Will Alcohol Weather the Economic Storm?
Costs are going up for American consumers across the board, which begs the question, how will this effect the alcohol beverage industry? U.S. consumer prices reached the highest point in June since 2005 thanks to increased costs for fuel and food, reports Bloomberg. Prices increased 5% in the 12 months to June, the most since May 1991. The cost of living soared above its forecast at 1.1%, after a 0.6% gain the prior month, according to the Labor Department.
Energy expenses jumped 6.6%, while gas prices soaring 10.1% and fuel oil jumping 10.4%. The cost of fuel will continue, which means there is no break from pricing pressures in the near future. Crude oil futures reached a record $147.27 a barrel on July 11 and have risen almost 90% in the past year. Prices for all commodities increased 1.9%.
As a result, Americans are dining out less and spending less money on non-necessities.
ALCOHOL “PRETTY RESILIENT.” Clearly, high fuel prices will take a toll on individual businesses, but how will it affect consumers’ purchasing patterns? Industry bigwigs have said for months that beverage alcohol will dodge most bullets because it is seen as an “affordable luxury,” even necessary, by consumers. Many companies have admitted that on-premise sales have taken a dive as more consumers opt to eat at home, but off-premise sales remain strong. However, Richard Hurst of Nielsen said in an article in Business Week that it could be only a matter of time before consumers start cutting back on alcohol sales.
"We think wine and spirits will be the last to be impacted, so some of this may be a delay. But there's enough strength in that income [group] that they can probably weather this pretty well."
Nielsen’s research has echoed the sentiment that alcohol is “pretty resilient” in economic downturns, although on-premise sales have been “considerably impacted” by the declining economy. Off-premise sales have experienced a “mild impact.”
So far, the economy is weighing most heavily on wine, says Nielsen, namely because it is most often consumed at restaurants where sales are soft. Beer sales have remained the most durable.
“Alcoholic beverages are withstanding the economic slowdown very well, compared to other categories that might be considered indulgent or non-necessities. To many consumers, alcoholic beverages are an affordable luxury,” said Danny Brager, vp, Client Service, Beverage Alcohol, Nielsen.
To read a summary of Nielsen’s on-premise research, click here.
To view a summary of the economy’s effect on the alcohol industry according to Nieslen, click here.
NCL SEEKS TO EDUCATE CONSUMERS ABOUT A “STANDARD DRINK”
The National Consumers League is launching a new initiative called Alcohol: How It All Adds Up, which challenges “the myth that some alcoholic beverages are ‘safer’ and less ‘potent’ than others,” says the group. The group is fighting in support of serving facts labels for beer, wine and spirits, which would feature nutrition content (calories and carbohydrates) and alcohol content per serving.
“It is a myth that beer and wine are not as strong as the typical cocktail. Standard serving sizes of all alcohol beverages -- beer, wine, and distilled spirits -- are equal in alcohol strength and their effect on the body,” said the organization.
A standard drink is 0.6 fluid ounces of pure alcohol. Or, a 12-ounce bottle or can of regular beer (5% alcohol), a 5-ounce glass of wine (12% alcohol), and a 1.5 ounce drink of 80 proof (40% alcohol) distilled spirits (either straight or in a mixed drink). The standard drink campaign, along with nutritional content, is generally supported by larger spirits companies (particularly Diageo) and Discus but disliked by most beer and wine producers.
The TTB is reviewing a proposal that would require all alcohol beverages to display serving facts. However, the proposal does not require producers to display the amount of alcohol per serving or the definition of a standard drink.
"Without ready access to information about the amount of alcohol they are consuming, many Americans believe that beer and wine offer a 'soft' option and can be consumed in greater amounts than so-called 'hard' liquor," said Sally Greenberg, Executive Director of the League.
"We are trying to give consumers the basics about the alcohol content of different alcoholic beverages, but the real answer is government action to require standardized and complete labeling information on beer, wine and distilled spirits products. Consumers should know how many calories, carbohydrates, and other nutrition information are in a standard drink. They have it for nonalcoholic beverages, food, and nonprescription drugs. It is time for this information to be on the labels for alcoholic beverages."
The NCL is making available a new Alcohol: How It All Adds Up guide and a series of information sheets about alcohol content, alcohol labels, and binge drinking to consumers, community leaders and health professionals. These materials are available on their website, www.nclnet.org.
ABSOLUT FEATURES KANYE WEST INFOMERCIAL
Absolut vodka has been working to change is traditional image through its “Visionaries” campaign featuring pop celebrities. The most recent, and arguably the most popular, was a spoof on infomercials with Kanye West, which Brandweek covered this week. The spot promoted "fast-acting Kanye tablets" that can turn anyone into Kanye West complete with a toll-free number: 877-Bekanye.
A newer version of the advertisement launched this week and features what you think is Kanye West at a nightclub until the Kanye tablet wears off.
So far, Absolut has worked with about 20 artists in the campaign in effort to dispel the classic Absolut bottle image. "It's been a challenge," said Ian Crystal, brand director at Absolut. "The new campaign has been in the market for a little over a year and people were still thinking of the old one. As of the past few months though, they started to adapt. This new campaign, which is a more ideal look at the world, has a lot of legs to it."
To view the original spot, click here.
To view the newest spot, click here.
WHAT IS FUME BLANC?
Fume Blanc, a term invented by Robert Mondavi in the 1960’s, is something you don’t hear much about nowadays. Basically another word for Sauvignon Blanc, Mondavi decided to use “Fume Blanc” as a way to differentiate his wines from sweet, American wines. However, California winery Dry Creek Vineyard has launched a "What is fumé?" campaign complete with Web site (whatisfume.com), brochures, store signage and educational tastings to promote the term.
The Chicago Tribune featured an interesting article on the subject of Fume Blanc and Sauvignon Blanc, its history and whether the term Fume Blanc should be officially retired.
ONLINE ALCOHOL ADS STILL ILLEGAL IN FRANCE
Promoting wine in any way on the internet is still illegal in France after the Senate failed to pass an amendment, reports Decanter. It was voted out mainly because it did include the results of a government study because the report was not yet available. It was also rejected because it proposed a new definition of the word 'publicity,' which aimed at clearing up whether writing about wine in an editorial context can be considered advertising. A revised amendment should be presented in September or October.
WSD BRIEFS:
WINE INSTITUTE NAMES DIRECTOR OF ENVIRONMENTAL AFFAIRS. Allison Jordan has been named Director of Environmental Affairs at Wine Institute, a new department to oversee the sustainable winegrowing program and environmental issues. Jordan joined the Wine Institute in 2004 and was previously Communications Programs Manager and also Executive Director of the California Sustainable Winegrowing Alliance (CSWA), a position she will continue to hold.
SAN MATEO COUNTY CONSIDERS MENU LABELING. California's San Mateo County is evaluating a proposal similar to San Francisco’s menu labeling laws. If passed, it would require chain restaurants to disclose the calorie, fat, sodium and carbohydrate content of every standard menu item on menus, menu boards or posters. Non-complying restaurants would be subject to fines and a revocation of their operating permits, reports NRN.
CALIFORNIA PASSES TRANS-FAT BILL. The California legislature has passed a bill that would require restaurants throughout the state to eliminate trans fats from all menu items during a multi-year process. Gov. Arnold Schwarzenegger has yet to indicate whether he will veto the measure or sign it into law, says NRN. Several cities and counties have banned trans fat from menus, but California would be the first state to do so.
BULGARIAN WINES HIT $1M. BulgarianWine.com, an importer of Bulgarian wines, has surpassed the $1 million dollar milestone in Internet sales of Bulgarian wines. In a statement, the company says “this achievement illustrates the vastly improved quality of Bulgarian wines over the past decade.”
Until tomorrow, Megan
“The wit makes fun of other persons; the satirist makes fun of the world; the humorist makes fun of himself.”
James Thurber
--------- Sell Day Calendar ----------
Today’s Sell Day: 12
Sell days this month: 23
Sell days this month last year: 22
This month ends on a: Thur
This month last year ended on a: Tues.
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.
Energy expenses jumped 6.6%, while gas prices soaring 10.1% and fuel oil jumping 10.4%. The cost of fuel will continue, which means there is no break from pricing pressures in the near future. Crude oil futures reached a record $147.27 a barrel on July 11 and have risen almost 90% in the past year. Prices for all commodities increased 1.9%.
As a result, Americans are dining out less and spending less money on non-necessities.
ALCOHOL “PRETTY RESILIENT.” Clearly, high fuel prices will take a toll on individual businesses, but how will it affect consumers’ purchasing patterns? Industry bigwigs have said for months that beverage alcohol will dodge most bullets because it is seen as an “affordable luxury,” even necessary, by consumers. Many companies have admitted that on-premise sales have taken a dive as more consumers opt to eat at home, but off-premise sales remain strong. However, Richard Hurst of Nielsen said in an article in Business Week that it could be only a matter of time before consumers start cutting back on alcohol sales.
"We think wine and spirits will be the last to be impacted, so some of this may be a delay. But there's enough strength in that income [group] that they can probably weather this pretty well."
Nielsen’s research has echoed the sentiment that alcohol is “pretty resilient” in economic downturns, although on-premise sales have been “considerably impacted” by the declining economy. Off-premise sales have experienced a “mild impact.”
So far, the economy is weighing most heavily on wine, says Nielsen, namely because it is most often consumed at restaurants where sales are soft. Beer sales have remained the most durable.
“Alcoholic beverages are withstanding the economic slowdown very well, compared to other categories that might be considered indulgent or non-necessities. To many consumers, alcoholic beverages are an affordable luxury,” said Danny Brager, vp, Client Service, Beverage Alcohol, Nielsen.
To read a summary of Nielsen’s on-premise research, click here.
To view a summary of the economy’s effect on the alcohol industry according to Nieslen, click here.
NCL SEEKS TO EDUCATE CONSUMERS ABOUT A “STANDARD DRINK”
The National Consumers League is launching a new initiative called Alcohol: How It All Adds Up, which challenges “the myth that some alcoholic beverages are ‘safer’ and less ‘potent’ than others,” says the group. The group is fighting in support of serving facts labels for beer, wine and spirits, which would feature nutrition content (calories and carbohydrates) and alcohol content per serving.
“It is a myth that beer and wine are not as strong as the typical cocktail. Standard serving sizes of all alcohol beverages -- beer, wine, and distilled spirits -- are equal in alcohol strength and their effect on the body,” said the organization.
A standard drink is 0.6 fluid ounces of pure alcohol. Or, a 12-ounce bottle or can of regular beer (5% alcohol), a 5-ounce glass of wine (12% alcohol), and a 1.5 ounce drink of 80 proof (40% alcohol) distilled spirits (either straight or in a mixed drink). The standard drink campaign, along with nutritional content, is generally supported by larger spirits companies (particularly Diageo) and Discus but disliked by most beer and wine producers.
The TTB is reviewing a proposal that would require all alcohol beverages to display serving facts. However, the proposal does not require producers to display the amount of alcohol per serving or the definition of a standard drink.
"Without ready access to information about the amount of alcohol they are consuming, many Americans believe that beer and wine offer a 'soft' option and can be consumed in greater amounts than so-called 'hard' liquor," said Sally Greenberg, Executive Director of the League.
"We are trying to give consumers the basics about the alcohol content of different alcoholic beverages, but the real answer is government action to require standardized and complete labeling information on beer, wine and distilled spirits products. Consumers should know how many calories, carbohydrates, and other nutrition information are in a standard drink. They have it for nonalcoholic beverages, food, and nonprescription drugs. It is time for this information to be on the labels for alcoholic beverages."
The NCL is making available a new Alcohol: How It All Adds Up guide and a series of information sheets about alcohol content, alcohol labels, and binge drinking to consumers, community leaders and health professionals. These materials are available on their website, www.nclnet.org.
ABSOLUT FEATURES KANYE WEST INFOMERCIAL
Absolut vodka has been working to change is traditional image through its “Visionaries” campaign featuring pop celebrities. The most recent, and arguably the most popular, was a spoof on infomercials with Kanye West, which Brandweek covered this week. The spot promoted "fast-acting Kanye tablets" that can turn anyone into Kanye West complete with a toll-free number: 877-Bekanye.
A newer version of the advertisement launched this week and features what you think is Kanye West at a nightclub until the Kanye tablet wears off.
So far, Absolut has worked with about 20 artists in the campaign in effort to dispel the classic Absolut bottle image. "It's been a challenge," said Ian Crystal, brand director at Absolut. "The new campaign has been in the market for a little over a year and people were still thinking of the old one. As of the past few months though, they started to adapt. This new campaign, which is a more ideal look at the world, has a lot of legs to it."
To view the original spot, click here.
To view the newest spot, click here.
WHAT IS FUME BLANC?
Fume Blanc, a term invented by Robert Mondavi in the 1960’s, is something you don’t hear much about nowadays. Basically another word for Sauvignon Blanc, Mondavi decided to use “Fume Blanc” as a way to differentiate his wines from sweet, American wines. However, California winery Dry Creek Vineyard has launched a "What is fumé?" campaign complete with Web site (whatisfume.com), brochures, store signage and educational tastings to promote the term.
The Chicago Tribune featured an interesting article on the subject of Fume Blanc and Sauvignon Blanc, its history and whether the term Fume Blanc should be officially retired.
ONLINE ALCOHOL ADS STILL ILLEGAL IN FRANCE
Promoting wine in any way on the internet is still illegal in France after the Senate failed to pass an amendment, reports Decanter. It was voted out mainly because it did include the results of a government study because the report was not yet available. It was also rejected because it proposed a new definition of the word 'publicity,' which aimed at clearing up whether writing about wine in an editorial context can be considered advertising. A revised amendment should be presented in September or October.
WSD BRIEFS:
WINE INSTITUTE NAMES DIRECTOR OF ENVIRONMENTAL AFFAIRS. Allison Jordan has been named Director of Environmental Affairs at Wine Institute, a new department to oversee the sustainable winegrowing program and environmental issues. Jordan joined the Wine Institute in 2004 and was previously Communications Programs Manager and also Executive Director of the California Sustainable Winegrowing Alliance (CSWA), a position she will continue to hold.
SAN MATEO COUNTY CONSIDERS MENU LABELING. California's San Mateo County is evaluating a proposal similar to San Francisco’s menu labeling laws. If passed, it would require chain restaurants to disclose the calorie, fat, sodium and carbohydrate content of every standard menu item on menus, menu boards or posters. Non-complying restaurants would be subject to fines and a revocation of their operating permits, reports NRN.
CALIFORNIA PASSES TRANS-FAT BILL. The California legislature has passed a bill that would require restaurants throughout the state to eliminate trans fats from all menu items during a multi-year process. Gov. Arnold Schwarzenegger has yet to indicate whether he will veto the measure or sign it into law, says NRN. Several cities and counties have banned trans fat from menus, but California would be the first state to do so.
BULGARIAN WINES HIT $1M. BulgarianWine.com, an importer of Bulgarian wines, has surpassed the $1 million dollar milestone in Internet sales of Bulgarian wines. In a statement, the company says “this achievement illustrates the vastly improved quality of Bulgarian wines over the past decade.”
Until tomorrow, Megan
“The wit makes fun of other persons; the satirist makes fun of the world; the humorist makes fun of himself.”
James Thurber
--------- Sell Day Calendar ----------
Today’s Sell Day: 12
Sell days this month: 23
Sell days this month last year: 22
This month ends on a: Thur
This month last year ended on a: Tues.
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 1:41 PM
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