PART II OF SURVEY MONKEY

Thanks again for the wonderful reaction to our first ever survey. WSD received many more responses over the holiday weekend, and we greatly appreciate your feedback.

When asked about the future of screwcap wine closures, readers responded with equally mixed feelings. Some of you feel that the mainstream public already accepts non-cork closures, while others think it may never happen. Here are some of the responses:

“Until more of the larger companies, like Gallo, Constellation and Diageo, as well as high end producers around the world begin to use the screw cap, it will not be fully accepted in the mainstream.”

“Mainstream and "early adopters" (those that like to try new things) consumers already do. It is the "older" (not by age, but by amount of time drinking wine) wine drinker that has been turned off by cheap wines that have notoriously been in screwcaps over the years. I think it will be at leat 5 years before those stodgy wine drinkers try something new."

Others, however, think mainstream acceptance of alternative wine closures will either “never happen” or is already “widely accepted.”

Most feel that wine will soon show package innovation like that of the spirits industry, with a few alternations. While some readers feel that wine is already in equal footing with spirits packaging, others think wine will advance in “convenience and bag in box packaging” and “bottle shape and label shape.” However, several individuals noted that wine is too traditional to rely heavily on packaging innovation.

Consolidation seems to be the name of the game. When asked how wine and spirit wholesaler consolidation will end up, most said that less than 5 national players will lead a pack of smaller players.

“3-4 big national players and lots of small innovative wholesalers handling emerging brands and the on premise arena,” said one reader.

“I believe that the wholesaler network will continue to mirror supplier structure.”

Most respondents feel that chains like Super Wal-Mart, Costco and Trader Joe’s widen wines horizons, while the majority of the rest feel it both widens wine’s horizons and cheapens its image.

“They're great for wine's horizons--more people consume, the prices are attractive, and the retailers make profits that induce them to merchandise wine.”

“Cheapen wine's image and reduce availability of brands. The big boxes brand the store not the winery. This is not a positive development.”

“They do both. They increase exposure to uneducated buyers and cheapen to educated buyers.”

The majority of readers also think Fred Franzia – founder of Bronco Wine Co., maker of the Two Buck Chuck – widens wine’s horizons instead of cheapen its image.

“He forced wineries to justify the price and quality of their products,” said one reader.

“Though I don't see much future in marketing wine in this fashion, in the long term, cheap wine won't hold wine or its image back.”

And finally, 75% of those that took the survey do not think that the ever increasing list of vodka flavors will dampen growth rates.

UB GROUP YANKED FROM THE RUNNING

It looks like Taittinger champagne company might return to the Taittinger family who have reportedly teamed up with the French bank Crédit Agricole. US real-estate group Starwood Capital, current owner of Taittinger, has reportedly entered into “advanced discussions” with Crédit Agricole on the sale of Taittinger’s champagne assets, along with their California and Loire vineyards. The outcome is expected to surface early next week.

The Taittinger family bid has reportedly beaten all other offers, including India’s UB Group which is no longer under consideration. Some wine industry officials in Northern France were apparently concerned about UB’s $700-million bid, seeing it as a threat to the French system of locality-based appellations. People also called into question the Group’s long-term intentions for Taittinger and felt the brand might not get adequate protection.

NEW ACQUISITIONS AND VENTURES FOR STE. MICHELLE WINE

Ste. Michelle Wine Estates of Washington is set to acquire Erath Winery in Oregon - known as one of the best pinot producers in the state – starting July 1. The sales agreement includes the Dundee-based winery, the Erath brand name, its inventory and the long-term contracts of all Oregon grapes grown by Dick Erath.

Along with Ste. Michelle’s new acquisition, the company announced today that Glazer’s will distribute their products in Iowa, while Olinger Distributing Company - a partnership between Glazer's and M & D Investments - will distribute Ste. Michelle in Indiana. Both appointments are effective June 1. “We congratulate our Iowa and Indiana teams, as their reputation for brand building and customer service have been rewarded with these important appointments,” said Keith Petrauskas, Glazer’s Midwest region president.

ARIZONA SENDS LEGISLATION TO GOV. NAPOLITANO

Arizona wine guys and distributors finally reached a decision. If signed by Gov. Janet Napolitano, SB 1276 will allow small wineries to ship directly to consumers who placed orders over the internet, phone, fax or through the mail. Small wineries will also continue shipping to retailers and restaurants, granted these wineries have an Arizona domestic farm winery license and pay taxes.

Along with direct to consumer and retailers shipments, the bill would allow wine clubs where member receive regular shipments and satellite tasting rooms in metropolitan areas for remote wineries.

AUSTRALIA’S WINE DROPPING SLOWLY BUT SURELY

Australian wine exports have dropped 1/3 since 2002, leaving almost half of the country’s wineries struggling to stay in business. The Aussie grape glut paired with European grocery chains are pushing prices down even further, and wineries are having trouble staying afloat. In response, vintners are turning to the government for help and growing fewer crops for the future.

IT’S DELIVERY TIME IN INDIANA

It is now legal to ship wine directly to Indiana consumers, but only under certain conditions.

While consumers are allowed to receive shipments, they must first visit the winery in person and sign an affidavit. Thereafter, individuals can order up to two cases a month from wineries with a direct seller permit but must show their ID upon delivery. Wineries that sell more than 500,000 gallons of wine in Indiana each year are not allowed to ship directly to consumers.

Indiana wine-drinkers are still prohibited from making online orders or participating in wine-of-the-month clubs offered by retail stores.

30-SOMETHINGS PEGGED THE IDEAL CONSUMER

With advertising and marketing you always hear about baby boomers and millennials, but what about the people in-between? What do they want?

Several new studies have shown that the growing number of unwed, single people in their 30s make ideal customers. With money to burn and a taste for luxury, these individuals are ready to spend cash on themselves much more than, say, a 20-something prepping for marriage or a baby boomer with debt. This 30-something group is searching for the finer things in life and will trade up in all fathomable arenas, especially alcohol. You see it with beer, wine and spirits equally as consumers lunge for craft brews, super-premium wine and expensive liquors with easily attainable prices.

Retailers have taken notice and started targeting this group more and more. Ads that speak to individuals vs. couples and families are more prevalent, along with premiumized grocery shopping (think Super Target and the new upscale Wal-Mart in Plano.)

PINK IS THE NEW WHITE AND RUM IS THE NEW VODKA

Rum is making a similar wave in the spirits world as vodka did 5 years ago. With more flavor versatility, cocktail recipes and consumers trading up, the mojito is the new cosmo. Like their alcoholic counterpart, mojitos are versatile and invite all kinds of mixer combinations. (Just ask Delta Air Lines who is coming out with the Mile High Mojito June 1.)

Led by Bacardi, Captain Morgan and Malibu, rum is now being used in everything from margaritas to martinis, and will continue to evolve as long as rum companies keep introducing new flavors. Just last year rum grew 6.5% with the flavor sector alone representing 40% of the category. In the past few years Bacardi has invested heavily in the flavor segment with labels such as Bacardi O, Razz, Limón and Big Apple, and marketers have had a field day.

TWO BUCK CHUCK TO IMPORT CODORNIU

Spain’s Codorniu Group has chosen Bronco Wine Co. as its U.S. importer and marketer. As a result, Bronco formed the Forest Glen/Vinum International Sales Division, which will represent Codorniu’s range of Cava and table wines from Spain, Argentina and California. Gary Ramona will serve as general manager over the new division.

WEBSITE PUSHES MALIBU FLAVORS AND COCKTAILS

Malibu-Kahlua International created a new website, Malibu-rum.com, to boost its international influence. Much like Bacardi’s recent website – bacardilive.com – Malibu is taking a step to up its presence in the growing rum market, especially flavored rum.

Offered in English, French, Spanish and Chinese, the website includes cocktail recipes that “professional and amateur bartenders alike will appreciate,” said Simon Hunt, president and chief. Malibu will use these recipes to push their flavored products such as Malibu Passion Fruit, Malibu Mango and Malibu Pineapple. Malibu is using the new website as a “strategic consumer tool” to reach out to a worldwide audience and build their brand on a “market by market basis.”

WINE NOW SOLD AT KANSAS STATE FAIR

Kansas Gov. Kathleen Sebelius signed SB 297 that will allow Kansas consumers to receive direct wine shipments and drink wine at the state fair. The new law, in effect July 1, will allow in-state and out-of-state wineries to ship directly to adult consumers after they first make the purchase at the winery. It will also allow consumers to place internet and phone orders that will then be sent to a liquor store.

Restaurant patrons will also be able to take home an open bottle of wine after it is placed in a tamperproof transparent bag.

SURVEY MONKEY

We always get the best information from our readers, so please click this link to fill out a quick and dirty survey, always anonymous of course.



http://www.surveymonkey.com/s.asp?u=868482184879

SOLD: V&S’ DANZKA VODKA

France’s Belvedere SA has purchased the Danzka vodka brand from Sweden’s V&S. Under the agreement, Belvedere will market and distribute Danzka while V&S will continue to produce the vodka for the next five months until Belvedere makes further arrangements. Now that Danzka is sold, V&S can concentrate on premium brands such as Absolut, Level and Cruzan.

JOHN PHILIPS STEPS DOWN FROM FOSTER’S

Peter Jackson will become the new managing director for Foster’s UK and European wine business beginning June 1, replacing John Philips. “I am delighted to lead the business at such an exciting time,” Peter said. “With the integration of Beringer Blass and Southcorp completed we are now ready to focus on growing the top line by using consumer insights and the power of the global business to develop products to meet customer and consumer needs.”

BREAK OUT THE BUBBLY, PERNOD’S ON THE PROWL

Pernod Ricard reportedly wants to grow their champagne business which already ranks 4th worldwide thanks to Mumm and Perrier-Jouet. CEO and Chairman Patrick Ricard told a group of reporters and analysts that Pernod has a “huge ambition” to become a major player in champagne, according to CNN. Patrick told the group that the company would use an “aggressive development strategy” but only after they have fully digested their new Allied brands.

However, he avoided any questions about possible acquisitions, such as Taittinger, which was put up for sale by Starwood Capital. UB Group has also showed interest in Taittinger by putting up an $800 million bid, along with the Taittinger family and Alain Thienot vying for the company. The Taittinger auction is supposed to close this week.

UB GROUP GOES FOR TAITTINGER

UB Group, an Indian wine and spirits company run by Vijay Mallya, has offered close to $800 million for the acquisition of Taittinger, the world’s sixth-largest champagne company. According to sources, UB group put in its bid for the French company last week despite recent denials made by UB.

CALIFORNIA WINEMAKERS VIE FOR THE EMERGING CHINESE PALATE

California wineries are attempting to spread their wings in China. As the largest wine consuming nation in Asia, although less advanced than Japan, Western wine-producing nations are lunging at this widely untapped market with enormous consumer potential. However, only 5.3% of the total volume sold in 2004 was foreign wine while imported spirits accounted for just 0.3% of Chinese consumption. So if California wine-producers can help develop the Chinese palate, than they’ll have a huge new market with a population of 1.3 billion. One in seven belongs to a high-end consumer class, nearly 2/3 of the entire U.S. population which makes it a very attractive market.

Reps from the Northern California wine industry have been pouring into China to explore the country and educate Chinese consumers and potential business partners about California. However, France, Spain, Chile and especially Australia have already made a mark in China with California lagging behind. Another problem is that American wine faces duties of up to 80% making it an expensive luxury. Most wine sold in China is domestic and costs $4 or less per bottle but it tastes terrible. In 2005 only $6 million in California wines made their way into the Chinese market, but it was an 8% jump from the prior year, according to the U.S. Department of Commerce statistics.

REPUBLIC ACQUIRES A NEW BROKERAGE OPERATION

Republic Beverage announced today the acquisition of Majestic Marketing Company, an Oklahoma brokerage firm, from Alan Musser. "Alan will continue to lead the Majestic division during the integration process in conjunction with Daniel Zeigler, President of RBC-Oklahoma," said Bob Hendrickson, president of Republic’s Open States division.

After Republic’s merger with National Distributing Company, the new company will stand as the second largest wholesaler in the U.S. with business ties in approximately 20 states.

TEXAS COURT SIDESTEPS DISTRIBUTORS

In an ominous development for wholesaler advocates, a Texas court signed a preliminary injunction that makes it legal for out-of-state beer and wine RETAILERS to ship to adults in the state without a permit.

Northern Texas District Judge John McBryde wrote the order, which states that “out-of-state retailers using permitted carriers may ship wine to adult Texas consumers without applying for or obtaining a permit.” That means out-of-state retailers can ship wine to consumers anywhere in the state, even in dry areas, something even in-state retailers had always believed was illegal. Even wineries outside the state must obtain a permit to ship to Texas consumers, so this injunction is extremely surprising.

“It’s hard for me to believe that any court would say that the state can’t regulate any retailers. It’s unimaginable,” said Mike McKinney, president of the Wholesale Beer Distributors of Texas, to Beer Business Daily this morning.


The original lawsuit, brought by the Specialty Wine Retailers Association, contends that Texas’ requirement that retailers reside in Texas in order to have a license is unconstitutional under Granholm. We’ve since learned that Glazer’s has issued a motion to intervene in the case, arguing that this order would essentially give out-of-state retailers an advantage, as in-state retailers must obtain their product through the three-tier system. It’s the exact same argument in Granholm, only in reverse.

However, one source points out that maybe the harsh nature of the injunction was actually intentional, even encouraged by state regulators, as it would force the issue to be resolved in a full fledged trial, which would test the state’s alcohol laws completely, rather than an easy compromise reached by all parties, which could invite more litigation down the road.

SW&S ANNOUNCES TWO SENIOR EXEC APPOINTMENTS

Southern Wine & Spirits has promoted Bobby Burg to Senior Vice President, Operation & Supply Chain Strategy, and Barry Goldberg to Senior Vice President, Chief Information Officer & Managing Director, Business Solutions Group.

FLORIDA RESTAURANT ASSOCIATION FIGHTS ALCOHOL TAX

A Florida tax on alcoholic beverages sold in restaurants may have seen its final day. The tax has been cut twice before since it was passed in the 1990’s, and now the final repeal is awaiting Gov. Jeb Bush’s signature. The tax currently brings in $40 million a year and has been fought by The Florida Restaurant and Lodging Association since it was first enacted. The tax will be repealed by 2007 if approved by the Governor.

AUSTRALIAN GLUT LEAST OF THEIR WORRIES

Despite all the hype and press surrounding the Australian grape glut – which WSD is guilty of as well – at least one beverage research agency claims that excess grapes are the least of Australia’s problems. The UK-based International Wine and Spirit Record said in a recent report that grape shortages will likely be a problem for the Australian wine industry as early as 2010 despite the current surplus.


Because growers are planting lower levels of new vines to make up for the glut, they may not be able to meet demand in the coming years. According to the report, Australia could have close to 10% of the global international trade market by 2010 but may not be able to support it. “At the current level of new plantings, Australia will not be able to sustain that growth and will move into undersupply by 2010, a situation that might bring its own set of challenges in an increasingly competitive market,” the IWSR said.

MENDOCINO COUNTY PUMPS UP THE VOLUME

Mendocino County grape growers and vintners voted in favor of the Mendocino Winegrape & Wine Commission by approximately 85% following a 30-day industry referendum. As the only California Agricultural Commission that includes grape growers and vintners, both groups will be charged $10 per ton for grapes sold and/or processed. The funds will target promotion and marketing along with viticultural and enological research. John Enquist, executive director of the Mendocino Winegrowers Alliance, believes this new dedication to endorsement will help Mendocino county wines and grapes “compete at a much higher level.”

SEN. CLINTON STEPS IN FOR NEW YORK GRAPE PRODUCERS

A bi-partisan coalition of New York’s Congressional Delegation is asking the U.S. Department of Agriculture Secretary Mike Johanns to provide disaster assistance to grape growers affected by the spring freeze. A letter initiated by Hillary Rodham Clinton asked the USDA Secretary to provide enough money to help grape producers to recover.

"Mother Nature has not been kind to New York's grape growers but the recent adverse weather has come at an especially bad time. We must step in and help our growers, which is why we are urging Secretary Johanns to review and grant this request as quickly as possible," Senator Clinton said. "New York farmers know better than anyone that if their crops can't grow, neither can our economy."

JUMPING THE GUN HELPED THE GLUT

Some Australian growers are blaming the wine glut on a 12 year vineyard expansion plan and are calling for a redo. Wine producers on the NSW mid-north coast are doing better than everyone else because they did not administer the aggressive expansion strategy and as a result, have done little dumping.

BRITS PUTTING WINE ON THE BACKBURNER

Britain is starting to see declines in wine sales, which comes at a bad time for Australian exporters already suffering from the glut. One of the most important wine markets in the world has come to a sudden halt – down 1.5% from 2005 - after rising steadily since the 1980s. A combination of rising fuel costs and growing consumer debt is reportedly to blame, along with low on-premise sales due to smoking bans and an aging society. This could mean bad news for U.S. and Aussie winemakers who have a huge presence in that market.

And although wine consumption is still relatively high, wine producers are currently spending less on marketing due to heavy supermarket discounts and reduced inventories, a trend that is also hurting imports. Many individuals have continued to import their wine into the UK, banking on the idea that it’s a growing market even if profits are currently slim. If British drinkers don’t soon rediscover their love for New World wines, it could get dangerous.

ZIN NAMED HISTORIC WINE OF CALIFORNIA

California state senators voted to make Zinfandel California’s official historic wine despite criticism by some lawmakers. The bill originally proposed to make Zinfandel the state’s official wine but was softened after growers of other varietals protested the measure. According to Sen. Carole Migden, sponsor of SB1253, the bill is meant to honor Zinfandel’s historic presence that came about during the gold rush. The measure was sent to Assembly on a 21-12 roll call with no votes to spare.

A HUNT FOR MIDDLE GROUND IN ARIZONA

Arizona vineyards and wholesalers are still struggling to find a middle ground. The one bill standing, SB1276, proposes limited direct shipping that would allow internet sales from vineyards producing less than 50,000 gallons a year. The proposal was passed by the Senate and House Commerce Committee but has been delayed in the House Rules Committee until the opposing sides can reach a compromise. One possible deal would put a cap at 12,000 to 20,000 gallons a year, or about 5,000 to 8,000 cases.

GALLO RATED MOST POWERFUL IN WINE

Gallo was deemed the most powerful wine brand in the world by Intangible Business, an independent UK market research firm. A panel of five senior international beverage experts from Intangible measured the power of wine and spirits brands based on four “soft” and “hard” measures - including market share, price positioning, distribution, brand awareness and relevancy. Stuart Whitwell, managing director of Intangible Business, called Gallo a “standard bearer.”

It is the same research that placed Smirnoff at #1 one as the most powerful wine and spirits brand. Only ten wine brands made the list overall.

RUMORS EXAGGERATED ON GLAZER’S AND SW&S HOOKUP

The rumors that are circulating about Glazer’s and Southern Wine & Spirits are exaggerated, according to sources. Gazer’s has been in conversations with other people, much like other large wholesalers, as they all scramble to consolidate and maintain scale but not SW&S specifically.

A PEACHY ADDITION TO BACARDI SILVER

A-B is adding another flavor to the Bacardi Silver family, Bacardi Silver Peach. According to their statement, it is the first peach-flavored malt beverage available nationally and joins the strawberry, apple and watermelon flavors of the Bacardi Silver brand.

TENNESSE STATE PUSHING THE LOCAL WINE MARKET

A bill that just passed unanimously in the Tennessee House would allow wineries to sell as much of their product as they want on their propery, as long as they use 50% Tennessee-grown grapes. The companion bill passed the Senate last week and is on its way to Gov. Bredesen.

HE MAY HAVE LOST THE BATTLE, BUT FRANZIA PROMISES TO WIN THE WAR

Fred Franzia, creator of Two Buck Chuck, made a rare appearance before the press promising victory in the war for American consumers. "In 10 years you'll be astounded how few wineries will still be profitable and be in business," Franzia said Tuesday. "Bet on me. I'll pound these guys." At the conference, Franzia introduced his new brand, Harlow Ridge, and went to great lengths to persuade those present to drink more White Zinfandel. Despite the sometimes negative stigma attributed to Bronco - especially since the recent lawsuit with Napa Valley growers - it is the fourth largest U.S. wine company with little debt and growing attraction. Franzia believes that most Americans are not willing to spend much on wine. "No bottle of wine is worth more than $10, in my opinion." He called White Zinfandel the “American wine” because the prices haven’t changed, and pointed out that White Zinfandel is still America’s 3rd favorite wine by volume.

Franzia told the crowd that he doesn’t “want to see Americans buying wines from Australia” or Italy and wants “more Americans drinking wine from California.” He went on to compare the Australian wine industry’s current problems to the second tower of the World Trade Center after the airplane hit, saying, "Their internal structures are burning. They look OK on the outside, but they'll figure it out soon when they collapse like that tower."

BORDEAUX REGAINING INFLUENCE IN THE U.S.

Bordeaux imports are making a comeback with an almost 14% rise to 1.5 million cases in 2005. Shipment value is up 10.7%. The French Bordeaux region was outperformed by only the must smaller Alsace and Loire Valley regions.

Globally, Bordeaux exports fell 3% by volume last year and export value declined 4%. The UK and Germany were the hardest hit markets.

GLAZER’S TO MAKE A MOVE?

There’s been increased chatter about a potential hook up between Glazer’s and Southern Wine & Spirits. Indeed the Dallas Morning News confirms that it's in "potential transaction discussions with various players." Stay tuned for more.

SABMILLER USING EXPANSION TO STAY IN THE GAME

SABMiller is betting on worldwide expansion to drive company growth with a special emphasis on Asia. CEO Graham Mackay told investors today that he expects Asia to be the focus of acquisitions in the coming year, believing it to have more potential than any other region. The company is supposedly one of the favorite bidders in the race to purchase Foster’s Asian operations, along with their reported interest in Mohan Meakin of India. SABMiller is not the only brewery vying for a spot in Asia… A-B, InBev and Heineken aren’t too far behind. These major brewers need volume, and moving to the burgeoning Asian market seems to be a popular way of doing so.


The brewing giant posted an 8% rise in annual earnings and a 19% revenue increase for the fiscal year ending March 31. While the earnings were in line with forecasts, SABMiller advised caution due to severe price cutting in the U.S. and rising aluminum and energy costs. Global underlying beer volume was up 19%. "We are both cautious because of pricing and rising commodity costs mainly in the U.S. and also confident because of the momentum in the business," said Graham. Earnings were boosted by the five and a half months of results from their South American operation, Bavaria, and growth in Europe, Asia and South Africa. SABMiller is currently the market leader in Colombia, Peru, Ecuador and Panama.

THE UNOFFICAL ZIN OF CALIFORNIA

Zinfandel will no longer be considered as the official state wine of California. Sen. Carole Midgen amended her bill to declare zinfandel as “the historic wine of California” in a more toned down version. The revised proposal passed through a senate committee and could be taken up by the full senate as early as Thursday.

STATE AGs ASK FTC TO STUDY ALCOHOL ADS

A group of 20 state attorneys general, led by two from Utah and Main, has taken aim at the alcohol industry's advertising and marketing practices, asking the Federal Trade Commission to collect "updated data from alcohol advertisers, including data on expenditures, marketing practices and independent review procedures." The information they want regulators to get includes actual spending, both on traditional media advertising and various promotions, sponsorships and even product placement. The attorneys general are also requesting that the alcohol industry only advertise to audiences where 85% of the people are 21 and older. Currently, the industry adheres to a 70% self-imposed guideline.

"Alcoholism is a major pediatric disease in this nation," said Steve Rowe, the AG from Maine. "Young people are starting to drink at an earlier age and drinking more aggressively than ever before. We are troubled by this growing thirst for alcohol among young people. We believe this thirst is driven by a culture of drinking created in part by alcohol industry marketing." Pretty harsh.

However, the FTC has rejected the 85% standard before. In a report to Congress in 2003, the FTC said that while the proposed 85% threshold of a 21 plus audience would reduce underage exposure, it would also "prevent the companies from advertising in media where there is substantial adult interest." Ironically, the Center on Alcohol Marketing and Youth at Georgetown recently published a study that the number of youth exposed to alcohol advertising in magazines has dropped 31% from 2001 to 2004.

RETAIL WINE GIANT FINED FOR ILLEGAL WAREHOUSING

Sam’s Wine & Spirits, the largest wine retailer in the U.S., will pay $300,000 and shut its Chicago store for three days as a settlement with the state. According to Illinois officials, Sam’s violated the state’s liquor laws by illegally warehousing alcohol products, using an illegal third-party marketing company to extort money from distributors and illegally selling alcoholic beverages to liquor stores. As further punishment, store employees will attend a training seminar on selling and marketing alcoholic drinks along with signs posted at cash registers alerting patrons that Sam’s can’t sell to other retailers.

It is the largest fine ever made by the Illinois Liquor Control Commission and comes after a two year investigation into Sam’s business practices. The retailer will close Jan. 1-3 and will empty its 1760 N. Kingsbury warehouse of all alcoholic beverages by May 31. The agreement really only effects the Chicago stores at 1720 N. Marcey which does about $60 million in sales a year. Sam’s claims they did nothing wrong and is simply going along with the settlement so they can move on.

FOSTER’S SHEDDING VINEYARDS

Foster’s Group is reportedly on the brink of selling two wineries, Jamieson’s Run and Rothbury Estate, as a result of the Southcorp acquisition. The sell-off is expected to go for around $15 million, and Foster’s plans to keep the rights to the brands.

EU STRIVES TO SLOW GRAPE PRODUCTION

EU officials are proposing measures to help offset the damaging wine surplus in Europe by cutting down a chunk of EU vineyards, 400,000 hectares altogether. The reforms to help Europe’s wine industry are expected to be passed at a June 21 meeting of EU commissioners. The officials hope that by cutting out winery land, they can save the millions of dollars currently spent getting rid of unsold wine.

Furthermore, European countries that produce more wine, such as Italy and France, will receive more money in the future while lesser known countries will receive less funding, if the proposal is passed.

CELLAR DOOR COLLABORATES WITH THE HUNEEUS FAMILY

Cellar Door – a division of Pacific Wine Partners, a Constellation company – has added duo wines to their portfolio. The Chilean brand includes a 2005 Casablanca Valley Sauvignon Blanc and a 2003 Maipo Valley Cabernet Sauvignon-Merlot, available for $14.00.

BACARDI APPOINTS RIVAL EXECUTIVE

Former head of Moet Hennessy USA, John Esposito, is taking over Eduardo Sardiña’s position as president and CEO of Bacardi USA. Eduardo chose to retire after 33 years with Bacardi and more than a decade overseeing the company’s North American region. Bacardi was attracted to John’s experience with luxury brands at Moet Hennessy and felt he “understands how to manage premium brands,'' said Andreas Gembler, president and chief executive of Bacardi Ltd.

With thoughts of one day becoming a public company, Bacardi has broken away from tradition lately by hiring seasoned outside executives as an attempt to keep pace in the ever changing spirits industry. After all, recruiting knowledge and experience from the competition never hurts. John joined Moet Hennessy’s precursor, Schieffelin & Somerset, in 1992 and became president and chief in 1999.

VERMONT OPTS FOR LIMITED DIRECT SHIPPING

Last week Vermont Gov. Jim Douglas signed a bill allowing limited direct shipping of up to 12 cases annually. In-state and out-of-state wineries can now apply for a $300 direct shipping license and must file direct shipping, excise, and sales tax reports regularly. The law also requires a $200 self-distribution license that enables wineries to sell up to 2,000 gallons a year to first or second class licensees but no more than 40 gallons a month.

PETER CRESSY: DISCUS “HAS BEEN RECOGNIZED BY THE BUSINESS COMMUNITY.”

DISCUS was named today as a finalist in the American Business Awards “Best Corporate Social Responsibility Program” category for the spirits industry’s new system of public reporting on alcohol advertising complaints. DISCUS imposes a self-regulation process by sending out a semi-annual public report that details complaints against specific spirits advertisements which can be viewed at their website.

EFFEN VODKA JOINS THE INDIE 500

Effen vodka will sponsor the Effen Vodka Team Leader Special at the Indianapolis 500, piloted by veteran Stephan Gregoire. "To be a part of the Kent Baker/Greg Beck team which has fielded 15 Indianapolis 500 appearances between them, and then to bring a competitive driver like Stephan Gregoire on board, makes this an exciting opportunity for EFFEN Vodka," said Jon Deitelbaum, president and CEO of Planet 10 Spirits, owner of Effen.

TWO EXECUTIVE APPOINTMENTS FOR CASTLE BRANDS

US spirits group Castle Brands today announced two key executive appointments, John Soden and Seth Weinberg. John was named international managing director and will be in charge of international strategy at Castle Brands, along with international sales and marketing. Seth will serve in the new role of senior vice president and general counsel and will be responsible for securities, finance and corporate governance issues. Both men will report directly to Keith Bellinger, president and COO, and Mark Andrews, chairman and CEO.

BAILEYS LAUNCHE A NEW TV CAMPAIGN THIS SUMMER

Baileys Irish Cream is coming out with a new global television spot that began airing in the UK in December. Starting June in the U.S., the “Served Chilled” campaign will run on cable networks and will center on a California couple drinking Baileys and ice with friends. “Serve Chilled really brings to life the easy-going relationship that this couple has between each other and their friends, while showcasing great new ways of enjoying Baileys and ice,” said Ami-Lynn Bakshi, Baileys Brand Director. The spots seek to create relaxed drinking occasions for Baileys while also promoting drinking safety and designated driving.

FLORIDA VOTES NOT TO CAP WINE SALES

The Florida senate voted not to pass legislation that would have put a production cap on direct wine deliveries. Although the proposed bill was approved by the house, the Florida legislature completed its session without passing a bill on direct-to-consumer sales. As of now, Florida remains open for shipping under current regulations although another legislative attempt is likely to take place in 2007.

GRAPE EXPECTATIONS FOR THE 2006 HARVEST

Many wine experts believe the 2006 grape harvest will be lighter than the previous year for various reasons. Due to heavy rains, many of the early blooming chardonnay and pinot noir grapes lost buds while millions of other wine grapes – such as red varietals - were just coming out of hibernation and will probably fare better. Furthermore, history shows that after a record-breaking crop, a short crop is likely to come the following year, such as the 1997 and 1998 harvests that resulted from El Nino weather.

If the 2006 harvest does turn out smaller than grape demand will go up along with prices and retail business. Already California is enjoying growing success despite the recent gluts with a 13% increase in super premium and ultra premium wine. However, it is interesting to consider how much price drives consumer sales. If prices go up, than perhaps the less-than-seasoned wine drinker and/or 20-somethings will turn back to cheaper spirits and beer, especially the ever-growing import and craft brand segment.

OTHER CALIFORNIA COUNTIES FOLLOW NAPA’S NAMESAKE LAW

Now that Napa vintners won their lawsuit against Bronco, six other California counties are following. Sonoma, Mendocino, Monterey, San Benito, San Luis Obispo and Santa Barbara are pushing similar proposals that would require any wine label containing any of those names to be made with at least 75% grapes from that county. Current law requires that at least 75% of the grapes in a wine must come from the specific region in that wine’s title, but brands that started before July 7, 1986 are grandfathered in.

Senate Bill 1380, however, is set to change that grandfather clause and looks much like the California law passed in 2000 that was aimed solely at Napa. The main difference between the Napa law and SB 1380 is that the latter only protects county names, such as Napa County or Sonoma County. SB 1380 is currently on its way to the California state house.

OHIO DISTRIBUTORS TAKE A PROACTIVE STEP TO KEEP OUT COSTCO

Ohio distributors are taking a proactive step by getting their state’s alcohol laws in check before a Costco-type lawsuit comes sweeping through. The distributors are putting together legislation that will allow limited direct shipping from in-state and out-of-state wineries that sell less than 150,000 gallons a year. In addition, consumers would be prohibited from purchasing more than 24 cases of nine-liter bottles of wine in a year. This is a unique situation because they are seeking to prevent a lawsuit instead of waiting to deal with it once it arrives.

BEAM HIRES PUBLICIS DIALOG FOR EXPANDED BRANDS

Beam Global Spirits & Wine selected Publicis Dialog to act as its ad agency for former Allied Domecq brands that lately joined Beam’s portfolio. Under the agreement, Publicis will represent Canadian Club Canadian Whisky, Courvoisier Cognac, Sauza Tequila, Whisky DYC, Larios Dry Gin, Kuemmerling Bitters, Jacobi Brandy, Fundador Brandy, Teacher’s Scotch Whisky and Terry Centenario Brandy globally.

Beam’s heritage brands will continue to receive coverage by the Chicago-based Energy BBDO with expanded responsibilities. Jim Beam bourbon will be promoted in three new international markets - the U.K., Germany and Spain.

KANSAS COMPROMISE BILL SENT TO GOV. SEBELIUS

The Kansas governor is likely to okay a bill that will allow direct delivery and the selling of wine at the state fair. The Senate passed the compromise legislation 36-2 after the House approved it 87-36. If the governor approves the bill, wineries throughout the nation will be allowed to ship directly to consumers of age who made the purchase at the winery. The bill would also allow wineries to ship wine to a liquor store where the consumer could pick it up when it’s ordered by the phone or over the internet.

In addition, the compromise would also allow restaurant goers to take home an open, unfinished bottle of wine if it’s placed in a tamperproof transparent bag. Kansas law currently prohibits direct wine shipping of any sort, although its 13 “farm wineries” are allowed to deliver their products directly to retail stores.

BLAVOD EXPANDS ITS U.S. PRESENCE

Blavod Extreme Spirits announced today the continued expansion of their brand, El Diamante del Cielo Tequila, in Delaware, Georgia, Florida, Maryland, Massachusetts, New Jersey, West Virginia, Rhode Island, South Carolina and Pennsylvania. Diamante will expand to 230 stores in Pennsylvania, while Georgia’s Tower and Green’s retail store has added the full line of El Diamante. California’s Beverages and More also authorized El Diamante in its stores along with Blavod Black Vodka and Barocini Chianti wine.

The company’s wine portfolio achieved new distribution as well, including Zingari and Tebavio being added to Cost Plus World Market’s.

CHANGES TO COME AS WASHINGTON MORPHS INTO A PERMIT STATE

On July 1, two new wine shipment laws will be put into effect in Washington allowing both in-state and out-of-state wineries to ship directly to consumers. Washington retailers will also have the ability to receive beer and wine from out-of-state and in-state breweries and wineries. However, the laws sunset in two years.

The new laws turn Washington into a permit state, meaning that any licensed winery can obtain a wine shipper permit to ship to Washington consumers. The fee for a wine shipper permit is $100 unless the winery is already licensed with Washington as a Certificate of Approval for wine (COA). And there is no limit to how much wine may be shipped to a Washington consumer. Wine shipper permit holder and COA holders must report monthly on shipments made even if there are no sales, and shipping containers must contain language maintaining that the package cannot be delivered to anyone under 21.

COA holders and licensed out-of-state wineries and breweries may also ship to Washington retailers for $100 a pop. The COA must report monthly and pay the Washington Liquor Control Board taxes on all shipments, and must price post with Washington as a distributor, using their own employees. Washington retailers must hold an endorsement from the Liquor Control Board for each licensed retail location to receive direct shipments without a fee. COA holders and Washington wineries and breweries must post prices as a distributor by June 15 to be able to ship to Washington retailers by July 1. There is no price-posting requirement for sales directly to consumers, and as of press time, no brewers have elected to ship direct to retailers.

PERNOD’S SPIRITS UNIT DRIVE SALES

Thanks to the successful integration of the new Allied Domecq brands, Pernod’s sales were lifted by 67.4% in the first nine months of the year. However, organic growth in the third quarter fell to 1.5% compared to 4% in total from the start of the year. And despite the strong performance by Pernod’s new brands, total volume growth for the company was just 1% as the group’s wine business fell by 2.9% due to the Australian grape glut.


However, sales from 12 key brands – including Chivas Regal, Jameson, Martel and The Glenlivet – performed strongly with 7% sales growth since the start of the year, according to Pernod. This shows that the company is concentrating more on their premium brands and going along with consumer trends. Organic growth from its Americas division was up 7% due to a “good performance” in the US and strong sales in Venezuela and Central America. U.S. sales increased 4.9% for the nine-month period with improvements in the acquired Allied Domecq brands in the 3Q. Pernod reiterated its expectation for a 10%-15% growth for 2006.

THE EU MAKES A MOVE TO END OVERPRODUCTION

The EU is planning to reduce the amount of funding it gives to winemakers in order to help end wine overproduction. EU officials are asking that subsidies be divided between member states and not taken from a central pool, with the amount depending on previous levels of production. While traditional wine-producing countries like Italy and France will receive more funding over countries like Greece or Portugal, the new order will hopefully prevent countries from asking for further subsidies that feed overproduction. This will cause many countries to stop mass production and even abandon vineyards, ultimately driving up overall wine prices for countries in the EU.

BRONCO MOVES FORWARD AFTER RECENT LAWSUIT

Bronco Wine Co. is set to announce the launch of a new brand, Harlow Ridge, next week at an event in Napa. The new label looks a lot like Napa Ridge although most of the grapes come from the Lodi area. Bronco plans to continue selling Napa Ridge but will now use grapes from Napa Valley following the recent legal fight between Bronco and Napa vintners.

REPUBLIC BEVERAGE AND NATIONAL COMBINE

Republic Beverage and National Distributing Co. have reportedly made the first move in a possible merger. COOs Tom Cole of Republic and Charlie Andrews of National said they made a basic agreement towards combining the two companies in over 20 states which will likely come to pass sometime in the near future. This is becoming more and more of a trend amongst wine and spirits wholesalers and leads one to wonder, whose next? Glazer’s and Southern?

GLASS CLOSURES TO HIT NAPA

There’s a new type of wine closure to add to the list. Whitehall Lane Winery of Napa is the first winery in the world to seal its bottles with the Alcoa developed Vino-Seal, the company announced today. The Vino-Seal is a resealable glass closure secured by the traditional tin capsule and stands as an alternative to corks and synthetics. Its counterpart, Vino-Lok, is already being used in almost 350 wineries throughout Europe.

COCKTAIL INNOVATION, THE SMIRNOFF DREAM JOB

Smirnoff announced today the winner of their first ever nationwide cocktail consultant search, Cameron Bogue of Las Vegas. Reviewed by a panel of experts, amateur “cocktailians, culinary connoisseurs and entertaining experts” sent in applications, a three-minute long video, and their modern re-creation of the Smirnoff Moscow Mule. Cameron’s job basically consists of going around the country in order to find the hottest drink trends and serving as a media resource concerning cocktails. This is clearly an effort on Smirnoff’s side to lead the cocktail culture in innovation and discover new ways to reach 20 and 30-something consumers flocking to spirits.

CONSTELLATION: IF YOU BUILD IT, THEY WILL COME

Constellation Chief Richard Sands told listeners at the Goldman Sachs Consumer Products Symposium that he would rather build the company’s own premium spirits brands instead of acquiring expensive brands with an established name. “In this case we are saying if you cannot buy them, then build them," Sands said. "It is a better idea to buy evolving brands or build premium brands." This goes along with recent trends among American consumers trading up to premium, more expensive brands in place of their cheaper counterparts.

SEAGRAM’S REACHING OUT ON SHELVES

Seagram’s is adding a new flavor to their Seagram’s Smooth portfolio entitled Blue Banshee, a blue raspberry blend. Blue Banshee will be released in nightclubs, bars, grocery and c-stores in early 2006. Blue Banshee’s launch coincides with a new packaging design for the company where the bottles emphasize flavor and color, an attempt to make Seagram’s more noticeable in aisles. It’s all about flavor and package innovation today, and most mainstream wine and spirits companies are going along to meet consumer trends. Flavors such as grapefruit, blue raspberry and blueberry are popping up more than ever as consumers are more willing to experiment with brand choice and taste.

HISPANICS #1 FOR WINE CONSUMPTION AMONG ETHNIC GROUPS

Wine consumption among Hispanics is growing more than any other ethnic or consumer group. According to a survey issued by the Wine Market