SWEDISH OFFICIAL RESIGNS OVER PRIVATIZATION

The Swedish press is reporting that an official, Malin Bjoerkmo, close to the privatization of V&S Group has resigned. Malin told Swedish publication Dagens Industri that the government does not have “the appropriate staffing in place.”

FORMER BROWN-FORMAN EXEC SWITCHES TO CLOSURES

Michael Friedman, former vp and general manager of Brown-Forman’s Fetzer Winery, has signed on to manager operations for Oeneo Closures USA. Michael will oversee production, marketing, sales and distribution for the US, Canada and Mexico.

TESCO FACES COURT INJUNCTION

Tesco has been faced with a whole host of problems since announcing its entrance to the United States. Health First, an environmental organization, has applied for a court injunction to stop Tesco from building a warehouse to supply its new stores in the U.S. The group is apparently concerned about the toll the warehouse would take on the environment once built.

Remco Waller, chief financial officer of Tesco's U.S. operations, said in a court statement filed this week, that under a "best case scenario with the construction crews remaining in place, the loss to Tesco would be $39.6m."

Luckily for Tesco, the plot of land where the company plans to build is owned by the March Joint Powers Authority, who approved the construction. The court is expected to rule on the request for an injunction next week.

FREIXENET SPICES UP ITS PORTFOLIO

Freixenet has launched a new Spanish wine, Tapeña, in the U.S. that is retailing for $9.99 a 750ml bottle. The brand includes popular Spanish varietals, Tempranillo and Garnacha and, is currently available in 20 states in both the on and off-premise channels.

MAGNOTTA WINERY TO REMAIN PUBLIC

The Magnotta Winery Corp. (based in Toronto) called off its plans to take the company private after over 5% of shareholders vehemently opposed it. Magnotta had planned on acquiring all the shares and merging them company with a wholly owned subsidiary of their holding company, Magnotta Family Holdings.

TEQUILA: THE NEXT BIG THING

I usually get a couple of emails a week from subscribers concerned about cocktails. Questions like, “what’s the next big ingredient” and “what cocktails are the most popular” generally flood my inbox on any given day, so I decided to do a little research and inject my findings into today’s newsletter. It’s not so much about quantitative research, but more about what people are seeing in the marketplace.

So let’s start with the spirits side. Vodka is arguably the most popular spirit out of today’s mixed drinks and holds the highest amount of dollar share in the spirits category (26.8% in 2006 according to ACNielsen). In the 52 weeks to January 13, 2007, vodka sales grew an impressive 5.2% from the previous year, but alas, was not the fastest growing spirits category. No, that title is reserved for the fast-charging tequila sector, up 10% over the same period and slightly behind Irish whiskey which grew 10.5%. But enough numbers. What does this mean? Out of the multiple articles and sources I thumbed through, it seems that tequila is quickly becoming the new vodka. Many bartenders and retailers note that consumers are shifting from vodka to tequila, particularly Patron and Sauza Blanco, in search of the “next big thing.” However, most people in the spirits industry seem to agree that Grey Goose is in a prime position as it fills the super-premium itch

Even more interestingly, many in the on and off-premise sector feel that the wide range of flavored vodkas have their days numbered. The general feeling is that consumers already have their vodka brand of choice (which increasingly has become Grey Goose as a part of the trading up trend) and are sticking to it. Out of the countless flavored vodka brands hitting shelves, insiders expect that only a few will last long term especially as tequila grows more popular. Jack Daniels and coke and Jack and diet also seems to be a rising trend among consumers.


When it comes to ingredients, I saw things like lychee, rose juice, gooseberries, nut flavors, pomegranate, guava, green tea, pear, cucumber, basil and basically anything out of the norm. It appears that consumers are becoming a bit more particular about their cocktail and choose not to settle for the same-old ingredients, like strawberries or raspberries. Also, cocktail with bright colors and/or an attractive presentation is big, especially among the ladies.

GALLO TO MARKET A CHEETAH OF A BRAND

E&J Gallo has taken on its first South African import under the Sebeka brand name, originating from the Western Cape. The range includes Chardonnay, Sauvignon Blanc, Syrah, a Cabernet-Pinotage blend, and a blend of Syrah and Pinotage called Cape Blend. [Ed. note: Pinotage was traditionally known as the flagship varietal of South Africa, but it is increasingly being replaced by Syrah and even Cabernet.]

The label lends itself to the growing pack of critter brands by featuring a Cheetah running in full stride against the backdrop of the South African bushveld.

Sebeka wines will retail for approximately $9 per bottle, and will be available in restaurants and wine retail outlets across the U.S. in 750ml cork-finished bottles.

IRONSTONE’S LATEST RELEASE FOR THE SEASONED DRINKER

Though we often hear about wines targeting the millennial age group (such as certain Kendall-Jackson and Wine Group brands), it’s much rarer for a brand to openly reach out to the older, and perhaps more experienced wine drinkers. However, that’s just what Ironstone Vineyards is doing with its latest release, Christine Andrews, which will hit select markets this May. Priced in the premium $12-15 range, the company is aiming to target “the experienced wine consumer between the ages of 30 and 55," according to winebusiness.com. The new brand will include Chardonnay, Cabernet Sauvignon, Malbec, Merlot, Petite Sirah, Tempranillo, Viognier and Zinfandel.

BONG VODKA REFUSING TO PULL ITS ADS

DISCUS issued its fifth semi-annual report detailing complaints over 16 alcohol advertisements. Out of the 16 advertisements, the Code Review Board found nine were in violation, leading all but one to take corrective action.

Ads from The Patrón Spirits Company’s Silver Patrón Tequila, Moët Hennessy USA’s Hennessy, The Margarita King Inc., Sidney Frank’s Jagermeister, Skyy Spirit’s Skyy vodka and Atlantic Brands’ Maximus Vodka all pulled their advertisements to comply with DISCUS.

The company that, so far, hasn’t chosen to follow the code? Bong Spirit Company over their Bong Vodka that, yes, looks like a bong. According to the report:

“The advertiser disagreed that they ‘market a distilled spirit in a device used to smoke marijuana.’ The advertiser views the nature of their concept as ‘pop icon imagery’ that represents a history and lifestyle of creative expression, which dates back a hundred years to [their] vodka’s origination in Holland.’ Further, the advertiser stated that ‘there is nothing illegal or obscene about the use of the word ‘bong.’”

“After careful deliberation, the Code Review Board respectfully disagreed with the advertiser and found that, although the marketing materials make no specific illicit drug references, the marketing of a distilled spirit in a bottle shaped as a bong, which is a device commonly known to be used to smoke marijuana, in conjunction with using the word 'bong' in the brand name implies illegal activity and therefore violates Responsible Content Provision No. 17 of the DISCUS Code.”

DISCUS states that “the board continues to urge the advertiser to revise these advertising and marketing materials in light of the Code’s provisions.”

“While this recent Report continued to show 100 percent compliance by Distilled Spirits Council members with Code Review Board decisions, importantly, there also was overwhelming compliance by non-members,” said DISCUS president and chief Peter Cressy, who noted that of the 7 non-DISCUS member ads found in violation, six were pulled. “These results show that the Code review process continues to have a positive and significant impact in the marketplace and that the industry’s self-regulation works,” he added.

HOW TO MARKET WINE FRIENDLY WINE TO MILLENNIALS

One minute we hear that young adults are embracing wine with open arms, and the next thing we know industry insiders are encouraging their counterparts to reach out to this virtually untouched demographic. No matter which side you take, it goes to say that millennials, or any demographic for that matter, could stand a little extra marketing.

An international study led by Vinexpo says that while winemakers and retailers have gotten a lot better at reaching out to young adults (21-26), say, from ten years ago, there is still a big room for improvement. The research is based on focus groups in the U.K., Belgium, France, U.S. and Japan.

It’s worth mentioning that wine is much more acceptable to young folks than the days of yore, leading millennials to desire a better understanding of wine “which they perceive as refined, cultivated and an aspirational part of growing up,” says Vinexpo.

THE SCARY WORLD OF WINE. However, there are a number of obstacles that serve as deterrents in their quest for knowledge, but nothing that really strays from what we’ve already heard. One, young adults automatically assume wine is expensive (and that $15 cocktail your holding isn’t?) and therefore something that only wealthy people drink (again, the cocktail?). On top of that, wine appears intimidating (‘who knows what tannins are anyway’) because, you must admit, it requires a level of knowledge to discern through all the various ranges and sometimes confusing labels. Learning about wine sometimes take work and practice, and that might seem a bit daunting to a 21-year-old college student.

According to Vinexpo, young adults in the U.S., along with the U.K. and Belgium, are interested in wine cocktails, which could serve as a wonderful gateway into the world of wine. Millennials in the U.S. also showed an interest in innovative packaging, like tetra-packs, and colorful, attractive labels.

IT’S ALL ABOUT MAKING WINE COOL. The study recommends that retailers and bar owners put more of an effort in showcasing wine sections for young adults and reserving special nights at wine bars that feature age appropriate food and music (such as Nelly and buffalo wings). In the U.S., the largest obstacle for the wine industry is getting millennials out of the frame of mind that wine is only reserved for special occasions, something that our culture has taught in the past.

So while elitism can sometimes serve as a deterrent, it can also drive young adults to drink wine. Says Vinexpo: “The groups commented that they wanted to be able to drink wine like older people while others said wine drinking was associated with more reasonable behavior.”

BROWN-FORMAN BIDS ADO TO MICHAEL CRUTCHER

Brown-Forman is saying good-bye to Michael Crutcher, the company’s vice chairman, general counsel and secretary, who is retiring effective August 31. Michael joined B-F in May of 1989, and has since then accomplished a whole host of things including serving as an advisor to the company and as chairman for DISCUS.

WAL-MART CONSIDERS A BID FOR SAINSBURY

The Daily Telegraph reports that Asda, a British subsidiary of Wal-Mart, is considering making a bid for rival U.K. supermarket chain J Sainsbury. According to the article, the retailer is reportedly on the verge of contacting the competition authorities to nail out a practical bid for Sainsbury, which is owned by a private equity consortium led by CVC. Of course, nothing is final, or confirmed yet.

CHAMPAGNE IMPORTS GROW 12%

While Britain currently holds the number one spot for Champagne exports, the U.S. remains its second largest market by volume. According to the Comité Interprofessionel du Vin de Champagne (CIVC), Champagne exports to the U.S. were up 12% to over 2 million cases last year, helped by a surge of popularity in the rosé category (a whopping 32%). Overall, Champagne shipments to the U.S. stood at about $534 million.

MAS TANK: A NEW WAY TO STORE WINE

Sometimes, when it comes to wine, it’s what’s on the outside that counts. Just walk down a wine aisle in your local grocery store, and you’ll see a whole range of critter labels, outlandish titles, boxes, juice boxes and single-serve four packs. In fact, ACNielsen numbers show that boxed wines are the fastest growing category with a volume growth of 44% last year. This shift in consumer interest is also paving the way for other types of packaging, which can include containers the consumer never sees.

MÁS Wine Company, a negociant wine firm based in Sonoma, has launched the nation's first wine airtight mini-tank, called MÁS Vino. The German engineered mini-tank keeps wine fresh for 60 days by basically mimicking the way wine is stored at a winery, according to the company.

Mini-tanks contain MÁS Vino, a 2004 blend of Mendocino County Cabernet Sauvignon and Napa Valley Sangiovese. Each mini-tank is reusable and holds the equivalent of 20 bottles of wine. MÁS Wine Company services and replaces the mini-tanks, from which restaurants can start pouring wine immediately.

UNITED STATES BEVERAGE WINS PERNOD LAWSUIT

Pernod Ricard USA and United States Beverage of Stamford, Conn. have agreed to stick it out. According to local news reports, Pernod was hoping to pull its Seagram’s Cooler brand from United and move it to High Falls Brewing Co. of Rochester. In doing so, Pernod filed a lawsuit in the U.S. District Court in New York against United on the grounds that its five year contract to sell Seagram’s Cooler expired at the end of March.

United argued, however, that it paid Pernod over $30 million and spent additional money to market Seagram’s in return for a long-term agreement. Terms of the settlement were not disclosed.

A request for comment from Pernod had not been returned by press time.

SPECIALTY RETAILERS FIRE BACK AT THE WSWA

Last week WSD covered reports by the Daily Iowan of an out-of-state retailer shipping wine directly to an Iowa college student in violation of that state’s law, which prohibits direct-to-consumers sales by out-of-state retailers. In response to these reports, Craig Wolf of the Wine and Spirits Wholesalers of America (WSWA) issued a statement condemning the act of selling to minors, including the following:

“Online retailers are playing fast and loose with alcohol laws—shipping beer, wine and liquor with no fear of being caught doing something illegal—including selling to kids.”

The Specialty Wine Retailers Association (a trade organization for the rights of retailers to ship directly to consumers) was none too pleased with the WSWA’s “near hysterical” reaction. The association recognized the retailer’s wrong doing, but also pointed out that many direct shipping laws in various states are confusing and in need of a “protocol for safe, effective, consumer delivery. Retailers, not having been faced with any degree of enforcement by state regulators, shipped to states where the laws were unclear.” Here are some of the responses issued by SWRA president, Tom Wark:

“The [media] sting illustrates the need for new permit systems to be put into place around the country for retailer-to-consumer wine shipments. The event also illuminated the double standard wine distributors embrace when it comes to what sort of sales are dangerous.”

"Mr. Wolf’s tantrum, disguised as a press release, begs the question, what interest do wholesalers have in laws regulating retailers?"

"When wholesalers start issuing press releases about brick and mortar wine shops making their first, second or even 500th illegal sale to minors, then we’ll take seriously anything the Wine & Spirit Wholesalers Association has to say. Until then we’ll write off their self-indulgent tantrums and remind politicians and consumers that the state clearly has successful ways to catch and punish wrong-doers and that retailers, just like wineries, should be permitted to ship direct to consumers under a well-regulated permit system."

We hear there’s going to be a shootout at the OK Corral tomorrow at high noon. See you there.

ARKANSAS TO ALLOW SPIRITED TASTING

The spirits industry had a small victory today when Arkansas Gov. Mike Beebe signed a law that will allow liquor stores to hold spirits tastings for consumers. With the signing of House Bill 2397, Arkansas became the 15th state since 2000 to allow or expand its spirits tastings on or off-premise.

BRUNTON NABS FORMER CONSTELLATION EXEC

Former senior vp of HR for Constellation Wines, Chester Hutchinson, has joined the Brunton Vineyards advisory board and will oversee executive hiring. In addition to Constellation, Chester also served at Diageo Chateau & Estate and currently co-owns Human Resource Business Partners.

BEAM GLOBAL WELCOMES EXECUTIVE APPOINTMENT

Sauza Mexico., an operating company of Beam Global has appointed Hector Hernandez to replace Andy Consuegra as managing director, the company’s top commercial position in Mexico, effective May 2. Hernandez will report directly to Jim Clerkin, president of Beam Global North America.

According to a statement from the company, Consuegra stepped down for personal reasons but is “exploring a number of options and opportunities elsewhere within Beam Global.”

SOUTHERN CALIFORNIA BRACING FOR GROCERY STRIKE

The Southern California grocery industry is once again bracing for the possibility of widespread union strikes which debilitated the industry back in 2003. The three-year contract covering 65,000 workers at Albertson’s, Ralph’s, and Von’s will expire April 9. Already Albertson’s union employees have authorized a strike.

DELICATO MODERNIZES ITS IMAGE

Much in the American tradition of shortening everything, Delicato Family Vineyards has switched its name to three simple initials: DFV Wines. It’s Custom Resource Group and vineyard holdings will, however, retain the Delicato Family Vineyards name.

DFV also redesigned its logo to feature three hills representing its family heritage, vineyards and wines.

"We recognize that the future of the wine industry is in the premium wine category. The new name is a nod to the changing marketplace,” said chief and third generation family member Chris Indelicato.

DFV Wines’ include Gnarly Head, Irony Napa Valley, 337 and Twisted.

ACCUSED ARSONIST PLEADS “NOT GUILTY.”

Remember that warehouse fire we reported on last week? After Mark Anderson allegedly set fire to his wine storage unit in 2005 that contained 6 million bottles of wine and incurred a whopping $250 million in losses, he plead not guilty to charges on Monday.

Here’s a quick refresher. Authorities say Mark set the fire to cover up the fact that he had been selling the wine behind his customers’ backs and making a nice little profit. He currently faces 19 felonies, including arson, interstate transportation of fraudulently obtained property, fraud and tax evasion.

Mark posted a $500,000 bond to sit this one out at home.

EU CALLS IN THE WTO

Yesterday, the EU asked the World Trade Organization (WTO) to form a dispute settlement panel to hash out the tax issues in India. Presently, the Indian government imposes a basic customs duty of 150% on imported spirits and 100% on imported wines. Along with the additional duties, the levies range between 177% and 540%.

Last month, India refused to reform its expensive tax structure which led the EU to formally involve the WTO this week. The U.S. has also filed a complaint with the WTO about the Indian tariffs, claiming they offer unfair disadvantage for foreign businesses. (Case in point? Western countries are eager to get their piece of the burgeoning wine and spirits market in India.)

The panel process typically lasts about a year, and whatever ruling the panel agrees on is legally binding.

SPIRITS VOLUMES FALL FROM JANUARY

After NABCA (control states) spirits volumes soared in January to 4.12% from the previous year, February volumes were up only 1.6%, according to Melissa Earlam of UBS based on data from Information Resource (IRI). Last year, spirits grew 4% overall, leaving 2.8% YTD growth at a considerable disadvantage. Nevertheless, Melissa “does note a relatively tough year on year comps for January and February 2007 with almost 6% growth in 2006.”

In January, Diageo lost volume share in gin, vodka and tequila, but made a comeback in February with a volume gain of 2.1 and 3.1% YTD. Diageo gained share in Scotch, Canadian whiskey, rum and cordial, which “could be a reflection of the timing of price increases,” says Melissa.

KENTUCKY WHOLESALERS SUSPICIOUS OF KENDALL JACKSON

Kentucky wholesalers are attempting to bar two Kendall-Jackson wineries from obtaining a license to deliver direct shipments to consumers on the grounds that the wineries exceed the state’s volume cap. Kentucky law only allows farm wineries that produce no more than 50,000 gallons a year to fill direct orders via the phone or internet.

According to the Courier-Journal, the California wineries, Atalon and La Jota, each produce less than 20,000 gallons a year but are both owned by Jess Jackson. Although their wines are reportedly sold in Kentucky retail stores via wholesalers, the wineries are hoping to branch out to direct shipments. A spokesman for both wineries insists their marketing and management teams are entirely separate from the rest of the Kendall-Jackson empire, although both wineries are listed as subsidiaries of Jackson Family Farms. Currently, Kentucky’s law does not deal with the issue of a large company owning smaller vineyards.

DIRECT WINE SALES REACH $2.4 BILLION

According to figures released by wine marketing advisors VinterActive, direct to consumer wine sales (which includes tasting rooms, wine club and internet) reached an impressive $2.4 billion in 2006. Consumer demand for wine club, internet and phone/mail orders jumped 58% to $1 billion in 2006 as more states adopted direct wine shipping laws. Specifically, wine club sales grew 66% to $600 million, while online sales were up 45% to $200 million.

At the same time, tasting rooms and other events took a hit with sales down 18% due to reduced spending and fewer visitors. Could it have something to do with recent liquid bans on airplanes, or is it that Americans are growing lazy with all this direct shipping litigation? Nevertheless, poor tasting room sales brought the total direct wine sales to $2.4 billion last year, about 10% of total annual wine sales (not too shabby.)

“Falling tasting room and event sales were attributed to higher fuel prices and competition from new wineries - reducing average visitor counts in many wine regions. Airline restrictions on wine as a carry-on item were cited as reducing onsite sales in some regions,” said the company.

More than 230 wineries from 35 U.S. states completed VinterActive’s questionnaire from Dec. 2006 through Feb. 2007.

GREEN VALLEY SONOMA NO MORE

The TTB has approved a change from "Sonoma County Green Valley" to "Green Valley of Russian River Valley." The newly named appellation is known mainly for it Pinot Noir, Chardonnay and sparkling wines.

BRUNTON ACQUIRES JERIKO WINERY

Brunton Vineyards, Inc. has signed a letter of intent to acquire a 160 acre Mendocino-based vineyard and winery, Jeriko Vineyards. Both parties have agreed to a $16.5 million all cash transaction to close the deal in the second quarter, after which Jeriko will become a wholly owned subsidiary.

Brunton reportedly plans to increase production capacity from its current 25,000 cases a year to over 100,000 cases from the Jeriko winery.

DISCUS HAS NAMED

Amanda Hunter as public relations manager for its public affairs and communications team. Previously, Amanda worked as the deputy director of communications with the Recording Industry Association of America

In her new position, Hunter will handle media relations and event planning that focuses on spirits trends, industry heritage and providing industry data to the media.

eSKYE SOLUTIONS GAINS VINTNERS ADVANTAGE

eSkye Solutions, the leading software provider for the alcohol beverage industry, is acquiring Modular Information Systems (MIS) based in California. MIS developed and markets the Vintners Advantage winery management software, which basically provides solutions for everything from vineyard and harvest management to tasting room and winery club applications.

The acquisition will increase eSkye winery software operations by 25% and will allow the company to offer a complete end-to-end solution.

Terms of the agreement were not disclosed.

LEGGINGS AND MULLETS: AN 80’s COMEBACK

As WSD reported earlier in the year, California Cooler is making a comeback. Known for originating the wine cooler segment in the 80’s, Majestic Brands is re-launching Cooler to the Western half of the U.S. by May 2007. The product will be available in six-packs retailing for about $7.99. Its flavors include Coastal Citrus, Pomegranate Berry, Cranberry Grapefruit and White Peach.

"Most wine- and spirit-based beverages switched to malt during the '90s because of taxation and state-to-state shipping restrictions," explains Majestic President and chief Jason Kane. "The new California Cooler, in contrast, will be the only nationally available brand to use real wine and juice as well as infused natural fruit flavors."

MONDAVI GOES THE WAY OF THE FRENCH

Robert Mondavi Private Selection is launching it first Bordeaux-inspired wine Vinetta, which will arrive at stores and in restaurants by early April. Its suggested retail price is $11.

Vinetta is a red wine blend made with Cabernet, Merlot, Petit Verdot, Malbec and Cabernet Franc. Believe it or not, sales of blended red wines have risen 19% from last year, according to IRI data, and are outpacing the growth of many single varietals including Pinot Noir. (How very French of us.) So as not to confuse consumers, Vinetta’s bottle features a large front label that includes the percentage of each varietal found in the blend.

TWO MAINE SENATORS

are working on a tax reform plan that would reduce the burden of property and income tax by raising the tax on beer and wine, as well as restaurant meals and hotels.

AN ARKANSAS SENATE

committee on revenue and taxation approved a bill that would place a 5% tax on liquor sold off-premise (the bill was amended Friday to exempt all restaurants from the tax.) The bill is now on its way to the senate floor.

RUSSIAN STANDARD, THE NEXT “GLOBAL VODKA BRAND.”

As the fourth fastest growing premium spirits brand in the world, Russian Standard Vodka has seen a lot of press lately. Not only did the brand grow 30% last year to 1.4 million case (according to Impact database), but it is currently involved in a New York lawsuit with Pernod Ricard over Stolichnaya’s origin.

The latest news now involves Bacardi. Russian Standard has brought Carlo Radicati on board as general director after recently heading Beverages & Trading LLC, the Russian distribution arm of Bacardi-Martini Group. Now, Carlo will oversee RS’s production, distribution and marketing worldwide.

Authenticity is RS’s selling point, as Roustam Tariko told the London Financial Times on Saturday (March 24). Russian Standard is one of the few premium vodkas made in Russia, which Roustam claims invented the spirit (although many would disagree). His line of thought is supported by recent ad campaigns that claim “Vodka is Russian,” conveying the message that Russian Standard is a “true vodka.”

Coincidentally, RS filed a lawsuit last October against Pernod for falsely advertising that Stoli comes from Russia. While Pernod claims Stolichnaya is distilled and produced in Russia, Russian Standard alleges it is actually distilled in Latvia.

“We are not interested to be a niche player,” Roustam told the FT, “We would like to be a global vodka brand.”

BACARDI’S PLANS FOR ABSOLUT

Yesterday, Bacardi chief Andreas Gembler sat down for an interview with Jenny Wiggins of the London Financial Times. The first half of the article focused mainly on the chief’s background and the history of Bacardi, but towards the end Andreas let some inside information drop. Here are the highlights:

In the article, Andreas makes it clear that Bacardi is looking to become “a bit more professional,” mainly to help the company compete more effectively with the likes of Diageo and Pernod Ricard. A more professional setting would certainly help the company prepare if it ever decides to go public, but would also better position Bacardi to purchase Vin & Sprit (Absolut) in the not too distant future.

[Ed. note: Earlier this month Andreas wrote a letter to the Swedish government expressing interest in buying Absolut, and also told the Financial Times that Absolut would be "a terrific fit" for the privately-owned spirits giant.]

If, IF Bacardi were to succeed, purchasing Absolut would automatically spearhead the privately-owned group into the second largest spirits company behind Diageo.

Purchasing Vin & Sprit won’t come cheap. Any future Absolut acquisition is currently estimated at $6 billion; however, coughing up the money may only be the first step in getting the prize. Andreas told FT that the Swedish government will likely take a close look at what any potential buyers plan on doing with the brand, because, as he put it, “Absolut is a Swedish icon.”

In addition to the high profile Absolut brand, Bacardi is working to improve its portfolio overall. That includes slowly ridding itself of RTDs (Bacardi Breezer), and replacing them with super-premium products. Bacardi’s recent purchase of the New Zealand vodka, 42 Below, falls under the super-premium destination, not to mention Grey Goose and Bombay Sapphire.

Two things that Bacardi is currently lacking? Cognac and an American whiskey. According to FT, “Mr. Gembler says Bacardi could expand into other kinds of spirits, and that it would like to own a cognac and an American whiskey - to cash in on the increasing popularity of the category.”

FIREFLY MOVES TO THE BIG APPLE

After gaining success in South Carolina and Georgia since its launch in 2006, FireFly Vodka has been picked up for distribution in the New York area by Windmill Distributing.

“In 2006, it received the Silver Medal by the Beverage Testing Institute, outscoring popular vodkas Absolut, Finlandia, Fris and Ketel One, and has received rave reviews by renowned spirit critics,” says the company.

FireFly is currently available at retailers in South Carolina and Georgia. Windmill will start selling FireFly in May 2007 and will mainly target Southern style restaurants as well as other points of sale with connections to the South.

V&S NAMES NEW CHAIRMAN

The coveted V&S has named Anders Narvinger to serve as the company’s new chairman in place of Claes Dahlbäck, who recently retired.

Andreas is director-general of the Association of Swedish Engineering Industries and former CEO of technology group ABB Sweden.

B-F SHAREHOLDERS GAIN $205M

Brown-Forman is distributing around $205 million to its shareholders, amounting to about $1.66 per share, after selling it Lenox Inc. subsidiary. The distribution will take place on May 10.

WHAT GLOBAL WARMING?

Global warming? What global warming? Scientists and environmentalists have been grappling with the issue for some time now, but lately winemakers are growing more and more concerned.

Global warming, however, is just a part of a whole host of weather problems. Wineries in Australia were hit earlier this year by droughts, which inadvertently turned into a blessing due to oversupply. However, wine areas in the U.S. are taking measures to make sure that never happens.

According to the Press Democrat, the Sonoma County Water Agency is proposing a $375 million Agricultural Reuse Project. The project would oversee the construction of 19 reservoirs and 112 miles of pipeline to provide treated wastewater to agriculture in the Alexander, Dry Creek and Russian River valleys. Pipelines would generally be buried along or under pavement on existing roadways

The water reuse project is part of the Water Agency’s effort to gain approval from state regulators to use more water from Lake Sonoma and Lake Mendocino.

ONLINE RETAILER BUSTED

Earlier this week two Iowa state college students obtained an illegal shipment of beer that was ordered online at Binny’s Beverage Depot. Unfortunately, the UPS delivery men did not check IDs before completing the delivery. So not only were the students underage, but it is currently illegal for out-of-state retailers to ship beer and wine directly to consumers in Iowa.

"[Binny's Beverage Depot] is not authorized to bring liquor into the state [of Iowa]," said Lynn Walding, the administrator of the Iowa Alcoholic Beverages Division, to the Daily Iowan.

As a result, Binny’s license will either be fined, suspended or revoked. Meanwhile, UPS is considering dropping Binny’s contract, but maintains they are not responsible for enforcing the law.

The Wine and Spirits Wholesalers of America (WSWA) are taking action. They sent a press release today requesting that the Iowa Alcoholic Beverages Division further investigates and acts against the online retailer.

Said Craig Wolf (president and chief of WSWA) in a statement:

“Online retailers are playing fast and loose with alcohol laws—shipping beer, wine and liquor with no fear of being caught doing something illegal—including selling to kids.”

“I will be following up with Iowa ABC Administrator Lynn Walding to see that his division makes good on his promise to investigate and hold this company as accountable as a neighborhood retailer—and I will ask that he widen his investigation to include the other interstate retailers The Daily Iowan found were willing to ship to Iowa, including Texas retailer Specs Liquors, Berbiglia Wine and Spirits in Kansas, New York’s Grand Wine Cellar, Surdyks Liquor Store in Minnesota and the Jug Shop in San Francisco.”

EX-WILLIAM GRANT EXEC FORMS NEW SPIRITS CO.

Former executive vp and national sales manager for William Grant and Sons, Inc, Joel Gosler, is starting a new alcohol beverage import and marketing company entitled Kindred Spirits, Inc. The company is a j-v between Gosler, Bodegas Williams and Humbert, and The Reformed Spirits Group.

The new company’s portfolio includes premium spirits brands Gran Duque D'Alba Brandy and Dry Sack Sherries from Spain, as well as Malt Trust Single Barrel Cask Whiskies from Scotland.

DUCKHORN NOT FOR SELL – AT THE MOMENT

Despite reports to the contrary, the president of Duckhorn Wine Co., Alex Ryan, is denying the company is for sale – kind of. Last week when the story surfaced, he said: “Currently, we don’t have a buyer and our company is not for sale.”

In other words, Duckhorn is not for sale at the moment. Many publications have reported that Alex admits the sale of the company could happen eventually, but is not currently in the plans. Instead of selling Duckhorn, other options include adding more brands to the company’s portfolio.

BONNY DOON PRIVATIZES PACIFIC RIM

Known for his quirky humor and excellent wines, Randall Grahm of Boony Doon is switching his Pacific Rim vineyard to become an independent winery and sole producer of Riesling. As the company phrased it, Pacific Rim is “a northwest winery obsessed with Riesling.”

“Riesling is the world’s noblest and most aristocratic white wine grape,” says Grahm, “and we want to give it the love and attention it deserves.”

Grahm decided that instead of having a large company with many brands, he would rather divide his holdings into smaller entities that allow the vineyards to focus on their strengths, said the company. Now, Pacific is an autonomous winery, still owned by Grahm, and run by former Bonny Doon managers who “share a passion, bordering on fanaticism, for Riesling.”

The winery will be relocated in southeastern Washington under the leadership of GM and winemaker Nicolas Quillé

Last year, Riesling was one of the fastest growing varietals in the U.S., with dollar sales rising 26%, second only to Pinot Noir at 31%, according to ACNielsen. Bonny Doon Pacific Rim Riesling is already the top selling American Riesling in the $9.00-$11.00 category, based on IRI data for 52 weeks ending January 13, 2007.

TESCO “UTTERLY DETRIMENTAL?”

It seems that almost every week we come across a new report bashing Tesco. Last week it was a Phoenix union crying foul on the British retailer, and this week it’s a politician accusing Tesco of “predatory” prices. According to the Telegraph.co.uk, former conservative minister Sir John Nott, known for serving as Defense Minister under Margaret Thatcher, has written a letter to the Competition Commission calling for Tesco to be broken up.

"In my view the supermarket chain [Tesco] has to be broken up. It is utterly detrimental to the wider health of consumers, producers and the environment for this situation to continue," wrote John.

It remains to be seen if anything will actually come of the letter, because for every one person that dislikes Tesco, there are hundreds that would happily vouch for the company.

In the meantime, the Commission is expected to publish its provisional findings in June, according to The Telegraph.

AN INTERIM RULING FOR FISH EGGS

Last July the TTB issued a proposal that would require alcohol beverage companies to include common allergens, such as fish, on their labels. Anything that a consumer wouldn’t normally expect to find in wine, spirits or beer – such as fish, shellfish, milk, eggs, tree nuts, peanuts and soybeans – would fall under the labeling requirement.

The proposal has not yet been made a law, but in the meantime the TTB has published an interim rule that lays the woodwork for an optional allergen labeling statement. Basically, alcohol companies are not required at this time to declare any major food allergens in their products, but if they decide to do so they must follow these guidelines:

“An allergen declaration must consist of the word “Contains” followed by a colon and the name of the food source from which each major food allergen is derived. For example, a declaration could be ‘Contains: milk and egg.'”

If the allergen in question is a nut or Crustacean shellfish, for example, the specific type, (such as almond, pecan, crab or lobster) must be listed.

Winemakers that choose to list major food allergens on their wine labels must include all the major food allergens in the product, including fining or processing agents, unless TTB has approved a petition that voids that ingredient. Any person may petition TTB to exempt a particular product or class of products from the labeling requirements.

As far as the TTB is concerned, a food ingredient that is not considered a major allergen by the FDA does not need to be included on a warning label.

LATEST SUPER-PREMIUM OFFERING FROM RUSSIA

If there was a “most popular” category among U.S. spirits, vodka would certainly win the title. Overall sales were up 5.2% in 2006 year on year, according to ACNielsen, while super-premium sales alone grew 14.5%.

On that note, two new Russian vodkas Michel Strogoy ultra-premium and Severka premium will be released in the US through its importer, SPPGroup USA.

Both brands are produced, bottled and imported from Kolomna, Moscow Region of The Russian Federation, “The True Home of Vodka." Michel Strogov was distilled seven times, while Severka was distilled four times. Both recipes include “the finest wheat and waters.”

The brands are now available in Illinois and Ohio through Judge & Dolph with more states to follow.

NEW TANQUERAY FLAVOR HOPES FOR “A RESURGENCE.”

The second largest gin brand in the U.S., Tanqueray (owned by Diageo), has unveiled a new addition to the line: Tanqueray Rangpur.

“Distilled with rare Rangpur limes for a more subtle gin taste and smooth finish, Tanqueray Rangpur Gin can be enjoyed on the rocks or in cocktails made with popular mixers such as Ginger Ale and Cranberry Juice,” said the company in a statement.

As WSD has said for sometime, “the gin category is experiencing a resurgence as consumers seek more complex and interesting spirits," said Jennifer Van Ness, vp of marketing, gins, Diageo.

Rangpur will be launched nationally along with TV, out-of-home and digital advertising. Beginning in early 2007, Rangpur will go for $21.99 per 750ml bottle.

CASTLE BRANDS LOSES SECOND CFO IN FIVE MONTH

After signing on with Castle Brands as CFO three months ago, Herbert Roberts has resigned for personal reasons, according to the company. Herbert’s resignation follows the departure of Matthew MacFarland from the CFO position in October 2006.



It might seem like a strange coincidence, but the company cautions that it’s just that. A coincidence.



“No business, competitive or financial issues regarding the Company played a role in Mr. Robert’s decision,” said the company.



Keith A. Bellinger, the company's president and COO, will take his role as CFO during a search Herbert’s successor.



In a separate note, Castle Brands also announced that Donald Marsh will act as senior consultant on financial and operational matters. His most recent position was CFO at Commonwealth Industries, a metals company.



It’s no secret that Castle Brand had a bit of a struggle in its third quarter earners, posting a net loss of $3.7 million in the quarter to December 31.

SIX NEW REGIONS JOIN FIGHT FOR PLACE NAMES

In the past couple of years, several different waves of litigation to protect place names have passed through the United States, lead by regions such as Napa Valley and Sonoma Valley. As a result, it’s no longer acceptable to include the word “Napa” or “Sonoma” on your wine label if the majority of your grapes do not hail from the famous California region.



As a part of a movement to protect wine place names, a group of thirteen wine regions have added their names to the Joint Declaration to Protect Wine Place Names & Origin. The six new regions to add their signatures during a signing ceremony in Washington D.C today are Sonoma County and Paso Robles, California; Chianti Classico, Italy; Tokaj, Hungary; and, Victoria, and Western Australia, Australia.



They join the seven founding members of the coalition: Napa Valley, Oregon, Washington, Walla Walla Valley, Champagne, Porto, and Jerez



Representatives from each wine region met with members of congress and Bush administration officials to discuss their group’s efforts to halt misleading labels.



The first step in protecting place names in the US was taken in 2005 when the California Supreme Court ruled that Bronco Wine Co.’s (founder Fred Franzia) Napa Ridge brand was required to use grapes from the Napa Valley or stop using the word “Napa” in its label. Then, last September Gov. Schwarzenegger signed a bill that requires any label bearing the “Sonoma” name must source as least 75% of its grapes from the region.



Officials from the US and EU also signed a deal last year that prevents new wine producers from using semi-generic names, such as port and burgundy.



The Joint Declaration to Protect Wine Place Names & Origin was signed by the original seven members on July 26, 2005. Here’s a link to the full declaration: http://www.protectplace.com.

BRITAIN PUTS MORE HURT ON THE WINE INDUSTRY

The UK wine industry has been like a thorn in the side of many wine companies with its exceptionally cheap private label wines, made possible by bulk shipments from Australia. Today, an announcement by the government to implement a 5 pence duty increase per bottle for table wine and 7 pence for sparkling wine came as an unwelcome surprise. The spirits duty, however, was frozen, much to the happiness of the industry.



The new tax will certainly put a strain on wine companies, most notably Constellation which has faced a bit of a struggle at the hands of the British retailers and their low-end pricing pressures. Overall, UK wine represents 20% of Constellation’s branded wine sales. Kaumil Gajrawala of UBS predicts that the UK market will remain “very challenging” over the next year.



In terms of Constellation, Kaumil included the following in a report:



“The following issues keep us on the sideline: 1) UK could still get worse; 2) over-shipment in the US suggests transition issues with acquired brands; and 3) STZ remains over-indexed to the low-end. Very long term, STZ should benefit from its global presence and the mix shift toward high-end wines in the US.”

WINE BRANDS THAT TOP THE CHARTS

At the end of the day when the work is done and your dear wine and spirits editor packs up the office and enters the world as just another consumer wandering various on and off-premise accounts, we often wonder what wine brands are at the top of their game. It seems as though we see and read about the same few brands over and over, but in such a fragmented industry, does over-exposure always guarantee a purchase?

IRI compiled a list of the top 30 brand performers in 2006. Here’s a peek at the top fifteen beginning with the number one spot:

Barefoot (E & J Gallo); Francis Coppola (Rubicon Estate); Sterling Vintners Collection (Diageo); Chateau Ste Michelle (Chateau Ste Michelle Estates); Crane Lake (Bronco Wine Co.); Bogle Vineyards (Bogle Vineyards); Smoking Loon (Don Sebastiani & Sons); J Lohr (J Lohr); Mirassou (E&J Gallo); La Crema (Majestic Fine Wines); The Little Penguin (Foster’s); Rex Goliath (Constellation); Kendall-Jackson Vintners (Majestic Fine Wines); Fish Eye (The Wine Group); Pepperwood Grove (Don Sebastiani & Sons).

What does it take to make the top thirty? IRI ranked the brands that achieved dollar sales growth of 22.2% versus a year ago and volume gains of 22.3%. These brands far outpaced the total table wine category which reached a 10% dollar sales increase and saw volume rise 3.6%. The top brand performers alone accounted for almost 30% of total dollar share for the table wine category and collectively gained 3 dollar share points.

Good news for California wineries. Remarkably, 23 of the top 30 brands are domestic table wines from the golden state. Imports had only five top brands with Australia contributing four.

When it comes to premiumization, there was no exception here. A whopping 83% of the brands sold for about $5.50 a bottle, which is a premium price.

Not surprisingly, E&J Gallo and Constellation each dominated the ranking again in 2006.

REMY SIGNS ON WITH EMPIRE MERCHANTS

The new Empire Merchants merger between Charmer and Peerless has been appointed the distributor for Rémy Cointreau USA in the Metro New York marketplace, effective April 1, 2007

GALLO ADDS SPAIN’S “PRIZED WHITE WINE.”

E&J Gallo is set to import the Martín Códax brand of Albariño wine, Spain’s “most prized white wine,” according a statement released by the company. The brand will become Gallo’s latest import addition to wines from France, Chile, Germany, Italy, Australia, South Africa, and New Zealand.

ARSONIST ARRESTED FOR DESTROYING MILLIONS

We don’t normally cover this kind of stuff, but we figured that anytime arson is involved it’s worth mentioning. In 2005, Mark Anderson set fire to a huge warehouse where wineries and collectors had paid him to store their wine. Apparently, Mark had been selling the wine behind his customers’ backs, and therefore decided that burning the warehouse and all the wine within was the only way to undo this injustice.

The warehouse contained 6 million bottles of wine owned by 92 wineries and 43 private collectors, adding up to a whopping $250 million in losses.

Since then, Mark was charged with 19 felonies, including arson, interstate transportation of fraudulently obtained property, fraud and tax evasion, in a federal court. He was arrested at his home on Friday.

SPIRITS SALES REACH 3% IN FEB

In the four weeks ending February 25, 2007, spirits industry dollar sales were up 3.2% in the U.S. from the prior year, while volume gained 0.7%, according to Information Resources (IRI).

The vodka category showed the most growth, with sales up 6.2% year on year and volume up 3%. Tequila wasn’t far behind with a 5% sales increase and a 1.6% volume gain. Rum, whiskey and cordial sales grew 2.5%, 2.3% and 2.3% respectively, with volumes coming in at 1%, -1.1% and -0.6%. Gin and brandy were down across the board.

CAMPARI FALLS SHORT IN 2006

Campari fell below analysts’ estimates in its 2006 results, with weaker organic sales growth in spirits and wine. The company reported that full-year sale rose 15.1%, helped by new brands, including Glen Grant whiskey and Old Smuggler, and the distribution of new brands (Jack Daniel’s and Midori) in the U.S. The spirits segment gained 19.1% in sales, while wine grew 7.8%.

Overall, sales of its flagship Campari brand rose 2.6%, while Skyy sales rose 11.3% mainly due to positive sales in the U.S. 1800 Tequila was up 15.7%. The wine business’ positive performance was driven by Cinzano sparkling wines, up 13.6%, and Cinzano Vermouth (4.2%).

The U.S. experienced organic and external growths of 11.7% and 26.8%, paired with a negative exchange rate.

"In 2006 the results we achieved were positive and in line with our objectives," said Chief Enzo Vizone. "Going forward, we remain confident in a positive performance of our business."

FRENCH WINEMAKERS SNEAKING WOOD CHIPS

We all know how many of the old world winemakers, particularly French, feel about new world winemaking practices, specifically the use of wood chips. It’s comparable to the way your grandmother feels about young ladies in mini-skirts. Well, according to an article in wineinternational.com by Sophie Kevany, many French winemakers are using wood chips on the sly before the government outlaws it. Since then, sales of woodchips to winemakers in Bordeaux have increased by as much as 200%.

While a draft was written last November to ban the use of woodchips in AOC winemaking, it has yet to be signed into a law. Until then, winemakers are following EU regulations that allow woodchips “post fermentation.”

The article states that while woodchips have helped increase sales, many winemakers are using the taboo substance on the sneak. Why? Because winemakers either do not want their neighbor to find out and look down on them, or they don’t want their fellow winemakers to take up the same practice and increase sales.

THE NEXT PHASE IN THE COSTCO DRAMA

Now that the Ninth Circuit Court of Appeals has extended the stay of Judge Pechman’s original ruling, the court is likely to issue a ruling relatively soon. The question remains, however, which way the court will turn. As mentioned in our sister publication, Harry Schuhmacher’s Beer Business Daily: “They seemed sympathetic to the 21st Amendment concerns, but not sold on Washington State's post-and-hold law.”

There’s a chance that after the ruling, the case could go on to the Supreme Court for those guys to decide whether Washington’s three-tier laws are violations of antitrust, or the Sherman Act.

One of the big issues was whether Washington's price post-and-hold law is materially different from Oregon's similar price posting law, which was deemed unconstitutional. The state argued that Oregon's law allowed distributors to see the prices before they were posted, while Washington's doesn't, so it is very different.

However, the Judges didn’t seem to agree. According to BBD, the judges repeatedly remarked that the post-and-hold law should be considered separately because, presumably, it's unconstitutional. However, they seemed to think that Washington's ban on credit, ban on quantity discounts, and same-price-for-everybody structure may be acceptable. Central warehousing is the real wildcard here. They didn't spend much time on it, and it is tough to know what they are thinking on this.

SPANISH WINE SALES UP 19%

The U.S. has become the third largest foreign export market for Rioja wines of Spain, with 6.8 million liters sold in 2006, an increase of 13% over the previous year. Overall, sales of Rioja wine reached an all-time high in 2006, with more than 261 million liters sold and a 4.3 % growth from 2005, according to a regulatory board that oversee wine production for the Rioja region.

According to IRI, sales of Spanish table wine were up 19% in the four weeks to February 25, while volume was up 12%. Spain was the third fastes