Liquor Industry News 3-23-13

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Pernod Plunges as China Extravagance Crackdown Softens Sales

 

Source: Bloomberg

By Clementine Fletcher

Mar 21, 2013

 

Pernod Ricard SA (RI), France’s biggest distiller, slumped in Paris trading after reporting “softness” in revenue over Chinese New Year, an important festival for sales of high-priced cognacs and whiskies.

 

Pernod shares fell 4.4 percent, the most since Sept. 5, 2011, after Pierre Coppere, who heads the Paris-based company’s Asian unit, said he expected Chinese sales in the nine months through March to show “double-digit growth, albeit at the lower end.” The maker of Martell cognac reported that first-half organic sales gained 18 percent in China.

 

Coppere, speaking today on a webcast with analysts, said the distiller still saw “high single-digit volume growth” over Chinese New Year for Martell cognac, but that demand for whisky was affected by measures implemented by China’s new government to limit excessive gift-giving and banqueting.

 

Distillers including Pernod and Remy Cointreau SA (RCO) have benefited from demand for their higher-priced spirits in China, particularly cognac, as sales growth becomes tougher to achieve in the straitened economies of Europe. Chinese President Xi Jinping has been cracking down on extravagant gift-giving and feasting by businessmen and government officials.

 

Pernod shares declined 4.43 euros to 95.57 euros. Remy, the maker of Remy Martin cognac, declined 2.2 percent. Diageo Plc (DGE), which has an alcohol joint venture in China with LVMH Moet Hennessy Louis Vuitton SA (MC), slid 1 percent in London.

 

‘Great Potential’

 

“Asia offers great mid-term growth potential, but China’s recovery could actually take a little bit more time than the market expects,” Laetitia Delaye, an analyst at Kepler Capital Markets in Paris, wrote today in a note. “We think this could continue to weigh on Pernod’s business trends for a few months before seeing volumes — and more importantly, pricing power — coming back.” Delaye has a hold rating on Pernod.

 

Pernod, which claims it’s the biggest seller of cognac in China, said it can still raise the price of the spirit in the country, even as the decline in gifts and banquets drags on sales of higher-end alcohols. Cognac suffered less than whisky over Chinese New Year as it has a “much deeper, larger penetration” in the country, Coppere said. Whisky sales declined by a “double-digit” percentage, he said.

 

 

——

Pernod-Ricard SA: Chinese New Year: No cause for celebration

 

Source: Barclays

Mar 21st

 

Stock Rating/Industry View: Overweight/Neutral

Price Target: EUR 105.00

Price (20-Mar-2013): EUR 100.00

Potential Upside/Downside: +5%

Tickers: RI FP / PERP.PA

 

Disappointment in Asia: Soft Chinese New Year (CNY) trading leaves Q3 Chinese sales broadly flat vs the high teens reported in H1. Adjusting down our forecasts for this leaves the stock trading on a CY14e PE of 16.4x. Although these weaker trading trends do little to dent our core positive medium-term thesis on brown spirits, with less near-term earnings risk, positive FX tailwinds and trading on a PE multiple of 15.9x, Diageo (Overweight, PT £ 21.50) may see better near-term relative performance.

 

A “softer” Chinese New Year: Reports from local Chinese spirits companies, retailers and restaurateurs in recent weeks had suggested the consumer off-take around CNY was weaker than in 2012. However, the size of the slowdown noted by Pernod in an analyst conference call with Pernod’s Head of Asia, Pierre Coppéré, still came as a surprise. According to the group, depletions were flat over the holiday period, while high-end Cognac brands experienced “strong declines,” as gifting and banqueting occasions were reduced in the face of political pressures. This negative sales mix will offset price increases annualizing in the period and leave Q3 sales broadly flat, vs. +18% in H1. In terms of detail, Cognac sales were up high single digits in Q3, (+27% in H1), while Scotch sales posted further double-digit declines. Moreover, poor trading was not unique to China. CNY celebrations in Taiwan and Vietnam were weaker, suggesting the slowdown was not purely politically motivated.

 

It wasn’t all bad: Encouragingly, Q3 Indian sales growth has continued at H1’s 17% run-rate and Mr Coppéré confirmed regional AMP spend has now reached a very good level. In addition, after years of significant route-to-market investment, structure costs are set to fall as a percentage of sales in the periods ahead, driving improved margin leverage.

 

We downgrade EPS by 3%: With Asia accounting for an estimated 75% of Asia/ROW sales, we have downgraded our 9-month regional sales estimate to 9% from 12% – we estimate Q3 sales +4.5%. Assuming regional growth picks up to 14% in Q4, we reduce our FY13e group organic sales growth rates from 6.3% to 5.4%. After adjusting down our H2 13e gross margin forecasts to reflect the weaker sales mix, we cut group EBIT by ?44m, leaving organic EBIT growth at 6.1%. We downgrade our EPS by 3%.

 

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

 

 

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80 jobs to be axed in latest Diageo shake-up

 

Source: Herald Scotland

Tim Sharp

Friday 22 March 2013

 

A rejig of drinks giant Diageo’s supply chain is to result in the axing of 80 jobs in Scotland, most of them managerial posts.

 

The company, which makes Johnnie Walker whisky and Smirnoff vodka, said the changes would be implemented by the middle of 2014.

 

The company said: “To ensure the business in Scotland remains competitive the review identified opportunities to simplify processes and organisation at local levels which will result in a proposed reduction of around 80 roles across Diageo’s 50 sites in Scotland.

 

Diageo said earlier this month it was seeking to strip £60 million from its annual running costs and warned that jobs in the UK were at risk.

 

Under a new management structure, Diageo’s operations in Scotland will be part of an Edinburgh-based international supply centre, which will bring together management of Diageo’s beer, wine and spirits production operations in Europe.

 

The changes come a year after Diageo closed the doors at its Johnnie Walker bottling plant in Kilmarnock in another cost-cutting move, with more than 500 workers made redundant.

 

Diageo is keen to manage its supply chain in the markets where its products are sold rather than on a regional basis.

 

There is little scope for changes in its whisky portfolio which must be distilled in Scotland.

 

However, its vodka can be made anywhere and Diageo is keen to keep costs down in its Scottish distilling operation.

 

 

——

Diageo backs away from ‘flavoured’ Scotch move (Excerpt)

 

Source: Just-Drinks

By Ian Buxton

21 March 2013

 

Diageo has distanced itself from entering the ‘flavoured’ Scotch whisky arena, as Bacardi readies a honey-“infused” expression of its Dewar’s Scotch brand.

 

However, speaking to just-drinks yesterday (20 March), Diageo’s head of whisky outreach, Dr Nicholas Morgan, said that the company has “no plans for ‘flavoured’ variants of any of its Scotch brands”.

 

“(Scotch) is a global category built over 100 years and based on integrity and authenticity,” said Morgan. “While the consumer views American and Irish whiskies as more ‘relaxed’, that latitude is not extended to the Scotch whisky category.”

 

http://www.just-drinks.com/news/diageo-backs-away-from-flavoured-scotch-move_id109866.aspx

 

 

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Bruce Willis’s Belvedere Taken Over by Bondholders in Debt Deal

 

Source: Bloomberg

By Julie Miecamp

Mar 20, 2013

 

Belvedere SA (BVD), the French maker of Sobieski vodka part-owned by Bruce Willis, will be taken over by its bond investors after a court approved a restructuring plan today.

 

Holders of its 375 million-euro ($486 million) floating- rate notes due May 2013 will get 87 percent of the French spirits maker, according to a document from the Dijon Commercial Court. Shareholders will take the remaining stake, while investors owning subordinated debt have an option to buy the equity, the court said.

 

“My first decision as chairman was to focus on reducing the group’s debt. This is now done. The war is over,” Krzysztof Trylinski, Belvedere’s chairman and chief executive said in an e-mailed statement. “It’s an important day for Belvedere and its employees after four years of legal battle.”

 

Belvedere, which was 2.6 percent-owned by the Hollywood actor as part of an endorsement deal, filed for protection from creditors in July 2008 and has been in negotiations with lenders since then. In September it agreed to a plan that would see bondholders repaid using funds raised from asset sales as well as taking shares in the business.

 

The company got bids of 155 million euros for the assets being sold, half the targeted figure of 310 million euros, according to the document. The low prices meant the sales didn’t take place and bondholders took a larger stake in the company, the court said. Separately, Belvedere will sell its Danzka drinks brand for about 19 million euros to provide liquidity, it said.

 

Belvedere fell as much as 5 percent to 21.5 euros, and was quoted at 21.8 euros at 5:34 p.m. in Paris.

 

Bruce Willis, star of the Die Hard action movies, received cash and shares in Belvedere as part of a four-year deal signed in December 2009 to market the Sobieski brand. Belvedere’s brands also include William Peel whiskey and Marie Brizard liqueurs.

 

 

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Economic Sentiment Among Alcohol Drinkers Was Broadly Weaker in February

 

Source: Consumer Edge Insight

March 21, 2013

 

According to Alcoholic Beverage DemandTracker, a periodic survey of US adults age 21+ who consume any type of alcohol at least once a week or more, economic sentiment among alcohol drinkers was broadly weaker in February than in November, and is still at very weak levels. Only 13% of alcohol drinkers reported having more spending money recently in February, compared to 16% in November. This compares to 43% of alcohol drinkers in February who say they have had less spending money recently.

 

Perceptions of, and expectations for, the general economy and job market were weaker in February than November. Only 14% of alcohol drinkers said the current economy was good in February (vs. 17% in November).

 

Only 10% of alcohol drinkers think the current job market is good (vs. 10% in November), and only 23% are expecting the job market to be better in 6 months (down from 27% in November).

 

Alcohol drinkers were also less optimistic about their own personal financial situation in February. Only 23% of alcohol drinkers are expecting their income to rise over the next six months (vs. 26% in November). Only 16% of alcohol drinkers feel very secure in their jobs in February (vs. 20% in November). And more alcohol drinkers saidtheir spending habits are being negatively impacted by gas prices, 50% in February vs. 47% in November.

 

“After showing some improvement at the end of 2012, economic sentiment among alcohol drinkers was noticeably weaker in February across many of the factors tracked by Alcoholic Beverage DemandTracker,” said David Decker, President of Consumer Edge Insight. “Most alcohol consumers continue to face a wide variety of economic headwinds that impact their consumption habits. Clients of Alcoholic Beverage DemandTracker gain a deep understanding of how these economic factors are impacting behaviors across different alcoholic beverage categories, and are able to keep a close eye on trends in sentiment.”

 

 

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USVI appeals to CARIFORUM in rum dispute

 

Source: Caribbean 360

Mar 22nd

 

The United States Virgin Islands have now turned to moral suasion in an attempt to get fellow rum producing nations in the Caribbean Forum nation to back down from plans to take their ongoing dispute before the World Trade Organisation (WTO).

 

United States Virgin Islands Governor John de Jongh has penned letters to the prime ministers of Antigua and Barbuda, St Vincent and the Grenadines, Grenada, St Kitts and Nevis, Dominica, and St Lucia, asking them for the sake of Caribbean unity to avoid the WTO action that could lead to a prolonged legal case that he thinks could prove divisive and difficult to win.

 

A March 4 letter from de Jongh to Antigua’s prime minister Baldwin Spencer cautions that the WTO filing could “inflict damage on all of our economies”. The letter, which was shared with Caribbean 360 by Greg Romano, a communications consultant with the team working with the USVI rum companies, the USVI government and others hoping to avoid a WTO case, is reportedly similar to letters sent to the other Caribbean leaders.

 

Highlighting the damaging effect that last year’s closure of the USVI-based Venezuelan rum refinery Hovensa had on his nation’s economy, de Jongh told Spencer that the US$580 million decline in economic output and $80 million loss of tax revenues caused by the closure has made holding on to the Rum Cover-Over Program even more critical.

 

“To ensure the economic health, stability and future of our region, we must move forward together. We must support, not undermine, one another’s efforts to be creative and look to new, innovative ways to modernize our economies, bring foreign direct investment to our countries and attract sophisticated jobs to our shores.

 

“That is what we accomplished through our partnerships with Diageo and Beam, seizing the opportunity to do some real good for the people of the Territory, a result that is exactly in line with the US Congress’s intent for this economic development program. Today, those partnerships and this program constitute nearly twenty percent of our Government’s total revenue,” de Jongh told Spencer.

 

This direct leader-to-leader appeal is the latest attempt by the Virgin Islands to protect its public-private rum partnerships, legal agreements that have saved its historic rum industry from extinction. However, the rum-producing countries of the Caribbean Forum (a trade bloc comprising the Caribbean Community and the Dominican Republic) have stridently argued that the concessions provided by the USVI to large European rum manufacturers are equivalent to subsidies, which are not allowed under WTO rules. The Caribbean rum producers under the umbrella of the West Indies Rum and Spirits Producers Association (WIRSPA) have argued that thanks to the USVI’s concessions, European producers such as Diageo are able to get their rum products into the United States at a much cheaper rate than the WIRSPA producers, and therefore are threatening their sales and by extension their island economies.

 

 

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Pennsylvania: Pennsylvania legislature votes to privatize state liquor sales

 

Source: Reuters

By Dave Warner

Thu, Mar 21 2013

 

Pennsylvania moved a step closer on Thursday toward getting out of the liquor business, with its House of Representatives voting to sell state-run liquor stores into private hands.

 

Passage of the measure, which still faces a vote in the state Senate, would leave Utah as the only U.S. state to control the wholesale and retail sales of liquor and wine.

 

The Republican-controlled Pennsylvania House approved the measure by a vote of 105 to 90.

 

It still must pass the Republican-controlled Senate, where its fate is uncertain.

 

Currently, liquor and wine can only be purchased in Pennsylvania in 600 state-run stores, which have standardized hours and standardized prices.

 

Under this measure, licenses to sell wine and liquor would be open for sale to beer distributors, grocery stores, convenience stores, restaurants and bars, while the state-run stores would be phased out.

 

Advocates of privatization say it would allow for more flexibility in sales and say the sale of licenses could generate as much as $1 billion in revenue for the state.

 

Opponents dispute that figure, saying it is overblown, and say the measure would cost hundreds of jobs. They also say the price of the licenses could well be beyond the means of small retail stores.

 

Republican state Senator Chuck McIlhinney, chairman of the Senate’s Law and Justice committee, said on Thursday there is no timeline yet for consideration of the measure in the committee or full Senate.

 

He also said he was unsure if there are enough votes in the Senate to pass the bill.

 

When the measure cleared a House committee earlier this week, Pennsylvania Governor Tom Corbett called it “a momentous, first step to bring Pennsylvania into the 21st century and provide Pennsylvanians with the convenience and choice that Americans in 48 other states enjoy.”

 

Corbett, like several governors before him dating back to 1974, has been attempting to privatize the state’s liquor business. The system dates back to 1933, at the end of Prohibition.

 

A public opinion survey conducted by Franklin & Marshall College showed last month that state voters are by and large split on whether to sell the state liquor stores.

 

 

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Washington: Liquor shoplifting: Did initiative create a problem?

 

Officials are worried that the proliferation of private liquor sales has led to more chances for underage theft. But no officials have hard numbers on the scope of the problem.

 

Source: Crosscut

By Tom James

March 20, 2013

 

Did Initiative 1183, the state’s liquor privatization measure, create a liquor shoplifting problem in Washington?

 

So far, our legislators don’t know.

 

A work group convened by the head of the state House’s government accountability committee to address liquor shoplifting left its first meeting Monday with more questions than answers.

 

The group, dubbed the “Post-Privatization Workgroup on Alcohol Diversion, Access and Loss Prevention,” spent much of its time just trying to get a handle on the issue, as representatives from various grocery corporations and associations took turns saying how little information they had about the crime.

 

About halfway through the meeting, after representatives of grocers and grocers’ associations said that they had not brought hard numbers to share with the group, Enumclaw Democratic Rep. Chris Hurst asked: “How do we get to the question of do we have a problem, and if so how big is it?”

 

Typically, workgroups assembled in the Legislature study issues to decide if a change to the law is necessary; if one is, they often will also help prepare the first draft of a bill. Since Hurst’s committee only began meeting halfway through this legislative session, well after several key deadlines, any changes or proposals the committee might decide to recommend likely would not see a larger vote in the Legislature until next year.

 

Hurst said he convened the group in response to a request from House Speaker Rep. Frank Chopp, D-Seattle, and that he and Chopp shared the feeling that the shoplifting question warranted further investigation. Liquor shoplifting, especially by teens, has been covered extensively by newspapers around the state since the 2011 initiative switched liquor sales from state-run stores to private groceries.

 

“I’ve noticed a big change, personally,” Hurst said. “When I went out and saw alcohol being displayed right by the front door, that was a problem.”

 

Another part of the reason for creating the group, Hurst said, was a request earlier in the year from the Washington Association of Police Chiefs and Sherriffs for a change in the rules about how liquor theft is reported. Currently, stores are not required to report thefts of liquor to the police, or any other state agency. Earlier this year the association asked the state Liquor Control Board to change require stores to report their losses due to theft so that police and regulators in the state could see if a problem existed.

 

But the stores resisted the idea, said Mitch Barker, head of the police association after Monday’s meeting.

 

Barker said the original request wasn’t motivated at first by any concrete knowledge of a problem, but rather by wanting to figure out if a problem did exist. “We didn’t think it was a problem, but now we think it is,” Barker said. “The fact that they won’t give us the numbers makes me suspicious.”

 

Representatives of grocery chains, including Fred Meyer and Costco, took a different tack, saying they did not have numbers or even general data about the amount of liquor being shoplifted from their stores, but that they would find the information to present to the workgroup.

 

Despite the lack of hard numbers, Hurst said afterward he wasn’t disappointed with the course the meeting had taken. Rather, he said, he trusted the retailers to make good on their promise to supply the information, and also had expected the group would take some time to gather information.

 

The next meeting will be held within a month, Hurst said. Along with giving retailers time to get their own information together, Hurst said, the delay would also be a time to study the issue as a whole,  including how other states dealt with the privatization process.

 

The Liquor Control Board could create an inventory rule to require tracking without waiting for the Legislature.

 

 

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California: Craft distillers aim to pour it on

 

Small liquor makers hope to tweak state law to be able to charge for tastings and sell bottles. Big wholesalers are a major hurdle.

 

Source: Los Angeles Times

By Marc Lifsher

March 21, 2013

 

In a 65,000-square-foot structure that once housed Navy fighter jets, Lance Winters of St. George Spirits makes popular Hangar One vodka, along with gin, bourbon, rum, whiskey, liqueurs and even absinthe.

 

Unlike vast distilleries in Kentucky and Tennessee that make and bottle hard liquor by the millions of barrels, Hangar One is produced by one of a growing breed of small-batch, craft distillers. There are already more than 30 of them in California, and – like wineries and microbreweries – they want to charge for tastings and sell bottles for their visitors to take home.

 

But in recent months, the craft distillers have run up against the powerful liquor lobby in Sacramento, led by wholesalers opposed to changing state law. A legislative hearing is set for next month, and the battle is on.

 

Fighting the powerful liquor distributors to tweak alcoholic beverage laws in Sacramento can be daunting, said Phillip Ung of California Common Cause, a watchdog group. “I can’t think of one example where the distributors haven’t gotten their way on alcohol issues.”

 

Offering labels such as Three Sheets Rum, TRU Organic Vodka and Botanivore Gin, these craft distillers are ready to test the odds. To them, spreading the gospel of organic liqueurs and old-time ryes is a matter of economic survival.

 

Opening more tasting rooms and selling their liquor there are crucial to the fledgling industry, said Melkon Khosrovian. He is head of Greenbar Collective in Los Angeles’ downtown arts district, where Greenbar makes organic whiskey, tequila, bitters and other spirits in an old garment sewing shop.

 

“Without these laws, we lose ground each year to more progressive states – like Washington, Colorado and New York – where distilleries can earn much more money from their tasting rooms and on-site sales and spend that money here to gain market share,” he said. “We need our elected officials to bring California’s laws up to par with the rest of the country’s so we can stay competitive, create jobs and support our state’s farmers and manufacturing trades.”

 

For now, artisanal spirit makers are prohibited from operating their tasting rooms for extended hours as do wineries. Instead they offer occasional scheduled tours at either no cost or for nominal fees.

 

After a recent Greenbar tasting of Slow Hand White Whiskey, Darby O’Neill, a film studio marketer from Glendale, was enthusiastic. She supports fixing “hiccups” in the law that ban liquor sales at distilleries. “It would have been neat to take one of the things we tasted home,” she said, “but we couldn’t do that.”

 

Greenbar also makes brands such as Bar Keep Organic Bitters, Crusoe Organic Rum and Fruitlab Organic Liqueurs. In San Diego, for instance, Ballast Point makes a Three Sheets Rum. Charbay Vodka comes from Domaine Charbay in St. Helena; Gin 209 is made by Distiller 209 in San Francisco, and Botanivore Gin is also produced by St. George Spirits. These craft liquors are served in some bars and sold in many liquor stores and supermarkets.

 

Greenbar and other new-breed spirits makers argue that their emphasis on California-grown ingredients, such as wheat, fruit, rye and sugar cane, puts them on the alcohol-laced leading edge of an eat-local and artisanal food movement first popularized by legendary chef Alice Waters at her Chez Panisse restaurant in Berkeley.

 

Using sugar cane from Imperial County, barley from Chico and rye from Shasta “helps benefit California at every stage from farm to glass,” said Winters, the president and master distiller at St. George Spirits in Alameda.

 

California’s craft distillers want to amend strict post-Prohibition laws that separate the three main aspects of the liquor business: production, distribution and retailing. The idea of those laws was to prevent the formation of oligopolies such as the big brewers in Britain that control the entire supply chain, down to the corner pub.

 

Opposition slowed the craft distiller’s push even before their bill, AB 933, was introduced Feb. 22. Distributors signaled through legislative staff and lobbyists that they didn’t want competition from distillers selling from their tasting rooms.

 

Liquor distributors have been major players in the Legislature for decades, particularly in the Assembly and Senate Governmental Organization committees. The panels deal with alcoholic beverages, gambling and horse racing. They’re known as “juice committees” in Capitol parlance because their members often get campaign contributions from industries they regulate.

 

Liquor wholesalers contributed more than $590,000 to lawmakers’ political kitties over the last four years, according to Maplight.org, an independent website that tracks money and politics.

 

“Our lobbyist advised us that he didn’t think direct sales were going to be one of those things that would be available to us this year,” said California Artisanal Distillers Guild President Arthur Hartunian, a Napa vodka maker. “He didn’t think we had a chance because there was too much opposition from the wholesalers.”

 

Historically, California liquor laws treat distilled spirits more strictly than wine, said Terrance Flanigan, a lobbyist for Southern Wine & Spirits of America Inc., one of the state’s two big wholesalers. “My client is comfortable with the current law,” he said.

 

Distributors warn that these new operations could be the equivalent of opening new liquor stores in unsuspecting neighborhoods, said Manuel Espinoza, the state’s former top alcoholic beverage regulator and the executive director of Wine & Spirits Wholesalers of California. Lawmakers should not “whittle down the concept of the three-tiered system” of producers, distributors and retailers, he said.

 

The distillers’ bill may have gotten off to a rough start by being watered down to deal only with tasting events. But its author, Assemblywoman Nancy Skinner (D-Berkeley), said she’s eager “to start the conversation” with distributors to help the small companies create new jobs and economic activity.

 

Artisanal distillers are looking to lawmakers to help spur California versions of “Distillery Row” in Portland, Ore. A handful of spirit makers banded together a few years ago to attract tourists and locals to the gentrifying Southeast neighborhood.

 

“I think there’s a market for that,” said Anne Stericker, a West Los Angeles personal concierge and blogger. “It’s not expensive. It’s something new that’s a little adventurous.”

 

 

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ULTIMATE SPIRITS CHALLENGE 2013 ANNOUNCES BEST GIN, VODKA, SCOTCH, TEQUILA AND MORE

 

2013 Chairman’s Trophy Winners and Full Results Announced Today, Including USC’s First 100-Point Spirit

 

Source: UBC

March 21st

 

Ultimate Beverage Challenge’s (UBC) fourth annual Ultimate Spirits Challenge was held at state-of-the-art Astor Center in New York City on March 11-15, 2013. Today, Ultimate Spirits Challenge (USC) proudly announces this year’s Chairman’s Trophy winners and Finalists in more than 30 spirits categories, including USC’s first 100-point score that honors Highland Park 25 Years Old Single Malt Scotch Whisky from Orkney.

 

Ultimate Spirits Challenge 2013 had a record number of entries, up 8% from last year, from more than 70 companies and 30 countries around the world. This year’s entries likewise included more craft spirits than ever before and an extraordinarily high standard of spirits across all categories.

 

Led by UBC Founder and Judging Chairman F. Paul Pacult and Judging Co-Chairman Sean Ludford, the judges included many of the world’s most famous distilled spirits authorities, award-winning authors, spirits buyers, journalists, educators, bar owners and consultants.  The judging panels rated the distillates on the 100-point scale, using USC’s innovative multilevel evaluation system, which renders the industry’s most unassailable results. This remarkable super-group of experts named 33 Ultimate Spirits Challenge Chairman’s Trophy winners and 151 Finalists. Judges for USC 2013 were F. Paul Pacult, Sean Ludford, Jacques Bezuidenhout, Tad Carducci, James Conley, Dale DeGroff, Jim Meehan, Dan Nicolaescu, Steve Olson, Julie Reiner, Jack Robertiello, Jennifer Simonetti-Bryan, MW, Katie Stipe and David Wondrich.

 

Says UBC founder F. Paul Pacult, “The increase in entries we’ve had for Ultimate Spirits Challenge each year is a testament to suppliers who appreciate our meticulous attention to rating and scoring their products. They understand that Ultimate Spirits Challenge also provides them with an array of useful tools to help them build and market their brands, from credible scores to insightful tasting notes to useful point-of-sale materials to our summary guide in Beverage Media.”

 

THE 2013 RESULTS

This year, all spirits rated 85 points and higher are featured on their own detailed results page and include relevant award information, downloadable score icon, tasting note, accolade and bottle image. New this year, USC will also provide a summary page for this year’s Award Recipients and Great Values in each category. Because of Ultimate Spirits Challenge’s partnership with Astor Wines & Spirits, all spirits that display a shopping cart icon boast a ‘click and purchase’ option for consumers who can place their order online, with direct delivery to many states in the U.S.

 

For a complete list of results go to www.ultimate-beverage.com/usc2013results/

 

For downloadable images (hi/lo res) go to www.ultimate-beverage.com/2013USCpics

 

2013 ULTIMATE SPIRITS CHALLENGE CHAIRMAN’S TROPHY WINNERS

 

VODKA – UNFLAVORED

Tahoe Blue

 

VODKA – FLAVORED

HOPHEAD Pot Stilled Hop Flavored

 

GIN

Fords Gin

 

AQUAVIT

Linie Aquavit

 

TEQUILA – 100% AGAVE

BLANCO: Milagro Silver

REPOSADO: Siete Leguas Reposado

AÑEJO: IZKALI Añejo

EXTRA AÑEJO: Casa Sauza XA Edición Limitada Extra Añejo

 

MEZCAL

Del Maguey Minero

 

RUM

Brugal Papa Andres

 

RHUM AGRICOLE

Rhum Clement Grande Reserve 6 Years Old

 

WHISK(E)Y – NORTH AMERICA

AMERICAN WHISKEY: Balcones 1 Texas Single Malt

BOURBON: Blanton’s Single Barrel Kentucky Straight Bourbon

RYE: Knob Creek Rye

TENNESSEE WHISKEY: George Dickel No. 12

 

WHISKEY – IRELAND

BLENDED: Jameson 18 Years Old

IRISH POT STILL WHISKEY: Redbreast 15 Years Old

SINGLE MALT: Tullamore Dew 10 Years Old

 

WHISKY – SCOTLAND

BLENDED MALT: Haig Supreme 1627 12 Years Old

BLENDED: Royal Salute 21 Years Old

SINGLE MALT*: Highland Park 25 Years Old (100 points)

 

WHISKY – CANADA

Caribou Crossing Single Barrel

 

BRANDY

ARMAGNAC: Delord 30 Years Old 1981 Bas-Armagnac France

CALVADOS: Boulard XO Calvados France

COGNAC: Hardy XO Cognac France

GRAPPA: Bocchino Riserva Carlo Bocchino Grappa Italy

PISCO: Barsol Supremo Mosto Verde Pisco Peru

FRENCH BRANDY: St-Rémy Réserve Privée

SPANISH BRANDY: Cardenal Mendoza Brandy de Jerez

AMERICAN BRANDY: E & J XO

 

SHOCHU

Iichiko Frasco Barley

 

LIQUEUR

La Muse Verte Absinthe

 

APERITIF

Lillet Jean de Lillet 2009

 

*Signifies Ultimate Spirits Challenge’s first 100 point rated spirit.

 

For the first time, a selection of 24 products from China were submitted as a group for assessment by a special Ultimate Spirits Challenge panel of judges, the results of which can be found here www.ultimate-beverage.com/special-evaluation/

 

Ultimate Spirits Challenge.not like any other competition and doesn’t want to be.

 

Next 2013 Challenge: Ultimate Wine Challenge, June 3-7, 2013. Click here for more information.

 

ABOUT ULTIMATE BEVERAGE CHALLENGE www.ultimate-beverage.com

Ultimate Beverage Challenge (UBC) provides expert evaluation of wines and spirits for producers, importers and marketers through its two innovative annual competitions – Ultimate Spirits Challenge and Ultimate Wine Challenge. Based on exacting standards, expert judges and rigorous methodology, UBC raises the standards of spirits and wine evaluation and supplies ratings and accolades to help companies build their brands with buyers, both industry and consumer. UBC partners are F. Paul Pacult, Sue Woodley, Sean Ludford and David Talbot. Challenge results from 2010, 2011, 2012 and 2013 as well as event photos, videos and press coverage can be found at www.ultimate-beverage.com.

 

 

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News From TTB

 

Source: TTB

Mar 21st

 

Learn More About the Changes That Can Be Made to Labels Without Getting a New COLA

 

The Advertising, Labeling and Formulation Division will present a one-hour webinar designed especially for those who are interested in gaining a clearer understanding of the changes that can be made to labels without applying for a new COLA. We have significantly expanded the list of allowable changes in order to reduce regulatory burden and to help you get your products to the marketplace faster. During this webinar, we will walk you through of each of the 26 allowable revisions that appear on TTB F 5100.31 and answer any questions you may have about them.

 

See our Labeling page to learn more about allowable revisions.

 

Space is limited, so please register soon to reserve your spot. We will hold additional sessions in April if you can’t make this session.

 

Just click on the “Register for Webinar” link to the right to email your reservation for this session. Simply type “registration” in the subject line and send! Once registered, you will receive email confirmation and instructions for joining the webinar.

 

http://www.ttb.gov/labeling/allowable-changes.shtml

 

 

——

Gin Still Whetting Spanish Appetites

 

Source: WSJ

By SIMON ZEKARIA

Mar 21st

 

As record unemployment worsens in debt-ridden Spain, consumers are seeking solace in a bottle of gin.

 

The country’s recent economic woes hit liquor demand hard. Spain saw a 5.1% drop in consumption between 2006 and 2011, the most recent year for which data are available, according to data group International Wine & Spirit Research.

 

But despite a cutback in premium spirits across southern Europe, gin is proving a surprising tonic for producers.

 

The volume of gin sold rose 3.5% between 2010 and 2011 to 3.2 million nine-liter cases, according to IWSR, making Spain the world’s third-largest gin market by volume. By contrast, whiskey fell 9.5% and rum volume declined 6.7% in the country over the same period.

 

Gin’s resurgent popularity is particular to Spain-world-wide volume fell 2.9% in 2011, and even in the U.S., which is the second-largest gin market by volume after the Philippines, volume fell 1.6%. The juniper-flavored spirit is resistant to evolving trends in Spain, said Ed Pilkington, Diageo DGE.LN +0.20% PLC’s director for vodka, rum and gin. “Whiskey took over from brandy. Then there was the rum boom. [But] gin was always there.”

 

Charles Rolls, co-founder of upscale tonic water and mixers group Fever-Tree, agreed that gin in Spain is taking market share from other categories, notably golden rum and whiskey. This is linked to Spain’s warm climate, he said.

 

“[There is] a decline in the interest for whiskey as a post-lunch or post-dinner drink. It is very heavy. Gin is the perfect spirit because it is a diuretic. It opens up the blood vessels and makes you less full after a big meal,” he said.

 

The spirit is helped in Spain by the popularity of “long-drinks”-alcohol and a soft drink-usually drunk with generous measures. “Gin tonics” served in large balloon glasses with lemon or lime are a staple of the buoyant bar and club scene, while classic gin cocktails are returning, like the Negroni, made with embittered red vermouth, and the French 75.

 

A wave of specialist gin bars, like Del Diego in Madrid and Bobby Gin in Barcelona, are keeping the category fresh. Long gin menus and imaginative garnishes like nutmeg and peppercorns have elevated the spirit to an art form by bartenders and chefs.

 

Fernando del Diego, the 64-year-old proprietor at Del Diego, said he noticed an increase in gin consumption in the past year. He attributed the boom to better brand advertising and a proliferation of gins and gin-mixes that make the drink attractive to a wider clientele.

 

“Gins are evolving toward premium brands infused with botanicals,” he said, standing behind a bar that offers 40 different brands. “As a dry drink, it is a man’s drink. Now there are very nice gins with fruity flavors especially for women,” he said.

 

Mr. del Diego said gin had long been popular in Spain as a digestif after lunch and as an afternoon refreshment. “What’s new is that it is being taken as an after-dinner drink,” Mr. del Diego said.

 

William Grant & Sons’ rose and cucumber-infused gin Hendrick’s, distilled in the Scottish seaside village of Girvan, has made inroads by capturing the consumer zeitgeist of drinking less but better, according to Euromonitor International analyst Spiros Malandrakis. “[It has] a very convincing narrative [by] tying into the eccentricity of the British,” he said.

 

“About the time when Hendrick’s was launching in Spain, we were also launching. Now six years later, there are 120 brands of gin on the Spanish market and 15 tonic waters,” said Fever-Tree head Mr. Rolls.

 

“The category has always been large in Spain. It was a sleeping giant [that] has awoken,” said IWSR analyst Jose Hermoso.

 

Europe’s beverage giants are making the most of the Spanish gin resurgence and plowing marketing money into launches of new flavors and variants. Diageo’s softly spiced Tanqueray Malacca, for example, is only distributed in selected markets, such as Spain and the U.S. Malacca, which was sold briefly in the U.S. more than a decade ago, has now been relaunched, but with 100,000 bottles released world-wide only to hotels, bars and restaurants.

 

Diageo said that the growth of ultra-premium gin is most vibrant, although lower-price brands are also doing well. Spain is the world’s biggest market for premium gin by demand per capita. “For many years, Tanqueray was the priority in gin [in Spain], but we are getting Gordon’s back,” Mr. Pilkington said. The group is launching Gordon’s Crisp Cucumber in May and will also consider twists to its higher-strength yellow label range.

 

Pernod Ricard SA’s RI.FR -0.31% Beefeater gin is also a top-seller in Spain, rivaling Bacardi Ltd.s Bombay Sapphire and Beam Inc’s BEAM -0.76% Larios brands. First-half global sales, excluding acquisitions and disposals, and volume of Beefeater rose 5% and 2%, respectively, outpacing the growth of some the company’s main Scotch whisky marks. Seagram’s gin, popular in the U.S., is also showing strong growth in Spain, the company said.

 

As always with gin, a tonic mixer is never far behind. For Fever-Tree, founded in 2005, Spain’s desire for gin represents a commercial boon in the multibillion-dollar spirit and mixer market. After private investment this month of close to £50 million ($75.5 million), the U.K. company aims to more than double its annual sales in three years to £40 million, with annual revenue in Spain growing 25% on average.

 

Mr. Rolls admits that Fever-Tree’s business in Spain kicked off fortuitously after Ferran Adrià, previously the renowned chef at the El Bulli restaurant in the Catalan town of Roses, recommended its Indian tonics, blended with quinine, spring water and botanicals flavors. A Mediterranean variant launched two years ago, with lemon oils from Sicily, as well as thyme, geranium, rosemary and mandarin, now accounts for 10% of the company’s total tonic sales in Spain.

 

“Gin is the big love that continues to power forward,” he said.

 

 

——

Wine production falls worldwide

 

Source: Chronicle News Services

Thursday, March 21, 2013

 

World wine production dropped 6 percent in 2012 to the lowest level in at least 37 years on smaller grape crops in France, Spain and Argentina, according to the International Organization of Vine and Wine. Output fell to 6.63 billion gallons, a drop of about 6 percent from 2011, the group said.

 

Bulk white-wine prices in France, the world’s largest producer, jumped 45 percent since the start of August, while those for bulk reds advanced 17 percent, data from crop office FranceAgriMer show.

 

Vineyards in France, Spain, Italy and Argentina all suffered weather damage last year, including hail and drought. Last year’s production was the lowest on record going to back to 1975.

 

 

——

Bad weather squeezes global wine production

 

Source: Reuters

March 21, 2013

 

Global wine production fell sharply last year due to bad weather in Europe and a policy to drain its “wine lakes,” while Chile and United States saw a jump in harvests, according to a report on Thursday.

 

The International Organisation of Vine and Wine (OIV) said world production was down around 6 percent in 2012 at 251 million hectolitres (Mhl), a level it described as very low. European Union output fell 10 percent to 141 Mhl, with France suffering a drop of nearly 17 percent after a good harvest in 2011.

 

“We had a difficult year 2012, mainly because of a sharp drop in production, but trade flows mostly held stable,” OIV Director General Federico Castellucci told reporters, referring to total wine exports which were stable at 101 Mhl after a long-term upward trend.

 

The EU policy of digging up vines to end years of surpluses had lead to a reduction of 269,000 hectares between 2008 and 2011, well above the targeted 175,000 hectares, contributing to a recent rise in prices, Castellucci said. Rising consumption also helped push prices up.

 

“This meant tightness on the market and we need to be careful because once a market is lost it is hard to conquer it back,” he said, pointing to higher prices for bulk wines, used to make liquors such as brandy and vermouth or vinegar.

 

Prices for French bulk red wines gained 7 percent between August and February, while bulk white wines rose 30 percent, data by French farm office FranceAgriMer showed.

 

NEW CONFIGURATION

 

French exports rose 6 percent to 15 Mhl, but Italy and Spain, the world’s two largest wine exporters by volume, which also had a poor crop although not as bad, saw their exports fall 7 and 13 percent respectively to 21.5 and 19.1 Mhl.

 

Chile, the largest South American producer which had a record output in 2012, saw a 13-percent rise in exports to 7.5 Mhl. South African exports were up 17 percent to 4.2 Mhl, with sales to Britain jumping 50 percent.

 

This meant that the share of the top five European producers — Italy, Spain, France, Germany and Portugal — in world exports fell to 62 percent, from 65 percent last year, to the benefit of South America as well as the United States whose crop jumped 7 percent last year, the OIV said.

 

Wine consumption increased 0.6 percent last year to 245 Mhl, mainly helped by China and the United States, the OIV said.

 

Chinese consumption rose 9 percent to reach 17.8 Mhl, leading to a total rise in consumption since 2008 of 27 percent, with local output supplying the bulk of the additional demand. Imports only accounted to 0.3 Mhl of the 1.5 Mhl rise recorded in 2012.

 

“There is a slightly new configuration here. The Chinese start either to make the wine themselves or to import wine from countries where they have companies — it’s still a small number but not minimal anymore,” Castellucci added.

 

An increasing number of Chinese wine lovers have bought French chateaux, keen to ship the wine home and turn their new properties into tourist resorts.

 

 

——

Bordeaux 2012: mixed verdict on first look at Right Bank

 

Source: Decanter

by Adam Lechmere

Thursday 21 March 2013

‘Brittle’ and ‘lots of make-up’ were two of the comments from critics as London had its first look at the 2012 vintage from Bordeaux’s Right Bank properties.

 

Tuesday night’s annual London en primeur tasting of the Cercle Rive Droite – a group of some 35 chateaux from St Emilion, Pomerol and their satellite communes – is regarded by critics as unrepresentative and highly selective, but nevertheless an interesting early look at the en primeur vintage.

 

Many of the wines have scarcely finished malolactic fermentation, and almost all have heavy doses of new oak.

 

Critics found the wines highly aromatic, many with fine ripe tannins and good depth of fruit, but it is by no means a homogenous vintage on the right bank, with some wines having thin, insipid fruit and patchy underripe tannins. ‘Brittle’ was one critic’s brief comment.

 

Richard Bampfield MW said, ‘First impressions were that these wines had impressive, very pure aromatics with pronounced black fruit character. They do not seem to have the middle palate of vintages such as 2009 and 2010, but the majority looked flavoursome and well balanced.’

 

He added, ‘There should be some very good wines amongst the Grands Crus Classés. I am not sure there is a strong argument to buy these wines en primeur, but they should make excellent drinking in four to six years.’

 

‘A mixed bunch,’ was the cautious verdict of Corney and Barrow associate director Alison Buchanan. ‘This is very early so I am keeping a completely open mind. I could see freshness, which is positive, but that sometimes leant to greenness.’

 

She agreed the wines showed very fine ‘Merlot-esque’ aromatics with perfume and black cherry fruit, but ‘there was often a disparity between the nose and the palate, which was disconcerting. There was also a lot of make-up – lashings of oak to complement the fruit.’

 

The 2012 growing season is notorious, especially in France and England, for the appalling weather at the beginning of the summer, with hailstorms in April, rain for most of June, followed by a heatwave in the third week of August in which temperatures in Bordeaux reached 42C, causing vines to shut down and fruit to burn, and then more rain at harvest.

 

Winemakers present at the tasting said that it was a vintage that required great attention to detail, in the vineyard and the winery. Grapes tended to have thin skins requiring much more extraction for tannins and colour. Alix Coombes at Chateau Fleur Cardinale, a St Emilion Grand Cru Classé, said that at the beginning of fermentation they were doing pigeage or punching down three to four times a day.

 

Those properties that sit on well-drained limestone soils coped best with the rains and the heatwave, Paul Goldschmidt – who owns Chateau Vray Croix de Gay and Siaurac in Pomerol and St Emilion Grand Cru Classé Chateau Le Prieuré – said, ‘Limestone is very useful. It absorbs the water and holds it, then gives it back during hot weather.’

 

Alain Raynaud, the president of the Cercle Rive Droite, said that the grapes had good polyphenols and anthocyanins, which would imply the wines would age well. He also conceded many vignerons were tempted ‘to extract too much’, thereby unbalancing the wines.

 

‘It’s not an exceptional vintage but it’s a good vintage. It’s not effortless, as in 2009 and 2010, but then you can’t ask vines to produce the top level possible every year.’

 

Critics will taste the entire vintage in Bordeaux during en primeur at the beginning of April.

 

 

——

Drew Bledsoe lobbies to lift wine sale restrictions

 

Source: Boston Herald

Thursday, March 21, 2013

 

Former New England Patriots quarterback Drew Bledsoe, who now runs a boutique winery in Walla Walla, Wash., was on Beacon Hill today lobbying for a new law that would allow direct wine sales via the mail to consumers.

 

“This bill is fair and it’s right,” Bledsoe said.

 

Bledsoe said he’d met with House Speaker Robert A. DeLeo (D-Winthrop) and Rep. Theodore Speliotis (D-Danvers) about HB294, a Speliotis-sponsored bill that lifts restrictions on wine sales. The bill would replace a ban on shipments to homes unless the winery produces less than 30,000 gallons a year. That ban, which excludes almost all out-of-state wineries, was deemed unconstitutional by the 1st Circuit Court of Appeals.

 

Massachusetts is one of only 11 states in the United States to restrict direct mail sales to consumers, and is the largest wine-consuming state left to still have restrictions.

 

“If Massachusetts falls and becomes the 40th, the other states will fall in line,” Bledsoe said.

 

HB294 has been referred to the Joint Committee on Consumer Protection and Professional Licensure, but a hearing date has not yet been set.

 

 

——

Australia: Retailers applaud scrapping of “unworkable” wine label integrity scheme

 

Source: The Shout

By James Atkinson

22/03/2013

 

The Federal Senate has passed amendments to the Wine Australia Act that remove the onerous requirement for liquor retailers and wholesalers to keep detailed records of the Australian wine they sell.

 

Designed by the old Australian Wine & Brandy Corporation (AW&BC), the Label Integrity Program provisions were introduced in September 2010 with the intention of protecting the integrity of Australian wine overseas.

 

By documenting the quantity of a particular grape variety by vintage and geographic origin and requiring liquor retailers and wholesalers to keep records of what they sold, the LIP aimed to take a ‘cradle-to-grave’ approach to ensure a wine’s authenticity.

 

But the proposal was fraught with issues, not least the fact that barcodes on mainstream wines do not currently distinguish between each vintage.

 

Retailers and wholesalers who did not comply with the provisions were in breach of a Federal Act of Parliament and potentially subject to stiff financial penalties and up to two years imprisonment.

 

The Australian Liquor Stores Association (ALSA) coordinated the industry opposition to the provisions and led the negotiations to have an amnesty against prosecution while it lobbied to have the Federal Labor Government accept the need for amendments to the Act.

 

“The original LIP provisions introduced without consultation in September 2010, were unworkable,” said ALSA CEO Terry Mott.

 

“Without millions of dollars of expenditure by winemakers, wholesalers and retailers, plus new systems throughout the entire wine marketing and wholesaling distribution system, the recording provisions were unable to be complied with and nor would they have achieved the targeted objectives they had been designed for.”

 

Mott said the amendments to the Act – which shift the onus of label integrity back on to the manufacturer – were drafted with ALSA and other industry input in 2011.

 

They were introduced and passed by the House of Representatives in the first half of last year, but they had been shelved for a number of months awaiting an opportunity to get passed by the Senate.

 

“After almost 2.5 years, this week we finally saw the LIP retailer recording provisions amended and liquor retailers, pubs, clubs, restaurants and wholesalers able to undertake their normal liquor retailing activities without threat of prosecution under this legislation,” said Mott.

 

 

——

Supervalu sale complete

 

Source: RT

By Michael Johnsen

March 21, 2013

 

Supervalu has completed the sale of its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores and related Osco and Sav-on in-store pharmacies to AB Acquisition LLC, an affiliate of a Cerberus Capital Management-led investor consortium, in a stock deal valued at $3.3 billion, including $100 million in cash and $3.2 billion in debt assumption.

 

“The successful completion of this transaction marks a significant milestone for Supervalu and our shareholders, customers and employees,” stated Sam Duncan, Supervalu president and CEO. “As we move forward, Supervalu will continue as one of the largest wholesale grocery providers in America serving nearly 2,000 independent retailers in 43 states; we plan to continue growing our hard discount Save-A-Lot format that includes over 1,300 stores nationwide; and we will operate five, strong regional retail banners.”

 

Operations for these banners will transfer overnight, and the new Supervalu will open for business on Friday as a more efficient wholesale and retail company with annual sales of approximately $17 billion.

 

As part of the transaction, Supervalu also announced that Symphony Investors, a Cerberus-led investor consortium, completed its tender offer resulting in the acquisition of 11.7 million shares at a purchase price of $4.00 per share in cash. In addition, pursuant to the terms of the transaction, the company issued 42.5 million new shares of common stock (approximately 19.9% of the outstanding shares) to Symphony Investors at a purchase price of $4.00 per share in cash to the company, or approximately $170 million. The tender offer and primary stock issuance establish Symphony Investors as Supervalu’s largest shareholder with 21.2% of total outstanding common shares.

 

With the close of the deal, Robert Miller, president and CEO of Albertsons LLC, becomes Supervalu’s new non-executive chairman replacing Wayne Sales, who has served as executive chairman since August 2012. Supervalu also announced that Sales will remain on the board as a director along with four other current board members – Donald Chappel, Irwin Cohen, Philip Francis and Matthew Rubel. As previously agreed upon by Supervalu and Symphony Investors, five directors voluntarily resigned from the Board effective today, including Ronald Daly, Susan Engel, Edwin “Skip” Gage, Steven Rogers and Kathi Seifert.

 

Lenard Tessler, a designee of Symphony Investors, also was appointed to the Supervalu board of directors today. He currently serves as co-head global private equity and senior managing director of Cerberus Capital Management. Prior to joining Cerberus in 2001, Tessler served as managing partner of TGV Partners from 1990 to 2001, a private equity firm that he founded.

 

The seven-person board resulting from today’s transaction will have four members who are independent directors under the New York Stock Exchange listing standards. This seven-person board will now identify two additional independent directors. Upon the selection and appointment of these two directors, Duncan and Mark Neporent, a designee of Symphony Investors, will join the board increasing its final size to 11 directors.

 

Neporent is the chief operating officer and general counsel for Cerberus Capital Management, positions he has held with the firm since 1998. He is responsible for the day-to-day management of the firm.

 

Supervalu also confirmed that it has closed on a $1 billion asset based revolving credit facility led by Wells Fargo, US Bank and Rabobank and a $1.5 billion term loan secured by a portion of the Company’s real estate, equipment and an equity pledge of Moran Foods (the parent entity of the Save-A-Lot business) led by Goldman Sachs Bank USA, Credit Suisse, Morgan Stanley, Bank of America Merrill Lynch and Barclays. The proceeds of these financings replaced a previous $1.7 billion asset-based revolving credit facility, an existing $834 million term loan and a $200 million receivables financing facility and refinanced $490 million of 7.5% bonds scheduled to mature in November 2014.

 

 

——

Luby’s 2Q sales ‘disappointing’

 

Source: NRN

Ron Ruggless

Mar 21st

 

Officials at Luby’s Inc., the cafeteria and multi-concept burger operator, called second-quarter sales “disappointing,” as the company integrates its recent Cheeseburger in Paradise acquisition into its portfolio.

 

Same-store sales for Cheeseburger in Paradise, which the company purchased for $11 million in a deal closed Dec. 6, fell about 12 percent year over year.

 

Luby’s expected some decline in the brand’s slower fall and winter months, although weather and other circumstances also attributed to the drop, said Luby’s president and chief executive Chris Pappas. “We’re mindful of this development,” Pappas said in a call with investors Thursday. “We attribute a portion of this decline in comp sales for Cheeseburger in Paradise in the quarter to some significant weather events, some prior-year promotions not repeated this year, as well as the overall industry negative trend in traffic in calendar 2013.”

 

Pappas said Luby’s, which also owns the Luby’s cafeteria chain and owns and franchises the Fuddruckers and Koo Koo Roo brands, saw opportunities in Cheeseburger in Paradise’s menu, with an improved burger, a better customer experience and the acquisition of good real estate leases.

 

“Our aim is to emphasize quality and product innovation with the brand and not resort to discounting these truly unique menu items,” Pappas said. He added that Cheeseburger in Paradise’s real estate was well located and had new buildings, and the company plans to invest in décor to help build sales in the slower fall and winter months.

 

K. Scott Gray, Luby’s chief financial officer, said Cheeseburger in Paradise units had generated $7.7 million in sales from the close of the deal on Dec. 6 to the end of Luby’s second quarter on Feb. 13.

 

“We expect this brand to contribute to profitability in the second half of the year,” Gray said.

Consumer spending drop impacts results

 

Among its other brands, Pappas said the company saw challenges in the quarter.

 

“We saw a reduction in consumer discretionary spending,” Pappas said. “We attribute this to escalating gas prices, payroll taxes and [federal government] sequestration concerns.

 

“This soft demand has been reported by other retailers as well,” Pappas added. “As the quarter progressed, it became clear these factors were having a measurable impact on our business, and they were more than the usual week-to-week variability in our business.”

 

For the Feb. 13-ended second quarter, Luby’s reported net income of $203,000, or one cent per share, versus nearly $1.1 million, or four cents per share, in the same period a year ago. Revenue, including Luby’s culinary contract division, was $87.5 million in the second quarter, rising from $79.4 million in the prior-year period.

 

Systemwide same-store sales declined 0.6 percent in the second quarter, the company said, compared to an increase of 2.2 percent in the same period last year.

 

Luby’s adjusted its fiscal year earnings per share guidance down to a range of 21 cents to 25 cents, from 27 cents to 30 cents.

 

Because of the economic headwinds, Pappas said Luby’s is committed to building traffic and not raising prices. “We chose not to raise prices this quarter in light of the current economic environment, as we are more focused on maintaining the frequency of our guest visits,” he said.

 

The company is also continuing its remodeling program, with a target of 14 Luby’s and 14 Fuddruckers remodels by the end of fiscal 2013.

 

“So far this year, we’ve opened one Luby’s cafeteria and six Fuddruckers, including one property with a Luby’s cafeteria and Fuddruckers positioned side-by side,” Pappas said. “We’re quickly coming to the conclusion that this will be one of our vehicles for growth. We have two more of this type slated to break ground this calendar year.”

 

Fuddruckers’ international development will take the brand to Panama and Aruba in 2014, Pappas added.

 

So far this fiscal year, the company has opened one Luby’s Cafeteria and six Fuddruckers. “We continue to build our new unit pipeline of locations,” he said in prepared remarks. “Our current pipeline includes locations for three Luby’s cafeterias and five Fuddruckers. For the remainder of the fiscal year, we plan to substantially complete one Luby’s/Fuddruckers combination location and one Fuddruckers end-cap location for opening in the fall 2013.”

 

The company also recently struck a Fuddruckers franchise deal for up to five units in North Dakota.

 

Luby’s owns and operates 93 cafeterias, 64 Fuddruckers, 23 Cheeseburger in Paradise full-service restaurants and bars, two Koo Koo Roo Chicken Bistros, and one Bob Luby’s Seafood Grill. The company also franchises 119 Fuddruckers across the United States, Puerto Rico, Canada and Mexico. Luby’s Culinary Services manages foodservice at 20 health care, higher education and corporate dining locations.

 

 

——

Buffalo Wild Wings receives responsible alcohol service program award

 

Source: NRA

March 21, 2013

 

The National Restaurant Association congratulated Buffalo Wild Wings on receiving the 2013 VIBE Vista Operator Award for Best Responsible Alcohol Service Program. The restaurant received the award at the VIBE (Very Important Beverage Executives) conference in Las Vegas this week. The award is sponsored by the National Restaurant Association’s ServSafe Alcohol® program.

 

Minneapolis-based Buffalo Wild Wings provides its guests with the ultimate sports fan experience at more than 900 company-owned and franchised restaurants in 49 states and Canada. The company chose the ServSafe Alcohol responsible service training because the program delivers a consistent and holistic message.

 

Alcohol service training starts as soon as a new front-of-house team member is hired, from servers and bartenders to greeters and cashiers. In addition to ServSafe Alcohol training, restaurant managers also discuss alcohol safety at pre-shift meetings to reinforce the importance of safe alcohol service and continually monitor service throughout their shifts.

 

Since adopting ServSafe Alcohol, Buffalo Wild Wings began a tracking and reporting communication that brought awareness to every restaurant’s performance against participation in the SSA program. Currently, Buffalo Wild Wings restaurants are required to maintain a 95 percent compliance rate.

 

The VIBE Vista Operator Award winners are selected by a panel of beverage professionals, including the VIBE Advisory Council members. The award for responsible beverage alcohol service highlights customized server training programs that emphasize ongoing reinforcement of training and a culture of responsible alcohol sales.

 

ServSafe Alcohol offers training solutions to restaurant employees in responsible alcohol service. The training program teaches employees about their personal responsibility, and how to recognize signs of intoxication in guests and manage service accordingly.

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One Response to “Liquor Industry News 3-23-13”

  1. Alicia Says:

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