INFORMATION RESOURCES NAMES NEW CEO

Information Resources, Inc. (IRI) has named John Freeland president and ceo effective October 1. John previously worked at salesforce.com. He succeeds Scott W. Klein, who has served as president and chief since January 2004 and is joining Symphony Technology Group as an operating partner.

DIRECT SHIPPING WOES IN OHIO

Ohio’s new direct wine shipping law goes into effect Oct. 1 and winery advocates are not happy. In June, an Ohio law was passed that bars medium and large wineries from shipping directly to Ohio consumers. (The official cap is 150,000 gallons). Furthermore, Free the Grapes, a winery trade group, says confusing language in the bill may scare off vintners.

The so-called confusing language has to do with the annual shipping limit. The bill sets a 24-case limit per “family household,” rather than an annual limit per winery, per individual, as is common in most states. Because wineries cannot be sure how much wine a household has purchased directly from other wineries, they will not risk the penalties of non-compliance, says the group.

According to Ship Compliant Blog, however, “any penalty for a violation of the case limit provisions will fall solely to the consumers who order the wine, so long as no individual winery were to ship more than the legal amount to a given address.”

TROUBLED RABBIT RIDGE WINERY SELLS FOR $4M

Rabbit Ridge Winery is reportedly selling its Healdsburg tasting room and dormant winery to Ken Wilson, who owns nearby Wilson Winery and Mazzocco Vineyards. The winery sold for about $4 million. To read more about Rabbit Ridge’s checkered past, click here.

TERLATO GAINS NEW SPANISH IMPORT

Terlato Wines International has joined with Spanish winery Bodegas Olvena to imports its Crianza, Hache, Coupage, Cuatro 4 and Chardonnay wines into the US.

BLAVOD SUSPENDS SHARES, SELLS U.S. BUSINESS

Blavod Extreme Spirits shareholders voted in favor of selling its US business to Black Diamond, a company controlled by Blavod's current ceo Jeff Hopmayer, earlier this week. As a result, the AIM listed company has temporarily suspended its shares as it works to complete the sale and finalize its reports and accounts.

The sell of Blavod’s former US business will be completed no later than today (September 28), the company said. Meanwhile, the company expects to publish its accounts in the week beginning Oct. 1, after which “trading in its shares will recommence.”

Quick Background: Under the AIM Rules, Blavod must suspend trading because it will not have posted its accounts to shareholders by September 30.

THE WINE GROUP WINS TRADEMARK BATTLE AGAINST V&S

Golden State Vintners, a subsidiary of The Wine Group, has won its case against Vin & Sprit, the company announced yesterday. The Svea Court of Appeal in Stockholm, Sweden sided with a lower court against V&S, and ordered the company to cancel its registration of the Golden Gate trademark in Sweden. The Swedish court also awarded damages to GSV in an amount to be determined for breach of contract regarding the Golden Gate wine brand.

The Court of Appeal said V&S infringed GSV's trademark rights by falsely claiming it had secured permission to use GSV's Golden Gate mark on V&S' labels for the Golden Gate brand. Also, the court ruled that V&S breached a license agreement with GSV by registering the trademark in Sweden without permission, and selling wine under the trademark Golden Gate in Sweden from suppliers other than GSV.

In a statement, GSV acknowledged its win but claimed it “continues to suffer from V&S' deceptive marketing practices...and plans to take further legal action against V&S under the Marketing Act.”

David B. Kent, chief of The Wine Group, said:

“I am astounded that V&S would take such a laissez faire attitude towards the international protection of trademarks and by their wrongful support of such a low standard for consumer confusion regarding trade dress. Their actions may regrettably make it more difficult to defend their own ABSOLUT brand from similar knock-off and counterfeit products in the future.”

THE INDUSTRY LOSES A LEGEND

We regret to inform you that Bill Wirtz died yesterday at Evanston Hospital in Illinois after a battle with cancer. He was 77.

In the wine and spirits industry, Bill is best known for the Wirtz Beverage Group. He took over the flagship operation of Judge & Dolph in Illinois in 1950, and grew the business into a four-state operation comprised of five distributorships operating in Illinois, Wisconsin, Minnesota and Nevada. Bill was also president of the family-owned Chicago Blackhawks hockey team.

“Anyone who got to know Bill personally adored and admired him,” WSWA ceo Craig Wolf said in a statement. “He was an unforgettable man. His personality and his caring spirit filled any room he entered-he was truly larger than life. I consider myself fortunate to have had the opportunity to work with such a kind and generous man-the perfect gentleman.”

Bill was known for his expansive charitable contributions in the community at large, along with being a staunch defender of the industry. WSD offers its condolences to his family, including his wife Alice, children Rocky, Gail, Karey, Peter and Alyson, and his seven grandchildren.

Visitation will be on Sunday, September 30 from 2 to 9 p.m. at Donnellan Family Funeral Home, 10045 Skokie Blvd, Skokie, Ill.

The funeral service will be on Monday, October 1 at 10 a.m. at Fourth Presbyterian Church, 126 East Chestnut Street, Chicago, Ill.

In lieu of flowers, the family has requested that memorials be made to: Chicago Blackhawk Charities, 1901 West Madison Street, Chicago, Ill. 60612; or Wine & Spirits Wholesalers of America Foundation, Inc, 805 15th Street N.W., Suite 430, Washington, D.C. 20005.

GREY GOOSE OFFICIAL SPONSOR OF BREEDERS’ CUP CHAMPIONSHIPS

Grey Goose will be the Official Sponsor of the 2007 Breeders’ Cup World Championships (BCWC) to be held in Oceanport, N.J., Oct. 26-27. It has also entered a multi-year agreement to sponsor the $2 million Breeders' Cup Juvenile Fillies.

In addition, Grey Goose will continue to be title sponsor of the Grey Goose Vodka Breeders' Cup VIP Party on Thursday, Oct. 25, and an official sponsor of the Breeders' Cup Charity Gala on Friday, Oct. 26.

EU WILLING TO COMPROMISE IN CONTROVERSIAL WINE REFORM

In a small victory for critics, the European Commission has agreed to compromise on some of its highly controversial wine reform proposals after meeting with agricultural ministers yesterday (Sept. 27).

Following protests by several countries, mainly France and Germany, EU agriculture commissioner Marian Fischer Boel said she is willing to delay the timetable for ending the current restrictions on planting rights. By extending the deadline, competitive wine producers will be able to expand production.

Also, she agreed to compromise on a proposal to ban the use of sugar, which is common in Germany and other northern countries, as long as it was limited to small producers who use it for their own production.

For background on the EU’s proposed wine reforms, click here.

TOM FLOCCO EXPECTS STRONG HOLIDAY SEASON

In a small piece by Reuters, Tom Flocco (Beam Global chief) says the company expects a strong holiday season. He also said the company has not seen any drop in sales due to the weak economy and does not expect any during the fourth quarter.

COSENTINO: CRIPPLING MANAGEMENT ISSUES BACK ON TRACK

Napa-based Cosentino Signature Wines saw sales rise 62% to $5.3 million in the six months to June 30 thanks to a surge in wine club membership, the company said. Shares rose 50% yesterday (September 26) as a result.

As you’ll recall, the company struggled with debt last fall, which ceo Larry Soldinger blamed on a lack of proper management. Splits over the future of the company were worsened when the bottling of Cosentino was delayed last fall, leading to supply problems.

“The lesson I have learned is to keep control of the management, and that is something I will hold on to,” Larry said.

He also reassured listeners that “un-coordinated relationships between the company’s previous management and our key distributors” was now stabilized.

“With the relationships with key distributors back in place and available inventory on hand, the first six months of 2007 saw record results for the period,” he continued.

Larry replaced Keith Smith as ceo in February.

FOSTER’S CHAIRMAN RESIGNS

Foster’s Group chairman Frank Swan will retire after eight years in the position. The company said that Swan will be replaced by David Crawford, who has been a non-executive director on the Foster's board since 2001. In addition, non-executive director Colin Carter plans to retire at the end of the month.

STE. MICHELLE WINE HIRES NEW VP OF MARKETING

Ste. Michelle Wine Estates announced last week that Martin Johnson will be joining the company as senior vp of marketing in October.

Johnson has more than 18 years in the fine wine business and most recently was managing director and ceo for Evans & Tate Wine Group of Australia. He has also served as executive vp of marketing for Jackson Wine Estates in California and senior vp of marketing for Robert Mondavi Winery of California.

JACKSON FAMILY ACQUIRES CHATEAU POTELLE WINERY

Jackson Family Wines has purchased Chateau Potelle winery, located in Mount Veeder next to Jackson’s Veeder Peak Vineyard. The winery sold for a reported $13.5 million and does not include brand or inventory.

TESCO REVEALS NEW PLANS IN NOVEMBER LAUNCH

Tesco has added 48 new Fresh & Easy stores to the list of 50 previously announced locations in California, as well as Las Vegas and Phoenix. The first stores are set to open in November, with about 30 more to follow in February. An additional 100 stores are scheduled to open during the next few years in California, Arizona and Nevada, according to a company spokesman.

“In order to ensure freshness is paramount, we've put our distribution center in Riverside, central to the areas where we are building stores, and we're making daily deliveries to each of our stores. We also aim to source as much as possible from local suppliers,” said John Burry, cmo.

Tesco says its food production facility will employ between 1,500 and 2,000 people within the next five years.

The stores will be roughly 10,000 sq ft, which is “smaller than the typical supermarket.” The release repeatedly says that convenience, price and freshness are key points for Tesco’s Fresh and Easy concept, which stands as clear competition to Whole Foods.

There have been rumors that both Whole Foods and Safeway plan to open smaller-store formats if the Fresh and Easy idea proves profitable.

VINTRUST GAINS NEW LEADERSHIP

Wine collection management company Vintrust hired Barry Waitte to replace founder André de Baubigny as the company’s ceo. André now resides as chairman. San Francisco-based Vintrust was founded in 2003 by de Baubigny and Timothy Komada, who is cfo.

PATRON WINS “SPIRITS BRAND OF THE YEAR.”

Market Watch has named Patron “Spirits Brand of the Year,” describing the brand as having “unprecedented success” in the US. The magazine’s annual “Leaders Choice Awards” polls approximately 200 of the largest retailers in the US to choose one spirit brand, one beer and one wine.

“Back in 1989 when Patrón was first introduced to the market, our goal was, and always has been, to produce the world's most simply perfect tequila,” says Ed Brown, President and chief of the Las Vegas-based Patrón Spirits Company. “It's gratifying to know that so many consumers and retailers enjoy our tequila and hold us in such high esteem.”

SOBIESKI’S ‘TRUTH IN VODKA’ AIMS TO OVERTHROW LUXURY COMPETITION

Polish-based Sobieski Vodka says it is entering the US “to overthrow overpriced vodkas,” through its sole importer Imperial Brands, a wholly-owned subsidiary of Belvedere. Not only is Sobieski highlighting the low-retail price, but it’s playing on heritage as well. The brand is reportedly named after Poland's King Jan III Sobieski who saved Europe from the Ottoman Empire.

Sobieski is the #1 premium vodka in Poland and the world’s 7th bestselling and fastest growing international spirits brand, said the company in a statement.

“Consumers are spending between $30 to $60 a bottle for so-called super- premium vodka...It's time to get back to basics with an honest, premium vodka at a price that won't make consumers' heads swim,” said Chester Brandes, president and chief of Imperial Brands.

During a time of such heavy trading up, particularly in the vodka category, it will be interesting to see how well Sobieski does. Focusing on its heritage, though, is a good point of differentiation.

In the company’s press release, it acknowledges that Sobieski is being “introduced at a time when the vodka ‘wars’ are raging,” and points out that 60 new vodka brands were introduced in 2006 alone.

Their observation is certainly true as flavored vodkas, energy vodkas, colored vodkas and vodkas targeting women are just a few examples of what we’ve seen hit shelves in recent years.

“In this cluttered marketplace, companies are resorting to marketing gimmicks that focus on image rather than what's in the bottle itself. As a result, consumers have become confused as to what exactly vodka is and why they are paying astronomical prices that seem unrelated to what is in the bottle.”

With a suggested retail price of $10.99 for a 750 ml bottle and $19.99 for a 1.75 liter bottle, Sobieski Vodka will be available this fall in major retail stores throughout the U.S. The marketing campaign accompanying Sobieski’s launch is entitled, “Truth-In-Vodka.”

WSWA AND IRI HAVE STRUCK A PARTNERSHIP

that will give WSWA members discounted access to market data to better understand their products, industry trends and consumers.

CALI RETAILERS TO SHIP TO MISSOURI

Good news for California wine retailers. The Specialty Wine Retailers Association (SWRA) reports that Missouri now allows California retailers to ship directly to Missouri consumers, since retailers in both states fall under a reciprocity arrangement. Although California and Missouri passed laws that placed wineries under a permit system, retailers remaine under the old reciprocity system.

OWSLEY BROWN TURNS TO POLITICS

In an interesting piece of news, the Courier Journal is reporting that outgoing B-F exec Owsley Brown II might be considering running for the US Senate against minority leader Mitch McConnell. The article says that Brown was a Republic until last December, when he switched to a Democrat.

As you’ll recall, Brown will step down as B-F chairman at the end of September. Paul Varga, chief and president, will take his place.

FTC OPENS INVESTIGATION IN OK

The FTC is reportedly reviewing Oklahoma’s alcohol beverage laws to determine whether the state is requiring a form of pre-fixing. The OK ABC has until Oct. 10 to provide copies of the state’s alcohol regulations.

The components of state alcohol code that are of interest to the FTC include price posting regulations, bans on credit, and bans on volume discounts, all of which were deemed unconstitutional under the Sherman Act.

Right now, it is unclear whether the FTC is simply conducting an investigation or if they intend to make some changes in the Oklahoma alcohol beverage law.

REPORT CLAIMS PERNOD IS FAST APPROACHING STOLI DEADLINE

Russian newspaper “Kommersant International” is reporting that SPI Group (owners of Stoli) is negotiating with companies other than Pernod to purchase its Stoli brand. This latest development comes after SPI has been unable to reach an agreement with Pernod by an previously-established deadline. As you’ll recall, Pernod and SPI struck a deal in 2005 that gave Pernod the distribution rights to Stoli outside of Russia and most notably the US, with the exclusive rights to buy the trademark. Since then, the two companies have not come to terms with an agreement.

“SPI Group president Andrey Skurikhin said that the group is now negotiating with other companies, both Russian and international. Skurikhin declined to name those companies,” according to Kommersant.

Could it be a negotiation strategy from the Russians? Pernod has squashed speculation by claiming that talks with SPI have continued as usual. As a part of the deal, the French company retains the right of first refusal. However, it is unclear when Pernod’s “exclusivity period” to the Stoli trademark runs dry.

If there really is something to this rumor, then it looks like Pernod has even more incentive to acquire Absolut. So far, its competition comes from Diageo, Beam Global and Bacardi.

“I’ll be interested to see how this thing unfolds, that’s for sure. I’d say Pernod or Beam, but I wouldn’t really be that surprised if Bacardi ended up getting the brand,” an executive at a major spirits supplier told WSD. Keeping things vague. We like it.

But as Patrick Ricard eloquently put it in last week’s investors meeting: “The one I prefer is the one I buy.”

CAMPARI HOPES TO PROFIT FROM ABSOLUT DEAL

In your daily dose of Absolut news, Campari CEO Bob Kunze-Concewitz told Italian daily Corriere della Sera that the company is not interested in bidding for Absolut. However, he said the sale could benefit Campari if the eventual buyer has to sell other brands or if they need a local distributor.

When asked if he is interested in the auction, Kunze-Concewitz said, “No, this is a deal for big players. But it could represent a great opportunity also for us. It shuffles the cards and different scenarios could emerge.”

PIPER SONOMA CONSIDERS MOVING TO MENDOCINO

Sparkling wine brand Piper Sonoma may soon relocate outside of Sonoma County to Mendocino County. It has reportedly reached the end of its 10-year production contract with J Vineyards, and officials at Remy USA say it is in talks to move the brand to a new Hopland wine facility under renovation by RB Wine Associates.

If Piper Sonoma moves to Mendocino will it have to change its name? A truth in labeling law passed last year requires wines with Sonoma in their name to use at least 75% of their grapes from the region. Remy officials implied to the Press Democrat that Piper will continue to source its grapes from Sonoma.

However, nothing is finalized yet.

DIAGEO GAINS, WHILE PERNOD AND B-F LOSE SHARE IN AUGUST

Kaumil Gajrawala of UBS reports that NABCA volumes grew by 4.9% in August as compared to strong growth of 5.5% in August 2006. Year to date growth has been 3.8%, only slightly below the 3.9% volume growth reported for 2006.

DIAGEO, CAMPARI AND REMY GAIN SHARE. Diageo’s volume grew 5% (4.3% ytd) in August, while gaining share in Scotch, Canadian whiskey, gin, cordials and cocktails. It lost some share in vodka (+7.1% vs category +7.4%), rum (+1.5% vs category +4.2%) and tequila (+0.8% vs category +6.8%).

Both Campari and Remy gained share in the month.

PERNOD AND B-F LOSE SHARE. Kaumil notes that Pernod’s performance in August was weak at 1% (3% ytd). The company gained share in Scotch and rum, but lost share in gin, cordials and significantly in vodka and brandy/Cognac. Vodka was down -1.8% vs category +7.4%. Brandy/Cognac declined -31% vs category +4.4% where Pernod is deemphasizing Cognac VS growth, said Kaumil.

Meanwhile, B-Forman lost share with 1% growth in August as compared to flat results ytd (-0.44%).

UBS has buy ratings on Diageo, Pernod and B-F. The firm “remain upbeat about the US spirits market with volume growth expected at 2-3% and price/mix growth of 2-3%, with recent comments from Diageo management highlighting the economic resilience of premiumization.”

THREE MONTHS LEFT TO COMMENT ON TTB PROPOSAL

The alcohol beverage industry will have 90 more days to comment on a TTB proposal to enforce a mandatory serving facts label, including calories, fat and carbs. The TTB is extending the deadline to Jan. 27, 2008 for public comments on Notice No. 73.

HAVENS WINE CELLARS GOES GREEN

Havens Wine Cellars in Napa is going green. The company has reportedly completed a rooftop solar installation and is now running completely on solar power. Havens says it also plans to use solar power to fuel its anticipated 60% growth over the next four years, ultimately saving as much as US$14,000 per year in energy costs. The solar power system will reduce the winery’s carbon footprint by more than 87,000 pounds of CO2 annually, equivalent to the carbon captured annually by 12 acres of forest.

BABY BOOMERS: FITTING A SQUARE PEG IN A ROUND HOLE

Reaching baby boomers through advertising is not always easy in the modern world, as many marketers will tell you. Cell phones, the internet and video games, for example, were not around when Baby Boomers were children, and therefore do not resonate with Boomers as they do with their children and grandchildren. [Ed. note: my Dad, a successful and intelligent individual, has no idea how to work a computer or cell phone, and has no interest in learning, either.]

With that said, an interesting article on adage.com by Michael Antonoff this week specifically addresses how to market to Baby Boomers.

“You don't want to overwhelm us with science, but by the same token you don't want to make us think we're stupid. Appealing to our sense of nostalgia is a smooth entry point.”

“So, how do you appeal to anadigious Americans, measured by some accounts at 82,826,479 strong? You make them feel comfortable about change. You play the nostalgia card,” he writes.

It’s an interesting read. To view the article in its entirety, click here.

WILL THE SCOTCH “RENAISSANCE” HIT HOME IN THE U.S.?

There’s a good piece in the FT that discusses the much buzzed about Scotch “renaissance,” which got us thinking. The article suggests in is title, “Whisky: Brown is the new white for distillers,” that brown spirits, most notably Scotch, will soon trump white spirits, specifically vodka. While we’re not yet seeing those trends in the US, it’s clear that spirits companies are paying attention to rising demand.

According to IRI data, Scotch whiskey dollar sales grew 2.2% in the four weeks ending August 12, while volume was down -3.6% in the US. Meanwhile, vodka sales were up 5.6% and volume grew 1.5%. So while Scotch has a ways to go to catch up with vodka, we’re definitely seeing some growth.

Scotch is “aspirational” for “newly affluent” consumers in Asia and South America, says the article. That may be true, but we’ve yet to see those strong trends in the US although demand is reportedly on the rise. Meanwhile, Scotch sales in the UK, Spain and Italy are down, although Europeans remains the biggest consumers of Scotch.

There’s no denying that there’s been a lot of movement in the whiskey industry lately. For example, India’s Vijay Mallya recently purchased Whyte & Mackay, which is a bit ironic since Mallya was a top defender of what the Scotch whiskey distillers deemed unusually high import tariffs in India.

"In the last few years, there have been concerns about whether vodka or other white spirits were actually eating into the Scotch whisky market, but that trend seems to have started fading away and the demand for Scotch whisky - particularly in the emerging economies - is coming back stronger than ever," Vijay was quoted saying in an earlier article in FT.

Major companies such as Diageo, Bacardi and Beam Global have also started pumping money into their whiskey brands.

Bacardi announced in July it will spend over $250 million in the next decade to expand its Dewar’s Scotch production in response to “growing global demand.”

Meanwhile, Diageo plans to invest over $200 million to build a new malt distillery in Scotland, while Chivas Brothers (owned by Pernod) also spent millions of dollars in expanding bottling operations in Scotland this year. In addition, both Pernod and Diageo have invested more money in global marketing campaigns for their whiskey brands, including Johnnie Walker and Ballantine’s.

On a similar token, Beam Global declared 2007 “the year of Bourbon.” The company will support its claims with the launch of four new Jim Beam TV ads, and a 5 year, $70 million investment in Jim Beam and Maker’s Mark.

“Trading up” and “fitting in by standing out” are two growth drivers in the alcohol beverage industry today. If spirits companies can convince drinkers that Scotch is once again “cool,” we think they’ll see an even higher rise in sales. In a note to young hipsters: if you want to beat the tide, trade in your cocktail for a premium, aged Scotch.

E&J GALLO WINS LAWSUIT AGAINST NATURAL GAS SUPPLIER

The 9th U.S. Circuit Court of Appeals on Wednesday (Sept. 19) sided with E&J Gallo in a lawsuit against EnCana Corp., a Canadian natural gas supplier. E&J accused EnCana and others of conspiring to unlawfully raise prices of natural gas sold to the winemaker during the energy crisis in 2001. The appeals court upheld a district court ruling that had thrown out EnCana’s move to dismiss the lawsuit.

Gallo's suit seeks $30 million - the difference between what it says it should have paid and what it did pay based on fraud. EnCana has called the allegations absurd.

PATRICK RICARD CALLS RETIREMENT A “NON-EVENT.”

In today’s fiscal 2006-2007 conference call, Pernod chairman Patrick Ricard called his impending retirement a “non-event.” Although prodded by investors to give a more specific timeline for his departure, Patrick would only say that he plans to retire towards the end of next year.
“My successor [Pierre Pringuet] is sitting right here next to me...it’s a non-event really, the company will remain the same...it’s a non-occurrence in the life of an organization such as ours...that’s just the way it is. I’m not going to do as some have done, i.e., ask my successor to retire before me,” he said, laughing.

With regards to the hot topic of Absolut and Stoli, Patrick remarked that “the one I prefer is the one I buy.” Good answer.

“There are pros and cons from both brands in terms of size, penetration you name it,” he pointed out. “When we acquired Stoli, Absolut was not up for grabs at the time and we’re very happy to distribute Stoli. Tomorrow we might want to stop the negotiations for Stoli but as of yet Absolut is not up for sale, it’s almost of for sale, but not quite. We will know in October...we will know when we know, what can I say?”

Patrick said the company shall find the right financing if (and when) it indeed competes for Absolut.

FROM MALIBU TO MARTELL. The brands that showed the most growth in the Americas during fiscal 2007 were Martell, Jameson, Glenlivet, Malibu and Stoli.
Martell saw 12-month depletions grow 4% in the US, with particular success in the XO and Noblige extensions. In fiscal 2007-2008, Pierre Pringuet said there is an expected decline in cognac, which likely will result in a significant price increase and volume decrease.

“In cognac, things are a little more involved...we should be able to face up to the situation and we could always restrict sales and we should experience strong growth for our aged brands,” said Patrick later in the conference.

Jameson saw depletions rise 21% in the US, while The Glenlivet and Malibu depletions both grew 9%. Pierre said Malibu’s new Tropical Banana flavor helped accelerate growth in Q-4. Stoli depletions were slightly lower at 6%, but was helped by its “very successful” ad campaign entitled “Authenticity,” said the company.

Meanwhile, Chivas showed “modest growth” in the US, while Kahlua depletions stabilized at the end of June after experiencing a -4% drop in March. Beefeater has regained footing after Pernod introduced new packaging and a new ad campaign. US depletions were down -1%, which the French company called “a sharp improvement.”

In the champagne sector, Mumm is “back with a vengeance,” said Pierre, while posting a 1% gain in 12-month depletions. Perrier-Jouët depletions rose 14%.
Sales grew 5% in the Americas for the year, but the cost of energy and alcohol adversely affected the company’s results overall. For the fiscal year, Pernod’s results were not exceptional but they were solid.

Pernod said all its former-Allied brands benefited from a substantial increase in ad spend with the relaunch of advertising & promotional campaigns. The 15 strategic brands attracted more than 70% of marketing expenditure and 90% of growth in the 2006/07 financial year.

OUTLOOK. Pernod said it anticipates another year of strong growth. So far it has seen a “good start of the financial year in July and August, in particular for our premium brands.”

DIAGEO PARTNERS WITH ZAGAT IN COCKTAIL RATING SYSTEM

In a bi-industry collaboration, Diageo announced it has joined with Zagat Survey to launch Drinkwell (www.idrinkwell.com), the first online resource guide to restaurants with the best drinks and drink service.

Visitors to www.idrinkwell.com will have free access to the ratings that Zagat surveyors have given to the hundreds of drinkwell establishments across the country, based on the quality of drinks, service, atmosphere and cost.

KROGER’S SAME-STORE SALES INCREASE 6%

Kroger’s shares jumped 7% yesterday (September 18) after the grocery chain saw sales increase 6.6% to $16.1 billion in the second quarter. Same store sales rose 5.8% with fuel and 5.1% without fuel. Revenue rose 7% to $16.14 billion in the quarter from $15.14 billion last year.

The company said it has focused more heavily on improving customer service with faster checkouts, expanding organic food offerings and new formats including Marketplace that’s double the size of a typical Kroger.

Kroger expects its same store sales to grow in the 3% to 5% range with a slightly improving operating margin for the fiscal year.

DEKUYPER RED APPLE TO HIT SHELVES

In other Beam Global news, DeKuyper Red Apple will hit shelves nationwide at the beginning of October. Red Apple is available at a suggested retail price of $10.99 for a 750ml bottle.

DON & SONS GIVES AQUINAS NAPA VALLEY A FACELIFT

Don Sebastiani & Sons says it will roll out a new, more elegant look for its fast-growing Aquinas Napa Valley brand in response to rapidly increasing on-premise sales.

“This new look has an upscale appeal to restaurateurs and still reflects the heritage and inspiration of St. Thomas Aquinas,” Don Sebastiani, Jr. said.

The new label has replaced large areas of flat color with rich tones reminiscent of historical paintings and frescos. In addition, the new back label features a toll-free number for information on Aquinas.

PAUL WALSH GAURDED BUT “VERY INTERESTED” IN ABSOLUT

It seems like the media is in the midst of an Absolut craze as rumors and reports continue to pile on top of one another. In an interview with Paul Walsh, Reuters quotes the Diageo chief as saying the company is “very interested in Absolut.” Futhermore, Paul seems to think there are solutions if any anti-trust allegations arise, but would not comment specifically on potential concerns regarding European and US regulators.

“We can see solutions in all jurisdictions but the complexity will vary from market to market,” Walsh told Reuters in an interview on Wednesday

Paul points out several times that many of Diageo’s decisions depend on several factors, including financial details and market by market viability, or in other words, anti-trust problems. The Swedish government is expected to contact all likely buyers in October.

So while Diageo would like to acquire Absolut, it is not a “must have” acquisition, as Paul noted in an earlier interview. Reuters confirmed that Paul has not visited Sweden in connection with the sale of Absolut.

SAUZA HORNITOS TO LAUNCH $15 MILLION MARKETING CAMPAIGN

According to a MarketWatch report by William Spain, Beam Global is about to roll out two new versions of its premium Sauza Hornitos brand supported by a $15 million marketing campaign. The company hopes to reposition its Hornitos Reposado and introduce two new extensions, Plata and Anejo. As you likely remember, Beam acquired Sauza from Allied-Domecq in 2005.

Andy Floor, senior global brand manager for Sauza told MarketWatch that the new campaign “near triples any single-year investment ever made in Hornitos.”

It looks like Beam Global is attempting to tap into the current “trading up” craze among consumers. The tag line reads "The Fine Line of Tequilas," which is meant to encourage consumers to “sip, shoot and savor.” Ads will appear on radio, in print and outdoor, but the majority of the budget will be spent online.

Hornitos Reposado produces roughly 300,000 cases a year.

CASTLE BRANDS APPOINTS INTERNATIONAL DISTRIBUTOR

US-based Castle Brands has selected Godoy Wines & Spirits Corp. as its exclusive broker in the Caribbean, Latin America and Mexico. Godoy’s appointment marks Castle’s first venture into these growing markets, in addition to current nationwide distribution in the US and the Republic of Ireland and growing distribution in Europe.

The company’s brands include Boru Vodka, Clontarf Irish Whiskey, Brady's Irish Cream and Celtic Crossing Liqueur.

ICON ESTATES UNVEILS PASO CREEK LABEL

Constellation-owned Icon Estates is adding a new label, Paso Creek, to its portfolio. Paso Creek's inaugural 2005 vintage offers Paso Creek Cabernet Sauvignon and Paso Creek Merlot. The addition is slated for nation release Oct. 1 with a suggested retail price of $18.

SMIRNOFF LAUNCHES “SIGNATURE” AD CAMPAIGN

Diageo-owned Smirnoff is launching its national “Signature” ad campaign this month, the company said. The campaign will include in-theatre advertising, an interactive Smirnoff Russian heritage game through Yahoo.com and the Smirnoff Experience in Moscow on September 29. The Moscow Experience is the first of four landmark cities explored by The Smirnoff Ten, consumers from around the globe who have won the opportunity to travel the world in the footsteps of Vladimir Smirnoff.

To read more, click here.

WOMEN LESS COMFORTABLE ORDERING WINE AT RESTAURANTS

In general, young adults are not comfortable with wine – a fact that most of us know well. In a more interesting turn, however, a survey conducted by Harris Interactive for Robert Mondavi Private Selection found that women are more likely to feel uncomfortable when it comes to choosing wine at a restaurant.

Approximately 3,400 adults ages 21 and over answered the online survey in mid-July. It found that young adults are less likely to drink wine at least once a week, are more likely to feel uncomfortable pairing wine with food, and are less likely to have received or given wine as a gift. Women in particular are less comfortable with pairing food and wine and asking a waiter about specific wines at a restaurant.

On a happier note, 69% of respondents said they either strongly or somewhat agree that they would like to learn more about wine. The survey also showed that 3 out of 5 wine drinkers have ever visited a winery (58%) and half (54%) have attended a wine tasting.

Younger drinkers are less likely to send back a bottle of wine in a restaurant, believe expensive wines dictate quality and feel embarrassed to ask questions about wine.

To read more of the statistics, click here.

ABSOLUT BIDDING TO BEGIN NEXT MONTH

It looks like the Swedish government auction to sell V&S for about $5-6 billion could begin as early as next month. A news report at bloomberg.com is basing its claim on “five people with direct knowledge of the planned transaction.”

Potential bidders, including Pernod, Bacardi, Fortune and Diageo, will receive details of the auction by mid-October, according to the Bloomberg sources. They declined to be named before a sale is final.

The company that ultimately wins the auction could quite possibly become the proud parent of the Absolut, Cruzan and Plymouth brands. That of course depends on how the Swedish government chooses to conduct the sale – whether they will keep V&S in tact or sell it on a brand by brand basis.

“The government is unlikely to favor an initial public offering...the state hasn't indicated whether it will sell all of V&S or just the business involving Absolut,” said the report.

Meanwhile, a spokeswoman for Financial Markets Minister Mats Odell said the government has not yet issued a timetable and does not comment on specific timing or pricing.

FORTUNE. In our opinion, Fortune Brands has by far been the most outwardly aggressive company. The company’s chairman Norm Wesley has reportedly made numerous trips to Sweden and has spoken of his interest quite openly in the press. In August, Norm outlined several reasons why Pernod, Diageo and Bacardi would have problems acquiring Absolut, including anti-trust issues. Norm urged the Swedish government to go with Fortune if it wants to secure Swedish jobs and keep the company from splitting. Furthermore, not only does the company currently distribute Absolut in the US, but Fortune also has a relationship with V&S through its Maxxium joint-venture.

PERNOD. Pernod says it is interested in purchasing all of V&S, but has noted it will have to choose between Stoli and Absolut. As you’ll recall, Pernod has been in talks to acquire the entire Stoli brand for several years.

DIAGEO. Meanwhile, Diageo and Bacardi are keeping relatively quiet. Diageo already owns the top global vodka (Smirnoff) and would likely face anti-trust issues if it tries to acquire Absolut. Therefore, the company has appeared reluctant to show too much interest.

In late August, Paul Walsh told the Sunday Times, “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.”

BACARDI. As a private company, Bacardi has said very little concerning Absolut other than spokeswoman Pat Neal confirming in May that the company sent a letter to Sweden’s government requesting a meeting.

Several analysts and industry insiders have cited Bacardi as the most likely candidate for V&S because it is in the best position to pay the highest price for the company. The question is whether they are willing to pay $6 billion, especially since Bacardi already has a successful vodka brand (Grey Goose). Only time will tell.

UC DAVIS PROFESSOR ADDRESSES STATE OF THE WINE INDUSTRY

Robert Smiley, professor of wine studies at the University of California, Davis, addressed a number of important issues at the Wine Industry Financial Symposium in Napa. In a survey of wine industry insiders and execs, Robert asked questions concerning the popularity of Pinot Noir, global branding, alternative packing, nutrition labeling and future wine industry issues.

Most interestingly, he predicts California vintners are headed for a supply problem in the next five years as demand outstrips the number of wineries in the state.

“The demand continues to grow in this 4 to 5% range, and in 4 to 5 years that’s 20 to 25% more volume and there is just not enough vineyard land and people putting vineyard into production.”

Other challenges include consolidation among retailers and distributors, global competition and regulation issues that plague the entire alcohol beverage industry. Some other interesting quotes are as follows:

“We continue to see a huge amount of interest by the consumer in appellation and the nuance of where the wine is from... If that goes away, we just become a commodity.”

“Ingredient labeling should be limited to ‘Contains Sulfites’ and ‘May Contain Allergens.’ All other ingredients in a bottle of wine change with every bottling. If wineries are expected to change labels constantly, the cost could be prohibitive and could put some wineries out of business.”

Dr. Smiley posted a copy of the survey results on the UC Davis website. To view the presentation, click here.

ARIZONA ENACTS IGNITION INTERLOCK LAW

One of the nation’s toughest DUI laws is set to go into effect Wednesday, September 19. Arizona’s new law includes mandatory ignition-interlock devices for first time offenders, increased fines and a minimum of 45 days in jail for extreme DUI offenders. The Arizona Motor Vehicle Division expects about 17,000 first-time drunk drivers in the coming year.

LEADER UK WINE IMPORTER DIES IN CAR CRASH

We regret to inform you that Thierry Cabanne, founder and chairman of UK wine importer Thierry's Wine Services, died in a car crash near Little Somborne, Hampshire, Thursday (Sept. 13). The Romsey-based company is the UK’s largest importer of French wines. Cabanne was 61.


"Everyone at Thierry's is deeply sad and will miss him terribly,” said the company in a statement.

VIJAY MALLYA GAINS PINKY VODKA

India-based United Spirits, which is led by the boisterous Vijay Mallya, has secured a controlling stake in Liquidity, a Delaware-based specialty vodka distiller, through its Cyprus-based subsidiary Zelinka. The purchase cost roughly $3 million.

Liquidity offers specialty brands such as Pinky Vodka and Marakesh, a vodka liqueur. Pinky is currently in the test-marketing stage and claims to be the only vodka targeted towards women.

BACARDI LAUNCHES “PEACHY” NEW FLAVOR

Bacardi USA has launched a new Peach Red flavor with a suggested retail price of $13.99 for a 750-ml. Peach Red joins Bacardi Limon, O, Coco, Razz, Big Apple and Grand Melon. The package features a bright peach cap and a peach logo label.

“RED WINE DIET” DETAILS THE HEALTHINESS OF WINE

A new book entitled “The Red Wine Diet” is the latest publication to support red wine health claims. As most of us already know, red wine drinkers are supposedly less likely to develop heart disease, diabetes, and dementia than non-wine drinkers, and as a result, live longer. Author Roger Corder goes on to explain what exactly makes red wine healthy and which wines are better than others.

In his study, Corder says compounds called procyanidins help reduce the risk of heart disease among other things. Half a bottle of wine each day is roughly what a person should consume to reap the benefits, according to Corder, which is much more doable compared to the resveratrol study earlier this year.

[Ed. note: As you’ll recall, critics of the resveratrol study pointed out that an individual would have to consume multiple bottles of wine a day to achieve any real benefits.]

Based on the grape variety and wine-making style, some red wines contain much higher levels of procyanidins than others. Corder recommends specific wines including Malbec Riserva from Altos Las Hormigas in Argentina, Madiran wines, Robert Mondavi Napa Reserve and Matthew Cellars Red.

To read more, click here.

THE FUTURE OF WINE AND SPIRITS

In a WSD survey conducted at the beginning of the summer, we asked our readers what they consider to be the next biggest trend(s) in the wine and spirits industry. The majority of replies stuck to these themes: import/export markets, on-premise and off-premise trends, trading down vs. trading up, packaging, consolidation, varietals and spirits categories. One thing that everyone seems to agree on is that consumption will continue to grow. (“Wine with lunch will soon become a staple,” said one reader). Some of the answers may surprise you, so let’s take a look.

IMPORTS AND EXPORTS. Many of our readers think wine imports from countries such as Argentina, Chile, South Africa, New Zealand and Spain will become a much stronger force in the US.

“Argentina will pass Chile on the premium ladder (if it hasn’t already). France will keep doing what it always has at home and will step up vineyard and brand purchases for labels outside France (Argentina, Chile, US etc.),” said one reader.

ON- AND OFF-PREMISE TRENDS. The word “convenience” popped up in a lot of peoples’ answers. What that means exactly we’re not sure, but thankfully other respondents were more specific. Readers believe that restaurants and retailers will eventually focus more on food and beverage pairings, which we agree with. In addition, they wrote that wines by the glass could eventually range between $12-$20, much like martinis, and that restaurants and hotels will soon offer more high-quality private labels wines. Here’s a sample of some of the responses:

“More specialization in retail. The proliferation of thematic franchises such as Vino 100 and Wine Styles is a precursor to an explosion in entrepreneurial retailing which will lead to boutique and specialty retailing with focus on specialized areas (i.e. strictly new world wine shops, Mediterranean wine stores, collectible wines, as well as unique retail pairings with wines ranging from a typical wine & cheese boutique to the wine and art or wine and antiques).”

“An eventual reduction in the total number of wine sku's at retail.”

“Retail recognition to innovation.”

“Back to basics rapport selling.”

TRADING DOWN VS. TRADING UP. An increase in consumer education will eventually affect the current “trading up” trend by—well, no one could really decide.

“I think both will continue to go upscale and boutique with more continued focus on the big and bold in wine and experimentation in spirits.”

“Hopefully, a shift away from consumers blindly buying the label they know best and actually tasting and learning more about the spirits they drink.”

“More production of "luxury" brands”

“More super premium spirits, more marketing of wine to under-35 consumers.”

“Generic wines being trendy again.”

“Increased popularity for artisan spirits -- more than 70 micro spirits makers currently in U.S.”

PACKAGING. Survey respondents think we will see more things like bottle shapes, tetra packs, box wine (premium and lower-end) and screw caps in the future.

INDUSTRY CONSOLIDATION. It’s a major trend even now as suppliers, wholesalers and retailers race to get bigger. As if we haven’t already heard enough about consolidation, most WSD readers think it’s only going to continue. Here are some interesting comments:

“Continued global sharing of information and winemaking techniques in the future. We will see more winemakers that travel to make wine in both hemispheres and discover things that will aid the entire industry as a whole.”

“I think over the next 10 years you will see the mega giants (distributors, suppliers and retailers) start to go back to the mom and pop businesses where service is the main focus and not profits.”

“Direct to consumer and the falling apart of the three-tier system especially in wine.”

VARIETALS AND SPIRITS CATEGORIES. According to you, consumers want more flavors and more colors. When it comes to wine varietals, respondents believe the following are the future: Riesling, Rose, California Petite Syrah, South African Pinotage, Italian Prosecco, New Zealand Pinot Noir, California red blends (Meritage) and esoteric varietals from international wineries.

“Younger consumers, especially female, are already exploring all flavor profiles in all facets of the industry, and are moving towards whiskey on more occasions. I predict a continued move to red wines, especially Pinot Noir, Beaujolais, and other more approachable reds.”

For spirits, almost all the respondents stressed “premium” and/or “super-premium.” The categories included: Gin, premium Rum, premium Vodka, premium Tequila, Irish whiskey, Tequila flavor Bourbons and imported Russian Vodkas.

“Tequila is growing but I don’t see the long term, steady growth, mainly because of the lack of flavors. It’s difficult to sell a premium flavored Tequila --- The consumer just don’t know what to do with it and it ain't Raspberry Margarita's.”

“Rum is on the way up - Tommy Bahamas, Cachaca, Rhums... tropical/Latin drinks with premium brands.”

KAHLUA GETS A NEW LOOK

In an attempt to boost sales, Pernod is reportedly giving its Kahlua liqueur line, including Hazelnut and French Vanilla, a different look. The new packaging will highlight its Meso-American roots, with illustrations of the Mexican landscape on the label, said the company. Other strategic initiatives will take place throughout the year to help the ailing brand.

WAL-MART ADOPTS NEW, FAMILY-CENTRIC LOGO

Wal-Mart is trading in its 19-year-old “Always Low Prices” motto for a new tagline that reads “Save Money. Live Better.” An article in Ad Age says that Wal-Mart is opting to return to its “low prices” roots and putting its recent attempts to move upscale on the back burner.

The push features 30-second TV spots that will run during four fall-season premiers: "Dancing with the Stars," "Desperate Housewives," "Grey's Anatomy" and "Ugly Betty."

To read more about it, click here.

BONNY DOON FOUNDER TALKS WITH USA TODAY

There’s an interesting article in USA Today about Randall Grahm, self-titled “president for life” of Bonny Doon Vineyard in Santa Cruz.

In the article, Randall says he is rethinking his approach to winemaking.

"Biodynamics is about trying to find the individual character of a site," he says. "I'm really trying to produce more life force in my wines, and that changes everything you do."

To read the article in its entirety, click here.

A NEW GENERATION MAKES THE JIM BEAM LABEL

In other bourbon news, Jim Beam’s great-grandson Fred Noe’s likeness will join the six other generations of Beam family distillers on the brand’s label. Noe, who is 50, is assuming the role as Jim Beam’s distiller after longtime master distiller Booker Noe died in 2004.

The new label will hit store shelves this month, and will appear on Jim Beam, Jim Beam Black, Jim Beam Rye and Jim Beam Choice.

JOSE CUERVO LAUNCHES A CUERVO FAMILY SECRET

Diageo’s Jose Cuervo is launching a Cuervo family secret. Jose Cuervo Platino, limited-edition ultra premium silver tequila, was once reserved exclusively for the Cuervo family. The brand hits North American shelves this month with a suggested retail price of approximately $59.99 for a 750 ml bottle.

A fully integrated marketing campaign will focus on Platino’s heritage and
ultra-premium characteristics. The ad tagline, “Every Family Has Its Secret,” features visuals from the Jose Cuervo distillery, La Rojeña, and will appear in national and regional lifestyle publications as well as beverage trades beginning this fall.

WILD TURKEY DISPLAYS “AMERICAN SPIRITS” LIMITED EDITION

Pernod-owned Wild Turkey is releasing a limited edition, 100 proof, 15-year-old bourbon in conjunction with a U.S. Senate resolution officially declaring the month "National Bourbon Heritage Month," says the company. Wild Turkey American Spirits will be bottled at bond proof, in recognition of the historic tradition of storing barrels of whiskey in bonded, government-supervised warehouses, thereby insuring their unimpeachable age and purity.

American Spirit will be available in very limited quantities in the US in September. Distribution will then extend to Australia and Japan in October.

ANGOSTURA ON ACQUISITION FAST TRACK

In continuation of our story earlier this week, Angostura has not only made the former Seagram’s distillery its international headquarters, but has also acquired Charles W. Medley distillery in Owensboro, KY. The company reportedly paid over $3 million for the distillery.

"One of the gaps in our portfolio has been Kentucky bourbon," said Lawrence Duprey, chairman of Angostura’s parent, CL Financial Group, as reported by the Courier Journal.

"Kentucky bourbon is enjoying significant growth in Europe and the Far East. It's becoming a world brand," Duprey said.

It looks like Angostura is on the acquisition fast track, but it remains to be see how things will eventually pan out for the Caribbean company.