Liquor Industry News 3-26-13

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Tuesday March 26th

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Anheuser-Busch Discloses India Foreign Corruption Probe by SEC

 

Source: Bloomberg

By Duane D. Stanford

Mar 25, 2013

 

Anheuser-Busch InBev NV (ABI)’s India joint venture is being investigated by the U.S. Securities and Exchange Commission for possible violations of the Foreign Corrupt Practices Act.

 

“We have been informed by the SEC that it is conducting an investigation into our affiliates in India, including our non- consolidated Indian joint venture, InBev Indian Int’l Private Ltd., and whether certain relationships of agents and employees were compliant with the FCPA,” the company said today in a regulatory filing. “We are investigating the conduct in question and cooperating with the SEC.”

 

John Nester, an SEC spokesman, declined to comment.

 

The investigation is at an early stage and no claims have been asserted by regulators, Marianne Amssoms, an AB InBev spokeswoman, said today in an e-mail. AB InBev’s market share in India is about 2 percent, she said. Operations are run by an Indian subsidiary, Crown Beers India, and a joint venture with RKJ Group for local production, in which AB InBev holds a minority stake.

 

“We have an extensive compliance program which includes robust policies, training, and an employee hotline,” Amssoms also wrote. “We do not tolerate any violations and are fully cooperating with this investigation.”

 

Beam Inc. (BEAM), the distiller of Jim Beam, Maker’s Mark and Canadian Club liquors, said in October that it was investigating its operations in India after a report of possible FCPA violations.

 

AB InBev rose 0.6 percent to 75.43 euros today in Brussels trading. The shares have climbed 15 percent this year.

 

 

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SABMiller Sees No Profit-margin Wall in Latin America

 

Source: Dow Jones

By Simon Zekaria

Mar 25th

 

SABMiller PLC (SAB.LN) Monday said it isn’t hitting a profit-margin wall in Latin America, even after the world’s second-biggest brewer by sales narrowed forecasts for its largest and most lucrative region.

 

The maker of Miller Genuine Draft and Peroni Nastro Azzuro targets its earnings before interest, tax and amortization margin in Latin America to grow by between 0.6 to 0.8 of a percentage point in the three to five years from fiscal year 2013. It previously set a medium-term growth forecast of between 0.6 and 1 of a percentage point in 2011.

 

“We are not saying we are hitting a wall. [We are not being] more pessimistic, we are being more precise,” said Karl Lippert, president of the brewer’s operations in Latin America, who was speaking at an investor conference.

 

SABMiller also targets 4% to 6% beer volume growth in the medium term, with revenue per hectoliter on a constant currency basis seen growing 3% to 5%. In 2011 it saw volumes growing 5% to 8%, with revenue per hectoliter on the same basis rising 2% to 4%.

 

“We believe we can continue to deliver mid-single-digit volume growth and upper-single-digit revenue growth for the foreseeable future,” Mr. Lippert said ahead of the meeting.

 

Latin America has accounted for over 40% of the group’s earnings growth before interest, tax and amortization since the fiscal year 2007, due to the brewer’s dominant market position in northern countries like Colombia, Ecuador and Peru. It is also strong in central American nations Honduras, El Salvador and Panama. Still, it cedes ground to rivals in the region’s biggest economies of Brazil, Argentina and Mexico.

 

While the brewer is driving revenue on higher prices thanks to an emphasis on premium beers, it is also targeting demand at the economy end of the market with larger bottles of mainstream lager brands like Aguila and Poker.

 

SABMiller says beer is still an expensive and aspirational product for many consumers, with around 80% of the population in SABMiller’s Latin American markets considered low-income consumers. A key part of SABMiller’s strategy in the region is to attract these consumers away from low-quality local spirits, often produced and sold illegally, by providing affordable alternatives in its portfolio.

 

At the end of January, the London-listed company said global beer volumes for the third quarter rose 2% before acquisitions and disposals, representing a slowdown from the 3% growth rate recorded a year earlier and 4% posted in the first half. Beer-volume growth in Latin America recovered to 6%, up from 4% in the first-half, but down from 8% in the same period last year.

 

 

——

SABMiller seeks to convert illegal alcohol drinkers

 

Lager giant SABMiller is hoping to boost sales in its biggest market, Latin America, by targeting drinkers who buy illegal beer and spirits on the black market.

 

Source: Daily Telegraph

By Nathalie Thomas

25 Mar 2013

 

The world’s second biggest brewer has been trying to make beer more affordable for drinkers on low incomes in the region, through initiatives such as selling bigger bottles which can be shared among several people.

 

SAB, best known in Europe for brands such as Peroni and Grolsch, told investors yesterday that illegal alcohol accounts for more than a fifth of the market in the Latin American countries where it operates, offering opportunity for further significant growth in the region.

 

Problems around counterfeit and contraband alcohol are particularly acute in Colombia, Peru and Ecuador, where the black market can be controlled by powerful criminal gangs.

 

SAB is hoping that initiatives such as selling 750ml bottles of popular brands including Aguila and Poker, which work out cheaper when shared among several people, will help move more drinkers into the mainstream beer market.

 

It estimates that if all illegal alcohol buyers were converted into beer drinkers, the market would expand by 15m-19m hectolitres.

 

In Colombia, drinkers have to work for an average of 66 minutes to earn enough money to buy half a litre of beer, compared to just 12 minutes in Europe.

 

Although many Latin American economies are expanding at a rapid rate, many drinkers are still tempted to buy cheap bootleg alcohol.

 

“A lot of the illegal market is extremely inexpensive stuff,” said Randy Ransom, a senior vice president in SAB’s Latin American business. “Beer is aspirational, these people want to drink beer, they can’t afford it.”

 

SAB, which generated a third of its operating profits in Latin America last year, has been pursuing a similar strategy in Africa . The group expects to continue growing beer volumes at 4pc-6pc in Latin America, but admitted that it had come to a “stand still” in the fast-growth but highly competitive Brazilian market.

 

 

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Device checks for poisonous alcohol

 

Source: Stuff NZ

LIZZIE WADE

25/03/2013

There’s nothing like suddenly going blind to spoil a good happy hour. Alcoholic beverages tainted with poisonous methanol are a scourge of the developing world, causing blindness and even death.

 

The dangerous drinks can come from botched batches of home-distilled liquor, but they often have a more sinister origin; criminal gangs will cut standard alcohols with methanol and sell the resulting concoctions to unassuming customers for inflated profits.

 

Because adding methanol doesn’t change the drink’s flavour, colour, or smell, there’s no easy way to tell if the brew you’re about to imbibe could poison you – until now.

 

Scientists in Colombia have developed a reusable wireless chip that can analyse a drink’s proportion of methanol to ethanol (the good kind of alcohol) and warn consumers of any danger, they have reported at the meeting here of the American Physical Society.

 

This first generation device costs about $5 and still requires an antenna, but within two years they hope to have a commercial product that sends easy-to-interpret results directly to a user’s cell phone. Until then, you might want to lay off the hooch.

 

 

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Irish Town Legalizes Drinking and Driving

 

Law allows people to “to drive home from their nearest pub after having two or three drinks on little-used roads driving at very low speeds.”

 

Source: Daily Telegraph

By Patrick Hickey Jr.

Monday, Mar 25, 2013  

 

The Irish town of Kilgarvan passed a law this winter that allows members of its community to drink and drive.

 

Proposed by local pub owner and politician Danny Healy-Rae, the motion allows people who live in country areas to have a few beers before they drive home. Healy-Rae told The New York Times he thinks the measure will help preserve pub culture, lower the risk of suicide and attack isolation in the small town.

 

Amid governmental and local backlash, Healy-Rae says the law isn’t supposed to apply to everyone, mainly “elderly people who live in very remote places.”

 

“What is the alternative for them where no public or other transport is available? Staying at home lonely, staring at the four walls?” Healy-Rae told The Times.

 

Some local politicians are still shocked that the motion was passed, including one Kerry County council member who was absent when the measure passed because her child was sick, according to the Times.

 

 

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Don’t stick taxpayers with huge drinking tab

 

Source: Wisconsin State Journal

Editorial

March 24, 2013

 

We knew it was bad.

 

But now researchers at the University of Wisconsin Population Health Institute specifically have quantified Wisconsin’s horrible hangover from excessive alcohol use in a single year:

 

. 1,529 premature deaths.

. 48,578 hospitalizations.

. 60,221 arrests.

. 5,721 motor vehicle crashes.

 

Throw in lost productivity at work, higher insurance rates, greater health care costs, substance abuse treatment, law enforcement, incarceration and other expenses, and the tab is staggering: $6.8 billion annually – with nearly $3 billion of that total being picked up by local, state and federal governments in Wisconsin.

 

There’s no easy or single answer to changing our state’s heavy drinking culture. But one simple act would help curb that cost and discourage destructive behavior.

 

Wisconsin should raise its tiny tax on beer, booze and wine.

 

Current state liquor taxes bring in a total of $69 million a year, which is less than 1 percent of the total economic cost of abusive drinking in Wisconsin, according to the UW study released this month by Health First Wisconsin.

 

Wisconsin’s beer tax is the second lowest in the nation and hasn’t been raised in more than four decades – not since man walked on the moon.

 

Wisconsin’s beer tax is less than a penny per pint, and the liquor tax here is less than $1 per liter.

 

Raising the tax would bring in more revenue to combat the causes and effects of alcohol abuse. It also would reduce access to alcohol for teenagers, just as higher taxes on cigarettes reduced teen smoking.

 

Wisconsin ranks worst in the nation for binge drinking, defined as four or more drinks in a row for a woman, and five or more drinks for a man. The intensity of Wisconsin’s drinking also ranks worst, with adult binge drinkers here averaging nine drinks in a row, the UW study suggests, based on surveys.

 

Such excessive drinking doesn’t just affect the people getting blitzed. It hurts others by leading to drunken driving and related injuries and death, property damage, domestic abuse and other violence.

 

That means even responsible drinkers will benefit from paying a higher tax on beer, wine and booze. They’ll get more protection from the damage caused by excessive drinkers who get behind the wheel or otherwise risk injury and higher cost to taxpayers.

 

And the higher tax could potentially save drinkers more than it costs if the revenue is dedicated to treatment and enforcement.

 

Most of the politicians at the state Capitol will say they oppose higher taxes, especially on beer. Yet these are the same politicians who hiked the state tax on cigarettes to $2.52 a pack, which is one of the highest rates in the nation.

 

The high state tax on cigarettes was justified to deter teens and recoup some of the public health costs. For the same reasons, Wisconsin should jack up its tiny beer tax.

 

 

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Rebate Coupon Fraud

 

IN THE UNITED STATES DISTRICT COURT OR THE WESTERN DISTRICT OF WISCONSIN UNITED STATES OF AMERICA v. FAYE MITTELSTEADT, Defendant (Excerpt)

 

Source: Pacer

2012 DEC 13

 

THE UNITED STATES ATTORNEY CHARGES:

 

COUNT 1

 

Background

1. At all times material to this indictment:

 

a. Defendant FAYE MITTELSTEADT lived at N 847 Hilly Road, Merrill, Wisconsin.

 

b. Faye’s Flowers and More Garden Center operated as a floral and garden center at 361 N. Bradenburg Ave., Merrill, Wisconsin. The business was owned and operated by FAYE MITTELSTEADT and other family members. The business operated in the spring and summer months and was closed from the end of September through the winter months.

 

c. Certain liquor companies allowed consumers to obtain a refund on part of their purchase price by mailing a rebate form along with an original receipt showing the product purchased, price paid and date of purchase. In order to receive a refund check, the consumer was required to write down on the rebate form the 12 digit UPC bar code number located on the liquor bottle. The consumer was also required to list their name, date of birth, and address on the rebate form. The rebate forms listed certain rules for obtaining a refund. These rules included: (1) only one refund per household name and/or address per offer code; (2) only originals of the rebate form and the original cash register receipt would be accepted; (3) rebate checks would only be mailed to the name of the requestor and only if the requestor lived in the same state where the product was purchased. The rebate form also gave notice that any fraudulent submissions could result in federal prosecution under the mail fraud statute.

 

Scheme To Defraud

2. During the period beginning in or about January 2008, and continuing to on or about November 10, 2010, in the Western District of Wisconsin and elsewhere, the defendant, FAYE MITTELSTEADT, knowingly and with the intent to defraud, devised and participated in a scheme to defraud liquor companies and rebate processing centers, and to obtain money and property by means of false and fraudulent pretenses, representations and promises.

 

3. It was part of the scheme that the defendant submitted fake cash register receipts purportedly from Nick’s County Market to support non-existent liquor purchases which she claimed on liquor rebate forms that were mailed to rebate centers.

 

4. It was further part of the scheme that the defendant used the names and addresses of family members as nominees on some of the rebate forms to obtain refund checks in an effort to circumvent the rule prohibiting one rebate per household.

 

5. It was further part of the scheme that the defendant intentionally misspelled her name, and those of family members, on the fraudulently submitted rebate forms, in an effort to conceal and disguise the scheme.

 

6. It was further part of the scheme that the defendant deposited the fraudulently obtained refund checks into a Park City Credit Union joint savings account.

 

7. It was further part of the scheme that the defendant used a Royal cash register from her business — Faye’s Flowers and More Garden Center. This register did not work properly and the defendant moved it to her home. The defendant programmed the cash register to issue fake cash register receipts.

 

8. It was further part of the scheme that the defendant received over $13,867 in refund checks from these false submissions.

 

Mailing

9. On or about the dates listed below, in the Western District of Wisconsin, the defendant, FAYE MITTELSTEADT, for the purpose of executing this scheme, knowingly caused to be delivered by mail according to the directions thereon, the following item: 1 2-16-10 Rebate form in the name Merrill, Wisconsin Salvador’s Refund of Ron Mittelsteadt, with Dept. 10 cash register receipt from P.O. Box 6037 Nick’s County Market Douglas, AZ 85655-6037 showing purchase of liquor on 1-30-10

 

 

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Stoli owner places bid for CEDC

 

Source: The Spirits Business

by Becky Paskin

26th March, 2013

 

SPI Group, along with a consortium of other investors, has made a bid for embattled Russian vodka group Central European Distribution Corp (CEDC).

 

The consortium, which also includes A1 – a division of Russia’s Alfa bank – and CEDC shareholder Mark Kaufman, made an offer for the Poland-based drinks group for US$280 million cash and $650m in new debt to restructure the group.

 

In exchange the consortium would receive 100% of reorganised equity in CEDC.

 

The bid comes after CEDC, which owns the Zubrowka, Green Mark, Absolwent and Parliament brands, defaulted on the exchange of $257bn worth of notes that were due to mature on 15 March.

 

“SPI has a fantastic ability to help those brands develop an export business,” said Val Mendeleev, CEO of SPI Group. “Our products are currently distributed in 167 markets worldwide and we can certainly add CEDC brands with high potential – particularly in the USA where we’ll have our own distribution company from 1 January”

 

CEDC currently holds just under 6% of the entire vodka category, but crippled by debt, its shares have floundered and hit 44 cents in March in New York, down 80% on the start of the year.

 

A letter to the CEDC board, written on behalf of the consortium: “The Consortium is confident that this new proposal constitutes the most attractive offer available for the Company and 2016 note holders and substantially improves our previous term sheet.

 

“This is true not only in immediate and evident monetary terms but also from the point of view of CEDC’s financial position and liquidity as well as future development.”

 

Roust Trading owner Roustam Tariko, already a major shareholder in CEDC and holder of around $102.6m of the 2013 notes, has also made a bid for the company. He offered to buy the notes he doesn’t own – approximately $155.3m – for $25m in cash and $30m in secured notes issued by Roust.

 

“CEDC continues to believe that a successful restructuring will improve its financial strength and flexibility, and enable it to focus on maximizing the value of its strong brands and market position,” the group stated. “The restructuring is expected to have no effect on CEDC’s operations in Poland, Russia, Hungary or Ukraine, all of which will continue doing business as usual.”

 

 

——

Why Beer Marketers Don’t Spend Much on Joe Six-Pack Anymore

 

Subpremium Suds Like Busch, Keystone Light Yield ‘Fast Nickels,’ But Advertising More-Expensive Brews Brings in “Slow Dimes’

 

Source: Ad Age

E.J. Schultz

March 25, 2013

 

With the beer market inundated by fruity flavored brews, pricey craft brands and Justin Timberlake ads, what ever happened to Joe Six-Pack?

 

He’s still there, chugging cheap beers after work, but brewers are dedicating fewer dollars to reach him as the “subpremium” segment declines. Instead, beer marketers, on a quest for fatter profit margins, are encouraging drinkers to trade up to pricier line extensions such as Bud Light Platinum or new concoctions like Redd’s Apple Ale.

 

Brewers are advertising economy brands less: Measured-media spending on the five largest low-end brews — Natural Light, Busch Light, Busch, Miller High Life and Keystone Light — fell to $6.9 million last year from $22.4 million in 2011, according to Kantar Media. That compares with the $32 million that Anheuser-Busch InBev spent last year launching Bud Light Platinum. Redd’s Apple Ale, introduced by MillerCoors this year, is getting a similarly hefty push, while the brewer last week launched the first national TV ads for Leinenkugel’s that spotlight its lemonade-flavored Summer Shandy offering, whose sales soared 90% last year, according to the brewer.

 

Add in the fact that the economic downturn hurt blue-collar drinkers the most and the result is that the sub-premium segment has been on a long-term slide, falling to 13.5% in 2012 from 15.7% of beer sales at supermarkets in 2009, according to SymphonyIRI. During the same period, craft-beer sales grew to 11.9% from 8.3%, while so-called superpremium beers, like Blue Moon and Shock Top, jumped to 10.7% from 9.1%.

 

How has beer been able to get consumers to trade up in a sluggish economy? “It comes down to emotional engagement,” Trevor Stirling, a beverages analyst at Sanford C. Bernstein, said. “Consumers are much more likely to “brand’ themselves by what they drink, be it a quirky, heavily hopped IPA, or a “sophisticated’ Stella; whereas Natty Light and Beast Light have, if anything, negative brand badging.”

 

New drinkers — think Joe College — are a lot more experimental than they used to be, sampling craft beers, cocktails and flavored malt beverages, rather than relying on the same old Keystone or Natural Light. Younger drinkers “grew up with so many different flavors that it’s not unusual for them to want to try different things,” said Dan Wandel, SymphonyIRI’s senior VP-beverage alcohol client insights.

 

Marketers have also spurred the shifts by hiking prices on subpremium brands. A-B InBev for the past few years has been closing price gaps between mainstream beers like Bud Light and its value brands in an effort to rebalance its portfolio — and the American beer market at large — toward premium beers. “Our strategic intent is to grow our share of the value segment, but without growing the segment itself,” said Edison Yu, VP-value brands at A-B InBev.

 

Still, big brewers cannot risk alienating economy drinkers for fear of losing them to cheap liquor or smaller beer brands like Pabst Brewing Co.’s Pabst and Old Milwaukee, whose locally targeted, quirky Will Ferrell ads have gotten a ton of free media attention.

 

There are signs that A-B InBev and MillerCoors this year are paying a bit more attention to their low-end brands, rolling out new packaging, campaigns and promotions. The goal is to protect share in a segment that still accounts for 18.4% of dollar sales, according to SymphonyIRI. Although declining, the segment is still larger than imports (14.4%) and crafts (5.4%).

 

“When you are a big mega-brewer like [A-B InBev] or MillerCoors, you are looking to be all things to all people,” said Benj Steinman, president of Beer Marketer’s Insights. “And if subpremiums are 20% of the business, you damn well want to play there.” Economy brands are more about “fast nickels” than a “slow dime,” said Ashley Selman, marketing director-economy brands at MillerCoors. “We make less per barrel, but we sell a lot of volume.”

 

As they narrow their focus, value brands are zeroing in on core drinkers. Keystone Light is replacing its “Keith Stone” ads that targeted younger drinkers with a partnership with tournament-fishing organization FLW. Its mostly in-store campaign targets Walmart-shopping, middle-age drinkers.

 

Busch is seeking to hook more anglers with a limited-time promo this spring in which 50,000 special “fishing-lure” cans will be randomly inserted into cases. Fans who upload pictures of the cans to the Busch Facebook page can win prizes, including a fishing trip with star angler Kevin VanDam.

 

Miller High Life is launching a campaign that plugs the beer’s role in “everyday celebrations,” teaming with Harley Davidson for in-store promotions that tout the fact that both brands are turning 110 years old this year.

 

Despite the competition from crafts, economy brands are not giving up on younger drinkers. A-B InBev’s Natural Light, which targets college-age consumers, is seeking to stand out with new “stubby” bottles, dubbed “Fatty Natty,” rolling out nationally. MillerCoors is targeting hipsters with its Hamm’s brand via grassroots marketing.

 

The brew is part of the marketer’s “classic” economy-brand lineup, which is meant to compete with crafts. “These guys are still challenged by the economy,” Ms. Selman said. “And they don’t have the money to buy crafts all night long.”

 

 

——

Wine fraud lawsuit is a test of bottle for billionaire Bill Koch

 

Court case due to begin in New York brings to light claims of widespread counterfeiting in the world of fine and rare wines

 

Source: The Guardian

Matt Williams in New York         

24 March 2013

 

It has aged for six years, but the uncorking of a wine-fraud lawsuit in a Manhattan court on Monday looks set to leave a rather nasty – and potentially costly – aftertaste.

 

Brought by one of America’s richest men, Bill Koch, against Eric Greenberg, a businessman who himself was once reportedly worth $1bn, the case will also put a spotlight on what some experts have claimed has been a scourge of the wine market for years: counterfeits. At the heart of the matter are a couple of dozen bottles that were purchased for up to $30,000 each, but may have turned out to be less than vintage. In the process of testimony that could last up to four weeks, the court is expected to hear of alleged underhand tactics used by some retailers and auction houses to offload suspect plonk.

 

It is a lawsuit with a heady body: nuclear scientists, dodgy wine labs and allegations of a culture of fraud all feature in the civil action brought by a man whose single-minded trail of those he deems responsible for flooding the wine market with fakes has seen him likened to Captain Ahab, the pursuer of Moby Dick.

 

Certainly the money pumped into the case is of whale-like proportions. Greenberg’s lawyers say Koch – who is worth an estimated $4bn – has ploughed “seven or eight million” dollars into the case. The total worth of the wines in question runs into hundreds of thousands of dollars. Koch, who is an avid collector of many things – including ‘wild west’ memorabilia and nautical instruments – launched his lawsuit in 2007, against both Greenberg and the New York auctioneers Zachys. It followed the discovery, during an inspection, that a number of bottles gathering dust in his impressive cellars were counterfeit.

 

Some of the suspect bottles are alleged to have come into the possession of Koch through a single-seller auction at Zachys in October 2005. That sale saw Greenberg offload nearly $10m worth of wine in one go. It is claimed that in an effort to offset his shrinking fortune, the founder of the internet companies Scient and Viant sold some $50m of his cellar’s contents.

 

The fine print in at the Zachys’ sale catalogue warned of buyer beware, stating “prospective bidders are invited to inspect the property before bidding”. Lawyers for Koch say that is an unreasonable demand on a would-be buyer. “It would have taken Koch’s expert, Michael Egan, at his current rate of 36 bottles per 15 hours, more than 7,000 hours, at a cost of nearly $1m, to inspect all 17,000 bottles,” the billionaire’s legal representatives argued in pretrial memorandum of law.

 

Moreover, they claim that the seller already knew that many of the bottles – some of which were allegedly bought from Royal Wine Merchants, a New York-based specialist in French Bordeaux and Burgundy – were fake. Greenberg was allegedly tipped off by international auctioneer Sotheby’s that some of the bottles were not authentic, when it declined to sell the collection. Sotheby’s suspicions were later confirmed by a team of nuclear scientists and chemists brought in by Greenberg to analyse the bottles and labels.

Allegations of fraud

 

But it was not just Greenberg’s cellars that had been infected by fakes. The civil action lifts a veil on just how rife allegations of fraud were in the fine wine market in the mid-2000s.

 

On learning that Royal was behind the sale to Greenberg, Sotheby’s head of wine, Serena Sutcliffe, allegedly claimed the wine collector that “the guys at Royal are crooks”, and that anything the company sold was likely to be fake, according to a filing by Koch’s lawyers. Greenberg subsequently threatened legal action against Royal Wine Merchants and around February 2004 he returned $362,941 worth of wine to the seller, according to court documents filed by Koch’s team. In a statement to the Guardian over the weekend, Royal Wine Merchants said it was “incredulous” over the allegation included in Koch’s legal filings, adding that it was “the stuff of fantasy”.

 

Sam Israel, Royal’s legal counsel, added: “Royal has enjoyed a reputation as a top-tier distributor of authentic fine wines.”

 

Koch says Greenberg concealed what he knew about some of his wines. Koch’s lawyers claim he told a house manager: “What they did to me, I’m going to do to somebody else,” adding that the comment was taken to mean he intended to offload counterfeit wines. It is alleged that Greenberg first tried to sell magnums of purported 1945 Château Lafite and 1921 Cheval Blanc through Acker Merrall & Condit.

 

But the auction house’s president, John Kapon, expressed concerns. According to documents filed by Koch’s legal representatives, Greenberg was “fucking pissed” and wrote to Kapon stating: “If my [magnums] are good enough for Zachys, they are good enough for anyone else.”

 

The allegedly rejected 1945 Lafite was amongst those bought by Koch. Other bottles purchased at the 2005 Zachys auction included an 1811 Lafite, for $29,172, and a 1870 bottle described in auction as “one of the all-time greats”. All were found to be among the fakes, Koch’s lawyers claim.

 

The apparently counterfeit bottles were identified by William Edgerton, a noted wine expert employed in 2007 by Koch. Lawyers for the billionaire claim that while Edgerton was examining Koch’s cellars, he stumbled across bottles that he had marked as potentially counterfeit during an earlier inspection of Greenberg’s collection.

 

‘He’s like Ahab’

 

The lawsuit against Greenberg is part of a campaign by Koch to tighten up practices at wine sales and to pursue those he believes to be responsible for fraud through the courts.

 

The brother of fellow billionaires David and Charles – who are noted funders of conservative causes in the US – Bill has been allegedly stung in the rare wine market before. He alleges that wine he brought through Christie’s, which is purportedly from the estate of third US president Thomas Jefferson, is inauthentic. Last year, a court in the US ruled that he had left it too long to bring a lawsuit against the auction house. A lawyer for Christie’s told Bloomberg that the court ruling was “clearly correct”.

 

The decision has seemingly emboldened his drive to pursue the latest court action.

 

“He’s like Ahab,” Greenberg’s spokesman, Bill Cunningham, told the Guardian on Friday. “Eric offered to him a refund and offered to have a charity event in which experts tasted the wines. Koch turned down the refund and the charity offer.” Koch’s lawyers confirmed that an offer was made, but that the billionaire returned Greenberg’s cheque.

 

Zachys was dismissed from the complaint last year, with the two sides reaching a undisclosed settlement, but Cunningham said on Friday that Greenberg’s legal team expected the case against their client to go to trial as scheduled. “I do not think anybody is confident. We are up against a billionaire with massive resources who has spent the last seven years pursuing this,” he said.

 

Greenberg’s lawyers maintain that their client is not responsible for Koch’s wine woes. They note that Greenberg was not mentioned in the Zachys sale catalogue and that the auction house inspected and selected the bottles to be sold. “They were not selected by Eric Greenberg,” Cunningham said. In any event, Greenberg’s lawyers have stated in court documents, “Koch cannot establish his claims.”

 

What doesn’t appear to be in question is that fake wines were present in both men’s collections. “There is no question that anybody with an extensive collection of wines and who buys from auctions may have inauthentic wines. Every collector has fake bottles in his collection,” said Cunningham.

 

“No one doubts that there were counterfeit or inauthentic wines in [Greenberg’s] collection. But what we are concerned with is firstly that Eric Greenberg did not select the wines for auction and did not knowingly sell inauthentic wines. Secondly, even the experts do not agree [about what wines are fake].”

 

Cunningham said that of the 24 bottles in question, even Koch’s experts cannot agree which ones are fake.

The Kurniawan connection

 

The civil trial is being paired with a criminal one slated for later this year as having the potential to blow the lid off fraud in the fine wine sector. Last year, one of the most prominent wine dealers in America, Rudy Kurniawan, was arrested and charged as the alleged head of a counterfeit wine laboratory that had fooled the wine world for eight years. It is claimed that from his Californian home, Kurniawan – who also goes by the names of Dr Conti and Mr 47 – mixed low-priced wines to mimic the tastes of far more expensive ones.

 

According to his indictment, he would then pour the creations into empty bottles of rare wines procured from a restaurant in New York City, and complete the fraud by fitting the bottles with fake labels that he created using stencils and rubber stamps. The finished counterfeits would then be sold for up to $50,000 a bottle, prosecutors say.

 

Kurniawan’s trial is expected later this year. But his name is likely crop up in the civil case that is due to commence on Monday. In legal documents, Koch’s lawyers allege that in late 2003, Greenberg bought wines from the alleged counterfeiter. Greenberg’s representatives accept that their client bought from Kurniawan, but say “so did many other people” and add that he did not know the purchased bottles were fake.

 

It has been claimed that actions like those alleged to have been conducted by Kurniawan have caused the fine wine market to be flooded with fakes in recent years. Maureen Downey, a rare-wine expert who is set to give evidence as part of the Koch civil action, said: “The media has only been aware of this in the last couple of years, but the most blatant fraud was going on in 2004 to 2009. At that point there was industry pressure to clean up. It is my belief that when the pressure ratcheted up, there was some wholesale dumping in Asia.”

 

She added that the majority of fakes are still around, with their true price unknown to the collector. “Absolutely – most of it is still out there. I find them all the time, everywhere.”

 

 

——

China as a Vast Wine Market

 

Australian Vintner Plans to Open Outlets in Country to Create a Taste for Luxury Brands

 

Source: WSJ

By LAURIE BURKITT And JASON CHOW

March 24th

 

Australia’s Treasury Wine Estates Ltd. TWE.AU -3.38% is planning to open wine bars or restaurant and entertainment outlets in China in a bid to get the country’s consumers drinking luxury wines-not just giving them as gifts.

 

The winemaker intends to unveil its own wine outlets in the next three to five years, said David Dearie, Treasury’s chief executive. The goal is to help consumers learn more about wine and drink more of it, said Mr. Dearie, noting that it is too early to disclose details. Currently it sells in China only through distributors.

 

China’s appetite for wine is growing, with consumption in 2012 up 20% from the year before. Jennie Mack of Asia Wine and Services Education Center tells the WSJ’s Jake Lee what kinds of wine the Chinese are drinking today.

 

“If you’re going to make great wine and be a leading brand in China, you also have to be consumer-oriented,” Mr. Dearie said.

 

China’s wine market has exploded in recent years, spurring major competition among winemakers who have flooded the market and are now looking to differentiate themselves. Sales of wine reached 257 billion yuan, roughly $41 billion, in 2012, up 20% from a year earlier, according to research firm Euromonitor International.

 

But wine consumption per capita in China is still a fraction of that in other countries. Chinese drinkers consumed only 1.4 liters of wine per person in 2011, far below the French average of 53.2 liters per person, according to the most recent data from London-based research company International Wine & Spirit Research. It predicts China’s per capita consumption will increase to 2.1 liters per person over the next three years.

 

Mr. Dearie said higher-quality import wines are often given as gifts between businessmen to be stashed away rather than swilled. And while Treasury is rolling out some of its priciest wines to be used as gifts, the company hopes that with wine bars or restaurants it will encourage actual consumption of the wine.

 

Mr. Dearie said the move toward entertaining hasn’t been influenced by China’s recent austerity campaign, in which catering and wine companies have been hurt by a ban on government banquets.

 

Local vineyards and wine retailers have already started opening bars, restaurants, clubs and shops with the option to drink on premises, like state-owned Cofco Corp.’s Chateau Junding wine-club chain. Aussino World Wines, a Chinese wine retailer with shops in more than 100 cities in China, runs lounges in China’s southern city of Guangzhou.

 

Executives of liquor giant Diageo DGE.LN -0.71% PLC, which recently launched its second flagship bar in China, say its Johnnie Walker Houses have been successful in helping Diageo identify its VIP consumers and to sell exclusive products that can boost the brand and its profit.

 

Fongyee Walker, a Beijing-based wine consultant, said winemakers have to be creative in China, adapting to local habits. “People in the West buy to consume at home; in China, they buy to consume with friends when they’re out,” Ms. Walker said.

 

Mr. Dearie said Treasury-which sells in China wines such as a high-end Penfolds Grange for around 7,594 yuan, or about $1,222, and a low-end Rosemount Diamond Label for 160 yuan-is working with one of its distributors toward opening a 6,000-square-meter wine gallery, for tasting events, in Shanghai.

 

He said he has no plans to develop special blends to suit China’s flavorful food, which doesn’t adhere well to the traditional pairings dictating, for example, that red wine goes with beef.

 

Treasury, spun off from Foster’s Group Ltd. in 2011, is investing 15 million Australian dollars (US$15.7 million) in its Australian-based winery Magill Estate, in part to attract Asian visitors, Mr. Dearie said. He said they are working with tourism boards and are boosting infrastructure so that Asian tourists can store wine there or ship wine from the Magill Estate.

 

The company is also increasing its presence at duty-free shops around the world and holding tastings there so Asian tourists can learn more about premium brands like its 1,874 yuan Wolf Blass Platinum Label, he said.

 

Treasury’s sales by volume to China and Hong Kong rose 31% in the fiscal year ended June 30, 2012 from a year earlier.

 

Mr. Dearie said Treasury’s business in China is profitable. He declined to offer further details.

 

Treasury’s net profit increased 31% to A$52.3 million in its fiscal first half ended Dec. 31 on a reported-currency basis.

 

 

——

Single-Serving Wine for Sipping Small

 

Source: New York Times

By FLORENCE FABRICANT

Mar 25th

 

Buy me some pinot and Cracker Jack! Pinot grigio, California merlot, cabernet sauvignon and chardonnay are now sold in sealed single-serve plastic goblets. Next month, Zipz, the company behind this new format, will introduce them at baseball stadiums, including Citi Field (hear that, Mets fans?), and at wine shops.

 

A couple of entrepreneurs in Miami have also entered the single-serve fray with the Vini, which sells California wines in 187-milliliter (quarter-bottle or quartino) glass vials with screw caps. Bottled in Sonoma, they are far more elegant than the plastic goblets, though you need a straw or a glass for drinking. Zipz claims its varietal wines are “premium,” though “ordinary” is more like it. The Vini calls its blends, mostly zinfandel from Napa and chardonnay from Sonoma, “exceptional,” which is another overstatement: Zipz wines, about $4 each or $14 for a four-pack, will be sold starting in mid-April at Yorkshire Wines and Spirits and zipzwine.com. They will also be sold at Citi Field and other sports venues. The Vini, $35 to $40 for a four-pack, is sold at thevini.com.

 

 

——

German wine exports continue downward trend

 

Source: Decanter    

by Panos Kakaviatos in Düsseldorf

Monday 25 March 2013

 

German wine exports slid by 15.2% in 2012 compared to 2011, continuing a declining trend from the previous year, according to statistics released by the German Wine Institute.

 

The drop in the volume of exports in 2012, to 1.3m hectolitres, follows an 11.8% drop in exports in 2011.

 

While exports in 2012 to some smaller markets showed gains, a ‘significant decline’ in exports to high-volume sales markets like the US, Great Britain and Russia led to the decline, according to a press release issued on the eve of Prowein, Germany’s largest international wine fair, held in Düsseldorf.

 

The German Wine Institute said the decline was due in part to a smaller 2010 crop and ‘fiercer competition’ for lower priced wine segments. Import regulation changes in the Russian market also led to lower exports there.

 

The value of wines exported also dropped by 7.8% in 2012. This figure is less striking because the average price per litre of wines sold increased, indicating ‘a trend towards selling higher quality wines,’ German Wine Institute managing director Monika Reule said.

 

But given the declines overall, Reule called for ‘intensive and continuous public relations work in foreign markets to regain lost market shares.’

 

 

——

Brunello vandal gets four years in jail

 

Source: the drinks business

by Lucy Shaw

25th March, 2013

 

The vandal who destroyed six vintages of Case Basse Brunello di Montalcino from his former employer has been sentenced to four years in prison.

 

Andrea Di Gisi, 39, from Rome, was sentenced in a Siena court last Friday, and received two years fewer in prison than the prosecutor requested.

 

According to Montalcinonews.com, Di Gisi, who has been dubbed “The Brunello Killer” in the Italian press, is planning to appeal the sentence.

 

On announcing the jail term, Case Basse owner Gianfranco Soldera also said in a statement that he was resigning from the Brunello di Montalcino consorzio.

 

On 2 December last year, 62,600 litres of Brunello were lost after the taps to the barrels were opened by Di Gisi, who entered the cellar by breaking a window.

 

Once inside, he opened the valves of 10 barrels, allowing wine from the last six vintages: 2007, 2008, 2009, 2010, 2011 and 2012 to flow down the drain.

 

The act of vandalism resulted in a commercial loss in the region of ?10m.

 

Di Gisi allegedly carried out the attack out of revenge, and was said to have been angry that he hadn’t been given accommodation on the estate while working there.

 

Located in the south-west of Montalcino, the 23-hectare Case Basse estate was bought and restored by Soldera, a former insurance broker from Treviso, in 1972. It produces around 10,000 bottles each year.

 

The vintages of Case Basse Brunello that have been destroyed will now become a rarity, with only a few small barrels of each vintage remaining.

 

Having halted the sale of Case Basse Brunello after the attack in December in an attempt to prevent price speculation, Soldera will begin selling the wine again at the end of this month.

 

 

——

Ontario’s wine industry worth $7B: Study

 

Source: Canoe Money

By Patrick Gallagher, QMI Agency  

Mar 25th

 

Every bottle of wine produced in Ontario creates spinoff benefits worth $40, an economic impact study found, adding up to a national economic impact of almost $7 billion and more than 31,000 jobs.

 

The report was commissioned by the Canadian Vintners Association and other provincial wine associations.

 

Ontario residents alone drank 84 million bottles of wine last year, while almost two million people visited a winery in the province, the report found.

 

Nationally, Canadians enjoy more than 220 million bottles of wine produced by the domestic wine industry each year.

 

“The impacts are both direct and indirect, from job creation and tourism to tax generation and agricultural growth, the wine industry benefits multiple business sectors across the entire Canadian economy,” said Dan Paszkowski, president of the Canadian Vintners Association.

 

Wineries in B.C. are second to those in Ontario in terms of economic output, with a spinoff at about $2 billion.

 

 

——

TY KU Premium Sake & Spirits Announces Expanded Partnership with Southern Wine & Spirits of America

 

Source: SWS

March 25, 2013

 

Mel Dick, President-Wine Division & Senior Vice President, Southern Wine & Spirits of America, Inc. (Southern)-the country’s leading wine and spirits distributor-announced today that TY KU Premium Sake & Spirits-a leading supplier of premium sakeand the fastest-growing sake brand in 2011 and 2012 as rated by Nielson-has extended its distribution agreement with Southern across the country. This brings the two companies’ alignment for TY KU’s entire portfolio of premium products to 25 U.S. markets where Southern is present-and another 9 markets for TY KU’s spirits portfolio.  The TY KU/Southern alliance is effective immediately.

 

Regarding the expanded relationship, Dick said, “Southern Wine & Spirits is proud to have TY KU Premium Sake & Spirits across a majority of our markets.  We are excited about the dynamic sake category and impressed with TY KU’s growth since its launch just a few short years ago. We see great promise for the category, the TY KU brand, and the positive message of friendship and respect embedded within the TY KU ‘Share On’ campaign.”

 

 

——

Paul Draper crowned the 2013 Winemakers’ Winemaker by IMW and db

 

Source: the drinks business

by Andy Young

25th March, 2013

 

Californian legend Paul Draper has been named the 2013 Winemakers’ Winemaker by the Institute of Masters of Wine and the drinks business.

 

The award was presented at a ceremony at ProWein in Düsseldorf by Jean-Michel Valette MW, chairman of the Institute of Masters of Wine.

 

Recognising outstanding achievement in the field of winemaking, the award is now in its third year, with previous winners being Peter Sisseck of Dominio de Pingus and Peter Gago of Penfolds.

 

As chief winemaker at Ridge Vineyards in California since 1969, Paul was chosen as the recipient of this year’s award by a panel that comprised Master of Wine winemakers from all over the world and the previous winners of the award.

 

Paul said: “This honour means so much to me because of my respect for the Masters of Wine – and most especially for the winemakers among them, who have such a breadth of knowledge of wine as well as expertise in my chosen vocation.”

 

In particular the judging panel recognised Paul for an approach that has been characterised by an emphasis on traditional winemaking practices, sustainable agriculture and a sense of place. He has been a pioneer in the popularising of single estate winemaking in California, and was instrumental in the growing recognition of Zinfandel as an important regional grape variety.

 

Ridge Monte Bello 1971 achieved international renown when it was included in the famous Judgement of Paris tasting in 1976, in which Cabernet Sauvignon wines from California were shown to compare very favourably with top French wines from Bordeaux when tasted blind. In the 30th Anniversary tasting of the same wines in 2006, Ridge Monte Bello 1971 emerged as the winner.

 

Mr Valette said: “It’s a delight for me, as a fellow countryman, to be presenting this award to Paul Draper. Paul has done so much for winemaking in the United States, and, in his quiet way, has been a beacon of winemaking excellence and inquiry to so many. It’s a privilege to have this opportunity to show the respect in which he is held by his peers worldwide.”

 

 

——

‘Kentucky Bourbon History’ author sees story of US in evolution of whiskey

 

Source: Courier Journal

Written by Matt Frassica

Mar. 25

If you’ve spent any time reading the back labels of bourbon bottles, you’ve heard about them – the pioneering farmer-distillers, swashbuckling moonshiners and crooked tax agents who lent their names or family recipes to each brand.

 

Judging by the number and variety of these origin stories, there are enough colorful characters in the history of America’s native spirit to populate a whole aisle at one of the big-box liquor stores.

 

These figures constitute what historian Michael Veach calls “marketing history.” “Salesmen have been the same for thousands of years, and if they can stretch the truth or make up a truth that fits their needs to sell more product, they will do so,” Veach said. “That’s been around for the whole history of the bourbon industry.”

 

Veach should know. For the past 20 years, Veach has studied the history of bourbon distilling, earning a place in the Kentucky Distillers Association Bourbon Hall of Fame. His new book, “Kentucky Bourbon Whiskey,” published by the University of Kentucky Press, came out earlier this month.

 

“Kentucky Bourbon Whiskey” is one of the only histories of the industry written for a general reader available from a mainstream publisher. With reviews in places like The Wall Street Journal and a recent interview with Veach on the public radio show “Marketplace,” the book seems destined to become an important source for anyone looking to learn more about the history of Kentucky’s famous juice.

 

“I am the luckiest student to come out of the University of Louisville history department,” Veach said on a recent afternoon in the living room of the Filson Historical Society’s Third Street mansion, where he is associate curator of special collections and regularly holds classes on the history and appreciation of bourbon.

 

As a graduate student at the university in the early 1990s, Veach studied medieval history. He heard that United Distillers wanted a graduate student to build an archive of its historical materials. It offered $9 an hour, 35 hours a week, for six weeks. “As a grad student who hadn’t worked full time in a while, that sounded very good to me,” Veach said.

 

What started as a six-week project turned into a full-time job after he graduated, and Veach held it until the company sold its bourbon brands and closed the archives in 1996. The Filson then offered Veach a job, where he has continued his work on the history of the industry.

 

“The more I got to studying it, I realized the history of the distilling industry really is the history of the United States,” he said. “The first constitutional crisis is the Whiskey Rebellion,” caused by the whiskey tax that the federal government levied to pay off the debt of the Revolutionary War.

 

“You look at the Industrial Revolution, the evolution of technology through the 19th century – it’s mirrored very well in the distilling industry, going from a cottage industry of farmer-distillers all the way up to the modern column-still distilleries that are huge business ventures worth millions of dollars.”

 

If you can see American history reflected in the history of the bourbon industry, you can see our thirst for a good story in all that marketing copy. “Right after the Civil War in particular is when you start seeing bourbon playing up on the romanticism of the earlier days,” Veach said. Even in 1860, Jack Beam named a whiskey brand Early Times to hark back to the good old days.

 

No story is more hotly contested than the origin of bourbon itself. If you believe what Heaven Hill says on every bottle of Elijah Craig, its namesake invented Kentucky bourbon by aging corn whiskey in charred oak barrels.

 

Veach views such claims with professional skepticism. “Elijah Craig was a distiller, and he was a Baptist minister. There’s no lie in that,” he said. “Was he the inventor of bourbon? Probably not.”

 

In the book, Veach offers his own theory of bourbon’s origin. In Veach’s version of the story, sometime after 1807, John and Louis Tarascon, French immigrants who owned a mill and warehouse in Louisville, may have come up with the idea to age whiskey in charred oak as a way to imitate the taste of French brandy, which was popular among the French population in New Orleans at the time.

 

“The Tarascon brothers were in a great position to buy whiskey cheap, they were in trade with New Orleans, they knew about French brandy, they knew about what people in New Orleans were drinking,” Veach said. “It just makes sense to me.”

 

But, he cautions, it is just a theory. “The fact of the matter is, we are never going to know who invented bourbon,” he said. “Bourbon, I think, is more of an evolution than an invention.”

 

 

——

DG to surpass 11,000 stores in ’13

 

Source: RT

By Mike Troy

March 25, 2013

 

Fourth quarter same store sales increased 3% at Dollar General as the company capped of another record year and indicated it would open 635 stores this year.

 

Total sales for the company’s 13 week fourth quarter ended February 1, increased 0.5%, to $4.21 billion compared to $4.19 billion during the 14 week fourth quarter the prior year. Excluding the extra week from the prior year’s fourth quarter, sales would have increased 8%. The company said its same store sales increase was driven by consumables and a mix of increased transaction size and customer traffic.

 

Net income for the fourth quarter was $317 million and earnings per share totaled 97 cents, compared to net income of $293 million, or earnings per share of 85 cents, which benefitted by six cents because of the extra week.

 

“Dollar General had yet another outstanding year in 2012 including exceptionally strong fourth quarter results,” said chairman and CEO Rick Dreiling. “We grew our market share and invested strategically to continue to win with our customers. These results demonstrate the strength of our business strategy, and we believe we are very well-positioned for future growth.”

 

During 2012, the Dollar General opened 625 new stores and remodeled or relocated 592 other stores to end the year with a total of 10,506 stores. It said it expects to open another 625 new stores this year and remodel or relocate 550 stores. The company has previously indicated the U.S. market is capable of accommodating as many as 20,000 Dollar General stores.

 

In 2013, the expansion of selling space and the upgrade of existing square footage is expected to combine with same store sales growth in the 4% to 6% range to produce total sales growth in the 10% to 12% range. Full year earnings per share are expected to total between $3.15 and $3.30.

 

 

——

Dollar General: when shopping lists

 

Retailer’s customers could be crimped by delays in tax refunds

 

Source: FT

March 25th

 

Higher US payroll taxes and how they will affect retailers is a vexing question for investors this year. Take Dollar General, one of a few “dollar stores” that offer a hodgepodge of low-priced items, everything from packaged food to razors to clothing. On the one hand, there are fears that low income households will be the hardest hit from higher taxes, hurting sales at places such as Dollar General. On the other, most of their sales are from consumables and the company stands to benefit from the prospect of consumers with lower take-home pay “trading down”. A third factor is the improving US economy, which could cause some shoppers to trade up instead.

 

On Monday, Dollar General reported a 3 per cent increase in same-store sales in the three months ended February 1, at the low end of in-house guidance for a 3 to 4 per cent increase. But Dollar General was able to preserve margins, in spite of some concerns late last year about heightened competition and net profit beat analysts’ forecasts.

 

The company expects sales and profit growth in 2013, but warned that they will be stronger in the second half of the year, partly due to the rollout of cigarettes in its stores – a bid to boost traffic. It faces a tough first-quarter comparison – same- store sales rose 6.7 per cent a year ago. Cold spring temperatures versus last year’s warm weather also are not helping. And, in addition to payroll tax changes, Dollar General’s customers could be crimped by delays in tax refunds this year. Just ask Walmart.

 

The uncertainty helps to explain the stock’s performance on Monday: a range of up 6 per cent to down 0.5 per cent. At 16 times forward earnings, it trades in line with its historic multiple. Dollar General is opening new stores, but investors had still better believe that higher taxes are neutral or will lure more dollar shoppers.

 

 

——

Deals not driving restaurant traffic

 

Offers must be revamped to attract younger diners, NPD researchers say

 

Source: NRN

Lisa Jennings   

Mar. 25, 2013

 

Deals and discounts did not drive restaurant traffic in 2012 as much as they did in prior years, and operators need to re-engineer offers to appeal to younger diners, according to research released Monday by The NPD Group.

 

Restaurant visits driven by a deal or discount declined 3 percent for the year ending in December 2012 compared with the prior year, according to Port Washington, N.Y.-based NPD’s foodservice market research.

 

Researchers blamed the decrease in deal traffic on the increased reliance on bundled meals and value menu offerings, tactics that many restaurant chains used last year with the hope of weaning consumers off of straight discounts.

 

“Deals and special offers definitely influence restaurant visits, and if it weren’t for deals during the recession, the industry would have fared much worse, but some of the deals being offered today aren’t resonating with consumers,” said Bonnie Riggs, restaurant industry analyst for NPD.

 

In 2008, when consumers were hit hardest by the recession, restaurant visits based on deals or discounts rose 5 percent, while non-deal traffic fell 1 percent, NPD said. That trend continued into 2009, when deal-related traffic rose 3 percent, while non-deal traffic declined by 4 percent.

 

By 2012, however, those trends were reversed. Deal-related restaurant traffic fell 3 percent last year, and non-deal traffic rose 2 percent.

 

One factor may be that many restaurant deals, such as “two for $20” lunch deals in casual dining, have been in place for several years now. “After certain deals have been in the marketplace for a while, they become the norm,” Riggs explained. “It becomes no longer a deal to consumers.”

 

In addition, in the quick-service world, in particular, the disparity between deal and non-deal pricing is shrinking, she added. That factor has hurt traffic among younger consumers specifically, an age group that continues to be very price sensitive.

 

Going into 2013, value remains top of mind for all consumers, especially as the payroll tax increase and rising gas prices take a toll on discretionary spending, said Riggs. NPD has projected that overall traffic overall will remain slightly negative in 2013, especially among full-service restaurants.

 

The NPD report, “Planning for Growth in the New Normal Marketplace,” explores how restaurant operators can rethink their value message. “Considering current consumer sentiment and their continuing frugality, the deals that have historically appealed to restaurant customers need to be re-engineered and the next generation of deals introduced,” Riggs said.

 

Restaurant operators are going to have to get more innovative and creative, she noted. “They’re going to have to make deals seem like something new and different.”

 

Coupons – especially those available on restaurant company websites – continue to be traffic drivers, Riggs said, while bundled meals and value menus are not as effective in getting diners through the door.

 

“People tend to want a discount on regular menu items, things they like,” said Riggs, rather than targeted items with low prices. “You can have something that costs $1, but if it’s not decent quality and doesn’t taste good, it’s not worth $1.”

 

 

——

Arizona: Inside the liquor department’s covert underage buyer operation

 

Source: CBS 5

By Lindsey Reiser

Mar 25th

 

We all know bars and restaurants are supposed to be checking identification cards, but we also know not all do. So there are police officers and teenagers out there doing undercover work to keep them on their toes.

 

The Arizona Department of Liquor has a CUB program, in which CUB stands for covert underage buyer. The Arizona Department of Liquor sends in a teenager with their real IDs to try and buy alcohol. If they’re successful, the cops are there to bust the sellers.

 

“You never know what we’re going to run into in the night,” said Sgt. Wes Kuhl with the Arizona Department of Liquor. They go on CUB stings a few times a month. This time, they let us tag along.

 

“We get some sort of complaint that a location is selling to an underage,” Kuhl said. “We can only check those places per state statute.”

 

After they get the complaint, the undercover officers check it out, usually by sending in the CUB.

 

“Not every high schooler gets the opportunity to go and do undercover work,” said one of the CUBs, Zack, who will soon retire because a CUB cannot be older than 19. Zack said he usually gets a buy 50 percent of the time.

 

“I’ve had friends who’ve gotten hurt from drinking alcohol and from other teenagers drinking alcohol in car accidents and whatnot,” Zack said.

 

“In 2012 we had a buy rate of about 38 percent, so approximately four out of 10 places have sold alcohol to our underage buyers,” Kuhl said. He said that number seems a little high, considering all restaurant, bar, and liquor store owners learn about this program when they get their license.

 

“It’s no surprise, we’re not trying to deceive anybody, we’re just checking compliance,” Kuhl said.

 

On this sting, we went to nine different places that sell alcohol. First, one of the liquor department’s undercover cops walks in. Then, the CUB follows a few minutes later.

 

At our first few locations, the bars and restaurants turned the CUB away like they’re supposed to, like Poppy’s Place in Tempe.

 

“I asked for his ID immediately because he looked really young,” said Nicole Vidana, a waitress who refused to serve Zack.

 

If the place is compliant, they’ll get a letter from the liquor department saying they passed the test. But not everyone gets that pat on the back. At Valley Fair Liquor Store in Tempe, we followed close behind and saw the clerk sell a beer to the underage buyer.

 

The clerk that sells the alcohol gets arrested for selling to a minor, which usually leads to a fine. The establishment also gets cited, which can range from a fine to revocation of their liquor license.

 

On our sting, only one other location sold to the CUB – Dave’s Place in Phoenix.

 

And while there’s surely other places the undercover officers would rather be on their Saturday night, they know the CUB program is vital to keeping the peace.

 

“Our job is to protect the public and protect the safety of the underage people and also people on the streets of Arizona,” Kuhl said.

 

We reached out to the managers of both locations that failed the CUB challenge, but we have yet to hear back. In the 10 years the CUB program has been in place, they’ve visited nearly 3,000 bars, restaurants, and liquor stores and about a third of them failed the test.

 

 

——

Egypt: Egypt’s Islamist rulers get tough on alcohol

 

Drinkers say rises in taxes on beer and wine suggest hardliners are gaining more power in Mohamed Morsi’s government

 

Source: The Guardian

Patrick Kingsley

Sunday 24 March 2013

 

In 6 October City, a new sprawl of malls and mansions just west of the capital, locals say there is only one shop that sells alcohol. Its name is Bazaar al-Gamaa, and if you ask its owner, Abu Ramez, nicely, he will fetch you a bottle of vodka from the storeroom. In the fridges opposite the till, there are crates of local lagers: Sakara, Meister, Rex – and Stella, an award-winning Egyptian lager unconnected to its Belgian namesake. “That’s my favourite,” said Ramez, who has been an off-licence owner for 22 years. “Low alcohol percentage. Better for my liver.”

 

But now, Ramez has more to worry about than his beer consumption. Last month, Egyptian authorities announced plans to ban alcohol sales in new developments outside Cairo. Most worryingly for Ramez, they said existing licences would not be renewed in towns beyond the capital – towns such as 6 October City, a satellite development built in 1979 of about 1 million people.

 

To add to the gloom, the government doubled beer tax to 200% this month, with wine tax rising from 100% to 150%. Then last Monday, the civil aviation minister mooted banning alcohol from duty-free shops in airports. For many liberals, this triple blow adds to the impression that Egypt’s Islamist-led government, headed by President Mohamed Morsi, intends to turn the country significantly more conservative.

 

“If this government continues on this same path, we’ll be like Saudi Arabia,” said Akram, assistant manager at Charwood’s – one of a handful of restaurants that sell alcohol in 6 October City – who preferred not to give his surname. The planned licence ban had been discussed at management level, Akram said, and there are concerns that it could affect business. “Most of our guests are foreigners or Egyptians who drink alcohol,” he explained.

 

But other restaurateurs were more relaxed. “It’s not relevant,” argued Rafaat Habib, manager at the nearby Piccolo Mondo, who said his restaurant’s alcohol licence is sourced through its head office in the capital. “Our licence is connected to Cairo.”

 

Habib’s nonchalance may also derive from a wider expectation that the authorities lack the political will to enforce new licensing legislation.”The thing about licences – it’s a thing to scare people,” said Ramez, stocking his fridge with a recent Stella delivery. “When they make these questionable laws, it’s the people who will decide whether to enforce them. It’s not actually going to be implemented. In Port Said, they had a curfew, and no one followed that. They’re a failed government and no one’s going to listen to the things they’re trying to enforce.”

 

In any case, for all the talk about Egypt’s Islamisation, countered one of Ramez’s customers, many Egyptians would not adhere to a licensing ban. “It wouldn’t make a difference,” said Emam Hussein, a logistics manager, popping in to buy vodka. “There are tonnes of people who drink, even the religious. There are tonnes of Copts and tonnes of Muslims who drink underground.”

 

“We will never allow our country to become a fundamentalist country,” Ramez added. “As long as we keep on talking and speaking, no one will be able to change Egypt in this crazy manner.”

 

Even a high-profile Islamist politician sends his driver to pick up a crate of beer every week from Bazaar al Gamaa, Ramez claimed.

 

Yet beneath the bravado, there were hints of a more pressing danger. “On the phone I get a lot of threats saying ‘we will burn down your shop,'” said Ramez. “I responded very aggressively and I said that they should go ahead and do it. We won’t let them get to us. If it comes to violence, so be it.”

 

Others in the alcohol business were reluctant to speak on the record. Many Egyptian drinkers source their alcohol from delivery companies such as Gocheers or Drinkies. But when the Guardian visited Gocheers’ headquarters, no one was available for interview, or willing to say whether remotely located delivery services would be affected by the licensing change. Drinkies was also reluctant to be drawn on the subject, conscious – one employee said – of keeping a low profile.

 

“We are in close contact with stakeholders to remind them that we are an important employer in the country,” a spokesman for Drinkies’ owners – Al Ahram breweries – said in a statement. Al Ahram is owned by Heineken, which therefore controls the vast majority of Egyptian alcohol brands, including Stella and Sakara beers and popular wines such as Omar Khayyam. The spokesman pointed out that Al Ahram employed more than 2,000 people, and was “strategic for the tourism industry, which is a key driver of the Egyptian economy”.

 

In general, claimed Akram at Charwood’s, some Egyptians were wary of being seen as too fond of alcohol. “After the fall of Mubarak, there wasn’t really a government, and people had more freedom – so people drank more,” he said of his customers. “But eventually there reached a point when the customers became a bit more fearful and they didn’t want to be seen downing a whole bottle. They just drank a glass.”

 

This apprehension is derived from the government’s open conservatism, Akram argued. “There’s a much stronger group in power that’s out to implement their laws,” he said. “Before one person might tell them drinking is against religion. Now you have an entire group in government saying this. So people are more afraid in public.”

 

But Ramez had other ideas. “If [the government] wanted to prevent alcohol sales,” he said, “then they would have banned it [completely]. But they just want to raise more taxes.”

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