Control Spirits Weaken in March
Spirits volumes in control states fell -5.2% in March, reports UBS analyst Melissa Earlam based on NABCA data. Comps year over year were not challenging, with 3% growth in March 07. March 2008 was depressed by several reasons, including one less Saturday in the month and the fact that Michigan (15% of Control State volumes) and Utah (2%) had one less week of selling days in March year over year. Market volume growth in the year to March 2008 increased 2.1%
Both Diageo and Pernod lost share in vodka and rum, but gained share with whiskey.
Diageo’s March performance fell below the market at -5.9%. The company lost some volume share, notably in vodka (-3.5% decline y/y vs category decline -1.7% y/y), rum (-8.7% vs category -5.5%), and tequila (-11.3% vs category -5.4%). Melissa noted the decline is likely related to price increases introduced over the last several months.
Diageo gained some share in Canadian whisky (-3.9% vs category -6.8%), cocktails (-7.7% vs category -8.9%) and cordials (- 6.8% vs category -8.3). It broadly held share in Scotch and gin.
Pernod, Brown-Forman, Campari and Remy all lost share in March. Pernod’s volumes declined -8.3% in 2008, but grew 1.3% year over year in 2007. The company gained share in Scotch and Irish whiskey; but lost share in vodka (-9.3%), gin (-8.4%), rum (-5.9%), cordials (-9.5%) and brandy/Cognac (-52.8% vs category -10.6%) where it is de-emphasizing VS growth.
B-F volumes declined -7.6% (vs -0.9% in 2007). Campari declined -6.2% and Remy -9.3%.
UBS has buy ratings on Diageo, Pernod, Brown-Forman and Campari
“While we expect a slowdown in US spirits growth in a recession, we forecast market volume growth of 1.7% and 4.5% sales for 2008,” said Melissa.
ARIZONA JUDGE STRIKES VOLUME CAP CHALLENGE
Larger out-of-state wineries lost a court case in Arizona this week when a judge ruled that the current law does not give in-state wineries an unfair advantage. Judge Mary Murguia struck down a lawsuit seeking to overturn the current 20,000 gallon cap on wineries that can ship directly to consumers and retailers. The 20,000 gallon cap allows most Arizona wineries to ship direct, so out-of-state wineries argue the law is discriminatory and impedes interstate commerce.
According to AZ Central.com, Judge Murguia acknowledged that a 2006 law might be of more benefit to wineries in Arizona than elsewhere, but she ruled that the statute, by itself, does not discriminate.
"The simple fact that there are more out-of-state wineries than in-state wineries that produce more than 20,000 gallons of wine per year and are thus required to adhere to the three-tiered distribution system in order to gain access to Arizona's wine market does not by itself establish patent discrimination in effect against interstate commerce," the judge wrote.
"In fact, the number of out-of-state wineries that produce less than 20,000 gallons of wine per year and are thus able to take advantage of this direct-shipment exception dwarf the number of instate wineries that are able to take advantage of the exception," she said.
A decision has not yet been made whether to appeal. The suit was filed on behalf of Black Star Farms as well as several locals.
GOVERNMENT RELEASES DRUNK DRIVING REPORT
The Midwest reportedly has the highest number of drunk drivers according to a government study released earlier this week. In all, about 15% of U.S. adults have driven under the influence of alcohol in the past year. Another 4.7% of the drivers were discovered to be under the influence of illegal drugs, according to the survey by the Substance Abuse and Mental Health Services Administration. The study was based on information from the National Survey on Drug Use and Health.
Wisconsin is the state with the worst drunken driving rates in the country, with 26.4% of adult drivers reported driving under the influence of alcohol in the previous year. Wisconsin is closely followed by North Dakota (24.9%), Minnesota (23.5%), Nebraska and South Dakota.
The survey found that Utah had the lowest incidence of drunken driving. Only 10% of adult motorists were reported to be driving under the influence. Arkansas, West Virginia, North Carolina and Kentucky all had drunken driving rates of less than 11%.
Research professor Eric Goplerud told the AP that religion may be the reason there is more drunk driving in northern states. Religions and denominations in the south typically discourage drinking, which isn’t as common in the upper Midwest.
WILL KETEL ONE MAINTAIN ITS MYSTIQUE?
Business Week featured an interesting story on Ketel One yesterday and the effectiveness of its “white space” ads. The article also explores how the Nolet family and Diageo will come together and make Ketel One an even bigger vodka in the U.S. than it already is.
“The campaign's origin speaks to how much the brand runs in the veins of the Nolet family. In 2003, M&C Saatchi pitched the campaign on a single poster, lots of white space, no bottle, and a headline written in the Gothic-looking Bradley typeface: ‘Dear Ketel One Drinker. Thank you.’”
“The challenge confronting the Nolets is finding a way to retain the mystique that comes from not being understood by everyone while striving to double sales in the next five years with Diageo's help,” says Business Week journalist David Kiley.
To read the entire article, click here.
Until Monday, Megan
“To sit in the shade on a fine day, and look upon verdure is the most perfect refreshment.”
Jane Austen
--------- Sell Day Calendar ----------
Today's Sell Day: 19
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
Both Diageo and Pernod lost share in vodka and rum, but gained share with whiskey.
Diageo’s March performance fell below the market at -5.9%. The company lost some volume share, notably in vodka (-3.5% decline y/y vs category decline -1.7% y/y), rum (-8.7% vs category -5.5%), and tequila (-11.3% vs category -5.4%). Melissa noted the decline is likely related to price increases introduced over the last several months.
Diageo gained some share in Canadian whisky (-3.9% vs category -6.8%), cocktails (-7.7% vs category -8.9%) and cordials (- 6.8% vs category -8.3). It broadly held share in Scotch and gin.
Pernod, Brown-Forman, Campari and Remy all lost share in March. Pernod’s volumes declined -8.3% in 2008, but grew 1.3% year over year in 2007. The company gained share in Scotch and Irish whiskey; but lost share in vodka (-9.3%), gin (-8.4%), rum (-5.9%), cordials (-9.5%) and brandy/Cognac (-52.8% vs category -10.6%) where it is de-emphasizing VS growth.
B-F volumes declined -7.6% (vs -0.9% in 2007). Campari declined -6.2% and Remy -9.3%.
UBS has buy ratings on Diageo, Pernod, Brown-Forman and Campari
“While we expect a slowdown in US spirits growth in a recession, we forecast market volume growth of 1.7% and 4.5% sales for 2008,” said Melissa.
ARIZONA JUDGE STRIKES VOLUME CAP CHALLENGE
Larger out-of-state wineries lost a court case in Arizona this week when a judge ruled that the current law does not give in-state wineries an unfair advantage. Judge Mary Murguia struck down a lawsuit seeking to overturn the current 20,000 gallon cap on wineries that can ship directly to consumers and retailers. The 20,000 gallon cap allows most Arizona wineries to ship direct, so out-of-state wineries argue the law is discriminatory and impedes interstate commerce.
According to AZ Central.com, Judge Murguia acknowledged that a 2006 law might be of more benefit to wineries in Arizona than elsewhere, but she ruled that the statute, by itself, does not discriminate.
"The simple fact that there are more out-of-state wineries than in-state wineries that produce more than 20,000 gallons of wine per year and are thus required to adhere to the three-tiered distribution system in order to gain access to Arizona's wine market does not by itself establish patent discrimination in effect against interstate commerce," the judge wrote.
"In fact, the number of out-of-state wineries that produce less than 20,000 gallons of wine per year and are thus able to take advantage of this direct-shipment exception dwarf the number of instate wineries that are able to take advantage of the exception," she said.
A decision has not yet been made whether to appeal. The suit was filed on behalf of Black Star Farms as well as several locals.
GOVERNMENT RELEASES DRUNK DRIVING REPORT
The Midwest reportedly has the highest number of drunk drivers according to a government study released earlier this week. In all, about 15% of U.S. adults have driven under the influence of alcohol in the past year. Another 4.7% of the drivers were discovered to be under the influence of illegal drugs, according to the survey by the Substance Abuse and Mental Health Services Administration. The study was based on information from the National Survey on Drug Use and Health.
Wisconsin is the state with the worst drunken driving rates in the country, with 26.4% of adult drivers reported driving under the influence of alcohol in the previous year. Wisconsin is closely followed by North Dakota (24.9%), Minnesota (23.5%), Nebraska and South Dakota.
The survey found that Utah had the lowest incidence of drunken driving. Only 10% of adult motorists were reported to be driving under the influence. Arkansas, West Virginia, North Carolina and Kentucky all had drunken driving rates of less than 11%.
Research professor Eric Goplerud told the AP that religion may be the reason there is more drunk driving in northern states. Religions and denominations in the south typically discourage drinking, which isn’t as common in the upper Midwest.
WILL KETEL ONE MAINTAIN ITS MYSTIQUE?
Business Week featured an interesting story on Ketel One yesterday and the effectiveness of its “white space” ads. The article also explores how the Nolet family and Diageo will come together and make Ketel One an even bigger vodka in the U.S. than it already is.
“The campaign's origin speaks to how much the brand runs in the veins of the Nolet family. In 2003, M&C Saatchi pitched the campaign on a single poster, lots of white space, no bottle, and a headline written in the Gothic-looking Bradley typeface: ‘Dear Ketel One Drinker. Thank you.’”
“The challenge confronting the Nolets is finding a way to retain the mystique that comes from not being understood by everyone while striving to double sales in the next five years with Diageo's help,” says Business Week journalist David Kiley.
To read the entire article, click here.
Until Monday, Megan
“To sit in the shade on a fine day, and look upon verdure is the most perfect refreshment.”
Jane Austen
--------- Sell Day Calendar ----------
Today's Sell Day: 19
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 10:01 AM
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