Liquor Industry News 4-1-2013

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Franklin Liquors

 

Monday April 1st

Pernod Ricard Looks to Acquisitions in US, Emerging Markets – Report

 

Source: Dow Jones Newswires

March 29, 2013

 

The world’s second-largest alcoholic beverage group Pernod Ricard SA (RI.FR) is looking for possible acquisition targets in the U.S. and in emerging markets, Les Echos newspaper reports Friday.

 

“The two areas we are looking at the most is the U.S. and the emerging markets,” said Alexandre Ricard, the company’s deputy chief executive, who will take the top job in early 2015, is quoted as saying. The U.S. is “by far” the most profitable market in the world, he adds.

 

Mr. Ricard, who belongs to the company’s founding family, which still controls 20% of the company, also sees wine sales, which represents only 5% of the company’s revenue, as an area for future growth.

 

 

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AB InBev moving jobs to Argentina

 

Source: KSDK

Mar 29, 2013

 

A spokesperson for Anheuser-Busch InBev says they are reorganizing some departments in the U.S. business services area, and that fewer than 30 people will lose their jobs.

 

A statement from Vice President of People Jim Brickey says the reductions were minimized by using unfilled positions.

 

The company will not disclose how many employees have lost their jobs since the merger with InBev.

 

Employees in eliminated positions are allowed to apply for other positions that are open within the company.

 

Some of the work that has been eliminated in the United States will be performed at an AB InBev global center in Argentina.

 

The company did not specify if the positions cut are local.

 

Here is the full statement from Brickey:

 

“We recently announced to some departments within our U.S. business services area we are reorganizing work that will displace a small number of workers. These reductions were minimized as much as possible by using unfilled positions. We communicated this news to impacted employees recently. They are able to apply for other open positions in the company they are qualified to perform.

 

“Additionally, other areas of that division will be expanding, which we expect to result in new jobs in the near future. This is an excellent workforce, and when we can expand the work and resulting positions, we will.

 

“These are always difficult decisions, but are important in evolving our business and improving our competitiveness. We will always be challenging ourselves to find better ways to run our business. As on ongoing practice, we assess our resources to assure they reflect our current business strategies and needs that will drive long-term growth.

 

“There is certain work that will now be performed in one of our global centers in Argentina, where the company has operated a business service functions for many years and there is a high level of experience, technology and expertise in performing this function. As a global company, we organize work how and where it can be most effectively performed, using the expertise of our talent in any location. We bring people with the right knowledge and experience together where the work is ideally suited. Doing so optimizes our operations and carries excellence companywide.

 

“Based on the small number of reductions, notices are not required under the federal WARN act.”

 

 

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Sazerac Company to Launch 22 flavors line under the Benchmark Bourbon brand

 

Source: Sazerac Company

March 31st

 

Sazerac Company announces the national launch of a 22 flavor line of bourbons under the Benchmark brand.

 

Marketing Director for North American Whiskeys – Kevin Richards commented on the launch “Having studied the success of other spirit brands in the flavor space we decided that a complete launch of the entire line of flavors all at once was by far the best approach as opposed to the drip, drip of one or two flavors at a time.  Clearly bourbon is a hot category, flavored spirit products remain hot and flavored whiskeys are gaining traction so the logic of a full line launch at this time makes perfect sense.  Further, it will give customers the opportunity to find their favorite flavor more quickly.

 

We have been slow to market in this fast growing segment because of the amount of R&D work that has been required to develop the full line but we are pleased with the final result.  The flavors are just spectacular owing to our use of eight year old whiskey which we also believe creates a sustainable competitive advantage.

 

Flavors in the line up include Honey, cherry, apple, lime, peach, spiced, caramel, coconut, berry, grape, peppermint, orange, butterscotch, blackberry, peanut, chocolate, coffee, apricot, root beer, ginger and two flavors designed for specific international markets – Maj-kat and Gowk, Denmark and Scotland respectively.

 

The launch will be taking place over the next several months and will be supported by a $5.0 million multi-media campaign.  In addition, the company will also be providing groundbreaking mobile floor display units utilizing the same technology that is employed by Honda’s “Asimo” robot (http://asimo.honda.com/ )  The Automated Floor Displays or AFDs are motion activated by the consumer and then provide an interactive product knowledge discussion.  The display units will be capable of answering slightly more than 1,000 product knowledge questions when asked.   The units are programmed with a Kentucky accent to provide complete authenticity when answering consumer questions.  The display units are also capable of stocking shelves and building floor displays which will add value at the store level.

 

The whiskeys are being bottled at the company’s Barton 1792 Distillery in Bardstown.  Available sizes include 1.75L, Liter, 750ml and 50ml.

 

 

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Forbes Billionaires 2013: Notable Drop-Offs (Excerpt)

 

Source: Forbes India

by Caleb Mel|

Mar 31st

 

Only 68 billionaires fell from the list this year, and eight of those died. That pales in comparison with the 210 newcomers to the list. Here are 10 notable drop-offs

 

Vijay Mallya, India

Mallya’s Kingfisher Airlines is on the verge of closure. Planes grounded, salaries unpaid for months. The wife of a Kingfisher engineer committed suicide due to financial worries. Mallya is trying to sell his stake in United Spirits to Diageo to pay off Kingfisher’s debts-estimated at over $2 billion.

 

 

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Fight looms over United Spirits cash

 

Source: FT

By Louise Lucas, Amy Kazmin and Victor Mallet

Mar 31st

 

A legal dogfight looms over part of the £1.3bn cash Diageo is paying for United Spirits, the Indian drinks group owned by mercurial liquor baron Vijay Mallya.

 

The acquisition will give the world’s biggest distiller control of India’s biggest drinks company and also hands some much-needed cash to the debt-burdened Mr Mallya, whose grounded Kingfisher Airlines is estimated to owe at least $2.5bn to creditors, mainly Indian state-banks.

 

Lawyers are working round the clock to see who will be able to access the cash – Mr Mallya or his creditors, some of whom are holding United Spirits shares as collateral for loans to Kingfisher.

 

Diageo, maker of Johnnie Walker whisky and Smirnoff vodka, is understood to have structured its part of the deal in a way that enables it to “pay unfettered cash for unfettered shares,” according to people familiar with the matter.

 

However, the dispute in India centres on the fate of the balance of cash paid by Diageo after the shares pledged as collateral to banks against loans are released.

 

While part of the cash will be used to pay off loans to release the shares, the rise in the value of the shares means there will be cash left over, sparking a spat among creditors over who can access it.

 

The shares were pledged for loans when they were trading at about Rp400-600, sharply below the Rp1,440 being paid by Diageo for each United Spirits share.

 

Crucially, India lacks a bankruptcy law and, unlike in the US, loans are not automatically clubbed together. Thus Mr Mallya can claim that he will have paid off the specific loans attached to the United Spirits shares being released and – as the law stands – try to retain the rest of the money.

 

However, regulators are understood to be pushing to ensure the money cannot be siphoned off and instead is used to repay further debts.

 

“I’m sure there are enough legal brains working on it to figure out the loopholes,” said another person familiar with the Indian situation.

 

A corporate lawyer said banks would likely approach the courts to try to give them the first right to the additional funds from Diageo. He said banks’ attorneys would try to “pierce the corporate veil” and argued that United Spirits and Kingfisher were in fact “alter-egos” of Mr Mallya, and therefore liable for repayments to Kingfisher’s creditors.

 

UB Group, the parent company for United Spirits, United Breweries and Kingfisher, said lenders to the airline could not make “any claim whatsoever” on the funds being invested by Diageo into United Spirits.

 

However, it added that United Breweries Holdings, the company from which Diageo is buying a portion of the United Spirits shares, has pledged 2.6m shares, or 2 per cent of United Spirits’ share capital, with a consortium of banks as collateral over loans to Kingfisher Airlines.

 

UB Group said: “Whilst no notice of loan recall has been received, a procedure has to be followed before any pledge can be enforced and shares sold. United Breweries (Holdings) also have a legal right of redemption over any collateral that has been provided pursuant to the guarantees given.”

 

The spat is not expected to scupper Diageo’s deal, with one person pointing out that Diageo had a potent weapon in its ability to walk away, taking all the money off the table. Sebi, India’s financial regulator, is understood to have approved the deal. Diageo declined to comment.

 

Kingfisher’s debts have been the source of bitter fights already. International aircraft leasing companies have complained that planes they leased to Kingfisher have been stuck in India, as airports, and other Kingfisher creditors, attempt to use the planes as leverage to collect on the airlines unpaid parking fees, and other dues.

 

 

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Wine and Beer: Nielsen Data Analysis: Beer Category Sales Growth Decelerates; Wine Remains Healthy

 

Source: CITI

Mar 28th

 

Wine Category Dollar Sales Increase HSD – In the four-week period ended Mar. 16, 2013, wine category dollar sales increased 7.8% YoY (and +8.6% in the past 12 weeks), while volume sales were up 4.0% YoY (and +4.3% in the last 12 weeks). Also of note, in the period we saw a category-wide decline in promotional spending (-0.6 pts YoY) as well as category-wide pricing increases (+3.6% YoY).

 

STZ Wine Sales Increase 8% YoY – STZ’s dollar sales grew 8.4% in the period (and are up 8.5% over the last 12 weeks), while volume sales increased 9.2% (and +8.9% over the last 12 weeks). STZ’s portfolio-wide pricing was down 0.7% in the period (and down 0.4% over the last 12 weeks), while promotional spending was down for the fifth consecutive period (-2.0 pts YoY).

 

Beer Category Dollar Sales Increase LSD – Beer category dollar sales increased 1.0% YoY (and +3.5% over the last 12 weeks), with ABI’s new Budweiser Black Crown offering accounting for 88% of the growth. Volume sales were down 1.6% YoY (vs. and +0.6% over the last 12 weeks). As detailed by ABI on its recent earnings call, it is likely that trends in the period were negatively affected by a tough weather comp, the U.S. payroll tax increase and by higher gas prices. Beer category promotional spending was down in the period (-3.5 pts YoY, vs. -2.7 pts over the last 12 weeks), while category-wide pricing was up (+2.6%, vs. +3.0% over the last 12 weeks).

 

MillerCoors Trends Remain Challenged – TAP’s MillerCoors JV dollar sales were down 0.7% YoY (but +1.2% over the last 12 weeks), as the continued growth of Coors Light (+2.9%) was offset by declines for a number of other key brands, including Miller Lite (-3.9%), Miller High Life (-4.5%) and Keystone Light (-4.8%). Promotional spending was down 3.8 pts YoY while pricing was up 0.9%.

 

Crown Imports Dollar Sales Increase Ahead of the Category – Dollar sales for STZ’s Crown Imports JV were up 5.1% YoY in the period (and +5.9% over the last 12 weeks). Meanwhile, volumes increased 5.8% YoY (vs. +6.2% over the last 12 weeks), as the company’s pricing was down 0.7% YoY. Declining dollar sales for Corona Light were offset by double-digit growth for Modelo Especial and low-single-digit growth for Corona Extra.

 

SAM Underperforms – SAM’s dollar sales increased 0.5% in the period (vs. +4.9% over the last 12 weeks) despite a relatively easy comp (sales were down 1.0% in the year-ago period). The results were primarily driven by Sam Adams Light (-24.2% YoY) and by the company’s seasonal offerings (-17.9% YoY). Promotional spending was down 4.7 pts in the period while pricing was up a modest 0.6% YoY.

 

BREW Posts Solid Growth – BREW grew dollar sales 6.6% YoY (vs. +6.5% over the last 12 weeks), driven by strong results for Redhook and Kona. While promo was down a notable 7.9 pts, pricing once lagged the category, up 0.9 pts.

 

 

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Wells Fargo’s Weekly Economic & Financial Commentary

 

Source: Wells Fargo

March 29th

 

U.S.

.         4Q12 GDP was revised higher (0.4%) as investment in nonresidential construction was stronger than previously reported.

.         However, personal consumption expenditures were a bit weaker than prior estimates.

.         1Q13 should produce a sizeable bounce in economic activity as the housing and labor markets continue to improve and the manufacturing sector strengthens.

.         Home prices have risen 8% year-over-year as homeowners benefit from tight supply and a declining portion of distressed sales.

.         Driven by stronger aircraft orders and, surprisingly, defense spending, durable goods orders surged 5.7% in February.

.         Consumer confidence has retreated recently, partly resulting from higher gasoline prices and fiscal uncertainty.

.         However, consumer spending has held up fairly well as households have limited savings to compensate for lost income resulting from higher energy prices and higher payroll taxes.

 

International

.         While Cyprus is too small to significantly impact the global economy, contagion effects could cause issues in other struggling Eurozone countries.

.         The precedent set by Cyprus has bondholders and depositors concerned that similar policies may be adopted in Greece, Spain, Portugal, and Italy.

.         The overall Eurozone economy likely contracted for the sixth consecutive quarter in 1Q13.

.         Spain’s economy continues to struggle, with GDP contractions in each of the last six quarters.

.         With French unemployment above 10% and rising, consumer confidence continues to weaken.

.         German economic activity is expanding, but the Ifo index of business sentiment edged lower for the first time in four months.

 

Point of View

.         Interest Rate Watch

.         The ECB will likely hold its main policy rate at 0.75%, as uncertainty of what a rate cut could actually accomplish persists.

.         Instead, more unconventional policies may be required to encourage bank lending.

.         Credit Market Insights

.         Homeownership rates have steadily declined since 2007, and even today more households are choosing to rent instead of buy.

.         Despite the record low mortgage rates, stiff lending requirements are limiting the number of potential borrowers.

.         As a result, investors are buying up single-family homes for rental purposes, pushing median home prices higher.

 

Topic of the Week

.         Changing Trends?

.         Over the next few years, we are likely to see GDP and Industrial Production growth revert back to the long-run average of 2.75% and 2.29%, respectively.

.         However, the labor market may not be as fortunate, with unemployment stabilizing around 6.3%.

.         Furthermore, a structural shift with growing demand for part-time workers instead of full-time employees appears to be unfolding.

 

 

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Restaurant sales improve in March; On-premise Alcohol Beverage Sales also Improve

 

Source: GuestMetrics

March 29th

 

According to GuestMetrics, based on its POS database of over $8 billion in annual sales, table service restaurants and bars had sales break into positive territory with a gain of 0.7% for the 4 weeks ending March 24th, an improvement vs. the 0.6% decline during the 4-week period ending February 24th and also better than the 1.4% decline during the 8-week period ending January 27th (we looked at the 8-week view of Dec/Jan due to the shift of New Year’s Eve).  All three on-premise segments are showing improvement in the latest 4 weeks: casual dining was still in negative territory with a (2.7)% decline but this was an improvement versus the (4.8)% decline in the 4 weeks ending February 24th and the (5.7)% decline for Dec/Jan period. Fine dining sales remained solidly in positive territory in March at +3.1%, similar to the +4.0% in February, and sales at bars and nightclubs were up +3.4% in March, a healthy improvement from the (4.1)% decline they posted during February. The casual dining segment still had a (2.7)% sales decline in March but that was still better than the (4.8)% decline in February.

 

“While on-premise was generally quite weak during the holiday season and January, and then continued down during February, our data indicates that during March sales moved into positive territory” said Bill Pecoriello, CEO of GuestMetrics LLC. “Based on our data, on-premise alcohol volumes were down (1.6)% in the 4 weeks ending March 24th compared to a decline of (2.1)% for the 4 weeks ending February 24th and the (3.6)% decline for the 8 weeks ending January 27.  Alcohol dollar sales were up 1.2% for the latest 4 weeks, similar to the 1.3% for the prior 4 weeks, as pricing was up 2.9%, a moderation from the 3.3% increase during the prior 4 weeks.”

 

“Looking at the specific alcohol categories, while March beer volumes were still negative with a (3.0)% decline, this was a slight improvement from the (3.2)% decline in the previous 4 weeks, and quite a bit better than the down (5.1)% in the 8-week period for December and January,” said Peter Reidhead, VP of Strategy and Insights at GuestMetrics. “Beer trends improved in bars and nightclubs but remained weak in the casual dining channel. Spirits volume was down (2.0)%, a slight improvement from down (2.8)% through February 24th and the down (3.0)% for the 8 weeks through January 27th.  Spirits remained quite weak in the casual dining channel but improved in bars and nightclubs and remained positive in fine dining. Lastly, wine volume was up 4.2% vs. up 3.0% through February 24th, both an improvement compared to the down (0.7)% for the 8-week period through January 27th.  Relative to February, in March wine volume growth improved in Bars and Nightclubs, remained very strong in fine dining and was flattish in casual dining but outperformed beer and spirits. Given the general moderation in alcohol pricing across the board, however, sales for the alcohol categories were similar to the prior 4-week period.  Beer dollar sales were up 0.6% vs. up 0.7% for the prior 4 weeks, wine sales were up 2.5% vs. 2.7%, and spirits sales were up 0.9% vs. up 0.7%.”

 

“After seeing signs of alcohol pricing moderating during the last 4 week period, the trend continued this past month with alcohol prices up 2.9% through March 24th versus up 3.3% through February 24th,” said Brian Barrett, President of GuestMetrics. “However, offsetting this was some re-inflation in food prices.  Food prices were up 2.6% for March compared to a 1.9% increase during February.  Given food represents 65% of all sales in table service restaurants, it will be important to monitor whether this is a temporary uptick or whether prices will become a renewed headwind for volumes and traffic over the next few months.”

About GuestMetrics LLC

GuestMetrics, LLC is revolutionizing how the hospitality industry operates.  Despite the dawn of the Digital Age having begun more than three decades ago, the hospitality industry essentially functions the same way it did centuries before.  GuestMetrics has cracked the code by collecting $8 billion dollars in sales from over 250 million checks from tens of thousands of restaurants, and turning billions of raw transactions into intelligible data that is fundamentally transforming the business operations of everyone from the independently-owned bar/restaurant on the corner, to multi-national chains, to the food & beverage companies that supply them.  Please visit www.GuestMetrics.com for more information and to arrange for a free demonstration.

 

 

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Restaurant industry sales, traffic soften in February

 

The National Restaurant Association’s Restaurant Performance Index fell to 99.9

 

Source: NRN

Paul Frumkin

Mar. 29, 2013

 

Foodservice operators appeared more downbeat as they reported softer same-store sales and customer traffic for the month of February, according to the National Restaurant Association’s Restaurant Performance Index.

 

The RPI, a monthly composite that tracks the health of and outlook for the restaurant industry, slipped to 99.9 in February, a decline of 0.8 percent from January’s 100.6, which reflected a five-month high in the index.

 

February marks the fourth time in the last five months that the index was below 100, which signifies a contraction in the NRA’s index of key industry indicators.

 

“The Restaurant Performance Index decline was due largely to softer sales and traffic results, which fell in February amid higher gas prices and the impact of the payroll tax hike,” said Hudson Riehle, senior vice president of the research and knowledge group for the NRA. “In addition, sales and traffic comparisons were more difficult due to the extra day in February 2012 as a result of Leap Year.

 

“Despite the sales and traffic declines in February, restaurant operators remain generally optimistic about business conditions in the months ahead, which suggests they feel the setbacks will be temporary,” Riehle added.

 

The RPI consists of two components: the Current Situation Index, which measures current trends in same-store sales, traffic, labor and capital expenditures; and the Expectations Index, which gauges restaurant operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions.

 

The Current Situation Index fell to 98.3 in February, a decline of 1.4 percent from January’s level and the sixth consecutive month it languished below the 100 mark. The NRA said sales comparisons were more difficult in February because of the 2012 Leap Year, which contributed to the first same-store sales decline in 21 months.

 

According to the NRA, 33 percent of operators reported a same-store sales gain between February 2012 and February 2013, while 48 percent tallied lower sales. In the month of January, 44 percent of operators said same-store sales were trending higher, while 37 percent said they experienced a sales decline.

 

Most operators also said customer traffic levels fell in February. Twenty-four percent reported higher customer traffic levels between February 2012 and February 2013, while 53 percent said traffic had fallen off. In January, 33 percent of restaurateurs reported higher customer traffic, while 40 percent said traffic levels had decreased.

 

The RPI’s Expectations Index was 101.4 in February, down from 101.6 in January. However, the NRA said each of the four expectations indicators remained around the 100 mark for the second consecutive month, suggesting that operators are upbeat about future business conditions.

 

While foodservice operators are generally positive about future sales growth, they are less upbeat compared with last month. The NRA said 41 percent of restaurateurs anticipate having higher sales in six months compared with the same period in the previous year – down from 46 percent last month. Fourteen percent say their sales volume in six months will be lower than it was in the same period of the previous year, compared with 17 percent last month.

 

Meanwhile, 25 percent of operators expect economic conditions to improve in six months, a decline from the 30 percent who reported similarly last month. Twenty percent of operators said they believe that economic conditions will deteriorate in the next six months.

 

The RPI is based on the responses to the NRA’s monthly tracking survey.

 

 

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News From TTB

 

Source: TTB

March 29th

 

ANTHONY GLEDHILL SELECTED AS TTB CHIEF COUNSEL

Anthony has been serving as Assistant Chief Counsel (Field Operations) in Cincinnati, Ohio since January 2008. He started his career with the Bureau of Alcohol Tobacco and Firearms (ATF) within the Department of Treasury in 1989 as a staff attorney in the Office of Assistant Chief Counsel in Philadelphia and then subsequently in the Office of Assistant Chief Counsel in Cincinnati.  From September 1998 until September 2003, Anthony was the Division Counsel for the ATF Detroit Field Division. This included an eight month period when ATF transitioned to the Department of Justice in 2003. In September 2003, Anthony rejoined Treasury as TTB’s Senior Counsel, Firearms and Ammunition Excise Tax (FAET) and served in that capacity until his selection as Assistant Chief Counsel, Field Operations.

 

Anthony has extensive experience in the regulation and enforcement of the laws under TTB’s jurisdiction. His principal area of practice has been Firearms and Ammunition Excise Tax and he is considered a national expert in this area of the law, particularly on the subject of the constructive sale price provisions of 26 U.S.C. Section 4216(b).

 

Anthony holds a B.A. from Temple University, and a J.D. from Capital University Law School, Columbus, Ohio, cum laude. He is a member of the Commonwealth of Pennsylvania bar.

 

 

ELISABETH C. KANN SELECTED AS TTB CHIEF OF STAFF

Elisabeth is a graduate of Dartmouth College, where she received a B.A. in English Literature.  She obtained her Juris Doctor from Yeshiva University in 2000 and a Masters in Public Administration from the Harvard Kennedy School of Government in 2010.  Following an extensive litigation history as an associate in the litigation department of the law firm of Kaye Scholer from 2000-2010, Lis was selected as a Presidential Management Fellow and joined TTB in the Regulations and Rulings Division, where she served from 2010 to 2012.  Immediately preceding her appointment as Chief of Staff, Lis served as Special Assistant, Office of the Administrator, where she advised and assisted the Bureau on a broad variety of sensitive and complex matters spanning TTB’s authority.

 

The Chief of Staff reports to the Deputy Administrator and the Administrator and coordinates an array of special policy, regulatory, and legislative matters concerning the Bureau’s operations, and advises in areas of policy development, resource utilization, and the coordination of internal review investigations.

 

 

REGISTER NOW FOR THE NEXT WEBINAR IN THE PREVENTING UNDERAGE DRINKING SERIES

This webinar series is sponsored by the Interagency Coordinating Committee on the Prevention of Underage Drinking (ICCPUD).  ICCPUD member agencies presenting this webinar are the National Institute on Alcohol Abuse and Alcoholism, the National Institute on Drug Abuse, the Office of National Drug Control Policy, and the Substance Abuse and Mental Health Services Administration.

 

When:  April 17, 2013, 2:00 to 3:15 p.m. EDT

 

Who:  A panel of national experts on underage drinking prevention:

.         Frances M. Harding, Director of the Center for Substance Abuse Prevention, SAMHSA;

.         Kelli A. Komro, Ph.D., M.P.H., Professor in the Department of Health Outcomes and Policy within the College of Medicine and the Associate Director of the Institute for Child Health Policy at the University of Florida;

.         Robert F. Saltz, Ph.D., Senior Scientist for the Prevention Research Center in Berkeley, California; and

.         Richard Spoth, Ph.D., F. Wendell Miller Senior Prevention Scientist and Director of the Partnerships in Prevention Science Institute, Iowa State University.

Why:  Nearly 10 million 12- to 20-year-olds in the United States are underage drinkers.  Underage drinking poses serious negative consequences for individuals, families, and communities.  This webinar series features national leaders and experts discussing the extent and nature of the problem, lessons from recent research, and evidence-based strategies for addressing underage drinking.

What:  In this webinar, national experts will expand on the “shape of the solution” to underage drinking introduced by Ms. Harding during the first webinar in the series.  The discussion will focus on evidence-based strategies for preventing underage drinking that are age and culturally appropriate and address both individual and environmental factors.  Following their presentations, panelists will engage with participants in a live question-and-answer period.

 

Where:  To find more information and to register, please visit www.stopalcoholabuse.gov.

 

 

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How Laithwaites turns wine into gold

 

Charles Vallance and David Hopper meet a man who has made his fortune, and a company employing over 1,000 people, from his lifelong passion.

 

Source: Daily Telegraph

By Charles Vallance and David Hopper

29 Mar 2013

 

Were you to bump into Tony Laithwaite at the post office or at an airport check-in you would probably guess that he is a wine maker; put him in a vineyard and he looks like he belongs there – in the way that French existential philosophers look like they belong in street cafes on the Boulevard Saint-Germain.

 

The UK’s biggest wine company is eponymously named after Laithwaite and his wife, Barbara. In fact, according to some calculations, they are the biggest wine merchants in the world, excluding supermarket retailers.

 

Trading under his own name and several other subsidiaries, Laithwaite and his wife have built up a company with turnover in excess of £350m annually – which works out at around 50m bottles – with usually at least 2,500 wines in stock, and directly employing more than 1,000 people worldwide.

 

The Laithwaites make wine too, owning a collection of vineyards and wineries in Bordeaux and Australia.

 

“They say that the only way to make a small fortune in wine is to start with a large fortune,” Laithwaite laughs. “People don’t usually make money out of wine. You go into wine because you like it. And that was my attitude. My plan was to have a lovely life, just swanning around in vineyards.

 

“A lot of people I know have wanted to build up businesses so that they could just sell them on. That was never my idea and it wasn’t Barbara’s. It’s the wine itself that gives you the reward”.

 

In 2010, world wine consumption was the equivalent of nearly 32bn bottles, and global sales are currently showing year-on-year growth. The UK is the world’s biggest importer and sixth-largest consumer and, although consumption is declining, we are drinking more expensive wine.

 

Neither of Laithwaite’s parents were entrepreneurial, but he grew up with a passion for all things French: “It just seemed so sexy. France was cool.” A three-month trip after he had left school ignited the love affair. On a second trip he worked in the vineyards of Bordeaux. “It was great . exotic, fabulous food, and there were the girls as well . .”

 

At Durham University he wrote his geography dissertation on the wines of Saint-Emilion, “I showed it to my director of studies and told him I wanted to get into the wine trade, but he tossed it back at me, and said, ‘The best thing you can hope for, laddie, is running an off-licence in Carlisle’.”

 

He returned to France and got a job at a winery; the owner, Monsieur Cassin, became his mentor, suggesting Laithwaite sell his wine in the UK. “My grandmother gave me £700 and then gave me another £7,000 through my mother. You needed a bit of funding and the banks would certainly not have given any money to someone like me.”

 

It was a joint venture, with Barbara, his invaluable partner who became his wife. “She is the business head. She kept saying I was selling too cheaply. She was a statistician. So one day I just said, ‘Well, if you think you’re so bloody clever, why don’t you come and do it?’ So she did. She chucked in an amazing job doing audience research. They said she was mad to go from that to working for me in a caravan under a railway line.

 

“But she sorted me out. She discovered I hadn’t kept any accounts for two years. Barbara took one look and saw that it didn’t make financial sense, so she made me put the price up. At first, we didn’t really try to make profits. At that time, the top rate of tax, if we made good profits, was going to be 98 per cent super tax. What was the point?”

 

But it was a good time to start in the wine business. Retail Price Maintenance was abolished and, in France, Monsieur Cassin was creating a mini-revolution of his own, becoming the first co-operative to sell directly to a supermarket in Bordeaux.

 

“All of a sudden, there were these small entrepreneurial growers who weren’t happy just to sit there and wait for their stuff to be bought in bulk; they wanted to put it in a bottle and sell it themselves. That was perfect for me. Roll-on-roll-off ferries had just started, so I was able to drive over directly to them. I called myself ‘Bordeaux Direct’, just to emphasise that I only bought estate-bottled wines.

 

“Customers would now see that, with me, when they got my Saint-Emilion, it tasted very different from the disgusting stuff mass-bottled in the UK.”

 

In those early years the Laithwaites developed the simple modus operandi of reinvesting profits when they came in. But the absence of a proper management structure, coupled with relentless expansion, meant that, by the early Eighties, with turnover at tens of millions, logistics were becoming troublesome. Laithwaite, by then a father of three, suffered a heart attack. He was told by his specialist: ‘You can’t carry on. You’ve got to stop or you’ll die.’

 

“I did pull right back,” he admits. “Barbara carried on running it and for the first time made a decent profit, because I wasn’t interfering”.

 

In 1991, a board was recruited, including a managing director, wine director, marketing director, finance director, and head of IT. The effect was spectacular.

 

“We went to something like £50m by 1994, then £100m and more. But it was just perfecting what was there.”

 

The Laithwaites became non-execs, but after two decades running the company the relationship with new managing director, Greg Hodder, was not easy. “There was conflict, I’ll tell you. We were like two cocks. I can’t complain: he was good and he did his stuff. I felt that it was his job to run it, yet it was still my business, and I found it hard to let go.

 

“But the business wasn’t in good nick. We hadn’t kept up with the market. When we started up, supermarkets didn’t do wine; then they started but with poor wine and they didn’t know how to sell it. But then, all of a sudden, the supermarkets became really good. And there were other merchants starting up as well. So it was a call for us to change too.”

 

He says it was like a marriage; both had to compromise. He even brought in a mediation expert from the London Business School to manage the relationship.

 

The company was rebranded ‘Laithwaite’s Wines’ – though he was embarrassed it bore his name. “I’m of a generation and an upbringing where you don’t brag. I kept thinking that all my mates will be saying, ‘Look at that show-off Laithwaite’.”

 

He hates wine snobbery. “Socially, I don’t appear to take wine all that seriously. I’m fond of saying, ‘It all tastes the same to me.’ Because, when I’m working, I’m intense, so when I’m not working I just want to drink without thinking too hard. I have a terrible cellar at home. When I’m relaxing, I want someone else to choose a fantastic wine.”

 

These days, Laithwaite’s personal wealth runs to many millions; the 2012 Sunday Times Rich List put the family at 410th in its UK rankings. Back where they started, in Windsor, the Laithwaites have become the tenant farmers of a four-hectare plot on the Queen’s estate. After planting 10,000 vines there in 2011, their first harvest is due soon.

 

They dislike the industrialisation of the wine industry. “I want the little guys to carry on because they’re doing things of character. People may want a bottle of Chardonnay for a Friday night at £5, but I want to say, ‘Yes, but try this at £15, and appreciate the difference’.”

 

Laithwaite has relinquished aspects of the firm’s management yet his ambitions remain as strong as ever. There are now more than a dozen shops, and international growth is a key element of the plan. Almost a quarter of the company’s business is now in the United States where turnover has reached some $100m (£65m).

 

The US may be a tricky market, but its wine consumption has grown every year for almost two decades.

 

Direct retailing involves a significant degree of customer churn, but a company recruiting around 200,000 new customers each year has to be doing something right.

 

 

——

Wine in reusable growlers? Ore. Senate says cheers

 

Source: AP

Jonathan J. Cooper

March 29, 2013

 

Fans of Oregon craft beer can bring a reusable container known as a “growler” to their local brewery and fill up, and the Oregon wine industry wants in on that kind of trade.

 

The state Senate raised a glass to the idea Thursday, voting unanimously to let wineries, restaurants, grocery stores and wine shops dispense wine in consumer-supplied growlers of up to two gallons. The measure now goes to Gov. John Kitzhaber.

 

Winemakers say they’re always looking for new ways to market the products of a growing Oregon business, adding that growlers save a lot of glass and cork.

 

“It is really environmentally friendly, and it’s also promoting wine as a daily commodity that can be enjoyed with meals and shouldn’t be thought of as something extraordinarily special every time,” said Wynne Peterson-Nedry, the second-generation winemaker at Chehalem Winery in Newberg.

 

Chehalem already offers growler fills at its tasting room. The legislation will allow its customers to fill their growlers at restaurants and grocery stores, Peterson-Nedry said.

 

Oregon has about 900 vineyards, according to the Oregon Winegrowers Association. Many are small operations that have trouble competing for limited space on store shelves, said Sen. Lee Beyer, D-Springfield. The measure would give the small local businesses another way to get their wine in front of consumers.

 

“It allows the small wineries to get equal standing with some of their larger brethren from outside the state,” Beyer said.

 

Some wineries already distribute wine in kegs, which restaurants use to sell by the glass.

 

The legislation would require the wine to be dispensed by someone with a valid service license from the Oregon Liquor Control Commission. As with beer growlers, the wine container will have to be securely covered before it’s returned to the customer.

 

A spokeswoman for Kitzhaber, Amy Wojcicki, said the governor will sign the bill, and it will take effect immediately. That will happen in time for winemakers to promote growlers during Oregon Wine Month in May, said Dan Jarman, a lobbyist for the Oregon Winegrowers Association, in testimony submitted to legislative committees.

 

 

——

Auction of record-breaking HK$590,400 wine helps revive flagging market

 

Source: SCMP

30 March, 2013

 

Three double magnums of 1990 Petrus sold for HK$590,400.

 

The wine market revived a little this month at an Acker Merrall & Condit auction in Hong Kong, but it still has a long way to go before revisiting its peak of two years ago.

 

The sale by the American auction house, on March 22 and 23, set 97 records, including four for Chateau Petrus, a leading Bordeaux estate. The auction fetched a total of HK$38.3 million, with 94 per cent of lots sold.

 

A case of three double magnums of 1990 Petrus sold for a record price of HK$590,400, while one bottle of 1947 Petrus set another record at HK$118,080.

 

A 12-bottle lot of Chateau Lafite-Rothschild 1982 sold for HK$442,800, about 8 per cent more than the £34,500 (HK$405,860) a similar lot fetched at Christie’s London auction last month.

 

An original wooden case of 12 bottles of Romanée Conti 1988 fetched HK$984,000 – up from the HK$907,500 paid for each of two similar 12-bottle lots at Christie’s in June, according to Bloomberg. While the Burgundy gem set many records last year, the prices of some of its vintages have been dipping recently.

 

Three bottles of the 1999 vintage sold for HK$295,200 – or US$12,615 per bottle, down from US$13,685 at a January sale by the Zachy’s auction house.

 

Three bottles of the 1990 vintage sold for HK$344,400 – 7 per cent lower per bottle than at Zachy’s December auction.

 

Liv-Ex’s Fine Wine 100 Index, which tracks the price of sought-after wines, dropped 29 per cent from its peak in June 2011 to rock bottom in November last year.

 

Acker’s January and March auctions this year set 212 record prices, well up from the 95 recorded the previous year.

 

 

——

Five Wine Blogs I Really Click With

 

Source: WSJ

By LETTIE TEAGUE

March 29th

 

I SPENT THE BETTER part of last week doing something that relatively few wine drinkers probably do: reading wine blogs. Not just a handful of blogs here and there but hundreds and hundreds of wine blogs from all over the world. I read until I was absolutely blog-bleary; I probably totaled 10,000 page views.

 

I did this partly out of curiosity. I don’t read many wine blogs, and I wondered what I might be missing. What was being discussed? What wines, wineries and topics were hot? After all, people in the wine trade have called bloggers a powerful force, capable of challenging-perhaps even eclipsing-traditional media and conventional wine critics. I’m not sure if that’s true, but the numbers are certainly impressive. There are about 1,450 wine blogs today, of which about 1,000 are nonprofessional endeavors (the rest are “industry” blogs), according to Allan Wright of the Zephyr Adventures tour operator, who has organized Wine Bloggers Conferences in North America for the past five years. But most bloggers haven’t been doing it very long: “Only 18% of [wine] bloggers today have been blogging for more than six years,” he said.

 

Most of the bloggers were doing it just for “personal satisfaction,” Mr. Wright said, since the possibility of making money was quite small. Alder Yarrow, who writes a much-talked-about blog, Vinography, told me that he earns $12,000 to $16,000 from it annually, most of which comes from banner ads. Said Mr. Yarrow, who began his blog in 2004 and has a day job: “Monetizing a blog is very hard if you don’t want to sell products, sell advertising to wineries and therefore look like a shill.”

 

Most bloggers are more like Alice Feiring, a traditional wine journalist and blogger who has never made “a cent” from her blog, the Feiring Line, which she started in 2004. (It’s one of the few that I read on a regular basis.) But unlike most other bloggers, Ms. Feiring has a newsletter; she has 450 subscribers paying $65 a year for 10 issues. “The blog was a soapbox; the newsletter is a mini-magazine,” Ms. Feiring explained.

 

A lack of profit potential isn’t necessarily the biggest blogger obstacle; time is in even shorter supply. Judging from the number of bloggers who allow weeks, months, even years to go by without posting a thought, it’s clearly hard to maintain momentum. Or inspiration. More than one blogger explained his or her absence with a post that began something like: “I didn’t drink anything worth writing about.”

 

The perceived need to pile up tasting notes in a quest for legitimacy is a problem in wine blogging. Many of the amateur blogs that I read were bloated with tasting notes, enlivened only occasionally by a bit of prose or a photo of the family dog (Rosie the dog’s winery visits in California’s Sonoma County, on the blog CorkPopper, were a bright spot). On the other hand, tasting notes are one way that a blog can be monetized. For example, bloggers who recommend wines are paid a small referral fee if they direct readers to sites like Wine-Searcher, said Mr. Yarrow, who makes some money this way as well.

 

A blog full of tasting notes helps to ensure the author receives plenty of free wine; wineries are more likely to send samples to bloggers who post notes. And yet, wineries do this less and less often, according to Lisa Mattson, communications director at Jordan Winery in Sonoma. Ms. Mattson said she sends fewer samples than ever, and the vetting process is intense. “We’re working with a much smaller set of wine bloggers who have remained credible,” she wrote in an email. What makes a blogger credible? “Reputation and awards. Design and writing style,” she said. And a blogger would do well to get rid of an AOL email address, which Ms. Mattson called a “credibility killer.” Most of all, a blog had to “be about something” she said.

 

I knew what Ms. Mattson meant (and not just about the AOL email addresses). I was looking for meaningful bloggers as well. I was hoping to find a few impassioned amateurs with no connection to wine other than a genuine curiosity and an interesting point of view (ones who kept their blogs current, too). Wine Bloggers Conference polled wine bloggers and found that a full 83% cited “passion” as a reason for keeping a blog. That’s an impressive number. It’s even more impressive when passion and talent happen to coincide-as it does with the following five bloggers, whose work I particularly admired.

 

Brooklynguy’s Wine and Food Blog

 

brooklynguyloveswine.blogspot.com

 

Brooklynguy is an education consultant who has been blogging from the most fashionable borough of New York since 2006. Brooklynguy posts about wine and food-often with recipes-but he writes brief vignettes about his life, too. For example, a March 10 post on the inadequacy of language culminates in a few notes about a Cheverney Rouge (a wine from the Loire). He seems like a thoughtful, even philosophical, fellow-and his palate is clearly refined (he loves white Burgundy)-but he’s no snob. He’s a Brooklyn guy, after all.

 

Cellar-Book

 

cellarbook.wordpress.com

 

Keith Levenberg may not post very often (there were four long months between his post of March 2 and his post last November), but his topics are truly stimulating. His post last August on why “buy what you like” is “absolutely terrible advice” was positively inspired. (Among Mr. Levenberg’s provocative statements: Taste is not as important as you think.) It’s a long post-in fact, most of Mr. Levenberg’s posts are more like essays than notes-but he raises, and argues, a number of excellent points. That’s not surprising, as in the real world Mr. Levenberg is an attorney in Washington, D.C.

 

Odd Bacchus

 

oddbacchus.com

 

This blog has an unusual premise: It’s devoted to odd wines and spirits. Why odd? According to its author, Chicago-based Rob Frisch, who works for Andrew Harper Travel, he was originally inspired by the wines that he liked-and that he could afford. “I didn’t start writing this blog until I walked into a wine shop and asked for their most obscure wine under $15,” he wrote in an email. The wine was from Serbia-and the blogging began. Notes are posted on both wine and cocktails-and occasionally beer-and Mr. Frisch points out that he buys almost all of his wines. That’s why they tend to be cheap.

 

The Cellar-Fella

 

cellarfella.com

 

Did the subhead of this blog-“wine, and words composed under its influence”-mean that its author, Simon Burnton, never posted when he was sober? Not really, replied Mr. Burnton, who explained that he hadn’t meant it literally. “I think it’s possible to be under the influence of wine while not actually drunk,” he said.

 

Mr. Burnton is a London-based sportswriter for the Guardian who took to writing about wine because he “needed a hobby that could be pursued despite a sudden inability to go out” after his first child was born. I found Mr. Burnton’s post on the Codorníu winery and its Cavas to be particularly interesting. Brits like their Cava cheap, Mr. Burnton wrote, and Codorníu actually wrapped bottles in pink and blue to give the wines a “premium” sheen for the U.K. market. (The accompanying picture of pink and blue bottles was decidedly alarming.)

 

Benito’s Wine Reviews

 

wine-by-benito.blogspot.com

 

The Memphis, Tenn.-based Benito, aka Benjamin Carter, spends his workday in quality assurance for a large corporation-and his nights blogging about wine. He has been blogging since 2005, when he was still “under 30” and just learning about wine. He blogged in part to keep track of his own tasting notes.

 

Mr. Carter accepts samples but discloses when the wine he’s reviewing was free. He writes tasting notes-but they’re preceded by a long “pretasting” note. For example, for Francis Ford Coppola’s Director’s Cabernet Sauvignon, he begins with a digression on Roman Coppola’s nomination for an Oscar alongside “the great Wes Anderson” for the film “Moonrise Kingdom.” And yes, if you read to the tasting note, it turns out Mr. Carter did like the wine, too. He recommends drinking it with a steak sandwich.

 

 

——

Charles Banks acquires 50% stake in Wind Gap winery

 

Source: DBR

March 31st

 

Investment group Terroir Selection owner Charles Banks has purchased 50% stake in California-based fine wine producer Wind Gap Wines for an undisclosed amount.

 

The purchase also includes a brand called Agharta, a separate wine label that focuses on small-production wines from Bordeaux and Rhone varieties.

 

Founded in 2006, the Wind Gap winery produces wines from a variety of grapes grown at cool-climate vineyards.

 

Wing Gap Wines founder Pax Mahle will continue to produce wines at both Wind Gap and Agharta, whereas Terroir Selection will look after the sales and marketing aspects of the winery, reported Wine Spectator.

 

Banks was quoted by the website as saying that the group wants Mahle to focus on wines, while they will search for additional vineyards to add to their lineup.

 

“It’s not so much about growing volume as it is about continuing to pursue quality,” Banks added.

 

Mahle, who previously owned Pax Wine Cellars with co-owner Joe Donelan, now plans to re-launch Pax Wine Cellars in 2013 after a dispute with Donelan. Mahle also plans to use Pax Wine Cellars’ original vineyards such as Alder Springs and Castelli-Knight Ranch for producing wines.

 

 

——

Provocative billboard touting marijuana as being safer than alcohol is vandalized in Portland, Ore., days before Spring Beer & Wine Festival

 

Source: NEW YORK DAILY NEWS

By David Knowles

Friday, March 29, 2013

 

A controversial pro-marijuana billboard in Oregon features a photo of a glass of beer, a glass of wine, and a marijuana leaf with the words: “Beer,” “Wine,” and “Safer has been vandalized.

 

A controversial pro-marijuana billboard in Portland, Ore. was put up to coincide with the city’s Spring Beer & Wine Festival.

 

Not everyone on the West Coast is happy about marijuana taking its place alongside wine and beer.

 

Vandals destroyed a billboard in Portland, Ore. Thursday night, that promoted marijuana as being “safer” than alcohol.

 

Paid for by the Marijuana Policy Project, an advocacy group that helped pass Colorado’s initiative legalizing recreational use of the drug, the billboard featured a picture of a pint of beer, a glass of wine, and a marijuana leaf with the words “beer,” “wine” and “safer” positioned correspondingly above each image.

 

Mason Tvert, the director of communications for the Marijuana Policy Project, said the billboard was meant to coincide with Portland’s Beer & Wine Festival, which takes place the weekend of March 30 and 31, and draws thousands of people to the city’s downtown.

 

“Portland is a city where a strong majority of people realize that prohibition of marijuana has failed,” Tvert told the Daily News. “More voters are acknowledging the fact that marijuana is less harmful than alcohol, so this is an important message to keep pushing.”

 

Pointing to data from the Centers for Disease Control and Prevention, Tvert argues that, unlike alcohol, no one has ever died because of smoking too much pot.

 

“Marijuana is far less toxic than alcohol. It’s far less addictive, and far less harmful to the body in general,” Tvert said.

 

Unlike in Colorado and Washington, voters in Oregon failed to pass a ballot measure that would have legalized marijuana in the state in the 2012 election, but Tvert says that pro-pot forces will try again in 2016.

 

While the billboard attracted a fair share of media attention over the past few days, it will not be repaired in time for this weekend’s festivities. To hear the event’s organizers tell it, marijuana may not be an outcast at the festival for too much longer.

 

“We are a tourist industry and if it gets legalized and we can sell it as one of our fine products, all the better,” Steve Woolard of the Spring Beer & Wine Fest told KOIN News.

 

If so, Woolard said, the organizers could simply rename the event “The Spring Beer, Wine & Weed Festival.”

 

 

——

New York: NEWS FROM THE NYS LIQUOR AUTHORITY TRADE PRACTICES MEETING – April 8, 2013

 

Source: NYSLA

March 29th

 

Chairman Rosen will be hosting a meeting to discuss trade practices and other issues of concern between wholesalers and retailers. This meeting will be held on April 8, 2013, 11 a.m. at the Authority’s New York City Office. Anyone who would like to participate may also do so via videoconference at the Authority’s offices in Albany and Buffalo. The meeting is open to the public. Given the limited space available at each location, anyone wishing to attend is requested to rsvp to the Chairman’s Office by email at Kimberly.Ciccone@sla.ny.gov. or Debra.Maloney@sla.ny.gov on or before April 4, 2013.

 

 

——

Maryland: End Baltimore’s glut of non-conforming liquor stores

 

Source: Baltimore Sun

March 30, 2013

 

Next week, the Baltimore City Council will consider the changes to the zoning code that will affect about 100 of the city’s 1,300 existing liquor outlets. These outlets have been non-conforming for more than 40 years, and it’s time for them to be closed.

 

During the Planning Commission’s hearings, two students from Patterson High School testified on why the number of liquor outlets needs to be reduced. One of the commissioners said their testimony moved him more than any of the others. Inspired by these young ladies, we solicited the opinions of several more teens. Some of their comments:

 

“In my neighborhood, there are [many] liquor stores and taverns. There is a lot of trash that drunken people throw. People also sell drugs outside the liquor outlets and it spills into the neighborhoods.”

 

“There are a high number of young adults around the ages of 15, 16 and 17 that are being sold alcohol. It is easy to purchase or at least have someone hanging around the outside of the liquor stores buy it for us. We have more liquor stores and taverns than we have recreation centers.”

 

“There are multiple liquor outlets in the 21218 zip code and all of them are in the wrong spots. They sell tobacco products and liquor and [these] are sold to students from my school without asking for ID. They bring negative activity into our neighborhoods such as loitering, drug dealing and drug abuse, theft and other violence.”

 

While we hope that the City Council will assist the owners of these non-conforming stores in finding other ways to make a living, we urge members to approve the Planning Commission’s proposal to begin reducing the number of liquor outlets as soon as possible for the health, safety and cleanliness of Baltimore.

 

Helene Luce, Baltimore

 

The writer is senior director for educational programs and opportunities at Community Law In Action Inc.

 

 

——

Tennessee: TN House GOP leader opposes reviving wine bill

 

Source: The Tennessean

Mar 30, 2013

 

House Majority Leader Gerald McCormick says he favors a bill to allow wine to be sold in Tennessee supermarkets and convenience stores, but he opposes efforts to hold a revote in a committee where it narrowly failed.

 

The Chattanooga Republican told reporters on Thursday that reconsidering the vote in the House Local Government Committee would set a bad precedent.

 

McCormick and House Speaker Beth Harwell said they would prefer starting afresh next legislative session in hopes of changing laws that restrict the sale of anything stronger than beer to liquor stores.

 

The Senate is moving ahead with its bill, though leaders have said it won’t come to a full floor vote.

 

 

——

New Jersey: Possibility of liquor privatization in Pennsylvania has New Jersey businesses concerned

 

Source: South Jersey Times

By Jason Laday

March 30, 2013

 

Liquor bottles The bill passed by the Pennsylvania House in March would allow grocery stores to sell wine, and beer distributors to sell wine and liquor, before selling licenses to other private businesses.

 

At any given time, on any given day, the parking lot of Liquor Mart, located in Logan Township just a few miles from the Commodore Barry Bridge, can be inundated with Pennsylvania license plates.

 

However, if state senators in Pennsylvania follow their counterparts in the House and approve legislation to privatize wine and spirits sales, those vehicles could be staying in-state when their owners decide to go for liquor runs.

 

“It would definitely affect business here – no question about it,” said Raminder Sehgal, who along with co-owner Rayt Singh has operated Liquor Mart for the past six years. “We get Pennsylvania customers because of variety and cost, and if those issues are taken care of in Pennsylvania, then customers may stay there.”

 

According to Paul Santelle, president of the New Jersey Liquor Store Alliance and state director for the American Beverage Licensees (ABL), as much as 50 percent of liquor store sales from Trenton and points south occur inside businesses along the Pennsylvania border. Much of that business, Santelle added, hails from across the Delaware.

 

There is much concern among New Jersey liquor store owners with prime real estate along the Delaware River that the closing of Pennsylvania’s state stores could eat into their revenues, he said.

 

“They could lose a substantial amount of business, and there’s also the fact that we’re also talking about tens of millions of dollars in sales and excise taxes that New Jersey collects that could diminish,” said Santelle, who operates his own liquor store in Perth Amboy. “We’re very much in tune with the situation – we’re monitoring what’s going on.”

 

As the situation stands now, the issue of privatizing state stores is in the hands of the Pennsylvania Senate, following the House’s March 21 vote to get out of the wine and liquor business.

 

The plan approved by the House allows beer distributors and grocery stores to sell wine. Beer distributors would also be permitted to sell liquor. After two years, the state would begin selling liquor licenses to other private businesses, including big-box stores.

 

The state stores would be gradually phased out as more licenses are sold.

 

However, leaders in the Senate seem to be in no rush to take up the issue, and some have been quoted favoring a plan that would tweak the state store system rather than abolish it.

 

New Jersey’s border liquor stores already compete with Delaware for Pennsylvania residents’ business.

 

According to the Liquor Mart’s co-owners, New Jersey law prohibits stores from charging less than cost – a regulation that is absent in the First State.

 

“They can sell lower than cost, and we’re already at the lowest price in the area here,” said Singh. “Some in Delaware are more expensive than us, but they can have lower prices.”

 

Ridley Park, Pa., resident Frank Taddie can attest to that fact. On Thursday, standing in Liquor Mart’s parking lot, he said he was only buying in New Jersey because of a special request from his wife.

 

“I would normally frequent the stores in Delaware, because it’s cheaper with the taxes,” he said. “But this place has the type of wine my wife asked for, and it wasn’t available in either Pennsylvania or Delaware.”

 

Bob Bauer, from Ambler, Pa., was traveling to meet with family for Easter on Friday and stopped at the Logan liquor store on the way.

 

“I do buy in Pennsylvania, but I will go to New Jersey and Delaware for a better deal,” said Bauer. “If it turns out to be competitive, I could buy more in Pennsylvania.”

 

As for trying to protect their own interests, Santelle said there is little the New Jersey Liquor Store Association or the ABL can do while legislators debate in Harrisburg.

 

“Pennsylvania is a closed state, the ABL actually has no presence there,” he said. “We can only watch closely.”

 

Sehgal and Singh were similarly resigned to the situation.

 

“What can you do?” said Singh. “We’re from New Jersey – we can’t go out to the capitol and stand out there with signs.”

 

 

——

Michigan: MICHIGAN SPIRITS ASSOCIATION ANNOUNCES 2013-2014 BOARD OF DIRECTORS

 

Source: MLC

Mar 29th

 

Ryan Koehneke of Lake Orion, MI has been elected President of the Michigan Spirits Association (MSA) at its recent board meeting in Lansing. Ryan Koehneke is currently the State Manager of Michigan for Brown Forman and has served the MSA in various capacities including Vice-President and Director.

 

Other officers elected to serve on the MSA Board of Directors for 2013-14 include:

 

William Kalin of Commerce will serve as Vice-President. He is the Region Manager-MI for Pernod Ricard USA

Brian Pizzuti of Howell will serve as Secretary/Treasurer. He is the Vice President of Sales for National Wine & Spirits (NWS) which is located in Brownstown, MI

Marsha Keenoy of Okemos will serve as Immediate Past-President. She is the Michigan Market Director for DIAGEO

George Zrinyi of Commerce will serve as Director. He is the Michigan State Manager for Beam, Inc.

Sam Awdish of Novi will serve as Director. He is General Manager for Veritas Distributors, Inc.

Keith Keeler of Northville will serve as Director. He is Great Lakes Regional Director for Bacardi USA

Established in 1967, the MSA represents the vendors, suppliers and distributors of distilled spirit products in Michigan.

 

The MSA partners with the Michigan Liquor Control Commission to ensure that quality products are available to meet consumer demand across the state.

 

MSA members provide thousands of jobs for Michigan residents and generate nearly $300 million annually to the state. The MSA members represent more than 90 percent of the more than 7.1 million cases of spirits sold to the state each year.

 

For decades, the MSA and its members have been on the forefront of promoting the responsible consumption of distilled spirits. In addition, the MSA advocates for the prevention of underage drinking through vigilant enforcement of state law and strict penalties for violations.

 

 

——

Canada: Ontario C-Stores Launch Petition Campaign for Alcohol Sales

 

Retailers are collecting customer signatures in support of a petition to allow beer and wine sales at convenience stores.

 

Source: NACS

March 29

 

The Ontario Convenience Store Association is upping its game in the fight to sell beer and wine at convenience stores, the Hamilton Spectator. The Free Our Beer campaign has brought petitions to each member store, urging each location to get 300 to 500 signatures.

 

CEO Dave Bryans said a retailer in the small town of Kingsville gathered 500 signatures in only two days. “We don’t want to replace the LCBO [Liquor Control Board of Ontario-run stores] but people want more access. We can’t replace the shopping experience at the LCBO,” he said, adding that in rural areas, the need for access to alcohol later and on holidays is greater. “If you can buy beer or wine in a convenience store in Newfoundland, why can’t you in Ontario?”

 

Two years ago, a poll discovered 60% of Ontario residents were in favor of corner stores selling alcohol. Michelle Park, who co-owns the Copetown General Store, wants to serve customers who prefer not driving to another town for beer or wine. “It’s not like it’s going to make us rich,” she said. “At least we try. If we don’t try, they’ll never change.”

 

While the freeourbeer.ca website has collected 112,500 signatures, the association is now tasking 3,000 to 4,000 stores with onsite petitions. Rami Reda, director of the Big Bee chain, said he is giving incentives to operators who gather signatures.

 

“Our industry is very challenged,” said Reda. “This is an opportunity for small business owners to grow their business. No matter the banner, most of these stores are family run.”

 

For Bryans, the target is 1 million signatures, which he hopes will make the government consider allowing wine and beer sales in convenience stores.

 

 

——

South Carolina: SC liquor store owners in spirited fight

 

Source: The State

By NOELLE PHILLIPS

March 30, 2013

 

When he retired, Ed Andino invested his savings from his Army career into a small liquor store at a shopping center along Forest Drive.

 

Andino and his wife put a lot of thought into what type of business they wanted to own, and when they finally chose to open a liquor store in 2011, they picked East Forest Plaza because it appeared insulated from competition.

 

“Sam’s can’t open another liquor store,” Andino said. “There’s no place for Costco to build here. There’s no way for Total Wine to come over here and build.”

 

Now, Andino believes his livelihood is threatened by a bill that would allow businesses to hold seven retail liquor permits in the state instead of three, the maximum currently allowed under South Carolina law. The bill, sponsored by Sen. Chauncey Gregory, R-Lancaster, and Sen. Brad Hutto, D-Orangeburg, is working its way through the Senate Judiciary Committee.

 

It has created a spirited debate about marketplace competition between mom-and-pop liquor store owners and Total Wine, a major retailer with three stores in South Carolina. A representative of Costco, a discount membership chain, has said his company also supports the bill.

 

The bill’s critics say that if Total Wine were allowed to open more liquor stores, it would drive the little stores out of business.

 

“It would be what Home Depot did to the neighborhood hardware store,” said John Kelsey, president of the ABC Stores of South Carolina, a trade group that represents the state’s liquor stores.

 

But David Trone, president of the Potomac, Md.-based Total Wine, said the bill would benefit consumers by providing a larger selection, lower prices and great customer service to people who buy whiskey, vodka, tequila and other liquor products.

 

“Frankly, the limit is protectionism, and protectionism is bad,” Trone said. “Competition is good.”

 

Liquor retailers filled a Senate subcommittee hearing two weeks ago, leaving more than a dozen people to stand in the hallway because the meeting room was at capacity. The audience cheered and jeered as the bill’s merits were debated during public testimony. At least once, a security officer had to order the crowd to be quiet.

 

Andino told his story during the hearing.

 

He retired from the Army in 2009 after 20 years of service. He held a real estate license and planned to do that in his second career, but the economy had tanked. So, he and his wife decided to invest their savings to open Rico’s Liquor Store in East Forest Plaza.

 

The small, brightly lit store is stocked with all sorts of spirits. They have mini-bottles, pints and even gallons. They even sell a tequila that comes in a bottle shaped like a rifle. On Friday, they did a brisk business as customers came in for weekend party supplies.

 

“It’s always been a dream of mine to open my own business,” Andino said.

 

He does not plan to sell beer, and his wine selection is limited because the store stands in the shadow of Sam’s and Wal-Mart and can’t compete with their prices.

 

For now, those retailers do not sell liquor. If the bill passes, Sam’s, which already has three liquor stores in South Carolina, could open one across the parking lot and crush Rico’s Liquor Store, Andino said.

 

“Even though Total Wine submitted the bill, it’s not just them that would benefit,” he said. “This bill would cost me everything.”

 

Total Wine’s Trone said it is unfair for the state to limit competition in one industry. Groceries, clothing stores and other types of retailers don’t have state laws that aim to protect one business from another, he said.

 

Total Wine is pushing the bill, Trone said.

 

The company has a South Carolina lobbyist, and Trone and Total Wine are regular contributors to political campaigns in the state. In 2012, Trone donated $1,000 each to Gregory and Hutto, the bill’s sponsors.

 

If the bill passes, Trone said Total Wine would open second stores in Columbia and Greenville, one in Mount Pleasant and one in Myrtle Beach.

 

“The competition doesn’t want to compete with me and other people who want to offer lower prices and great selection,” he said.

 

Trone, a Furman University graduate, started Total Wine in 1991 when he opened his first liquor store in Delaware. He said he saved money and opened a second store that his brother managed. Together, they built the company into a retail giant that has 90 stores in 15 states.

 

“They can’t say the bigger company puts them at a competitive disadvantage,” Trone said. “I was that mom-and-pop outfit that built a better mousetrap.”

 

But Andino said there is no way he could compete. In the liquor business, everything revolves around volume. The more you buy, the bigger the discount. And there’s no way he could buy the same amount as Total Wine and in turn receive the same discounts.

 

“They have the budget to invest in one product what I have invested in my entire inventory,” Andino said.

 

He cited the pricing on a 750 ml bottle of Crown Royal as an example. He can buy 15 cases of the popular Canadian whiskey for $270 each, so he pays $22.50 per bottle. His distributor recommends at least a 20 percent markup, which means he would sell a bottle for $27.

 

On Friday, he checked Total Wine’s website and found the same 750 ml bottle of Crown Royal for $17.99.

 

“How can they sell it for $4.50 below cost?” Andino said. “The Senate doesn’t see that.”

 

Kelsey, of the ABC Stores association, said legislators need to pay attention to the small businesses that make up the backbone of the state’s economy.

 

“If Total Wine comes in, the profits will go to Maryland,” he said. “What’s the benefit to the people of South Carolina? They can buy liquor cheaper at a big store or they can buy liquor from a locally owned store.”

 

About retail liquor licenses

 

. Issued by S.C. Department of Revenue

 

. About 1,000 exist now

 

. Businesses only allowed three S.C. licenses

 

. Law prevents loopholes such as a husband owning three and a wife owning three.

 

. Application fee is $200; licenses cost $1,400 every two years.

 

 

——

Wyoming: Sobering reality – Wyo’s beer tax too low

 

Source: Trib.com

March 31, 2013

 

Ninety-nine bottles of beer on the wall amount to 18.56 cents in state tax revenue.

 

It’s safe to say the cost of substance abuse impact and treatment is higher.

 

Add it up: Crime. Abuse of all sorts. Drunken driving. Incarceration. Broken homes. Job loss. Public assistance. Rising health care and vehicle insurance rates. Counseling.

 

Take one down, pass it around, 99 problems still to be resolved.

 

Fremont County officials and residents and a handful of legislators are again leading an effort to raise the state beer tax to generate more funding for substance abuse treatment. It’s an ongoing, decade-old battle.

 

Wyoming’s 2-cents-per-gallon beer tax is the lowest in the nation. It has remained unchanged since it was first passed in 1935 – slightly more than a year after Prohibition was repealed.

 

The current tax generates about $265,000 per year for the state’s general fund, according to the Wyoming Liquor Divison. The agency says a 5-cent tax would generate $668,000 per year. That’s less than a penny on every 20 ounces of beer.

 

Interestingly, a 3-cent hike would still leave Wyoming with the nation’s lowest beer tax. Missouri and Wisconsin are tied for second-lowest at 6 cents.

 

According to a recent story by Star-Tribune capital bureau reporter Joan Barron, legislative leaders have assigned a beer tax study to the Joint Interim Revenue Committee. State Rep. Patrick Goggles, D-Ethete, is a member of the revenue committee. He said the beer tax hike “is on our radar but it’s not a priority.”

 

Make no mistake. Goggles lives on the Wind River Indian Reservation in Fremont County and is a longtime supporter of substance abuse treatment programs and funding. He is also fully aware of the fact that the majority of clients of the Alcohol Crisis Center in Riverton are from the reservation.

 

He’s also a political realist.

 

Goggles has sponsored bills to allow a local optional tax on alcohol but says they haven’t gotten through the Legislature because of opposition from the Wyoming Liquor Association and the Wyoming Lodging and Restaurant Association.

 

“It’s a bill that needs to have lots of work done to pass,” Goggles told Barron. “It needs advocates in the House and Senate.”

 

Let’s also be clear about one other fact: Alcohol-related problems aren’t exclusive to the Wind River Reservation.

 

According to the “2012 Community Epidemiological Profile” issued by the Wyoming State Epidemiological Outcomes Workgroup under the auspices of the Wyoming Department of Health, the state’s alcohol-related problems are shared.

 

Campbell County was tops in alcohol-related arrests per 100,000 people.

 

Washakie County led the state in both drunkenness and DUI arrests.

 

Sublette County ranked No. 1 in alcohol-related combined fatal, injury and property crashes.

 

Natrona County led in liquor law violations.

 

Take one down, pass it around …

 

Opponents of a higher tax on beer say it would generate little revenue compared to the ill will it would provoke among beer drinkers. They also claim the tax should be kept low because beer is the working man’s beverage.

 

Those are disturbingly thin arguments.

 

A 3-cents-per-gallon hike would be so marginal, it virtually wouldn’t affect consumers. Conversely, it would more than double the amount of funding available for substance abuse treatment.

 

Goggles was only half right. The bill doesn’t need a lot of work; it simply needs to say: “Hike the state beer tax by 3 cents per gallon for substance abuse treatment.” It does, though, need advocates in the House and Senate – the same people who were quick to jump the state tax on gasoline and diesel from 14 to 24 cents per gallon in the last session to fund roadways.

 

 

——

Australia: Cider industry hostile to ‘pre-mix tax’

 

Source: The Age

Eli Greenblat

April 1st

 

Cider Australia, a coalition of cider growers, producers and manufacturers is pushing back against lobbying efforts in Canberra by the spirits industry to overhaul the way alcohol is taxed that would see the tax on a glass of cider quadruple.

 

Supported by Foster’s, currently the largest producer of cider in Australia with brands like Bulmer’s and Strongbow, Cider Australia has written to all members of parliament in the lead up to the May budget arguing a new tax proposal by the spirits industry to tax cider at the same level as pre-mixed spirits would destroy a local industry that is creating jobs in the agricultural and manufacturing sector.

 

A spokesman for Cider Australia has labelled a budget proposal paper produced by the Distilled Spirits Industry Council of Australia, which calls for in part a tax hike on cider, as “misleading, disingenuous and deceptive”.

 

“Cider Australia has significant concerns in relation to the push for change to cider taxation, which is being heavily lobbied by the DSICA,” a letter to all members of Parliament reads.

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“This body [the DSICA] is made up almost exclusively of multinational companies who rely on primary industry in their home countries, but are lobbying the Australian government to impose a killer tax on the Australian cider industry.

 

“Further, the DSICA lobby paper is purposefully misleading and deceptive in its “reform of cider taxation” content.”

 

The DSICA which represents big liquor companies like Diageo, Bacardi and Remy Cointreau, proposes a rationalised alcohol tax system based on a volumetric tax across all alcohol products that taxes drinks based on their alcohol content.

 

The distilled spirits industry has argued traditional ciders are robbing its market on the back of the massive price advantage they enjoy. It argues that to consumers, ciders and pre-mixed spirits are the same, contain the same level of alcohol and should therefore be treated the same by the Tax Office.

 

Its budget submission would see traditional cider, currently taxed under the WET system, have its tax rate lifted from roughly 23¢ per standard drink to the level paid by ready-to-drink spirits which is around 95¢ tax per drink. The DSICA believes this would raise $496 million in additional revenue over the forward estimates.

 

In response Cider Australia is calling for no overall increase in total revenue from the cider sector as well as a reform of the WET rebate to remove unintended recipients and alleviate unintended consequences of the system that are distorting supply decisions.

 

“Further, Cider Australia proposes that if any changes are made to the current WET scheme, then Australian produced cider should be taxed in line with Australian produced wine. This is the logical position for an industry that mirrors the wine industry from growers, producers and manufacturers through to sales and distribution.

 

“All Australian apple and pear growers and cider producers are calling on your support to reject the lobbying by the DSICA and to support the growing Australian cider industry and its local benefiters, the Australian orcharding communities and families across the nation.”

 

Foster’s is also lobbying hard on the issue.

 

“We are concerned that the imported spirits industry is again aggressively lobbying for reform to the taxation of traditional ciders,” a Foster’s government relations manager said in a letter to Cider Australia.

 

“The arguments raised…fail to reflect the current situation relating to traditional cider and ignore the devastating impact an excise change would have on the traditional cider industry, as well as apple and pear producers.

 

“If traditional cider was moved from the WET regime into the spirits, the tax rate would increase by over 140 per cent. It would have an immediate impact upon the Australian cider industry and local apple and pear growers. It is estimated sales would decline by up to 30 per cent.”

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