ONTARIO SUPERIOR COURT ISSUES INTERIM ORDER

Vincor International attained an interim order from the Ontario Superior Court of Justice having to do with their proposed statutory plan of arrangement. The plan states that all of Vincor’s common shares will be acquired by Constellation and will be considered by shareholders at a special meeting June 1.

SONOMA WINE GROUP’S BETTER HALF

Sonoma Wine Group’s new brand, Better Half, will make its Florida debut on the cover of the Florida Restaurant and Lodging Association magazine next week. A network of Miller and Coors wholesalers in Florida already distribute Sonoma’s Bluey White Zinfandel, Los Danzantes Shiraz and Turtle Moon Chardonnay in 375 ml bottles with twist-off closures. Designed as a wine program meant for beer distributors, Better Half – A Big Wine Sealed In A Little Bottle – will be available next Monday, May 1.

A SURGE IN ONLINE WINE ORDERS

Not only has direct wine shipping and online wine shopping become a huge issue in the U.S. alcohol beverage industry, but consumers are taking notice as well. In this week’s “Tastings” column by Dorothy Gaiter and John Brecher in The Wall Street Journal, the writers discussed the enormous popularity of online wine shopping saying:

“Lately, thanks in part to a Supreme Court ruling, state law changes and Americans' growing comfort with the Web, the online wine business has been undergoing a sea change: There's a surge in the number and quality of sites devoted to educating consumers, highlighting unusual regions and, mostly, selling a lot of wine.”

Everyone from huge retail centers such as Sam’s Wines & Spirits in Chicago to small, specialized websites featuring only Austrian or Jewish wines, for example, are joining the trend. About 1% of the U.S. retail business is made up of wines sold online, coming out to almost $26 billion according to the Wine Institute. And the numbers will continue growing as online wine shopping improves. As more states pass laws that allow online wine orders, consumers will take notice and online merchants will keep getting better.

“Customers, too, will push the transformation: While there will always be a market for people who want to order directly from a winery and geeks like us looking for rare stuff, our feeling is that, in the long run, online wine sales -- similar to other online businesses -- will rise or fall based on whether consumers use it as an everyday convenience for everyday wines, just as they use Amazon.com for books.”

AN AUSTRIAN DEAL FOR FOLIO FINE WINE

Napa Valley’s Folio Fine Wine Partners, founded by Michael Mondavi, today announced a new marketing deal with Lenz Moser which will bring two Austrian Gruner Veltliner wines to their portfolio. The two wines fall under the Laurenz V label and are entitled “Charming” and “Singing.” In a statement Lenz Moser said: “Representing the 6th and 7th generations of the Moser family from Niederosterreich (Lower Austria) we are both very proud and excited to be introducing Austria's flagship grape varietal in a very accessible manner and at a time when we truly believe the future lies with white wines.”

FORTUNE BRANDS SHOW DOUBLE DIGIT GROWTH FOR WINE AND SPIRITS

Fortune Brands’ wine and spirits category showed strong growth along with an overall profit jump of 14% and a 33% rise in sales. The company said it benefited from “the addition and growth of newly acquired spirits and wine brands," which had double-digit sales gains thanks to last year’s acquisition of Allied Domecq brands, including Sauza tequila, Courvoisier cognac, and Maker’s Mark bourbon. Jim Beam and Maker’s Mark sales grew in the double-digits individually.

65% OF AMERICANS WANT TO TRY WINE FROM “DOWN UNDER” OVER ANY OTHER COUNTRY

Led in a survey by Australian winemaker McWilliam’s Wine, 1,100 U.S. consumers answered questions concerning the Australian wine industry. Over half of the respondents reported they drink more wine than beer (52%) although half said they have never tried wine from Australia, also 52%. Out of the survey participants, 86% said they didn’t realize Australia had a longer winemaking history than the U.S., and when asked what comes to mind when Australia is mentioned, 61% chose “a category of wine emerging in popularity in the U.S.” McWilliam’s pointed out that consumers’ unfamiliarity with Australian wine is particularly hurtful to the industry since 70% of “frequent wine-drinkers” feel that knowing a wine’s history makes the experience more enjoyable. Sitting outside on a porch or veranda is considered the perfect location to drink wine by 57% of the responders, and 66% think taste is the single most important thing in choosing a wine.

BIRDS OF A FEATHER DON’T FLOCK TOGETHER

The Trademark Trial and Appeal Board of the U.S. Patent and Trademark Office ruled in favor of Pernod Ricard in a U.S. trademark battle with Dutch company Stichting Lodestar. The ruling rejected Stichting’s application to register the trademark “Wile Geese” for alcoholic beverages due to its similarity to Pernod’s Wild Turkey Kentucky Bourbon. The Trademark Office stated that the similarities between the two brands would be confusing for consumers. Pernod called the ruling “a very important decision that will support our enforcement programs for years to come, as infringers continue to take aim at our famous mark.”

GRAPES REIGN AS KING IN NAPA

Napa County had another great agricultural year according to the 2005 Napa County Agricultural Crop Report. The total value of all farm production in the county topped a half-billion with wine grapes accounting for an impressive 55% at $541 million. The wine grape success had a lot to do with weather, growing conditions and harvest timing, making a “trifecta” for growers according to Napa County Agriculture Commissioner Dave Whitmer.


The most expensive varietal was again petit verdot coming in at almost $5,000 a ton, while cabernet sauvignon was the most planted variety costing $2,000 per ton. Cabernet grapes took up 7,000 acres and produced 34,000 tons.

CAPS THREATENING TO BOTTLE WINE SHIPMENT BILLS

Yesterday, the Florida House unanimously approved HB 247, sponsored by Rep. Ellyn Bogdanoff, that will not allow wine producers making more than 250,000 gallons a year to deliver directly to residents. The bill must now go on to the Senate for approval. A separate Senate bill (SB 282) ready for floor consideration does not include a cap, allowing any winemaker to ship to Florida.


Some lawmakers feel that implementing a delivery cap will help prevent underage drinkers from accessing the larger, less expensive wine brands such as E & J Gallo. HB 247 would also create a tax collecting system and provide guidelines for an orderly market. Others, however, think capping the wine bill infringes on free trade. The key difference between the two bills could keep Florida legislators struggling to compromise for many months.

PASO ROBLES SPREADING OUT

Paso Robles Wine Services announced today that they are in the second phase of constructing a new facility that will serve as a consolidated cased good and wine shipping center. It is scheduled to open this fall. "Last year's bumper crop and the increased number of wineries in the area translate to the highest production of Central Coast wines in history," said PRWS representative, Nicholas Miller. "All that wine has got to be stored, consolidated, and shipped from some place, and our new location couldn't be more convenient." In addition to the cased good warehouse, Paso Robles is also building a 72,000 square foot custom winemaking facility, which will eventually hold up to 30 different wine brands.

CAPPED BILLS REPLACE DIRECT DELIVERY

The Florida House finally decided on a bill Tuesday that will allow Florida consumers to buy their wine over the internet or by mail order, but only from wineries that produce less than 250,000 gallons a year. The bill also caps shipments to 18 cases a year per individual, and requires wineries to report excise taxes they collect. The House bill is now ready for a floor vote.

ANDREW SMITH SAYS FAREWELL TO BROWN-FORMAN

Brown-Forman announced yesterday that Andrew Smith, president of Brown-Forman Spirits in Europe, Africa and Eurasia, informed the company that he will retire on May 31, 2006. Andrew joined the company in 1990 as vice president and marketing director for Europe, Middle East and Africa. "It is not an exaggeration to say that Andrew Smith is one of the key executive leaders responsible for leading Brown-Forman's remarkable international growth over the last 12 years," stated Brown-Forman Chief Executive Officer Paul Varga.

FORGET CORKS AND SCREWCAPS FOR A NEW PULL ON WINE

Known for their innovative packaging, The Three Thieves have launched a Pinot Grigio and Cabernet Sauvignon in a juice box style package. The Tetra Prisma 250ml four-pack – called a “Bullet” – contains 1/3 more than the wine industry standard for single serving portions and is sealed with a pull tab. "Bandit Bullets can be enjoyed anywhere people are comfortable with a beer in their hand ... enjoying fine wine wherever and whenever it suits them," says owner, Charles Bieler.

SONOMA COUNTY GROWERS OUT FOR A NAME

Sonoma County growers are backing SB1380, a “truth in labeling” law - much like recent Napa legislation - that would ensure Sonoma grapes are used in a wine with Sonoma on the label. Under the bill wine brands with Sonoma in the title must use at least 75% of Sonoma County grapes. Currently, wine brands with Sonoma labels can be produced from grapes grown anywhere else without a hint of Sonoma fruit. Vintners hope that if the bill is passed, consumers will be better informed and not misled in any way about what they are purchasing. Also, the law would increase the value of Sonoma grapes which will become increasingly important in pushing the proposed Sonoma County Winegrape Commission, a system in which Sonoma growers will tax themselves to raise money.


Napa set the precedent in 2000 with a similar bill and proved the law’s validity in court with the recent Bronco Wine Co. case. Although Sonoma vintners claim there is no current abuse of the county’s name, the law will help protect Sonoma growers in the future. SB 1380 passed through the Senate’s government organization committee yesterday with a unanimous vote. The legislation is expected to come for a final vote sometime this summer and if approved, it would become a law on Jan. 1, 2007.

INTERNATIONAL WINE & SPIRITS 1ST QUARTER RESULTS

UST’s subsidiary International Wine & Spirits Ltd. announced their 1st quarter earnings today showing a 9.1% increase in wine sales and an 8.3% rise in premium case sales. During the quarter, the company announced that through its own subsidiary, Ste. Michelle Wine Estates, they reached an agreement to form a partnership with the Antinori family of Tuscany to distribute their portfolio in the U.S.

FREEDOM FRIES AND FRENCHIE WINE

French wine imports have slowly gone done in the past couple of years, but a new study conducted by two Stanford economists suggests political reasoning could be at the root. In response to France’s opposition to the war in Iraq, many Americans boycotted French wine which may have cost millions in sales. Weekly sales of French wine dropped around 26% at the peak of the boycott and resulted in a 13% decline for the six month period.


Although experts originally believed the boycott had no real economic effect, these findings prove otherwise. Drawn from supermarket/large retail scanner data focused in Houston, Los Angeles and San Diego, the researchers found that French wine sales dropped during the six months after the war started, possibly losing up to $112 million. Cheap and expensive French wines were hurt the most by the boycott.

TAKE HOME WINE IN THE “OLD LINE STATE.”

Gov. Robert Ehrlich of Maryland said late last week that he plans to sign two bills: one that will allow in-state and out-of-state wineries producing up to 27,500 gallons to sell directly to restaurants and retailers, and the other that would allow restaurant goers to take home leftover wine. Proponents of the corked wine law believe it will encourage more people to purchase wine at restaurants and also moderate consumption before driving home.

DO DRINKERS KNOW SOMETHING EVERYONE ELSE DOESN’T?

As is often discussed and widely reported, wine is growing more and more popular in the U.S. especially with younger, but legal, generations. Millennials are toting wine to parties more frequently than older adults since many of them grew up with wine-drinking, baby boomer parents, making them more willing to sample different varietals and foreign brands. According to the Wine Institute, wine consumers are “open to new experiences; follow their own path in life; are information-savvy and confident; desire intangibles, experiences and emotions; have their life priorities in order; and eschew brands as badges.”



And according to some European studies, drinkers may be smarter than the average person. A survey taken of 6,000 Londoners ranging in age from 40-68 found that drinkers – which includes people who consume anywhere from one drink to 30-plus in a given week - in general performed better on tests measuring verbal fluency and inductive reasoning. A Danish study also found that wine drinkers tend to be smarter than beer drinkers or nondrinkers. This, of course, depends on so much more than the actual beverage and has not been proven as an actual correlation. It's a classic chicken or egg correlation conundrum: are drinkers smart because they drink (and can relax more), or do smart people simply drink more. Or is there a third correlative factor, like do intelligent people earn more money are therefore can afford to drink more. Something to think about.

COLORADO GOVERNOR SANCTIONS DIRECT DELIVERY

Colorado Gov. Bill Owens authorized consumers to make telephone and online wine shipment orders beginning July 1 by signing HB 1120 into a law. Wineries cannot, however, sell directly to retail stores or restaurants. Both in-state and out-of-state wineries must pay a $50 fee before they can ship to Colorado residents, but consumers are allowed to place orders without first visiting the winery.

ALEXIS BESPALOFF, 1934-2006

A celebrated wine critic and writer, Alexis Jacques Bespaloff died April 22 in Las Cruces, New Mexico after a long battle with cancer at the age of 71. Alexis was born on November 15, 1934 in Bucharest, Romania and eventually moved to the U.S. where he attended the Horace Mann School, Amherst College and Harvard University. After getting involved in the wine business, Alexis became one of the most important critics of his generation and published six books, including The Signet Book of Wine. He was also a wine critic of New York Magazine for over 20 years and wrote for Wine Enthusiasts, Food & Wine, GQ, Harper’s Bazaar, Elle, and Travel & Leisure. Mr. Bespaloff is survived by his wife, photographer Cecilia Lewis and will be sorely missed in the industry.

ABSOLUT FLAVOR MANIA

Absolut Vodka plans to launch its eighth flavor, Absolut Ruby Red, in the U.S. starting June 1 on-premise and off-premise. Capitalizing on the growing popularity of fruity cocktails in the celebrity world as well as the rest of the county, Absolut’s newest addition is a grapefruit-flavored concoction. "We expect Ruby Red to be another "it" flavor this spring, summer and beyond and we're looking forward to yet again forging new ground in the category," said Matt Aeppli, vice president of marketing.

HOW WILL COSTCO’S WIN IMPACT THE INDUSTRY?

As most of you are probably well aware, Costco won its lawsuit against the State of Washington and fulfilled a prediction many industry insiders had already made. Judge Pechman ruled late Friday that many provisions in the Washington state liquor control code are illegal antitrust violations, including their cash law, minimum markup, the ban on central warehousing, and price posting. She agreed with Costco that those provisions along with other rules unfairly prevent large retailers from being competitive with the usual marketing tools available to them on other products.


Furthermore, Judge Pechman ruled that the 21st Amendment does not protect the alcohol code from antitrust scrutiny and that laws such as minimum markup do not help promote temperance or maintain an orderly market. “The restraints challenged by Costco are plainly anticompetitive, and there is no dispute that these restraints increase the average cost of beer and wine in Washington," said Judge Pechman. She wrote in her decision that “the court finds that the state's interest do not trump the federal interest in promoting competition” and that “the citizens of this nation have long relied upon a healthy competitive market to distribute goods efficiently and economically.” Washington State has 30 days to appeal but said it will review the decision and decide whether to appeal sometime today. The case will then likely move to the Ninth Circuit Court of Appeals and may ultimately land itself in the Supreme Court as Costco moves to other states with similar alcohol codes. As for now, though, it’s only one state and not the end of the world, yet.

MICHAEL-DAVID APPOINTS NEW WHOLESALER IN CALIFORNIA

Michael-David Winery of Lodi has appointed Young’s Market Co. as its California wholesaler effected May 15, a move that consolidates the west coast distribution. Young’s Market also handles Michael-David wine distribution in Washington, Oregon, Arizona, Hawaii and Alaska and is the broker for Idaho, Montana, Utah and Wyoming.

ARIZONA HOUSE RULES COMMITTEE DEMANDS A COMPROMISE

The Arizona House Rules committee is awaiting a compromise between wholesalers and vineyards before approving SB 1276. Already passed by the Senate and House Commerce Committees, SB 1276 would allow internet wine sales as long as the person placing the order is of age and the wine comes from a vineyard that produces less than 50,000 gallons a year. However, Bob Robson, House Rules chairman, “wants both sides to come up with a compromise before I let it out of my committee.” One possible agreement would cap wineries to a 12,000 to 20,000 gallon yearly limit, about 5,000 to 8,000 cases. But until the opposing groups reach a decision, there the bill will continue to sit.

WINE CUSTOMERS DRAWN TOWARDS THE UNTRADITIONAL

Innovation continues to push the wine category as screwcaps and boxed wine sales are up 51% and 70% from 2005, according to an ACNielsen study. Consumers today are flocking towards quality, value wine in convenient packaging, a trend that will likely continue for the foreseeable future. And companies that opt for inventive packaging now will likely profit in the future when the market turns and their brands morph into the mainstream.

CAMPARI POSITIONS GLEN GRANT FOR GROWTH

According to an interview with Campari’s CEO Enzo Visone in forbes.com, Visone predicts that the spirits giant’s recently acquired Glen Grant whiskey will greatly impact results in 2007. “Glen Grant will bring results in 2006, but the main impact will be in 2007,” he said. Previously owned by Pernod Ricard, Glen Grant is Campari’s only whiskey and currently holds the second largest sales volume for single malts in the world. The company plans to step up marketing claiming “the previous owner had a lot of brands and Glen Grant was not a priority.” Campari hopes to further develop the brand in the U.S. and Asia, and also “intends to make more acquisitions in spirits” as well as Italian wines.

A PROPOSED SONOMA COMMISSION SEEKS TO REPLACE THE GRAPE GROWERS ASSOCATION

Plans to form a Sonoma County Winegrape Commission continue to ferment with a mail-in ballot election to be held in May and June. If growers show a considerable amount of support, the commission will raise more than $1 million on a yearly basis for wine promotion, education and research. However, only Sonoma and Marin county growers who sold more than 25 tons of grapes last year are eligible to vote. Already ten cultivators have volunteered to serve on the board of directors: Mark Houser, Jim Murphy, Duff Bevill, Richard Rued, Joe Dutton, Barb Stiling, Steve Hill, Steve Sangiacomo, John Pelkan and Mark Pasternak. Nick Frey, executive director of the Sonoma County Grape Growers, would become the commission’s president.

PORTUGUESE WINEMAKER DEEMED UNPATRIOTIC FOR SWITCHING TO SCREW CAPS

Portuguese cork producers are up in arms over one of the oldest Portuguese vineyards, Quinta do Cotto, switching to screw caps. Could this be a sign of the changing times? Miguel Champalimaud, owner of Quinta winery, told Reuters that “today a cork is more expensive than a liter of wine,” and that he will be saving $0.20 a bottle with screw caps. As the world’s biggest cork producing country, industry leaders "are obviously unhappy with this move because one of the main drivers for the cork industry is the wine sector," said Joaquim Lima, head of the Portuguese Cork Association. However, about 5% of natural corks are defective and cause the wine to spoil, leading many top wine-producing countries to switch to non-traditional closures.

WINE TALK WITH A FEMININE TWIST

Women & Wine announced yesterday the launch of its weekly one-hour radio show, Women & Wine Radio on voice.voiceamerica.com, the leading internet radio network. Self-proclaimed as not another “wine-geek” show, they will discuss the latest on wine and health, wine tastings and wine region tours.

INEXPENSIVE WINE STILL #1 IN VOLUME

Although sales of more expensive wines are growing like weeds, wines under $6 are still the craze among the average consumer. ACNielsen data shows that between July 2003 and February 2006, wines priced $15 and above gained 123% and have continued to grow. And while their cheaper counterparts – which include jug and boxed wine - are still the highest volume of wine sold in food channels, the category’s share continues to decline. Between February 2005 and February 2006 wines in the ultra-value group lost 6% share with the average bottle costing $3.36. So, while group like Image Seekers and well-seasoned wine drinkers are willing to shell out more money for a good product, you always have your value-sniffers that keep the sub-premium category alive.

CAMPARI CHOOSES A DUTY-FREE DISTRIBUTOR

Italian spirits group Campari International has appointed Alexander James & Co. as its exclusive US duty-free distributor. The agreement covers the company’s full portfolio including Skyy Vodka, Cinzano and Martin Miller’s gin.

REMY COINTREAU SHOWS DOUBLE DIGIT GROWTH WITH HELP FROM PARTNER BRANDS

In the twelve months ending March 31, Cognac producer Remy Cointreau reported a 6.4% growth for the year. The company’s liqueur and spirits products grew 1.3% giving an “excellent performance” in the U.S., especially in the last half of the year. Partner brands increased 20.4% on Scotch whiskies – The Famous Grouse and The Macallan - and California wine sales in the U.S. Remy acknowledged that the strongest growth came from their partner brands stating: “The remarkable double-digit growth for the year was sustained by the dynamism of the Scotch whiskies The Famous Grouse and The Macallan as well as Californian wines in the US.” Cognac sales inched up 0.5% and champagne sales grew 4.6%.

KENWOOD VINEYARDS RELEASES COMMEMORATIVE BOTTLING

The Pennsylvania Liquor Control Board selected Kenwood Vineyards to commemorate the 2006 All-Star Game in Pittsburgh July 11th. The Russian River Valley Chardonnay and Sonoma County Cabernet Sauvignon will feature the 2006 All-Star game label and will be released in Pittsburgh on April 28th. This marks the first time a Major League Baseball has joined with a winery to form commemorative bottling.

LVMH: “ALL BUSINESS GROUPS RECORDED STRONG PROGRESS.”

Wine and spirits revenue grew 23%, or 16% on a comparable basis, in Q1 2006 with a 10% rise in champagne. “The higher quality ranges made the strongest progress,” the company said, especially in the U.S. and Asia. Veuve Clicquot did well in the U.S. while Dom Perignon, Moet & Chandon, and Hennessy showed momentum in Asia.

COSENTINO IN THE MARKET FOR A NEW CFO

Wine producer Cosentino Signature Wines has reportedly let go of newly appointed CFO Joe Andreski citing a difficulty on his part with making “the necessary transition.” The company is in the process of finding a replacement.

WINE CONTINUES TO PUSH BEER AND SPIRITS INTO ITS WAKE

A report released by Merrill Lynch shows that wine was flowing in March more than it has since September 2005 while spirits dwindled. Wine’s consumer price index rose 2.9% as compared to their 2.7% increase in February while spirits grew only 1% in March. Wine and spirits CPI show an average growth of 1.6% and 2.6% overall. The report stated that pricing competition, health concerns, and the growing trend of millennials drinking wine “have contributed to stronger volume growth in spirits and wine relative to beer of late.”

PERNOD RICARD CLOSING THEIR INDIANA DISTILLERY

Pernod Ricard USA has decided to close their Lawrenceburg, Indiana distillery by 2008 prompted by a study that “clearly showed that we have significant excess capacity,” said Alain Barbet, president and COO of Pernod Ricard USA. "The outstanding work that our employees performed made the study's conclusion even more difficult to accept." The company will close their plant in stages beginning in early 2007. While about 400 employees stand to lose their jobs, some non-manufacturing employees could transfer to an undisclosed new location while others will receive severance and outplacement services.

THE BIG GET BIGGER: TWO W/S DISTRIBUTORS COMBINE BROKERAGE UNITS

As you may recall, we reported last week that Southern Wine & Spirits and Alaska Distributors Co. were entering into a joint venture in six control states. Now it's official, and the details are a little different than we reporated.


The two companies announced yesterday a strategic partnership aimed at strengthening their wine and spirits brokerage operations across six northwest control states.


A division of Alaska Distributors Co, formally Spirits West, will combine with SW&S to form the Southern Wine/Spirits West operation and will cover the control markets of Washington, Oregon, Idaho, Montana, Utah and Wyoming. The deal is set to close in the next six weeks, probably sometime in May.


Wayne Chaplin, president and COO of SW&S, called the venture “another landmark in the history of Southern Wine & Spirits,” while Steve Loeb, president and CEO of Alaska Distributors Co., expressed a similar sentiment: “It’s an exciting day for our Spirits West Division to partner with Southern Wine & Spirits of America, Inc.”


The deal marks the latest in strategic partnerships that are taking place all across the fruited plain among wine and spirits houses, with all players jockeying for scale in order to attract and keep their main liquor suppliers. We expect this trend to continue, with more straight M&As and more joint ventures. Stay tuned....it's going to be a wild ride.

BEAM GLOBAL SPIRTS SWEEPS CONSUMERS WITH MARKETING CAMPAIGN

Beam Global Spirits & Wine brand DeKuyper has kicked off a “Bump Up Your Party!” sweepstake to help boost company cocktail sales in the U.S. The brand is running the sweepstake until the end of August and offering up to 100 prizes everyday, including music downloads, caterer, or bartender for a party with a grand prize of $15,000. POS materials will help support the promotion along with an advertisement on Evite.com. “Through this promotion we are encouraging consumers to add some excitement to their at-home parties by adding a splash of their favorite DeKuyper flavor to almost any classic cocktail to “Bump Up!” the flavor and fun,” said senior brand director Chris Mahoney.

NEW KIDS ON THE BLOCK AT THE WSWA

The Wine and Spirits Wholesalers of America, Inc. (WSWA) has added three new staff members to their team. Dawson Hobbs joins the association in the new position of Vice President of State Affairs after eight years with the National Riffle Association. Joanne Moak will serve as Assistant General Counsel working with litigation, while Kimberly Brock – most recently from Mothers Against Drunk Driving – will assume the new role of Communications Manager.

MANAGEMENT SHIFTING IN GLAZER'S

Glazer’s Distributors announced that Scott Rawlings, currently president for Louisiana and Mississippi, will be transferred to Dallas, Texas for a corporate leadership position overseeing Louisiana. Glazer’s president Jerry Cargill said, "Glazer's Louisiana business has never been healthier, and Scott Rawlings is a big reason why we have been so successful in the state.” In Rawlings place, Andy Halpern will serve as president of Louisiana and will be responsible for the entire Louisiana business. Scott stated that Andy has “done an outstanding job” and expressed confidence “that Andy will deliver on that vision for the state.” Both appointments are effective June 1.

CROWN ROYAL 400 BEGINNING IN MAY

Crown Royal Championship Racing today announced that Crown Royal has signed a multi-contract with the annual spring NASCAR NEXTEL Cup series at Richmond International Raceway. Beginning May 6, the race will now be called The Crown Royal 400 and will be broadcast live on F/X. "We are honored and proud to have such a significant presence during a race at one of NASCAR's most entertaining and popular tracks," said Jim Lorenz, Senior Brand Manager, Crown Royal. "Richmond International Raceway will always be special to Crown Royal and our consumers as it was the site of our first-ever victory.”

360 GLOBAL KICK STARTS A NATIONAL AD CAMPAIGN

360 Global Wine Company has partnered with Global Media Fund, Inc. to launch a nationwide media campaign complete with newspaper space and radio airtime. The print ads are expected to reach approximately 10,000 newspapers, news and wire services and more than 6,000 radio stations. Combined, the various mediums will reach over a million consumers. “In addition to educating consumers about our products, we believe this media campaign, which will co-market our products with nationally known brands, will increase our channels of distribution and increase our sales," said Jake Shapiro, CEO of 360 Global Wine Company.

ARIZONA STILL NOT CLOSE TO REACHING A DECISION

While winery backed HB 2500 died in an Arizona committee several weeks ago, SB 1276 is still under review. The bill was heard in the House Commerce Committee and prohibits all wineries producing more than 50,000 gallons unless the wine is purchased in-person from the winery.

ZORK: POSITIONING ITSELF TO BE TAKEN SERIOUSLY

As the wine closure debate continues to unfold, more and more companies are turning to non-cork closures. Don Sebastiani and Sons, who produces Screw Kappa Napa and Smoking Loon, is one of the largest wine companies to go down the non-traditional path by using Zork, a synthetic closure developed in Australia. Don Sebastiani is reportedly planning to gradually move to non-cork closures on all their wines in the future and will become the largest company in the world to do so. As Zork prepares itself for the roll-out stage, the company hopes to communicate to consumers that “trial results over the past 18 months have proven there were virtually no bottle variation and a long, reliable shelf life.”

FLORIDA WHOLESALERS LOOKING TO CAP DIRECT WINE SALES

Industry leaders in Florida are still struggling over wine shipment bans with distributors pushing for a cap provision and wineries fighting back. HB 247 and SB 144 include a ban on wineries that produce 250,000 gallons or more, while SB 282 calls for unrestricted direct delivery. The Federal Trade Commission issued a statement supporting SB 282, citing it "would enhance consumer welfare," although the bill has encountered resistance in some committees. A decision has yet to be made.

MARYLAND’S GOVERNOR WELCOMES DIRECT WINE SALES

Maryland’s Gov. Robert Ehrlich is expected to sign SB 812 which allows small wineries to sell their product directly to retail stores and restaurants within the state. As a response to the state comptroller’s ruling that would have halted direct wine sales, the governor believes it is “the appropriate solution” to allow wineries that produce less than 27,500 gallons of wine to distribute without the use of wholesalers.

GLAZER AND TONORE COMBINE IN MISSISSIPPI

Glazer’s president in Louisiana and Mississippi, Scott Rawlings, announced today plans to integrate Glazer’s brokerage company in the state of Mississippi with Tonore Brokerage, Inc. of Tonore Spirits & Wines, Inc. Bob Tonore, former president of TS&W, will takeover as president of Glazer’s Mississippi operations and Steve Tonore will serve as vice-president. Scott Rawlings said, "We are excited about our continued expansion into Mississippi, and look forward to integrating the Tonore business and management team into the Glazer's organization."

GRAPE GLUT DIGGING A HOLE DOWN UNDER

Because of national over-supply, Australian growers will be forced to dump thousands of tons of grapes. The South Australian region stands to lose $65 million alone and has left many growers with contract suspensions.

WHAT IS TO COME OF VINCOR?

There has been speculation in the industry over what is to come of Vincor once Constellation fully takes over, some believing Vincor will remain a separate entity while others disagree. While Constellation has had a long history of allowing subsidiaries to run on their own - Hardy Wines in Australia for example - some acquisitions have not faired the same, like the recent Mondavi acquisition. While Vincor has strong brands and a popular presence in Canada that will benefit Constellation, they do not necessarily need Vincor’s management team to function, according to some sources. However, both companies have insisted that the “financially sound” Vincor will remain a separate entity, maintaining the merger is a “good fit” for both.

TPG MOVES INTO TURKEY

San Francisco-based Texas Pacific Group and the Nurol-Limak-Ozaltyn-Tutsab of Turkey, owners of Mey Alcoholic Beverages, signed an agreement to enter a partnership regarding Mey. Mey is Turkey’s leading producer of raki with 80% share, and is one of the largest producers of wine in the country. The completion of the transaction is expected to come later this year. “The investment is the first of hopefully several by TPG in Turkey and is a reflection of the great progress of the Turkish economy in recent years," said TPG Partner Stephen Peel. TPG also has significant investments in Beringer Wines, Spirits Group, Punch Taverns, Neiman Marcus and Burger King.

WINE RETAIL SHOPS GROWING WITH CONSUMER TRENDS

With nationwide consumers turning more and more towards wine, the United States is slated to become the largest wine drinking nation in the world by 2008. And retailers are hoping to capitalize on that growth. Flashy labels, colorful titles and ever increasing brand exposure make it easy for the average consumer to choose a bottle without the intimidation. With easily recognizable brands like Yellowtail, Smoking Loon and Little Penguin, consumers can attain that image easily without much brand knowledge. These brands, along with many others, are a function of marketing, not necessarily quality.


Wine is no longer limited to small specialty shops and is now offered in every Kroger, Costco, Sam’s and Wal-Mart in bright, showy displays. As a result, wine specialty shops are sidling up to the big guys with the emergence of nation-wide specialty chains such as Total Wine and WineStyles that usually cost less than warehouse clubs.


And, as most of you are well aware, consumers are willing to branch out more than ever. For example, 85% of the increasingly important millennial group says they frequently or occasionally purchase a label they’ve never seen before, usually in the $10 range. “We're able to have a lot better pricing because of the volume going through our stores,” said David Trone, the president and co-founder of Total Wine, told the Miami Herald. “The majority of folks prefer to shop in specialty stores that can give you better service and selection.”

A NEW PRESIDENT FOR MOET HENNESSY USA

Mark Cornell was appointed president and chief of Moet Hennessy USA yesterday, April 11, and comes from their French-based parent company. Mark replaces John Esposito and most recently served on Moet Hennessy’s Executive Committee.

PATERNO WINES TAKES ON NEW BORDEAUX

Paterno Wines International announced today an exclusive, long-term agreement to market Tour des Laurets in the United States. "We are thrilled to welcome the Rothschild family's unparalleled tradition of excellence," said William A. Terlato, President and CEO of Paterno Wines International. "Baron Benjamin de Rothschild has spared no effort or expense at Tour des Laurets, and we are pleased to add its classic Bordeaux and the legendary Rothschild name to our luxury portfolio."

NEW BENEFITS FOR GUEST WORKERS

The United Farm Workers of America and Global Horizons, a major labor recruiter, reached an unparalleled agreement that gives guest workers brought into the U.S. higher wages, benefits and improved working conditions. Under the agreement, workers will receive a 2% pay raise over the federally mandated Adverse Effect Wage Rate – the rates are set by individual states – along with medical care and work breaks. Workers will also receive paid bereavement leave when a family member dies and a paid round-trip transportation to their native country. The agreement comes after Global Horizons was criticized by the UFW and Washington state officials over working conditions and wages for guest workers.

PETER CRESSY: “THE HOSPITATLITY INDUSTRY NEEDS TO BE RECOGNIZED AND PROTECTED.”

DISCUS president Peter Cressy highlighted the “devastating and far-reaching” implications hospitality taxes have on that industry yesterday at the Global Travel and Tourism Summit in Washington D.C. “Taxing tourists and business travelers is unfortunately convenient because they don’t vote in the cities and towns in which they travel. But in the long run, it’s bad economic policy because it impedes growth,” he said citing an analysis of 10 major cities, which shows tourists are hit with 16 different direct taxes. He stressed the fact that all parts of the hospitality industry are heavily taxed, costing more than $40 billion every year in U.S. taxes. Also, Peter said that public officials need to understand that taxing alcohol is the same as taxing the hospitality industry, showing that alcohol represents 26%-40% of restaurant profits.

OUT-OF-STATE RETAILERS CHALLENGE THE TABC

Out-of-state retailers are fighting for direct delivery in Texas. The Texas Alcoholic Beverage Commission put out a cease-and-desist order last week threatening to prosecute out-of-state retailers that “illegally” ship wine across the Texas state line. In May 2005, Texas passed SB 877 that makes it legal for wineries to ship wine directly to in-state consumers; however, the law prohibits out-of-state retailers from doing the same. Now some out-of-state retailers that want to create a national wine market are suing the TABC over what they call an unconstitutional law.

VIRGINIA GOVERNOR SIGNS TASTINGS LAW

Virginia Governor Tim Kaine signed a new law that will give adult consumers more opportunities to sample distilled spirits at the state’s hotels, restaurants and clubs beginning July 1. Previously, only retailers were allowed to conduct tastings but under SB 685 hotels, restaurants and clubs will gain the right for an on-premise tasting. The spirit quantity cannot exceed more than 1 ½ ounces but patrons are allowed to sample up to three spirits products.

DIRECT DELIVERY BILL EXPECTED TO PASS IN MARYLAND

A Maryland winery bill is expected to pass through the House sometime this week allowing small wineries to sell directly to restaurants and retailers, according to local newspapers. A similar proposal was passed in the Senate several weeks ago, and will permit wineries that produce less than 27,500 gallons a year to sell directly to retailers and restaurants. The bill was drafted in reaction to a ruling by Comptroller William Donald Schaefer that required wineries to use wholesalers as a way to prevent underage drinking.

DELAWARE APPEARS CLOSE TO LEGALIZING DIRECT DELIVERY

Last week HB 379 passed through the Delaware House and is currently awaiting consideration in the Senate Agriculture Committee. According to sources, the legislation is expected to pass through the Senate sometime this week. Under HB 379 vineyards that produce less than 1,000 cases of wine annually may ship limited amounts directly to retailers. Larger wineries, such as Nassau, would be required to use a wholesaler but could do so independently and for a small fee. HB 336, already passed by the House, would require that Delaware wineries and other out-of-state vintners use wholesalers when distributing to retailers.

CALIFORNIA’S WINE REGION RECEIVES A “STATE OF EMERGENCY.”

California Gov. Arnold (“I’ll be back”) Schwarzenegger declared a state of emergency Monday in seven northern and central California counties. The governor called March 2006 the rainiest March on record for the region and with more rain on the horizon, people and property are in “extreme peril.” Growers will not be able to access their vineyards with a tractor for weeks and harvests will be postponed. Many reservoirs in California’s Central Valley are at full capacity, and at least 10 more days of rain are in the forecast. Although Arnold didn’t specify an amount of aid when making the announcement on Monday, he directed “all agencies of the state” to dispatch staff, equipment and facilities. The region includes the counties of Amador, Calaveras, Fresno, Merced, San Joaquin, San Mateo and Stanislaus. Schwarzenegger already declared a state of emergency for California's levee system in February, a move that freed up about $103 million for repairs to 24 flood-prone sites.

HIGH OUTLOOK FOR THE 2005 BORDEAUX VINTAGE

Wines from the new 2005 Bordeaux vintage may possibly earn 10-30% more than last year, with top growths challenging records set in the 2000s. Ideal growing conditions helped produce unusually high-quality, well-structured wines according to buyers who attended vineyard tastings this month. However, since the wine is still maturing in barrels and won’t be ready for at least another two years or more, buyers are using the wine futures market to secure allocations which merchants hold for them in bond. Prices will be established in mid-to late-May.

JOHNNIE WALKER MAKES A WALKING YANKEE DONATION

Diageo’s Johnnie Walker announced today their plans to donate $100 to Recording Artists, Actors and Athletes Against Drunk Driving (RADD) every time a Yankee player draws a walk at Yankee Stadium during the 2006 baseball season. Their donations plans are a part of Johnnie Walker’s Keep Walking ad campaign and led by Wade Boggs. "This program is a huge opportunity for Diageo and Johnnie Walker to raise awareness of our efforts against drunk driving," said Chris Parsons, Vice President, Scotch Marketing, Diageo, NA. "As we approached the kick-off of the baseball season, we saw the opportunity to promote responsible drinking, and we're thrilled to work with Yankee legend Wade Boggs to help us do so." Boggs will be handing out free NYC MetroCards before the Yankees game today, April 11th, to ensure all adult fans arrive home safely.

SABMILLER CLOSE TO BULL-SNOWING A-B?

Snow beer may have surpassed Tsingtao, partly owned by A-B, as China’s number one selling beer. Sales volume of Snow rose by almost 50% in China, likely exceeding Tsingtao, while volumes grew 26% in the past year. In a joint venture with China Resources Enterprise, SABMiller’s Snow brand makes up 13% of the highly fragmented Chinese beer market. They are currently under construction with a new brewery in Harbin that will provide an annual production capacity of 230,000 kiloliters and put them head to head with Tsingtao. In a recent interview with Reuters, Andre Parker, managing director for SABMiller Africa and Asia, said that its beer sales in China are expected to grow by double-digit percentages in coming years, ahead of the market rate of between 5% and 8% annually.

EXCESS GRAPE CRUSH BOOSTS NZ PRESENCE IN THE U.S.

The New Zealand Wine Co. has increased grape production by 50% to just under 1500 tons this season. The winemaker says it had a record 2006 grape crush of less than 3000 tons in total, the rest of which came from other suppliers. According to the company, production increases resulted from new plantings and an overall improvement in yields which will help them grow in U.S. and British markets. In January, the company reported a 4.1% increase in half-year profits.

CANADA GIVES CONSTELLATION THE OK TO MOVE FORWARD WITH VINCOR

Constellation announced after today’s closing bell that the company has received confirmation from the Investment Review Division of Industry Canada, and Canada’s Competition Bureau, that no further filings or approvals are necessary in Constellation’s acquisition of Vincor.

MONTEREY WINE CORRIDOR UP FOR DEBATE