WHOLE FOODS FOLLOWS TESCO WITH “EXPRESS” CONCEPT

It looks like Whole Foods is going the way of Tesco. One day after acquiring Wild Oats, the company says it will convert a Wild Oats in Boulder, CO to an experimental concept called “Whole Foods Market Express” – similar to Tesco’s Fresh and Easy stores. Market Express will focus on convenience and have a “value-oriented product mix.” Could this be the future of grocery shopping?

BLAVOD SPIRITS TO LIKELY SELL US UNIT

Blavod Extreme Spirits is planning to sell its US subsidiary to its ceo, Jeff Hopmayer. The spirits company will reportedly vote next month on the proposal to sell Blavod USA to Black Diamond, a company controlled by Jeff. The sale would cost Black Diamond $800,000, with the company assuming liability for $3.2m-worth of debt owed by the unit. If the sale goes through, Jeff will resign from Blavod USA.

http://www.acceptresponsibility.org/

Republic National, or RNDC, has appointed Jennifer Shoemaker to the position of corporate vp, on-premise national accounts.

PERNOD LAUNCHES NEW RESPONSIBILITY ADS

Pernod has hinted of its new irresponsibility consumption campaign for sometime, and has finally released it to the public. Beginning with a full-page advertisement in today's edition of USA Today, the new public serve campaign will focus on three critical issues: drunk driving, underage consumption and binge drinking. The advertisement’s headliner reads “Drunk driving doesn't start with a drink. It starts with an excuse.” The ad also features a martini glass illustrated with typical excuses people make, including “I'm 220 lbs. - it takes a lot more than three drinks to slow this guy down," and "I've driven home from here so many times I could do it blindfolded.”

To click out the campaign’s website, click here.

Jack Shea, spokesman for Pernod, told Marketwatch that the new campaign is part of a “multi-year, multimillion-dollar commitment.” Eventually, he said, Pernod will dedicate 15% of its corporate and brand advertising budget to responsibility messages.

BEAM LAUNCHES FIRST MIXABLE COGNAC

Beam Global announced the imminent release of Courvoisier Exclusif Cognac, the first Cognac made for mixing. The company said that Exclusif was designed as a mixable cognac set to compete with vodkas and other cocktail mixers in “the revival of the cocktail culture.”

First introduced in Asia and then launched in the UK, Exclusif will be available nationwide in the United States beginning mid-September 2007. National print advertising will launch in 2008. The 750ml bottle has a suggested retail price of $50.00.

FAMED SPIRITS CRITIC DIES

We regret to report that the alcohol beverage industry has lost yet another legend. Michael Jackson, famed beer and spirits author/critic/aficionado, died in his sleep Wednesday night. Michael was a well-loved industry figure and will be sorely missed.

PAUL WALSH TALKS ACQUISITIONS, SCOTCH AND RTDs

During yesterday’s financial results conference, Paul Walsh gave listeners insight into Diageo’s acquisition strategy, price pressures in the US and several other key issues. Let’s take a look.

When asked about future acquisitions, Paul was guarded in his answer. With so much Absolut rumors swirling in the air we don’t necessarily blame him.

“Our first priority is to grow the business that we currently have, so organic growth is a priority...secondarily, if we see opportunities for growth in acquisitions we will certainly seize those opportunities. In fact, I think we have a reasonable track record with that one.”

“We will continue to be alert to opportunities and it would probably be unwise to say more than that.”

We were a little disappointed though. With Fortune so open about its interests in the Swedish company, we hoped he’d address Absolut more. However, the company is most likely concerned about anti-trust issues, and as a result is staying tight lipped.

Paul acknowledged recent pressures in the US as a result of dropping prices, but claimed Diageo refused to get involved. Therefore, he said, prices pressure haven’t effected the business much or at all.

“Trend to premiumization will continue which is where our brands play...we are proud of the prudencey of which we’ve managed our affairs...regarding this debt crunch...we are very cash generative.”

Meanwhile, renewed interest in Scotch has helped drive growth for Johnny Walker, particularly Johnny Walker Black, and Diageo’s other Scotch brands.

“Scotch generally is seeing somewhat as a renaissance particularly as we gain access to more and more of the emerging markets. I think as a category it offers authenticity, quality and its rich in heritage.”

“Clearly in the Scotch category, Johnny Walker is by far the leader...our Scotch portfolio is more than Johnnie Walker. Johnnie Walker makes up about half of our total Scotch sales, which make up a total of about 13% of sales.”

And in the opposite side of the spectrum, it doesn’t look like Diageo is pulling out of the RTD segment anytime soon. You’ll recall that 29 AGs wrote a letter asking the TTB to rethink the definition of RTDs and alcoholic energy drinks last week, but the letter only specifically cited beer companies (Miller and A-B, mainly). Here’s what Ivan Menezes had to say on the malted matter:

“RTD is about under 2% of the alcohol servings in the US across beer, spirits and wine. We see it as a sustainable category. We have over 50% share, nearly 60% share in it. It’s a category that requires news and innovation and constant renovations but we see it as very profitable. And even though it’s less than 10% of our business there, it’s an important segment to the marketplace.”

“Our emphasis is on beer, spirits and wine. With that said, we believe we can growth RTD in certain markets around the world. It tends to be a market driven strategy,” reiterated Paul.

To take a peak at yesterday’s coverage of the results, click here.

INDIANA COURT STRIKES DOWN FACE-TO-FACE LAW

A court in Indiana struck down the face-to-face requirement that limited in-state and out-of-state wineries from shipping directly to consumers. Wineries find the face-to-face law protectionist because it prevents consumers from placing internet and phone orders without visiting the winery first. Clearly, it’s easier for Indiana residents to visit an in-state winery than a California winery and apparently the judge agreed.

NICK NOBILO PASSES AWAY AT 94

We regret to inform you that New Zealand winemaker and legend Nikola “Nick” Nobilo has died in Auckland at the age of 94. His company, Nobilo Wines, grew to be one of the largest players in the NZ wine industry after Nick immigrated from Croatia in the 1940s. Nobilo was bought by Hardy in 2000 and is now owned by Constellation.

CHAMPPS SHAREHOLDERS TO VOTE ON FOX ACQUISITION

Champps Entertainment said that stockholders will vote Sept. 28 on the proposed acquisition by F&H Acquisition Corp., the holding company for Fox & Hound. Champps agreed to be acquired by F&H for $5.60 a share in cash, about $74.8 million.

LESS IMMIGRANTS MEANS RISING WINE PRICES

An interesting article in Wine Spectator points out that new immigration regulations announced in August by the Homeland Security could result in higher prices of California wine. The policy threatens employers with fines as high as $10,000 if they hire illegal immigrants or do not fire current illegal employees. Illegal aliens make up a significant portion of vineyard workers in California, and industry insiders say the new policy could prove detrimental to the business.

While everyone agrees a big change is in store, many expect an increase in mechanization and guest worker programs.

To view the article in its entirety, click here.

B-F SEES SLUGGISH CONSUMPTION IN THE US

First quarter net sales grew 17% yoy to $106 million, while gross profit increased 12% to $42 million. Continuing consumer demand for premium global brands (particularly in international markets), the addition of acquired brands (Herradura) and a weaker US dollar contributed to the strong results, however the Casa Herradura acquisition hurt overall gross margin.

Jack Daniel's depletions (shipments from wholesalers to retailers) registered mid-single digit gains in the quarter, led by double-digit growth outside of the U.S. Meanwhile, Jack Daniel's volume growth moderated slightly, increasing at a low-single digit rate in the U.S.

SoCo grew mid-single digits internationally, while strong gains in the UK, South Africa and Germany were offset by modest declines in the US.

Stay tuned for deeper coverage tomorrow...

DIAGEO DELIVERS GROWTH IN A SLOWING MARKET

It’s no secret that spirits growth is seeing a slight slowdown in the US, but Diageo still managed to outperform the market in its fiscal year results. In the year ending June 30, Diageo said that an increased focus on priority brands delivered strong top-line and bottom-line growth in North America, while operating margins also saw improvement. Overall volume for the continent grew 3%, while net sales were up 7%. Meanwhile, marketing spend rose 5% and operating profit increased 12%.

“In North America we outperformed the US spirits market for the third consecutive year,” said chief Paul Walsh.

Remember that Diageo raised its forecast for annual operating profit to 8% in February on sales of Johnnie Walker Scotch whisky and Smirnoff vodka in the U.S. and Asia. The company managed to beat its forecast, with earnings rising 8.7% helped by price increases and heavier advertising.

Volume growth of spirits was 3%, while wine grew 6% and beer jumped 7%. A combination of mix improvements and price increases on approximately 50% of the volume resulted in net sales for spirits, wine and beer to grow 8% in North America. Meanwhile, RTD net sales were down
-1% and volume declined -6%. Smirnoff vodka and Baileys each delivered double digit net sales growth, while Crown Royal saw organic volume rise 5% and organic net sales increase 9%.

Smirnoff vodka volume was particularly strong in North America, the company said, which accounts for over 40% of total Smirnoff sales.

UNITED STATES. Diageo’s value share of the spirits market in the US grew 0.6 percentage points, while the value share of premium wine grew 0.6ppts. The US saw price/mix improvements in spirits, beer, wine and RTDs.

Diageo said it would continue “focusing on priority brands and building brand image in the US” as consumers continue to seek out “sophistication and image.”

Stay tuned tomorrow for further coverage...

BEAM GLOBAL: NEW AD BUDGET TO GET PEOPLE TALKING

In an interesting article written by Ad Age’s Jeremy Mullman, Beam Global says it plans to refocus its $100 million budget on “word-of-mouth” advertising. CMO Rory Finlay says that while advertising isn’t dead, “it's more about fanning the flames [of word-of-mouth] than anything else.”

The company is introducing revamped creative on about 75% of its global brands this autumn in which to generate stunts and promotions that will get people talking. So while the “talk generating” stunts won’t replace Beam’s traditional advertising, it will merely shift the direction of its intent.

To read the article in its entirety, click here.

POSTIVE MIX HELPS FOSTER’S SHAKE TAKEOVER RUMORS

Foster’s showed strong overall beer and wine sales in its second half despite a strong Australian dollar and bad weather. Combined with the company’s plan to buy back about A$350 million worth of stock, Foster’s saw a 6% jump in shares. Stock has fallen 11% so far this year based on currency concerns and rumors that Foster’s might be a takeover target. However, Foster’s says that while it has been approached by almost all private equity buyers, interest has lessened in recent weeks.

With the Australian glut starting to wane and increased demand in the US, Foster’s is headed for a brighter future. The Australian drinks company is currently focusing on organic growth and not acquisitions, it said, while hoping to drive sales by riding the “trading up” wave to premium beer and wine.

"Growth of international wine was a highlight and reinforces our strategy to become a major global premium wine player," chief Trevor O'Hoy said in a statement.

AMERICAS AND THE US. The Americas had a 12% fall in earnings to A$109.3 million in the second half as profit was cut by the rise in the Australian dollar. Overall wine volume in the Americas was up 5.5% for the fiscal year. In the US, wine volume grew 4.3%.

Sales in the Americas were driven by positive mix in the Lindemans, Chateau St Jean and Stags's Leap labels, coupled with eight of the nine premium Californian brands that sold for more than $10 a bottle. The company also said the re-launched Rosemount brand was off to an “encouraging start.” Positive mix was offset by higher packaging costs in H2.

AMERICAN PRIORITIES. Foster’s outlined several goals that will reportedly take top priority in the Americas in fiscal 2008. For starters, the company plans to review how its products are sold in the U.S. market as it seeks faster growing distributors. We included the rest below:

• Strong wine category momentum
• Strong growth in $10 and above price points
• Improved mix and selective price increases
• Distributor review in key US states
• Sustained wine quality
• Continue new product development momentum
• Varietal extensions
• Mix shift to Californian portfolio

VINTAGE OUTLOOK. Foster’s says the California industry is “in balance,” with the 2007 vintage yields expected to be in line to moderately below longer term averages.

Meanwhile, the 2008 Australian vintage will look similar to 2007, with expected yields below average but above the 2007 vintage.

CFO BIDS ADIEU. Pete Scott, Foster’s cfo, will retire from the company and return to the US, effective at the end of the current fiscal year. An international search has commenced to identify a successor, including both internal and external candidates, said the company.

WHOLE FOODS FINALIZES ACQUISITION, SNATCHES WILD OATS

Whole Foods Market said it officially acquired Wild Oats earlier this week after gaining support from enough of its shareholders. Whole Foods said it would own 84.1% of the outstanding shares of Wild Oats after its tender offer of $18.50 per share closed Monday (August 27), and another 12.7% were subject to guaranteed delivery over the next three days.

The company said 25.2 million shares of Wild Oats were tendered and not withdrawn and another 3.8 million shares were subject to guaranteed delivery. After buying the shares guaranteed for delivery, Whole Foods said it would acquire all the remaining outstanding Wild Oats shares.

Whole Foods shares gained $1.21, or 2.7%, to $45.75; and Wild Oats shares edged up 2 cents, to $18.48 after the announcement was made on Monday.

VIA PACIFICA TO IMPORT TRINITY HILL WINERY

Via Pacifica Selections, an importer specializing in New Zealand wines, says it has added producer Trinity Hill to its portfolio. Trinity Hill is a well-established Hawkes Bay winery and a founding member of the Gimblett Gravels Appellation. The winery produces the following labels: Homage, Gimblett Gravels and Hawkes Bay which are now available nationally in the US.

COE VINTNERS TO DISTRIBUTE HERRADURA IN UK

Brown-Forman has appointed Coe Vintners the exclusive distributor for Tequila Herradura and el Jimador tequila brands in the UK. Beginning in Oct., the Herradura brands will be available in the UK.

BACARDI DISTILLERY DRAWS INTEREST FROM TENNESSEE

Local reports are saying Phil Pritchard, owner of Pritchards’ Distillery in Tennessee, is expressing interest in buying the Nassau Bacardi facility after the company announced it was leaving in April 2009. However, Bacardi has yet to decide what to do with the facility or the surrounding land.

GREY GOOSE DEBUTS “DISCERNING TASTE” CAMPAIGN

Grey Goose is launching a new advertising campaign, entitled “Discerning Taste.” Produced by New York-based @radical.media, the campaign is the brand's first major advertising effort since its acquisition by Bacardi Limited in 2004.

The ads consist of four different print advertisements and three broadcast spots that capture particular moments, people, place and events in the lives of Grey Goose consumers, while focusing on the “luxurious lifestyle” of the brand. For example, the prints include pictures of consumers playing golf and having a late dinner with friends.

The advertising campaign debuts in conjunction with the U.S. Open Tennis Championships in which Grey Goose will be the Proud Promotional Partner of the tournament.

PERNOD SPENDS $640,000 ON US GOVT

In other Pernod news, the AP reports that Pernod spent $640,000 to lobby the federal government in the first half of 2007. The company lobbied on U.S. trade legislation and other matters, according to disclosure form posted online Aug. 7 by the US Senate's public records office.

Under a federal law enacted in 1995, lobbyists are required to disclose activities that could influence members of the executive and legislative branches. They must register with Congress within 45 days of being hired or engaging in lobbying.

PERNOD LOBBIES IN SWEDEN, WILLING TO GIVE UP STOLI

It looks like Fortune isn’t the only company willing to put up a fight for Absolut. Reports in Sweden are saying Pernod chief Pierre Pringuet is currently in the country lobbying Vin & Sprit.

Pierre told the Svenska Dagbladet daily, "If the Swedish government wants a quick and simple deal they would sell it as one unit. We are prepared to buy the whole company, it fits perfectly with our strategy."

Pierre also said Pernod is willing to break the Stolichnaya contract in the US and drop current efforts to gain international rights if the company is allowed to buy V&S, according to UK reports.

IMPORTED WINES GAIN VOLUME SHARE IN JULY

In the four weeks ending July 15, overall table wine sales rose 7.3% while volume grew 3.5%, according to IRI. Domestic wines sales were slightly ahead of the category increasing 7.4%, but volume was below at 3%. Last month, domestic wine sales grew 8.5% and volume rose 4.4%, but the overall category was up 8.1% and 4.4%, respectively. Share of domestic wine volumes were down -0.3 in July and -0.1 in June. It looks like consumers weren’t buying as many domestic wines in July, but they were buying more expensive bottles.

Meanwhile, imported table wines dollar sales were further below the category, up 6.9%. Volume, on the other hand, was up 5.4%, almost two percentage points above the category. Clearly, consumers are turning to cheaper imports. In July, imports lost -0.1 dollar share, while they gained 0.3 in volume. In June, imports dollar sales were relatively the same, rising 6.8%, while volume increased 4.7%, well below the July number.

RED WINE KEEPS ON TRUCKIN’. In July, red wine dollar sales rose 11% and white wine grew 5.6%. White wine sales have gone down noticeably since June, where it showed dollar growth of 7.1%. Blush, meanwhile, declined -1.6% in July. The red wine category has gained 1.5 dollar share points since the same period last July, while white wine has gone done -0.8 share point.

Meanwhile, red wine volume was up 7.6%, while white and blush volume increased 2.2% and decline -3%. Red wine volume share rose 1.6 and white declined -0.5 since the same period last year.

BIG WINERIES SUFFER. Out of the top five wine brands in the US, including Yellow Tail, Sutter Home, Franzia Box, Woodbridge and Kendall-Jackson Vintners Reserve, all lost dollar share. Most of the brands also lost volume share except for Sutter Home (0.1) and Woodbridge, which was flat.

HPNOTIQ LAUNCHES BARTENDER INCENTIVE PROGRAM

Heaven Hill-owned Hpnotiq is launching a bartender education and incentive program that will reward bartenders for their knowledge of Hynotiq with a $25 cash card and entry into a Las Vegas VIP trip. Each participant with a perfect score on the 10 question multiple-choice quiz will be eligible for the cash card. Bartenders must also submit an Hpnotiq recipe to be registered for the grand prize.

Hpnotiq, the fourth-largest selling imported liqueur in the US, is a mixable blend of tropical fruit juices, cognac and vodka. To enter, bartenders should contact their distributor representatives or send an e-mail to info@hpnotiq.com.

EVANS & TATE STRIKES DEAL WITH MCWILLIAMS WINERY

Troubled Australian winery Evans & Tate has signed over its distribution rights to New South Wales-based McWilliams Wines in Australia, beginning Sept. 1. Evans & Tate went into voluntary receivership last week after ANZ bank foreclosed on a A$100 million loan to the company. The receiver, McGrathNicol, in turn entered an interim agreement with McWilliams.

In addition to distribution, McWilliams’ will work with E&T and receiver McGrathNicol to drive value and brand development through a large marketing campaign. McGrathNicol also pointed out E&T brand would benefit from McWilliams’ established on- and off-premise channels.

According to local reports, E&T reps will meet creditors today to discuss what will happen now that McGrathNicol has taken control of the company’s assets and operations while it looks for a buyer.

CHAMPAGNE HARVEST UNDERWAY

The 2007 champagne harvest began last week and will cross the 323 villages of the French region over the next two weeks. The US is the second largest champagne export market behind the UK and has steadily increased for the last five years, said office of champagne, USA director Sharon Castillo.

More than 100,000 workers and volunteers certified by the Comite Interprofessionnel du Vin de Champagne (CIVC) from across Europe will pick all the grapes by hand. Machine-harvesting is strictly forbidden in Champagne, according to the quality regulations of the Champagne appellation.

PAUL WALSH: “WE DON’T HAVE TO HAVE ABSOLUT.”

In an article in the Sunday Times, Diageo chief Paul Walsh makes interesting and somewhat frank remarks about Absolut and his personal life.

ABSOLUT NOT A MAJOR CONCERN. When asked how much Diageo will bid on Absolut, Paul said the following:

“I'm not going to tell you how much we'll bid. The reality is, no-one's seen the company's numbers yet.”

While Fortune’s Norm Wesley has been candid about his company’s interest in Absolut, apparently it’s not as big of a concern for Diageo.

“It's [Absolut] nice to have but we don't have to have it. It's a bit different from Seagram - we had to have that. It moved us a quantum leap away from the rest of the pack, particularly in America.”

Determination, rather than money, just might become the deciding force in who gets Absolut.

WORK DAYS AND DOWNTIME. In a few interesting tidbits, the Times reporter included a day-in-the-life look at Paul Walsh’s weekly work routine.

Paul generally works from 7:30 am-until after 7 pm, and spends half the year traveling abroad on business. When on vacation, Paul relaxes by fishing and riding near his country house in West Sussex. His favorite band is Pink Floyd. When asked if he has a girlfriend, his answer, in so many words, was no comment.

For many more details, click here.

WSWA ASKS SUPREME COURT TO SANCTION STATES RIGHTS ON DIRECT SHIPPING

The WSWA has asked the U.S. Supreme Court for a new ruling that would give states primary legal authority over alcohol distribution and regulation, rather than surrender state authority to the federal government.

Why, exactly, is the WSWA taking these steps? The trade organization elected to file a brief in a case that challenges the Tobacco Delivery Law enacted by Maine in 2003. The Delivery Law requires tobacco sellers to verify the age and identity of the purchaser when delivering their products via a carrier. Since most state laws concerning alcohol delivery are worded similarly to the Maine tobacco statute, the WSWA hopes to prevent the Supreme Court from possibly ruling that those state laws are collectively preempted by federal statute with their brief. The WSWA believes if such a ruling was made, it would have “dire consequences” for a state’s ability to regulate alcohol sales on its own.

As we see it, the long and the short of it is this: (1) the WSWA wants the Supreme Court to reiterate that states have primary legal authority over alcohol regulation within their borders. (2) State laws governing the shipment and delivery of alcohol are fundamentally different from state laws governing the shipment and delivery of tobacco.

Says WSWA ceo Craig Wolf:

“WSWA opposes direct interstate sales of alcohol to consumers because there is no credible way to verify the age of the purchaser through an anonymous online sale, and because carriers have repeatedly failed to ensure that deliveries to minors are prevented. However, states that do permit such sales should retain the power to regulate carriers and hold them accountable when alcohol deliveries to minors inevitably do occur.”

“Should the Supreme Court ultimately limit a state’s ability to regulate carrier delivery of alcohol, every state that has permitted such direct sales will need to reassess the wisdom of allowing such sales without any ability to control them.”

LUXCO ADDS NEW FLAVORS TO PEARL VODKA

Luxco says it has extended it Pearl Vodka line to include Pearl Plum and Blueberry flavors. The suggested retail price is about $20 per bottle.

BACARDI TO CLOSE BAHAMAS DISTILLERY

Bacardi says it will close its rum distillery in Nassau by April 2009, where light and dark Bacardi rum is produced and then shipped in bulk to Europe. Instead, the company has chosen to consolidate its production site in Puerto Rico and other facilities in the US due to changes in trade agreements and increased competition.

Bacardi established a presence in the Bahamas in 1965 partly to avoid large duties on shipments from Puerto Rico to Europe, but things have since changed.

"The change in business conditions and economies of scale were significant factors in the decision to prepare to cease operations here in Nassau," said Felix Mateo, director of the facility. "It is very difficult to make a decision like this, but it is the right decision for the company."

According to a statement issued by Bacardi, it has not yet decided what to do with the distillery in the future.

VOLUME TRENDS IMPROVE IN AUGUST, BUT OVERALL NUMBERS SOFT

In answer to the now widely reported Brandweek article earlier this week that claimed beer is poised for a comeback at spirits’ expense, a report by Bill Pecoriello of Morgan Stanley suggests otherwise. Based on IRI supermarket scanner data for the four weeks ending August 12, volumes were up 0.6% and dollars up 4.1% for total alcohol. Bill says wine and spirits added to the growth while both imported and domestic beer decreased.

Spirits volume continues to grow ahead of dollars, which is likely due to a mixture of discounting and consumers drinking low-end. The average price of spirits per volume declined 0.5% as compared to a 3.7% increase a year ago. Meanwhile, wine (especially high-end wine) continues to come in strong, gaining both volume (80bps) and dollar (120bps) share.

Not only do consumers want premium wines, but they are also turning more and more to small and medium-sized vineyards. As a result, major wineries like E&J Gallo and Woodbridge continue to struggle to hold dollar share. Foster’s was the only major wine company to gain dollar share, which probably has something to do with current popularity of Australian brands. Constellation once again lost share of the wine industry, losing 140bps of volume share and 70 bps of dollar share in the latest four weeks.

TORTUGA RUM FLAVORS HIT U.S. SHELVES

Majestic Distilling Company, the exclusive US importer for Tortuga Rums of the Cayman Islands, has launched Tortuga's 80 proof flavored rums. The extension, including Tortuga Banana, Tortuga Coconut and Tortuga Spiced Rum, comes one year after Tortuga Gold and Tortuga Light entered the U.S. market.

JUDGE SIDES WITH WAL-MART IN JULIE ROEHM CASE

Michigan Judge Denise Langford Morris has dismissed a lawsuit filed by former troubled marketing exec Julie Roehm on the grounds that the case should be filed in Arkansas where Wal-Mart is based. This comes as a victory for the retail giant after they asked the court in June to toss the case, arguing that Roehm should have filed in Arkansas.

As you’ll recall, Roehm was fired from Wal-Mart in December due to accusations of inappropriate behavior, including sexual relations with a subordinate. Roehm then sued, filing a breach of contract and fraud claim against Wal-Mart alleging the company owes her severance pay.

Roehm is reportedly deciding whether to appeal in Michigan or file in Arkansas.

DISTELL GAINS SHARE OF BOTTLED WINE EXPORTS

South African wine and spirits company Distell said its wine segment showed profitable growth in the year to June despite increased competition. Distell's international business contributed 18% of total revenue, while export volumes grew 9.8%. Spirit volumes were up 23.2% thanks to solid performances in all key markets. Its “drive” wine brands showed volume growth of 12.6% despite worldwide oversupply and the contracting market share experienced by many players. Meanwhile, wine export volume rose 3.3% due to a decline in the sales of the company’s non-drive brands.

Jan Scannell, managing director, said Distell had performed better than the South African wine industry in foreign markets, growing its share of bottled wine exports. Earnings from wine exports had also “significantly increased,” as the company works to strengthen its ties in North America, Europe and Asia Pacific.

CANADIAN CLUB: OFFICIAL SPIRIT OF BELLE ISLE GRAND PRIX

Canadian Club whisky announced a partnership with the Raceway at Belle Isle Park to become the Official Spirit of the Detroit Belle Isle Grand Prix. CC is in its second year with Andretti Green Racing (AGR) in the IndyCar Series as the major sponsor of the No. 27 car driven by Dario Franchitti.

As the official spirit sponsor of the race, CC will have signs prominently displaced around the 2.1-mile race course. The brand will also be featured in several promotions both prior to and during the race week.

NATIONAL TV CAMPAIGN TO PROMOTE CALIFORNIA WINE MONTH

The California Wine Institute and California Travel & Tourism Commission announced a new five-year partnership to nationally promote wine and culinary tourism in California during wine month (September). The partnership includes a 30-second national TV campaign that features Gov. Schwarzenegger and California wine and culinary celebrities, scheduled to begin this winter.

Last year's California Wine Month helped increase sales of California wines during September by more than 11% in U.S. supermarkets, according to Nielsen.

V&S HOPES FOR BETTER FULL YEAR RESULTS

Vin & Sprit posted lower second-quarter profits and sales, but said it hoped for better full-year results than last year. Revenues fell 6% to 2.46 billion crowns.

"It is my hope that we will see even better results for the group this year than last year. I base this on continued good sales development for Absolut Vodka, while we are also increasing efficiency throughout the group," V&S Chief Executive Bengt Baron said in a statement.

Absolut Spirits operating profit fell to 415 crowns due to a weaker dollar and distributors scaling down inventories compared to the same period last year. Sales for the unit fell 1%, while volume rose 4% thanks to strong market development for Absolut and Cruzan Rum. Sales volume for Absolut increased 3%.

The company said that positive development continued in the US, where sales from distributor to retail increased by 4%.

As you likely remember, Fortune Brand’s soon-to-leave chief Norm Wesley had some strong statements for V&S earlier this month as he assured the company “we [Fortune] provide certainty.” Pernod, Diageo, Bacardi and Brown-Forman have also shown interest in acquiring the company.

BLACKSTONE WINERY GETS LUXURIOUS

In an effort to take part of the new trading up trend among consumers, Blackstone Winery of Sonoma has launched a new luxury tier that includes a chardonnay, pinot noir, merlot and Bordeaux-inspired red blend, rubric. Suggested retails falls in the $16.99-$18.99 range.

GOLD FLAKES VODKA HITS U.S.

“Ultra-premium” French Vodka Gold Flakes Supreme, which is made with 24-karat gold flakes, will soon be available in select markets in the US. Estimated retail price is $60 per 750 ml.

BACARDI CAMPAIGN A HIT WITH BAR PATRONS

Bacardi reports that its interactive marketing campaign (by Ecast) for Bacardi, launched June 2, saw a 13% click-through rate. Or in other words, 13% of bar patrons looked at the Bacardi mini-site after selecting music. The marketing campaign is basically an interactive jukebox with digital display, allowing consumers to choose songs and text and audio messages.

The campaign is running in New York, Los Angeles, Chicago, Philadelphia, Boston, the Bay Area, Dallas, Washington D.C., Atlanta, Cleveland, Miami, Denver and other cities.

On behalf of Ecast, Arbitron released a study that found 50% of legal adults, about 105 million people, in the US had visited a bar within the last month. About 65 million people, or 31%, had been to a bar in the last week. Among those weekly bar-goers, 27% consider themselves “early adopters,” or in other words, they tend to recommend things to friends.

FRENCH EXPORTS GROW 8%, THANKS TO CHAMPAGNE AND COGNAC

French exports of wine and spirits rose 7.5% in the first half of 2007 to $5.62 billion, according to France’s export federation (FEVS). Champagne and cognac sales reportedly led the increase, while wine sales experienced a more modest growth.

Of course, this has been a problem for France for some time as New World wine producing countries gain scale internationally and domestic consumption drops. Over-production is also a factor in drawing back sales.

Overall champagne exports rose 13% in value and 8% in volume, while spirits jumped 9% in value and 20% in volume thanks to a 23% increase in cognac sales. Wine export sales were up 4%, with Bourgogne wines growing 21% and Bordeaux falling -2.4%. Wine volume rose 1.3%.

COMPETITION STILL EXISTS IN WHOLE FOODS/WILD OATS MERGER

It’s been a long ride with the Whole Foods/Wild Oats takeover, and here’s the latest development. After denying the FTC’s attempt to block the merger, Judge Paul Friedman released the details of his decision yesterday (August 21) to the public. In the 93- page document, Judge Friedman say competition from conventional supermarkets would prevent Whole Foods from making significant price hikes if it ever succeeds in acquiring Wild Oats. The Judge pointed out that supermarket chains such as Safeway and Kroger are starting to offer more organic products and redesign their stores after Whole Foods.

As you’ll recall, the FTC argued that a Whole Foods and Wild Oats merger would create a monopoly in the natural foods segment. Remember all that Rahodeb stuff that surfaced earlier this summer? Judge Friedman doesn’t seem to care. He never once mentioned the postings in his 93-page opinion, which was another key part of the FTC’s argument.

"If the combined firm raised prices or permitting quality to slide, many customers could and would readily shift more of their purchases to any of these alternative sources of natural and organic foods, often stores where they already shop," said Judge Friedman.

Meanwhile, the FTC won an appeal of Friedman's decision and put a hold on the takeover pending the appeal’s outcome. Earlier this week the appeals court asked the FTC and the two companies to provide more information by tomorrow (August 23).

Wild Oats said Whole Foods Market extended the expiration date for its offer to buy all Wild Oats to the close of business on August 27.

AGs BUTT HEADS WITH ALCOHOL ENERGY DRINKS

Attorneys General from 29 states signed and released a letter yesterday asking the Alcohol and Tobacco Tax and Trade Bureau (TTB) to look into the formulation of alcohol energy drinks to determine whether they are properly classified as malt beverages under federal law. This includes drinks like Sparks, Bud Extra, and Liquid Charge. The Marin Institute is taking credit.

As we see it, the issue is double pronged. The AGs are asking the TTB to invest whether the above mentioned brands are making false claims of stamina and whether they should be classified as spirits instead of malt beverages.

From letter:

“These beverages [non-alcoholic energy drinks] are particularly popular with teens and young adults. Unfortunately, alcoholic beverage manufacturers have taken advantage of the youth appeal of these drinks by engaging in aggressive marketing campaigns for pre-mixed alcoholic energy drinks. These campaigns claim that such beverages increase a person’s stamina or energy level. However, they do not mention the potentially severe, adverse consequences of mixing caffeine or other stimulants and alcohol.”

ENERGIZING EFFECT IS MISLEADING. They claim the advertising scheme for Bud Extra, Sparks and Liquid Charge “imply an energizing or stimulating effect” which are “misleading health-related claims regarding the products’ effects, in violation of federal regulations.” Why is this misleading? Well, the AGs say that research shows the “energizing” effect produced by alcohol energy drinks is merely deceptive.

“As a result of consuming alcoholic beverages containing stimulants, intoxicated persons may falsely believe that they can continue to drink and function without impairment, even behind the wheel of a car,” said the letter.

Here are some of the advertising slogans included in the AGs’ letter:

Sparks : “Powered by Sparks.”

Bud Extra : “Who’s up for staying out all night?” “You can sleep when you’re 30.”

Liquid Charge : “A new power source for the 21st century”

Liquid Core : “Whether you are working a nine to five, pulling an all-nighter or just need a little extra help to keep you going after a long day on the slopes, Liquid Core provides you that charge.”

MALT BEVERAGE OR DISTILLED SPIRITS? Another problem, says the AGs, is the alcohol content in malt beverages – not just energy alcohol drinks – and their supposed lack of “resemblance to beer.”

“The products discussed in this letter are marketed as malt beverages and all have an alcohol content of 6% [which is the cut-off] or greater. Most alcoholic energy drinks and flavored malt beverages bear little resemblance to beer in taste or appearance. We question whether these products should be classified as malt beverages under federal law.”

SO WHY DO WE CARE? There are many spirits brands out there with caffeine, ginseng and/or taurine that could eventually come under fire. Also, don’t forget Diageo has several FMBs in the market and Beam Global has Starbucks Coffee Liqueur, for example.

PATRON XO CAFÉ. In an unfortunate coincidence, Patron XO Café was featured in the New York Times for what could be argued the very thing the AGs are after. A new marketing campaign for Patron XO is making its initial debut in San Francisco and New York, beginning in September.

In a piece in the New York Times, reporter Stuart Elliot says the new campaign is “inspired by the social culture that thrives on staying out late, which is fueled by energy drinks like Red Bull as well as other beverages like soft drinks.”

One of the slogans for Patron XO Café reads: “It’s 12 a.m. You’re ready to turn in. To the next club.”

Matt Carroll, vice president for marketing at Patrón Spirits, is quoted in the article saying the following: “‘Patron XO is a nice after-dinner drink, in front of the fire or at a Mexican café...[but] the consumer base for that type of product is much smaller...we’re going to fish where the fish are.’”

“‘The message is pretty simple: When everyone else is ready to turn in, you don’t have to shut it down,’” said Chuck Schiller, creative group head at Richards. “‘A perfect night can be extended in a way that isn’t Red Bull-ish.’”

There’s no denying that energy infused alcohol beverages are a huge hit right now. We just hope this doesn’t become a bigger issue with regulators.

We’ll keep you updated on how this plays out. Stay tuned...

WINEMAKER ELLIOTT MILLETT PASSES AWAY

We regret to inform you that Sonoma-Cutrer Pinot Noir assistant winemaker Elliott Millett, 43, passed away on August 10 after battling health problems for an extended period of time. Elliott is survived by his wife, Christina, twin sister Amber Brown and a younger brother, Aaron Millett.

GLAZER’S HAS APPOINTED DAVID LOCKIE

as president of the Illinois-based Union Beverage Company, effective August 27. David will report to Keith Petrauskas, Glazer’s svp Midwest region.

APPEALS COURT PUTS HOLD ON WHOLE FOODS MERGER

The U.S. Court of Appeals for the D.C. Circuit said yesterday (August 20) that it needs more time to determine whether to block Whole Foods's proposed $565 million purchase of rival organic grocer Wild Oats. The three-judge panel has put the deal on hold until it collects written arguments from both sides by Thursday (August 23).

BEER POISED FOR A COMEBACK?

A recent article by Mike Beirne of Brandweek asserts the beer industry is starting to take share from spirits – something that’s been quite the opposite in recent years. As you likely know, consumers have shifted away from beer in favor of wine and spirits for most of this decade, thanks in particular to the millennial and boomer generations. However, says Brandweek, that trend is starting to change.

Since beer began losing share, the industry has fought back tooth and nail. For example, Heineken is running an ad where a consumer chooses a cold beer over a martini. We wouldn’t be surprised if more ads that directly challenge wine and spirits begin surfacing in the coming months.

At the same time, not everyone agrees that beer it up for a big comeback. In the article, Frank Walters of Impact Databank said he doesn’t see it, while Dave Ozgo of DISCUS said the growth in beer is not just coming from spirits, but low-end beers as well.

We think it’s fair to say that consumers are still trading up, whether it’s from low-end beer, wine and spirits to the high-end arena. High-end beer is a force to be reckoned with, true, but low-end beer, just like low-end wine, isn’t doing so hot. People want martinis, premium wine or crafts and imports - or in other words, something to make them standout.

NORM WESLEY STEPS DOWN AS CEO

Fortune Brands announced today that Bruce Carbonari, currently president and coo, will succeed Norm Wesley as ceo, effective January 1, 2008. Wesley, 57, currently chairman and chief, will continue as chairman of the board. He will have served as ceo for eight years at the time of the transition. Carbonari, 51, has also been elected a member of the board effective August 21.

“Bruce will have served as president and COO for the same length of time that I did before becoming CEO at the end of 1999,” said Norm in a press release.

“By continuing to serve as chairman, I will look forward to continuing to lead major strategic initiatives, including our interest in the sale process surrounding Absolut vodka,” he continued.

VINTAGE POINT ENTERS WASHINGTON STATE

Vintage Point – Partners in Wine, the Sonoma-based sales, marketing and general consulting firm specializing in small, luxury wine producers, announces its entry into the Washington state wine market with the signing of clients JM Cellars, Goose Ridge Estate Vineyards and Winery, Stonecap Wines and Alder Ridge.

NEW ZEALAND EXPORTS TO U.S. GROW 27%

New Zealand wine exports have risen 36% over the past year to hit NZ$700 million and 76 million liters. The UK was the top export market, with sales rising 36% to NZ$227 million. The US came in third, behind Australia, with sales growing 27% to NZ$176 million.

New Zealand Winegrowers chair, Stuart Smith, says the 2007 vintage produced a crop of 205,000 tons, up 11% on last year.

CASTLE BRANDS NOMINATES TWO NEW BOARD MEMBERS

Castle Brands says it has nominated its eight current directors for reelection, in addition to nominating two new individuals to its Board. The new nominees include Gill Jefferson, who has primarily worked with the Irish Distillers Group, and Keith Bellinger, Castle Brand’s current president and coo and former Allied Domecq exec.

Phillip Frost, M.D. was not nominated for reelection due to extensive commitments elsewhere, which would have prevented him from attending a number of the regularly scheduled meetings of the Board. He will instead remain an investor and special advisor to the Board.

THIRD LARGEST VODKA BRAND PUT ON THE BLOCK

Russian Alcohol, owner of Green Mark vodka, has reportedly been put up for sale. As Russia’s best selling vodka and the number three vodka brand in the world, spirits companies are likely paying attention.

Russian Alcohol has appointed investment bank ABN Amro to advise on a sale that is expected to go for about $600 million. The group is owned by a Russian investment fund, Industrial Investors.

In addition to Green Mark, the company also produces Zhuravli and Marusya vodka brands along with other drinks. The company is headquartered in Moscow and led by chief Sergey Sorokin.

TOM WARK TALKS RETAILER SHIPPING RIGHTS, PART II

WSD had the chance to talk with Tom Wark, director of the Specialty Wine Retailers Association (SWRA) last week. To check out Part One of the interview, click here. Otherwise, kick back and enjoy Part Two as you, dear reader, are a fly on the wall.

WSD: From what I understand, wholesalers say Granholm focuses on product-based discrimination. In other words, states can’t discriminate against a producer based on where the product is coming from; however, geography alone cannot create discrimination, such as in the case of out-of-state retailers.

TW: Well, that’s just simply wrong. Granholm is very, very clear. They’re arguing that as long as the supply of wine comes from an in-state wholesaler anyone’s able to ship to a consumer, and he’s talking about residency requirements that have recently been struck down.

WSD: Okay. So you guys have other litigation you’re dealing with right now such as Texas and California? How is that going?

TW: In 2005, California passed a law very similar to Illinois, again at the behest of wholesalers. Basically California changed from its reciprocity system to a permit system. The way the bill was originally written, out-of- state wineries and out-of-state retailers would have been allowed to get a permit to ship into California. Wholesalers insisted that retailers be struck out of that, and that’s how the bill passed.

SWRA immediately sued the California and we got an agreement with the California ABC not to enforce the new law against out-of-state retailers for a period of two years during which time SWRA would pursue a new law that basically allowed out-of-state retailers to ship into California. We’ve already had a hearing in the California senate and we’re moving toward getting a law passed in ’08 that will codify retailers being able to ship into the state on the same terms that wineries are able to ship into the state.

Texas passed a law, of course, that prohibited out-of-state retailers from shipping into Texas while still allowing Texas retailers to ship to Texas. We sued them. We’ve gotten through all of our briefs and we’ll be having oral arguments on summary judgment on September 21st. That was a really interesting case, Megan, because right in the midst of that whole case being worked through, Texas wholesalers pushed through a new law in Texas which essentially leveled it down. Now in Texas, according to SB 1229, a Texas retailer may only ship wine to a consumer who resides in the county where that store resides. And it’s quite clear why they passed that law. They were afraid that we were going to win our lawsuit and so they were trying to protect themselves through a cynical leveling down provision. And now Texans basically can’t get any wine shipped to them that exists outside the county in which they live. This answers the question, do wholesalers ever have consumers' interests at heart.

WSD: Are things looking good in Texas, or is that a state that the SWRA is a little more worried about?

TW: We believe our arguments are stellar. The issue is how the judge will treat the new law as related to our lawsuit.

WSD: Right. Okay. And what other states are you guys fighting in right now?

TW: Those are the only two states in which we have litigation going on right now, California and Texas. Beyond that, we’re doing is a lot of consumer outreach. We’re also working closely with a variety of different state regulatory bodies to clear up confusions in a variety of different laws. So, for example, Missouri just changed from reciprocity over to a permit system but they left reciprocity in place for retailers. And then they were under the mistaken assumption that there was no reciprocity states left in America for retailers, so they stated in their newly issued rules that no retailers from out of state can ship into Missouri. But of course California remains a reciprocal state for retailers as does New Mexico. So we do that sort of work too. Our job basically is to work on behalf of retailers across the country and consumers to make sure they have access to the wines that they want.

WSD: What do Specialty Retailers see as their biggest threat right now?

TW: The biggest threat that we see right now to consumer rights is most certainly wholesalers who are trying to hang on to an outdated system that simply does not work for the 21st century. Consumers have every expectation that they’ll be able to go online and purchase the wines they want. States have numerous controls for collecting taxes, for keeping the market orderly, but wholesalers are trying to hang onto a system that was built to their advantage over 75 years ago. And as a result of that system they have enormous power in the state legislature. I mean, wholesalers donated $5.4 million since 2000 to the Illinois legislature. And there’s no one else who can compete with that. Who wouldn’t love to have a monopoly on sales? I mean, I can see why the wholesalers want to protect that, but it’s not good for consumers and it’s not good for retailers.

Specialty Wine Retailers is growing. As a national organization we’re becoming more and more powerful with more and more clout. And I think one of our biggest assets is consumers who love wine. They’re looking for someone who’s going to represent them in these battles, someone who’s always going to stand up for them no matter what. And I think Specialty Wine Retailers is probably the only organization out there that’s actually willing to take action on behalf of consumers, the only organization.

Consumers need an advocate out there. They need an advocate who’s going to stand up for them and say you should be able to obtain the wine that you want to obtain without being obstructed by any number of different obstacles. We’re going to be the ones who stand up for consumers and we’re going to fight for their rights. We are going to stand up for retailers' rights. We’re going to sue where we have to and we’re going to lobby where we have to. By the time we’re done consumers are going to have a right to buy the wine they want.

WSD: Thanks again Tom for speaking with us.

VICTORY FOR WHOLE FOODS

As what must come as a relief for the natural food grocers, a federal judge refused to temporarily block Whole Foods' $565 million acquisition of rival Wild Oats. The two companies could complete their deal as early as next week. As of press time, the FTC has not said whether it would file an emergency appeal or pursue its own administrative trial that could derail the deal.

A TALK WITH TOM WARK AND RETAILER SHIPPING RIGHTS

WSD sat down with Tom Wark, director of the Specialty Wine Retailers Association (SWRA) earlier this week to get his take on the Granholm litigation swarming the country. The SWRA generally fights for states to pass legislation that will allow out-of-state retailers to ship directly to consumers. On their website, the SWRA says they are “the only group of retailers seeking a ‘borderless’ wine market so that consumers can purchase and receive wine directly from any retailer in the United States.” Let’s take a look at Part One of the interview as you, dear reader, are a fly on the wall.

WSD: How did you get involved with the SWRA and the wine business in general?

Tom Wark: Well, I got involved with the SWRA when they were looking for an executive director back in December of last year.

I’ve been involved on the periphery of the direct shipping industry for many years, first being involved with it when I was the public relations consultant for Matanzas Creek Winery where Bill MacIver, who was one of the owners, was very involved in the early direct shipping issues. And so I worked with him pretty closely.

I got into the wine business in 1990 when I took a position at a public relations firm that specialized in wine and then three years later I opened my own firm.

WSD: Okay, great. I want to go ahead and talk about Illinois because it’s fresh in everyone’s mind. Is the SWRA planning on contesting the outcome of HB 429 if the governor signs it?

TW: Yes, at this point Specialty Wine Retailers is looking for the best way to contest the bill, and that could be filing suit in advance of it taking effect, which would be I believe July first of next year, or after it takes effect.

WSD: In the Illinois case, the Specialty Retailers argued that blocking out-of-state retailers from shipping directly to residents reduces consumers’ wine selection. Illinois retailers and wholesalers, however, argued that consumers will have just as much choice through in-state retailers and direct shipments from wineries. How do you rebut that?

TW: Well, first there’s no possible way that the wholesalers in Illinois can provide Illinoisans with the universe of wine. Thousands and thousands of wines not available to Illinoisans, particularly imported wines and the rare and fine wines, including wines that show up at auctions, will not be available to Illinoisans. Under HB 429, an Illinoisan can go straight to an American winery and purchase wines from them. That doesn’t mean, of course, that they’d be able to get their hands on all the wines that that winery would produce. If it doesn’t exist in Illinois at any retailer they’re out of luck. However, if they were allowed to buy that wine from out of state retailers, they could very easily go online and purchase from any number of places that have it.

In addition, there’s the problem of imported wines. You simply can’t buy wine directly from an Italian or German or a French winery and have it shipped here. It’s illegal and the cost would be prohibitive.

WSD: What about California crush facilities that have wholesaler licenses?

TW: Yeah, there’s a category of winemakers in California that don’t have “winery” licenses. They’re essentially virtual wineries and they have a combination type 17 and type 20 licenses. Those are essentially wholesaler and retailer licenses. What that allows them to do is make their wine at a crush facility or somebody else’s winery. And then they can go ahead and sell that wine directly to a wholesaler or directly to an individual in California. The problem is that since they’re not licensed as wineries they would not be able to get a permit in Illinois, because the Illinois permit system that was just passed says that only a winery can get a permit and these people are not wineries. They have retailer and wholesaler licenses. And there are hundreds of those in California.

WSD: What about those individuals that claim out-of-state retailers never actually had the right to ship directly to Illinois residents in the past?

TW: Let me just, in fact, I believe I actually addressed that on your Web site. But let me read to you the language concerning reciprocity in Illinois. This is directly from their law:

“Not withstanding any other provision of law, an adult resident or holder of an alcoholic beverage license in a state which affords Illinois license either adult residents an equal reciprocal shipping privilege may ship.”

So in other words, you simply have to have an alcoholic beverage license. An alcoholic beverage license is a retailer, wholesaler or a winery. I don’t believe that any member of the