The Costco Decision Is In
Distributors were victorious today in the long awaited Costco case decision in Washington. Basically, distributors got what they wanted with the exception of price post and hold, which was viewed as a long shot anyway, according to our sister publication Beer Business Daily. An appeal is expected. Here’s an excerpt of the decision:
“Given that the State has failed to demonstrate that the post-and-hold requirement is effective in promoting temperance, we agree with the district court that ‘the state’s interests do not outweigh the federal interest in promoting competition under the Sherman Act.’”
“Because the State failed to carry its burden on the Twenty-first Amendment defense, the post-and-hold scheme is not saved from preemption under the Sherman Act.”
“In conclusion, we reverse the judgment of the district court insofar as it held that most of Washington’s restraints on the sale of beer and wine were hybrid restraints subject to preemption under the Sherman Act. We affirm the district court’s rejection of Costco’s challenge to the retailer-to-retailer sales ban. We also affirm its conclusion that under our precedents, the post-and-hold scheme is a hybrid restraint of trade that is not saved by the state immunity doctrine of the Twenty-first Amendment. Each party shall bear its own costs on appeal.”
The NBWA said the following:
"The National Beer Wholesalers Association (NBWA) is pleased that the Ninth Circuit Court of Appeals has reversed much of a lower court's decision in Costco v. Hoen (Washington State Liquor Control Board), thereby affirming the right of the states to regulate alcohol under the 21st Amendment - a system that works to protect the citizens of each state. While NBWA is still reviewing the totality of the Court's opinion, it appears that state regulation has been validated."
READERS SPILL THE BEANS
Many readers have sent us emails in response to reports that trading up may slow in 2008. The idea seems to be that trends are cyclical and consumers are always looking for the next big thing. Here’s an excerpt from three anonymous emails:
“Megan, to me it all means consumers are getting more discriminating and boutique brand friendly. The big spends and marketing pushes of the over-priced, hollow legacy brands like Grey Goose may be wearing thin. It’s more than economics, its brand ownership and association. People passing stories on brands onto their friends. New brands are in the stories told as much as what’s in the bottles sold. Even in the beer category, I see Bud struggling to be so hip. And they flop at it. It’s about craft across beer, wine and spirits--into the future. That is the real trend to watch we feel. Ultra-premium has been so overplayed it is played out. Folks crave a handsell and to be the first ones onto the next great brands on the rise.”
“Megan,I have been in the wine and spirits industry for 18 years as a delivery driver and I have seen changes like this before. When times are good people tend to drink better quality products and when times appear to be less than stellar they gravitate towards less costly products. It's all cyclical.”
“The wine and spirits companies aren’t hurting too much from the slowdown, yet, and I stress yet. It’s bound to happen sooner or later. American’s aren’t just going to buy a $40 bottle of vodka when they’re having trouble paying their bills. To say anything else is spin doctoring in its purest form. Who’s not to say that consumers won’t go back to that bottle of Grey Goose once the economy turns around?”
Thanks for your responses and don’t forget to fill out our annual survey on the industry (details below).
CONSUMERS WANT SERVING FACTS
A newly released survey indicates that American consumers support the proposal by the TTB to require serving fact panels on alcohol beverage labels, according to an article in Wines and Vines. The survey results were submitted to the TTB on Jan. 22, five days before the agency closed its public comment period on the issue.
The survey was taken by 503 Americans and found that consumers want complete labeling information, including the percentage of alcohol by volume, the serving size, the amount of alcohol per serving, the definition of a "standard drink" and the number of standard drinks per container, said the article.
A strong majority (92%) of those surveyed ranked the amount of alcohol in each drink as the top priority for required labeling information, followed by the amount of calories (84%), carbohydrates (75%), fat (71%) and protein (66%).
To view the article, click here.
To read more information on the survey, click here.
A PEAK AT FOSTER’S IN THE FIRST HALF
Environmental conditions were more challenging for Foster’s Group in its first half (ending December 31), reports analyst Andrew Kovacs with Macquarie Research, after growth appears to have slowed in the US wine market. The strong Australian dollar also posed problems for its exports.
Dollar sales of Foster’s American wine are believed to have declined by 4% due to higher costs from the 2006 Californian vintage and an unfavorable product mix shift. Andrew says the Nielsen data won’t likely show up in Foster’s results until the second half of 2008 and fiscal 2009.
“This is due to the fact that FGL is benefiting from strong wholesaler shipments in the US thanks to a planned 1 January price increase on its blush wines (encouraging November and December buy up) as well as a change in some of its appointed wholesalers, with a resulting dual stocking for a short period of time,” reports Andrew.
Industry expectations for the Australian 2008 grape vintage remain wide open. As such, Foster’s sourcing situation (and therefore likely share of the crush) as well as expected grape inflation will be an area of keen interest in its first half earnings report in February. Stemming from this, understanding Foster’s recent success in implementing price increases, (widespread in Australia, but selective thus far in the US and UK) and the capacity for more will be important. The economic sensitivity of US wine consumption will be another key focus, says Andrew.
WSD BRIEFS:
AUSTRALIAN WINE PRICES are set to rise this year after a drop in production, mainly due to drought, and rising sales. Wine production reportedly fell by almost one third from the previous year to 978 million liters, reports the Australian Wine and Brandy Corp. The Australian surplus has been drained by 15% to 1.8 billion liters and is expected to dry up even more with an even lower grape harvest forecast in 2008.
BOX WINE GOOD FOR THE ENVIRONMENT. The wine industry has been on top of environmental issues for some time, as you know. In its latest initiative, The Wine Group is launching a website to show consumers how they can help the environment by drinking wine from a bag-in-box container. BIBs help save money and are more environmentally friendly then glass bottles, for example.
CALLING ALL TRUTH SQUADERS. We want to hear your thoughts on the industry: what’s bugging you, making you smile and just plain making you mad. Please take the time to fill out a quick WSD Truth Squad survey, and we’ll report the general results in the next couple of weeks. All answers are kept anonymous. Just click here to take the survey: http://tiny.cc/nnda6
Until tomorrow, Megan
“The world is my lobster.”
Henry J. Tillman
--------- Sell Day Calendar ----------
Today's Sell Day: 20
Sell days this month: 22
Sell days this month last year: 22
This month ends on a: Thur
This month last year ended on a: Wed.
YTD sell days Over/Under: 0
“Given that the State has failed to demonstrate that the post-and-hold requirement is effective in promoting temperance, we agree with the district court that ‘the state’s interests do not outweigh the federal interest in promoting competition under the Sherman Act.’”
“Because the State failed to carry its burden on the Twenty-first Amendment defense, the post-and-hold scheme is not saved from preemption under the Sherman Act.”
“In conclusion, we reverse the judgment of the district court insofar as it held that most of Washington’s restraints on the sale of beer and wine were hybrid restraints subject to preemption under the Sherman Act. We affirm the district court’s rejection of Costco’s challenge to the retailer-to-retailer sales ban. We also affirm its conclusion that under our precedents, the post-and-hold scheme is a hybrid restraint of trade that is not saved by the state immunity doctrine of the Twenty-first Amendment. Each party shall bear its own costs on appeal.”
The NBWA said the following:
"The National Beer Wholesalers Association (NBWA) is pleased that the Ninth Circuit Court of Appeals has reversed much of a lower court's decision in Costco v. Hoen (Washington State Liquor Control Board), thereby affirming the right of the states to regulate alcohol under the 21st Amendment - a system that works to protect the citizens of each state. While NBWA is still reviewing the totality of the Court's opinion, it appears that state regulation has been validated."
READERS SPILL THE BEANS
Many readers have sent us emails in response to reports that trading up may slow in 2008. The idea seems to be that trends are cyclical and consumers are always looking for the next big thing. Here’s an excerpt from three anonymous emails:
“Megan, to me it all means consumers are getting more discriminating and boutique brand friendly. The big spends and marketing pushes of the over-priced, hollow legacy brands like Grey Goose may be wearing thin. It’s more than economics, its brand ownership and association. People passing stories on brands onto their friends. New brands are in the stories told as much as what’s in the bottles sold. Even in the beer category, I see Bud struggling to be so hip. And they flop at it. It’s about craft across beer, wine and spirits--into the future. That is the real trend to watch we feel. Ultra-premium has been so overplayed it is played out. Folks crave a handsell and to be the first ones onto the next great brands on the rise.”
“Megan,I have been in the wine and spirits industry for 18 years as a delivery driver and I have seen changes like this before. When times are good people tend to drink better quality products and when times appear to be less than stellar they gravitate towards less costly products. It's all cyclical.”
“The wine and spirits companies aren’t hurting too much from the slowdown, yet, and I stress yet. It’s bound to happen sooner or later. American’s aren’t just going to buy a $40 bottle of vodka when they’re having trouble paying their bills. To say anything else is spin doctoring in its purest form. Who’s not to say that consumers won’t go back to that bottle of Grey Goose once the economy turns around?”
Thanks for your responses and don’t forget to fill out our annual survey on the industry (details below).
CONSUMERS WANT SERVING FACTS
A newly released survey indicates that American consumers support the proposal by the TTB to require serving fact panels on alcohol beverage labels, according to an article in Wines and Vines. The survey results were submitted to the TTB on Jan. 22, five days before the agency closed its public comment period on the issue.
The survey was taken by 503 Americans and found that consumers want complete labeling information, including the percentage of alcohol by volume, the serving size, the amount of alcohol per serving, the definition of a "standard drink" and the number of standard drinks per container, said the article.
A strong majority (92%) of those surveyed ranked the amount of alcohol in each drink as the top priority for required labeling information, followed by the amount of calories (84%), carbohydrates (75%), fat (71%) and protein (66%).
To view the article, click here.
To read more information on the survey, click here.
A PEAK AT FOSTER’S IN THE FIRST HALF
Environmental conditions were more challenging for Foster’s Group in its first half (ending December 31), reports analyst Andrew Kovacs with Macquarie Research, after growth appears to have slowed in the US wine market. The strong Australian dollar also posed problems for its exports.
Dollar sales of Foster’s American wine are believed to have declined by 4% due to higher costs from the 2006 Californian vintage and an unfavorable product mix shift. Andrew says the Nielsen data won’t likely show up in Foster’s results until the second half of 2008 and fiscal 2009.
“This is due to the fact that FGL is benefiting from strong wholesaler shipments in the US thanks to a planned 1 January price increase on its blush wines (encouraging November and December buy up) as well as a change in some of its appointed wholesalers, with a resulting dual stocking for a short period of time,” reports Andrew.
Industry expectations for the Australian 2008 grape vintage remain wide open. As such, Foster’s sourcing situation (and therefore likely share of the crush) as well as expected grape inflation will be an area of keen interest in its first half earnings report in February. Stemming from this, understanding Foster’s recent success in implementing price increases, (widespread in Australia, but selective thus far in the US and UK) and the capacity for more will be important. The economic sensitivity of US wine consumption will be another key focus, says Andrew.
WSD BRIEFS:
AUSTRALIAN WINE PRICES are set to rise this year after a drop in production, mainly due to drought, and rising sales. Wine production reportedly fell by almost one third from the previous year to 978 million liters, reports the Australian Wine and Brandy Corp. The Australian surplus has been drained by 15% to 1.8 billion liters and is expected to dry up even more with an even lower grape harvest forecast in 2008.
BOX WINE GOOD FOR THE ENVIRONMENT. The wine industry has been on top of environmental issues for some time, as you know. In its latest initiative, The Wine Group is launching a website to show consumers how they can help the environment by drinking wine from a bag-in-box container. BIBs help save money and are more environmentally friendly then glass bottles, for example.
CALLING ALL TRUTH SQUADERS. We want to hear your thoughts on the industry: what’s bugging you, making you smile and just plain making you mad. Please take the time to fill out a quick WSD Truth Squad survey, and we’ll report the general results in the next couple of weeks. All answers are kept anonymous. Just click here to take the survey: http://tiny.cc/nnda6
Until tomorrow, Megan
“The world is my lobster.”
Henry J. Tillman
--------- Sell Day Calendar ----------
Today's Sell Day: 20
Sell days this month: 22
Sell days this month last year: 22
This month ends on a: Thur
This month last year ended on a: Wed.
YTD sell days Over/Under: 0
posted at 11:43 AM
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