AL GOV. HALTS SUNDAY SALES

After experimenting with a store in Birmingham last Sunday, Alabama Gov. Rob Riley said the Alabama Alcoholic Beverage Control Board will continue to keep state-owned liquor stores closed on Sundays. The governor’s decision put an end to the ABC’s plans to possibly open other state-owned liquor stores on future Sundays during events such as NASCAR. Sunday sales are legal by private stores in some parts of Alabama, including Birmingham.

COMPETITION COMMISSION BACKS UK RETAILERS

The Competition Commission says UK supermarkets have done no wrong by selling alcohol below cost.

The Commission’s 18-month inquiry states “below-cost selling by national retailers is not part of a predatory strategy aimed at Convenience Stores or specialist stores and is not having significant unintended effects on smaller stores.” But what about suppliers?

The Government will stage its own inquiry into alcohol pricing and promotions beginning in October and ending April 2008.

“Small retailers and suppliers are being squeezed out because of practices such as selling items below the cost of production and bullying suppliers,” said Matthew Knowles of the Federation of Small Businesses.

WSWA FILES AMICUS BRIEF IN TENNESSEE

The Wine & Spirits Wholesalers of America (WSWA) among others filed an amicus brief Monday in support of Tennessee’s law requiring consumers to conduct face-to-face transactions at in-state and out-of-state wineries.

The pending appeal is of a lower court ruling which upheld Tennessee’s ban on direct to consumer wine shipments.

For background on the lower court ruling, click here.

FOSTER’S HINGING ON DROUGHT AND CURRENCY TROUBLES

Today, Foster’s Group addressed shareholders at its annual meeting in Adelaide. In the meeting ceo Trevor O’Hoy and chairman Frank Swan addressed supply issues, price recovery, the California harvest and currency problems the company is currently facing.

WINE AND BEER TO STAY IN TACT. Frank Swan, chairman of Foster's Group denied all speculation that the company will eventually split its beer and wine operation.

“The board and management team clearly keep all of these options under review, but we have no intention at the present time of moving to separate the two businesses and nor do we believe that's in the best interests of the shareholders that we should do so.”

Swan is retiring from his role as Chairman after the meeting. He joined the board in 1996.

TIGHTER SUPPLY: THE GOOD, BAD AND THE UGLY. O’Hoy says that tighter grape supply in Australia, and to some extent, California, will help prices after a prolonged period of discounting. However, current droughts in Australia may cause Foster’s to have too short of a supply in the 2008 harvest.

The good news for Foster’s is that smaller 2007 and 2008 Australian harvests will likely eliminate the oversupply that has caused a major downshift in grape and wine prices in recent years.

“Recent price rises and a steady shift toward premium products will drive improved revenue per case sold,” said O’Hoy.

Another positive for Foster’s is trading up trends across the pond. The Americas are crazy over premium wine, including both California and imported.

“Growth in the Americas was driven by ongoing investment in sales capability and innovation in brands such as Beringer Third Century, Bohemian Highway and Yellowglen Pink and Yellow. Revenue continues to grow faster than volume in the North American market, with Foster’s portfolio very well placed to benefit,” said Frank Swan, chairman of Foster's Group Ltd.

However, there are some setbacks with both regions. In the Americas, the company expects “constant currency earnings and margins to be below the prior period, as a result of product mix and a higher cost 2006 Californian vintage.”

In Australia, the drought is causing a lot of concern. Following a small 2007 vintage, Australia is facing the potential for an even smaller 2008 harvest, depending on weather conditions in coming months, said O’Hoy. If the 2008 yields are too small, Foster’s could have a reverse supply problem on its hands.

“We are monitoring the vintage carefully and have undertaken a wide range of scenario planning exercises to ensure we are prepared.”

Australian regions that are not dependent on the Murray irrigation system have the potential of good yields, said O’Hoy, which is the “majority of Foster’s own vineyards.”

“In a typical year, our own vineyards and contract suppliers not dependent on Murray River water, would supply around half of our requirements.”

Foster’s will look at the possibility of sourcing wine from international markets to fill any supply gaps.

The California harvest, meanwhile, is almost complete. O’Hoy said the “intake was in line with our targets and our quality expectations for the vintage are very high...We expect total Californian yields in this vintage to be below last year and expect to see some further tightening in overall supply.”

STRONG AUSTRALIAN DOLLAR POSING PROBLEMS. The strong Australian dollar has continued to negatively impact earnings, said O’Hoy, particularly in wine.

In the September quarter, the average Australian – US dollar exchange rate was up around 6c cents compared to the average rate for the 2007 financial year, and the Australian dollar has continue to strengthen.

“Currency is likely to be a significant net negative impact on our 2008 earnings growth and return on investment in wine,” said O’Hoy.

GROWTH DRIVERS. Down to specific brands and emerging trends, O’Hoy says Foster’s is capitalizing on what consumers’ want.

“As our largest wine brand, Beringer is critical to our success in the important North American market. The successful launch of Beringer Third Century and growing success in export markets marked another successful year for this great Californian brand.”

“Bottled white wine – particularly crisp dry white - is in major growth and we are targeting this area through great brands like Rosemount, Fifth Leg and New Zealand’s first maker of Sauvignon Blanc, Matua Valley.”

“Finally, Pure Blonde, Lindeman’s Early Harvest, Yellowglen Jewel, Cougar and Black
Douglas Zero – are targeted squarely at a growing ‘lifestyle’ category [i.e. low-carb].”

SUPPLY STRUCTURE. In 2007, Foster’s worked to create a global supply system, which the company claims is “already seeing efficiency and procurement benefits.” Nonetheless, O’Hoy acknowledged the new business model had “just started to scratch the surface” and that the company will continue to “leverage our global supply capability to drive efficiencies through every aspect of our business.”

CLOSING REMARKS. In his closing remarks, O’Hoy said that “while currency will remain a drag on earnings growth and wine returns, I believe we can continue the strong constant currency performance we saw in the second half of the 2007 financial year.”

And as his last address as chairman, Swan said the following:

“The challenges we faced in 2007 were many – encompassing the completion of our significant integration program, a rising Australian dollar, and an extended period of Australian grape surplus. However, it’s often the tough times that bring out the best in a company and its employees.”

TEX MCCARTHY LEAVES DIAGEO FOR GLAZER’S

Glazer’s has appointed Tex McCarthy as its senior vp malt beverages where he will be responsible for all sales and marketing issues relating to malt beverages. Tex will report to Mike Maxwell and will work out of Glazer's Corporate Office.

He most recently held the position of president, national account and sales development at Diageo. Prior to that, Tex served as vp regional marketing for Beam Global.

BACARDI SPENDS $6M ON HOLIDAY CAMPAIGN

Bacardi is set to run its first brand-wide holiday-focused campaign in more than a decade, according to Brandweek. TV and print ads will appear around Thanksgiving and will run for eight weeks. Bacardi will reportedly spend $6 million on the seasonal campaign.

PERNOD SHOWS “EXCELLENT” START TO THE YEAR

Pernod showed an “excellent” start to the year with first quarter organic net sales up 11.6%. Growth was driven by the company’s 15 strategic brands, which grew 9% in volume and 16% in value.

Favorable spirits/wine mix and strong positive impact of price increases helped accelerate the growth of the partner brands. Nine out of the 15 strategic brands recorded double-digit growth in value: Martell (39%), Jameson (24%), Ballantine’s (22%), Havana Club (22%), Chivas Regal (19%), Mumm (19%), Malibu (13%), The Glenlivet (13%) and Jacob’s Creek (10%). Other spirits brands registered growth overall in spite of difficulties encountered by Hiram Walker Liqueurs in the US, among others.

The spirits business grew 13.4% thanks to good performance in all geographic regions. Meanwhile, the wine business was up 3.3% with help from its premium brand portfolio.

“First quarter performance was excellent and again illustrated the success of our premiumization strategy and development in emerging countries. These very good results enable the confirmation, in current market conditions and on a like-for-like basis, of guidance of strong growth in sales and operating profit from ordinary activities for Pernod Ricard in 2007/08,” said chairman Patrick Ricard.

NORTH AMERICA. North American organic net sales grew 7.1%, while Jameson, Malibu, The Glenlivet and Wild Turkey continued to expand rapidly in the US. Chivas Regal sales increased slightly, whereas Martell and Mumm declined following the price increases, said Pernod. Kahlúa and Beefeater sales decreased again.

The wine and champagne portfolio, including Perrier-Jouët, Mumm Napa, Jacob’s Creek, Montana, Campo Viejo, grew strongly.

Now for a closer look at the U.S. Jameson showed impressive success in the U.S. with first quarter depletions up 23%. Both Malibu Rum and Glenlivet depletions grew 8%, with Malibu benefiting from the launch of the Tropical Banana flavor and a positive impact of price increases. Meanwhile, Chivas Regal depletions grew 2% during the first quarter and Stoli’s depletions grew 1%.

When it comes to wine, Jacob’s Creek and Montana especially showed strong growth. Jacob’s Creek depletions grew 9% in the quarter, while Montana jumped an astounding 24%.

Martell VS declined in the U.S. due to price increases, said the company. Kahlua’s situation remains difficult, with depletions down -10% despite positive impact from the launch of Kahlua Hazelnut and Kahlua French Vanilla. Beefeater also saw depletions slide -5%, which Pernod blamed on difficult marketing.

JESS JACKSON SITS DOWN WITH THE LA TIMES

Check out this interview with Kendall-Jackson’s Jess Jackson in the LA Times. In the article, Jess said he became a vintner because he “was attracted by the lifestyle. I wanted to get away from law and become a farmer.”

"We are not looking for quarterly profits," said Jackson. "We want something to hand down to the next generation."

To read the article in its entirety, click here.

MOSELLE RIESLINGS PROFIT FROM U.S. DEMAND

German wine exports from the Moselle region have increased by 21% in the year ending July thanks to rising demand from the U.S. and Scandinavia. Sales to the U.S. rose 29% to 63 million euros, while exports to the Netherlands reached 8 million euros, 7.5 million euros for the U.K. and 7 million euros for Norway, according to the Moselle Wine Growers Association.

“Americans prefer more and more expensive, high-quality Riesling,” said the group's president Adolf Schmitt said in an interview with Bloomberg.

QUINTESSENTIAL APPOINTS SAN FRANCISCO SALES REP

Napa-based wine importer Quintessential has appointed Douglas Griswold as a sales rep for the San Francisco Bay area. He will report directly to Dennis Kreps, Quintessential partner and national sales manager.

“THE PALM” TO LAUNCH NEW CASUAL CONCEPT

Palm Management group, owner and operator of The Palm steakhouse, plans to open a more casual concept called Palm Bar and Grill. The restaurant will debut in a yet unnamed airport by the middle of next year. NRN reports that the secondary concept would feature lighter fare, quicker service and a lower price point than its upscale sibling, The Palm.

WISCONSIN GOV. GETS VETOE HAPPY

In one swoop, Wisconsin Gov. Jim Doyle vetoed almost all alcohol related provisions in the new state budget Friday (Oct. 26). One provision dealt with alcohol distribution while the other proposal would have allowed retailers to offer liquor samples.

Gov. Doyle vetoed legislation last Friday (Oct. 26) that would have banned in-state and out-of-state wineries from selling their products directly to retailers. By vetoing the legislation, Gov. Doyle has prolonged the amount of time that Wisconsin is not compliant with Granholm.

As WSD reported on Friday, Gov. Doyle was expected to pass legislation that would allow all wineries that obtained an out-of-state permit to ship up to 108 liters annually to consumers. The law would have banned all wineries from shipping directly to retailers, which in-state wineries are currently allowed to do. Therein lies the problem.

WISCONSIN'S CURRENT LAW. As a “reciprocal” state, only wineries from other reciprocal states can ship directly to Wisconsin residents. Currently, Wisconsin only has a reciprocal arrangement with California, which allows California vintners to ship directly to Wisconsin consumers but prevents wineries in other states from doing the same thing. In-state wineries are allowed to sell directly to retailers but NOT consumers.

What’s his reasoning behind the veto? Gov. Doyle wrote the following:

“While the changes to the distribution system included in these sections may help address some concerns with sales of alcohol to minors, they also may have stifling economic effects on the small wineries around the state, forcing them out of business…While I am vetoing these provisions, I support the concept of a three-tier distribution system. The language included in the bill, however, does not adequately address the needs of small entrepreneurial wineries…”

Doyle said his administration will work with the Legislature to adopt legislation that complies with the Supreme Court ruling. It sounds like in-state wineries are worried about losing direct-to-retail shipping righs and competing with out-of-state wineries in general.

LIQUOR TASTINGS BANNED. Another part of the budget that didn’t make it was a proposal that would have allowed up to 1.5 ounces of liquor to be handed out as a free sample.

"To me, it's absurd that you walk into a grocery store and start taking shots," Doyle said.

However, beer and wine tastings are already permitted in the state.

DISCUS called the veto “a blow to equal treatment in the marketplace.”

“Adult consumers in a modern economy should be given a reasonable and responsible opportunity to sample the growing number of premium distilled spirits products,” said the group in a statement. “Since 1999, 23 states have passed or expanded consumer spirits tastings laws and Mothers Against Drunk Driving did not oppose any of these bills because the industry insisted on responsible guidelines.”

PRICE INCREASES AND STRONGER INVESTMENTS BOOST FORTUNE’S SPIRITS

Backed by price increases and new marketing campaigns, Fortune’s wine and spirits business helped offset the negative impact of the U.S. housing sector and is geared for the next quarter. Norm Wesley, chairman and chief of Fortune Brands, said that “as we enter the biggest [fourth] quarter, we feel good about the health of our brands and growth prospects.”

In the third quarter, sales were impacted by higher prices on premium wine and spirits brands, favorable mix shift and synergy costs. The company also increased brand spend behind global advertising campaigns for Sauza Tequila, Courvoisier Cognac and Canadian Club Whiskey.

When coo Bruce Carbonari was asked about the marketing investment, he said the campaigns are “spread” evenly throughout the world.

“It’s global...It [the campaigns] is very selected and targeted to an audience and geographic market targeted towards a specific brand,” he said.

“We're benefiting from higher pricing on certain premium spirits brands, the favorable trend of consumers trading up to higher end brands, and further synergies from our acquisition of the Allied Domecq brands,” continued Norm.

Wine and spirits sales rose 2% in the third quarter, impacted in part by soft revenue performance for select regional brands. Net sales for the nine months ending Sept. 30 were down -0.1%. As Bruce said in the conference call, premium brands continue to outperform regional brands.

Worldwide and U.S. case volumes (based on depletions) were both up low-single digits. Worldwide case volumes for Jim Beam grew low-single digits ytd, while revenues were up in the high-single digits due to price increases. Similarly, Sauza Tequila volumes rose low-single digits and revenues increased in the mid-single digit range. Maker’s Mark and Courvoisier case sales grew in the impressive high-single digit range, while Teacher’s was up double digits. DeKuyper and Canadian Club failed to show similar growth, as they were “off slightly” and flat, respectively.

“We continue to see the US market to be solid, good strong growth, strong mix with premium vs. regional,” said Bruce. He stated that Europe and the U.S. remain strong, while Australia and India continue to be Beam Global’s two fastest growing markets.

Meanwhile, wine brands grew in the high-single digit range with especially strong performance from Clos du Bois, Geyser Peak and Wild Horse.

In the forecast, Bruce predicted wine and spirits to be up in the high and mid-single digit range in the fourth quarter.

During the question and answer portion of the conference, Bruce was asked if he’d seen a slowdown in the shift from spirits to beer. Here’s what he had to say:

“We have not. Monthly numbers have volatility all the time but as we look over the year we do not...premium brands are doing very well but regionals are not doing as well...the cocktail culture is alive and the innovation that we’ve all brought to that culture continues motivating the consumer to purchase premium level spirits.”

A CLOSER LOOK AT THE CONTROVERSIAL ROBERT PARKER BIO

Much of the industry is up in arms over the new Robert Parker biography, as we reported earlier this week. If you are interest in more information, check out this great piece by the AFP.

PERNOD TO SELL CANEI WINE BRAND

Pernod says it will sell its Canei Wine brand to Baarsma Wine Group Holding, a wine distributor to the Benelux countries. Pernod Ricard Italia will continue the production of the Canei Wine for Baarsma Wine Group Holding (BWGH) in its production facility of Canelli, Italy.

INERTIA BEVERAGE HIRES FORMER FOSTER’S DIRECTOR

Inertia Beverage Group named Kristi Taaffe to the new position of vp, marketing. Taaffe joins the group after most recently serving as director, consumer relationship marketing at Foster’s Wine Estates. There she managed all aspects of the company’s direct marketing, contact center and e-business division inside its Consumer Relationship Marketing department.

OKLAHOMA REP. AIMS TO LOOSEN WINE SHIPPING LAWS

Oklahoma Rep. Don Armes is proposing new legislation to help the state’s fledgling wineries. His proposal would allow wineries to ship up to 10,000 gallons of wine either in or out-of-state per year directly to consumers. Currently, Oklahoma law prohibits wineries from shipping wine either within the state or out of the state without going through a wholesaler first.

IMPERIAL BRANDS APPOINTS NEW WINE DIRECTOR

Imperial Brands, Inc., a U.S. subsidiary of Belvédère SA, named Brad Coughlin vp, sales director of wines. Prior to joining Imperial Brands, Inc., Coughlin served as vp, sales & marketing at Ironstone Vineyards for nearly 10 years.

KRUG OFFERS NEW $3,000 CHAMPAGNE

LVMH-owned Krug is offering a new single-vineyard Champagne developed by former managing director and winemaker, Rémi and Henri Krug, and Henri’s son, Olivier Krug, who is the current managing director. The new wine, Clos d'Ambonnay 1995, has one of the highest-ever price tags of a newly released wine, currently estimated at $3,000 to $3,300 per bottle. Made entirely of Pinot Noir, the wine hails from the Ambonnay village in Montagne de Reims, rated grand cru. The wine will hit US shelves in the spring of 2008.

SPIRITS VOLUME DOWN -0.9% IN SEPTEMBER

Based on NABCA data, Melissa Earlam of UBS reports that volumes declined by -0.9% in September despite relatively unchallenging year-on-year (yoy) comps of 3.3% in Sept. 2006. Volumes were up 4.9% in August from the previous year, while year-to-date case sales rose 3.2%, slightly below the 3.9% reported growth for the same period last year.

DIAGEO. Diageo’s overall volumes were flat in the year ending September, but gained share in Scotch, Canadian whiskey, gin, cordials and cocktails. The company lost a bit of share in vodka, (2.5% vs. category 2.7%) and lost share in rum (-0.7% vs. category -0.1%) and tequila (-5% vs. category 1.6%).

PERNOD. Melissa describes Pernod’s performance in Sept. as “weak” at -4.9%, despite growing 2.1% YTD. The French company gained share in Scotch and rum, but lost share in cordials and significantly in vodka (-6.4% vs category 2.7%), gin (-6.2% vs category -3%) and brandy/Cognac (-33.3% vs category -3.3%). As you’ll recall, Pernod raised US prices across its portfolio at the start of August.

B-F, CAMPARI AND REMY. B-F lost share after seeing a -6% volume decline in Sept and -1.1% slide YTD. Campari also lost share with a volume loss of -2.3%. Remy, meanwhile, gained 1% share in September.

“We have Buy ratings on Diageo, Pernod and Brown-Forman. Despite a weak month, we remain upbeat about the US spirits market with volume growth expected at 2-3% and price/mix of 2-3%, with recent comments from Diageo management highlighting the economic resilience of premiumization,” said Melissa.

NEW ACQUISITIONS GIVE UST A BOOST

In today’s third quarter financial results, UST said net sales for Ste. Michelle Wine Estates increased 18.3% to $82.3 million as total premium case volume increased 12.6% to 1.2 million. Strong growth was driven by core brands, especially Chateau Ste. Michelle, as well as by last year's acquisition of Erath and the recent acquisition of Stag's Leap Wine Cellars, which closed on September 11, 2007. The net sales growth, combined with improved product mix, led to a 34.1% increase in operating profit to $12.7 million.

"This quarter, Chateau Ste. Michelle was the fastest growing top 25 premium wine brand in the United States," said Theodor P. Baseler, president, Ste. Michelle Wine Estates. "Solid performance by our core brands, combined with our recent acquisitions of Erath and Stag's Leap Wine Cellars, drove strong growth and improved returns in our business."

FTC SEEKS TO DE-MERGE WHOLE FOODS AND WILD OATS

The FTC just won’t give it up. David Kesmodel at the Wall Street Journal is reporting that the FTC is attempting to disrupt the merger between Whole Foods and Wild Oats after the deal was already struck.

In a strange twist, the agency is asking a Washington appellate court to review a federal-district court ruling in August that allowed the $565 million deal to proceed. The agency, which opposes the combination on antitrust grounds, is asking for an expedited ruling. David calls the appeal “a long shot.”

At this point, it seems like it’s a personal matter for the FTC. They already failed to win the preliminary injunction, but are refusing to give it up.

The read the entire story, click here.

MICHIGAN JUDGE SIDES WITH OUT-OF-STATE RETAILERS

A Michigan District Court Judge sided with the Specialty Wine Retailers in a preliminary ruling this week. In the case of Siesta Market v. Granholm, the judge sided with the plaintiff, represented by Alex Tanford and Robert Epstein, on the grounds that Granholm not only covers wineries, but retailers as well.

“The Court will not construe Granholm to explicitly exclude out-of-state retailers from the Supreme Court’s holding solely because the Supreme Court makes no mention of them in its opinion…. In Granholm, the Supreme Court focused more on discrimination against out-of-state economic interest and access to out-of-state markets, rather than, specifically, on out-of-state wine producers,” wrote the Michigan judge.

The decision is in stark contrast to a recent ruling in a New York District Court that upheld a law that bars out-of-state retailers from shipping directly to consumers on the grounds that Granholm applies only to wineries. The NY judge said the following:

“Because in-state retailers are the last tier in the state’s three-tier system, plaintiffs’ challenge to the ABC Law’s provisions…is clearly an attack on the three-tier system itself. However, the Supreme Court reaffirmed the constitutionality of the three-tier system in Granholm, and therefore the plaintiffs’ challenge must fail.”

The SWRA has a similar lawsuit in Texas that will likely be influenced by the recent decision in New York and preliminary decision in Michigan.

SEAN “DIDDY” COMBS SIGNS WITH DIAGEO

Sean “Diddy” Combs (formerly “Puff Daddy”) has signed a multiyear deal to develop Diageo’s Ciroc vodka brand for a 50/50 share in the profits. Depending on how well the brand does, the agreement could be worth more than $100 million for Diddy.

"It is not an endorsement deal," Combs told the AP on Tuesday night. "This is something that will have my daily attention."

Combs will reportedly be responsible for everything from marketing the brand to deciding where to sell it, and will focus on attracting "movers and shakers" to the line.

"I can't overhype someone into loving vodka," he said. But once consumers actually taste Ciroc, "I think we can convert a lot of people."

SOUTHERN GAINS NEW LINE OF ENERGY MIXERS

Southern Wine & Spirits will now distribute a line of energy drinks and energy cocktail mixers from Jetset Beverages, the company said today. The energy mixers include Jetset Club Soda, Jetset Tonic Water, and Jetset Ginger Ale and are enhanced with a blend of guarana, ginseng, taurine, vitamin B6 and B12 and caffeine.

MCWILLIAM’S WINES TO ACQUIRE EVANS & TATE

Australian-based Evans & Tate have reportedly named the Pendulum Capital/McWilliam’s Wines consortium as the preferred purchaser for E&T’s Margaret River business (including the Margaret River Classic, Evans & Tate Margaret River, Gnangara, The Reserve and X&Y brands). The sale is expected to be finalized on or around November 30. Terms of the sale are confidential.

Pendulum will not actually fund the deal or take a stake in E&T but will merely serve in an advisory role to McWilliam’s. Last month, McWilliams won the rights to distribute E&T wines.

UNAUTHORIZED ROBERT PARKER BIO HITS SHELVES TOMORROW

Famous wine critic Robert Parker is reportedly the subject of an unauthorized, highly inflammatory biography written by Hanna Agostini, a one-time rep for Robert in Bordeaux. Entitled, “Anatomy of a Myth,” it will be released in French tomorrow, October 25. Publisher Editions Scali describes the book as an “antithesis of an authorized biography,” (whatever that means).

COGNAC IMPORTS RISE 2.6% IN THE U.S.

The Bureau National Interprofessionnel du Cognac (BNIC) reported last week that global volume for Cognac was up 7.7% for the year ending September 2007. Premium and super-premium Cognacs are doing especially well, coupled with increased demand in Russia and China.

VSOP (Very Superior Old Pale) and XO (Extra Old), sales rose 10.5% and 15.8% respectively, while VS (Very Special) increased only 5.1%.

The US remains the top importer of Cognac, with volumes rising 2.6% to almost 55 million bottles.

ADAM FIRESTONE OPENS UP ABOUT SELLING HIS FAMILY’S WINERY

In an interesting interview in americanappellation.com, Adam Firestone of Firestone Vineyard opens up about the family selling its winery to Bill Foley of Foley Wine Estates. As the writer Dennis Schaefer put it, “it seems to be the season for wineries and vineyards to change hands.”

In the interview, Adam talks about timing, who called who, family succession and not giving up. He even comments on his brother, Andrew, a former “Bachelor” on ABC.

“I maintain that every vineyard and its history and management is different. There are legions (of) stories of winemakers pulling the sled to a certain point and then passing it on to another. The vineyards remain, we are but temporary custodians,” said Adam.

To read the full article, click here.

CASE SALES OF BORDEAUX WINE ROSE 3%

internationally in 2006-2007 but grew only 0.4% in France, the Bordeaux Wine Council (CIVB) said Monday. Export volume rose to 5.67 million hectoliters and grew 4%, the CIVB said, as compared to the previous year when exports grew 4% as well.

ABSOLUT WELCOMES “MANGO” BRAND EXTENSION

Absolut will begin offering a new Mango flavor addition that will be available in Global Travel Retail beginning February 2008. The company said further information on local launches will be communicated at the time of launch in each market.

“We are confident in the high volume potential of Absolut Mango. Not only because mango is a commercially underexplored flavor, but also since mango has a strong global appeal,” says Matthias Aeppli, vp marketing, V&S Absolut Spirits.

CALIFORNIA COURT REJECTS FRANCHISE LAW FOR WINE WHOLESALERS

Victory for wineries but not wholesalers in California after a court rejected attempts to pass a state franchise law for wine wholesalers. In other words, the jury decided that California vintners have the right to terminate open-ended agreements with wine distributors at any time upon reasonable notice and for any reason - without the requirement of paying a termination fee or any other form of compensation. Since 1995, California courts have recognized that an oral distribution agreement for wine is terminable at will upon reasonable notice.

Ironically, beer distributors were given franchise protection last week after Gov. Schwarzenegger signed Senate Bill 574 that requires a successor brewer to compensate a beer wholesaler if the distribution relationship is terminated. The successor manufacturer is to pay fair market value for the distribution right or face mandatory arbitration.

BACKGROUND. A Stockton jury rejected distributor Frank-Lin Distiller's claim that its relationship with Michael-David brands cannot be terminated without the winery paying a significant termination fee.

Michael-David Winery, producer of “7 Deadly Zins,” terminated Frank-Lin’s distribution agreement in 2006. As a result, the winery says Frank-Lin withheld payments in excess of $350,000 for wine purchased and later sued Michael-David Winery for $8.9 million in damages. Frank-Lin argued that an oral distribution agreement with goals could be terminated only for cause, and then only after written warnings and an opportunity to cure were given.

In the case, there was no written distribution agreement. As there was no agreement on the length of the distribution relationship, the court held that the contract was of indefinite duration, terminable at the will by either party. The court also cited evidence of industry custom that wine distribution arrangements were terminable for any reason and not just for good cause.

CANADIAN CLUB LAUNCHES FIRST AD CAMPAIGN IN 20 YEARS

Canadian Club is launching its first multi-layered national ad campaign in almost 20 years, Beam Global announced today. Entitled “Damn Right Your Dad Drank It,” Canadian Club is evoking a “retro” feel by featuring imagery from the 1960s and 1970s and taglines that remind consumers that their dads “were once cool, stylish and decidedly masculine – and they chose to represent these traits through their drink choice: whisky cocktails made with Canadian Club.”

Beam Global says it is supporting the campaign with a “significant increase” in advertising and promotional spend. Beginning in November, the campaign will be supported by print, out-of-home and radio advertising, experiential elements, point-of-sale items and in-market events that will continue throughout the brand’s 150th anniversary in 2008.

Many family photos submitted by Beam Global employees are included in the “Damn Right” campaign, including vintage photos of a mid-late twenties Dan Tullio, Canadian Club’s current global brand ambassador.

Some of the taglines are as follows: “Your Mom Wasn’t Your Dad’s First,” “Your Dad Was Not a Metrosexual” and “Your Dad Never Got a Pedicure.” Consumer print advertisements will run in Rolling Stone, Sports Illustrated and Sporting News, with additional placements in Playboy, Men’s Journal, Esquire, Outside and Men’s Fitness in December 2007 and throughout 2008.

BORU VODKA TO SPONSOR LOS ANGELES MUSIC AWARDS

Castle Brands Inc. today announced that its flagship brand, Boru Vodka, will be the main event sponsor of the 17th Annual Los Angeles Music Awards. The Los Angeles Music Awards is the largest and longest running Hollywood red-carpet event for independent artists in the world.

PATRON ACQUIRES NEW ULTIMAT VODKA

The Patrón Spirits Company has acquired the global distribution rights to the Ultimat vodka portfolio from New York-based Adamba Imports International. Financial details were not disclosed.

Ultimat is an ultra-premium vodka crafted from a blend of three different vodkas – potato, wheat and rye – and is the only vodka on the market that combines all three, said the company. It is triple distilled and bottled in Poland, and currently available in major markets worldwide, including the U.S.

The Ultimat portfolio includes Ultimat 80 proof, Ultimat Black Cherry and Ultimat Chocolate Vanilla. All three are packaged in crystal decanter bottles, and currently retail for approximately US$50 (750ml).

Patrón will begin offering Ultimat to its domestic, international and duty free distribution partners starting immediately.

“Like Patrón in the early 1990s, Ultimat is very much still in its infancy, and we see tremendous potential to increase awareness and build this brand across the globe,” said Ed Brown, president and chief of the Las Vegas-based Patrón Spirits Company.

OREGON LOOSENS TOUGH LABELING LAWS

Known for having tough wine labeling laws, the Oregon Liquor Control Commission (OLCC) has agreed to relax some of its requirements. As you would expect, some Oregon wineries are in favor of the changes while others are much more skeptical.

VARIETALS EXEMPT FROM 90% REQUIREMENT. Eleven new grape varieties will be exempted from the 90% minimum requirement for varietal labeling. Much to the relief of producers in southern Oregon, those eleven varieties may now blend with up to 25% of other grape varieties and still carry the name of the primary grape. The 11 new varieties include Carménère, Petite Sirah, Grenache, Marsanne, Mourvedre, Roussanne, Sangiovese, Syrah, Tannat, Tempranillo and Zinfandel. Previously, only seven Bordeaux varietals – Cabernet Sauvignon, Cabernet Franc, Merlot, Malbec, Petit Verdot, Semillon and Sauvignon Blanc – could be labeled with 75% varietal content per Federal Regulation.

The remaining 54 varieties, which make up more than 90% of Oregon wine production, will still require a minimum 90%. Pinot Noir, Pinot Gris, Chardonnay and Riesling, among others, fall under this category.

PINOT GRIGIO NOW ALLOWED. Oregon producers can now also use either Pinot Gris or Pinot Grigio on Oregon wine labels. Prior to these changes, only Pinot Gris could be used on the bottle because the 1977 regulations permitted the use of only one name.

GEOGRAPHICAL DESIGNATIONS. Oregon wines may now source 5% of their grapes from a region other than what is specified on the label. At the urging of the Oregon Winegrowers Association, the OLCC has updated the 30-year-old statewide wine labeling regulation that required wines to use 100% of the grapes hailing from the geographical destination featured on the bottle. This change was made to allow for real world cellar practices, such as topping when the wine in barrel evaporates. The current TTB regulation is 85%.

To read more about the new regulations, click here.

NEW ZEALAND WINES FACE LABOR AND LAND SHORTAGES

One of the fastest growing wine producers, New Zealand is set to reach $1 billion in exports by 2010. According to Nielsen scan data, New Zealand wine imports grew 31.4% in dollar value and 33% in volume in the 52 weeks ending September 22, 2007. In the next five years, exports to countries other than the UK are expected to double in volume.

However, industry insiders warn that short supplies in labor, land and water could pose serious issues, particularly in Marlborough. Chief executive of the NZ Winegrowers Philip Gregan said that to produce 300,000 tons of grapes, winemakers need an extra 35,000ha of producing grapevines which is 10,000ha more than they are currently producing.

BEAULIEU VINEYARD TO CREATE $7M GEORGES DE LATOUR WINERY FACILITY

Napa-based Beaulieu Vineyard said Friday (Oct. 19) it's adding a self-contained $7 million winemaking facility for its flagship Georges de Latour Private Reserve cabernet sauvignon. The new winery project will begin immediately and will be developed within an existing building at the BV winery. It is expected to be completed in time for next year’s harvest.

The decision to create a dedicated facility came as a direct result of success with small lot experiments over the past few vintages, said the company in a statement.

The new Georges de Latour winery plans include:

23 oak and stainless steel fermenters (each holding five to seven tons).
Room for 40 percent of production to be fermented in 59-gallon barrels.
Temperature controls throughout the facility.
Beaulieu Vineyard is part of Diageo Chateau & Estate Wines, which in turn is a unit of Britain's Diageo PLC, one of the world's largest wine and beverage companies.

A new private wine-trade tasting room will follow in the spring of 2009.

A RISE IN COUNTERFEITING THREATENS TEQUILA PRODUCERS

In an interesting article in The Arizona Republic, Mexican tequila makers say they are battle a surge of knockoffs as tequila’s popularity continues to rise. Under the Lisbon Agreement, only tequilas made from blue agave in certain regions of Mexico are the real thing, but producers worry that cheap imposters may deteriorate the spirit’s image. The U.S. has not signed the treaty but protects the tequila name under the 1994 North American Free Trade Agreement. In return, Mexico recognizes bourbon and Tennessee whiskey as American spirits.

In September, the Mexican Justice Department seized more than 23,000 gallons of fake tequila in Jalisco state alone. The Mexican Consumer Protection department has banned 41 brands of counterfeit tequila. In addition, the tequila council has hired detectives and lawyers to help combat counterfeiters.

To read the story in entirety, click here.

CREATOR OF THE NAPA WINE TRAIN AND RICE-A-RONI HEIR DIES

We regret to inform you that Vincent DeDomenico died Thursday in his sleep at home in Napa at the age of 92. Vincent is the son of Italian immigrants who porduced Rice-A-Roni - "the San Francisco treat" and later built and ran the Napa Valley Wine Train,

In addition to his wife of 60 years, Mildred, Vincent is survived by their children, Michael DeDomenico, Vicki McManus, Marla Bleecher and Vincent DeDomenico Jr., and seven grandchildren.

The family asks that donations be made in Mr. DeDomenico's memory to the Boys & Girls Clubs of Napa Valley, the Napa Valley Opera House, Queen of the Valley Hospital, or St. Helena Hospital.

A public celebration of his life will be held at 4 p.m. Thursday at the Napa Valley Wine Train station, 1275 McKinstry St., Napa.

FOSTER’S ANNOUNCES NEW GRAPE-BASED VODKA

Foster’s Wine Estates is introducing Boomerang Vodka to the U.S., a 100% grape-based vodka imported from Australia, effective late October. Boomerang is sourced from 100% premium Chardonnay grapes from the Barossa Valley and is five times distilled, charcoal filtered and bottled close to its source in South Australia.

Boomerang is marketed and distributed through Foster’s in a joint-venture with Chris Williams, also owner of Wattle Creek Winery in Sonoma, CA. The suggested retail price for the 750 ml bottle is $19.99.

“Boomerang Vodka is made in Australia and because we're such a high-profile Aussie beverage company, Chris Williams came to us with the opportunity to sell it in the United States,” said Scott Weiss, managing director of Foster's Americas. “We think it makes sense for us as a unique part of our innovation focus because we'll be able to leverage one of our greatest strengths -- marketing the Australian personality – without competing with our existing wine brands.”

C.K. MONDAVI REACHES 1M CASES

Southern Wine & Spirits of Arizona says it has received delivery of the one-millionth case of C.K. Mondavi wine, a 1.5 liter Merlot, of C.K. Mondavi Winery of St. Helena.

TARGET PLANS TO ENTER REMAINING THREE STATES

Target senior vp of real estate, Scott Nelson, said in an interview this week that the company is looking to enter Alaska, Hawaii and Vermont, which will put the retailer in all 50 states. Construction is reportedly underway in Alaska, and the company is currently trying to decide where it should locate in Vermont. Nelson said Target has plans to open a store on the island of Oahu, but it also has interest in opening stores on all the major Hawaiian islands.

Meanwhile, the retailer recently signed a lease to locate in the East River Plaza in Manhattan, a first for Target. Wal-Mart has yet to make similar inroads.

EVANS & TATE RETHINKS ITS FUTURE

Troubled Australian winery Evans & Tate says it will reach a decision regarding the company’s future in December. At a second creditors meeting on Wednesday (Oct. 17), a resolution was passed in favor of adjourning the meeting until December 14, according to a report in The West Australian. At that time, creditors will decide whether to wind up the group, end its administration or execute a deed of company arrangement (DOCA) that results in a better return to creditors than liquidation.

At least five parties, including De Bertolli Wines and a joint-venture between McWilliam's Wines and Pendulum Capital, are believed to be bidding to acquire E&T's assets and operations.

FAIRBANKS, AK LOOKING TO HIKE ALCOHOL TAX 10%.

Fairbanks, Alaska wants to double its alcohol tax to help combat a $2 million shortfall in next year's city budget, according to a repot by the Associated Press. The plan would increase the tax on alcoholic drinks, beer, wine and spirits from 5% to 10% in the city. As you would expect, the plan would apply to restaurants, general stores, bars and liquor stores that sell alcohol inside the city limits, but does not apply to wholesale sales.

MANAGEMENT SHIFT AT GLAZER’S TEXAS

Glazer’s of Texas is making the following organizational changes, the company said yesterday (Oct. 18). Ted Thomas is appointed senior vp, branch managers after joining the company in 1993. Derek Morrison will serve as vp, projects and inventory after most recently working as operations manager for NDC and Julius Schepps Co.

Meanwhile, Miron Sargent is appointed vp, Mustang Spirits and currently serves as state GM of Mustang. Mike Howard is appointed vp, Cactus Spirits and Kevin Mann is appointed vp, trade development.

PERNOD, BEAM AND DIAGEO ATTEMPT TO LIMIT PROMOTIONS IN THE UK

A bit of UK supermarket news in the works. As you’ll recall, alcohol suppliers have had a tough time with British retailers aggressively marketing down prices, resulting in extreme competitive prices and notable margin losses. Constellation has had an especially difficult time competing against private label wines that are sourced from cheap Australian bulk imports and sold for next to nothing.

An article in The Publican claims Diageo, Pernod and Beam Global are in talks with supermarkets to stop “buy one get one free” promotions over the holidays. As you can imagine, suppliers believe the discounts and promotions create unfair competition during a very important time of year.

“This year we are recommending retailers choose a single price point for promotion and support throughout the season,” said David Smith, sales director at Diageo GB to The Publican.

We “have put through a number of price increases this year on our brands without so far seeing a negative impact on volume,” said Drew Barrand, GM of Beam Global UK.

Meanwhile, British retailer Tesco – soon to come to the US – has undergone a number of management changes in recent months. Tesco lost its fifth senior manager, Keith Down, who recently left for pub operator JD Wetherspoon. Other departures include Julia Reynods, former buying director, John Browett, head of IT and potential successor to Tesco ceo Sir Terry Leahy, Steve Robinson, head of Tesco Direct, and lastly Dido Harding, director of Tesco’s development program.

The company denies speculation of a possible “brain drain,” saying, “This stuff about a brain drain is complete nonsense. People join and people leave.”

NEW SILK VODKA CAMPAIGN BEGINS NOVEMBER

Silk Vodka says it will launch ads in Playboy, Cosmopolitan and Vanity Fair November and December 2007 issues to jumpstart a new national ad campaign. To take a look at the black and white photos, click here.

Owned by Soyuz Victan, Silk Vodka is estimated to reach 30,000 cases by the end of the year. The brand retails for $29.99 for a 750ml bottle.

B-F WELCOMES NEW GENERAL COUNSEL

Brown-Forman announced that Matthew Hamel will serve as general counsel, effective Oct. 30. He succeeds Michael B. Crutcher, who retired from the company at the end of August.

EVAN WILLIAMS SINGLE BARREL WHISKEY HITS SELVES

Heaven Hill Distilleries today unveiled its newest vintage of Evan Williams Single Barrel Kentucky Straight Bourbon Whiskey. The 1998 Vintage is matured under the careful supervision of Heaven Hill’s father and son team of Parker and Craig Beam, who monitor the progress of each year’s vintage. Available nationally beginning January 2007, the offering will retail at an average price of $24.99.

JOHNNIE WALKER: QUADRUPLE SALES IN NEXT THREE YRS

Jeremy Mullman of Ad Age reports that Johnnie Walker plants to quadruple its sales within the next three years. If they manage to pull it off, says Jeremy, Johnnie Walker could become one of the largest premium-spirits offerings in the world.

“That blueprint is ambitious to say the least...But not everyone is counting out Johnnie Walker, which has thrived in spite of a tough market for brown spirits in general and for whiskey in particular in recent years.”

One way the goal can be achieved is by flooding the Chinese, Russian and Indian markets, says one industry insider.

To read the article in its entirety, click here.

HOLIDAY SALES ARRIVE EARLY FOR REMY

Remy Cointreau said overall sales for the six months increased 5.7% due to strong growth from its brands. Year on year organic growth was up 9.8%, while spirits grew 5% organically.

Organic sales of cognac grew 13%, accelerated by growth in several Asian and European countries. “Their growth rate again benefited...from an enhanced Group structure due to the logistical platform established in November 2006 in Shanghai,” said the company in a statement.

“Premium cognac was strong in H1 with Asia and Europe highlighted...Shipments to the US were strong in October, a positive sign for a strong Q3 performance in US cognac for Remy,” said Melissa Earlam of UBS.

The Champagne sector increased 14.8% in the first half, with Piper-Heidsieck and Charles Heidsieck performing especially well thanks to “early orders for Christmas and the New Year,” the company said. Most of the growth was seen in Europe and the U.S.

All liqueur and spirits brands “registered growth,” Remy added, “particularly Cointreau in Europe, Metaxa in Eastern Europe and Russia, and Passoa in France and Benelux.”

Meanwhile, partner brands grew 3.7% organically, helped by the development of Imperia vodka in the US and growth by Scotch whiskies and Californian wines.

The company maintained that performance is in line with guidance of significant organic growth in operating profitability for the 2007/2008 fiscal year.

BLACK BOX WELCOMES TWO NEW WINES

Black Box Wines, owned by Pacific Wine Partners, announced the nationwide availability of two new wines: the 2006 Italian-sourced Pinot Grigio and 2006 California Merlot.

DIAGEO PRESENTS GOLDEN BAR AWARD TO HARVEY CHAPLIN

Congratulations to Harvey Chaplin, chairman & ceo of Southern Wine & Spirits of America, who was honored with the “Corporate Citizen Excellence Award” for 2007 by Diageo North America. The award was presented at Diageo’s Fourth Annual Golden Bar Awards at the MGM Grand Hotel in Las Vegas September 26.

YELLOW TAIL LAUNCHES ‘TAILS, YOU WIN.’

Yellow Tail has recently launched one of its largest ad campaigns in the brand’s history, created by Cramer-Krasselt (New York). Featuring a tag line that reads “Tails, you win,” the ads include a variety of three-dimensional billboards and interactive print advertisements, including massive replicas of the famous 1930s Kit-Cat Clocks, glowing fireflies and temporary tattoos. The campaign also includes TV ads and event sponsorships and runs through December 2007.

CONSTELLATION UNVEILS NEW BILINGUAL PACKAGING

North Lake Wines (owned by Constellation) is introducing new bilingual packaging for its Marcus James brand, the leading Argentinean wine in the US (26% share). Beginning this fall, the new package will include bilingual messaging, colorful new graphics, and varietal specific color coding with matching foil graphics that “reinforces the brand’s Argentine heritage.”

“With more and more Americans speaking both Spanish and English, we believe that this new label will have wider consumer appeal,” said Bethany DiSanto, director of marketing for North Lake Wines.

According to a Wine Market Council study published May 2006, as the U.S. Spanish-speaking community evolves in its tastes and preferences, they are also emerging as a leading wine consumer group. Wine consumption among Spanish-speakers is increasing more than any other ethnic group, with 31% consuming more wine now than they did previously. Among Spanish-speaking consumers, one third of wine they consume is imported, which most often hail from Chile and Argentina.

With the introduction of bilingual labeling, Marcus James is looking to attract Spanish speaking consumers and further reinforce the brand's heritage. The front label now states that Marcus James comes "De los Vinedos del Sol" or "From the Vineyards of the Sun." The back label features tasting notes in both English and Spanish.

SUMMERTIME WINE SALES GROW 8.6%

Wine sales continued building momentum in the summer months, with overall sales growing 8.6% in the 13 weeks ending August 25 and case volume sales up 5.1%, according to Nielsen scan data. In the 52 weeks ending August 25, dollar sales rose 7% and volume increased 3.4%.

IMPORTS GAIN IN SUPERS. Domestic table wine sales were up 4.5 %, compared to imported sales which grew 7.3 % in the summer. Domestics lost -0.5% of market share, while imports gained 0.5%. Volume of domestic table wine increased 8.2 % from the previous year and imports grew 9.6 %. With that said, imports gained 0.3% of volume share, while domestics lost -0.3%. It looks like consumers were buying more imported wine brands at higher prices in the summer.

South African wines led imports in dollar growth, followed by New Zealand, Argentina and Portugal. The top three importers by dollar was Australia (9.5 share), Italy (10.1) and France (3). Australia lost -0.2% dollar market share pts., while Italy remained flat and France was down -0.1%. Dollar sales for Australia grew 6% in the 13 weeks to August 25, while Italy was up 8.3% and France jumped 5.7%.

While Australia lost its top spot in the dollar category, it remains ahead of Italy and France in terms of case volume. Australia held an 8.4% market share in the 13 weeks, compared to Italy’s 7.7% and France’s 2% claim.

RED WINE BARRELS FORWARD. Despite an overall hot summer, red wine continued to barrel forward. Red wine dollar sales rose 12.4% in the 13 weeks, while white wine increased a respectable 6.5%. Meanwhile, red wine volume was up 9.6% and white grew 3.5%. In the 52 weeks ending August 25, red wine gained 1.5% of dollar share and white wine lost -0.9%.

The red varietals grew like weeds, leaving Riesling as the white wine champion. Dollar sales of Cabernet Sauvignon grew 15.5 % in the summer, while volume was up 15.3%. Pinot Noir was the true winner with dollar growth of 30%, followed by Zin at 17%, Merlot at 6% and Syrah/Shiraz at 5.4%.

Now, on to our lighter colored friends. Riesling blew the category out of the water with dollar sales growth of 25.4% and volume growth of 25.5%. Pinot Grigio sales grew 13.2% in the summer followed by Fume/Sauvignon Blanc, up 10.7%. Old faithful Chardonnay increased 3.3% by dollar sales and 2.3% by volume.

PREMIUM AND ABOVE MAKES PERFECT. Wines priced in the $12-$15 range grew the most in dollar sales, up 18.4% and 16.4% by volume. Meanwhile, wines in the $15 and above category followed suit at 17.1% and 16%, respectively. Lower end wines showed some growth, but at a much smaller rate than the premium and super-premium wines.