Tuesday April 16th 2013
Billionaire William Koch wins $12 million in courtroom wine fraud battle
Wealthy wine collector says he will use the money to further his campaign to highlight counterfeiting of bottles
Source: The Guardian
Saturday 13 April 2013 10.31 EDT
A jury has awarded the Florida billionaire Bill Koch $12m in his long-running dispute over phony vintage wine. Vowing to do more to expose wine frauds, Koch proclaimed the court win on Friday to be his happiest day since winning the America’s Cup in 1992.
“Out of sight. Over the moon,” he said as he described his feelings after emerging, giggling with glee, from a courtroom in US District Court in Manhattan. “We weren’t even expecting any damages and we got $12m. Unbelievable.”
The verdict went against the businessman Eric Greenberg, who insisted that he had not intentionally sold a fake bottle of wine in auctions that generated about $42m for him over an eight-year period. The trial involved alleged that counterfeit bottles of Bordeaux were labeled as if they were made from 1864 to 1950. In a statement, Greenberg called the verdict “a disappointment because I believed all the consigned wine to be authentic”. Outside court, Greenberg declined to comment further.
Koch’s lawyer, John Hueston, suggested that a criminal investigation of Greenberg was underway, saying: “We’re co-operating with the FBI.” He declined to elaborate.
In a chilly drizzle outside court, the 72-year-old Koch celebrated with his lawyers, posed for pictures and met briefly with at least one of the eight jurors who decided on Thursday that Koch had been defrauded, awarding him $380,000 in compensatory damages.
Jurors returned Friday to hear Koch and Greenberg testify again and deliberate over punitive damages. “I’m very sorry I had counterfeit wine,” Greenberg told them. “It’s a horrible thing. Both of us have lost millions of dollars.” The verdict was another blow to Greenberg, a former billionaire who built two internet consulting companies before the 2000 collapse of those stocks reportedly reduced his net worth by as much as 90%.
Koch said he planned to use the $12m to continue his crusade to clean up the wine auction industry, including by creating a website that highlights fake wines and who sells them. He said he would include in the list the 421 bottles he had identified in his own collection as fake after buying them for $4.4m.
“I’m sad at the amount of fakes,” he said. “That’s why I stopped buying very old wines.”
Distell buys international whisky distilleries for $244m
Source: Engineering News
By: Natasha Odendaal
15th April 2013
South African wines, spirits and flavoured alcoholic beverage producer Distell is expanding its global exposure with the acquisition of Scotch whisky producer Burn Stewart from CL World Brands (CLWB) and Angostura for $244-million.
The deal would see the JSE-listed group take over three Scotland-based malt whisky distilleries – Tobermory, located on the Isle of Mull; the Isle of Islay-based Bunnahabhain; and Deanston, in Doune, near Stirling – producing a total of 6.7-million litres a year of alcohol.
The Glasgow-headquartered Burn Stewart, which maintained a strong portfolio of blended and single malt whiskey brands, also had a branch in Taiwan and had partnered with Distell in a joint venture operation in sub-Saharan Africa.
“Burn Stewart’s strong presence in the UK, Taiwan and other countries provides Distell with enhanced sales platforms and route-to-market opportunities,” the company said in a statement on Monday.
The acquisition also filled a “category gap” in the South African group’s portfolio and would provide access to a “highly attractive” sector, the company explained, citing the growing demand for Scotch whiskey.
Over the past decade, Scotch whisky exports rose 87%, reaching £4.3-billion, while single malt exports jumped 190% from £268-million to £778-million.
“Rising demand for Scotch whisky from both mature and emerging markets saw the value of exports grow for the eighth consecutive year,” Distell commented.
The South African company said it would retain Burn Stewart’s MD and senior executive management. Burn Stewart would also continue to bottle and distribute for the Caribbean-based rum producer Angostura.
Distell released an initial payment of $229-million on April 12 and a contingent amount of $15-million would be payable in cash in the next year, subject to Burn Stewart achieving a specific earnings before interest, tax, depreciation and amortisation.
CLWB parent company, Trinidad-based CL Financial, would appoint two directors to the board of Burn Stewart for the duration of the contingent consideration, Distell noted.
Missouri: Major alcohol suppliers, local distributors face off in court
Source: St. Louis Post Dispatch
By Lisa Brown
A battle brewing in local courtrooms and in Jefferson City could dramatically reshape the way wine and spirits are distributed in Missouri.
Lawsuits involving the country’s largest liquor suppliers began piling up in federal court in St. Louis in recent months as they seek to end deals with local distributors.
The most recent one was filed last week, which pits St. Louis-based wine distributor, Garco Wine Co., against Constellation Brands in Victor, N.Y..
Spirits suppliers Diageo Americas and Bacardi USA already have filed suit against St. Louis-based Major Brands, the state’s largest wine and spirits distributor, seeking to terminate distribution deals. Alcohol importer Pernod Ricard also filed suit against Major Brands and St. Charles-based Glazer’s Midwest, a unit of Dallas-based Glazer’s Inc.
While the litigation unfolds, Missouri lawmakers are renewing efforts to change state liquor laws to help local distributors, a year after similar legislation was vetoed by Gov. Jay Nixon.
After the repeal of Prohibition in 1933, the three-tier distribution system was created. It requires alcohol producers and suppliers to sell their products to distributors, who then sell the beverages to retailers.
In Missouri, the Franchise Act was amended in 1975 to clarify that liquor distributors’ relationships with their suppliers were deemed franchises.
But in recent years, legal efforts to challenge distributors’ status as franchisees have intensified, as suppliers seek to consolidate the number of distributors they use across the country to cut costs.
Opponents say consolidation will be the death knell for independent distributors like Garco Wine and lead to a handful of megadistributors that are more difficult to regulate for state authorities.
The ruckus in Missouri started with a 2011 federal court decision that gave suppliers the upper hand. In Mo. Bev. Co. vs. Shelton Bros. Inc., the U.S. District Court for the Western District of Missouri ruled that a business relationship between Missouri Beverage Co., a distributor, and Shelton, a Massachusetts-based supplier, was not that of a franchisee-franchisor under Missouri law.
The court reasoned that a franchise relationship didn’t exist because Shelton hadn’t granted Missouri Beverage the use of its trademarks. It also ruled that a “community of interest” didn’t exist between the two parties, in part, because Missouri Beverage wasn’t economically dependent on Shelton.
That ruling – which was affirmed last year by the 8th U.S. Circuit Court of Appeals – prompted distributors, including Major Brands, to support legislation last year to rewrite Missouri law to make it more difficult for suppliers to terminate their relationships with distributors.
But the legislation was vetoed by Nixon in July, in part, because of a potential negative impact on the state’s wine growers.
As similar legislation is pending before the Missouri Legislature, suppliers are taking this window of opportunity to terminate their agreements with distributors.
In late March, Constellation Brands – one of the largest wine and spirits suppliers in the country, with brands including Robert Mondavi and Svedka vodka – notified St. Louis-based Garco Wine that it would stop fulfilling its orders, effective April 30.
Garco, which has distributed Constellation’s brands in Missouri since 2004, sued Constellation in federal court in St. Louis on Tuesday, alleging Constellation wrongfully terminated its franchise relationship with Garco without good cause, thus violating Missouri law.
Garco’s sales of Constellation products totaled more than $5.6 million last year, representing 37 percent of Garco’s total sales revenue. That high level of sales constitutes a “community of interest” between the parties that offers protections to Garco under Missouri law, Garco argues in its lawsuit.
The breakup between the two companies occurred after Constellation demanded a change to their agreement.
The wine and spirits supplier asked Garco to submit a proposal as part of a “request for commitment” process – essentially asking Garco to accept that its agreement with Constellation was over and that it would have to reapply.
To participate in the proposal process, Constellation asked Garco to relinquish its rights to sell Constellation products and release Constellation from lawsuits and other claims related to the termination of its distributor agreement with Garco.
Garco refused, and alleged in its breach of contract lawsuit that Constellation is prohibited under Missouri law from terminating their agreement without good cause.
“If Garco’s relationship is terminated by Constellation Brands, Garco will lose its customers and those business relationships it developed to a new wholesaler appointed by Constellation Brands, despite the fact that it was Garco’s efforts and business acumen that cultivated those relationships for the sale of Constellation Brands’ products in Missouri,” Garco states in the suit.
An attorney representing Garco and its president, Michael Cohen, declined to comment. Constellation also declined to comment on the lawsuit.
A FLURRY OF LAWSUITS
In other cases, alcohol suppliers are the ones filing lawsuits against distributors.
In January, New York-based Pernod Ricard USA sued its two Missouri distributors, Major Brands and Glazer’s Midwest, seeking court approval to terminate agreements with both companies. Pernod Ricard’s brands include Absolut Vodka, Kahlúa Liqueur and Seagram’s Extra Dry Gin.
In March, both Diageo Americas Inc. and Bacardi USA also filed suit in federal court in St. Louis, seeking to terminate their distributor agreements with Major Brands, and Major Brands countersued.
In its lawsuit, Pernod Ricard argues Missouri franchise law doesn’t apply to its agreements with Major Brands or Glazer’s because sales of its products at either distributor are no more than 6 percent of their total sales – not enough to constitute a “community of interest,” according to Pernod Ricard.
While that case is still pending, Pernod Ricard announced Tuesday that it selected Major Brands as its exclusive distributor for all its wine and spirits brands in Missouri, effective May 1, and Glazer’s will continue to distribute Pernod products in Arkansas and Kansas.
“The lawsuit is still pending and at this point, there are no plans to drop it,” said Pernod Ricard spokesman Jack Shea. “Our decision to appoint Major Brands as our distributor in Missouri underscores our belief that market forces are sufficient to determine business relationships.”
As the franchise lawsuits make their way through the courts, lawmakers in Missouri again are pushing new legislation, Senate Bill 365 and House Bill 759, that would make it more difficult for alcohol suppliers to sever their relationships with distributors.
This time around, the Missouri Vintners Association, the winery owners group that opposed the legislation last year, is supporting it.
Seeking to block the legislation is the Distilled Spirits Council of the United States, a Washington-based trade group that represents spirits suppliers, which opposes franchise protection for distributors nationally.
“It’s a type of legislation that’s anti-consumer, anti-competitive and violates the spirit of free enterprise,” said Ben Jenkins, the group’s vice president of government communications.
The trade group contends that spirits are vastly different than franchises such as Dairy Queen or McDonald’s restaurants because alcohol distributors distribute hundreds of other brands from competitors. “There’s no community of interest (with spirits),” Jenkins said.
But some distributors disagree, including Major Brands, a family-owned distributor that got its start in 1934 and has grown to more than 700 employees statewide. Its wine and spirits business totals $430 million in annual revenue.
Susan McCollum, Major Brands’ chairman and CEO, declined to comment on the pending lawsuits, but she said she supports the proposed bills in the Missouri Legislature that would strengthen protections for distributors.
She also is closely watching a case that’s before the 8th U.S. Circuit Court of Appeals – Southern Wine and Spirits of America vs. Missouri Division of Alcohol and Tobacco Control. In that case, which had oral arguments last week, Miami-based Southern Wine and Spirits argues that a Missouri law that requires a residency requirement for distributors is unconstitutional.
Regarding the proposed legislation, McCollum said if it doesn’t pass, it will lead to more consolidation in the industry, hurting Missouri businesses and consumers.
“The federal court decision created confusion and uncertainty, and we’re merely seeking to clarify Missouri law that we’ve abided by for decades,” she said. “Without this clarifying legislation, our state runs the risk of losing hundreds of good jobs and a homegrown, Missouri-based business with deep roots in the communities it has served for nearly 80 years.”
Australia: Chains bottle up liquor market
April 14, 2013
Coles has bought one of Sydney’s most popular independent wine stores in a sign of further influence by the big chains over how and where shoppers buy their alcohol.
Ultimo Wine Centre was sold to Coles last week and reopened on Wednesday under the supermarket chain’s brand Vintage Cellars.
As Coles and Woolworths continue to increase their market share – the two chains own more than half all liquor outlets across Australia – small players are feeling the pinch.
A 2010 report by consumer group Choice said 45 per cent of Australian liquor outlets were run by Coles and Woolworths, but a July 2012 report from the McCusker Centre for Action on Alcohol and Youth puts the figure at more than 58 per cent.
Coles spokesman Jim Cooper said in the past four years Coles had opened “about 30” liquor outlets, and was focused on “making sure the stores we have are in the right locations and are the right kind of store for that location as well”.
A spokeswoman for Woolworths, which owns Dan Murphy’s and BWS, said the company does not discuss market share, but ”growth has closely mirrored our supermarket openings and reflects our customers’ desire for one-stop shopping”.
Terry Mott, the chief executive of the Australian Liquor Stores Association, said in the past six years in NSW the number of liquor stores had grown from about 1600 to about 2180.
“There’s been a significant increase in the number of outlets but the overall market has been flat or declining so what that’s led to is an increase in competition in a market that’s effectively flat,” he said.
Mr Mott said the biggest change in the sector was in the number of online retailers.
“Online-only has grown from a handful of six in 2008 to over 200 now,” he said.
Without the cost of a retail space or staff, online stores are able to provide big discounts, making it difficult for independents to match them.
With the local bottle shop finding itself caught between ferocious competition from big chain stores and a boom in online sales, some are becoming more specialist as a way to survive.
Simon Clarke, the manager of the independently owned wine store The Oak Barrel in Sydney’s central business district, said the store had made a conscious choice to focus on customers ”wanting and demanding more choice”.
The store is packed with unusual and hard-to-find wines, beers and spirits, and has earned a loyal following because of the depth and breadth of its range.
“We consider ourselves educators as well as retailers,” Mr Clarke said.
However Mr Clarke conceded the competition was challenging.
“Online selling is both an opportunity and a curse,” he said.
“A number of wineries and suppliers undercut independent shops by selling their products considerably cheaper online.”
Camperdown Cellars is another independent outlet. Owner Rip Viropoulos said chain stores were not able to react to customer trends as easily as independents could.
“Being a smaller independent retailer, we have the ability to effect change very quickly and keep up with all the latest trends,” Mr Viropoulos said.
“We don’t have all the red tape and paperwork to cut through before getting (new products) and small suppliers that don’t produce enough to feed the chain stores are still able to look after our customers.”
Australia: Think Spirits to take over distribution rights of Jose Cuervo from Diageo
15 April 2013
Think Spirits, a New South Wales-based distributor of premium spirits and liqueurs to both trade and consumers, is set to take over the distribution rights of Jose Cuervo brand from Diageo Australia.
Effective from 1 July 2013, Think Spirits will be the sole distributor of entire Jose Cuervo range in Australia.
The move follows Diageo’s decision in late 2012 to drop acquisition of Jose Cuervo brand and also to end distribution of Jose Cuervo range by June 2013, reported The Shout.
Think Spirits earlier handled Casa Cuervo’s three tequila brands, 1800 Tequila, Gran Centenario Tequila and Agavero Tequila Liqueur, in Australia.
However from July 2013, the distributor will also distribute Jose Cuervo’s premium tequila brands such as Especial Reposado, Especial Silver, Tradicional Reposado, Reserva Platino and Reserva de la Familia, and Cuervo Margarita Mix 1l throughout Australia.
P. Diddy throws massive tantrum over vodka
Source: Vancouver Sun
Apr 13, 2013
P Diddy apparently had a major meltdown at a Golden Globes pre-party over the weekend because the bar wasn’t selling his brand of vodka. Even though the party he was at was sponsored by Grey Goose Vodka, P Diddy wanted staff to serve him his own brand.
“He made quite a big deal about it, prompting the polite bartenders to finally ignore him and help other guests.”
Diddy was spotted at the party with Cameron Diaz getting cosy supporting prior rumours that P Diddy and Ms Diaz are more than just flirty friends despite P Diddy having a long term girlfriend.
Wells Fargo’s Weekly Economic & Financial Commentary
Source: Wells Fargo
. Recent economic data suggests another spring slowdown.
. 2Q13 GDP growth will likely be 1.8%, compared to the 2.8% pace expected for 1Q13.
. Small business optimism retreated in March as business owners remain concerned about taxes, regulations, and general economic health.
. The negative outlook could keep near-term job gains limited.
. Inflationary pressures should remain muted as the slower global demand environment restrains energy price increases.
. Retail sales declined in March as consumers cut back on spending.
. Weak job and income growth combined with a surprising fall in consumer sentiment indicate a more cautious buyer.
. Past experience with North Korea suggests propaganda rather than imminent threat, but one can never be too careful.
. Financial markets, however, seem to believe the current situation is nothing more than posturing.
. Despite indications of a slowing economy, the Bank of Korea left rates unchanged, citing inflation concerns.
. The lack of a rate cut opens the door to a fiscal stimulus package.
. Economic activity in Korea should pick up in 2H13 as exports improve.
US retail sales fall 0.4 percent in March, most in 9 months, a sign of consumer caution
Source: By Associated Press
Sales at U.S. retailers fell in March from February, indicating that higher taxes and weak hiring likely made some consumers more cautious about spending.
Retail sales declined a seasonally adjusted 0.4 percent last month, the Commerce Department said Friday. That followed a 1 percent gain in February and a 0.1 percent decline in January. Both February and January figures were revised lower.
Consumers cut back across a wide range of categories last month. Sales at auto dealers dropped 0.6 percent. Gas station sales dropped 2.2 percent, partly reflecting lower prices. The retail figures aren’t adjusted for price changes.
Excluding the volatile categories of autos, gas and building materials, core sales dropped 0.2 percent in March. That followed a gain of 0.3 percent in February. Department stores, electronics retailers and sporting goods outlets all reported lower sales.
The retail sales report is the government’s first look at consumer spending, which drives about 70 percent of economic activity.
The decline in March shows higher Social Security taxes are starting to affect consumers and could dampen growth in the spring.
Many economists still predict economic growth accelerated to an annual rate of roughly 3 percent in the January-March quarter. That would be a significant increase from the anemic growth rate of 0.4 percent reported for the October-December quarter.
Still, economists say the improvement is likely temporary. Many now expect weaker spending will be among factors that slow growth again in the April-June quarter, to an annual rate of around 1.5 percent.
“The U.S. consumer looks a little less resilient,” said Michael Feroli, an economist at JPMorgan Chase. “It now appears that close to $200 billion in higher taxes may have actually had some impact on consumer spending.”
A separate report Friday on April consumer confidence seemed to bolster that point.
The University of Michigan’s preliminary survey of consumer sentiment fell to 72.3. That’s down from 78.6 in March and the lowest since July. The discouraging jobs report and other weak economic reports weighed on consumers’ minds.
Companies are also less optimistic about the next few months, according to a separate Commerce report issued Friday. Businesses increased their stockpiles only 0.1 percent in February, the smallest gain in 8 months. That suggests companies had expected sales to weaken this spring, a point confirmed by the March retail sales figures.
Economists said restocking will likely stay tepid in the April-June quarter. Slower restocking means companies will order fewer goods, slowing factory output and growth.
“The economy appears to have lost some momentum,” Paul Dales, an economist at Capital Economics, said. “But with gasoline prices now falling, we don’t expect too sharp a slowdown.”
The cost of a gallon of gas averaged $3.56 nationwide Thursday, down from $3.70 a month earlier.
The increase in Social Security taxes has lowered take-home pay this year for nearly all workers. Someone earning $50,000 has about $1,000 less to spend in 2013. A household with two high-paid workers has up to $4,500 less.
Growth for the rest of the year will depend on what happens with hiring.
Employers added only 88,000 jobs last month, much lower than the average gain of 220,000 in the previous four months. But hiring may pick up in the coming months. Weekly unemployment benefit applications fell sharply last week, suggesting that companies are cutting fewer jobs.
There were a few positive signs in the retail spending report. Furniture stores reported a 0.9 percent sales increase, suggesting the housing recovery is still encouraging more spending. And sales at hardware and garden supply stores ticked up 0.1 percent, despite an unseasonably cold March.
But sales at general merchandise stores, which include major department stores such as Macy’s and big discount stores such as Wal-Mart and Target, dropped 1.2 percent.
Heineken to sell Finnish arm to Hartwall Capital: report
Fri, Apr 12 2013
Dutch brewer Heineken (HEIN.AS: Quote, Profile, Research, Stock Buzz) plans to sell its Finnish unit Hartwall to Hartwall Capital, an investment firm owned by the family which started the beverage business, a report said on Friday.
The report in the Finnish business magazine Talouselama cited unnamed sources and gave no deal value.
Hartwall Capital’s chairman Tom von Weymar, in the report, was quoted as saying the firm was “eyeing” a purchase but declined to comment further.
Regulating Density of Alcohol Outlets a Promising Strategy to Improve Public Health
Source: Johns Hopkins University Bloomberg School of Public Health
Published: April 11, 2013
Regulating alcohol outlet density, or the number of physical locations in which alcoholic beverages are available for purchase in a geographic area, is an effective strategy for reducing excessive alcohol consumption and associated harms. A new report from the Center on Alcohol Marketing and Youth (CAMY) at the Johns Hopkins Bloomberg School of Public Health documents how localities can address alcohol outlet density, and outlines the critical role of health departments and community coalitions in these efforts. The report, published in the journal Preventing Chronic Disease, is an important resource for public health practitioners, many of which are often unaware of the potential of this evidence-based strategy.
“Excessive alcohol use is the third leading cause of preventable death in the U.S., and responsible for approximately 80,000 deaths annually,” said lead study author David Jernigan, PhD, CAMY director. “Public health agencies are on the frontlines of addressing the toll alcohol misuse has on the public’s health, and are therefore well-positioned to inform communities about the benefits of addressing alcohol outlet density in their communities.”
The report notes that the public health profession has a tradition of promoting health and preventing harm through the use of evidence-based strategies, including land use and zoning codes. “Despite this tradition and evidence supporting regulation of alcohol outlet density, many public health professionals are unaware of its potential and do not know how to work with local authorities to implement the strategy,” said Jernigan.
The authors cite several examples of the significant relationship between alcohol outlet density, consumption and harms: in Los Angeles County, researchers estimated that every additional alcohol outlet was associated with 3.4 incidents of violence per year, and in New Orleans, researchers predicted that a 10 percent increase in the density of outlets selling alcohol for off-premise consumption would increase the homicide rate by 2.4 percent.
The report provides four ways in which states and localities can reduce alcohol outlet density: Limit the number of alcohol outlets per specific geographic unit; limit the number of outlets per population; establish a cap on the percentage of retail outlets per total businesses in a specific area; and limit alcohol outlet locations and operating hours. In addition, localities may use land-use powers to limit, deny or remove permission to sell alcohol from existing outlets.
A previously released Action Guide, Regulating Alcohol Outlet Density (see http://www.camy.org/action/Outlet_Density), developed by CAMY and Community Anti-Drug Coalitions of America (CADCA) – the nation’s leading substance abuse prevention organization, representing over 5,000 community anti-drug coalitions across the country – outlines nine specific steps community coalitions and public health departments can take to educate and inform policy makers. “By providing the data necessary to inform policy decisions and building partnerships with community coalitions, state and local health departments can offer critical support to states and localities in these efforts,” said report co-author Evelyn Yang, deputy director of Evaluation and Research at CADCA.
“Since the publication of the Guide, we’ve collected several case studies of local health agencies and community coalitions effectively working to regulate alcohol outlet density,” stated Jernigan. “With increased uptake by more agencies, communities can become healthier, safer places to live and work.”
Legislators’ Report Confronts Energy Drinks
Source: Natural Products Insider
April 11, 2013
U.S. Rep. Edward Markey (D-MA) and Senators Richard Durbin (D-IL) and Richard Blumenthal (D-CT) have released a report based on their ongoing concerns over the way these products are regulated and marketing, contending the safety of these products is a major concern for children. The report is based on their investigation of 14 commonly sold “energy drink” products and details marketing, labeling, safety and regulatory findings, as well as recommendations to improve transparency and protect consumers, especially children.
The primary target of the lawmakers’ ire is caffeine content, targeting children and the way these products can be marketed as beverages or supplements-rules on labeling and caffeine limits are different between the two categories.
The report opens with notes on how FDA has released a bunch of adverse event reports (AERs) associated with energy drink products and is currently investigating this segment of products. It also noted the Department of Health and Human Services has reported emergency room visits related to energy drink consumption have doubled to 20,000 between 2007 and 2011.
In their report, the legislators note, “…nearly identical energy drinks can be marketed and represented to consumers differently, leading to consumer confusion and a lack of transparency.” They said marketing identical products in different regulatory categories can result in full disclosure of caffeine content in one product and little to no disclosure of caffeine in the similar product. The report further lists some known caffeine amounts for popular energy drinks, including CocaCola’s NOS (260 mg per can, among the highest) and Monster’s Worx Energy Shot (200 mg per 2 ounces).
What was not in the report were caffeine amounts for popular beverages like coffee and tea. According to the Mayo Clinic, generic brewed coffee can range from 95 to 200 mg, while Starbucks brewed can be as high as 330 mg per 16-ounce serving-at Starbucks, 16 ounces is a Grande, w hile a Tall is 12 ounces, a Venti is 24 ounces and a Trenta is 31 ounces. Mayo also lists amounts for tea (most are lower than 100 mg per 8 ounces), soft drinks (nothing on the list is more than 55 mg per 12 ounces) and energy drinks (most popular names are under 100 mg per 8 ounces, except for 5-Hour Energy, which packs 207 mg in two ounces.)
The ingredients issue is not with caffeine alone, but additional, often undisclosed, sources of caffeine, as well as other stimulants such as guarana and green tea. The report takes a shot at taurine, a popular energy drink ingredient, saying it is not approved as a food additive, but is instead is self-determined as safe-self-GRAS, generally recognized as safe-by manufacturers for inclusion in such products.
Among the bigger claims in the report is the argument energy drink marketers target children. Countering statements from 14 such companies that denied marketing to children, the lawmakers assured the evidence is clear the products are paraded to young Americans, via sports-based marketing. “The use of unconventional marketing practices combined with product design and placement on store shelves assists in creating product images that appeal to children and teens,” the report states. They further lament some energy drink products are meant to mimic alcoholic drinks.
In addition to target audience, the marketing is rife with irresponsible claims, according tot he report, which singles out claims to “energize and hydrate,” provide “50 percent more focus,” improve “up to the nanosecond performance,” and provide “increased concentration and reaction speed.”
Recommendations in the report include a call for clearly labeling the products for total caffeine content (from all sources) and for the entire container, not just whatever is deemed as a serving. In addition, the legislators would like to see all products containing more than 200 mg of added caffeine, the limit for self-GRAS by FDA, bear a warning statement such as: “This product is not intended for individuals under 18 years of age, pregnant or nursing women or for those sensitive to caffeine. Consult with your doctor before use if you are taking medication and/or have a medical condition.”
The report’s recommendation to cease marketing of energy drinks to children and teens under 18 could be an even trickier suggestion, as it calls for curtailing the use of social media and sponsorship of sports and other events.
Further, the proposal to mandate reporting of serious AERs to FDA when they relate to energy drinks marketed as beverages appears to address earlier criticisms of the lawmakers’ complaints-the argument was energy drinks were marketed as dietary supplements for easier regulation, but supplements are regulated by a serious AER law that beverages are not.
How this report will influence regulators and legislators is unclear, but it sends a clear message these lawmakers are not giving up on making changes to this category. “We’ll follow up with the FDA and FTC to make sure they are taking appropriate action, because even one more emergency room visit linked to energy drinks is unacceptable,” Blumenthal said.
Rend Al-Mondhiry, regulatory counsel for the dietary supplement-focused trade group Council for Responsible Nutrition (CRN), said the recently released recommended guidelines for caffeine-containing dietary supplements are very similar to many of the recommendations made in the Durbin/Blumenthal/Markey report. “We have shared our recommended guidelines with their offices,” Al-Mondhiry said, adding the legislators’ report was likely in very late stages when the CRN guidelines were released. “Maybe it impacted their report.”
The CRN caffeine guidelines focus on full disclosure of total caffeine content from all sources, label advisories from conditions of use, intake and serving size suggestions, and restrictions on marketing in combination with alcohol. Among the small differences, the lawmakers’ report highlights the marketing focus on children and teens under 18 as a concerning and major issue, while the CRN guidelines only mention children under 18 in its proposed conditions of use labeling-any supplement with a total caffeine content more than 100 mg per serving should bear an advisory such as: “This product is not intended /recommended for children and those sensitive to caffeine.” In fact, Al-Mondhiry said there is a big difference between young people under 18 and those over that age, and CRN does not currently see pervasive marketing of energy drinks to those under 18.
Effective April 1, the guidelines are intended as a basis for how companies should communicate with consumers on such products, and CRN recommends companies comply with the recommendations by April1, 2014. “The guidelines are not mandatory,” Al-Mondhiry reminded. She did report, however, a group of CRN member companies met several times with CRN staff to come to a consensus on the caffeine guidelines and the membership supports the finished publication.
Commentary: Latest Durbin energy drink report unlikely to generate much ‘buzz’; includes relatively benign recommendations
Source: Goldman Sachs
By Judy E. Hong
In an April 10 report entitled “What’s all the BUZZ about?” Congressman Edward J. Markey and Senators Richard J. Durbin and Richard Blumenthal released their latest findings, criticisms, and recommendations for the energy drink category.
We view the conclusions from this wave of criticism from Senators Durbin and Blumenthal as broadly benign with respect to the energy drink category and MNST (Buy, $55.86). On the positive side, the report calls for explicit steps to improve product transparency and representation, ones that MNST is already in compliance with, can readily adjust its practices in accordance with, or do not apply to the firm or its products.
Label caffeine per serving and total caffeine from all sources – MNST, Red Bull, and Rockstar already disclose caffeine content in their products
Larger and more descript precautionary statement – both MNST and Red Bull include statements that their products are not recommended for children, pregnant or nursing women, or people sensitive to caffeine.
The specific language of the statement could be easily adjusted to include specific age specifications, which the report recommends.
Cease marketing products to children and teens under 18 – the core of MNST’s marketing activity consists of extreme sports sponsorships to build brand awareness. These events are not directly “intended for an audience comprised primarily of children or teens” and would therefore most likely be allowed to continue. Red Bull’s advertising and marketing is more traditional, and does not directly target adolescents as part of its broader campaign.
Report to the FDA adverse events associated with energy drink use – this is only required by the FDA for dietary supplements, and thus could be contested on the grounds that MNST, Red Bull, and Rockstar all classify their products as beverages. However, this guideline could also be accommodated by the companies’ voluntary disclosure.
We are encouraged by the report, as we believe that these recommendations suggest that more drastic and onerous restrictions (e.g., an outright ban on energy drinks, age restriction, product reformulation) are unlikely. In addition, we believe the energy drink companies will be more proactive in addressing some of these recommendations (as evidenced by the decision by MNST and Rockstar to being classified as a beverage).
Indiana: GLAZER’S OF INDIANA AND AVENÍU BRANDS ANNOUNCE NEW AGREEMENT
Glazer’s, one of the country’s largest beverage distributors, and Aveníu Brands, a leading marketer of distinctive brands from the world’s foremost regions, have announced that Glazer’s Indiana has been awarded the statewide distribution rights for the Aveníu portfolio. This appointment is part of a newly enhanced strategic alignment between Glazer’s and Aveníu Brands. The agreement affirms both companies’ commitment and investment to build Aveníu’s growing portfolio of premium brands, including Artesa, Anna de Codorníu Cava, Septima, Vina Zaco, James Mitchell, Clos La Chance, Amarula Cream Liqueur, Piccini, Raimat, and Elements.
Glazer’s Executive Vice President Sales and Marketing Mike McLaughlin stated, “We are thrilled to have acquired the rights to Aveníu Brands for Indiana. We look forward to building these brands with a team that has been a long term strategic partner for our company. Today’s announcement is an endorsement of Glazer’s Indiana team and our whole business relationship.”
Aveníu Brand President Andrew Mansinne added, “Glazer’s is one of our key growth partners nationally. We are delighted to finalize our agreement in Indiana to support the growth of the Aveníu portfolio at Glazer’s for years to come.”
Champagne shipments down -6.1% in February against a tougher comp
CIVC global shipments declined by -6.1% in February 2013 (5% of annual volumes), a deterioration from the +8.3% reported in January. We note February 2012 volumes were -0.9%, while January 2012 volumes fell -13%. France was down by -4.2% on an easy comparable (-7.4% in February 2012). European volumes declined by -5.1%, compared to -8.8% a year before. Shipments to other countries (19% of volumes) deteriorated by -10.3% (+22.6% in February 2012). YTD industry shipments are up +1.1%, with a -4.4% decline in France, +9.7% in rest of Europe and +5% in other countries.
Although we believe austerity measures will continue to hold back any sharp recovery in core European markets, with tentative signs of a bottoming in total industry data, the outlook is arguably a little more encouraging. Lanson recently stated in its FY result press release that 2013 had started “a little bit better than 2012”. We recently changed our ratings on Laurent-Perrier and Lanson-BCC to EW from UW, and kept the EW rating on Vranken-Pommery, see our report “Tough comps – buy on any weakness” from 11 April 2013. Our preferred pick in the European Beverages space is Diageo (OW, PT 2400p), a reflection of its increasing Emerging Markets exposure augmented by improving price/mix delivery in the US.
Wine critics say cheers to Bordeaux’s new vintage
by Suzanne MUSTACICH
Wine professionals declared themselves “pleasantly surprised” with the 2012 Bordeaux vintage but demand from China was expected to be weak due to losses on 2010 wines.
China is currently Bordeaux’s biggest market in terms of volume and second in value, but Chinese buyers were expected to stay away this time.
“They won’t touch it,” said Gary Boom, managing director of Bordeaux Index, with offices in London, Hong Kong and Los Angeles.
Chinese clients are still smarting over their losses on the 2010 vintages, bought when Bordeaux prices soared, only to fall quickly after the wines were sold.
“They’ve learned that the price can go down as well as up.”
Alain Raynaud, vintner and president of the Cercle Rive Droite, a winemakers association, said he had been “very pleased ” by the quality of the 2012 wine despite the difficult growing conditions last year.
“In the end the vintage was much better for everyone than expected,” he said.
The wine samples are drawn directly from the barrels in the cellars, more than a year before bottling, to give professionals a chance to assess the quality before they are sold as a futures commodity in the coming weeks.
The primary organisers of the tastings, the Union des Grands Crus de Bordeaux (UGC) told AFP attendance was up seven percent from last year with over 5,700 professionals from around the globe taking part. Another popular winemakers group, the Alliance of the Crus Bourgeois, hosted 1,200 visitors. And the Cercle Rive Droite logged 1,300 visitors for their 140 wines presented.
The strong attendance, despite competition for travel budgets from Vinexpo in June and this week’s events at Vinitaly in Verona, reaffirms interest in Bordeaux.
The stakes are high. The region sold 740 million bottles in 2012, worth EUR4.3 billion ($5.6 billion). Each vintage’s commercial success is strongly influenced by the ratings the wines receive from critics, journalists and buyers during this round of barrel tastings.
Bordeaux’s sweet wine growers suffered a particularly difficult season when some vineyards waited in vain for botrytis — or noble rot — to properly develop, robbing the wines of their famous concentration of sugar and aromas.
“The summer was very dry, the water stress very strong, and until the end of September the noble rot was zero,” said Denis Dubourdieu, consultant, professor and vintner.
The spread of noble rot was especially slow on the soil of Sauternes, leading three prominent estates, Chateau d’Yquem, Chateau Suduiraut and Chateau Rieussec, to decide against releasing early samples of the 2012 vintage.
Nevertheless, the sweet wines from several estates around Barsac received rave reviews, including Chateau Coutet, Chateau Doisy-Daene and Chateau Doisy-Vedrines.
“We were very happy with the wine we made, especially in Barsac. It was easier than in Sauternes,” said Dubourdieu, owner of Chateau Doisy Daene.
Dry white wines, picked prior to the downpours in October, were well-received, and red wine producers in the Right Bank appellations of Saint Emilion and Pomerol where the early-ripening Merlot dominates were also able to pick before the rain.
“Without a doubt, the maturity of the Merlot on the Right Bank made it more accessible and easier to taste en primeur,” said Raynaud. “But the Left Bank also has some lovely wines, but perhaps less homogeneous.”
The late-ripening Cabernet variety, which dominates the Left Bank appellations in the Medoc, created some hits and misses.
Positive response from potential buyers left many vintners with a spring in their step despite the gloomy world economic outlook.
“I hear people were quite pleasantly surprised by the vintage. It’s fresh, appealing, some wines have more fruit than others,” said Sophie Schyler, co-owner of grand cru classe Chateau Kirwan in the Margaux appellation.
“I think we’ll have a good demand from America.”
Hot on the heels of the swirling, sipping and spitting at the tastings comes the haggling over prices and anticipation of demand.
“It doesn’t matter how nice the wines are. The harsh reality is that people have a choice. You need to give them a compelling reason to buy, and the only compelling reason to buy this vintage is price,” said Boom.
Several chateau owners, meanwhile, called for reasonable pricing and a brisk sales campaign to show that Bordeaux still knows how to offer good value to its traditional markets.
“We hope all Bordeaux will release soon, fast, with good pricing, in an efficient way so the message can be communicated positively,” added Schyler.
Bordeaux 2012: major releases ‘next week’
by Jane Anson, Adam Lechmere and Georgie Hindle in Bordeaux
Friday 12 April 2013
A flurry of early Bordeaux 2012 releases is expected next week including Chateau Gazin in Pomerol, Rauzan Ségla in Margaux, and ‘a high probability’ of a First Growth.
Merchants and négociants are gearing up to get straight into the 2012 campaign, without the usual break that is observed after the en primeur tastings, as chateaux owners seem to be listening to calls for a quick campaign.
Among the chateaux expected out next week are The 13 RendezVous Médoc chateaux, including Arsac, Cambon La Pelouse and Caronne Ste Gemme, have already confirmed that they are coming out with prices next week, from April 15 to April 19.
Jean Luc Thunevin’s Valandraud is expected out on April 22, at half the price of its 2011, despite its new status as a classified Saint Emilion – meaning around ?96 ex-Bordeaux.
At Chateau Angelus, managing director Stephanie de Bouard did not comment on timing but said they would set their price at ‘between ?140 and ?200 per bottle’ – the hike in price from last year’s ?115 to reflect the fact the chateau is now in the top level of the St Emilion classification, Grand Cru Classe ‘A’.
Chateau Rauzan-Ségla in Margaux has been criticised in the last few campaigns for its high prices, but director John Kolasa toldDecanter.com today that he hopes to come out early, and close to the 2008 price of ?36 ex-Bordeaux, although the final decision would be taken by the Wertheimer brothers, owners of the chateau. ‘There are many friendly wines in 2012,’ said Kolasa, ‘and I hope to offer some friendly pricing also, and give people a good deal.’
As ever with difficult commercial vintages, the First Growths are being asked to come out early and ‘set the tone’, as one leading courtier said this week.
This same source suggested that Mouton would lead the way next week. Director Philippe Dhalluin would not confirm timings, but did agree that the campaign was likely to be early.
In a sign that prices at Mouton is likely to be responsive to the market, Jean-Emmanuel Danjoy, director of the Mouton’s sister property Clerc Milon in Pauillac, told French magazine Terre des Vins that he expects to release at under last year’s exit price of ?30.
At another first growth, Chateau Margaux, director Paul Pontallier said they would adapt to the ‘diffcult’ market conditions. ‘That’s what we always try to do, more or less successfully’, and Nicolas Glumineau at Pichon Comtesse agreed: ‘I think that all of us have understood we have to decrease the price’.
Philippe Dambrine, director of Chateau Cantemerle said, ‘I expect it to be a fast campaign. Prices won’t go as low as 2008, that’s a dream, but maybe close. The difficulty is that we have found if we price too low, it can harm sales. So we have to find the right level.’
The bi-annual Vinexpo wine fair begins on June 15 this year, and most observers expect the campaign to be largely over by then.
‘We have to get people drinking the wines,’ said Kolasa, ‘and recognise that when things are just about points and egos, it’s not professional. Effective distribution has a cost, and everyone involved needs to be able to make their margin.’
Kolasa also said he would like to see the top properties releasing at ?200 per bottle – ‘and even that would be too much. We’d like to be able to sell at ?200 per bottle.’
Privately, owners and directors around Bordeaux expect the top properties to release at between ?230 and ?250 per bottle.
Profits up at Rite Aid
By Alaric Dearment
April 11, 2013
Rite Aid’s profits grew in fourth quarter and fiscal year 2013 amid stronger front-end sales and prescription count, the retail pharmacy chain said Thursday.
The company reported a $123.1 million profit for the fourth quarter and a $118.1 million profit for the fiscal year, compared with respective losses of $161.3 million and $368.6 million during the same period last year. In third quarter 2013, the company reported a profit of nearly $62 million, its first in five years, which together with the fourth quarter’s results helped deliver the company’s first profitable year since 2007.
Behind the results was a combination of stronger sales in Wellness-format stores, retention of most patients who switched to Rite Aid during the dispute between Walgreens and pharmacy benefit manager Express Scripts, the Wellness+ loyalty card program and increased use of generics.
“Together, we are successfully transforming Rite Aid into a true neighborhood destination for health and wellness,” president, chairman and CEO John Standley said in a conference call with investors to discuss the results.
The company plans to remodel 400 more stores in fiscal year 2014, the “vast majority” of which will be remodeled according to the updated “Genuine Well-Being” format, similar to the updated Wellness store in Lemoyne, Pa., featured in a recent video on Drug Store News’ website. For this purpose, $175 million of the $400 million Rite Aid plans to invest in the year has been set aside.
Sales for the fourth quarter were $6.5 billion, compared to $7.1 billion in fourth quarter 2012. Sales for fiscal year 2013 were $25.4 billion, compared to $26.1 billion in fiscal year 2012.
Same-store sales for the quarter decreased 2%, including a 0.3% increase in front-end same-store sales and a 3.1% decrease in the pharmacy. For the fiscal year, same-store sales decreased 0.3%, including a 1.4% increase in front-end same-store sales and a 1% decrease in pharmacy same-store sales. Same-store prescription count increased 3% for the quarter and 3.4% for the fiscal year.
Wall Street responded with optimism to the results. “Importantly, the underlying business, excluding the generic benefit and the Walgreen windfall, appears quite healthy,” Guggenheim Partners analyst John Heinbockel wrote in a note to investors. Following the company’s announcement, Rite Aid’s stock was trading at $2.08 per share in late-morning trading, up by 10 cents, from the start of the trading day’s $1.98.
Woolies posts five per cent sales growth
By James Atkinson
Woolworths’ Australian Food and Liquor division has reported third quarter sales of $9.9 billion, an increase of $0.5 billion or 5.6 per cent on the previous year (4.9 per cent Easter adjusted).
Comparable store sales in the division were up 3.8 per cent or 3.1 per cent Easter adjusted, which compared to a 2.4 per cent increase in the first half of the 2013 financial year.
Director of liquor Brad Banducci said the liquor business had another quarter of good growth with Convenience (BWS and Woolworths Supermarket Liquor) and Dan Murphy’s both producing pleasing results despite the cycling of heavy promotional activity in the prior year.
“During the quarter, we continued the rebranding of our Woolworths Supermarket Liquor sites to BWS. A further 152 sites were rebranded as we work towards our target to have the majority of these sites converted to the BWS brand by the end of FY13,” he said.
The company opened three Dan Murphy’s during the quarter, taking the total to 174. It plans to open two more Dan Murphy’s in the final quarter of the 2013 financial year.
Hotel sales through the Australian Leisure & Hospitality business were $353 million in the third quarter, an increase of 19.7 per cent on the previous year or 20.5 per cent Easter adjusted.
Comparable sales for the third quarter were up 11.4 per cent or 12.3 per cent Easter adjusted.
Growth was driven by the acquisition of 29 hotels in New South Wales, two in Queensland and one in Western Australia during the first half of the 2013 financial year as well as the impacts of the Victorian gaming regulatory changes that came into effect in August 2012.
ALH Group CEO Bruce Mathieson Jnr said: “Overall, the third quarter result was pleasing with positive comparable sales growth. Our Food offer remains a focus with strong sales continuing to counter ongoing challenges in the bar environment which are being experienced across most states.”
ALH added one hotel to its business during the third quarter, bringing the total number of venues to 325.
Restaurant sales pick up in March
April 12, 2013
In his latest commentary, the National Restaurant Association’s Chief Economist Bruce Grindy looks at the Census Bureau’s latest sales data. After declining in both January and February, total restaurant sales volume bounced back in March with a solid gain. However, sales remained dampened from their December levels, which suggests the impact of the payroll tax hike is still being felt.
Restaurant sales registered a solid gain in March, according to preliminary figures from the U.S. Census Bureau. Eating and drinking place sales totaled $45.6 billion in March on a seasonally-adjusted basis, up 0.7 percent from February’s level and the first increase in three months.
The March uptick gained back some of the losses from January and February, which were both down from December’s record high of $45.7 billion. However, on a cumulative basis, eating and drinking place sales in the first quarter remained nearly $800 million short of December’s baseline level. (Note that these figures are preliminary, and will potentially be revised by the Census Bureau in upcoming releases.)
Despite the dampened first quarter results, restaurants fared much better than many other sectors in March. Sales at electronics and appliance stores (-1.6%), general merchandise stores (-1.2%) and sporting goods, hobby, book and music stores (-0.8%) all fell sharply in March.
Sales at gasoline stations fell 2.2 percent in March amid lower pump prices, which is a positive development for consumers after their sales surged 5.4 percent in February. Overall, total retail sales excluding autos and gasoline were down 0.1 percent in March on a seasonally-adjusted basis.
For their part, restaurant operators are cautiously optimistic that business will improve in the months ahead. In the Association’s March 2013 Restaurant Industry Tracking Survey, 41 percent of restaurant operators said they expect to have higher sales in six months, compared to the same period in the previous year. Only 14 percent expect their sales will be lower in six months, while 45 percent think their sales will remain about the same.
Read more from the Economist’s Notebook and get additional analysis of restaurant industry trends on Restaurant TrendMapper (subscription required). For an annual overview of the restaurant industry, see the 2013 Restaurant Industry Forecast.
New Hampshire: Another change coming atop NH Liquor Commission
Source The Telegraph
There’s yet another shake-up in the works at the state Liquor Commission.
The Sunday Telegraph confirmed that Eddie Edwards, the longtime chief of the agency’s enforcement division, will retire in June.
Attempts to reach Edwards for comment last week weren’t successful.
Associates of Edwards say he’s looking to start his own law enforcement consulting business, which presumably would work with officials here and in other so-called “control” states that sell their own liquor.
Surely, Edwards had his run-ins with the powers that be at the SLC.
As we first reported, the commissioners had pointed fingers in the missing wine fiasco for failing to get to the bottom of whether 300 cases of high-priced wine had disappeared when a Portsmouth liquor store changed sites.
To his credit, Edwards’ own report cast real doubt on whether any product in that case had disappeared, which was what Attorney General Michael Delaney ultimately concluded.
Then there was the now infamous crackdown on a former Keene bar that resulted in Gov. John Lynch’s move to oust SLC Chairman Mark Bodi.
Ultimately, the council didn’t decide to remove Bodi for his role in handling the Keene incident, but instead stripped him of his chairmanship. Bodi resigned from the commission last June.
Delaney and his staff maintained that Edwards allowed Bodi to influence that investigation, a charge Edwards vigorously denied.
Throughout his tenure, Edwards was a by-the-book professional who wasn’t fond of leniency with scofflaw license holders. In addition, Edwards has maintained in the past and did so in the missing wine report he wrote that there is an alarming number of reported “breakage” at the stores.
And in the past, Edwards has noted much of the “damaged” product that may disappear out the back loading docks was often of the high-priced variety.
Bodi deposed in contract suit
The plot also thickens regarding the 20-year liquor warehouse contract controversy.
Law Warehouse of Nashua filed a civil suit in court claiming the contract was illegally awarded to Exel, and its executives have maintained throughout that the commission was determined to terminate their long relationship.
Bodi was deposed as part of the lawsuit last week, and according to informed sources, he corroborated the suit’s claim that the two other commissioners did not want Law to get the job under any circumstances.
State prosecutors had filed a motion in Superior Court trying to prevent Bodi from being deposed, maintaining that as part of the commission, his testimony would violate the lawyer-client privilege.
The judge rejected that argument and ordered Bodi be deposed.