HERRADURA'S CLOSING DATE PUSHED BACK

Brown-Forman and the owners of Casa Herradura have pushed back the closing date of B-F's acquisition to January 11, 2007. Originally the closing was set to occur by the end of December, but both parties agreed to a later date.

DEUTSCHE BANK DOWNGRADES REMY

Deutsche Bank has downgraded Rémy Cointreau's rating, warning that the company's stock is "fundamentally overvalued." Rémy shares have rallied by 20% since the company announced it was leaving Maxxium last month.

The bank reduced its coverage of the company to 'sell' from 'hold'.

STE. MICHELLE WELCOMES NEW CHILEAN RANGE

Washington's Ste. Michelle has added a Chilean range, Haras de Pirque, to its portfolio, becoming the wine-producer's sole importer into the U.S. beginning January 1.

Haras de Pirque’s wines, priced at $10-$55 and estimated at 6 million cases in the U.S., include Albis (a Bordeaux-style blend jointly produced with Tuscany’s Marchese Piero de Antinori); Elegance Cabernet Sauvignon; and Estate Sauvignon Blanc, Chardonnay, and Cabernet Sauvignon.

The new deal follows Ste. Michelle’s appointment as exclusive U.S. marketer of Antinori’s high-end portfolio, including Tignanello, Solaia, Tormaresca, Montenisa, Antinori California and Col Solare, under an agreement announced last spring.

FAMILY WINEMAKERS JOINS WITH WINE COMPLIANCE

Family Winemakers of California announced yesterday its partnership with WineCompliancePro, Inc., located in Napa, California, to provide automated compliance solutions, compliance consulting services and technology consulting services for direct-to-consumer wine sales. The partnership will provide members of Family Winemakers of California significant discounts for the use of WineCompliancePro.

"This fills an important need for wineries, particularly small producers, engaged in wine sales outside of California," said Paul Kronenberg, FWC President. "Cost effective compliance tools are essential for wineries intent on capitalizing on new markets opened up by the U.S. Supreme Court's decision that paved the way for more direct-to-consumer wine sales."

KENTUCKY WINE SHIPPING UP FOR REVIEW

The state of Kentucky will likely learn next week whether a new law limiting direct wine shipping will take effect Jan. 1 as planned.

U.S. District Judge Charles R. Simpson III ruled in August that portions of Kentucky’s existing law were unconstitutional under Granholm, which required face-to-face sales and prevented consumers from ordering wine via phone and the internet. Afterwards, the state appealed.

Now Judge Simpson is considering whether the state’s new law should be enforced as written.

If Judge Simpson rules that Kentucky's new law can't be enforced, than wineries across the county could start taking internet and telephone orders from Kentucky residents almost immediately.

DIAGEO'S INTEREST IN WINE "REALLY NOTHING NEW."

After making some comments to a German newspaper last weekend, Diageo is down-playing reports that suggest the spirits giant is eager to expand its wine portfolio soon.

Earlier this week Diageo pointed out that showing interest in the wine category was “really nothing new,” and that the company is certainly not limiting its investments solely to wine.

Wine is a much more difficult business to enter due to the uncertainties that come with grape harvesting. So it makes sense that several reports are suggesting that Diageo is also eager to add another Bourbon brand, as the company only currently owns one (Bulleit Bourbon).

Nevertheless, all future investments are limited to “something that is growing faster than our current portfolio," stated Chief Paul Walsh. "On top of that, it has to produce a return over three or four years that is higher than our cost of capital."

US GOVERNMENT STUDY FINDS UNDERAGE DRINKING IN DECLINE

In a press release yesterday, DISCUS senior vp, Frank Coleman, issued these encouraging statements regarding the US government study "Monitoring the Future":

“The US government today reported that a Monitoring the Future Survey, one of the principal measures of underage drinking, continued to find a decline in underage drinking in 2006.

“While encouraged by these findings, the Distilled Spirits Council believes that any amount of underage drinking is too much and that all interested parties need to continue to work together to stop illegal access to alcohol by youth.”

Mr. Coleman told WSD that according to Monitoring the Future, "underage drinking has generally declined in 2001-2005."

NEW WINE DIRECTOR JOINS WILLIAM GRANT & SONS

Veteran wine importer Martin Sinkoff has jointed William Grant & Sons USA as wine director, the company announced today.

"We are truly thrilled to be hiring someone with Martin's experience and passion," says Phil West, senior vp, marketing William Grant & Sons USA. "His extensive wine knowledge and understanding of the marketplace further strengthens our ability to build world class wine brands."

Sinkoff will report directly to West and will be responsible for determining the company's overall wine strategy and leading its wine marketing activities.

CAMY BLAMES INCREASED ALCOHOL EXPOSURE ON CABLE

It seems like we see a new study like this almost every week, but we suppose it’s always worth covering. According to a new study (Growing After All These Years: Youth Exposure to Alcohol Ads on TV 2001-2005) released today by the Center on Alcohol Marketing and Youth (CAMY) at Georgetown University, underage exposure to alcohol advertising on television grew “substantially” from 2001 to 2005.

The study traces the heightened exposure to “an historic increase in alcohol advertising on cable television, particularly by distilled spirits companies.”

"More spending on television, especially on cable, translates into kids seeing more and more alcohol ads," said David Jernigan, executive director of CAMY. "Twenty state attorneys general and the Institute of Medicine have said the alcohol industry needs to do a better job of shielding our kids from its advertising."

HAVE CRITTER LABELS SEEN THEIR DAY?

The influx of critter brands has been huge over the past couple of years, ever since a little brand called Yellow Tail (you may have heard of it) made a not-so-little impact in the U.S. – and now everybody wants a piece of the animal pie.

Or do they? WSD predicts that 2007 will be the beginning of the end when it comes to critter labels, although some might argue the end has already begun. But before we delve into our theory, let’s take a look at the record breaking numbers these cuddly labels have generated.

In March of 2006, ACNielsen put out a report dealing directly with our delectable friends. Not surprising, but shocking nonetheless, the study found that 77 (18%) of the 438 sustainable table wine brands introduced in the past three years feature animals on the bottle.

In combination with existing critter labels, sales of critter-branded wine reached over $600 million while new critter brands alone accumulated $74 million. In fact, the critter labels among the top 125 table wine brands account for almost 15% of category sales in food stores and outsell non-critter brands more than 2.5 to 1.

It’s not just that they’re cute to look at. About 5% of Critter labels tend to be priced at a slight premium as compared to traditional table wine, but are sold more on promotion and featured in displays than the rest of the category. There’s certainly a sizable consumer segment (usually millennials) that prefer the easy-to-read, colorful appeal that critter brands bring.

So case in point, most critter labels aren’t hurting for scratch. And who benefited the most from critter labels’ phenomenal success? Why Yellow Tail of course. For the first time an Australian import (Yellow Tail) became the top overall wine in dollar sales in the U.S. – a spot that was previously reserved for Beringer or Kendall Jackson. Remarkably, Yellow Tail produced sales of $621 million in 2005, up from its third place position in 2004, and accounts for 11% of the imported table wine market by volume.

But where there’s popularity, a backlash is sure to follow.

“It’s not just about the Yellow Tail and the critter label brands. It’s about quality. It’s about what’s inside the bottle, not necessarily outside – although packaging is a part of marketing,” said Scott McWilliam of McWilliam’s Winery.

He pointed out that nowadays, going into the wine aisle is like going to the zoo, and called critter labels “roadkill.”

Certainly there are others in the industry that follows Scott’s sentiments. WSD suspects that consumers may eventually turn from the familiar critter-faced labels to something they perceive as superior, perhaps returning to the labels of yore. According to an article in San Francisco Chronicle, even Constellation is turning its back on critter brands.

The company “has started speaking not in terms of an animal category but instead of ‘adventure labels,’ which lump emus and moose together with such brands as Twin Fin, which features surfboards and a convertible on the beach,” wrote Jon Bonne, wine editor of San Francisco Chronicle.

Critter labels have catapulted consumers, and vintners, into a new wave of advertising for the wine industry. They have taught consumers to purchase wine as an extension of their own personality, which may eventually end up hurting those now mainstream brands once consumers start looking for the next big thing. Today’s consumers are looking to trade up, to purchase goods that stand alone and hopefully above what their friends and peers buy. Once the product no longer defines them as an individual, they will look elsewhere.

It’s true, great packaging is vital, but once the label becomes more important than the wine inside, the brand is going to have problems – at least in the long-term. Thankfully, critter labels have succeeded in making wine a more mainstream, popular product while simultaneously launching a new wave of easy to drink wines. They’ve also served as an outlet for excess wine as many countries in the industry have faced grape gluts (but that’s a whole other article).

We think in the future, wine companies will likely opt for simpler, perhaps classier labels to stand out among the hundreds of critter brands roaming the aisles. In a way, critter brands serve as a gateway wine. They’re great for reeling consumers into the category, but once a wine-drinker learns more about what’s out there, they’ll likely move onto more sophisticated labels.

PLANNING FOR ABSOLUT IN ’07

With the holidays upon us and cheer in the air, we can’t help but wonder how the big boys will fair. Yes, rhymes are cheesy, but we got your attention didn’t we? In the next couple of days WSD plans on taking a look at the issues facing us in 2007, and what the heads of the companies have to say (if anything at all).

The one acquisition that is most on everybody’s mind is V&S-run Absolut, especially since the Swedish government announced last week that Absolut would definitely go for sale.

FORTUNE. WSD predicts that Fortune’s alcohol beverage division, Beam Wine and Spirits, is one of the most likely candidates, and here’s why. For starters, Beam lacks a major vodka brand of its own and Absolut ranks as the 2nd most popular premium vodka in the world (which is why Wall Street analysts are estimating that Absolut could go for as much as $4 billion). Also, Beam already imports and distributes Absolut in the U.S. as a part of the MAXXIUM distribution agreement.

ANHEUSER-BUSCH. Another likely contender? Believe it or not, Anheuser-Busch. We think A-B is at least looking into Absolut, which would make a very interesting acquisition indeed. As most of you know, the beer industry has seen better days and A-B’s newest chief, August Busch IV, has expressed interest in entering the premium spirits market.

[Ed. Note: We believe wine is another viable option for the beer giant, but the wine industry is much trickier than spirits, which would provide a much steadier and fatter profit stream.]

And of course there’s a good chance that Pernod, Constellation or Brown-Forman could make the ultimate move – and who’s to say that it couldn’t happen – but for some reason we’re not as convinced.

PERNOD. We know Pernod would love to gets its hands on a nice premium vodka, but we feel like tequila might be more of an interest for the French company. If it were truly interested in adding Absolut, Pernod would probably have to relax its Stolichnaya distribution according to analysts.

BROWN-FORMAN. With the recent purchase of Herradura, Brown-Forman has been in a fairly acquisitive mood lately, and has also shown interest in Absolut.

CONSTELLATION. WSD feels confident that Constellation is still interested in beefing up its premium spirits portfolio, but recent mergers/acquisitions (Mondavi and Vincor) might prevent the company from taking over Absolut.

Chief Richard Sands confirmed last month that the company is keeping a close eye on Absolut, but stated:

“It’s just one out of many potential opportunities. The other ones aren't as public.”

He also claimed that Constellation has “the financial capacity to make additional acquisitions,” but that its strategic value had to be up to par.

DIAGEO. What about King Diageo? Well, the company would likely be prevented from purchasing Absolut because of anti-trust issues due to Smirnoff’s 27% global share.

CHARMER SUNBELT STRENGTHENS HR

Charmer Sunbelt Group has made a few changes to its human resources department by promoting Ann Giambusso to executive vp of HR (effective Jan. 1). Ann will join Diana Carrasquillo who was appointed Oct. 1 to serve as director of corporate benefits. Congratulations to both.

In a press-release, the company claimed that the “continued development of the corporate HR department reflects the Company's investment in what vice chairman and CEO Charles Merinoff considers to be CSG's greatest asset - its people.”

ALCOHOL BEVERAGES UP 2.3%

Bureau of Labor Statistics said consumers paid 2.3% more for alcohol beverages in November than they did a year earlier. That's the same price increase as nonalcoholic beverages and beverage materials, but higher than the 2% increase in all items purchased by consumers.

DIAGEO’S PAUL WALSH HAS WINE ON THE BRAIN

The time is ripe for mergers and acquisitions as almost all alcohol beverage companies are currently looking to get more involved in whichever sector they currently hold a minority stake. A-B and Constellation is leaning towards spirits, while Diageo is looking at wine.

Diageo chief Paul Walsh told Germany’s Handelsblatt newspaper in an interview released Sunday:


"We already bought the Chalone group in California. There will be a whole lot of these opportunities and we will make these acquisitions."

As Reuters pointed out, Diageo generally prefers to grow internally versus taking on acquisitions, which Walsh touched on in the interview.

"We'll only buy something that is growing faster than our current portfolio. On top of that, it has to produce a return over three or four years that is higher than our cost of capital.”

GROWING SHARES MAY PROMPT FORTUNE TO SPLIT

Speculation alert: Shares of Fortune Brands have grown rapidly from June to Dec. 13, prompting speculation that Fortune may split in two.

Spirits, led by Jim Beam, could combine with the golf business, while home and hardware would be “spun off to shareholder,” according to Business Week.

RESTAURANT WINE PROMOTIONS THAT WORK

When it comes to selling wine in restaurants, what promotions work? Not all advertising is profitable, and some of the results might surprise you, as they did us.

A 12-week study conducted by Brian Wansink Ph.D., director of the Cornell University Food and Brand Lab, and other researchers was aimed at uncovering what kind of effect various table-tent wine promotions have on restaurant wine sales. The study took place in two restaurants of the Texas chain, Rockfish Seafood Grill, 22 miles apart in Houston.

Not shocking, but worth reiterating: more recommendations equal more wine sales. Getting waiters and sommeliers to recommend a wine brand is like putting gold straight in the brand-owner’s pocket.

[Ed. Note: In a recent conversation with a beer-distributor-turned-wine-wholesaler, he observed that wine sales are largely influenced by the people selling it, rather than by mega-branding, hence the abundance of small brands. If a waiter at a restaurant, wine editor, or a trusted friend recommends a brand, chances are consumers are going to try it.]

According to the study, if a wine company promotes five wines, those promotions will increase sales by 39% without "cannibalizing" other wines.

Be careful, though, since promotions CAN cannibalize. Out of the wines that were promoted, between 69-87% of sales came from other wines that patrons would have ordered anyway. The study’s recommendation? Stick to promoting higher-margin wines, mid-priced or above, and avoiding margin-cutting price promotions.

But if you’re going to promote, why not do it in bulk. The study showed that a table-tent promotion of five wines increased its sales more than promotions recommending a single wine or three, spurring a 39% increase for the five featured wines, a 12% increase in overall sales and a 4% increase in total restaurant sales.

Big on food and wine pairings? Keep it small, according to a study co-authored by Collin Payne. Suggested wine and food pairings are effective, but only in small doses. More than three wine recommendations "and people give up.” Table-tents featuring five food and wine pairings decreased wine sales by 11% and all other wine sales by 14%, perhaps because the excessive choices confused and/or intimidated diners.

Offering wine tastings, however, is a great way to push sales. In fact, not only did the study find that two-ounce tasting portions increase sales by 18-47%, but more the merrier. The single tasting promotion increased subsequent sales of full glasses by 18.2%, but when five tastes were offered, the total increase in sales for all five wines grew an astonishing 47.3% week on week.

FRED FRANZIA ISSUING COPYCAT LABELS?

Fred Franzia has done it again, managing to strike controversy virtually every time his highly successful company, Bronco Wine, puts out a new brand. This time, however, the brawl is not with Napa wineries.

After spending six years in court unsuccessfully fighting for the right to use “Napa” in the name of several brands whose grapes did not originate from Napa Valley, Franzia has moved his irksome ways down south. His latest brand, Santa Barbara Landing ($4.99 at Trader Joe’s), is accused of featuring a label that strongly resembles that of Santa Barbara Winery, which goes for a much more expensive $14.

True, copycat labels are somewhat common but that doesn’t make them any less forgivable. Santa Barbara Winery seems to agree. In a press-release issued last week, the winery’s proprietor Pierre Lafond said:

“These producers hope to ride on Santa Barbara's reputation and perceived consumer ignorance.”

Bronco claims innocence, however, claiming the labels are not that similar. Company spokesman Harvey Posert was quoted in the San Francisco Chronicle saying:

"If you look at the labels, they're really not alike. We think it's unlikely that anyone would mistake it. We're suggesting that people buy one bottle of each and taste it and see whether they like the $4.99 Santa Barbara Landing wine or the other wine."

You got to hand it to him. Franzia sure knows how to keep things interesting.

KENDALL JACKSON RUFFLING THE LOCALS

Kendall-Jackson has once again made plans for a wine grape processing facility in rural Knights Valley after an earlier version met with neighborhood resistance, according to the Press-Democrat.

Last week the wine giant issued a scaled-down proposal to build a larger boutique winery and tasting room in Knights Valley after failing to gain acceptance from locals over a year ago.

K-J has agreed to move the winery up the hill and away from the road, but continues with their plan to erect a tasting room (1,000 sq. ft. and open to the public). The tasting room will likely remain the community’s biggest objection since they pride themselves on maintaining an agricultural and rural neighborhood.

A community meeting will be held next month to further discuss the proposal.

On a side note, Jess Jackson was awarded “Man of the Year” by Wine Enthusiast Magazine. Congratulations!

VINCOR’S GOING TO THE OLYMPICS

Vincor Canada, a unit of Constellation, announced yesterday it has secured a sponsorship deal with the country’s Olympic and Paralympic Winter games in 2010, along with sponsoring the Canadian Olympic team for the games in Beijing in 2008 and London in 2012.

Two varietals in Vincor’s super-premium price segment will make up the co-branded offering, while the official ‘Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games’ (VANOC) emblem will also appear on wines from Inniskillin, Jackson-Triggs, Sawmill Creek, Naked Grape, Nk’Mip Cellars, Sumac Ridge and See Ya Later Ranch.

The sponsorship, which makes Vincor the official supplier in the wine category, will be staged over the next six years and will include on- and off-trade promotions, visibility at Olympic venues and VANOC events, hospitality programs, entertainment and corporate gifting opportunities.

PERNOD GETS ‘SENSIBLE.’

Pernod is going above and beyond the regulation requirements in the E.U. by extending a warning display to pregnant women.

The wine and spirits company plans to put warning labels to pregnant women on its wine and spirits brands throughout the E.U., where it is already mandatory in France but not in other E.U. countries. The label will be progressively added to the back of all Pernod products from the first half of 2007, and as label stocks are depleted.

Pernod also plans to release a message promoting “sensible consumption” in all of the company’s international advertising campaigns.

CHINA IS WHERE IT’S AT

Reuters reports that wine and spirits firm Moet Hennessy, majority-owned by French fashion powerhouse LVMH , is in talks to buy into top Chinese liquor maker Jiannanchun.

Jiannanchun owns China's second-biggest brand of baijiu -- a grain and sorghum-based alcohol whose name means "white liquor.” The two companies are still in negotiations.

On Tuesday WSD reported that Diageo has also announced plans to buy a minority steak in another Chinese baijiu maker, Sichuan Quanxing Group.

WINE INDUSTRY PETITIONS FOR TRUTH IN LABELING

Representatives from wine regions around the globe have joined together to further reinforce truth in labeling laws with consumers. In effort to gain support, members of the wine industry have launched the Wine Place & Origins online petition today (December 15), asserting the importance of location to wine.

Much like the recent rulings by the U.S. Supreme Court, the California Supreme Court and the California Legislature, the petition hopes to emphasize the importance of accurately citing where grapes are grown on wine labels.

"Wine is now a $100 billion global industry and consumers worldwide should not settle for anything but authentic, unique products. Accurate labeling is critical to ensuring consumers of a wine's unique qualities and attributes to help them make an informed buying decision," said Linda Reiff, executive director of Napa Valley Vintners.

A new national survey released last week shows that an overwhelming majority of consumers believe location matters. Conducted by Fairbank, Maslin & Associates, the poll's key findings show that 85% believe that the region or location where a wine comes from is an important factor in their purchasing decision.

The petition was initially signed by the seven regions of Champagne (France), Jerez (Spain), Napa Valley (California), Porto (Portugal), Oregon, Walla Walla and Washington State.

DISSENSION ERRUPTS IN PENNSYLVANIA LIQUOR BOARD

Former Pennsylvania State Senator Joe Conti was named CEO of the Pennsylvania Liquor Control Board PLCB), but not without some criticism. PLCB Chairman Jonathan Newman loudly opposes the appointment, initiated by Gov. Ed Rendell and confirmed by two other members of the board, on the grounds that more steps should have been taken. Newman claims that there should have been public awareness and a nationwide search to fill the position.

In a statement, Newman said he was “very uncomfortable with the process” and added that he did not “believe it appropriate for the PLCB to pay an unprecedented $150,000 in the style and manner in which this was done.”

A spokesperson for Rendell, however, said the appointment did not happen overnight and that the PLCB has discussed the possibility of creating a CEO position for years.

Newman isn’t alone in his criticism. Three ranking members of the state assembly that oversee the PLCB also disagree with the hiring.

Senator John Rafferty and Representatives Ron Raymond and Robert Donatucci wrote that “if such a position is created, we no longer understand the significance of the board.” They also noted that they knew of no other instances in which a board created by the legislature operated with a CEO.

RUSSIAN STANDARD DROPS $3M FOR DOMAIN

Russian Standard, producer of the Imperia brand, is moving fast to make an imprint on the U.S. vodka market. In addition to its recent lawsuit against Pernod’s Stolichnaya vodka, Russian Standard dropped a whopping $3 million for the internet domain name vodka.com, confirmed yesterday.

Russian billionaire Roustam Tariko purchased the name from an undisclosed seller through the web domain brokering company sedo.com (part of Germany's United Internet AG). The purchase goes does as one of the highest prices ever paid for generic domain. According to CNN Money, diamond.com reportedly sold for $7.5 million to jewelry retailer Ice.com in May.

WINE CATEGORY GROWING STRONG, BIG THREE TRAILING

IRI numbers indicate that the table wine category rose by 10% in the 4-week period ending December 3, according to Merrill Lynch’s Christine Farkas.

Table wine category dollar sales rose 9.8% (similar to 10.7% in October and 10.1% YTD) despite a tough comp (10.5%).

Table wine volumes rose 5.5% in November, accelerating slightly from last month's growth of 5.3%. As was expected, volumes showed the most growth in premium and super-premium brands, partially offset by low-end brand declines.

By contrast, favorable mix growth slowed due to tough comparisons, but the table wine category enjoyed a good 4.1% price/mix gain to $5.47/bottle (higher than in Oct. but growth rate slowed).

Low-end brands continue to benefit from trading up from jugs to bottles, while mid-tier brand pricing is modest and super-premium pricing is up, likely from mix.

Volumes of wines priced below $15 /bottle rose by 20.5% in November, along with an 18.1% gain in the $12-$15 segment and a 7.8% rise in the $9-$12 segment. Volumes in the $5.50-$9 segment grew by 10.5% while volumes in the $3-$5.49 and below $3 segments rose by 3.4% and 2%.

The major wine companies are still trailing category growth, however, comparable to domestic brewers. With the entire category up 5.5%, Gallo Family Vineyards, Constellation Brands and the Wine Group experienced November volume growth of 0.7%, 1.7% and 7.5% respectively.

ABSOLUT PARTY IN LAS VEGAS

Absolut vodka and Esquire magazine announce the opening of the 'Find Your Flavor' suite at Caesars Palace in Las Vegas. Designed and constructed by the esteemed Rockwell Group, the bi-level, 1,380 square foot Absolut-inspired suite is divided into six spacious and colorful areas representing six of Absolut’s most popular flavors.

KROGER ADOPTS NEW WAY TO UP SALES

Vestcom’s AdTags are a new way to grab consumers’ attention, or so they claim. Kroger has announced plans to use the colorful, shelf-edge labels to increase sales of beer, wine and spirits by combining the brand’s product image and advertising message with a retailer’s price and bar code.

The AdTags are supposed to increase sales at the point of decision by combining full-color graphics and SKU-specific messages that can be attached to the shelf edge for high visibility.

Kicking off the expansion in Kroger stores are campaigns for the Bass and Stella brands from InBev, the Ebenezer and Red Hook brands from Gambrinus and Mike’s Hard Lemonade.

WOOD CHIP BAN MAY NOT HAPPEN

The French regulatory body for AOC wines, the INAO (Institut National des Appellations d’Origine), may not sign the wood chip ban after all.

The organization is going through a restructuring process to focus more closely on quality control, which has led to speculation that the INAO’s recent ban on wood chips in AOC winemaking may not hold up.

The group’s reorganization, along with France’s impending election, might be reason enough to keep the Minister for Agriculture, Dominique Bussereau, from signing the decree. At this point nothing is final, but we’ll keep you posted.

POLITICIAN AIMS TO UPHOLD THE PASO NAME

The Paso Robles AVA has a new hero. California Assemblyman Sam Blakeslee introduced new legislation earlier this week to create a labeling law to protect, and promote, the Paso Robles name. His bill, AB 87, would require vintners that use a Paso Robles “sub” appellation on their labels to also include Paso Robles AVA on the bottle.

Currently, the Paso Robles AVA is being divided into smaller, more distinctive viticultural areas, which some insiders fear will eventually take away from the Paso Robles winegrowing area and confuse consumers. Winegrowers in Paso Robles have been working on a proposal for "sub" AVAs for several months and a filing will likely be submitted to the U.S. Department of Treasury's Alcohol and Tobacco Tax and Trade Bureau within a few weeks, according to winebusiness.com.

The executive director of Paso Robles Wine Alliance, Stacy Jacob, welcomed the news, saying the Alliance had received support for the proposal from the Wine Institute, CAWG (California Association of Winegrape Growers) Family Winemakers, and the Napa Valley Vintners Association.

The recent increase in AVAs comes at a time when regional associations are trying to gain control of their marketing. Global competition and dwindling grape prices has made it imperative that vintners and growers find a way to make their regions stand out, as seen with Sonoma, Paso Robles and Mendocino. In fact, there are now roughly 200 AVAs in North America, but most consumers barely know what an AVA is. That’s why regional associations will have to get more involved in educating consumers about AVAs and their importance.

SWEDEN: EVERYTHING MUST GO

Good news for Brown-Forman, Beam Global, A-B and Pernod among others. The Swedish government has made it official by announcing that V&S Group, owner of Absolut vodka, will be among the six state-controlled companies the government plans to offload. After coming into power in September, the center-right government announced today (Dec. 14) its plans to sell V&S, while insisting there was no new details on the actual privatization.

When will it take place? Unfortunately, no timeframe was given. Before the sale can actually take place, the Swedish government will need to get the approval from the country’s parliament.

CASHING IN ON THE MOJITO CRAZE

Daily’s, a cocktail and mixer company, announces the Perfect Mojitos Made Easy promotion that will run January through March, 2007. The program will provide both on and off-premise accounts with materials designed to promote the product, including table tends and recipe cards for “contemporary” cocktails such as the Daily’s Cosmojitos and Perfect Pom Mojito. Off-premise accounts will receive POS materials including case cards, shelf-talkers and pre-packed neckers with recipes.

Daily’s Mojito mix is available nationally in a 1.0L size. The suggested retail price is between $3.49 and $3.99 a bottle.

IT’S GOOD FOR YOUR HEART, SO DRINK MORE OF IT

In our opinion, that would work as a great tagline for this new wine label. UK supermarket chain Sainsbury is cashing in on health claims by launching a new wine, entitled ‘Red Heart,’ that has high levels of anti-oxidants, made from Cabernet Sauvignon and Petit Verdot grapes. The blend will be available in stores starting December 1, priced at $7.38.

Private label wines are an especially popular sector in recent years as many of the major wine growing regions have experienced record-breaking grape surpluses. Combine that with the notion that wine is healthy, and you’ve got a recipe for success.

TONY SINCLAIR FEATURED ON USA NETWORK

Diageo’s Tanqueray gin has partnered with USA Network for a custom sponsorship campaign featuring Tony Sinclair, Tanqueray’s fictional spokesperson. The Tanqueray sponsorship, which runs from December 11-21, will feature scripted live-action promos where the characters behind some of the country’s most memorable brands share their background story.

Tanqueray is the number-two gin brand in the U.S., generating 1.4 million cases in a category that has struggled to hold its ground over the past five years. (WSD is expecting a comeback soon though, just wait and see.)

DIAGEO GETS A PIECE OF THE PIE

Diageo has purchased a 43% stake in local Chinese distiller Sichuan Quanxing Group, a leader in the super-premium tier of the Chinese white spirits, or “baijiu,” category with its Shui Jing Fang brand. Financial terms of the deal weren’t released, but under the agreement the two parties will establish a joint venture through which Diageo will become the exclusive global distributor of Shui Jing Fang.

In the past couple of years it seems everyone wants a piece of the Chinese alcohol beverage market. Companies like SABMiller, Anheuser-Busch and Diageo are betting that the burgeoning Chinese middle-class will eventually increase their demand for alcohol, and make them some money.

STZ TAPS INTO CONSUMER DESIRE FOR CHANGE

Centerra Wine Company, a division of Constellation Wines, is planning to launch a new drink which combines brandy, vodka and vanilla across the U.S. in both the on- and off-premise. The drink can be consumed either by itself or as part of a cocktail, according to the company.

In the U.S. off-trade, Kajmir will be available in 750ml, 375ml and 50ml sizes, with the largest bottle being sold at $18.99.

A print advertising campaign in consumer magazines will follow in the spring.

BACARDI WELCOMES ITS LATEST PREMIUM VODKA

It’s final. Shareholders have accepted Bacardi’s offer to acquire the New Zealand spirits company 42 Below, much to Bacardi’s satisfaction. The spirits company confirmed yesterday it had received shareholder acceptance for the $91 million purchase.

Bacardi said it plans to begin the compulsory acquisition of the shares for which it does not receive acceptances by Friday (15 December), after receiving the “okay” from shareholders for 90% of shares of 42 Below.

PERNOD UPPING PRICE OF JAMESON

Pernod Ricard plans to gradually increase the price of its Jameson Irish whiskey brand on a global scale as a 25% to 35% premium to standard Scotch. Now that Pernod has Ballantine’s, a stand Scotch formerly belonging to Allied Domecq, the French company is interested in accelerating Jameson’s image as a premium brand.

Jameson has been one of the world’s fastest-growing premium spirits brands in recent years. It rose 13% to 1.95 million cases in 2005, after enduring a five-year period in which it averaged 9% growth.

Jameson, currently priced at an average of around $25 per 750-ml., sells more than 300,000 cases annually in the U.S. market and accounts for around 85% of all Irish whiskey sales in the U.S. along with it’s former stablemate Bushmills (which Pernod sold to Diageo as a part of the Allied deal).

SO CLOSE THEY CAN ALMOST SMELL IT. What else is in the mix? Pernod is reportedly just moments away from purchasing Stolichnaya from Russia’s S.P.I. group for a whopping $2 billion. The French drinks company acquired the distribution rights to Stolichnaya from Allied Domecq almost a year and a half ago, but now wants the popular vodka brand all to themselves.

"We are almost convinced that we will be able to acquire the rights to Stolichnaya," the head of Pernod’s U.S. division, Alain Barbet, told Bloomberg. "This will possibly take several weeks or months."

Why is Pernod so sure? It makes commercial sense. S.P.I. bought Stoli for about $300,000 and could now sell it for up to $2 billion.

REMY NOT FOR SALE, OR SO THEY SAY

What’s to come of Remy? Since announcing plans to pull out of the MAXXIUM venture by March 2009, the French wine and spirits group has risen almost 7% thanks to rekindled takeover speculation. However, the company explicitly denies any acquisition rumors.

"Remy is a group with a majority shareholder, both in terms of shares and voting rights, and we are not the target of a takeover bid," chairwoman Dominique Heriard Dubreuil stated. Her family has 55% percent of the capital and 62% of the votes in Remy Cointreau, but whether or not the family will vote to keep Remy independent is unclear.

Remy claimed once again that the decision to pull out of Maxxium would enable it to consider alternative distribution options in priority markets such as Asia – and nothing else.

Many analysts, however, seem certain that Remy will soon be the subject of a takeover bid. Possible interested parties? If Remy, or part of Remy, does come up for sale, many are speculating that Brown-Forman, Bacardi, Constellation Brands and Diageo are all possible contenders.

Quitting Maxxium removes a poison pill for any bidder, and could indicate that the family is prepared to explore other options.

In its first-half conference call, Remy said it will pay a $316.5 million pretax penalty payment in 2009 to its Maxxium distribution j-v partners (V&S, Edrington Group and Beam Global). First-half net profit rose 76.5%, while current operating profit rose 12.8%.

CALIFORNIA WINERIES SALUTE MOTHER EARTH

California wineries are taking steps in the right direction towards environmentally friendly agricultural practices. According to the 2006 Progress Report from the California Sustainable Winegrowing Alliance (CSWA), established by the Wine Institute and the California Association of Winegrape Growers (CAWG), more wineries and vineyard businesses are willing to adopt “green practices.” In fact, there has been a 24% increase since 2004.

At a press event in San Francisco, industry insiders put environmental issues at the forefront.

"We're talking about the important way the state's vintners and growers contribute to the environmental and economic leadership of California," said Bobby Koch, president and CEO of Wine Institute at the event. "We want to continue to be known for growing world class wines. We also want to be known for the way in which we grow them.”

Wine Institute and CAWG launched the California Sustainable Winegrowing Program in 2002 to help the state earn a reputation as a leader in the adoption of sustainable winegrowing practices, as well as promote social responsibility in the state's wine community.

CALIFORNIA WINE, AN AFFORDABLE LUXURY

With all the complaints of bulk wine shipments lately, it’s easy to forget just how good California has it.

The consumer trend of “trading up” has taken a positive toll on California wine as it continues to dominate the premium category of bottles costing $15 and up, according to an economic study released Thursday by MKF Research. Good news for California, especially since the premium and super-premium wine sector is only expected to grow.

Based on 2005 sales, the study found that California has cornered about 85% of the U.S. market for the $15 and up sector, which may be one reason why the industry generated nearly $52 billion last year for the California economy, the report said.

The sub-premium sector is where the problem lies. California wines are losing out to imports in the under-$8 segment, especially critter labels (Yellow Tail), that often attracts younger buyers. It’s for that reason that imports account for about 27% of wine consumed in the U.S., up from 18% in 1998, according to MKF.

WINE ISN’T SCARY ANYMORE. If you haven’t noticed, wine has slowly become a drink for the masses, and it all has to do with its presentation. Marketing is everything.

Yellow Tail. Red Bicycle. Little Penguin. Smoking Loon. The latest group of imports is making waves here at home with its clever marketing and catchy appearances. The new labels featuring wild colors, names and pictures appeal mostly to younger generations, like millennials – so much so that companies like Kendall Jackson and The Wine Group have launched divisions designed specifically to market to that age group.

The leading importer in 2005 was Italy, according to the report, and Australia was second, largely because of the popularity of Yellow Tail wines that sold about 8 million cases in the U.S. last year. The countries with the biggest growth in imports were New Zealand and South Africa, but each represents less than 1% of wine sales in the U.S.

HARDY WINE “SHUTTLES” TO A SPORTING EVENT NEAR YOU

Constellation Brand’s Australian division, Hardy Wine Company, is going the convenience route with its latest release, the “shuttle” – a 187 ml single serve acrylic wine bottle that has a plastic wine glass attached to the cap. The new package is topped with a screw-cap closure that unhooks the glass once the bottle is opened.

The “shuttle,” which is available under Hardy’s Shiraz and Chardonnay varietals, will be sold at the Australian Grand Prix in Melbourne next year and tested in the United Kingdom market. It’s marketed mainly towards outdoor activities and/or sporting events.

ANDRES WINES MAKES A NAME-CHANGE

Canadian-based Andrés Wines went back to its roots in September after the company’s shareholders voted to change its name to Andrew Peller Ltd. The name-change is a tribute to the company’s founder, Andrew Peller, who launched the company in 1961.

Andrew Peller brands include “value-priced” products Hochtaler, Schloss Laderheim and Baby Duck, and premium brands Thirty Bench, Sandhill and Red Rooster. The latter three brands were acquired in 2005 as a part of a strategy to help improve Andrew Peller’s spot in the premium category.

NATIONAL COMPLETES ITS SALE TO GLAZER’S

National Wine & Spirits announced last week that it has completed the sale of its subsidiary, NWS-Illinois, to Glazer’s of Illinois.

National did, however, keep some assets, including the distribution rights for some unnamed beer brands. Financial details were not disclosed.

Last month, National posted a 9.4% increase in sales for the 2nd-quarter of this year, coming in at $182.5 million. Net income for the period rose 25% year-on-year to $1 million, while operating income rose to $4.4 million from $3.8 million.

THERE’S A NEW KID IN TOWN

While he’s not exactly new, Vijay Mallya is making more headway in the alcohol beverage industry, with his company United Spirits (USL) ranking as the third largest spirits company in the world by volume behind Diageo and Pernod Ricard.

Mallya is set to end 2006 with over 10% share. USL has seen robust double-digit growth and is currently sitting on a 20% volume jump in the first half of fiscal 2007. On an annualized basis, USL is expected to end the current financial year with 65 million cases (of 9 litre each), up from 55 million cases in the previous year. In just over a decade, USL has added a jaw-dropping 50 million cases to its fund. Just to give you an idea, USL wasn’t looking near as good in 1994 when its market share stood at 2.8% with volume depletions of about 16 million cases.

Most of USL’s volume comes from the Indian market since its brand portfolio is largely regional. However, this could soon change as Mallya is in the race to acquire Scotch maker Whyte & Mackay, which will give him a firm footing in the scotch whisky industry apart from adding about 6-8 million cases to the annualized sales.

NORTH AMERICAN WINERIES: CAUGHT BETWEEN THE OLD AND THE NEW

U.S. wineries as a whole are turning away from barrels and leaning more towards the use of alternatives, including micro-oxygenation. According to the results from the 2006 Wine Business Monthly Barrel and Oak Survey, both small and mid-size wineries are aging a smaller percentage of their production in oak barrels.

Caught between traditional winemaking practices and wanting to make a profit, U.S. wineries are increasingly using alternatives not only as a way to save money, but to also improve the quality of the wine. And it’s not just with white wines. True, the shift away from barrel aging is occurring more frequently with white wines, but red wines, especially at mid-size wineries, are also making a shift away from barrel aging as alternatives gain popularity.

Wineries are even starting to use alternatives at higher price points, in some cases in wines that retail for above $25.

PERNOD GETS CLOSER TO STOLI

Pernod may be just weeks away from acquiring the Stolichnaya vodka brand, owned by Russia’s SPI Group, according to Pernod USA managing director Pierre Pringuet.

The two companies have been in talks since May after Pernod acquired distribution rights through 2010 for Stoli when it purchased Allied last year.

"We are relatively confident we will be able to acquire the ownership of Stolichnaya," Alain Barbet, president of Pernod Ricard USA, said Friday. "It will probably take a few weeks or months."

Stolichnaya is the third-most-popular vodka in the United States after Diageo's Smirnoff and Sweden owned Absolut, controlled by V&S. Pernod has also shown interest in bidding for Absolut which may or may not go for sale sometime next year.

AUSTRALIAN EXPORTS REACH RECORD VOLUMES

The volume of Australian wine exports has reached a record 749 million liters this year, up 8% according to the Australian Wine and Brand Corporation. In the latest wine export approval report, the value of wine has increased slightly by 0.2%, which is the first positive result in months.

"Traditionally the Australian wine industry ships a lot of wine overseas to meet the Christmas needs and also wine has matured over the last season around this time," said Lawrie Stanford from the Australian Wine and Brandy Corporation.

Although the increase in overall value gives the Australian wine industry a little reason for celebration, the average price per liter has fallen by 7% to just under $4 a liter.

This is bad news for domestic growers as wine companies continue blending foreign wines (mainly from Australia) with wines from California and other U.S. states under the American Appellation. The California Association Wine Grape Growers (CAWG) believes California wineries may be bending a law that states 25% of one appellation can be blended with 75% of another, maintaining that the law only applies to domestic appellations.

“No other country allows blending of foreign wine with domestic wine,” said Karen Ross, president of CAWG.

“We are definitely looking into the blending of foreign wine with California wine and calling it American wine, but are not sure what actions we will ultimately take,” she said.

By the end of the year, burgeoning wine imports are expected to account for 30% of the U.S. market.

California’s wine industry, however, is the fourth-largest wine producer in the world after France, Italy and Spain, and contributes around $103 billion to the United State’s economy each year, according to a report released by The Wine Institute and CAWG.

SMALL TOWN JACK DANIEL’S

Jack Daniel’s latest set of commercials exude a small-town, Christmas feel with two spots running on cable and in movie theaters nationwide. The 30-second ads which first broke in the U.S. on Thanksgiving Day carry on the brand’s tradition of a postcard-style advertising effort.

The commercials, titled "Snowman" and "Jack Frost," feature photographs of employees at the distillery decorating for the holidays and playing in the snow.

The campaign also includes outdoor and print executions, the latter appearing in publications such as Rolling Stone, Sports Illustrated and Stuff.

That campaign also debuted last month in the U.K., Italy and Hungary.

ROBERT MONDAVI PRIVATE SELECTION, MOST LUXURIOUS

According to the 2007 Luxury Institute Luxury Brand Status Index (LBSI) survey of super-premium table wines (over $14), Robert Mondavi Private Selection took the first prize, edging out Sterling Vintner's Collection. Raymond placed third, followed closely by Chateau St. Michelle and Antinori.

Wealthy consumers who are familiar with Robert Mondavi Private Selection name the brand the highest in “delivering consistently superior quality” and “being consumed by those who are admired and respected.” Sterling Vintner's Collection ranks a very close second to Mondavi in overall LBSI, as well as leading the list of "unique and exclusive" brands.

Twenty-two leading brands were rated, including: Antinori, Beaulieu Vineyard, Blackstone, Bogle, Chateau Ste. Michelle, Clos du Bois, Estancia Estates, Gallo of Sonoma, Kendall-Jackson, Kenwood, Louis Jadot, Luna di Luna, Marqués de Caceres, Meridian, Penfolds, Rancho Zabaco, Ravenswood, Raymond, Robert Mondavi Private Selection, Rosemount Estate, Ruffino, and Sterling Vintner's Collection.

A nationally representative sample of 1,200 wealthy consumers, who have consumed or purchased alcoholic beverages in the past six months, was surveyed online. Respondents had an average household income of $340,000 and average net worth of $2.7 million.

STOP ACT PASSES CONGRESS

It’s official. The Stop Act has passed Congress, and the only thing standing in its way to becoming a law is the president’s (surefire) signature.

Late on Wednesday night an amended version of the Stop Act passed the Senate after passing the House of Representatives three weeks ago. The STOP Act, or the Sober Truth on Preventing Underage Drinking Act (H.R. 864 / S. 408) has language which puts Congress on record as reinforcing the notion that states have the right to regulate alcohol.

Let’s take a look at what some of the trade groups had to say.

Peter Cressy, president and ceo of DISCUS:

“While progress has been made, any amount of underage drinking is too much. We appreciate the bipartisan effort in Congress. By working together and focusing on effective, comprehensive solutions, we can continue to make progress.”

“We are pleased to join with the Beer Institute, Wine Institute, the Wine and Spirits Wholesalers of America, the National Beer Wholesalers Association and The Century Council in this step in the fight against underage drinking.”

Craig Wolf, president and ceo of WSWA:

“Wine and spirits wholesalers believe the first step to preventing underage drinking is restricting and monitoring who has access to alcohol. It is a unique product and must be managed within the safeguards of the three-tier system.”

BEER GIANT HONING IN ON SPIRITS

Since the Swedish government announced plans to off-load a number of their government owned companies, including V&S owned Absolut, the alcohol beverage industry has been wild with acquisition speculation. Analysts and the media (WSD included) have thrown around names like Pernod, Beam Global and Diageo as possible suspects, but one name we’ve been hearing more of lately is beer giant Anheuser-Busch (that’s A-B to you insiders.) It’s no secret that beer growth is diminishing while wine and spirits are seeing an all time high, so perhaps it’s not too over the top to assume that A-B would be eager to enter a new alcohol sector.

Our sister publication, Beer Business Daily, believes “A-B is looking at wine, but the business is very tricky, fragmented, and tough to brand and achieve scale. Spirits provide a much steadier and fatter profit stream.”

“We are confident that A-B is at least looking at the Absolut vodka deal and modeling it out with slide rules.”

A-B AND JACK. Another possibility? Well, there’s always the chance that A-B could strike a deal or take a stake in a spirits company a little closer to home. This is pure speculation, and we repeat, speculation, but we think Brown-Forman would be a possible candidate. Both companies have similar cultures and B-F is smaller than many of its peers, making it easier to swallow.

But if A-B were ever to buy a stake in the company, now’s the time to do it. Brown-Forman’s stock is at a 52-week low thanks to soft U.K. sales of its Jack Daniels brand, making its stock price cheap.

TREVOR O’HOY: WE NEED TO RAISE SOME CAPITAL

If Foster’s seriously wants to purchase the privately-owned New Zealand Independent Liquor company, it’s going to have to raise a little capital, says Foster’s ceo Trevor O’Hoy.

Chief executive Trevor O'Hoy wouldn't confirm to Dow Jones if Foster's has bid for Independent, but he did point out that some more money is in order if Foster’s is going to compete with the likes of Diageo and Lion Nathan.

"I am just saying what we have said all along, that we are interested in the process," he told reporters.

"If we were to participate in that we would have to raise capital."

Bids for Independent Liquor are due to close Wednesday, with companies tipped to offer about A$1 billion.

FOSTER’S NOT GOING ANYWHERE. And by the way, Foster’s isn’t for sale. O’Hoy reiterated once again that the company had not been approached by any private equity firms or any other potential suitors, despite takeover speculation that has driven Foster's shares up 26% between August and November.

THORNTON WINERY UP FOR SALE

Thornton Winery of Temecula Valley, California is on the selling block, poised to change hands in the coming months. After two decades in the local industry, the Thornton family intends to sell its winery, the Café Champagne restaurant and the surrounding 20 acres of land. Thornton declined to name the buyer or any tentative terms of the sale.

FORTUNE BRANDS WELCOMES NEW PRESIDENT

Fortune Brands today announced that Bruce A. Carbonari, 50, has been elected president and coo, effective January 1, 2007. Prior to the appointment, Carbonari led the company's Home & Hardware subsidiary, which accounts for more than half of Fortune Brands' total sales.

ACADEMY OF PEDIATRICS WANT THE FUN TAKEN OUT OF ADVERTISING

The American Academy of Pediatrics has asked Congress “to restrict alcohol advertising to what is known as 'tombstone advertising,” which shows only the product, not cartoon characters or attractive women. (So is featuring unattractive women permissible?)

In a policy statement in its journal, Pediatrics, AAP said “advertisers are targeting younger and younger children in an effort to establish 'brand-name preference' at as early an age as possible.” So just like with Camel cigarettes, cartoon characters should be eliminated, according to the association.

The statement also said that “sex is used in commercials to sell everything from beer to shampoo to cars. New research is showing that teenagers' exposure to sexual content in the media may be responsible for earlier onset of sexual intercourse or other sexual activities.”

We’ll keep you posted.

PERNOD ON THE HUNT FOR NEW BRANDS

Pernod has been in an acquisitive mood lately, showing interest in Absolut (if it ever goes for sale) and a tequila brand.

Pernod’s managing director Pierre Pringuet has expressed regret after Sauza, the world's No. 2 tequila, went to Beam Global Wine and Spirits during the Allied split, and was reportedly a part of the hunt for Mexico’s Herradura, which was eventually scooped up by Brown-Forman.

Pierre told attendees at a NYC luncheon this summer that adding a California wine to the company’s current wine portfolio may be in the future, according to Reuters.

Pernod’s current wine portfolio includes Australian wines Jacob's Creek and Wyndham Estate; Spanish wine Palacio de la Vega; Argentinean brands Etchart and Graffigna; and Montana from New Zealand.

The portfolio does not include a Chilean wine either, so perhaps Pernod’s in the market?

CHILEAN WINE PRODUCER DENIES ACQUISITION RUMORS. Rumors that Chilean wine producer Viña Ventisquero (Yali and Ventisquero brands) is up for sale were squashed earlier this week when a spokesman called the sales talk “absolutely not true.”

There was speculation in Chile that Pernod had offered Ventisquero a takeover bid of $40 mil