Wednesday May 15th 2013
Biodynamic FLOWER Day!
Great To Taste OR Drink Wine
U.S. Board Urges 0.05 Drunk-Driving Threshold
Source: Associated Press
Federal accident investigators recommended Tuesday that states cut their threshold for drunken driving by nearly half, matching a standard that has substantially reduced highway deaths in other countries.
The National Transportation Safety Board said states should shrink the standard from the current .08 blood-alcohol content to .05 as part of a series of recommendations aimed at reducing alcohol-related highway deaths.
More than 100 countries have adopted the .05 alcohol-content standard or lower, according to a report by the board’s staff. In Europe, the share of traffic deaths attributable to drunken driving was reduced by more than half within 10 years after the standard was dropped.
A woman weighing less than 120 pounds can reach .05 after just one drink, studies show. A man weighing as much as 160 pounds reaches .05 after two drinks.
New approaches are needed to combat drunken driving, which claims the lives of more than a third of the 30,000 people killed each year on U.S highways-a level that has remained stubbornly consistent for the past decade and a half, the board said.
“Our goal is to get to zero deaths because each alcohol-impaired death is preventable,” NTSB Chairman Deborah Hersman said. “Alcohol-impaired deaths are not accidents, they are crimes. They can and should be prevented. The tools exist. What is needed is the will.”
But the recommendation to lowering the alcohol content threshold to .05 is likely to meet strong resistance from states, said Jonathan Adkins, an official with the Governors Highway Safety Association, which represents state highway-safety offices.
“It was very difficult to get .08 in most states, so lowering it again won’t be popular,” Mr. Adkins said. “The focus in the states is on high [blood-alcohol-content] offenders as well as repeat offenders. We expect industry will also be very vocal about keeping the limit at .08.”
The lower alcohol-content threshold was one of nearly 20 recommendations aimed at reducing drunken driving made by the board, including that states adopt measures to ensure more widespread use of use of ignition devices. Those require a driver to breathe into a tube, much like the breathalyzers police ask suspected drunken drivers to use.
The board has previously recommended states to require that all convicted drunken drivers install the interlock devices in their vehicles as a condition to resume driving. Currently, 17 states and two California counties require that all convicted drivers use the devices.
However, only about a quarter of drivers ordered to use the devices actually end up doing so, the NTSB said. Drivers use a variety of ways to evade using the devices, including claiming they won’t drive at all or don’t own a vehicle and therefore don’t need the devices, staff said.
The board recommended that the National Highway Safety Administration, which makes safety grants to states, develop a program to encourage states to ensure all convicted drivers actually use the devices. The board also recommended that all suspected drunken drivers whose licenses are confiscated by police be required to install interlocks as a condition of getting their licenses reinstated even though they haven’t yet been convicted of a crime.
Courts usually require drivers to pay for the devices, which cost about $50 to $100 to buy plus a $50 monthly fee to operate, staff said.
Studies show more than four million people a year in the U.S. drive while intoxicated, but about half of the intoxicated drivers stopped by police escape detection, the NTSB report said.
Today, drunken driving claims about 10,000 lives a year, down from more than 18,000 in 1982. At that time, alcohol-related fatalities accounted for about 40% of highway deaths.
ABI Responds to NTSB’s Push for 0.05
May 14, 2013
Earlier today, the National Transportation Safety Board (NTSB) voted to recommend that all states lower their legal limits for drunk driving from 0.08 to 0.05 percent. The NTSB is pushing the National Highway Traffic Safety Administration to use funding incentives to encourage states to lower their BAC limits and adopt interlock mandates for low-BAC, first-time offenders.
ABI immediately responded to the NTSB’s decision with the press release below. We’ve also already been quoted in The New York Times, USA Today, CNN, Bloomberg Businessweek, and ABC News.
A lower 0.05 legal limit is just the latest threat to on-premise alcohol consumption and responsible social drinking. For more information on the activist campaign to lower the legal limit, contact ABI at 202-463-7110.
Restaurant Association Criticizes NTSB Push for Lower Legal Blood Alcohol Limit
American Beverage Institute Opposes Recommendation to Move to 0.05% BAC Per Se Legal Limit
Today the National Transportation Safety Board (NTSB) officially recommended that policymakers lower the legal threshold for drunk driving from 0.08 percent blood alcohol concentration (BAC) to 0.05 percent as part of its “Safety Report on Eliminating Impaired Driving.” The American Beverage Institute (ABI), a restaurant trade association with over 8,000 members, criticized the recommendation for ignoring the science on impairment and targeting moderate drinkers instead of dangerous drunk drivers.
The average woman reaches 0.05 percent BAC after the consumption of just one drink. Meanwhile, over 70 percent of drunk driving fatalities are caused by drivers with BACs of 0.15 or higher (consumption of 6-7 drinks), and the average BAC of a drunk driver involved in a fatal crash is 0.16 percent-twice the current legal limit.
“This recommendation is ludicrous. Moving from 0.08 to 0.05 would criminalize perfectly responsible behavior,” said Sarah Longwell, Managing Director of ABI. “Further restricting the moderate consumption of alcohol by responsible adults prior to driving does nothing to stop hardcore drunk drivers from getting behind the wheel. It would simply divert valuable public resources that should be used to pursue the most dangerous offenders and instead use them to target drivers engaging in perfectly safe behavior.”
Out of the over 32,000 U.S. traffic fatalities in 2011 (the most recent year for data), less than one percent were caused by drivers between 0.05 and 0.08 percent BAC. Lowering the legal limit is unlikely to lower the fatality rate further: A study of South Australia after the state lowered its BAC limit from 0.08 to 0.05 found that the lower limit did not significantly affect the number of alcohol related fatalities. A study of Denmark’s 0.05 law did not find a decrease in alcohol-related crashes in the first year after the law was adopted, but did find an increase in the number of drivers who said they will not consume any alcohol to avoid violating the law.
Longwell continued: “This is the latest attempt by traffic safety activist groups to expand the definition of ‘drunk’. A little over a decade ago, we lowered our legal limit from 0.1 percent after groups like Mothers Against Drunk Driving assured the country that, based on all the science, 0.08 BAC was absolutely, unequivocally where the legal threshold should be set for drunk driving. Has the science changed? Or have anti-alcohol activists simply set their sights on a new goal?”
Statement Of John D. Bodnovich Executive Director, American Beverage Licensees (ABL) On NTSB’s recommendation to pursue a national .05 BAC per se limit.
May 14, 2013
“Today’s recommendation by the National Transportation Safety Board to arbitrarily redefine drunk driving does not address the problem at its core and would dilute current efforts to stop repeat offenders and those who drive with high BAC. If implemented, the recommendation would effectively criminalize the activities of law-abiding social drinkers who, by wide majority, are responsible consumers. This recommendation also goes way beyond what public health groups – including Mothers Against Drunk Driving – call for to fight drunk driving.
Drunk driving is unacceptable. Despite the great strides we’ve made to change our culture when it comes drunk driving, we all agree that more work needs to be done. We will continue to work with policymakers, regulators and public officials to support effective drunk driving policies while opposing those that undermine the important efforts already being made in this fight.”
Chinese austerity hits Diageo’s sales
By Louise Lucas in London
Sales of Diageo’s baijiu, a clear grain spirit popular in China, slumped 40 per cent in the first quarter of this year as the world’s biggest distiller became the latest casualty of China’s crackdown on conspicuous consumption.
The rapid deterioration in fortunes at Shui Jing Fang, one of the first Chinese household names to be taken over by a foreign company, comes as other makers of high priced spirits have suffered falling sales amid the chill winds of austerity with socialist characteristics. It is a turnround for the drinks industry which, like other purveyors of status symbols, had become accustomed to runaway growth in China comfortably offsetting European weakness.
Pernod Ricard, the world’s second-biggest distiller after UK-listed Diageo, is set to report an annual decline in Scotch whisky sales in China, following years of surging growth. This came after flat sales over the Chinese New Year period, when it sold more Cognac but saw Scotch sales fall by double-digits in percentage terms year-on-year.
Diageo has so far shrugged off concerns about the crackdown saying it is having little effect on gifting, which makes up 10 to 15 per cent of Scotch and Cognac sales in the country.
Kweichow Moutai, China’s largest baijiu maker, reported a halving in year-on-year profit growth in the first quarter. Baijiu, like a host of other food and drinks in China, has also been caught up in food safety concerns.
Shui Jing Fang, which Diageo acquired last year after years of protracted and complex negotiations, saw both sales and earnings before interest and tax fall by 40 per cent in the first quarter of the calendar year, Diageo said on an investor call on Tuesday. That followed net sales growth of 10 per cent and operating profit growth of 12 per cent in the previous full year.
Although Shui Jing Fang is just a drop of Diageo’s sales at around 1 per cent, baijiu dwarfs sales of international spirits in China and is seen as an attractive sector for multinationals to increase their grip on.
Ian Shackleton, analyst at Nomura, said although Diageo expected the baijiu sector to remain soft this year, it anticipated double-digit growth longer term. With the category “going through a rough ride”, it would appear that the company would consider opportunities to add to its position in the Chinese baijiu market, he said.
Quick Note – Diageo (DGE LN, Buy) – Asian investor call
May 14, 2013
Stock Rating: Buy
Target Price: 2400p
Ian Shackleton – NIplc
Although 3Q had suggested some normalisation of growth in emerging markets, we still have confidence in Diageo meeting consensus EPS estimates, with better price/mix, especially in the core US market, helping margins. We believe that the announcement earlier this month of COO Menezes taking over as CEO at the end of June is likely to lead to more focus on the emerging market businesses, as well as a firm commitment to strong execution in-market. Further M&A, here again most likely in emerging markets, could also provide a catalyst for the shares. Valuation – 2014E PER of 17.0x vs spirits average of 18.2x.
Asia – some near-term challenges, but strategy on track
Today, the company hosted one of its regular brunch-time calls on the Asia Pacific division. Asia accounts for c.10% of F13 group EBIT and includes large positions in mature countries such as Australia and South Korea, as well as exposure to emerging Asia. Despite a moderation in top-line run rate in the Asia Pac division in F13 (est organic revenue growth +6% vs F12 +8%, F11 +11%), the Asian strategy and longer-term growth drivers are intact, with focus on increasing share of Scotch and driving premiumisation across the brand range.
F14 top line to accelerate
We see a pickup in the top-line run-rate in AsiaPac in F14 to +8% vs F13 +6% as key F13 headwinds show some moderation. In Korea, we would expect a slowdown in the rate of decline in F14 (H1 F13 revenues -14%); in Global Travel Asia the company sees a “rebound” in cal H2 2013 (H1 F14) following the current period of destocking; and for Shui Jing Fang (cal Q1 2013 -40%) the underlying run-rate should improve as the company laps soft comparatives in H2 F13 (Q3 F13 revenues -40%) given the existing anti-extravagance campaign and slower Chinese New Year.
Scotch a key focus – continuing to grow leadership position
Diageo is the leader in Scotch, which accounts for nearly 50% of net sales value of international spirits in the region (vs cognac <20%). Over a four-year period, the company has widened its share leadership to 9% ahead its nearest competitor. The company has significantly extended its super-deluxe offerings with innovation and premiumisation contributing to price/mix of 10-19% in Scotch in the region over the past 18 months.
Premiumisation – growing the reserve business
The company has doubled the value of its reserve brand portfolio since 2010. Some 30% of the region’s A&P spend is focused against reserve brands. The focus here is predominantly in Scotch with a second Johnnie Walker House in place now, however reserve brand growth is also strong in other categories such as vodka.
EBIT margin improvement
On the call, the company indicated that the >100bp organic EBIT margin improvement in H1 will be replicated in H2, given scale efficiencies in A&P spending and overhead reductions. Over the medium term, the company sees sustainable operating margin improvement from economies of scale in A&P and benefits of the premiumisation strategy.
China – some short-term slowdown in baijiu.
In China, although Shui Jing Fang is less exposed to institutional government sales, the anti-extravagance campaign and the food safety allegation around baijiu, as well as its premium positioning, have had a negative impact on the run-rate of this business. Following 10% net sales growth and 12% operating profit growth in cal 2012, Shui Jing Fang sales and EBIT declined 40% in cal Q1 (against a tough comparative +51%). Although the company expects the baijiu category to remain soft throughout cal 2013, longer term the category should return to double-digit growth. With the category “going through a rough ride”, it would appear that the company would consider opportunities to add to its position in the Chinese baijiu market.
.however, super-deluxe Scotch performing well
Some 24% of Diageo’s Scotch business in China is super-deluxe. We believe that Scotch is less exposed to gifting than baijiu and cognac. Although the overall Scotch category was flat to 9M F13 in value terms, super deluxe grew +18% with Diageo’s business up double digits. Other brands such as Baileys (100k cases today) have been successfully seeded, and the company believes this could be a 1m-case brand in 10 years.
SE Asia: solid double-digit top-line growth
SE Asia accounts for c.30% of the region. The company is taking share growth in Scotch across all SE Asian markets, with Scotch growth +20% in Vietnam, Indonesia and the Philippines. Guinness continues to grow strongly (mid-teens growth).
Global Travel Retail
Some 70% of this business is premium and above, with the company focused on capturing the high-net-worth customer. The launch of the Johnnie Walker Explorers’ Club collection (November 2012) exclusive to Global Travel Retail is an important driver of premiumisation. Although there has been some destocking in Q3 F13 as customers have been more cash constrained as well as a reduction in spending by Chinese travellers, the company sees a rebound in H1 F14 in Global Travel Retail.
Mature markets – not all bad news
Korea remains a tough market given the structural decline in the traditional on-trade, with Windsor losing share in an increasingly competitive category following price increases (year-to-date sales -19%). Although the company is gaining share in vodka and Guinness, this has a negative impact on mix. The company sees Korea revenues in F14 flat to down low single digits. In Japan, the company grew sales +9% to 9M F13 through share gains; we believe the company is benefiting from the strong distribution power of partner Kirin. In Australia, the company has grown revenues +4% to 9M F13 given route to market and scale advantages.
In India, the company continues to develop its model aiming for brands selling above USD 10/bottle. This focuses mainly on Scotch, but the company is developing high-end local spirits (Rowsons Reserve and Vat 69 growing double digits). Although Smirnoff has declined 2% in a weak vodka category, the company has strong underlying momentum with Johnnie Walker Red and Black growing double digit year to date. On United Spirits, the company expects the share purchase agreement to be completed by the end of F13. On the reduction of import tariffs on Scotch, discussions are ongoing, with progress appearing “closer than in the past”.
Takeaways from Beam Inc. (BEAM, Neutral) at the GS Consumer Products Symposium
Source: Goldman Sachs
By Judy E. Hong , Michael Luddy and Jacob Feinstein
14 May 2013
Overall, Beam’s presentation was upbeat as the company appears well positioned in the attractive bourbon category and is maintaining a high level of innovation activity to drive healthy sales growth.
US spirits category remains healthy – Management sees sales growth for the US at about 4% with about 1.5pp from volume, 1pp from price, and 1.5pp from mix. In addition, spirits continues to take share from beer and BEAM estimates about 50 bp of spirits growth per year has come from share gains from beer since 2000.
Pricing low outside bourbon, but bourbon pricing has successfully stuck – Looking back, BEAM is pleased with its decision to lead on pricing in bourbon as that pricing has stuck despite being one of the few categories taking price. Price remains less attractive in vodka, which remains intensely competitive, as well as tequila, which continues to wade through an agave oversupply.
Bourbon growth is robust as it sits in nexus of key industry trends – Bourbon continues to benefit from expansion into the high end, adding flavored line extensions, and because it is a fairly mixable spirit.
Growth is concentrated at the higher price points – In BEAM’s bourbon portfolio, the higher the price point, the higher the growth rate the company is seeing. Because the average price of bourbon is about half of scotch and cognac, BEAM is optimistic that this ‘premiumization has ample runway.
Pinnacle growth continues and synergies now ramping – Pinnacle’s affordable price, quality brand perception, and constant brand innovation continues to make it a compelling brand.
Emerging markets continue to accommodate more international brands – Most emerging markets remain predominantly made up of local spirits, but there is a growing trend of demand for international spirits. This is particularly true for higher end spirits such as single malt scotch and cognac.
Re-directing ad spending to video and digital – TV/online video is now 50% of ad investment from 25% while digital marketing has gone to 35% from 10% of ad investment. BEAM considers itself a leader on the digital marketing front in the industry.
Rating and pricing information
Beam Inc. (N/N, $67.59)
Campari’s CEO and the ‘mystery’ vodka brand (Excerpt)
By Andy Morton
13 May 2013
Gruppo Campari’s CEO, Bob Kunze-Concewitz, went a little off-piste in a conference call with analysts earlier today (13 May).
Asked his thoughts on vodka pricing in the US, bluff Bob bemoaned the lack of stability in the category, caused by “second-tier players” that refused to conform to the pricing strategies of the larger, “more disciplined participants”. Kunze-Concewitz even singled one of these smaller labels out – well, almost. He archly alluded to “a very important imported brand, which will be changing importers and distributing networks by the end of the year”, but stopped short of giving a name. A company spokesperson also refused to be drawn on which brand Kunze-Concewitz was referring to.
Which is strange, because he threw out enough clues for an educated guess. In November, SPI Group, which has been making changes around the world to its Stolichnaya distribution network, announced an end to its US agreement with William Grant & Sons. That deal expires at the end of this year, when SPI will set up its own import company.
Indiana: AG says he’ll defend Indiana cold beer sales law
May 14, 2013
Indiana Attorney General Greg Zoeller says he’ll defend the state’s position on limiting who can sell cold beer against a lawsuit by a trade group representing convenience stores and gas station owners that contend it’s unfair.
The Indiana Petroleum Marketers and Convenience Store Association filed a lawsuit Tuesday in federal court in Indianapolis that calls Indiana’s law allowing only liquor stores and bars to sell cold beer arbitrary.
The lawsuit contends Indiana is the only state that regulates the temperature beer may be sold at and that there’s no legitimate purpose for the restriction.
The lawsuit names the state, the Indiana Alcohol and Tobacco Commission and its chairman as defendants. Spokesman Brandon Thomas said the commission would not comment on pending litigation.
Washington: Garza to head state Liquor Control Board
Source: Seattle Times
by Bob Young
The Washington State Liquor Control Board announced today it has unanimously chosen Rick Garza to serve as its next agency director.
Garza, the agency’s deputy director, replaces Pat Kohler, who was recently appointed by Gov. Jay Inslee to lead the Washington State Department of Licensing.
According to a press release from the liquor board, Garza has led the agency’s policy, legislation and media relations. He also serves as its legislative and tribal liaison. Garza has been with the Liquor Control Board since 1997.
“Rick was a clear and unanimous choice by the board,” said Board Chair Sharon Foster. “Rick’s leadership on policy, legislative and tribal matters has been instrumental to the agency’s successes. He is regarded by stakeholders and legislators as an expert on many issues and is frequently called upon to help find solutions to difficult challenges.”
Gov. Jay Inslee lauded the Board’s choice for agency director.
“I have known Rick for many years and I’m thrilled the board selected him to lead the agency,” said Inslee. “He is a creative leader and a team player and I have full confidence in his ability to lead the agency during this important time.”
The LCB is drafting the rules, along with Colorado, that will govern the world’s only comprehensive systems of growing, processing and retailing marijuana for recreational use. The agency expects to begin accepting license applications in September.
Prior to joining the Liquor Control Board, Rick served 13 years as a staff member for the Washington State Legislature, including five years with the Washington State Senate and eight years with the state House. His legislative assignments included policy analyst in the state Senate, House of Representatives staff director, and adviser to House and Senate leadership.
GuestMetrics: On-premise wine prices being entirely driven by trade-up to higher price segments, offset by trade down from bottles to glasses with very little underlying rate
According to GuestMetrics, the overall average price for wine in full service restaurants and bars moderated slightly during the first quarter of 2013, the result of consumer trade-down to wine-by-the-glass offsetting the trade-up to higher priced wines taking place in the category. Similar to YTD off premise trends, there is very little in the way of underlying price increases taking place.
“While wine’s price/mix was up +1.0% during 2012 compared to the prior year, that moderated to +0.2% during the first quarter of 2013,” said Bill Pecoriello, CEO of GuestMetrics LLC. “As we wrote about earlier in the year, wine-by-the-glass took share from wine-by-the-bottle in 2012 as consumers remained under economic pressure, and this trend has continued into this year. While wine-by-the-glass accounted for 56% of wine sales in 2011, it increased to 59% in 2012, and moved up even further to 61% during 1Q13. However, somewhat paradoxically, while consumers continued to trade down from by-the-bottle to by-the-glass, when they do order bottles or glasses of wine, they are increasingly choosing more expensive wine selections,” continued Pecoriello. Based on data from GuestMetrics, while by-the-bottle saw year-over-year sales growth decelerate from -4.1% in 2012 to -4.7% in 1Q13, by-the-glass’ sales growth accelerated from +7.8% in 2012 to +8.8%, netting out in the slight acceleration in overall wine sales increasing from +2.6% in 2012 to +2.7% in 1Q13.
“During the first quarter of 2013, the average price paid for wine-by-the glass increased by +3% and the average price of wine-by-the-bottle increased by nearly 9%, continuing the premiumization trend we saw take place in 2012,” said Peter Reidhead, VP of Strategy and Insights at GuestMetrics. “The higher price paid was almost entirely due to mix with little to no actual rate increase in most price classes except slightly at the lower end. The lack of underlying price increases is consistent with YTD trends in the off premise channels. The Ultra-Premium segment continued to achieve strong share gains both in by-the-glass and by-the-bottle, despite consumers trading down to by-the-glass. Within by-the-glass, the Ultra Premium’s share of sales increased from 8% in 2011 to 10% in 2012, and reached 13% in 1Q13. In by-the-bottle, the premiumization was even more dramatic, with Ultra Premium’s share of sales going from 14% in 2011 to 18% in 2012, and reached 21% in 1Q13. However, despite the premiumization taking place in the category, this was more than offset by the trade-down from bottle to glass, resulting in the slight moderation in the overall price/mix in the category.”
“The wine category is displaying dynamics that are rapidly changing in terms of what consumers are buying. It is critical that restaurant operators have the accurate on-premise facts in to order to make decisions on which wines to offer and how to price them. While consumers are increasingly migrating from by-the-bottle to by-the-glass due to the differential in the price tag, they nonetheless continue to migrate to more expensive choices within each, which is important for restaurant operators to know when deciding what wines to offer on the menu,” said Brian Barrett, President of GuestMetrics. Based on data from GuestMetrics, the average price for wine-by-the-bottle was $46 while the average price for wine-by-the glass was slightly under $10 during the first quarter of 2013.
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 billions of dollars in sales 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.
Restaurant Sciences’ Data Reveals Low and Mid-Range Beer Prices Climbing in US Restaurants & Bars
Super-Premium and Craft Beer Post Only Modest Increases
May 14, 2013
Restaurant Sciences LLC, an independent firm that closely tracks food and beverage product sales throughout the foodservice industry in North America, unveiled that the high-volume premium and sub-premium beers popular in America — names like Budweiser, Coors Light, Miller Lite, Pabst Blue Ribbon, etc. — have seen a 3.5% to 6.8% price jump in the nation’s eating and drinking establishments over the past seven months (October ’12 thru April ’13). The accompanying chart shows the increases by price segment.
“While all the attention has been on Craft (Ultra-Premium) beers, the price of mainstay brands in the mid-price (Premium) tier have risen more dramatically. And traditionally lower-priced beers such as Pabst Blue Ribbon have seen sizeable double-digit price increases in both restaurants and bars & nightclubs. In fact, the only segment of the restaurant industry holding the price line on these beers is the value-conscious Family Dining segment, with average per-party checks under $40,” said Ellis.
“Across all restaurant and bar segments, and all beverage alcohol categories, the one constant is rapidly increasing prices in the fine-dining tier,” said Ellis. “This segment had some of the hardest-hit establishments in the last recession, and average drink prices there are increasing with a vengeance.”
About Restaurant Sciences
Restaurant Sciences is the premier provider of syndicated data and insights on food and beverage consumption in restaurants, bars, nightclubs and other foodservice establishments. The company delivers market share, market basket, competitive analysis, pricing, promotional, trend, segmentation and custom analytics to food and beverage manufacturers and distributors, as well as the broader industry they serve. Restaurant Sciences transforms over $1 Billion per month in guest check-level sales information into detailed data and insights across all segments of the foodservice landscape in the United States and Canada. Insights are delivered online through their business intelligence tool or through custom analytics. Visit www.restaurantsciences.com.
Asian investors snap up three more Bordeaux properties
by Jane Anson in Bordeaux
Tuesday 14 May 2013
Chateau de Pic in the Cadillac Cotes de Bordeaux, Chateau l’Enclos in Sainte Foy la Grande and Chateau Patarabet in Saint Emilion are the latest Bordeaux estates to reportedly pass into the hands of Asian investors.
This follows the recent announcement of the sale of Chateau La Fleur Jonquet in the Graves to Chinese architect Wengcheng Li.
Chateau Patarabet’s website has been announcing full sale of its stock ‘following change of owner’ for several months, but the final document has not yet been signed.
The 9ha estate has been owned by the Gombeau-Bordas family since 1920, but Madame Bordas was not prepared to comment on the expected date of completion.
‘As long as I am still owner, I have no comment to make,’ she told Decanter.com. It is believed, however, that the purchaser is a Singaporean investor who already owns one property in Saint Emilion.
Chateau L’Enclos has reportedly been sold to Cheng Qu, owner of the Haichang Group, and the driving force behind the Dalian wine festival in China.
He is already owner of numerous Bordeaux estates including Chateau Baby (also in Sainte Foy), Chateau Chenu-Lafitte and Chateau Branda. This 24-ha property has been owned by Isabelle and Eric Bonneville since late 2002, and has Stéphane Derenoncourt as wine consultant.
Another recent transaction, a spokesperson at the chateau confirmed, is the 44ha Chateau de Pic in Cadillac. The estate was on the market for at least three years prior to its purchase by Chinese industrialist Mr Wu, whose principal activity is the distribution of baiju alcohol in China. Wu has employed a Chinese manager to live full-time at the property.
There are at least two other transactions that are due to go through in the next month, Decanter.com understands, including one large Fronsac property.
Wine Forger’s Handbook warns of dangers of fake wines
by John Stimpfig
Tuesday 14 May 2013
A new eBook warning of the dangers of counterfeit wines has just been published online.
The Wine Forger’s Handbook is by wine journalist Stuart George and art crime expert Dr Noah Charney.
The slim volume gives a short history of forgery and fraud in the wine world, before going on to detail two short case studies covering two of the best known alleged fine wine fraudsters of recent times: Hardy Rodenstock and Rudy Kurniawan.
It also functions as a guide with practical tips and a checklist of actions on how to avoid becoming a victim of counterfeit wine.
The book comes at a time when collector awareness and press interest in the subject of fraud has never been higher, after series of high-profile legal cases.
In a New York court last month, a jubilant Bill Koch was recently awarded US$12m following counterfeit lawsuit against fellow wine collector Eric Greenberg.
Last month, Rudy Kurniawan pleaded not guilty in a Manhattan Federal Court to a two-count indictment of selling counterfeit wines and attempting to defraud a finance company out of US$3m.
His trial date has been set for 9 September. Burgundy producer Laurent Ponsot, Aubert de Villaine of Domaine de la Romanée Conti and Christophe Roumier of Domaine Georges Roumier will all give evidence by video link.
There are other anti-fraud guides on the market. Six years ago Russell H Frye, another victim of wine fraud, set up the website www.wineauthentication.com, and in 2011 the UK’s Wine and Spirit Trade Association published an investment guide subtitled, ‘Don’t be a victim of wine fraud’.
‘Today, there are constant reports of fake wine being produced in Asia, resembling full scale counterfeit manufacturing operations,’ warns Frye. ‘In addition, we believe that there are still individuals operating all over the world as Rudy Kurniawan is alleged to have done. The best advice is to verify whenever possible. Caveat emptor.’
BARON DE LEY (+) Q1 13 Results: Very strong figures
Source: Exane BNP
May 14, 2013
TP: EUR66 . Upside: 33%
Beverages (-) . Spain . Price (13 May. 13): EUR49.8
Q1 13 results: Strong figures
Q1 13 figures were above our estimates. Sales grew 6% versus 2%e. The main surprise came from the domestic market, which grew 4% versus -2%e. Exports climbed 8%, above our +7%e and well above the guidance for the full year (3%). Domestic demand grew largely on the back of bulk volumes (bottled wine, which grew 2.7%, declined 2.2% domestically). However, margins did not suffer: EBITDA margin was at 42.4%, and EBITDA rose 9% to EUR7.8m. Net profit grew 11% and EPS, which did not include the recent 4% buyback, was 12.6% above last year’s level.
Other points of interest
As always, FCF generation was very strong. Baron generated around EUR9m of FCF in Q1 13, or close to 50% of sales. Including long-term financial deposits, net cash came in at EUR70m at the end of the period. These figures are in line with our FCF estimate of EUR33m for FY13.
Outlook and estimates
We have maintained our estimates. We forecast 2% sales growth in 2013, with domestic sales flat and exports growing 5%. We think the Q1 trends should not be extrapolated for the whole year. April was a very weak month (probably due to the Easter effect in Q1) and we are comfortable with our FY13 sales estimate. However, we think that consensus has not taken into account the good momentum in EBITDA. The consensus estimate is for an average 3% decrease in EBITDA in FY13 versus our +6%, which leads our EPS to be 11% higher than consensus. We think consensus should catch up with our estimates after these results.
Investment case: Outperform reiterated
The strong cash generation underpins our Outperform rating. Sales are flat but margins are improving thanks to declining COGS and better opex, which alongside the stable capex and WC inflow translate into a FCF/sales of more than 40%. Furthermore, the company is trading below 6x EV/EBIT13 and at a discount of more than 50% to champagne companies.
Precept Wine Acquires Yamhela Vineyard in Yamhill, Oregon
Ultra-premium Pinot Noir site will realize its full potential as part of this rising Northwest wine company
Underscoring its growth strategy and marking its 10-year anniversary, Precept Wine chief executive officer Andrew Browne announced the company’s purchase of Yamhela vineyard, located in the renowned Yamhill-Carlton American Viticultural Area in Yamhill, Oregon, part of the overarching Willamette Valley AVA. Terms of the sale are undisclosed.
“In pursuit of being the vineyard and winery leader over the next decade in the Northwest, we will continue to develop, acquire and grow our business working from a strong foundation of Northwest vineyards and wines with powerful brand names,” Browne said. “We are hunting for world-class sites that support this strategy, and Yamhela is a prime example within our Oregon portfolio.”
Originally conceived by its previous ownership as a mixed-use site suited to vineyards, timber, and real estate, Precept Wine vice president of vineyards David J. Minick said the company intends to focus on Yamhela’s premium winegrape-growing potential. Precept will expand the 30 planted acres to a fully realized total of 120 planted acres over five years. The property has a total of 374 gross acres; its vineyard was first planted in 2007. Its neighboring vineyards are held in the highest esteem by local industry peers.
“Yamhela is perched on one of the finest sites for Pinot Noir in the Yamhill-Carlton AVA. Its neighbors, including the legendary Shea Vineyard, are among the most sought after vineyards in Oregon,” said Tim Ramey, principal of Zenith Vineyard in Salem. “Precept Wine’s purchase of Yamhela is not its first venture in Oregon, but this will clearly be a cornerstone of the company’s Oregon strategy.”
By extension of Precept Wine’s ownership through the Baty family and the family’s Winemakers LLC holdings, its existing Oregon interests include the second largest winery in the state, 12th & Maple Wine Company, in Dundee, Ore., and approximately 570 acres across four vineyards in the Willamette (Howell Prairie, Battle Creek and Waldo Hills) and Ribbon Ridge (Roe) AVAs. In Oregon it produces Battle Creek, Primarius, and Windy Bay brands, all Pinot Noir, the latter sold exclusively to the on-trade. Precept Wine is the only known wine company to have vineyards and wineries in three Northwest states: Oregon, Washington and Idaho.
About Precept Wine: Seattle-based Precept Wine is a top 20 North American wine producer that owns and operates vineyards, wineries, and tasting rooms across Idaho, Oregon, Washington, and enjoys a joint venture in the McLaren Vale, Australia. Founded in 2003 by Andrew Browne, the company’s wineries have garnered more than 350 combined best buys and critical scores exceeding 90 points. Learn more at www.preceptwine.com.
GLAZER’S, INC. ANNOUNCES APPOINTMENT OF THOMAS ROWEN TO SENIOR VICE PRESIDENT SALES ARKANSAS
May 14, 2013
Glazer’s today announces that Thomas Rowen has been promoted to Senior Vice President of Sales for Arkansas, effective June 1, 2013. Rowen will be responsible for the performance of the Sales organization in the state. Rowen will report to Scott Rawlings, Glazer’s Regional President for Alabama, Arkansas, Mississippi, Oklahoma and Tennessee.
Rowen started his career with Glazer’s in 2003 as the General Sales Manager for DMH in Iowa. Rowen advanced to the role of State President for Iowa in 2007, which is his current role in the organization. Prior to joining Glazer’s, Rowen held positions of varying responsibility with companies such as The Seagram Beverage Company, Constellation Wine Company, Coca-Cola, and The House of Seagram. Rowen attended Northern Arizona University in Flagstaff, Arizona where he received a Bachelor of Science in Business Administration and Management.
Scott Rawlings states, “I am excited to have Thom join our Arkansas team. His experience and energy will be a great addition for our continued focus on supplier performance in Arkansas.”
Patrón Spirits Appoints Paul Rothenberg to Vice President, On-Premise National Accounts
Source: Patron Spirits
Patrón Spirits, one of the fastest-growing companies in the global beverage alcohol industry, announces that Paul Rothenberg has joined the company as Vice President, On-Premise National Accounts. Reporting to Executive Vice President of Sales, North America Phil Gervasi, Paul will lead Patrón’s national on-premise team and work closely with Patrón’s U.S. distributor partners and national restaurant, bar, hotel and concession accounts.
Paul joins Patrón Spirits from the Tampa Bay Buccaneers where he was Chief Sales Ticketing Officer, responsible for all ticket sales and ticket sales channels. Paul’s 24-year career in sales and marketing began at Joseph E. Seagram & Sons, where he spent 11 years in the spirits industry. From there, he joined Universal Orlando where he was Vice President of Sales and Marketing at Universal City Walk, running one of the largest nightlife and entertainment complexes in the country. He was then promoted to Vice President of Park Sales, overseeing major ticket channels and all events at Universal Orlando Resort.
“We couldn’t be more thrilled to welcome Paul to our team. Not only does he bring with him a wealth of experience and industry relationships, his proven management skills and professionalism will only help strengthen our growing organization,” says Gervasi.
Enterprise Inns rejects government plans for pub industry
By Duncan Robinson
The chief executive of Enterprise Inns has claimed that the government vastly overstated the number of complaints made against his pub chain in a bid to regulate large pub companies more tightly.
The Department for Business, Innovation and Skills said that landlords had made hundreds of complaints to the British Institute of Innkeeping about pub companies such as Enterprise Inns when it announced plans for a statutory code of conduct for the sector in April.
But figures from the BII show that while it received 276 calls from Enterprise Inns’ landlords over four years, only four of these were complaints.
Ted Tuppen, chief executive at Enterprise Inns, said: “Sorry isn’t a word [BIS] have quite managed to say yet.”
He added: “A major plank of their decision to go against major government strategy to reduce bureaucracy has been somewhat damaged by them misunderstanding the data provided by the BII.”
A BIS spokesperson acknowledged the mistake, but added: “The data still shows that tenants from larger companies were significantly more likely to contact a helpline than tenants of smaller companies or those who ran free houses.”
Pub companies including Punch Taverns and Enterprise Inns have lined up to criticise the government’s plan to introduce a statutory code of conduct for the industry’s larger players. But the Campaign for Real Ale, which lobbies for community pubs and drinkers’ rights, has said that the reforms were “urgently needed”.
Enterprise Inns struggled with poor weather in its half-year results, with heavy snow in January and an unseasonably cold March resulting in a 4.2 per cent drop in like-for-like net income for the six months to March 31. Revenues fell 9 per cent year on year to £312m.
Mr Tuppen estimated that without the cold weather and the collapse of its wine and spirits supplier, WaverleyTBS, the drop in net income would have been about 1.5 per cent on a like-for-like basis. Enterprise Inns said that it was confident of achieving like-for-like growth in the second half.
Profit before tax fell 55 per cent year-on-year to £29m as the group cut the number of pubs in its estate. Enterprise Inns sold 161 pubs over the period, generating £54m in cash. Included in this figure were 10 “top quality” pubs, which were sold after the company received above market rate offers of, on average, 14 times earnings for them.
Of the pubs it sold, around half will continue to trade as pubs, while the remainder will be converted into alternative use.
Diluted earnings per share halved from 10.6p to 5p. Shares in Enterprise Inns fell 0.9 per cent to 99p.
Ilinois: Illinois passes law to make Busch divest beer distributorship
Source: Chicago Tribune
By Emily Bryson York Tribune reporter
May 14, 2013
A bill that will require Anheuser-Busch to sell its minority stake in Chicago’s City Beverage has passed the Illinois Senate.
Anheuser and the Illinois Liquor Control Commission have been involved in a string of litigation on this issue since the commission blocked the world’s largest brewer from acquiring City Beverage in 2010. The matter was sent to the General Assembly for clarification.
Most states regulate alcohol sales through a “three-tier system,” designed to separate manufacturing, distribution and retail sales among distinct business interests.
In a statement, Sen. Tony Munoz said the bill “reaffirms Illinois’ policy and the state’s regulatory structure that manufacturers of beer, including out-of-state brewers, are prohibited from holding a distributor’s license, from owning any ownership interest in a distributorship and from exercising vertical integration between a manufacturer of beer and a distributor or importing distributor through any ownership interest or through control of the distributor or importing distributor.”
The Illinois House had passed the bill in April. Upon receipt from the General Assembly, Gov. Pat Quinn will have 60 days to sign the bill. Anheuser has until January 2015 to sell its stake in City Beverage, its largest local distributor.
BDT Capital, an investment firm owned by Byron Trott, now owns the remainder of City.
Pennsylvania: Pa. senator sees support to privatize wine, liquor
Tuesday, May 14, 2013
A second hearing in front of Pennsylvania state senators Tuesday on the liberalization of Pennsylvania’s wine, beer and liquor laws appeared to solidify support for legislation that would allow private-sector sales of wine and liquor, but would not end every aspect of state control, as Gov. Tom Corbett has sought.
Many questions by senators on the Law and Justice Committee probed for whether representatives of groups that make and sell alcoholic beverages could support a plan similar to one favored by the committee chairman.
“I heard a lot of reinforcement for moving ahead, changing the system, allowing some private access points for wine and spirits, but I also heard a lot of testimony saying we could live within the current license structure,” Sen. Charles McIlhinney, the Bucks County Republican who chairs the committee, told reporters after the hearing.
Still, he said, “I’m still trying to craft a bill though that gets 26 votes, so we’ll see what happens in the next month.”
The hearing, the second of three that are planned, was motivated by pressure from Corbett to shut down the Depression-era state-controlled wine and liquor store system and allow the sale of alcoholic beverages by grocery stores, big box stores, convenience stores and other outlets.
A bill that passed the House in March would create 1,200 new private wine and liquor store licenses and allow thousands of bars, restaurants and grocery stores to begin selling bottles of wine. Corbett wants a bill on his desk by July 1.
McIlhinney is touting a plan that would allow the state’s approximately 12,000 existing private beer licensees _ eateries, bars and distributors, as well as supermarkets or convenience stores with a restaurant-style beer license _ to buy licenses to sell wine and liquor and shatter state control of the goods.
That is “10 times the number in the House bill, albeit probably 30,000 less than the governor wanted,” McIlhinney told reporters.
However, McIlhinney differs from the House and Corbett in two crucial elements on the subject of privatization, which has motivated the entire debate.
McIlhinney wants to allow the state Liquor Control Board to decide when private-sector service, selection and supply of wine and liquor is strong enough to shut down a local state store. Corbett had sought legislation that explicitly shut down the approximately 600 state stores, while the House plan created a set of competitive circumstances that would require the shutdown of state stores.
Also, McIlhinney may opt to keep the state-controlled wholesale wine and liquor distribution system, with changes to improve the delivery to licensees like restaurants, instead of shifting to a private system that is an “oligopoly” controlled by a couple companies.
“I’m not interested in turning it over to a small number of wholesalers that end up with … a brand-specific monopoly,” McIlhinney said.
The House plan and the governor’s plan are effectively dead in the Senate, and McIlhinney stressed that people are more concerned with price and accessibility and less concerned with who owns the store.
“The governor announced privatization in January, and I went back to my district and asked my constituents at town hall meetings and they said, `Yeah, I’d love to buy a six-pack in the beer store.’ Well that’s not privatization, McIlhinney said. “It’s evolved in the public opinion that the bigger, comprehensive `how we buy all types of alcohol’ is what’s at stake.”
Under McIlhinney’s plan, some beer licensees could switch entirely to wine and liquor or stock none at all.
McIlhinney also has suggested that he would be willing to relax the restaurant-style seating, food and space requirements that supermarkets, convenience stores and other retailers must obey if they want to sell alcoholic beverages. Meanwhile, beer licensees would be free to sell in a wider variety of volumes.
Pennsylvania: Hearing on Pennsylvania liquor privatizations plan focuses on retail sales
Source: Pittsburgh Post-Gazette
By Kate Giammarise
May 14, 2013
A Pennsylvania Senate committee heard this afternoon from a plethora of retail interests with a stake in alcohol sales — large and small grocery chains, beer distributors, bar owners, wineries — in the second hearing on Gov. Tom Corbett’s liquor privatization plan.
“The current system does not work,” said Matt English, chairman of the board of the Pennsylvania Restaurant and Lodging Association.
Many retail trade groups have remained formally neutral, saying they would like to see changes to the existing system but not wanting their members to be hurt who had a vested interest in current licenses.
At a prior hearing, senators heard from law enforcement, addiction counselors and advocates against drunk driving who warned against social ills that could come with what they believed will be easier access to liquor in a privately-run system.
In March, the state House passed a bill that creates 1,200 licenses for the sale of wine and spirits, first available to beer distributors, with the possibility of up to 600 additional licenses as state stores are phased out.
Groceries could buy licenses to sell wine but not beer, except through existing restaurant licenses.
Canada: Get the Facts on Privatized Alcohol Sales-MADD Canada Releases Newly-Updated Alcohol Policy Paper
May 14, 2013
MADD Canada is pleased to share its newly-updated alcohol policy paper, “Provincial Liquor Boards: Meeting the Best Interests of Canadians.” The paper supports the role of provincial liquor boards and outlines the negative health and public safety impacts associated with privatized alcohol sales.
In Canada, all provinces except Alberta have provincially-run liquor boards which oversee the distribution and sale of alcohol. Alberta’s alcohol sales are conducted by private retailers. Semi-privatized systems exist in: Quebec, which has provincially-run liquor stores but also allows the sale of beer and wine in corner stores and other retail locations; and in British Columbia where alcohol is sold in both private outlets and government run stores.
“There is ongoing pressure in some provinces to privatize alcohol sales and allow beer and wine to be sold in convenience stores and other retail locations,” said MADD Canada Chief Executive Officer Andrew Murie. “There are some who suggest there is no negative impact of selling alcohol alongside pop and milk, but the research and experiences in Canada and other countries tell a very different story. Alcohol is no ordinary commodity and it should not be sold as one.”
Alcohol is linked with more than 65 medical conditions and is a contributing factor in injuries and deaths caused by illness, impaired driving, homicides, suicides, falls, drowning, assaults, fires and other adverse events that threaten public safety and community well-being.
The policy paper outlines Canadian and international research which clearly and consistently shows that privatized systems result in increased access to alcohol which in turn leads to increased alcohol consumption and alcohol-related problems in society. In British Columbia, for example, researchers found that areas with more private stores than government-run stores had significantly higher rates of alcohol-related deaths involving local residents. There was a 27.5% increase in alcohol-related deaths for every extra private liquor store per 1,000 British Columbians.
“MADD Canada strongly supports the provincial liquor corporation model as the best way to regulate sales of alcohol,” Mr. Murie said. “These models are the best choice for protecting the public interest while meeting consumer needs.”
Provincial liquor boards regulate access to alcohol through outlet locations, limits on hours of operation, minimum pricing and taxes. Provincial liquor boards have intrinsic controls, comprehensive staff training programs and extensive social responsibility programs to protect the public and prevent the sale of alcohol to minors and intoxicated customers.
It is not only MADD Canada which supports the government-controlled model of alcohol sales; the World Health Organization, Canada’s National Alcohol Strategy and the Centre for Addiction and Mental Health have stated that government-controlled systems of liquor sales are the best option for controlling alcohol consumption and alcohol-related harm in society.
“As elected officials are faced with questions about privatizing alcohol sales, we would ask that they consider the impact it would have if the number of alcohol sales outlets in their communities were doubled, tripled or more,” Mr. Murie said. “The focus should not be on deregulation of alcohol sales, but rather on maintaining and building on the current system which protects the safety of Canadians while meeting customer needs.”
For more information, please see MADD Canada’s paper, Provincial Liquor Boards: Meeting the Best Interests of Canadians, in the Resource Library on MADD Canada’s web site at www.madd.ca.