Liquor Industry News 3-21-13

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Thursday March 21st

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Spirits Giants Toast High-End Clientele

 

Source: WSJ

By SIMON ZEKARIA

Mar 20th

 

Whiskey at $120,000 a bottle might not be everyone’s drink of choice, especially amid a global economic downturn. But that doesn’t matter to drinks giant Diageo DGE.LN -0.49% PLC: The company is offering the exclusive tipple only to a group of 200 VIP patrons, carefully selected and invited to join its Chinese whiskey “embassy” in Beijing.

 

Focusing on aspirational drinkers and wealthy individuals in fast-growth markets is a priority for liquor companies.

 

Diageo’s so-called embassy, partly an exclusive members club to sell luxury Scotch, offers private access to a whiskey vault, as well as a bar, museum, shop and dining from an in-house chef. Once in the vault, a customer can be advised by a master blender who will personalize a signature bottle of whiskey, along with a bespoke decanter.

 

Two such embassies are already up and running and Diageo wants to roll out more, first across Asia and then world-wide as the company seeks to cash in on the top end of the liquor market.

 

Pernod Ricard SA, RI.FR +0.16% meanwhile, is striving to appeal to high-net-worth individuals through its sponsorship of polo, a sport traditionally frequented by multimillionaire enthusiasts. Its Royal Salute whiskey brand is the sponsor of the World Polo Series, with tournaments played across the world. Christian Porta, chairman and chief executive of Chivas Brothers, the company’s whiskey division, said the brand has recorded double-digit sales growth in emerging markets over the past five years.

 

The whiskey embassies aren’t the only way Diageo is wooing its most valuable customers. Its John Walker & Sons Voyager luxury yacht set sail in September on a six-month voyage to nine Asian ports, with top customers invited aboard, including an opening three-day party on the Shanghai Bund.

 

“All the guests were invited to a lavish dinner accompanied by the finest whiskeys available,” said Malaysian entrepreneur William Ng, a guest on the ship. “[The] yacht was an event not to be missed and was the talk of town.”

 

The premium and high-end Champagne and spirits industry-in which bottles cost more than $20 each-has almost tripled in value to $72 billion in the past 10 years, according to data group International Wine & Spirit Research. That is despite the economic downturn, which has prompted customers of lower-price spirits to cut back on consumption and change habits to favor drinking at home rather than in bars, where margins are higher.

 

The exclusive, high-profile marketing events have helped drive consumption of Diageo’s most premium brands. Johnnie Walker Blue Label might not retail for thousands of dollars, but its cost of about $200 a bottle still makes it one of the most expensive blended Scotches available on the general market. The brand’s sales in China have increased 45% since 2011, when Diageo’s first whiskey embassy opened in Shanghai.

 

RI.FR +0.16% In Asia, Latin America and the Caribbean, as well as Africa, Diageo posted a double-digit gain in fiscal first-half operating profit. As Diageo mostly sells premium spirits, this is a sure sign that “premiumization”-an upselling strategy that is the Holy Grail of beverage companies-is gathering pace, analysts say.

 

In economically depressed Western markets, some drinkers are treating themselves, giving premium spirits categories a boost. Pernod Ricard says Havana Club rum posted improved sales for the first six months of the fiscal year, driven by Europe. “If you cannot afford to drink as much as you could, [you] can definitely drink less but better quality,” says Euromonitor International analyst Spiros Malandrakis.

 

In North America, Diageo’s reserve brands-or luxury division-posted double-digit sales growth for the six months ended in December, said Larry Schwartz, Diageo’s president in the region, with strong trading from upscale vodka brand Cîroc, as well as Bulleit Bourbon. Cîroc sales, excluding acquisitions, disposals and currency effects, rose 14%.

 

But while consumption is increasing for the high-end market, supply isn’t necessarily keeping pace. Pernod Ricard Chief Executive Pierre Pringuet says restricting access can be more beneficial than meeting demand, as the drinks giants chase value over volume. “It is up to us to make our brands so desirable,” he says. “We couldn’t envisage doubling the volume of Scotch in the medium term. [It is the] same for cognac. There is an element of scarcity.”

 

Diageo Chief Executive Paul Walsh agrees and says that even an economic crisis can lead to rewards elsewhere. “If there is a silver lining to the cloud of southern Europe, we are not selling as much young Scotch in markets like Spain and Greece as we were. We can hold on to that liquid longer and sell it into Latin America, Asia and Africa, probably as 12-year-old and make a lot more margin.”

 

Still, Diageo is trying to reach high-end drinkers in greater numbers through the launch of a Web portal in February to push direct global sales of the company’s ultra-premium brands. The Alexander & James site will offer drinks such as Zacapa XO-a blend of 25-year-old rums-at £99 ($150) a bottle, and the John Walker, a rare Scotch blend that retails at more than £2,000.

 

Alexander & James Managing Director Philippa Dickson describes it as a “white-glove, end-to-end luxury-brand experience, where people will be able to learn about our spirits and receive expert advice on food pairing and mixology ideas for every occasion.”

 

 

——

Pennsylvania: Liquor privatization – Vote could come tomorrow (Today)

 

Source: Philly.com

Angela Couloumbis,

March 20, 2013

 

The state House debated for less than two hours Wednesday on a bill to privatize wine and liquor sales in Pennsylvania, setting the stage for a historic vote on the issue.

 

House members could vote as soon as Thursday afternoon on a plan backed by Gov. Corbett to turn over the state’s 600-plus liquor stores to the private sector. Utah is the only other state with government-run wholesale and retail liquor operations.

 

It was not clear whether Corbett’s fellow Republicans had the votes to pass the bill. But Wednesday’s 108-91 defeat of a Democratic bid to gut the bill suggested that the GOP may have the 102 votes needed to send it to the Senate.

 

If the House passes the proposal, it would be the farthest a liquor-privatization bill has moved through the legislature since the birth of the State Store system when Prohibition ended in 1933.

 

“Everybody in this chamber recognizes that our current system for selling alcohol in Pennsylvania is an anachronism, it’s old-fashioned, and it needs to be changed,” Rep. Kate Harper (R., Montgomery) said in Wednesday’s debate.

 

The decks were cleared for a Thursday vote when Democrats who oppose the bill withdrew dozens of amendments that had House officials gearing up for a long night.

 

The version awaiting a vote is different from Corbett’s original proposal, which called for an aggressive auctioning of State Store licenses to the private sector, including supermarkets, convenience stores, and big-box stores.

 

Revisions made this week in a committee would slow the transition to the private sector and limit what some retailers could sell. Money raised by auctioning off the stores would still go to public schools, as Corbett had envisioned – but House Republicans say the revised plan would generate $800 million, not the $1 billion his administration projected.

 

The bill calls for 1,200 liquor licenses statewide. Beer distributors would get first crack and could choose between applying just to sell wine or just liquor, in addition to beer if they did not want to sell all three.

 

Also unlike Corbett’s proposal: Grocery stores could sell only wine unless they applied for a special license to sell beer as well. That license would require them to have a restaurant-style seating area.

 

Finally, the revised bill would not immediately shut down State Stores. They would be phased out and some could remain open in rural areas.

 

The union representing State Store retail clerks has warned that passage of the bill would cost 5,000 jobs.

 

 

——

Pennsylvania: Beer world – The distributors get most breaks in liquor reform

 

Source: Pittsburgh Post-Gazette

March 21, 2013

 

The latest version of Pennsylvania liquor reform is a beer distributor’s dream. Want to add wine and spirits to the inventory? Go ahead. Just want wine? That’s OK, too; the license for hard liquor will be held in abeyance in case the beer distributor has a change of heart.

 

Under an amended liquor privatization plan that could come up for a vote as early as today, beer distributors get all sorts of advantages over other private merchants looking to obtain any of the state’s proposed 1,200 retail wine and spirits licenses. And consumers would be left with not as much convenience as they deserve.

 

First, the 1,138 beer distributors get first crack at the licenses. They have 12 months to apply, and only after that would the option open up for others.

 

Second, the rates that distributors would pay for a license are a fraction of what it would cost other businesses. For instance, a beer distributor in Allegheny County would pay $82,500 for a wine and spirits license, but another applicant would be charged $397,500. And only beer distributors would be eligible for four-year financing from the state by paying a 5 percent fee.

 

Third, the beer distributors would continue to be insulated from competition on selling beer. Although grocery stores could get licenses to sell wine, their ability to sell beer would be restricted, as it is now, to separate registers in a cafe section of the market.

 

Lawmakers were wrong to think the bill would be a slam-dunk if they kowtowed to the state’s beer distributors. The trade associations that represent them still don’t like the legislation. Why? The groups want to keep things just as they are, which is why they’ve been among the impediments to reform for a long time.

 

The sad thing about House Bill 790 — amended from the better plan proposed by Gov. Tom Corbett — is that the liquor system it would deliver is an improvement over what Pennsylvania has today. Although the movement away from state-owned, state-operated stores would be too gradual and slow, at least it would eventually get the state out of the wholesale and retail alcohol business. In other words, things would be worse if nothing changes.

 

That may be a weak argument for urging the House to pass the measure, but advancing the legislation would mean the Senate could start making significant repairs to this necessary reform. And Gov. Corbett should put his muscle behind that.

 

 

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Pennsylvania: Anheuser-Busch, MillerCoors, Pennsylvania breweries oppose liquor privatization bill

 

Source: Penn Live

Ron Southwick

March 20, 2013

 

Even as the state House of Representatives is poised to vote on a bill to put liquor sales in private hands, the beer industry is fighting the legislation.

 

Anheuser-Busch and MillerCoors, the two giants of the American beer market, have put their names on a letter objecting to the bill. The letter states that the bill as it stands now is “detrimental to the beer industry.” Combined, Anheuser-Busch and MillerCoors account for three out of every four beers sold nationwide.

 

The Brewers of Pennsylvania, an advocacy group for Keystone State breweries such as Yuengling, Troegs Brewing Co., and Appalachian Brewing Co., has signed onto the letter and distributed it to lawmakers. The Pennsylvania Beer Alliance, which represents the state’s beer distributors, has also signed the letter.

 

The state House is poised to vote on the privatization bill Thursday and it appears there may be enough votes to pass it. Gov. Tom Corbett has placed his clout behind it, saying it is a top priority. However, the measure still must pass the state Senate, and some senators have problems with the bill.

 

In the letter, the brewers don’t spell out objections to the idea of privatization itself. Rather, they say the bill as it stands would hurt the beer industry.

 

The brewers state that the legislation would hurt beer distributors and tilt sales unfairly to the wine industry. The bill allows for hundreds of additional wine and spirit licenses.

 

In the letter, the beer industry contends that the bill doesn’t provide a level playing field for beer sales in grocery stores.

 

Grocery stores would be able to sell unlimited amounts of wine anywhere in the store, the brewers say. Conversely, the bill spells out that beer sales would remain in a restaurant section of the store, and sales of beer would be limited to the maximum equivalent of a case (24 bottles).

 

The privatization bill “would create approximately 800 new ‘Grocery Store’ licenses authorizing the sale of unlimited amounts of wine anywhere in a grocery store and, thereby, creating a very uneven playing field in the grocery store segment,” the letter states.

 

“And because it pertains only to wine, there will be supermarkets where wine will be the exclusive alcohol beverage option and no beer will be sold.”

Behind the Scenes of a Yuegling Ad Campaign The Brewers of Pennsylvania, which represents Yuengling and other breweries, objects to the privatization bill as it stands now.

 

In addition, the letter states that the bill poses a threat to beer distributors, who may have to devote half their shelf space to wine and spirits. Some distributors say they can’t afford a costly expansion to maintain their current beer selection and add wine and spirits.

 

Beer distributors sell about two-third of all beer sold in Pennsylvania, so the industry is wary of doing anything to hurt distributors.

 

Anheuser-Busch, the makers of Budweiser, Bud Light and Michelob beers, accounts for roughly half of all beer sold in the United States. MillerCoors, which makes Miller Lite, Coors Light and Blue Moon, racks up more than a quarter of American beer sales.

 

D.G. Yuengling & Sons, makers of Yuengling Lager, is the largest American-owned brewery and accounts for about 2 percent of beer sales. Yuengling is just ahead of Boston Beer Co., makers of Samuel Adams beers.

 

In a revamped liquor market, the question of shelf space could be even more important to the state’s smaller breweries, such as Troegs, ABC, Stoudt’s Brewing Co. in Lancaster County and Victory Brewing Co. in Downingtown, All are members of the Brewers of Pennsylvania.

 

The state’s microbreweries rely on distributors to reach customers. If distributors have to clear shelf space for wine and spirits, smaller microbrews could be the casualties.

 

Corbett and Republican lawmakers who have pushed for privatization have insisted that privatization would lead to bigger business. They argue that the private industry would do a better job selling beer and wine and they contend that it’s time to get the state government out of the liquor business.

 

Pennsylvania’s business advocates, including the Pennsylvania Chamber of Business and Industry, strongly support privatization. They argue it will lead to more choices and convenience for customers.

 

Under the bill, beer distributors would get first crack at 1,200 wine and spirit licenses. After a 12-month period, the licenses would go up for grabs to the general public.

 

Beer distributors would also be able to sell beer by the six-pack and in growlers.

 

Here’s the full content of the brewers’ letter opposing the legislation, dubbed House Bill 790. 

 

http://www.pennlive.com/midstate/index.ssf/2013/03/anheuser-busch_millercoors_pen.html

 

 

——

United Kingdom: Distillers rue dual treatment over duty escalator

 

Source: FT

By Louise Lucas and Mure Dickie

March 20th

 

There was a showdown in the pub when George Osborne, chancellor, allowed brewers to step off the duty escalator but kept on raising taxes for distillers – including Scotch whisky, one of the country’s big export success stories.

 

The dual treatment angered distillers and politicians. John Swinney, Scottish finance secretary, said: “There are already concerns that his small beer Budget will cost Scotland’s whisky industry, with warnings over future investment.”

 

Analysts accused the chancellor of pandering to the populist vote: Britain boasts more beer drinkers and Mr Osborne’s “penny off the pint” is aimed at reversing the dwindling ranks of pubs, some 10,000 of which have gone out of business in the past decade.

 

But spirits makers, quick to condone the inequitable treatment, said that even if designed to support pubs, the measure was “misplaced”.

 

According to the Wine and Spirit Trade Association, more than 41 per cent of drinks sold in pubs are wine and spirits, worth £9.4bn a year. “The chancellor’s decision ignores the growing value of the English wine industry and the UK spirits industry, which accounts for 18 per cent of all jobs in the EU spirits industry,” said Miles Beale, WSTA chief executive.

 

The Association of Licensed Multiple Retailers, however, reckons that on average beer makes up 60 per cent of alcohol sales in pubs, to 12 per cent for spirits and 13 per cent for wines. “There is no doubt this is a life saver to some of the traditional pubs and bars,” said Kate Nicholls, strategic affairs director.

 

Michael Laird, a partner at Cognosis, a drinks consultancy, said targeting wine and spirits was more to do with PR. “Osborne is playing politics to a certain extent. Beer is massively taxed here compared with Europe so there is little more he can do on beer taxation anyway,” he said.

 

Producers of Scotch, which contributes £134 a second to the UK trade balance and supports 35,000 jobs across the UK, were also left fuming. The decision is “unfair, incomprehensible and undermines one of Britain’s major industries in its home market”, said the Scotch Whisky Association.

 

It said drinkers of a dram are now paying 48 per cent more duty than a beer drinker, further distorting the alcohol drinks market in the UK.

 

The UK is the third biggest market for Scotch and now boasts the fourth highest taxed market in Europe: of the EU member states, only Ireland, Finland and Sweden are higher.

 

Distillers paid just shy of £3bn on duty last year; assuming constant consumption, that will rise to £3.12bn with the latest rise of 5.26 per cent. The government reckons the tax cut on beer, which generated tax revenues of £3.4bn last year, will cost it £170m next year from the cancellation of the duty escalator and the penny off a pint. Beer sales have been declining at roughly 4 per cent a year since the duty escalator was introduced in 2008.

 

Diageo dubbed the move “disappointing”. The world’s biggest distiller, which has earmarked £1bn for investment in Scotland for Scotch whisky over the next five years, said: “Cutting duty on beer while increasing it on spirits punishes the UK spirits industry for its success in this harsh economic climate. Scotch is the UK’s biggest food and drink export. This move risks that success.”

 

According to the SWA, the 5.3 per cent increase in spirits duty sees a standard 70cl bottle of Scotch whisky jump to £12.89 from £12.42.

 

“The Scotch whisky industry?.?.?.?is a vital part of the Scottish and UK economy and where it supports many other businesses. It penalises responsible drinkers who like a dram rather than a pint. There is no justification for spirits being taxed more heavily than beer,” said Gavin Hewitt, SWA chief executive.

 

“It also damages all the good work done to create fairer tax regimes overseas to provide a fairer playing field for Scotch whisky. It hinders the government’s ambitions for an export-led recovery.”

 

 

——

United Kingdom: Preferential treatment for beer ‘could be illegal’

 

Wine and spirits producers slammed the Chancellor’s decision to reduce duty for beer but raise tax on other alcohol as “unfair and incomprehensible”, claiming the move could be illegal under European law.

 

Source: Daily Telegraph

By Nathalie Thomas

20 Mar 2013

 

From Sunday, 10p will be added to the price of a bottle of wine in the UK while spirits will go up by 53p, after the Chancellor decided to press ahead in the Budget with a 5.3pc rise in alcohol duty.

 

Beer will be the one exception after the Government bowed to pressure from brewers to scrap the controversial “beer duty escalator” and reduce duty on a pint by 1p.

 

The escalator raised duty on beer by 2pc above the retail prices index measure of inflation every year and was blamed for accelerating the decline of traditional community pubs in Britain. However, an escalator will continue to be applied to other categories of alcohol, including wine, spirits and cider,.

 

The Wine and Sprit Trade Association said it made “little sense” to single out beer and claimed there was a legal precedent to suggest the Government could not treat other forms of alcohol differently.

 

Alcohol producers believe a ruling made by the European Court of Justice in 1983 that the UK’s duty regime at the time discriminated against wine in comparison with beer still applies.

 

Miles Beale, chief executive of the WSTA, accused the Chancellor of “riding roughshod” over the legal precedent.

 

He pointed out that more than 41pc of drinks sold in pubs are wine and spirits, generating £9.4bn a year. “If this was designed as a measure to support pubs it seems highly misplaced,” he said.

 

The Scotch Whisky Association (SWA) called the move “unfair” and “incomprehensible” and claimed it undermined one of Britain’s major industries in its home and third most important market.

 

A standard 70cl bottle of Scotch Whisky will rise to £12.89 from £12.42 as a result of the duty increase.

 

“There is no justification for spirits being taxed more heavily than beer,” said Gavin Hewitt, chief executive of the SWA. “It also damages all the good work done to create fairer tax regimes overseas to provide a fairer playing field for Scotch Whisky.”

 

Diageo, the world’s biggest drinks company, said: “Cutting duty on beer while increasing it on spirits punishes the UK spirits industry for its success in this harsh economic climate. Scotch is the UK’s biggest food and drink export. This move risks that success.”

 

However, the British Beer and Pub Association disputed the WSTA’s claims that the move was illegal. It pointed out that since 1983, Ireland and Denmark have enforced different duty regimes for wine and beer.

 

 

——

Mexico: Rivals demand share of Mexican beer market

 

Source: FT

By Adam Thomson in Mexico City

Mar 20th

 

Ask for a beer in almost any bar or restaurant in Mexico, and the waiter will rattle off half a dozen brands with all the ease and familiarity of reciting the alphabet. The problem is that the names will almost certainly belong to just one company.

 

For decades, Grupo Modelo, which produces Corona Extra and is half-owned by Anheuser-Busch InBev, and its main rival Cuauhtémoc-Moctezuma, which Netherlands-based Heineken acquired from Mexico’s Femsa in 2010, have used exclusive contracts with retailers to compete in Mexico’s roughly 70m-hectolitre-a-year market.

 

In the process, the two incumbents have made it nearly impossible for other producers to gain a foothold. Together, they control about 97 per cent of sales – Modelo, of which AB InBev is trying to buy the outstanding equity for $20.1bn, controls about 59 per cent of the market; Heineken has roughly 38 per cent.

 

But an unlikely combination of SABMiller, the world’s second-largest brewer, and a handful of local microbreweries is trying to change things. In the coming days, the companies hope that Mexico’s antitrust authority will support their complaint against exclusivity contracts – a move that they believe could blow open the country’s beer market to genuine competition for the first time.

 

“All we are looking for is market access,” Armando Valenzuela, SABMiller’s director-general in Mexico, told the Financial Times in a recent interview. “We want to make sure that no beer outlet has an exclusive agreement with any one company.”

 

The imminent ruling, which the country’s antitrust authorities say involves one of the biggest cases they have ever handled, coincides with a new administration in Mexico that appears determined to prise open long-protected sectors of the economy – from oil to cement and from bread to paint.

 

In one sign of changing attitudes to competition, Emilio Lozoya, who heads Pemex, the state oil monopoly, told the FT recently that he was optimistic about reform of the energy sector this year that would open up Mexico’s highly protected oil sector to private capital.

 

The new pro-business government headed by centrist President Enrique Peña Nieto has also announced a proposal to increase competition in telecommunications and television – a change that could affect some of the biggest corporate interests in Mexico, including those of América Móvil, the pan-American telecoms company controlled by Carlos Slim, the world’s richest man.

 

Jaime Andreu, owner of Cervecería Primus, a Mexican microbrewery that has joined SABMiller’s cause, says that thanks to Modelo and Heineken’s exclusivity contracts, only about one in 20 businesses – bars, restaurants and shops – that his network of sellers visits in search of business is potentially able to take his beer.

 

“It’s an everyday experience,” he explains. “They all say that they love the product and then they say that they can’t sell it.”

 

For entrepreneurs, particularly small-scale ones, contracts with the dominant market players are near irresistible. In their intense competition to win new business from each other, the two incumbents often offer support for those setting up new bars or restaurants. On offer? Refrigerators, tables, chairs and awnings, as part of commercial deals.

 

One owner of a bar in downtown Mexico City, who asked not to be named, said Modelo offered practically to furnish his entire premises in return for an agreement to sell its products on an exclusive basis.

 

“I would have preferred to offer a wider range of beer,” he says. “But when you are starting out, you need the support.”

 

The two incumbents have defended exclusivity contracts, arguing that they can provide credit to retailers, improve the look of retail outlets for customers, and create jobs and stimulate beer sales. They also say that the vast majority of the contracts do not specifically prohibit retailers from selling competing brands.

 

When asked about the forthcoming antitrust case, both Cuauhtémoc-Moctezuma and Grupo Modelo said they had no comment.

 

Critics insist it is hard to underestimate the effect of the exclusivity deals on competition. Mr Valenzuela of SABMiller, with its 200 brands, a presence in 70 countries and annual revenues in excess of $30bn, says that 20 years of trying to pick Mexico’s lock has resulted in a market share of just 0.7 per cent.

 

“It’s a completely closed market,” he says. “The two companies have created a national duopoly.”

 

The ruling will doubtless rest on a forest of technicalities. Eduardo Pérez Motta, who heads Cofeco, the antitrust authority, said that among other things, the plaintiffs have to prove that the companies carrying out the exclusive contracts were dominant in their market and that they were abusing that dominant position. They also have to prove that the contracts did not increase market efficiency in some way. “It’s not a straightforward thing,” he told the FT.

 

But even if Cofeco closes the case for lack of evidence, SABMiller and the microbreweries have at least two opportunities to appeal. And, if it comes to it, they are sure to use them. As Mr Valenzuela told the FT: “We’re taking this all the way.”

 

 

——

Ireland: Reilly supports minimum pricing for alcohol

 

Source: Irish Examiner

By Cormac O’Keeffe and Evelyn Ring

Thursday, March 21, 2013

 

Health Minister James Reilly says he “absolutely supports” the introduction of minimum pricing for alcohol.

 

His comments came as the Cabinet prepares to consider a long-awaited Government action plan on alcohol which is set to include proposals on minimum pricing, alcohol sponsorship and advertising.

 

Alex White, the junior health minister responsible for the alcohol strategy, publicly conceded yesterday there would be opposition to some of the measures, decisions on which would be made “shortly”.

 

Speaking at the National Alcohol Awareness Week conference, Mr White said the Government was “not going to wait” to see how alcohol measures in other countries fared and would take a lead. This was being interpreted as a possible reference to events in Britain last week where prime minister David Cameron did a U-turn on plans to introduce minimum pricing in England and Wales. Observers have speculated on whether it might affect the decision of the Cabinet here, where four ministers have already expressed opposition to, or concern with, key proposals.

 

There is also uncertainty as to what, if any, effect Downing St’s decision will have on plans by the North’s administration to introduce minimum pricing. The Government here has pushed for an all-island approach to minimum pricing, to avoid cross-border trade developing. It is also keeping an eye on events in Scotland which has passed legislation on minimum pricing but has not yet enforced it.

 

Speaking at a health conference, Mr Reilly said he “absolutely supports” minimum pricing for alcohol and said he had been in talks with his Northern counterpart Edwin Poots to introduce it simultaneously.

 

Mr Reilly said he wanted to see alcohol prices fall in pubs and for prices in off-licences and big supermarkets to go “way up”.

 

Mr White said he had heard arguments against “every single measure” being proposed. He said this included arguments that sports sponsorship doesn’t increase consumption – a claim made by Sports Minister Leo Varadkar.

 

Mr White told the conference, organised by Alcohol Forum, that the Government would announce “actual decisions” on pricing and sponsorship shortly.

 

He said governments across Europe were considering the same solutions.

 

“We won’t be deferring our decision, we’re not commissioning more research or see how other countries get along.”

 

The action plan is based on a Government expert group, which sat for three years before publishing its report a year ago.

 

The plan was initially supposed to go the Cabinet last summer and, again, last September. Since November, Mr White has stated it would be before the Cabinet in a matter of weeks.

 

The latest prediction is for next Tuesday.

 

 

——

North Carolina: Plan for 3-ounce alcohol drink falls flat

 

Source: WRAL

Mar 20th

 

State regulators on Wednesday rejected a brewer’s plans to sell 3-ounce vials of high-alcohol malt beverage in North Carolina, saying they feared it would entice teens to drink.

 

Stout Brewing wanted to sell its Stout 21 malt beverage in grocery and convenience stores in such flavors as Margarita, Screwdriver and Apple Pie. The company bills the product as a “Flavored Alcoholic Shooter.”

 

Mike Herring, administrator for the state Alcoholic Beverage Control Commission, noted that the 3-ounce can with the twist-off cap contains as much alcohol as a 12-ounce beer.

 

“In a matter of minutes, a person can gulp that container down and take one of these (four) packs and gulp it four times and have the equivalent of four, high-proof, 12-ounce beers,” Herring told the ABC board. “You can just keep drinking these and drinking these, and the next thing you know, it’s going to hit you, and you’re not going to realize how much alcohol you’ve had.”

 

Stout 21 would most likely appeal to underage drinkers, he said, because they could conceal the small container in a pocket or backpack. Also, the unusual packaging would make it harder for parents and law enforcement officers to recognize it as an alcoholic beverage, he said.

 

Mike Adams, an attorney for Stout Brewing, said the company wanted to make a safe and responsible product and designed the 3-ounce can to “stand out” so it could be marketed better to 21- to 35-year-olds.

 

There was never any intent to appeal to teens, Adams said, adding that the smaller beverage is for consumers who don’t want “to be filled up.”

 

“It allows the consumer to very appropriately regulate the quantity of alcohol they consume,” he said.

 

Adams complained that ABC regulations don’t spell out rules for the size and shape of containers, adding that Stout Brewing has already purchased the equipment to make the 3-ounce can at its Kings Mountain brewery.

 

The $2.1 million brewery opened last year and employs 32 people in an area with a 10.6 percent unemployment rate.

 

Commissioners weren’t swayed, however, voting unanimously against Stout 21.

 

“This vial you’re trying to approve is less than half the size of anything we’ve ever approved with that content of alcohol,” Commissioner Joel Keith said.

 

ABC Chairman Jim Gardner, a former lieutenant governor, said he worries about his three young granddaughters.

 

“I’m very much concerned about the underage drinking problems in our state,” Gardner said. “We’re going to do everything we can possibly can – in the area of underage drinking, to do what we possibly can – to turn the tide somehow.”

 

Stout Brewing owner Cody Sommer was disappointed with the decision and said his management team would have to reassess the situation.

 

“We still feel correct that our product is not marketed to underage drinkers, and we still feel that way and that’s how we’re going to move forward,” Sommer said.

 

 

——

In a New Aisle, Energy Drinks Sidestep Some Rules

 

Source: New York Times

By BARRY MEIER

Mar 19th

 

Fans of Monster Energy, the popular high-caffeine energy drink, may not notice the change: its ingredients will be the same and its familiar label bearing a green, clawlike monogram will change only slightly. But the drink’s maker has decided after a decade of selling it as a dietary supplement to market it as a beverage, a switch that will bring significant changes in how it is regulated.

 

Among them: Monster Beverage, the nation’s biggest seller of energy drinks, will no longer be required to tell federal regulators about reports potentially linking its products to deaths and injuries.

 

The company’s recent move, which follows a similar regulatory makeover by another brand, Rockstar Energy, comes amid intensifying scrutiny of energy drink safety. On Tuesday, a group of 18 doctors and researchers sent a letter to the Food and Drug Administration urging it to take action to protect adolescents and children from the possible risks of high caffeine consumption. “There is evidence in the published scientific literature that the caffeine levels in energy drinks pose serious potential health risks,” the researchers wrote.

 

Monster Beverage’s new cans will also disclose caffeine content for the first time. A 16-ounce can of Monster’s most popular energy drinks will contain 140 to 160 milligrams of caffeine, compared with about 330 milligrams in a 16-ounce cup of Starbucks coffee.

 

The company is fighting back against critics on several fronts. This month, it held a news conference to dispute accusations in a lawsuit that the death of a 14-year-old girl was linked to high caffeine levels in Monster Energy. Separately, it threatened to sue a nutritionist who publishes a newsletter for elementary schools for statements that it said were defamatory.

 

The changes by Monster and Rockstar demonstrate the degree to which energy drink manufacturers can decide which rules to follow.

 

“We don’t have energy drinks defined by any regulation,” Daniel Fabricant, director of the F.D.A.’s dietary supplement division, acknowledged in an interview in October.

 

For a decade, Monster sold its products as dietary supplements, apparently as part of a strategy to convince consumers that they were different from beverages. But the company, like its competitors, has run into a spate of bad news, including the disclosure in October that the F.D.A. had received reports in recent years that mentioned its drinks in connection with deaths and injuries.

 

Since then, the F.D.A. has received three more death reports and 14 injury reports that cite Monster energy drinks, an F.D.A. spokeswoman, Tamara Ward, said in an e-mail. In recent months, the agency has also received added reports about other energy products; since October, for example, it has received 38 reports that cite the popular energy “shot” 5-Hour Energy, including five involving a death.

 

The mention of a product in an incident report filed with the F.D.A. does not mean the product played a role in a death or injury, and such reports may provide few details. Monster Beverage and the maker of 5-Hour Energy have insisted that their products are safe and unrelated to the reported episodes.

 

A spokesman for Monster, Michael Sitrick, said the company had decided to market its products as beverages for several reasons. One was to stop what he described as “misguided criticism” that the company was selling its energy drinks as dietary supplements because of the belief that such products were more lightly regulated than beverages. Another consideration, he said, was that consumers can use government-subsidized food stamps to buy beverages.

 

“Monster Energy drinks could equally satisfy the regulatory requirements” for either category, Mr. Sitrick said.

 

An executive vice president at Rockstar, Joseph Cannata, said the company had made the change because consumers found food labels easier to read. In January, all production of Rockstar energy drinks switched to those labels, he said.

 

Rockstar had previously disclosed its caffeine content.

 

A lawyer who represents supplement makers, Justin J. Prochnow, said companies like Monster and Rockstar might have had another incentive. Over the last two years, the F.D.A. has intensified its scrutiny of the supplement industry’s manufacturing practices, driving up production costs.

 

As beverage producers, Monster and Rockstar will face some reporting mandates, including some that are stiffer than the mandates for supplement makers. Such companies are required to notify the government when they think a product could cause injury, a rule intended mainly to limit the distribution of tainted food. In addition, they are required to maintain scientific data supporting the safety of any ingredients they use that are not already cleared by the government. They can also voluntarily notify the F.D.A. about adverse events possibly affecting individual consumers, a step Monster Beverage said it planned to take.

 

Mr. Sitrick said Monster’s move to list caffeine content followed its decision to join the American Beverage Association, an industry trade group, which urges member companies to make such disclosures. He estimated that half of the company’s products would list caffeine content by April, and 90 percent by May.

 

In a recent filing with the Securities and Exchange Commission, Monster Beverage, which is based in Corona, Calif., said that negative media reports about energy drinks had created “softness” in demand. Its stock, which traded for $83.96 last spring, closed at $49.72 on Tuesday, a decrease of more than 40 percent. Rockstar is privately held.

 

The energy drink industry also faces several investigations from federal and state officials into claims that its products provide benefits lacking in other caffeine sources, like coffee. Researchers say there is little evidence to support these claims.

 

At a recent news conference, Monster Beverage denied accusations that it was responsible for the 2011 death of a Maryland teenager who had consumed two 24-ounce cans of Monster Energy. The company said that tests were never conducted on the 14-year-old, Anais Fournier, to determine caffeine levels in her blood.

 

A lawyer representing her family, Kevin Goldberg, said a state medical examiner had found that the teenager, who had an underlying heart condition, died of a cardiac arrhythmia caused by caffeine toxicity. A spokesman for the chief medical examiner’s office in Baltimore declined to comment, citing continuing litigation.

 

Monster Beverage also claimed recently that the March issue of a newsletter sent to elementary school students and their parents contained defamatory statements that had “materially damaged Monster and its well-known brand.” It objected to several statements in the newsletter, Build Healthy Kids, including one that said children had died from energy drinks and should “never drink” them.

 

In a letter dated March 4, the company demanded that Deborah Kennedy, a nutritionist who publishes the newsletter, retract and correct the statements within five days or face a lawsuit.

 

Ms. Kennedy, who lives in Connecticut, said in an interview that she was stunned by the threat, in part because the newsletter never mentioned Monster Energy or any other product by name, but focused instead on the need for children to cut down on sugar-laden beverages.

 

In response, she called on one of Connecticut’s United States senators, Richard Blumenthal, who is a critic of the energy drink industry. Mr. Blumenthal’s office contacted Monster, which agreed to withhold legal action pending a meeting with Ms. Kennedy.

 

Ms. Kennedy, who holds a doctorate in nutrition, said she thought the audience for her newsletter, children from kindergarten through fifth grade, should not consume energy drinks. “They are going after me for reaching that segment, and it boggles my mind,” she said.

 

Mr. Sitrick, the Monster spokesman, said that the 7-year-old son of a Monster employee had received the newsletter at his school and was upset by it. The boy showed it to his father, who brought it to the attention of a company lawyer.

 

“No child, much less a 7-year-old, should be falsely informed that his or her father’s employer is a child killer, especially since there are no facts to support the allegation,” Mr. Sitrick said. He added that Ms. Kennedy had yet to meet with a lawyer for Monster.

 

Last week, Senator Blumenthal and two other Democratic lawmakers, Senator Richard J. Durbin of Illinois and Representative Edward J. Markey of Massachusetts, sent a letter to Monster Beverage urging it to apologize for the tone of its letter to Ms. Kennedy and asking whether the company had threatened others with lawsuits.

 

Mr. Sitrick said the company was still reviewing the letter but continued to believe that Ms. Kennedy’s statements were defamatory.

 

 

——

Diageo sues Missouri distributor Major Brands for ‘unacceptable’ performance (Additional Coverage)

 

Source: Beverage Daily

By Ben Bouckley

20-Mar-2013

 

Diageo is suing its principal Missouri wines and spirits distributor Major Brands, alleging ‘unacceptable’ performance, but Major CEO Susan McCollum insists her firm has a long record of ‘outstanding performance’ with the drink’s giant’s brands.

 

Speaking to BeverageDaily.com this afternoon, Major Brands CEO, Susan McCollum, said the firm did not want to comment on the litigation, but said her firm had been “blindsided by the lawsuit, especially given our multigeneration long relationship with Diageo”.

 

“We’ve been carrying the Diageo brands for generations, and we have an equally long record of outstanding performance as their distributor in Missouri. Even after the termination, Diageo has said that Major Brands remains the most respected distributor in the state of Missouri,” she said.

 

In a March 6 complaint filed in the US District Court District of Connecticut, Diageo Americas said it had given Major Brands notice that it planned to end their distribution agreement as of June 30.

 

Diageo said it expected Major Brands to challenge the validity of the termination, as the latter did earlier this year with Pernod Ricard USA, with Major claiming this would violate the Missouri Franchise Act because “suppliers can terminate liquor distribution agreements only with good cause”.

 

Pernod Ricard argues in a January 17 complaint filed in Missouri that it can exit distribution deals with both Major and rival Glazer’s, since neither involved a franchise agreement under the above act.

 

Diageo claims the same thing in relation to its contracts with Major, and seeks a court declaration that it (1) has contractual right to terminate the agreement on June 30, and (2) to ensure Major Brands did not retain rights to

distribute or selling Diageo drinks thereafter.

 

Thirdly, in its complaint signed by law firms Day Pitney and McDermott Will & Emery, Diageo also seeks a declaration that Major breached distribution contracts, and desires further damages upon this basis.

 

“The quality of Major Brand’s performance on behalf of Diageo, and the business relationship between Diageo and Major Brands, are unacceptable,” Diageo says in its complaint.

 

“Major brands profits substantially from selling Diageo’s products, but fails to devote even close to equivalent resources to the promotion and sale of Diageo’s products.

 

“Far from acting in a collaborative way consistent with a community of interest, Major Brands acts solely in its own interest,” the drink’s giant adds.

 

Diageo said that Major Brands distributed around 86% of its Missouri spirits and wine portfolio in by nine-liter case volumes, with Glazer’s Midwest picking-up the balance.

 

The UK-headquartered firm’s spirits and wines represented around 32% of Major Brands’ portfolio in these categories, the court said, but (with beer and non-alcoholic drinks included) under 25% of Major’s total business.

As of July 1 2013 – when Diageo gives up the right to supply Jose Cuervo tequilas, cocktails – these numbers will fall to 27% and 21% respectively.

 

‘Regularly acts adversely to Diageo’s interests’, suit claims.

 

But Diageo claims that Major Brands spends “substantially less” than 25% of employee time, advertising funds and promotion dollars on Diageo products, even using Diageo-derived resources to subsidize its costs and promote products from rival suppliers.

 

Diageo also alleges that Major “regularly ignores or rejects” suggestions on how to best sell Diageo products: Captain Morgan rum, Smirnoff Vodka, Seagram’s 7 whiskey.

 

Major has no incentive to improve performance, Diageo claims, since it also sells rival drinks such as Absolut Vodka (Pernod Ricard) Sailor Jerry Rum (William Grant & Sons) and Jim Beam Whiskey (Beam Inc.)

 

Since Major Brands wanted customers to purchase products of all of its suppliers, the firm did not have predominantly common interests with Diageo, the latter claims.

 

“To the contrary, Major Brands regularly acts adversely to Diageo’s interests,” the firm said, adding that it Major even refused a request made on fairness grounds to better resource Diageo’s portfolio.

 

Major Brands is Missouri’s highest volume alcohol distributor; acting as a distributor for hundreds of producers and suppliers of brands it carries 5000+ products and employs 700+ staff.

 

 

——

Scotch Whisky Association raises concerns over Dewar’s Highlander Honey (Excerpt)

 

Source: Just Drinks

By Olly Wehring

20 March 2013

 

The Scotch Whisky Association has admitted that it has “concerns” over Bacardi’s extension of its Dewar’s Scotch whisky brand in the US.

 

Following the announcement, the SWA said that the product did not breach any laws governing the definition of Scotch whisky. “It’s actually a ‘spirit drink’,” a spokesperson for the trade body told just-drinks. “The regulations only cover Scotch whisky, and it’s not being sold as Scotch whisky.

 

However, late yesterday, the SWA said: “We do have concerns that the labelling and promotion of Dewar’s Highlander Honey could distinguish the product more clearly from Scotch whisky. Under EU law, it has to be sold under the sales description ‘Spirit Drink’ and it would assist if that description was more conspicuous on the labelling to help make it clear it is not Scotch whisky.

http://www.just-drinks.com/news/scotch-whisky-association-raises-concerns-over-dewars-highlander-honey_id109859.aspx

 

 

——

Judge grants delay in Anheuser-Busch InBev, DOJ hearing until April 9

 

The Justice Department and A-B InBev have until April 9 to either settle or create a schedule for the court to hear the antitrust dispute.

 

Source: St. Louis BJ

Mar 20th

 

A judge has agreed to again extend the deadline to hear arguments between the U.S. Justice Department and Anheuser-Busch InBev over A-B’s planned $20.1 billion acquisition of Grupo Modelo, which could be a sign the sides are nearing an agreement.

 

U.S. District Court Judge Richard Roberts gave the Justice Department and A-B InBev until April 9 to either settle or create a schedule for the court to hear the antitrust dispute, Reuters reports. Last week, the brewers and Justice Department had requested an extension of a deadline that already had been extended until March 19, saying they had made “substantial progress” in talks.

 

A-B InBev struck a deal last June to buy the half of Grupo Modelo, brewer of Corona, that it didn’t already own for $20.1 billion. But the Department of Justice filed a lawsuit in January to block the merger, saying it “would substantially lessen competition in the market for beer in the United States.”

 

In requesting the additional extension, the companies said the progress in discussions with the Department of Justice were based on revisions to the merger that A-B InBev had announced in February to satisfy U.S government objections. Last month, A-B InBev agreed to sell Modelo’s Piedras Negras brewery, near the Texas border, to Constellation Brands and grant it perpetual rights for the Corona and Modelo brands distributed by Crown in the U.S. at a cost of $2.9 billion.

 

St. Louis-based Anheuser-Busch is part of Belgium-based Anheuser-Busch InBev. A-B InBev reported revenue of $39.8 billion in 2012, and Grupo Modelo is about a $7 billion company.

 

 

——

In Wine Market, a Bubble Still Bursting

 

Source: Bloomberg

By Mark Gimein  

March 20, 2013

 

In the current issue of Bloomberg Pursuits, Bloomberg wine writer Elin McCoy writes about Domaine de la Romanee-Conti, the ne plus ultra of fine Burgundy. The latest release of DRC’s flagship wine, the 2009 vintage, sells for $15,000 a bottle, older bottles for as much as $2,000 an ounce.

 

Still, as McCoy points out, DRC has been outperforming other wines at auction, largely because of the Burgundy craze among Chinese collectors. All of this raises a question that goes beyond DRC: Do the prices for top wines bespeak a bubble?

 

Take a look at the chart below, which shows the Liv-ex Fine Wine 100 Index of prices for 100 frequently traded high-end wines back to July, 2000. You’ll see that for five years it stayed flat, rising 265 percent through the middle of 2011 before slipping down. Over the last few months the wine market seems to have resumed its ascent.

 

The Liv-ex Fine Wine 100 Index peaked in 2011. There’s still room for it to go down further.

 

Does that mean that it’s now reached its natural level, or that the bubble is still filled with air? The hard thing about bubbles is that there’s no decisive answer to whether you’re in a bubble until after it’s over. In periods of high prices, there’s generally no shortage of folks ready to say that prices have just reached a permanent new plateau. So it is with wine. The growth of the global ultra-rich is one reason prices could gave gone up.

 

That said, I’m skeptical that the number of folks actually drinking wine at $1,000 a sip has exploded. Yes, there’s a new Chinese market, but it seems to be driven largely by people who are more interested in the investment value of their cellar than the liquid in their glass. McCoy has covered that vividly. At the end of 2011, she wrote about Chinese banks funding wine purchases. Let’s assume that the impulse to open a nice wine with dinner dissipates when you’ve financed your cellar with borrowed money.

 

Wine prices are now already about 20 percent below their peak. It’s tempting to assume that now that having leveled off they’re set to rise again. Don’t count on it. Rarely is the first sharp descent the true end of a bubble. On this subject, it’s hard to beat the conclusion of McCoy’s 2011 story, so I won’t even try. She wrote then, “My nickname for the Chinese wine investment market? Duchang. It means ‘casino.'” That was right near the very top of the market. There’s still plenty of room to keep falling.

 

 

——

Wine Advocate sues ex-critic Antonio Galloni for missing tasting notes

 

Source: LA Times

By S. Irene Virbila

March 20, 2013

 

The breakup of the Wine Advocate’s Robert B. Parker with his former lead wine critic Antonio Galloni is getting ugly. You might remember that Parker sold a substantial interest in his influential wine newsletter, the most powerful in the country, to Singapore investors last December. Though Parker isn’t exactly retiring, he is stepping down as editor-in-chief. And that position has been claimed not by Galloni, his heir apparent, but by Lisa Perrotti-Brown, a Master of Wine who was a Singapore-based correspondent for the publication.

 

Fast forward to Feb. 12: Galloni leaves to found his own website. End of story, or so it seemed.

 

But now the Wine Advocate is suing Galloni for breach of contract-and fraud. According to a story up at “the Wine Cellar Insider” by founder Jeff Leve, “the problem is that prior to the sale of The Wine Advocate, Antonio Galloni, who was being paid $300,000 and expenses per year, contracted to write about and review the wines of Sonoma, California and other regions for Robert Parker and The Wine Advocate. Galloni refused to deliver the work product once he ended his business relationship with the company. He claimed that he was unable to finish his report on time as it would not do justice to the region.” Read more of Galloni’s side of the issue at his site.

 

First thought: $300,000 is an astonishingly high salary, especially since  I remember seeing a tweet sent by someone at The Symposium for Professional Wine Writers at Meadowood Napa Valley in February. Only three of the wine writers in the room earned more than $25,000 per year from their writing.

 

Galloni’s proposal for resolving the issue is to publish the Sonoma report when he finishes it early next month on www.antoniogalloni.com and to give readers of the Wine Advocate free access to it.

 

But that seems just a little disingenous, because, of course, doing so would drive Wine Advocate readers and members of the popular erobertparker site to Galloni’s competing site. And why would the Wine Advocate want to do that? Especially since the tasting expenses came out of its budget?

 

Each side has its points, but how will the judge rule?

 

The situation looks even more complicated if you read further.  Evidently, Parker let loose a blast from Bordeaux where he’s tasting the 2012 vintage, explaining to his readers that “we have taken appropriate action to retrieve the report Antonio was paid to produce. It’s a disservice to you and to the vintner associations and winemakers who put in massive efforts coordinating tastings for this report in hopes of getting a Wine Advocate review. At the time of these tastings, Antonio was a reviewer for The Wine Advocate, so it stands to reason the report he was paid to provide should be submitted. We regret having any delay and appreciate your patience as we sort through details via the proper channels.

 

“Our actions are simply a matter of retrieving a service we paid for on your behalf. This is not an attempt to stop Antonio from moving on; we continue to wish him our very best.”

 

For legal buffs, a copy of the lawsuit is posted on the Wine Cellar Insider.  http://www.thewinecellarinsider.com/2013/03/robert-parker-sues-antonio-galloni-for-fraud-breach-of-contract/

 

 

——

Wine business Laithwaite’s toasts 18% rise in US revenues

 

Latest accounts show company now the largest mail-order wine business in North America

 

Source: The Guardian

Juliette Garside

Wednesday 20 March 2013

 

Laithwaite’s, the world’s largest home delivery wine business, is celebrating an 18% rise in revenues from the United States.

 

Thanks to partnerships with the Wall Street Journal, the Zagat restaurant guide and its Virgin Wines brand, the family-run British business has now also become the largest mail-order wine business in North America.

 

Growth abroad has helped increase sales at its Direct Wines holding company by 2.5% to £353m, according to accounts published on Wednesday. With operations in Australia, Hong Kong, mainland Europe and Australia, 30% of income is now from international sales.

 

Investments in software and overseas expansion drained profits, which fell from £11.5m to £6.6m.

 

The founders and co-chairs, Tom and Barbara Laithwaite, began to pass the baton to the next generation by appointing their three sons, Henry, Will and Tom, as directors last summer. The family will share in a £1.37m dividend.

 

The business expanded its winemaking capacity during the year, buying two chateaux in the Bordeaux village of Sainte-Colombe, where the Laithwaites bought their first estate in 1980. The company also tends vines in Buckinghamshire, Berkshire and Windsor Great Park.

 

 

——

Wine Industry Tries to Fix Image in China

 

California Vintners, Led by Bay Area Players, Promote Their Better Offerings in Market Where Cheap Stuff Sells at High Prices

 

Source: WSJ

By BEN WORTHEN

Mar 20th

 

When Mark Bright attends wine events in China, he says, people often complain that California wine is overpriced and of poor quality.

 

The San Francisco-based winemaker and sommelier blames that reputation on vendors who have flooded China with cheap “plunk” wine that they sell at prices normally charged only for better vintages.

 

“It’s horrible for California,” says Mr. Bright, who laments that if this continues, “we’re never going to be able to build a business in China.”

 

California winemakers-in particular those in Bay Area counties like Napa and Sonoma-have spent decades establishing their wines as some of the best in the world. But in China, where drinking wine is a more recent phenomenon, these well-constructed wines compete with bulk wine from the state that is bottled, branded and sold at prices they could never command elsewhere.

 

California’s wine establishment, led by Bay Area vintners, brokers and trade representatives, is now trying to change the image of the state’s wine in China. Mr. Bright is working on a Mandarin-language book about California wines. The Wine Institute, a San Francisco-based advocacy group for California wines, in July 2011 started holding virtual tastings via video conference for Chinese journalists. And earlier this month, Gov. Jerry Brown announced plans to promote California wines on an upcoming trip to China.

 

There is a lot riding on the efforts. While China in 2012 accounted for just under $74 million of the $1.4 billion of U.S. wine exports-about 90% of which comes from California-that is up from $16 million in 2007 and $2.6 million in 2003, according to the Wine Institute.

 

“There’s an amazing opportunity with this emerging middle class [in China] that’s buying cars and watches and wine,” says Linsey Gallagher, international marketing director for the Wine Institute. She adds that about 90% of the calls she gets these days are about China.

 

Some California wine businesses say they have seen firsthand how poor wines from the state have wound up in China. “We’ve had people just show up with bags of cash and say give me the cheapest wine. It was that bad,” says Robert Dahl, chief executive of California Shiners, a Napa-based company that buys bulk wine and then blends it and bottles it for customers, who brand and sell it. The people, who are either from China or have business connections there, are often looking to make a quick buck, he says. He declined to name any of them.

 

Mr. Dahl started his company two years ago and says he is on track to ship one million cases of wine this year, almost all of it to China. He says that he takes steps to ensure that his is a high-quality product, including having the proper facilities to store and filter the wine.

 

“People were just sending junk,” he says. “We’ve been pushing 100% against that. It makes us all look bad.”

 

David Duckhorn, whose family once owned a Napa winery and who now lives in Shanghai, started a business importing wines to China in 2008 and has taken steps to distinguish the wine he sells from the lower-quality stuff. He says he only sells bottles that are branded the same as the ones a customer in the U.S. would get, from the same winemakers and sourced from the same vineyards.

 

Wine imported into China, like that brought to the U.S. from overseas, require a local-language label on the back. California winemakers would leave the back of their bottles blank or ship them with the Chinese-language labels already affixed. To demonstrate his wines are the real deal, Mr. Duckhorn now asks for winemakers he works with to ship bottles with an English-language label on the back and he sticks the Chinese import label over it.

 

“You can peel it off,” he says, which lets buyers confirm the authenticity of the product.

 

Mr. Duckhorn’s company, Via Pacifica U.S. Inc., will soon have eight offices in China, where his staff puts on tastings for Chinese buyers. He encourages them to check online the prices that the same bottles sell for in the U.S. so that they can tell whether it is overpriced.

 

A bottle of wine in China typically costs about two or three times what it would in the U.S. because of taxes, import fees and other costs.

[image]

 

Still, as a middleman Mr. Duckhorn can’t always stop overpricing. One of his customers once bought some Decoy wine, a less-expensive release from the Duckhorn Winery-formally owned by Mr. Duckhorn’s family-that retails in the U.S. for around $20 per bottle, and at a 10-times markup in China.

 

Ms. Gallagher of the Wine Institute says some of the current problems will go away as Chinese wine buyers become better educated. The institute has led trade missions to China with California winemakers to promote the wines and recently launched a Chinese-language website about California wines.

 

Ms. Gallagher says she has lately had some success marketing food-and-wine pairings, with California wines going well with spicy dishes and traditional Chinese food like barbecued meats. The Wine Institute has put on events with sommeliers and chefs to tout this in Beijing and Shanghai.

 

“Journalists [in China] now write about food-and-wine pairings and how good California wines are,” she says.

 

 

——

Kobrand to represent Masi Agricola wines in US

 

Source: DBR

21 March 2013

 

Kobrand, a New York-based family-owned company that imports and markets wine and spirits brands, has entered into a long term sales and marketing agreement with Masi Agricola of Italy to represent its Masi Tupungato wines, and Serego Alighieri and Bossi Fedrigotti estates in the US.

 

Located in Italy’s Veneto region, Masi Agricola is known for making wines using Appassimento winemaking method. The winery produces wines such as Amarone and Campofriorin.

 

Masi Agricola will be put under the wine division of Kobrand Wines and Spirits, and will be handled by Kobrand brand manager Marco Sorio.

 

Commenting on the new partnership, Masi Agricola president Sandro Boscaini said, “Our partnership combines Masi’s high quality wines and pristine vineyards with Kobrand’s professionalism and approach to market.”

 

Kobrand CEO Bob DeRoose said the company looks forward to working with the Boscaini family to continue the brands’ success in the US.

 

“Masi Agricola has had a strong presence in both the on- and off-premise segments of our industry since its introduction to the US in late 1960s,” DeRoose added.

 

 

——

Clos Fourtet family buys three more Saint Emilion estates

 

Source: Decanter

by Jane Anson in Bordeaux

Wednesday 20 March 2013

Mathieu Cuvelier, owner of Chateau Clos Fourtet, is to finalise in the next few weeks the purchase of three further Saint Emilion properties.

 

The properties are Chateau Clos St Martin (1.3 hectares), Les Grands Murailles (1.ha) and Cote de Baleau (14ha).

 

All three are owned by Sophie Fourcade, who was a practicing lawyer before joining the family wine business in 1998.

 

All three are Saint Emilion classified estates; the vines of Les Grands Murailles are next door to those of Clos Fourtet.

 

Fourcade is to continue as director of the properties after the purchase, as is the rest of the technical team, including Michel Rolland as consultant, Decanter.com understands. Stéphane Derenoncourt is consultant at Clos Fourtet.

 

‘We have been in discussions with Sophie since last December,’ Cuvelier told Decanter.com.

 

He said the vines of Les Grands Murailles would not be used to boost production of next-door Clos Fourtet – for now.

 

‘We are keeping all three brands, because all have strong identities, and for now will be trying to understand the terroir and see where we need to invest. Of course there is the possibility for changes in the future, but everything needs to be studied carefully.’

 

‘We were very keen for our properties to go to another family,’ said Fourcade, ‘and not to a faceless insurance company. We are extremely happy that it has gone to our neighbours, to a family that we have known for a long time. We know that the properties will be well treated.’

 

With the Clos Fourtet vines, the Cuvelier family will now have 40ha in St Emilion, and also own Chateau Poujeaux, with 68ha in Moulis en Médoc. The price of the purchase was not revealed, but it is likely to have been several million euros per hectare.

 

 

——

Wal-Mart Wine Selling Is Key to South Africa’s U.S. Push

 

Source: Bloomberg

By Veronica Navarro Espinosa

Mar 20, 2013

 

South Africa, the eighth-biggest wine producer, is seeking to regain a foothold in the U.S. market lost to imports from Australia to Argentina by promoting brands at Wal-Mart (WMT) Stores Inc. and Whole Foods Market Inc. (WFM)

 

“We used to have a quite substantial market presence in the U.S. and it went all the way down,” George Monyemangene, the consul general of South Africa in New York, said in an interview at Bloomberg’s headquarters. “Maybe we were not as responsive as we should have been to newcomers.”

 

Wal-Mart, the world’s largest retailer, started selling South African wines in August 2012 and now has bottles in 1,600 stores, according to Deisha Barnett, a spokeswoman in Bentonville, Arkansas. Whole Foods Market, the largest U.S. natural-foods grocer, is planning a South African wine promotion later this year, said Doug Bell, the company’s national wine and beer buyer.

 

South Africa’s share of the market for wines imported to the U.S. fell to 1.2 percent last year from a peak of “about 8 percent” in the 1990s, according to data from San Francisco- based Wine Institute and Monyemangene. Italian wines have about 29 percent of the import market, followed by France, Australia and Argentina. Imports of South African wine to the U.S. have risen fivefold since 2000, compared with a more than 12-fold jump for Argentina and New Zealand wine imports, according to the South African Consulate.

 

“South African wine has matured,” Bell said in a telephone interview from Blue Ridge, Georgia. “It’s time to showcase them. The quality is there. I don’t think they’re the little brother of the wine world anymore.”

 

Seven Sisters

 

In the U.S., Wal-Mart sells Seven Sisters wines, founded by seven sisters of South Africa’s Brutus family, Barnett said in a telephone interview. Wal-Mart entered Africa’s largest consumer market in 2011 with the acquisition of a majority stake in Johannesburg-based Massmart Holdings Ltd. (MSM)

 

The efforts to boost sales of South African wine in the U.S. are taking place as the rand trades at a four-year low against the U.S. dollar amid labor disputes in the mining industry, a widening budget shortfall and the threat of a downgrade of South Africa’s BBB credit rating, the second-lowest investment grade. The currency has slipped more than 8 percent this year, the most among 25 major emerging-market currencies compiled by Bloomberg.

 

White Wine

 

The weaker currency will boost South Africa’s total wine exports 5.1 percent this year to 430 million liters, a level 23 percent higher than two years earlier, according to a USDA Foreign Agricultural Service report dated March 14. White wine makes up 81 percent of the country’s exports to the U.S., according to the report.

 

South Africa wine production dates back to the 1600s, when the Dutch East India Company established a supply station in the Cape of Good Hope. Exports began booming after countries stopped boycotting South African products in protest over apartheid, the white minority government that ended in 1994.

 

Monyemangene, the consul general, said producers may have lost market share by underpricing “top-end” wine. With the new agreements with U.S. retailers, sales are starting to increase, he said.

 

“We have some intermediate to long-term agreements within the export market,” Monyemangene said in the March 13 interview. “We have seen a rise in terms of volume of wines.”

 

 

——

Ignite Restaurant 4th-Quarter Loss Widens on Restatement, Debt Costs

 

Source: WSJ

By Ben Fox Rubin

Mar 20th

 

Ignite Restaurant Group Inc.’s (IRG) fourth-quarter loss grew from a year ago as the restaurant operator was weighed down by a handful of one-time costs, though same-store sales continued to improve.

 

Ignite, which has about 130 Joe’s Crab Shack restaurants and 15 of its newer Brick House Tavern+Tap chain, launched its initial public offering in May with plans to expand in the dense U.S. market.

 

Connecticut private equity firm J.H. Whitney Capital Partners LLC bought 120 Joe’s locations from Landry’s Restaurants in 2006 in a $192 million deal. It then launched Brick House–a gastropub-styled brand–in 2008 and changed its name from Joe’s Crab Shack Holdings Inc. to Ignite. The company, whose market value is now about $414 million, last month agreed to buy Romano’s Macaroni Grill for $55 million, adding an Italian food chain to its portfolio.

 

While the company’s stock popped when it went public, shares tumbled in July after Ignite said it needed to correct and restate some financial records, after it uncovered non-cash accounting errors that had existed for years.

 

For the latest quarter, Ignite posted a loss of $7.6 million, or 30 cents a share, compared with a year-ago loss of $1 million, or five cents. The company had previously warned that it would post one-time charges in the latest quarter related to restatement costs and debt amortization write-offs. Excluding those costs and other items, the company reported a loss of 15 cents a share. Analysts polled by Thomson Reuters most recently expected a loss of 14 cents a share.

 

Revenue was up 11% at $112.6 million, mostly in-line with the company’s January estimate of $112.5 million. Total costs and expenses rose 13% to $118.6 million.

 

The company in January said same-store sales rose 0.8% during the quarter, excluding a 0.1% impact from Hurricane Sandy.

 

Shares closed Wednesday at $16.23 and were unchanged after hours. The stock is up 16% from its IPO price of $14.

 

 

——

California: Californians drinking less beer, more wine, spirits

 

Source: SacBee

By Phillip Reese

Mar. 19, 2013

 

California adults now drink, on average, less than a gallon of ethanol from beer each year. They’re making up for it by drinking more wine and distilled spirits.

 

California beer consumption per adult fell 12 percent from 1998 to 2010, according to the latest federal statistics.

 

Over that same period California wine consumption per adult grew by 22 percent, while distilled spirits consumption grew by 16 percent.

 

Beer remains the most popular alcoholic beverage, with California adults drinking an average of 0.97 gallons of ethanol from beer a year, compared to three-quarters of a gallon of spirits and half a gallon of wine. Beer is about 4.4% ethanol, so California adults drink, on average, about 22 gallons a year.

 

California alcohol consumption decreased slightly during the recession but has trended upward slightly overall in the last decade. Consumption remains well below levels from the 1980s and 1990s. (About 40 percent of California adults rarely or never drink alcohol.)

 

This chart shows average gallons of ethanol from alcohol consumed per California resident over the age of 14 each year since 1991.

 

http://www.sacbee.com/2013/03/19/5275952/californians-drinking-less-beer.html

 

 

——

Michigan: Michigan House votes to keep 0.08 pct. alcohol law

 

Source: Morning Sun

03/20/13

 

The Michigan House has passed legislation that would prevent a scheduled rise in the state’s blood-alcohol limit for drivers.

 

The bills approved unanimously Wednesday would keep the legal limit for drivers’ blood-alcohol content at 0.08 percent. The limit is set to revert back to 0.10 percent in October because of a sunset provision in current state law.

 

Republican Rep. Klint Kesto of Commerce Township in Oakland County is sponsoring one of the bills. He says the state would lose more than $50 million in federal funding if the limit rises to 0.10 percent.

 

He says since Michigan has implemented a 0.08 percent limit, there has been a significant drop in alcohol-related traffic fatalities.

 

The bills now head to the Senate.

 

 

——

U.S. to revise cigarette warning labels

 

Source: AP

Michael Felberbaum

March 19, 2013

 

The FDA will create labels to replace those that included images of diseased lungs and a corpse.

 

The U.S. government is abandoning a legal battle to require that cigarette packs carry a set of large and often macabre warning labels depicting the dangers of smoking and encouraging smokers to quit.

 

Instead, the Food and Drug Administration will go back to the drawing board and create labels to replace those that included images of diseased lungs and the sewn-up corpse of a smoker, according to a letter from Attorney General Eric Holder obtained by the Associated Press. The government had until Monday to ask the U.S. Supreme Court to review an appeals court decision upholding a ruling that the requirement violated First Amendment free speech protections.

 

“In light of these circumstances, the Solicitor General has determined … not to seek Supreme Court review of the First Amendment issues at the present time,” Holder wrote in a Friday letter to House Speaker John Boehner notifying him of the decision.

 

Some of the nation’s largest tobacco companies, including R.J. Reynolds Tobacco Co., sued to block the mandate to include warnings on cigarette packs as part of the 2009 Family Smoking Prevention and Tobacco Control Act that, for the first time, gave the federal government authority to regulate tobacco. The nine labels originally set to appear on store shelves last year would’ve represented the biggest change in cigarette packs in the U.S. in 25 years.

 

Tobacco companies increasingly rely on their packaging to build brand loyalty and grab consumers – one of the few advertising levers left to them after the government curbed their presence in magazines, billboards and TV. They had argued that the proposed warnings went beyond factual information into anti-smoking advocacy.

 

The government, however, argued the images were factual in conveying the dangers of tobacco, which is responsible for about 443,000 deaths in the U.S. a year.

 

The nine graphic warnings proposed by the FDA included color images of a man exhaling cigarette smoke through a tracheotomy hole in his throat, and a plume of cigarette smoke enveloping an infant receiving a mother’s kiss. These were accompanied by assertions that smoking causes cancer and can harm fetuses. The warnings were to cover the entire top half of cigarette packs, front and back, and include the phone number for a stop-smoking hotline, 1-800-QUIT-NOW.

 

In a statement on Tuesday, the FDA said it would “undertake research to support a new rulemaking consistent with the Tobacco Control Act.” The FDA did not provide a timeline for the revised labels.

 

Warning labels first appeared on U.S. cigarette packs in 1965, and current warning labels that feature a small box with text were put on cigarette packs in the mid-1980s. Changes to more graphic warning labels that feature color images of the negative effects of tobacco use were mandated in a law passed in 2009 that, for the first time, gave the federal government authority to regulate tobacco.

 

The share of Americans who smoke has fallen dramatically since 1970, from nearly 40% to about 19%. But the rate has stalled since about 2004, with about 45 million adults in the U.S. smoking cigarettes. It’s unclear why it hasn’t budged, but some market watchers have cited tobacco company discount coupons on cigarettes and lack of funding for programs to discourage smoking or to help smokers quit.

 

In recent years, more than 40 countries or jurisdictions have introduced labels similar to those created by the FDA. The World Health Organization said in a survey done in countries with graphic labels that a majority of smokers noticed the warnings and more than 25 percent said the warnings led them to consider quitting.

 

Joining North Carolina-based R.J. Reynolds, owned by Reynolds American Inc., and Lorillard Tobacco, owned by Lorillard Inc., in the lawsuit are Commonwealth Brands Inc., Liggett Group LLC and Santa Fe Natural Tobacco Company Inc.

 

Richmond, Va.-based Altria Group Inc., parent company of the nation’s largest cigarette maker, Philip Morris USA, which makes the top-selling Marlboro brand, is not a part of the lawsuit.

 

The case is separate from a lawsuit by several of the same tobacco companies over other marketing restrictions in the 2009 law. Last March, a federal appeals court in Cincinnati ruled that the law was constitutional. The companies in October petitioned the U.S. Supreme Court to review that case.

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