower cost inflation, innovation, accretive M&A.
Brown-Forman Corporation(BFb.N): Q3 EPS Upside; In-Line Underlying FY13 Guidance
Source: Morgan Stanley
Strong Results Continue: BFB’s Q3 EPS of $0.73 was above the $0.70 consensus, but in-line with our above consensus forecast, and its updated FY13 outlook is relatively in-line with consensus. 8% organic growth was in-line with the Street and our ~8.5% forecast; however, strong 11% and 14% underlying gross and operating profit growth, respectively, resulted in better than expected operating margins vs. the Street (23.1% vs. 22.3%) and 3.8% profit upside. Notably, price/mix is accelerating at BFB (+3% YTD, up from +2% YTD in 2Q) and was a key driver (along with the absence of the lower margin Hopland based wines) behind BFB’s 230 bp y-o-y Q3 gross margin increase, and should be perceived positively for the industry. Results were strong but expected, and underlying consensus (ex charges) is unlikely to change significantly, so we would expect a muted positive stock reaction. See detailed 3Q results vs. our forecast on page 2.
FY13 EPS Guidance Narrowed: BFB narrowed its FY13 EPS guidance to $2.60-$2.68 (from $2.58-$2.70 previously), but this now includes 5 cents of negative FX and interest expense charges. Therefore, underlying guidance ex charges is likely roughly in-line with the prior consensus of $2.69. BFB continues to expect high-single-digit (%) organic revenue growth and low double digit (%) operating profit growth for the FY, owed to greater leverage from gross margin expansion.
Brown-Forman Management Discusses Q3 2013 Results – Earnings Call Transcript (Excerpt)
Source: Seeking Alpha
Mar 6 2013
Good morning. My name is Holly, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the Brown-Forman Third Quarter Fiscal 2013 Conference Call. [Operator Instructions] I would now like to turn today’s conference over to Jay Koval, Director of Investor Relations. Please go ahead.
Jason Koval – Vice President and Director of Investor Relations
Thanks, Holly, and good morning, everyone. I want to thank you for joining us today for Brown-Forman’s 2013 Third Quarter Earnings Call. Joining me today are Paul Varga, our President and Chief Executive Officer; Don Berg, Executive Vice President and Chief Financial Officer; as well as welcome our new Chief Accounting Officer, Brian Fitzgerald.
This morning’s conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company’s ability to control or predict. You should not place any undue reliance on any forward-looking statements, and the company undertakes no obligation to update any of these statements whether due to new information, future events or otherwise.
This morning, we issued a press release containing our results for the fiscal 2013 third quarter. The release can be found on our website under the section titled Investor Relations. In the press release, we have listed a number of the risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K, Form 8-K and Form 10-Q reports filed with the Securities and Exchange Commission.
During this call, we will be discussing certain non-GAAP financial measures. These measures and the reasons the management believes they provide useful information to investors regarding the company’s financial conditions and results of operations are contained in the press release. And with that, I will turn the call over to Don for his prepared remarks.
DIAGEO AMERICAS, INC., Plaintiff, V. MAJOR BRANDS, INC., Defendant. (Excerpt)
MARCH 6, 2013
COMPLAINT FOR DECLARATORY JUDGMENT AND DAMAGES
Plaintiff Diageo Americas, Inc. (“Diageo”), by and through its undersigned counsel, files this Complaint for Declaratory Judgment and Damages (the “Complaint”) against Major Brands, Inc. (“Major Brands”), and alleges as follows:
NATURE OF THE LAWSUIT
1. Diageo brings this action for a declaratory judgment pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201. Major Brands is a distributor of Diageo’s wine and spirit products in the State of Missouri. Diageo provided Major Brands with notice of its intent to terminate Major Brands as a distributor effective June 30, 2013. Diageo seeks declaratory and equitable relief with respect to its termination of its alcohol beverage distribution relationship with Major Brands and damages for Major Brands’ breach of the governing distribution contracts.
2. Specifically, Diageo seeks a declaration that: (1) Diageo has the right to terminate its distribution relationship with Major Brands; (2) such termination will be and is effective as of June 30, 2013; and (3) Major Brands shall not have any right to continue to distribute or operate as a wholesaler of Diageo’s products after June 30, 2013.
3. Diageo also seeks a declaration that Major Brands breached its various distribution contracts with Diageo. Diageo further seeks damages for Major Brands’ breaches of contract.
Report: Restaurant sales, traffic decline notably in February
Black Box Intelligence analyzes the results of the latest Restaurant Industry Snapshot
Mar. 6, 2013
Black Box Intelligence and People Report released The Restaurant Industry Snapshot for February this week, showing significant downturn in sales, traffic and consumer sentiment during the month.
Same-store sales fell 5 percent in February, compared with January’s increase of 0.4 percent. The first two weeks in February experienced very poor sales, influenced by inclement winter weather. The Western region performed the best, with a 2.1-percent same-store sales decrease, while New England was the lowest performing area, with a same-store sales decrease of 8.9 percent.
Traffic showed a decline of 6.2 percent, worse than January’s decline of 3.1 percent.
In addition, the February Restaurant Willingness to Spend Index from Consumer Edge, a partner company to People Report and Black Box Intelligence, showed a second straight month of pullback. The results show that it dropped to 82, compared with 83 in January and 91 in December.
“As we stated last month in our January Restaurant Industry Snapshot, the impact of payroll taxes and tax refund delays is hurting consumers and their spending, as compared to one year ago,” said Bill Schaffler, president at Black Box Intelligence and People Report. “Couple that with bad weather, which we were lucky not to have last year, and it makes for a disappointing month overall.”
Possibly the most telling data point emphasizing the broad-based drop in spending is that only 1 out of 172 total DMAs reported a positive result in February.
People Report data also reveals turnover results by position by segment to its member companies each month. In February, results show management turnover and hourly turnover increasing.
Job growth, as reported by People Report, is 0.9 percent, an increase from last month’s number of 0.7 percent, but significantly below last year’s job growth momentum.
“We will be monitoring how the consumer continues to adjust to these challenges in March, but we certainly have a disappointing start to 2013,” said Schaffler.
This exclusive series to Nation’s Restaurant News provides C-level insights into the sales and traffic data from clients subscribing to Black Box Intelligence, a financial performance benchmarking company. The views expressed here do not necessarily reflect those of Nation’s Restaurant News.
The Restaurant Industry Snapshot is a compilation of real sales and traffic results from 172 DMAs from 100+ distinct restaurant brands and approximately 15,000+ restaurants that are clients of Black Box Intelligence. Currently, data is reported in four distinct segments: casual dining, upscale/fine-dining, fast casual, and family dining. Black Box Intelligence is a sister company to People Report, which tracks one million restaurant employees on workforce analytics. The Restaurant Industry Snapshot also includes the Restaurant Industry Willingness to Spend Index from Consumer Edge Research, which is a monthly household survey of more than 2,500 consumers. Consumer Edge Insights is a marketing partner with Black Box Intelligence and People Report.
New York: STATE LIQUOR AUTHORITY ANNOUNCES RESULTS OF UNDERCOVER INVESTIGATION INTO UNDERAGE ALCOHOL SALES IN NEW YORK CITY
90 NYC Stores Caught Selling Alcohol to Minors by State Liquor Authority
Source: NY SLA
The New York State Liquor Authority (SLA) today announced that a nine-day undercover investigation into underage alcohol sales has resulted in charges to 90 licensed groceries and liquor stores throughout New York City. The investigation is part of a coordinated enforcement action to prevent the sale of alcohol to minors statewide.
The investigation was conducted by the SLA from February 21 through March 3, 2013.
SLA investigators sent volunteer underage decoys into 201 licensed groceries and liquor stores in all five boroughs of New York City. In total, the decoys were able to purchase alcohol at 90 of the premises, including 21 of 35 in the Bronx, 20 of 34 in Brooklyn, 29 of 84 in Manhattan, 14 of 42 in Queens, and 6 of 6 on Staten Island.
State Liquor Authority Chairman Dennis Rosen said, “Preventing the sale of alcohol to minors is a priority for the State Liquor Authority. These large scale enforcement efforts will continue to be a part of our proactive measures to prevent alcohol abuse among our youth.”
Licensees charged by the SLA with underage sales face civil penalties of up to $10,000 per violation, with fines starting from $2,500 to $3,000 for a first time offense. Repeat offenders also face potential suspension or revocation of their licenses.
Beer legislation gets fiesty first hearing (Excerpt)
Tuesday, March 5, 2013
“Anti-competitive” – “tantamount to price controls” – “a government-sponsored price-fixing cartel.”
These were among the descriptions offered in the Texas Capitol during this morning’s public hearing regarding SB 639, the proposal supported by the Wholesale Beer Distributors of Texas over the objections of the state’s craft brewers and its other large distributor group, the Beer Alliance of Texas.
Listening in on the hearing, the rhetoric from two state business leaders and a conservative-leaning public policy expert was striking.
“That is very simply a government-sponsored price-fixing cartel,” said Mario Loyola of the Texas Public Policy Foundation.
Loyola, whose bio includes articles and op-eds in conservative publications, appearances on the Glenn Beck program and a stint as state policy adviser to former Republican U.S. Sen. Kay Baily Hutchison of Texas, said one provision of the bill would force manufacturers to charge one price to distributors in all circumstances but allow the distributors to sell at any price they wished.
“From the consumers’ point of view, that’s the worst of all possible worlds, restricted output and higher prices at every level,” Loyola said. “In fact, the law, in our view, should be amended in exactly the opposite direction.”
I would note that the bill also drew opposition from the Texas Retailers Association, the Texas Association of Business and other groups. Even Anheuser-Busch went on record against the bill. Here is a text of the testimony from a Texas-based VP for the beer giant:
A Sobering Moment for Chinese Spirits
By CHUIN-WEI YAP
China is toasting a new generation of leaders, but it isn’t using luxury liquor.
In February the National Development and Reform Commission-the government’s economic planner-fined premium liquor makers Kweichow Moutai 600519.SH +3.75% and Wuliangye 000858.SZ +1.50% a combined 449 million yuan ($71.4 million) for fixing the prices that distributors set for retailers and, ultimately, consumers.
[image] Agence France-Presse/Getty Images
A bottle of baijiu made by the Chinese government-owned Wuliangye. China’s state planner recently fined the liquor maker for fixing prices for distributors.
The fine, which amounts to about 1% of revenue for the two companies, isn’t as large as it could be. But the ruling also means distributors will be free to set lower prices for the liquor-called baijiu in Chinese. Bottles that sell for upwards of $300 could begin selling for less, which could result in lower margins and hurt the brands’ luxury image.
It isn’t just booze makers who should be feeling queasy. Sebastien Evrard, an antitrust lawyer at Jones Day, said that until the commission’s ruling, fixing distributor prices for retailers was a legal gray area. Luxury consumer goods and motor-vehicle manufacturers selling products through distributors in China will have to get in line with the new rules-and for some the result could be lower retail prices.
The move comes as China’s leaders promise a crackdown on corruption and official excess-two of the main drivers of sales in the luxury sector. The budget, published Tuesday says the government will “tighten control over official cars” and “further streamline and regulate celebrations, symposiums, forums and other activities.”
That all sounds like good news for official waistlines. But for the companies that feed on China’s official extravagance, it means a diet. Shares in China’s two liquor makers are down more than 30% from summer 2012 highs. If Beijing’s crackdown on price fixing and extravagance is continued, other luxury-goods companies could find themselves hitting the bottle.
Allied Blenders to raise $100m for expanding business in India
07 March 2013
Allied Blenders & Distillers (ABD), an India-based manufacturer of Indian made foreign liquor (IMFL), is close to secure $100m to expand its network and invest in emerging brands in the country.
The funds, which would be ready by the first quarter of 2013-14, will be used to set up a distillery in West India.
Out of the $100m funds, the distillery will raise $50m through private equity and the rest will be accounted for by debt, reported Business Standard.
The distillery has selected financial service provider Ambit Capital, which served as one of the investment bankers for advising United Breweries Group on the $2.1bn stake sale in United Spirits to Diageo, to manage the fund-raising task.
ABD executive vice-chairman and CEO Deepak Roy was quoted by the news website as saying that the fund-raising plans are almost in the closing stages and they are looking at premiumising their offerings.
The distillery aims to produce around 20.5 million cases of spirits by the end of 2013 and increase that number to 24 million cases by the end of 2014.
Lobbyists fear loss of British sway in EU
Source: Mar 6th
By Joshua Chaffin in Brussels
When the “vodka wars” broke out in Brussels eight years ago and Diageo, the UK drinks company, appeared vulnerable to new EU marketing rules, the British government rushed to rescue the maker of Smirnoff and Ketel One.
With a bit of diplomatic finesse, Downing Street managed to blunt a move by Nordic states to tighten EU labelling laws that would have prevented Diageo from marketing some of its top-selling brands as “vodka.”
So it is telling that for Alan Butler, Diageo’s Brussels lobbyist and a veteran of that conflict, one of the top priorities this year is to forge closer ties with Berlin.
“We are having to rebalance,” Mr Butler explained. “If one of your levers is distracted or weakened, then you need to focus your efforts elsewhere.”
Mr Butler is not alone. His shift is an acknowledgment of twin realities now dawning on British lobbyists and business executives across Brussels: Germany’s dominance over EU policy making is growing while the UK’s influence is being undermined by rampant speculation about a possible British exit from the club.
Those trends have been brought into stark relief this week by the British government’s inability to derail new legislation that would cap bankers’ bonuses, in spite of warnings by the City of London that it could pose an existential threat.
Jamie Fortescue, director of the European Starch Industry Association, put it more bluntly. “These days, if you haven’t gotten the Germans on board on any issue, you’re pretty screwed,” he said.
The UK’s influence has been clouded by its steady drift away from the continent, say British lobbyists, culminating in a pivotal speech in late January in which David Cameron, the UK prime minister, promised voters a referendum on EU membership.
Friends and foes alike acknowledge that the British have been among the most adept at pulling strings in Brussels and at engineering regulations for the benefit of companies such as Diageo. And while it is almost impossible to measure what Mr Butler called “the imperceptible, gradual ebb away of political influence and capital”, there is palpable worry among British lobbyists that the noisy political debate back home has made their jobs more difficult in Brussels – home to some 5,600 registered lobbyists and thousands more who operate off the register.
“There is a mild polluting of the atmosphere,” said Peter Guilford, a founder of GPlus, one of Brussels’ most-respected lobbying firms.
The EU is a system built on give-and-take as its 27 members and competing institutions struggle to find compromises. Frequently in those negotiations, size matters, with deals often pre-cooked between the big three of Berlin, Paris and London.
But with Britain at odds with fellow club members over an increasing number of portfolios, Mr Guilford forecasted others would become less flexible about accommodating them.
“If you lose credit in the bigger picture, then it constrains your ability on the more technical details that businesses care about,” he said.
James Stevens, a Brit working in the Brussels office of Fleishman-Hillard, the public affairs consultancy, put it this way: “How much do you want to horse-trade with the UK if you don’t know they’ll even be there to give you the payback?”
Some lobbyists hope that a decline in UK sway in Brussels could lead to more – not less – work for British influence peddlers. With British companies no longer able to take for granted that the government is looking after their EU interests, they may have to hire professionals to find allies elsewhere.
Fleishman and rival APCO say they have seen an uptick in calls from North American companies – many of which use the UK as their entryway to Europe – seeking to understand the potential repercussions of Mr Cameron’s speech.
For some, the disquiet preceded the referendum announcement. British lobbyists say Mr Cameron’s decision three years ago to withdraw conservative MEPs from the European Parliament’s largest political group, the centre-right European People’s Party, was just as damaging.
Conservative MEPs enjoyed unusual clout within the EPP which, in turn, gave them disproportionate influence in the parliament, itself. The EPP is now dominated by French and German parliamentarians, who oversee many of the chamber’s most important legislative files.
Meanwhile, the breakaway group Mr Cameron formed to appease eurosceptics in his party, the European Conservatives and Reformists, is generally regarded as a fringe player.
“I confess that I’m already feeling the impact of that, and have been since it happened,” said Mr Fortescue, who has been waging a campaign to roll back the EU’s system of sugar quotas. The quotas benefit French and German beet sugar companies and farmers, but are tilted against starch producers seeking to sell more isoglucose. Tate & Lyle, a British sugar company that uses imported cane sugar, also wants to overhaul the system.
In a ballot in January, the parliament’s agriculture committee voted to extend the quotas at least until 2020, in spite of a previous commitment from governments to dismantle them by 2015.
“In the good old days, [British MEPs] were influencing from within the major political group in the party. Now ?.?.?.?they are obviously far less influential,” Mr Fortescue laments. Then he adds: “There’s a general feeling of frustration with the Brits in Brussels right now.”
Pisco’s Renaissance (Excerpt)
Source: Drink Spirits
Peru’s National Spirit is One to Watch
There’s a buzz in the air in Lima, Peru. It’s not just the scores of cars, often stuck in gridlock, or the packs of young people who walk the streets and dine at a bevy of innovative late night Peruvian eateries. Peru has a palpable energy of a place where something amazing is happening. After a series of historical setbacks over the past thirty years, including a military coup, a serious earthquake, and a tsunami, Peru has overcome adversity, picked itself up, dusted itself off, and become one of the fastest growing economies in South America.
A notable part of this Peruvian renaissance has been Peru’s culinary offerings, including world renowned fusion cuisine and one of the world’s best grape-based spirits, pisco. Understanding pisco isn’t easy; unlike other spirit categories that can quickly be lumped together in easy-to-fit groupings, pisco has a complexity of offerings that takes some effort to really understand, but the rewards for taking that time are immense.
This could be one of the reasons why so many American bartenders have made the trek down to Peru to spend time with key pisco producers. “It’s an incredible experience,” exclaims Clinton Terry, bartender at Corazon del Mar in Nantucket. “Traveling to Peru, you really get to understand these grapes and the amazing beauty they have to offer.” Nathan Dalton, head bartender of Felipe’s Taqueria in New Orleans, decided to skip his beach vacation in favor of coming to Peru to learn about pisco. “Coming down here pays dividends. People come to my bar because they know they are going to be exposed to something new,” remarks Nathan, “and it’s just fun!”
Champagne negociant facing break-up
by Giles Fallowfield
Wednesday 6 March 2013
Champagne negociant business Pressoirs de France is almost certain to be broken up and its assets sold off after the company’s administrator failed to sell it.
Administrator Jean-Luc Mercier, appointed by the French courts in January after the business went into receivership, has now launched a tender calling for bids for the two main assets of the company, based in Faverolles-et-Coemy, near Reims.
Mercier has listed these assets as the vineyards it owns – some 10.67 hectares of vines worth an estimated ?11-15m – plus 165ha of supply contracts, including 84ha where the contract has a further four years to run.
Vineyard land in Champagne regularly fetches more than ?1m per hectare, but there is some debate about the value of the supply contracts.
Growers are paid for their grapes in four tranches, but Mercier had warned that the second payment for the 2012 crop – some ?2.5m, due on 5 March – would not be met by the deadline.
In the wake of past scandals, contracts are now more carefully drafted and may be nullified if payment is not made on time, making them worthless to any potential buyer.
Despite these developments, Pressoirs de France owner Nicolas Dubois still says he is optimistic about rescuing the business, which may further deter buyers interested in the supply contracts.
The vineyards are likely to attract interest from major groups in Champagne, such as LVMH, which has been actively buying up land under vine in recent times.
Yquem 1986 Retreats 6% From Last Year’s High to $3,710 on Liv-ex
By Guy Collins
Mar 7, 2013
A case of Chateau d’Yquem 1986 Sauternes traded at 2,466 pounds ($3,710) on the London-based Liv-ex wine market this week, 6 percent below last year’s high of 2,630 pounds reached 10 months ago, according to data on the exchange’s Cellar Watch website.
The wine, the highest-classified of the dessert wines from Bordeaux, fetched as much as $5,819 in April last year for a case sold at Sotheby’s (BID) in New York, according to the auction house’s online records. The vintage is among Yquem’s eight highest-priced of the past quarter-century, Liv-ex data shows.
MIKE GLENNON JOINS SIDNEY FRANK IMPORTING COMPANY, INC. AS VICE PRESIDENT OF NATIONAL OFF PREMISE CHAIN SALES
Sidney Frank Importing Company, Inc. announced today that Mike Glennon has been appointed Vice President of National Off Premise Chain Sales.
In this role, Glennon will set the overall strategy for Sidney Frank Importing Company’s off premise chain business consisting of super stores, clubs, supermarkets, drug and convenience. He is charged with maximizing the distribution, sales and promotion of key national and local chain stores for the company’s entire portfolio.
Glennon brings more than 15 years of experience in the beverage industry with focus on national account sales, event marketing, training and development as well as strategic planning. He most recently held the position of Director, National Accounts at Proximo where he led sales efforts in key National Accounts for the portfolio. Prior to that, Glennon served as a Vice President at Beam, Inc. for nearly 10 years, overseeing the Global Training, National On and Off Premise Accounts, as well as Sales & Marketing teams. Glennon received his Master’s Degree from Kellogg Graduate School at Northwestern University and a Bachelor’s Degree from St. Mary’s College.
“We are very excited for Mike Glennon to join Sidney Frank Importing Company and bring his expertise and experience to the increasingly important National Off Premise Chain Business. As this segment of the industry continues to grow, we feel that his addition to the team will be instrumental in the continued success of our portfolio of brands in this channel,” says Steve Bellini, Executive Vice President, Sales at Sidney Frank Importing Company, Inc.
Glennon will be based in Chicago, IL and report to Steve Bellini. Glennon will oversee Regional Chain Managers, James Cassin, Jim McCluskey and Mark Burgner.
Carrefour profits rise on asset sales
By Scheherazade Daneshkhu in Paris
Carrefour reported a sharp rise in 2012 net profit on Thursday, boosted by gains from selling assets in underperforming countries last year.
The French retailer reported net profit of ?1.2bn against ?371m in 2011, but net profit on recurring operations was a more modest ?113m, against a loss of ?1.9bn in 2011.
Carrefour is the world’s biggest retailer by sales after Walmart of the US, and is conducting a three-year turnround programme driven by Georges Plassat, chairman and chief executive.
Since taking over last May, Mr Plassat has sold out of Malaysia, Colombia and Greece and closed its small business in Singapore, raising ?2.6bn to date, both to reduce debt and finance investment in cutting prices in austerity-hit Europe.
Total sales rose 1.3 per cent to ?78.5bn but recurring operating income fell 2.6 per cent to ?2.1bn.
Operating profit fell 21 per cent in Europe but the policy of reinforcing price promotions in a fiercely competitive domestic market, and devolving more responsibility to individual store managers, seemed to be working in France, where operating income rose 3.5 per cent to ?929m.
Carrefour said it would expand in emerging markets, having last year made an acquisition to boost its business in Argentina. Latin America is the group’s fastest-growing region with operating profit up 14 per cent to ?608m. Asia disappointed with a 10 per cent fall in operating profit to ?168m.
Tennessee: Harwell’s vote rescues grocery store wine bill
Mar. 6, 2013
Speaker Beth Harwell, in casting the deciding vote Wednesday, rescued a bill from defeat in a House subcommittee that would allow wine sales in supermarkets.
As leader of the chamber, the Nashville Republican is allowed to vote in any committee, but rarely does. But her votes first halted an effort to punt the bill until July 2014 and later broke a tie to advance the measure to the full House Local Committee.
“I was pretty confident that my vote was going to be necessary,” Harwell said after the vote. “That is a privilege the speaker has, and I don’t abuse it and don’t use it often, but I thought today was a good time.”
Harwell’s vote unleashed groans among liquor store owners and other opponents gathered in the hallway outside the committee room, with one man running down the hallway of the press corps suite and slamming his jacket against the stairs.
The bill sponsored by Rep. Jon Lundberg of Bristol would allow cities and counties to hold referendums on whether to allow wine to be sold in supermarkets and convenience stores. The companion bill also cleared its first Senate committee last week by a single vote.
Under current state law, supermarkets can’t sell any alcohol stronger than beer, while package stores can’t sell anything other than wine, liquor and lottery tickets.
Lundberg and Harwell met with a representative of the liquor stores association after the vote in hopes of hammering out a compromise with the group that has previously been unwilling to negotiate over the matter.
“From what I understand they did not expect me to be happy this afternoon,” Lundberg said. “So I think they are going to be on the phone talking today. And have I just told them my door is open.”
But Chip Christianson, owner of J. Barleycorn’s package store in Nashville and former president of the Tennessee Wine and Spirits Retailers Association, did not appear to be in a conciliatory mood after the vote.
“The fact is it’s a dangerous product, and it’s in a very controlled environment,” he told reporters after the vote. “It’s been controlled since prohibition; it’s worked very well in this state.
“Trust me, we are opening a can of worms that’s going to cause some serious problems,” he said.
There are nearly 600 liquor stores in the state, and less than half of them belong to the association, which has been strenuously fighting the bill alongside the Wine and Spirits Wholesalers of Tennessee.
The beer industry association, which has also traditionally opposed the change, has taken a lower profile in the debate this year.
Justin Owen, president of the Beacon Center of Tennessee, a free market think tank, applauded the advance of the bill in both chambers of the General Assembly.
“The vast majority of states already sell wine in grocery stores, and it’s not had this catastrophic result,” Owen said. “Ultimately, the liquor stores have a monopoly over the product now, and that’s bad.”
Pennsylvania: Corbett’s plan to sell state liquor stores getting shaken and stirred
Governor’s model for selling off state stores faces overhaul in the House.
Source: THE MORNING CALL
By Steve Esack and Scott Kraus, Of The Morning Call
March 6, 2013
Gov. Tom Corbett’s plan to sell the state liquor stores and use the proceeds to give schools $1 billion in grants got a legislative kick-start this week.
House Majority Leader Mike Turzai, R-Allegheny, on Tuesday introduced a 209-page bill that mirrors the privatization plan Corbett floated as part of his 2013-14 budget proposal.
The bill calls for ending the state’s 80-year-old monopoly on the sale of wine and liquor by auctioning off 1,200 retail licenses to big-box stores and mom-and-pop shops. It also would expand beer and/or wine sales to convenience stores, drug stores, supermarkets and big-box retailers.
“There’s a lot of energy and enthusiasm for the concept,” Turzai said.
But Turzai’s bill may be dead on arrival when the House Liquor Control Committee meets March 18 – and with it Corbett’s education grant idea.
The bill is expected to be overhauled by state Rep. John Taylor, R-Philadelphia, chairman of the House Liquor Control Committee, who is working on an amendment that would scale back and slow down Corbett’s plan so much that the grant money would not materialize.
“I’m getting just bombarded [by critics that] I am an obstacle to privatization, and that’s not the case,” Taylor said. “I think you have to be careful.”
Taylor said his version protects the state’s existing 1,200 beer distributors by allowing them to pay a fairer licensing fee to sell wine and liquor in their stores than Corbett’s proposal would have allowed.
His amended bill would allow restaurants and grocery stores with cafes also to sell take-out wine. Large gas stations and convenience stores such as Wawa also could sell alcohol.
Those plans would produce more choice and convenience for consumers while also cutting down on the number of locations that could sell alcohol under Corbett’s plan, Taylor said.
If Taylor introduces the amendment, Turzai said, then both it and his bill will be fully vetted by the committee. As long as the final legislative product provides more liquor choice and convenience for customers, Turzai said he will be happy. He wants the full House to vote on a final bill no later than April 8.
“Our caucus is very energized,” Turzai said.
More like fractured, said Wendell Young IV, president of the union that represents more than 4,000 state liquor store employees.
Last year, Young said, Turzai floated a similar privatization bill and it failed because Taylor floated an amendment that gutted Turzai’s plan. The same fate will befall Turzai again, Young said, and he does not understand why Turzai and Corbett would look for the same losing fight within their political party.
“It shows a number of various conflicts that exist in the Republican caucus,” Young said.
Taylor said his amendments failed last year because Turzai’s supporters tried to change the bill back to its original version at the last minute, but there was not enough support.
The committee consists of 15 Republicans and 10 Democrats. Taylor predicted he’ll have unanimous support from his fellow Republicans.
House Democratic Leader Frank Dermody of Allegheny County asked Turzai to slow down his timeline, so more committee meetings could be held before a final vote.
“Leader Turzai is pushing for a vote on his liquor bill before almost any discussion takes place,” Dermody said in a statement.
There has been little to no activity in the Senate to move on Corbett’s proposal.
Senate Majority Leader Dominic Pileggi, R-Chester, said the Senate is mostly waiting to see the final version of the House bill, he said.
“Everyone has to understand the first act in this play is in the House,” Pileggi said.
One thing is certain: There’s a lot of money at stake. Interest groups representing those with a stake in Pennsylvania’s alcohol trade – including beer distributors, grocery stores and tavern owners – are already marshaling their troops for a fight.
The Beer Alliance, which represents a group of beer distributors, opposes Corbett’s bill. It argues the legislation would hurt Pennsylvania breweries, which wouldn’t have the distribution wherewithal to supply thousands of new beer retailers. Small distributors wouldn’t be able to compete with big-box retailers’ deep discounts or pay new upfront license fees.
But members of the Pennsylvania Food Merchants Association, mostly grocery and convenience stores, back Corbett’s plan, saying it will increase the selection of products, add competition and making buying alcohol more convenient by more than doubling the number of places it can be purchased.
Ohio: Don Postiy Closes 46-Year Career
Source: Ohio Tavern News
Don Postiy, former president of Postiy Wine & Spirits here, recently retired after more than 46 years in the beverage alcohol industry.
Postiy got his start in the industry bartending and managing a nightclub in his home town of Canton. A short time later, he purchased a local neighborhood tavern, becoming one of the youngest permit holders in Ohio at 21 years old.
In 1969, Postiy joined the Jim Beam Distilling Co. and soon was named the Ohio state manager. He continued to advance through the company’s ranks, attaining the position of Eastern regional sales director responsible for sales in Michigan, Pennsylvania, Vermont, Maine and New Hampshire.
Relocating to Beam headquarters in Chicago in 1981, Postiy was appointed vice president for the 18-state control states region.
Postiy left Beam in 1984 but maintained his relationship with the distiller as his new company, Postiy Wine & Spirits, was named broker for the Beam portfolio in Ohio. Founded on Jan. 1, 1985, Postiy Wine & Spirits grew from sales of 100,000 cases to more than 1 million cases in just 2 1/2 years, becoming Ohio’s largest spirits broker and the first 1 million-case broker in Ohio.
During his 22 years as a broker, Postiy represented the Beam portfolio as well as other top-selling brands encompassing bourbon, Scotch, Canadian whisky, vodka, rum, tequila, Cognac and brandy. He helped spearhead the renaissance of premium sprits in Ohio, which continues today.
“It has been an exceptional career,” said Postiy. “I loved every minute of it and I am blessed.”
In 2007, Postiy Wine & Spirits was acquired by Southern Wine & Spirits, although Postiy remained with the company in various capacities until his retirement on Dec. 31.
“Don was a tremendous asset to me during the transition in 2008 from Postiy Wine & Spirits to Southern Wine & Spirits of Ohio,” said Robinson Cooper, vice president and general manager of SWS. “His market knowledge and outstanding relationships across all tiers of the industry were invaluable. He is the consummate salesman, a good friend and great example that hard work, dedication and commitment lead to success.”
In his retirement, Postiy said he is looking forward to spending time with his family, attending his grandchildren’s sporting events, cruising the Caribbean and “just having fun.”