Wine & Spirits Daily

Wine Building Larger Presence in C-Stores

2009-07-02T10:20:00.000-07:00

Dear Client:

New data from Information Resources (IRI) reveals that wines are picking up momentum in convenience stores versus the more traditional grocery and drugstore channel.

DOMESTICS TAKE THE LEAD. Domestic wines in particular showed impressive growth, up 6.5% in dollar sales and 6.4% in volume, in the four weeks to June 14. In fact, domestic wines gained almost a share point in dollar sales and gained 1.4 market share points in volume. Varietals in the 1.5 liter bottles were the most popular package size for domestic wine in c-stores.

Meanwhile, imports grew 1.7% in dollar sales in the four week period but lost almost a full share point. In terms of volume, imports declined -2.3% and lost 1.4 market share points. Unlike domestic wines, imports saw the most growth among non-varietal bottles sized .75 liters.

WHITE WINE MOST POPULAR. Note that much more domestic wines are sold in c-stores than imports. In the period, domestics incurred about $23.4 million in dollar sales and about 310,000 cases. Imports sold about $7.6 million worth of wine and 78,000 cases.

Overall, white wine grew at the fastest rate, particularly fume/sauvignon blanc and pinot grigio/gris, with chardonnay trailing behind. Pinot noir took the lead among reds followed by cabernet sauvignon and trusty merlot. Surprisingly, white zinfandel lost share in both dollar sales (0.7) and even more so in volume (1.2).

California by far has the largest presence in c-stores, particularly in terms of cases sold. California wines grew 7% in dollar sales and gained 1.1 market share points in the period, and grew 6.8% in volume gaining 1.6 market share points. Oregon wines, which have a much smaller presence, showed impressive growth in sales (38.3%) and volume (50%) and gained about half a share point in both categories.

Although far behind California, Australian wines have the second largest presence in c-stores (not surprisingly). Australian wines lost some market share in both dollar sales and volume, but grew 0.4% and 2.1%, respectively. Imported wines growing at the fastest rates included France, New Zealand, Argentina and Spain.

WINES $8 AND BELOW WIN. In c-stores cheaper was better in June – a motto that seems to apply to all channels in this environment. With imports and domestic combined, wines priced $8 and below showed the most growth. The $11-$15 category posted some growth in dollar sales but declined in volume, while all other table wine price categories were in declines. The $2 and above boxed wine segment came in particularly strong, gaining 0.7 market share points in dollar value and 1 share point in volume.

The two wine brands that far outshone all the others in terms of market share growth in both dollar sales and volume were Barefoot and Sutter Home. The five wines with the biggest presence in c-stores are Sutter Home, Yellow Tail, Barefoot, Gallo Family Vineyard and Woodbridge.

DIAGEO REFUTES CLAIMS IT IS RECEIVING TARP FUNDS FROM THE BAILOUT

Remember the Bloomberg story on Diageo’s new Captain Morgan distillery in St. Croix? Well, Diageo has issued a press release refuting certain details of the article, namely that “Diageo has never sought, and will not receive TARP funds,” which are funds from the Troubled Assets Recovery Program from the U.S. government.

Diageo took especial offense with this line in the Bloomberg story: "Bailout of U.S. Banks Gives British Rum a $2.7 Billion Benefit... The $2.7 billion Diageo tax break in the October bailout bill gives the most financial aid to a non-U.S. company."

This suggestion “is false,” says the company. “The public-private initiative that is bringing Captain Morgan to St. Croix is based on cover over, not TARP.” Congress has reenacted the rum cover over extender (which increases cover over from $10.50/gallon to $13.50/gallon) for over 50 years “as part of an independent package of tax extenders” because Congress believes the US Virgin Islands “has a continuing need for cover over revenues to promote its economic stability and fiscal autonomy.”

Diageo said it is “purely a matter of circumstance” that Congress attached the extenders package to the TARP bill last fall, and that the cover over is completely unrelated in any way to either the bailout or TARP money.

Says Diageo: “The suggestion in the Bloomberg article that Diageo somehow benefits from TARP funds is misleading and gives the reader an inaccurate and false impression. Diageo's agreement with the USVI was announced in June 2008 -- well before any TARP legislation was ever discussed on Capitol Hill. Even if this extender had never been introduced or passed, Diageo's agreement with the USVI would still be in tact.”

And there you have it.

WSD BRIEFS:

WE’VE RECEIVED WORD THAT Southern Wine and Spirits is working on a deal to distribute all of Constellation’s brands in California, including those currently distributed by Young’s Market. We have no further details about the rumored change. Expect a lot of news concerning Constellation and its consolidation of wholesalers in the coming months.

CORRECTION. We attributed Geyser Peak Winery to Constellation in yesterday’s report, but the company of course sold the brand to Ascentia Wine Estates last year. Sorry for the mistake.

Until tomorrow, Megan

“You don’t have to specialize - do everything that you love and then, at some time, the future will come together for you in some form.”
Francis Ford Coppola
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WINE & SPIRITS DAILY
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© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.

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Distributor Consolidation Underway for Constellation

2009-07-01T13:09:00.000-07:00

Dear Client:

Constellation continued to focus on streamlining its business in Q1 of fiscal 2010, or the three months ended May 31, while the company also experienced adverse effects from the economy and reduced inventory.

In the spirit of simplification, Constellation undertook three main initiatives in recent months. One, the company “took steps over the past 18 months to shift the focus of our strategy to building must-have brands that return the greatest profits and that represent good value for consumers,” said ceo Rob Sands. This led to Constellation selling many of the Pacific Northwest brands it acquired from Beam Global Spirits and Wine, and selling most of its value spirits brands to Sazerac.

“We are already seeing the benefits from this strategy as brands such as Woodbridge by Robert Mondavi, Nobilo, Clos du Bois, Kim Crawford and Svedka continue to perform well,” Rob continued.

During the first quarter Constellation also “integrated the remaining spirits business into our North American wine organization and began refining the structure of our U.S. wine business into a single integrated group.” This mainly effected sales and marketing and unfortunately resulted in major lay-offs in the U.S.

Lastly, Constellation is in the midst of consolidating its distributor network. In all, said Rob, the changes with distributors will encompass 17 states and transitions will begin by the end of the summer.

THE WINE AND SPIRITS BIZ. Growth of the US wine market “remained healthy” with dollar sales rising 5% in the first quarter, according to IRI scan data. Again, consumers are turning to trusted brands in the economic downturn, which benefited premium wine brands such as Rex Goliath, Woodbridge, Kim Crawford, Wild Horse, Geyser Peak and Clos du Bois.

Svedka’s momentum continued in the quarter, while Black Velvet also posted solid sales results.

Sales of branded wine worldwide grew 1% on an organic constant currency basis, while North American wines decreased -1%. Numbers were impacted by ongoing SKU reductions and the economic downturn, said Rob. Constellation estimates that the SKU reduction negatively impacted North American sales by 2%.

ROB ON CONSUMERS TRADING DOWN. Overall, Constellation’s wine segment is growing but various price points are performing better than others.

“In terms of our mid tier brands we are seeing some positive results. We see brands like Woodbridge continuing to grow in the high single digit range. We see brands like Clos du Bois growing about 8% in volume. There are ups and downs...we do see a trend towards better known and trusted brands that represent good value for money. Some of our brands are benefiting from that in general. We did see on a volume basis some trading up continuing in the industry with total wine in a low-single digit range, and in the premium and super-premium range growing in the mid- and higher-single digit range,” said Rob.

Bob Ryder, cfo, noted that Svedka is one of those brands that have benefited from trading down. “The economy is certainly helping Svedka...getting sales from Ketel One and Grey Goose,” because Svedka offers prime positioning, good marketing and tastes great for less money.

Rob noted that “major players” in the value wine segment are taking the opportunity to increase prices and gain in dollar sales. Meanwhile, premium and super-premium wine brands are outpacing value brands on a volume basis. “In a dollar basis, we see in the value business a lot of pricing being taken in the marketplace. While we see value lines growing at lower percentage in volume than premium and super-premium, on a dollar basis they’re actually growing faster because major players in that segment, which we aren’t one, are taking the opportunity to take pricing in the value segment.”

In all, a negative mix shift had a big impact on Constellation in the first quarter. Rob explained that although general mix trends indicate that consumers are trading up, activity in respective price categories shows “there is in fact some degree of trading down.”

The highest end of the super premium category ($8-$12) is being more negatively affected versus the lower end, said Rob. “People are looking for bargains even within the respective categories.”

“When we talk about trading up in general it continue to be a phenomenon measured by the difference of total business in dollar and volume sales, versus looking at super-premium category versus value.”

Furthermore, “on-premise oriented brands are definitely being hurt in the economy...the highest margin brands in our portfolio which are more on-premise oriented are being more negatively impacted by the economy, especially in the restaurant business,” said Rob.

CONSTELLATION LOSES SOME SHARE IN Q1. Constellation lost some share in Q1 mainly due to recent price increases and SKU rationalization. Bob also pointed out that Constellation chosen “not to take part heavily in the value category” which is growing.

THE MOVE TOWARD CONSOLIDATING DISTRIBUTORS. When asked if Constellation anticipated a disruption with the distributor transition, Rob responded: “We don’t expect any disruption at this time...we’ve put a lot of things in place to ensure that things remain intact in the transition period so right now we feel pretty good about that.”

Why, you ask, does Rob not anticipate disruptions? He said the company has “obviously put some mitigation plans” in place and there are also “some natural things that occur when you make these movements that offset each other, such as when you’re moving the brands you’ve got inventory moving around, shipments to new distributors, etc.”

“When you balance everything out we really don’t think it will have a huge impact on retail sales. We think depletions should be somewhat stable. There might be some loss from distributors who are losing brands and some pick up from distributors who are gaining brands and the same things from the shipment side.”

He noted that “timing issues which would be the worst case scenario,” but the company isn’t currently expecting any timing issues between the second and third quarters. “By Q3 it should be largely complete and stabilized...the idea is to get this done before October, November and December which is one of the key selling seasons.”

Constellation executives decided they should be announcing the changes to the trade “fairly shortly in the next 30 to 60 days, something in that effect and it might not be all at once.”

“The trade is well aware of our intentions...we are in the process of filing negotiations as we sit here right now. Everybody knows what’s going on, basically,” Rob continued.

NON-COMPETING BRANDS MAKE THE MOVE POSSIBLE. The company is opting to change its distributor model because it has sold a significant amount of its value wine and spirits brands, which generally competed against one another. The old model “that worked for selling was putting brands that competed against each other with different distributors,” said Rob. Now, Constellation has a much more streamlined portfolio and can put all its brands with one distributor. “With the elimination of the value business and the narrowing down of the portfolio to a relatively small number brands that are fairly well differentiated, only 10-12 brands that are the key brands...one dist can prioritize those brands and we don’t have the issue of selling largely generic inter-competitive products.”

Rob also pointed out that Constellation will have more influence over a distributor if all their brands are under one roof.

2ND CIRCUIT COURT OF APPEALS UPHOLDS OUT-OF-STATE RETAILER BAN

The 2nd Circuit Court of Appeals today upheld the decision of the Southern District of New York by rejecting an attempt by out-of-state retailers to secure direct-to-consumer shipping licenses in the state of New York.

Circuit Judges Wesley concluded that “because New York’s three-tier system treats in-state and out-of-state liquor the same, and does not discriminate against out-of-state products or producers, we need not analyze the regulation further under Commerce Clause principles.” In all, NY ABC laws “instituting a three-tier system for the regulation of alcoholic beverages, do not discriminate against out-of-state producers in violation of the Commerce Clause.” You can’t get much plainer than that.

In Judge Calabresi’s concurrence, he stated that “to be sure, the Constitution as a whole does and must evolve. Moreover, as the Court may have done in its recent readings of the Twenty-First Amendment, history can be made into a tool for bringing the Charter into line with current needs. But judges are not historians with fancy robes and life tenure. And historical reinterpretation always poses the risk that courts will too readily “‘imagine the past [to] remember the future.’”

He went on to say that “any sort of updating can be dangerous. It may permit courts, especially well-meaning ones, to substitute their own notions of modern needs for those of the majority. Moreover, when a rereading results in the erection of a constitutional barrier, it may remove serious issues from the democratic process and from legislative deliberation.”

This opinion could have ramifications on the appeal pending before the Fifth Circuit. Stay tuned...

DIAGEO CUTS 900 JOBS IN SCOTLAND

Diageo announced early this morning a new cost restructuring plan that will result in the loss of 900 jobs over the next two years. It is closing Kilmarnock Packaging Plant resulting in the loss of 700 jobs due to “infrastructure limitations.” Instead, Diageo will invest £86 million to expand the Leven Packaging Plant in Fife, which will create approximately 400 jobs. “The company hopes that a number of these jobs would be taken by employees transferring from Kilmarnock.” In addition, Diageo will invest another £3 in the Shieldhall Packaging Plant in Glasgow, which will result in the loss of 30 jobs at the site.

Diageo is also closing the 200 year-old Scottish distillery Port Dundas and adjacent Dundashill Cooperage that will result in 150 lay-offs. Diageo said it hopes “that some employees would relocate to a new cooperage in Central Scotland,” which is the Cameronbridge Distillery in Fife. The company plans to build a new £9 million cooperage at Cambus near Alloa by summer 2011.

In all, the company says the restructuring will cut costs about £40 million ($65.8 million) in 2012. Recall that Diageo announced in February a £200 million restructuring plan. The company expects to cut costs by £100 million in the financial year ending June 2010 and reduce the global work force by 1,000 from 23,000.

“We believe the plans announced today will help secure the sustainability of our business in Scotland...Our plans and the associated £100 million investment reflect the strength of Diageo’s continued commitment to Scotland. With these changes, Diageo would still employ nearly 4,000 people across the country,” said the company in a statement.

TTB FIRES BACK AT NCL

In response to the National Consumers’ League criticizing “misleading” labels by U.S. wine producers, the TTB issued the following statement:

“The United States and the European Union (EU) signed an agreement on trade in wine on March 10, 2006. In the agreement the U.S. committed to seeking to change the legal status of the semi-generic names to restrict their use solely to wines originating in the applicable EU member state with certain exceptions, in particular, a ‘grandfather’ provision. Under the ‘grandfather’ provision, any person or their successor of interest may continue to use a semi-generic name on a label of wine not originating in the EU provided the semi-generic name appeared on a Certificate of Label Approval (COLA) that was issued prior to March 10, 2006.”

In all, certain wines are “grandfathered” into the provision that does not allow U.S. wine producers to incorrectly label their wines as Champagne or other place names if it does not hail from the specific region.

WSD BRIEFS:

VINEXPO CHIEF SAYS INTERNET “NOT THE RIGHT MEDIUM” FOR WINE SALES. In a new report from Decanter, Vinexpo ceo Robert Beynat said the internet will “never be anything other than a marginal circuit for sales.” He went on to say that “the internet is not the right medium for the sale of wines and spirits, it is not a real alternative to traditional sales circuits and will never reach more than around 8% of the market.”

AMAZON.COM THE NEW WAL-MART? An interesting research note from Cowen and Company claimed that Amazon is the “next generation Wal-Mart” because “we believe the company's focus on lower prices and a superior shopping experience versus online and offline competitors will result in substantial share gains over time,” said analyst Jim Friedland. This is notable given Amazon’s anticipated entrance into the wine industry in which the online retailer will surely jumpstart a new era of competition.

Until tomorrow, Megan

“You do ill if you praise, but worse if you censure, what you do not understand.”
Leonardo da Vinci

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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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Women Continue to Prefer Wine and Spirits to Beer

2009-06-30T13:16:00.000-07:00

Dear Client:

Like last year’s Gallup Poll, beer beat out wine and spirits as Americans’ preferred beverage. Four in 10 drinkers say they prefer beer, compared with 34% naming wine and 21% spirits. Recall that beer has been the top-ranking alcoholic beverage every year since 1992 (the poll’s inception) except in 2005, when wine edged slightly ahead of it. Spirits have consistently ranked third, named by between 18% and 24% of drinkers.

The majority of men say they most often drink beer, while half of women choose wine. There is also a significant generational difference in preferences, with younger men and women favoring beer and older adults favoring wine. As a result, there is a particularly wide gulf between younger men and older women, in terms of drink preferences.

Geographically, beer is most popular in the Midwest. On the basis of education, wine is far more popular among people with at least some college background than it is among those who have not attended college.

AMERICANS’ DRINKING HABITS STAY THE SAME. Overall, this year’s Gallup Poll found “little change in Americans’ drinking habits” despite some “anecdotal reports of a surge in drinking” due to the economy. The percentage of U.S. adults who consume alcohol is “essentially unchanged” from last year at 64%.

“The theory, at least, is that the recession may give people more reasons to drink, but less money to do it with,” said the poll.

About two-thirds of drinkers in the new survey (65%) say they have had at least one drink within the past week, which is identical to the 2008 findings. Heavy drinkers, or those who consume 8 or more drinks in a week, is currently 14%, which Gallup says is “also quite typical for the decade.” The biggest disparity was in the average number of drinks consumed per drinker in the past week, which was up slightly from 2008 to 4.8 drinks.

A ROUND-UP IN STATE TAX INCREASES

Despite protests from Discus and the hospitality industry, New Jersey Gov. Jon Corzine yesterday signed legislation that will increase taxes on wine and spirits among other things, effective Wednesday (July 1). Taxes on wine and spirits will rise 25%, while beer will see no change. This will raise the cost of an average bottle of wine by around 3.5 cents.

Meanwhile, the Massachusetts governor also signed a new state budget on Monday to increase the state sales tax 6.25% and extend it to beer, wine and spirits, effective August 1.

WSJ reports that a total of “ten states were scrambling Monday to pass budgets before a Tuesday deadline.” Several of those states (including Arizona, Indiana and Mississippi) face a “partial shutdown” if their legislatures don't act in time. States without budgets in hand include California, Pennsylvania, North Carolina, Delaware, Illinois, Ohio and Connecticut.

NCL SEEKS REFORM IN “TRUTH IN LABELING” LAWS

The National Consumers League (NCL) is asking Congress to join them in urging the U.S. Treasury Department to reform U.S. wine labeling laws. Their main beef is with a law that allows some domestic winemakers to use the place names of up to 16 internationally recognized regions despite the fact the wines are not actually produced there. The group wants wine labeling laws to be “more consistent with U.S. trademarks and phasing out labels that improperly use the names of other wine producing regions like Champagne.”

"These labeling problems mean both that wines can be sold abroad with labels that falsely suggest that they are from well known and highly-regarded winemaking regions in the U.S., and that American consumers may be victims of deceptive wine labeling," said NCL executive director Sally Greenberg.

DISCUS CHIEF SUBMITS PRO-SUNDAY SALES EDITORIAL TO LOCAL PAPER

Peter Cressy, ceo of the Distilled Spirits Council (Discus), wrote an editorial in today’s issue of the Hartford Courant in favor of Sunday sales at package stores.

As a Connecticut native, Peter said he finds “it astonishing to note that our state remains the only one in the entire Northeast that clings to a Colonial-era blue law ban on Sunday liquor sales at package stores.” Connecticut is also one of three states that does not permit sales of beer, wine or distilled spirits from package stores on Sunday.

He claims that the ban on Sunday sales is not “to protect our citizens” but rather “it is the stubborn resistance of a small, politically connected group of package store owners who disrespect and inconvenience Connecticut consumers, and allow their lobbyist to spread disinformation to protect a state-mandated day off.” This law, says Peter, encourages residents to drive to New York, Massachusetts and Rhode Island on Sunday to purchase alcohol from retailers. “New Connecticut tax revenues from increased sales of distilled spirits alone would reach between $2 million and $3.3 million.”

He points out that Connecticut allows bars and restaurants to sell beer, wine and spirits on Sundays. “Whether or not our Puritan ancestors like it, Sunday has become the second busiest shopping day of the week for our hard-working, culturally modern Connecticut consumers.”

WSD BRIEFS:

INTERESTED IN MARKETING TO MILLENNIALS? Then check out this article on Winebusiness.com. The article’s author, Liz Thach, Ph.D., notes that millennials have continued to drive sales of cheaper wine brands in the recession, but they “can be challenging to reach from a marketing perspective.” Authenticity and convenience over price is extremely important to this age group. Says Liz: “...there appear to be new opportunities for wineries to expand their online marketing, as well as to continue to reach out to Millennials in face to face settings at events and other tasting venues.”

LAST WEEK CONSTELLATION BRANDS laid-off about 100 employees in sales and marketing, WSD has learned.

Until tomorrow, Megan

“To sit in the shade on a fine day, and look upon verdure is the most perfect refreshment.”
Jane Austen

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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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Diageo Aiming to Make Cocktails “Cool Again”

2009-06-29T13:21:00.000-07:00

Dear Client:

Diageo is going to great lengths to tap into the new off-premise trend where consumers are increasingly drinking at home instead of bars and nightclubs. As you know, consumers tend to opt for beer or wine when drinking at home, and not spirits or cocktails. An article in BusinessWeek magazine states: “Diageo says it will continue to plug its Smirnoff, Jose Cuervo, and other spirits, but plans to spend millions in an attempt to make the cocktail cool again.”

“Cocktails wax and wane. They were hot in the '80s, partly thanks to the Tom Cruise movie, Cocktail. After Sex and the City helped make the cosmo and other concoctions hot in the '90s, cocktails are again fading as consumers pull back, says Tom Pirko, president of food and beverage consultant Bevmark.”

Some of the steps Diageo is taking include a revamped website, www.thebar.com, and more ready-to-drink offerings such as Smirnoff Tuscan Lemonade and Captain Morgan Long Island Ice Tea. Diageo also recently acquired the remaining shares of Stirrings, which sells ready-made martinis, mixers and cocktail garnishes.

This summer Diageo is implementing a strategy call Simply Cocktails, which it already tested in Ireland. It allows stores to carry Diageo’s RTDs in the “ready pour” section, and spirits and mixers in the “easy shake” and “simple mix” sections.

WILLIAM GRANT HIRES FORMER DIAGEO EXEC

William Grant has appointed Ronald Wall its chief financial officer for North America to replace Jim Heaton. The reason for Jim’s departure wasn’t given. Ron most recently worked as senior vp - U.S. spirits and national accounts for Diageo. He will join William Grant & Sons officially in early July 2009 and will be based at the company’s U.S. headquarters in New York City.

Ron will report operationally to Simon Hunt, president and general manager, and functionally to Lesley Jackson, group finance director.

“We are absolutely thrilled to welcome Ronald Wall to the William Grant & Sons team. Ron is an accomplished finance executive with a proven track record and hands-on experience that make him the ideal choice for this important role in our organization,” stated Simon Hunt, president, William Grant & Sons USA and managing director, North America. “We have ambitious objectives for our portfolio and over the past couple of years have recruited some of the top talent in the industry. As part of our team, Ron will help take us closer to achieving our goals.”

BEAM GLOBAL’S RORY FINLAY ON WORK-OF-MOUTH MARKETING

Since Rory Finlay joined Beam Global Spirits & Wine as its chief marketing officer in 2007, the company has refocused its advertising model on word-of-mouth marketing. According to TNS Media Intelligence, Beam spent about $28.4 million on U.S. measured media last year, reports Jeremy Mullman of Advertising Age. In an interview with Jeremy, Rory says word of mouth marketing is “about brand behavior, which is really what the brand says and what the brand does. And then we look at how you articulate that through a creative message, whether it's in a bar, or on TV, or in digital.”

His ultimate goal is for “peple to be proud to drink Jim Beamo” but the company has to develop a creative way to do so. As Rory pointed out, “we’re not the biggest spirits player in the world, so if we just go replicate what a Diageo or Pernod Ricard does, we're not going to break through.”

Rory claimed that “there’s an opportunity” for spirits to gain share from beer. “...if you look at the long-term trends, beer has been on the decline and spirits have increased. A large proportion of consumers coming into legal drinking age are actually going straight to spirits, because of cocktail culture or what have you. Now the economy has slowed that down a little bit. But I do feel the beer occasion is an opportunity for us....”

CASTLE BRANDS SHIPMENTS GROW 1% IN THE U.S.

In the twelve months ended March 31, Castle Brands U.S. case sales increased 1% to 206,532 nine liter cases despite a volatile U.S. retail environment. Shipments for Gosling's rums increased 16%, the company’s bourbon brands increased 27%, Pallini liqueurs increased 11% and Brady's Irish Cream increased 17%. While sales decreased slightly on Knappogue Castle Whiskey, revenue per case increased significantly, as the brand was “repositioned to better compete with premium single malts.” Finally, while Boru vodka shipments were down -17%, price related spending decreased by -21% as the company “focused more on profitable markets.” Castle Brands also noted that the U.S. now accounts for 71% of total case sales “as the company focused on more profitable brands and markets.”

John Glover, coo said: "Our results show the immediate benefit of focusing sales and marketing on our more profitable brands. We continue to concentrate on controlling costs throughout the organization and promoting efficiency in our efforts to achieve profitability. Additionally, our reinforced partner relationships should have a positive impact on operations in the coming quarters."

WSD BRIEFS:

LEGISLATION TO REPEAL THE FLOOR TAX IN NEW YORK STATE has reportedly passed the Assembly. Recall that the floor tax requires business owners to pay the state an additional 11 cents per gallon of wine and 3 cents per gallon of beer in their inventories. This is on top of taxes they already pay.

WINEBOW AND YOUNG’S MARKET have signed an exclusive distributor agreement in California.

VAN GOGH IMPORTS AND VIRIDIAN SPIRITS have entered into an exclusive arrangement for Van Gogh to serve as the U.S. sales and marketing force for Viridian’s portfolio of absinthes, including category leader and flagship product, Lucid Absinthe Supérieure.

THE ORGANIC SPIRITS COMPANY has named Preferred Brands as their new broker/agents in the following states: Alabama, Arkansas, Georgia, Louisiana, Mississippi, North and South Carolina and Tennessee. With this addition the Organic Spirits Company will now have representation in 37 states.

Until tomorrow, Megan

“Knowledge comes, but wisdom lingers.”
Alfred Lord Tennyson

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This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Islands Feud over Captain Morgan Rum Deal

2009-06-26T09:44:00.000-07:00

Dear Client:

Diageo, along with other companies such as Burger King Holdings, the builders of Nascar racing tacks and movie and television producers, are some of the unlikely beneficiaries of the emergency Troubled Asset Relief Program approved by Congress in the fall. As we know now (and even then) there was a lot of confusion surrounding the legislation with impending elections, threats of economic collapse and pressure from the Whitehouse, which enabled several hidden tax breaks for non-bank companies like the ones we listed above, reports Bloomberg.

Recall that in June of 2008 the U.S. Virgin Islands Governor John deJongh Jr. agreed to give Diageo billions of dollars in tax incentives if it moved production of Captain Morgan from Puerto Rico to St. Croix. Diageo complied and is now in the beginning stages of erecting a new Captain Morgan distillery (one that USVI is essentially funding with US taxes). Meanwhile, Bacardi Corp is based in Puerto Rico, and Chairman Joaquin Bacardi says the company will benefit from Diageo’s move to St. Croix.

BACKGROUND CHECK. The chair of the Senate Finance Committee, Max Baucus, thought the added provisions that allowed such tax breaks “wouldn’t be controversial” because they mostly renewed current laws. He reportedly didn’t realize at the time that it would eventually grant Diageo an additional $2.7 billion over the next three decades. In March Puerto Rican officials brought to light the amount of money they were losing to USVI, claiming it will be a disaster for the American territory.

RUM COME OVER is the name of the federal tax policy concerning Diageo. A $13.50 federal excise is collected over every gallon of rum sold in the U.S. by the U.S. Treasury Department, which then rebates it to the governments of Puerto Rico and the U.S.V.I. to help them pay for social services.

The second part of the tax renders a permanent $10.50 federal tax dating to 1917 that Washington turns over in full to the territorial governments and a $3 additional tax added in two phases in 1984 and 1993, of which $2.75 is rebated. That is the portion that Congress renewed in the October bailout.

DIAGEO’S DEAL WITH ST. CROIX. The Finance Committee’s staff director Russ Sullivan says that under the terms of the bill, the U.S gives the money to the island, not Diageo, which means that USVI “can do what they want to with their source of revenue.” In order to attract Diageo, USVI agreed to build the Captain Morgan distillery with the $250 million in public bonds that will be repaid with federal excise taxes from the U.S. The Virgin Islands will then give as much as 44.5% of the revenue to Diageo to promote Captain Morgan and provide funding for molasses. In exchange, Diageo agreed to stay in St. Croix for at least 30 years and hire 40 or more local workers.

Diageo lobbyist Michael Bertman noted in the Bloomberg article that the inducements gained from St. Croix will help the company “get a lot bigger,” but he also claimed that USVI needs the money more than Puerto Rico because its economy is much smaller. Of course Puerto Rico doesn’t agree.

Although Puerto Rico resident commissioner Pedro Pierluisis has introduced legislation to deny tax benefits for Diageo, its unlikely the bill will pass, says Fitch.

DISCUS STATED IN OCTOBER through spokesman Frank Coleman that the rum provision is meant to benefit the islands, not rum producers, and is usually renewed with little controversy. Of course, "being part of the bailout took it to another level," he noted.

Click here to view our coverage of the rum provision in October.

UST CHIEF DEPARTS IN JUNE...WHAT’S NEXT FOR STE. MICHELLE?

UST’s president and ceo Murray Kessler will leave Altria at the end of June after overseeing the “completion of the key elements” of UST’s integration into Altria, which included Ste. Michelle Estates. Recall that after Altria acquired UST, Murray agreed to stay on to help with the transition.

Michael Szymanczyk, chairman and chief of Altria, said, "Thanks to Murray's leadership, the integration of UST and its subsidiaries into the Altria family of companies has gone smoothly."

Murray then said he is “confident that USSTC and Ste. Michelle Wine Estates are in great hands and have a bright future."

So what does this mean for Ste. Michelle? There has been speculation since the deal between UST and Altria was announced that the winery would eventually be put up for sale. We’re confident that many parties would be interested in the Washington winery, but difficulties securing loans in this environment may postpone any possible acquisitions. Of course, there’s always the chance that Altria wants to keep the winery. Possible acquirers named in the past were Kendall-Jackson and Constellation Brands. What are your thoughts? Let us know at megan@beernet.com, where all names and indentifying information are kept secret.

WSD BRIEFS:

CONSTELLATION IS CUTTING PRICES for next year’s vintage by at least 30% in Australia’s Murray Valley due to falling demand. Constellation’s John Grant told growers at an industry forum in Mildura that “we been signaling consistently to them that they need to downsize. Those growers who are considering exiting the market should do so,” according to ABC News.

KROGER NAMES NEW PRESIDENT, COO. Long time employee Rodney McMullen will replace Don McGeorge who is retiring as president and coo, effective August 1. Don will reportedly stay with the company until December as a “special advisor” to ceo David Dillon, says WSJ.

SOURCES SAY THE GLAZER’S AND SOUTHERN DEAL is expected to close any day now. We’ll let you know as soon as we hear...

Until Monday, Megan

“It's all right letting yourself go as long as you can let yourself back.”
Mick Jagger

--------- Sell Day Calendar ----------
Today's Sell Day: 20
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Washington Wholesalers Ordered to Pay Costco’s Legal Fees

2009-06-25T12:45:00.000-07:00

Dear Client:

U.S. District Judge Marsha Pechman in Seattle says the State of Washington and beer and wine wholesalers must pay a majority of Costco’s legal costs in the infamous, long-running battle despite the fact that Costco lost most aspects of the case. The Seattle Times is reporting that the state and the Washington Beer and Wine Wholesalers Association will have to pay about $1.9 million, although the exact amount is still being worked out. Note that the state already paid Costco over $416k last year for another part of the case.

Judge Pechman ruled mostly in favor of Costco in the original lawsuit, where the retail giant claimed the state’s three-tier system was anti-competitive. Later an appeals court overturned most of her decisions. The one component that the appeals court upheld was eliminating the state’s post and hold rules, which Judge Pechman said was enough to force the state and wholesalers to pay for Costco’s legal bills. Her ruling seems odd, almost like a personal vendetta against wholesalers.

Costco attorney John Sullivan said yesterday: "We're pleased that the judge determined that we substantially prevailed in the lawsuit, and that the public interest was served."

According to the article, the state and wholesalers association haven’t yet decided if they’re going to appeal the decision. Assistant Attorney General Martha Lantz called the decision “disappointing,” while the attorney for the WBWWA, John Guadnola, said, “We don't have that much money" and indicated they would have to work with the state to divide the cost. It seems this case is never going to end. Recall that it started in 2004 and five years later we’re still dealing with the aftermath.

FISH EYE BOXED WINE RECOMMENDED BY CONSUMER REPORTS

The reviewers at Consumer Reports tested a number of different boxed wines in their July 2009 issue and uncovered three boxed chardonnays that “are very good.” Fish Eye 2007 ($16) was rated the highest, followed by Banrock Station 2007 ($19) and Black Box Monterey County 2008 ($25). The article encourages consumers to try other vintages as well since “manufacturers often achieve consistency from one vintage to another.”

They also tasted two boxed merlots, 2008 Banrock Station ($19) and 2007 Black Box California ($25). The article notes that “they are lower in quality, not very complex, and taste of overripe fruit. But if you're having a big party and not a wine tasting, they could fill the bill.”

Boxed wines prices are certainly a draw for consumer, especially nowadays. “Bottles might be prettier, but boxes are looking increasingly attractive to wine drinkers for one reason: They cost as little as $4 for the equivalent of a standard 750-milliliter bottle.” They quality has also dramatically improved from the old days.

NEW HAMPSHIRE IMPROVES LIQUOR COMMISSION

The New Hampshire legislature has approved an overhaul to the state’s liquor commission, which now awaits Gov. John Lynch’s signature (which he is expected to give). The new law establishes the commission as an enterprise fund agency, which makes it self-supporting. It will also realign the commission’s major departments, provide greater administrative freedom, and allow “broader discretion” to close unprofitable stores. Lastly, the new laws allow the commission to open up to 8 new agency stores in markets they feel would benefit. Chairman of the commission Mark Bodi said in a statement that adding new agency stores doesn’t signal a “shift into the private sale system.”

WSD BRIEFS:

WE HEAR THAT FOSTER’S AMERICAS laid off approximately another 100 employees – including long time employees – this week as the result of its Wine Review restructuring and slumping sales.

BILL PECORIELLO of ConsumerEdge Research is forecasting that Constellation’s wine sales will be “fairly flat...from a consumer takeaway standpoint for the upcoming quarter,” absent the destocking.

FOLIO FINE WINE PARTNERS will be the exclusive U.S. importer for all Masi Agricola wines effective July 1, 2009. Masi dates back to the 18th century when the Boscaini family first planted vineyards in Italy's Veneto region.

ONLINE ALCOHOL ADS LEGALIZED IN FRANCE. The French Senate has granted alcohol producers the right to advertise online under certain guidelines. The internet is now considered “established media” along with television and radio, which means alcohol producers can advertise on websites not aimed at children or that are not sports oriented.

KIRIN HOLDINGS has completed the sale of its 3.7% stake in Pernod Ricard to Le Delos Invest III, a unit of Societe Paul Ricard for $528.2 million.

Until tomorrow, Megan

“There's no present. There's only the immediate future and the recent past.”
George Carlin

--------- 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: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Walgreens Launches New Plan to Sell Wine and Beer

2009-06-24T14:03:00.000-07:00

Dear Client:

Walgreens has formally announced plans to once again sell beer and wine in its newly redesigned format titled Consumer Centric Retail stores. In addition to selling alcohol, the new format also includes lower and less cluttered shelves and higher-end brands in its private label program. How soon until Walgreens starts offering its own wine?

The program will be rolled out to about 400 stores this fall, and then will expand nationwide through calendar 2010. Its 35-store pilot programs “are performing ahead of plan on all metrics,” said chief Gregory Wasson. Recall that Walgreen stopped selling alcohol in most of its stores in the 1990s except in the South.

The chain is currently in the midst of applying for local liquor licenses. Walgreens estimates it will sell a limited selection of beer and wine at 70% of its almost 7,000 drugstores when the rollout is complete. Meanwhile, the company will slow its new store openings to about 2.5% to 3% annual growth.

Rumors began surfacing in the spring that Walgreens was looking to re-enter the alcohol business, as we reported in April.

PREMIUM CONSUMER BRANDS GAINING TRACTION, SAYS IRI

Consumers are still cutting back but not as much as they were in the fall of 2008, according to a new survey by IRI. In fact, many shoppers are increasing their purchases on premium consumer brands overall. The latest IRI Times & Trends Report, "The Value/Premium Dichotomy," reveals that value brands are growing rapidly in terms of dollars, while mid-tier brands lag. Premium brands are also picking up steam.

“Shoppers have moved away from their traditional brands to value brands, including both retailers' private brands as well as economy brands from national brand manufacturers," said Thom Blischok, president of IRI Consulting and Innovation.

They are also buying premium brands, which IRI calls "sophisticated splurging." For example, shoppers are still buying the premium brands they like but are purchasing them at value stores including dollar stores and supercenters. Meanwhile, grocery, drug, mass merchandise and club stores are seeing shrinking sales.

Sophisticated splurging is also being helped by the fact that retailers have improved their private label offerings with more high-end brands, and consumers are more concerned about health and wellness, says IRI.

The shoppers driving the premium trend are classified as “living comfortably,” instead of consumers in the “doing well” range who earning $55k in a two or more member household.

SWS AND DIAGEO RUMORED TO BE LOSING INTEREST IN BORDEAUX

Apparently there are some rumors at Vinexpo (we’re not there so we haven’t heard it directly) that Southern Wine & Spirits is “dramatically reducing its interest in Bordeaux,” reports Decanter.com. However, SWS president Melvin Dick said the accusations are “ridiculous” and that “Bordeaux is a major part of our fine wine business.” He did admit the company is currently not buying Bordeaux unless it’s absolutely necessary because the wholesaler is trying to cut back on inventories. “We have heavy inventory of 2006, 2007 and a bit of 2005,” he said. “These are tough times and we are being very careful.” Decanter also reports that Diageo’s Chateau & Estate Wines has halted orders of Bordeaux.

NEW LABELING RULES ON ORGANIC WINES

Based on a memorandum between the Agricultural Marketing Service (AMS) of the United States Department of Agriculture (USDA), the Alcohol and Tobacco Tax and Trade Bureau (TTB) has alerted the industry that AMS has changed the labeling policies for wines which contain both organic and non-organic grapes. If a wine label claims it is "Made with Organic Ingredients" and contains organic and non-organic grapes, the statement on the label must say one of the following:

"Made with Organic and Non-Organic Grapes";
"Made with Organic [variety] Grapes and Non-Organic [variety] Grapes";
"Made with _% Organic Grapes and _% Grapes";
"Made with _% Organic [variety] Grapes and _% Non-Organic [variety] Grapes"

Wines restricted to an "Organic Ingredients" statement must indicate the presence of any non-organic grapes in the "Organic Ingredients" statement. Here’s an example: Organic Merlot grapes, Cabernet Sauvignon grapes, tartaric acid. The wine must also bear a percentage statement, such as “55% Organic Ingredients.”

PERNOD’S PLAN TO CUT CONTRACTS IN NZ HAS LOCAL GROWERS PANICKED

There’s a lot of backlash in response to Pernod Ricard’s plan to cut contracts with Gisborne grape growers in New Zealand due to oversupply and falling demand. Pernod instead wants to shift its focus to New Zealand sauvignon blanc (which is huge) and away from sparkling pinot noir and chardonnay. Pernod managing director Famian Partifliani told local reporters that the company has “gone to considerable effort to stimulate consumer demand for Chardonnay,” but to no avail.

From what we understand, Gisborne contract grape growers have two choices: immediate termination with compensation or a two-year notice period. Only a small number of growers will be kept on.

“...We value our strong relationships with growers and any decisions regarding grape supply contracts will not be taken lightly. However, we must plan to get the balance right between supply and demand predictions and forecasts and our future grape supply must reflect changing consumer trends,” he continued.

President of Gisborne Winegrowers Society John Clarke believes the damage could be as much as 25% of the local tonnage, which is around 23,200 tons.

SPIRITS SAMPLES LEGAL IN MAINE, EFFECTIVE AUGUST 17

Maine Governor John Baldacci signed legislation that makes it legal for consumers to sample distilled spirits at tasting events held at liquor stores. The new law takes effect August 17. Under LD 498, liquor stores can conduct up to 12 tastings per year with a limit of 1.5 ounces per sample.

A total of 43 states allow some form of spirits tasting, including every other state in New England, says Discus.

“Spirits tastings are terrific opportunities to allow consumers a more informed purchasing decision,” said council vp David Wojnar. “Consumer tastings events are a widely-accepted means to let customers ‘try before they buy.’”

WSD BRIEFS:

DIAGEO HAS APPOINTED A NEW PRESIDENT of its Asia-Pacific region, Gilbert Ghostine, who is currently the managing director of Diageo Continental Europe, effective July 1. Gilbert replaces John Pollaers, who has held the role since the formation of Diageo Asia-Pacific as a separate region within Diageo in February 2007. The reason for John’s departure was not given. Gilbert will report directly to Ivan Menezes, chairman of Diageo Asia-Pacific.

ADMIRAL IMPORTS is releasing The Wild Geese Irish Soldiers & Heroes collection of super premium Irish Whiskeys, which celebrates descendents of Irish men and women who fled Ireland. The brand is new in the U.S. The line includes Classic Blend, Rare, Limited Edition and Single Malt.

THE AUSTRALIAN WINE AND BRAND CORP has appointed James Dominguez as the new chairman of the board. His three-year term kicks off on July 1. He replaces retiring chairman, John Moore.

WE ARE HEARING THAT wine and spirits distributors are being forced to take on more inventory from suppliers, likely due to “de-stocking issues” that distillers have recently blamed for softer sales results.

Until tomorrow, Megan

“The problem with the world is that everyone is a few drinks behind.”
Humphrey Bogart

--------- Sell Day Calendar ----------
Today's Sell Day: 18
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Alert: Beam Global Acquires Effen Vodka

2009-06-23T10:32:00.000-07:00

Dear Client:

We’ve heard some rumors over the past week and now the deal has come to pass. Beam Global Spirits and Wine has acquired Effen Vodka from the Sazerac Company. In exchange, Beam Global sold the Old Taylor whiskey brand and inventory to Sazerac. Other terms of the transaction were not disclosed.

Since losing Absolut to Pernod Ricard last year, Beam has had a vodka gap in its portfolio now filled by Effen. Clearly the company will help expand its distribution and perhaps build Effen into an even stronger national brand.

“Effen Vodka is an excellent fit with our brand portfolio, and we’re excited to put our sales and distribution muscle behind it to accelerate the brand’s growth,” said Matt Shattock, the new president and ceo of Beam Global Spirits & Wine who recently replaced Tom Flocco. “Effen has built a strong following in select markets, and we believe our sales and marketing organizations can help expand distribution and build excitement for Effen in many more markets in the U.S. and around the world.”

Beam reports that Effen has annual net sales of approximately $10 million, and its distribution is currently concentrated in Chicago, Southern California and major Florida markets. Effen’s product line includes the flagship vodka, Black Cherry and limited edition Raspberry.

Until tomorrow, Megan

“You have to know how to accept rejection and reject acceptance.”
Ray Bradbury

--------- Sell Day Calendar ----------
Today's Sell Day: 16
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Preiss Imports Benefits from Cocktail Craze

2009-06-22T15:36:00.000-07:00

Dear Client:

Every once in awhile we get emails from subscribers complaining that we focus too much on the “big guys.” Clearly there is much more to the wine and spirits industry than Diageo, Gallo, Constellation, Pernod-Ricard and other large suppliers, so we caught up with Steve Fox, National Sales Manager of Preiss Imports, for a quick chat on how the specialty spirits company is holding up during these tough times.

Steve has been with Preiss Imports for 17 years and says he is “very passionate” about boutique brands. “I’ve been preaching this and watching the momentum get better over the years.” We asked if he thinks the trend towards boutiques will last, to which he answered: “the family artisan type stuff is doing really, really well...that’s what our company has been living on.”

Preiss is a boutique spirits company that specializes in “high-end esoteric” brands that it imports from small companies around the world, said Steve. It specifically specializes in single malt Scotch and also imports such brands as the first super-premium tequila, Chinaco, in the 1980s. It was launched “long before Patron,” said Steve, “but Patron took it to the next level because they have the money and I give them a lot of credit.”

COCKTAIL CRAZE KEEPING PREISS “AFLOAT.” We asked how the economy has affected Preiss, and Steve said it’s done surprisingly well. “Products selling over $200 are slowing down,” he noted, “but they are starting to pick up a little bit.” It’s the “real expensive stuff” that is taking the biggest hit.

As other spirits companies have reported, he said that the six months from November to the first four months of this year were sluggish... “but eventually my stuff sales.” Cocktails also softened earlier this year but “are picking back up again...the cocktail craze is absolutely keeping us afloat.”

Brazilian Cachaca is “doing great” in the United States. The Cachaca producers have been “fighting for years” to gain their own classification in the U.S. (like vodka or tequila) but Steve said he’s not sure if it will ever get resolved.

In terms of whiskey, Steve said “I’m probably going to have my best June ever...we can feel the momentum is back.” July is also looking strong. He noted that Preiss thought things were coming back in April but it eventually petered out in May.

AU NATURALE. As a part of the cocktail craze, mixologists are increasingly seeking out quality mixers, garnishes and spirits to use for their drinks. About 3 or 4 years ago Preiss started selling Luxardo Maraschino Cherries, which has become very lucrative for the company. “They cost cocktail people 8 cents a piece and no one complains about the price...they’re all natural, don’t have artificial coloring or flavoring...they’re absolutely on fire.”

Meanwhile, he said it’s hard to go totally natural with liqueurs because they have to have food coloring but Preiss does the best it can. “We try to go as natural as we can but a lot of the natural products in Europe aren’t approved in this country so it’s not always as pure as we’d like...we’re being held back by the FDA in terms of how pure our products are.”

NEW YORK AND TEXAS “ON FIRE.” “New York is doing extremely well and Texas is absolutely on fire... probably my strongest growing market is Texas...Massachusetts is doing good, Florida has slowed down, California is coming back around and Vegas is doing just fine despite what everyone says...but New York keeps plugging away... its mainly on premise for us [in New York]...people eat out there, they don’t stay home because they can’t cook in their tiny 500 square foot apartments.”

While many spirits companies are hurting from consumers buying brands off-premise instead of on-premise, Steve said the on-premise is actually saving Preiss. “More of our categories are catching up on the on-premise which is our savior today,” whereas it used to be retail. “The on premise is setting the new trends.”

EXCISE TAXES TARGETING DISTILLERS. What about increases in state excise taxes? Steve said the company “had some great years” in Oregon, for example, but a new tax hike on spirits “makes it difficult for special orders” and “pops the bubble for us.” The government always targets “cigarettes and hard liquor,” he pointed out.

UK RETAILERS SHIPPING TO THE U.S. As a company that specializes in single malt Scotch, we asked Steve if he’s had any problems with UK retailers shipping directly to consumers in the United States. Certain websites make it easy for consumers to place an order, and this is of course problematic if federal, state and local taxes are not paid. It is also a problem if the direct shipment is conducted in a state where it is illegal or if it surpasses any quantity limits. Some collectors in particular are eager to bypass the three-tier system in order to get Scotch cheaper than they would from a retailer in the U.S. Steve agreed that it’s a problem and hopes the government will start checking packages more closely.

Recall that last October Anthony Foglio and Keith Greggor (formerly of Skyy Spirits) took a majority stake in Preiss Imports for an undisclosed sum. Steve said that they’ve “brought new insights into the company” and that it has been a positive step for Preiss.

BEAR STERNS VS. DEMETER FINANCIAL/PAHLMEYER VINEYARDS MOVES TO NORTHERN CALIFORNIA

WSD has learned that the lawsuit of Bear Sterns Merchant Manager vs. Demeter Financial Group and Pahlmeyer Vineyards has closed in New York and will move to Northern California. Earlier this month, Judge John Koeltl for the Southern District of New York granted a motion filed by defendant Demeter Financial to transfer the venue to the Northern District of California based on the “convenience of the witnesses.” According to the motion, “the Court reasoned that the key witnesses regarding liability (as opposed to the plaintiff’s damages) would be defendants’ employees, who were located in Northern California,” and “could be beyond the Court’s subpoena power.”

The original complaint was filed by Bear Sterns in October of 2008. It accuses Demeter Financial (which is based in Napa) of “duplicity” after allegedly going behind Bear Sterns’ back and secretly acting as a broker for Pahlmeyer Vineyards, which then allegedly broke its exclusivity agreement with Bear Sterns to strike a deal with GI Partners.

According to the lawsuit: “After promising to identify acquisition opportunities for Merchant Manager on an exclusive basis, Demeter separately agreed to act as broker for Pahlmeyer, one of the companies it identified to [Bear Sterns] Merchant Manager.” This took place after Demeter allegedly agreed not to reveal any “prospective Targets” to anyone else until Bear Sterns “released Demeter in writing,” which the company claims never happened.

Afterwards, Bear Sterns says it negotiated an exclusivity agreement with Demeter and Pahlmeyer from March 14, 2008 through June 6, 2008 “during which the parties ‘agreed to negotiate exclusively with each other...’” Pahlmeyer also agreed to “‘immediately cease and cause to be terminated any existing activities, discussions or negotiations with any third party with respect to an Alternative Proposal...”

Meanwhile, Bear Stearns claims that Demeter secretly “proceeded to shop Pahlmeyer to another potential purchaser during Pahlmeyer’s exclusivity period.” The winery then terminated its Exclusivity Agreement on June 6 with Bear Stearns and agreed “shortly thereafter to pursue a deal with the new potential purchaser that Demeter improperly obtained for Pahlmeyer.”

The “new potential purchaser” was GI Partners, according to the suit, which “Demeter identified and/or presented” to Pahlmeyer.”

Bear Sterns also says that Demeter “stands to reap a financial reward from its duplicity through a tail payment arrangement with Pahlmeyer which will pay Demeter when Pahlmeyer consummates the sale.”

As a result, the plaintiff “respectfully requests judgment in its favor and against Defendant, in an amount to be determined at trial, but believed to exceed Three Million, Seven Hundred Fifty Thousand Dollars ($3,750,000).”

The lawsuit has yet to open in Northern California but we’ll keep you posted as new developments surface.

WILLIAM GRANT & SONS HIRES NEW CHIEF

William Grant & Sons has hired Bacardi’s chief marketing officer Stella David as its new ceo, effective August 10. She will replace Roland van Bommel who decided to leave his post after five years with the company, although it’s not clear where he is going. Stella has held the position of cmo at Bacardi for four years, and also served as vp of global operations, MD of Asia Pacific and ceo of the UK and Dutch divisions.

PERNOD USA EXEC CHUCK SMITH ANNOUNCES RETIREMENT

Chuck Smith, senior vp, trade relations, Pernod Ricard USA, is retiring, effective July 15, 2009. He began his career in the alcohol industry with E&J Gallo in 1971. He joined Remy Cointreau New York in 1991 as executive vp of sales, and in 1999 joined Pernod Ricard as senior vp of sales for the former Austin Nichols, Inc.

“Whether working on strategic development initiatives with distributors, trade organizations, or as a member of our Responsibility Committee, Chuck leads by example, and has earned respect throughout the industry. While I am happy for Chuck as he heads into retirement, I know that his leadership and dedication will be missed,” said Jim Evans, senior vp, sales at PRUSA.

WSD BRIEFS:

WE RECEIVED A STATEMENT FROM SILICON VALLEY BANK regarding its supposed deal with Inertia Beverage Group. Here’s what they had to say: “Nothing has been made public yet but I’ll share with you that it is moving along according to plan. Nothing has happened yet and nothing has happened to suggest that it won’t happen. Sometimes it takes longer than a week to dot all the i’s and cross all the t’s.”

CORRECTION. In Friday's issue of WSD, we reported that WSWA now welcomes "legitimate shippers that follow state laws." However, WSWA chief Craig Wolf writes that the organization has "never altered our fundamental belief that direct to consumer sales are bad public policy.... My opening merely spoke to the fact that there are a slew of new models that create enormous challenges to regulators and I hoped the panel would help educate those regulators on the issues involved with these models." We apologize for the mistake.

Until tomorrow, Megan

“Men are not against you; they are merely for themselves.”
Gene Fowler

--------- Sell Day Calendar ----------
Today's Sell Day: 16
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Panel Debate on Cyberwine Merchants

2009-06-19T15:39:00.000-07:00

Dear Client:

Craig Wolf, ceo of the Wine and Spirits Wholesalers of America, led a panel at the NCSLA (National Conference of State Liquor Administrators) titled: “The New Cyberwine Merchants: Creating New Boundaries of Wine Distribution.” There are many different types of cyberwine merchants, and the panelists represented some of those various models. John Hinman, Partner, Hinman & Carmichael, and the general counsel for the Specialty Wine Retailers Association sat on the panel. He also served as the general counsel for 7-Eleven in California concerning the central warehousing proposal. Other panelists included Matthew Botting, general counsel for the California Department of Alcoholic Beverage Control; Ted Jansen of Inertia Beverage Group; and Bill Tomaszewski, general counsel of Wine.com.

JOHN HINMAN DEFINES CYBERWINE MERCHANTS. Who are the cyberwine merchants? “They’re wineries from our perspective that can’t get distribution through traditional means,” said John. This also includes cyberwine merchants that use “all available ad and marketing channels that currently exist and are in the process of being developed to reach consumers” such as mass media and targeted media.

“We are moving towards 7000 US wineries alone...there are possibly 70,000 wineries worldwide,” said John. Clearly there is a lot of product out there “attempting to get in the US market one way or another.” Cyberwine merchants give these producers an alternative to the three-tier in entering the marketplace.

TRUSTED WINE MERCHANTS. John feels that the most effective method in getting consumers to buy your products is to “get a third party voucher to endorse you,” which he described as “merchants who produce products other than wine” and have a “trusted” relationship with consumers. Some of these “trusted merchants,” as he put it, include Wall Street Journal, Williams Sonoma, Home Shopping Network, San Fran Chronicle, Sears, etc. Trusted merchants either taste wine, host groups that evaluate wines and/or make recommendations. They are not cyberwine merchants because they don’t sell wine, rather they sell information. He says they look for quality and value because their consumers trust their endorsement. “They are motivated to make good recommendations because they know consumers expect it.”

The basic model of the trusted merchant goes like this: a consumer places an order with the third party endorser; the trusted merchant collects information from the customer for transmission to the selling licensee, who is the only entity qualified to accept the order; acceptance of order by the licensee. The licensee is in charge of receiving the customer information, verifying funds, age, product availability, location of the consumer, and then either accepts or rejects the order.

If the selling licensee has appropriate permits they can ship direct, and go through all requirements including delivery and compliance (something that ShipCompliant oversees).

John claims this model doesn’t replace the three-tier system but rather works as a supplement. Of course, many in the industry disagree (such as regulators and wholesalers), so we will outline some of their issues below.

REGULTATORS ARE MEANT TO “IDENTIFY ISSUES,” SAYS MATT. Matt Botting provided the point of view of a regulator. Many of these cyberwine merchants have butted heads with him in the past so it was certainly an interesting panel. He claims that the California ABC has not approved or disapproved Amazon.com or other programs in the past. Rather, “our role is to identify regulatory issues and it’s up to various participants to deal with those issues.”

“I don’t meant to leave the impression that everything on the internet is a problem...or that everything these merchants are doing we have a problem with...it’s hard to tell which ones are doing it right and which ones are doing it wrong.”

He noted that “regulators have to deal with the pressure to fix the system...laws tend to be static and it takes a lot to change them,” which is the opposite of the business world that is “always moving forward... and those two concepts don’t always mesh well.” As a result, he said, there is “always pressure to bend the rules...to allow some new business venture to move forward...unfortunately us regulators can’t make up the rules to make it convenient.”

He said the three most common models are: agent of consumer, agent of winery and agent of retailer. There’s not a big difference between the various models, but the agent of consumer tends to be more ambiguous and involve multiple licensees.

One of the biggest problems for state regulators is they can’t regulate “rogue” shippers because they generally are not licensed. Clearly this is a source of frustration for licensed wineries and shippers who are doing things legally because they tend to get the brunt of everything.

Matt said the main regulatory issues are entities exercising privileges of other licensees; tied-house; offering free goods; and consignment sales. In case you were wondering, consignment sales involve the fact that retailers must actively own the wine being sold. It’s illegal for a retailer not to pay the winery until the sale is made.

In order to protect yourself, Matt advises against simply accepting “what you’re being told. Ask for documentation and read them. Compare them.”

He also noted that “transparency is good but does not define whether the whole system is appropriate.”

IBG “A LEGITIMATE BUSINESS,” SAYS TED. Next, Ted Jansen, the chief of Inertia Beverage Group (IBG) which has been the subject of much speculation over recent weeks regarding New Vine Logistics, spoke on his company’s model. “We see ourselves as a legitimate business trying to solve legitimate problems...we know there are some rogue companies out there...but there is a lot of room for legitimate business,” he said.

“There’s been enormous consolidation in three tier system...like John mentioned, we don’t see this as a substitute to three tier but a compliment to it...I don’t ever expect in this industry you’ll see the three tier dissipated.”

IBG’s model tries to provide serves to licensees “to allow for better and more efficient distribution” by “making sure we’re staying within the line of all states where we operate.”

“We think our model over time you’ll learn to support...we do a good job to make sure our clients are compliant...by filing the right reports and paying taxes.” They also ensure that consumers purchasing the wine are of legal age, in the right geological location and able to purchase wine all around. Ted says his company has about 300 winery customers.

IBG also gives “wholesalers the ability to use our system so they can move inventory responsibility to wineries...it allows them to represent in the marketplace but not take the title.”

They also ensure that “the licensee is the transactor of the sale and responsible for the product...all the things you’d expect them to be responsible for.”

“WHOLESALERS ARE OUR BEST FRIENDS,” SAYS WINE.COM GENERAL COUNSEL. Bill Tomaszewski of Wine.com opened his talk with a bold statement: “We do internet sales right and I’m not going to take a no as an answer from you.” Their operating model differs greatly from IBG because they have licenses in MA, NJ, NY, NC, WA, CT, and CA (which has the best selection and prices of all the warehouses) where they operate actual brick and mortar stores. “We are no different than your corner liquor store. We are exactly the same thing...the only difference between corner retail store and Wine.com is you don’t walk into our store...we ship it to you.” Our brick and mortar stores “ensure the adherence to all laws affecting pricing, packaging, advertising and more.”

He also said that “wholesalers are our best friends. We couldn’t exist without them. We buy our wines from a wholesaler.”

“We comply with all the states. Local taxes are collected and beverage excise taxes are collected at the wholesale tier.” Wine.com also ships to other states where it is legal to do so.

“We have a license. You know who is selling the wine, there is no subterfuge.”

THE ARGUMENT AGAINST TRUSTED MERCHANTS: WHO’S TO BLAME IF SOMETHING GOES WRONG? One of the problems surrounding the trusted merchant is they cannot be held liable if something illegal takes place because they are not licensed to make the wine sale. Craig addressed this in the question and answer section asking who is responsible if something goes wrong – the trusted merchant or the shipper – to which John responded: “The licensee making the sell is the one who should be held accountable...retail license in every state is conditioned on obeying laws, state and federal. So if a retailer doesn’t have a permit and violates a law they can be persecuted by local government.”

Matt noted that some parties are telling wineries they can do extra things that are otherwise illegal for licensed entities because they’re not licensed, to which Matt retorted: “that’s baloney.” Instead, the licensee, or winery, will get in trouble. “If they don’t hold a license they are outside our administrative jurisdiction...licensee is in trouble, not the non-licensee.”

“WILD WEST” OF RETAILER SHIPPERS. Bill seconded that by saying: “All retailers profit from being uncompliant...it’s a wild west for them...the people that get in trouble are those who are compliant...people without licenses like retailers in NY and NJ are making a lot of money because they’re not paying taxes and no one is regulating them or watching over them...while Wine.com has spent a lot of money to be compliant and if I happen to get caught up in a sting in Massachusetts I get banged pretty big with a lot of publicity...meanwhile people in another state that ship to a minor gets away scott-free” because they are unlicensed.

THE “MICE AROUND THE ELEPHANT.” This led the conversation back to Ted who maintained that companies such as IBG are “doing our best to stay within regulatory framework.” John agreed, claiming the conversation is focusing on “the mice around the elephant,” meaning the rogue shippers and the trusted merchant. “They [the rogue shippers] are small players that won’t last...you think the Wall Street Journal will associate themselves with them?”

IT’S A MATTER OF TIME AND MONEY, SAYS MATT. Matt, meanwhile, made the point that regulators don’t have the money or time to prosecute these rogue retailers, which is understandably frustrating for shippers like Wine.com. Matt said that if the illegal shippers are operating in California they can pin a misdemeanor transaction on them, but it is a timely process because they have to find someone willing to prosecute them. Attorneys are busy with bigger offenders such as murderers and rapists, he said. If the offender is out-of-state, “there are very, very limited options and very expensive options.”

A “CONFLICT” OF DOING BUSINESS. To that, John claimed that “a conflict exists in every business...today we have good compliance reporting.” He said the beef of the problem existed 5 to 10 years ago. He also encouraged wineries and regulators to utilize carriers and credit card companies. “The carriers have a big part in this. They are your best enforcement friends...American Express and UPS will tell you in a nanosecond if you don’t have a permit.”

AN UPDATE ON INERTIA AND NEW VINE LOGISTICS

New Vine and Inertia Beverage Group (IBG) dominated conversations at the NCSLA this past week. After talking to a lot of people in and out of the wine industry, we’ve pieced together a bit of news.

Right now it’s not clear how many clients New Vine has left, although they stated last week that shipping has resumed. For now it sounds like IBG is sitting back and waiting to see what happens. If possible, it would like to fully acquire New Vine but that all depends on Silicon Valley Bank. We’ve heard that IBG is close to finalizing its deal with Silicon Valley Bank (if it hasn’t already) but requests for comment were not returned by press time.

If the deal goes through and Amazon stays on board, this could be huge for IBG. From what we understand, Amazon is way too invested at this point not to go forward with its direct-to-consumer wine shipping plan, or Amazonwine.com. What’s not clear is if they’ll remain with New Vine or join another compliance company.

Meanwhile, Sears is also trying to enter the wine shipping business as a “trusted merchant” but has yet to gain access to California from what we understand.

SHIPCOMPLIANT LAUNCHES AUTOMATED WHOLESALE SOLUTION

The guys at ShipCompliant have released a new automated wholesale compliance solution designed to cut out a lot of the guesswork for wineries when dealing with wholesalers. As a result, it should make things simpler for wholesalers as well and create an overall smoother process.

It’s described as “a user-friendly in-house system that consolidates exhaustive amounts of details into a comprehensive database.” It analyzes every invoice against a set of more than 20 different rule types to ensure that every product is properly registered, renewals and revisions are up to date, licenses are valid, product prices are consistent with what has been posted in price posting states, and product limits have not been exceeded.

It’s a web-based solution and therefore available at any time, from any computer. Wineries and importers can create multiple user accounts so that senior management, the compliance team and the sales team in the field have access to the same up-to-date information.

The Wholesale solution is available on a first-come, first-served basis as a standalone product or as an add-on module for existing ShipCompliant Direct subscribers. For more information, visit www.shipcompliant.com/wholesale.

WINE.COM ENTERS “LOGISTICS” SIDE OF THE INDUSTRY

Speaking of Wine.com and its business model, the company is now launching a new direct-to-consumer fulfillment division for wineries called Wine.com Logistics. It will operate out of Wine.com's Berkeley, CA warehouse. The company is banking on its eleven year history and reputation after the all the uncertainty created by New Vine Logistics’ shutdown a couple of weeks ago.

"We've been looking at this for some time," said Rich Bergsund, Wine.com ceo. "We already have warehouses and call centers, we've shipped millions of orders direct-to-consumer and we understand the importance of a great customer experience. Wine.com Logistics is a natural extension of our core business."

Wine.com will provide warehousing, pick/pack/ship and call center support for winery wine clubs and daily orders placed by consumers with wineries. Inventory will be owned by the wineries and segregated from inventory owned by Wine.com for its retail business. Wine.com maintains a California ABC Type 14 public storage license in support of these services.

AUSTRALIA CRUSH DOWN -7% BUT STILL TOO HIGH

The crush report for Australia’s 2009 vintage shows that yields declined -7% or about 125,400 tons. The total intake was 1.71 million tons, compared with 1.83m tons in 2008. While it’s below the five-year average of 1.79m tons, it’s still higher than estimated and exceeds current demand. Red winegrapes recorded a slightly larger decline than white, but still accounted for 52% of total intake. Shiraz regained its position as Australia’s most popular variety for the first time since 2006. While dropping to second behind Shiraz overall, Chardonnay remained the clearly dominant white variety.

DISCUS BLASTS NJ PROPOSED TAX INCREASE ON WINE AND SPIRITS

Discus issued a statement blasting the New Jersey legislature for targeting the “already struggling hospitality industry during a recession.” Discus said the proposed tax increase “will destroy 1,000 hospitality jobs.” Recall that the proposal calls for raising spirits and wine excise taxes by 25% from $4.40 to $5.50/gallon on distilled spirits and from $0.70 to $0.875/gallon on wine. Over 60% of the cost of a typical bottle of spirits in NJ already goes toward taxes.

“Policymakers need to understand that because alcohol taxes are already extremely high, any additional increase will hurt business and cost jobs across the hospitality industry -- waiters and waitresses, store clerks, busboys and bartenders,” said Jay Hibbard, Discus vice president. He said that over 11,000 state hospitality jobs have already been lost over the past year due to the recession.

YOUNG’S MARKET TAPS FORMER PERNOD VP, DAN GRUNBECK

Young’s Market Company’s chief Christopher Underwood has appointed Dan Grunbeck as senior vp of wine for California. The appointment is effective July 1, 2009. Most recently Dan served as vp/national sales manager wine and champagnes for Pernod Ricard.

In a statement, Christopher said: “We are excited that Dan has agreed to join the Young’s Market team in this newly created position. Dan is a 20 year industry veteran with incomparable wine experience and expertise. We are confident that his contributions to Young’s will exceed our high expectations.” Young’s has operations in California, Arizona, Hawaii, Oregon, Washington, Alaska, Idaho, Utah, Montana and Wyoming.

DISCUS AND OTHERS RECEIVE “BEST PRACTICES AWARDS.”

The National Conference of State Liquor Administrators (NCSLA) issued their annual Best Practices Awards to five of their members this week. Discus won for “Best Practices Media Summit,” a free seminar where industry members and media experts exchanged ideas about placement methods and advertising content that highlight responsible spirits advertising.

The Oregon Liquor Control Commission won for its “Last Call” video project; Goodfellow Air Force Base developed by the Texas ABC, local retailers and law enforcement to combat alcohol violations; the Military Outreach initiative lead by the Virginia ABC against underage drinking; and “The Best Is Yet To Come” media campaign by the Virginia ABC and the Alcohol and Aging Awareness Group (AAAG).

WSD BRIEFS:

SAINT JAMES APPOINTS RICHARD HURST AS CEO. The Saint James Company says it has appointed Richard Hurst as its ceo. Prior to joining Saint James, Richard served as svp corporate strategy at Diageo and most served as svp beverage alcohol at The Nielsen Company.

CONGRESSIONAL BOURBON CAUCUS LAUNCHES THIS WEEK. The U.S. Congress launched the Congressional Bourbon Caucus this week – a bi-partisan group dedicated to maintaining and strengthening the Bourbon industry. Beam Global president Bill Newlands said the caucus “demonstrates the important and contributions of America’s distillers and vintners to the economy,” and noted that the Bourbon industry provides “more than 3,000 jobs in Kentucky and more than $3 billion in gross state revenue.” U.S. Reps. John Yarmuth and Brett Guthrie will serve as co-chairman of the caucus.

WINERELEASE.COM REVEALS RESULTS OF RESTAURANT SURVEY. WineRelease.com surveyed 570 of its subscribers on questions concerning wine in restaurants. To check out the results, click here. Some of the findings include: 37% believe a $15 corkage fee is fair; 739% believe wine bottles shouldn’t be returned unless there is a technical flaw; and the majority want wine lists to be organized by grape varietal, but country/region of origin is also popular.

DELAWARE GROCERY BILL TABLED. A bill (HB 193) to sell beer and wine in Delaware grocery stores was tabled by a House committee this week citing concerns over increased access to minors.

WE APLOGIZE FOR THE LENGTH of today’s newsletter. Your editor had a rather nasty case of vertigo and as you may have noticed didn’t publish yesterday.

Until Monday, Megan

“Love is an act of endless forgiveness, a tender look which becomes a habit.”
Peter Ustinov

--------- Sell Day Calendar ----------
Today's Sell Day: 15
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

The Move Towards Automation

2009-06-17T15:59:00.000-07:00

Dear Client:

Automating compliance systems seem like a common sense move but regulators still need a push in making the switch, according to a panel led by Alex Heckathorn, moderator, who is also the principal of Compliance Service of America. “Automation can be very helpful to you,” he said. The explosive growth in SKUs from wineries and other producers is increasing three-tier reporting, he said, not to mention direct to consumer wine shipments that typically require a whole new reporting system for states.

Some of the most “explosive” categories include flavored vodka, rum and tequila; flavored beers and malt beverages; and of course wine. The TTB approved 110,000 new wine brands just last year. On top of that state regulators have to deal with direct to consumer reporting.

When direct shipping was first introduced in 2005, reporting duties initially deterred small and medium wineries from shipping direct. Now, new technology and software solutions have given states more options in how they monitor their reporting duties, and it “does require expensive IT solutions.”

States that have already have done these things include Georgia, California and Florida. COLAs online have also “been a big success,” said Alex. Now, 62% of new COLAs are filed electronically. The TTB has helped “eliminate the fear of electronic reporting.”

THE SKINNY ON SHIPCOMPLIANT. ShipCompliant focuses on the administrative side of compliance. They don’t actually ship the product, but help wineries fill out reports, follow state laws and remain legal. One of the biggest inefficiencies with compliance is all the paperwork – both for the regulator and the wineries. As ShipCompliant’s ceo Jason Eckenroth said in his presentation, “Electronic filing saves a tree every 6 seconds.” His quote isn’t based on facts, but you get the picture.

“The single biggest impact on the wine industry has been direct to consumer sales,” said Jason. “With that there has been an explosion of regulation.”

Just to put things into perspective, the number of reports an average winery must file per year has grown 200% since 2004. As a result, wineries have become “more efficient” in filing reports. Now it’s up to the regulators to moderize.

“Producers have figured out how to scale reporting costs, have you?” he asked. States have to deal with about 5,000 wineries so you can only imagine the amount of paperwork they see. Only about 13% of wineries in the U.S. ship to Texas, for example, and that equals to about 35,000 sheets of paper per year, said Jason.

Jason divided state agencies into two group: those that represent markets that are new to direct shipping (such as Tennessee, Kansas and Maine); and incumbents that have an existing direct shipping market. Clearly the new guys can start with a clean slate. The incumbents will have to actually overhaul their current system to a more efficient way to ship. As you can imagine, the major challenge for ShipCompliant is there are a “lot of disparate systems.”

“The solution we chose was web services...we developed a series that allows wineries to run compliance checks and send data in a consistent format.” The software also “allows other companies to leverage this effort.” He said it “took awhile,” but they’re “starting to see a trend away from spreadsheets, which means humans don’t touch the reports in between,” said Jason. All in all the reports are more consistent and without human error.

DIGITAL TO ANALOG. In order for ShipCompliant’s customers to comply with state regulators, they fill out the reports online and then print them. Some wineries “literally mail boxes full of papers.” Clearly there is a need to move to e-file and automation.

Jason recommends that if regulators decide to comply with the e-file system, they need to start slow and simple. Try a PDF form submission, spreadsheet or XML submission, for example. Also, he encourages regulators to look internally at their staff to help with design and implementation. “You’ll be surprised by people on your staff that can do this.”

“The suppliers are ready for this from a technology perspective. They want to improve the filings they make to your states...the cost has never been lower for e-filing.”

STATES NOW HAVE TIME FOR COMPLIANCE. The next two panelists shared their experiences with automation. Anne Hutchison, Auditor, Office of State Tax Commissioner, North Dakota decided to go electronic once she realized the time she was wasting with paper.

“I was using most of my time reviewing perfectly good reports on paper for discrepancies or re-keying in info for spreadsheets...it was time consuming and yielded minimal results....most discrepancies were from shippers that weren’t licensed and I didn’t have their reports...papers I was reviewing, were not where the problem was.”

She pointed out that most people can use Excel and send emails. One idea is to build an Excel workbook based on monthly reports from UPS and FedEx. They use this “to identify unlicensed shippers and contact them.”

A few tips from Anne: keep it simple; keep all data and cell formatting consistent between various reports; keep all forms in a similar format and design; and convert all alcohol volumes to gallons or liters.

EMPLOYEES ARE NOW BETTER OFF. “We had several employees that just filed paper work...no time for compliance...now as a result of electronic filing we don’t shuffle paper,” said Anne.

Most importantly, they didn’t have to cut staff. Now those employees who were “shuffling paper” are focusing on compliance and they’re happier for it, said Anne. She noted there was some “panic” in the office at first from employees concerned about losing their job to the new automation system, but “they were reassured by the tax commissioner and supervisor that you will not lose your job.”

“Now those people sitting there doing all that mundane work before are opening emails, scanning letters and vouchers, things like that...I think we have them busier now more than ever...now they are doing compliance...when you start doing compliance you’re going to need that staff.”

AUTOMATION DRIVES WEBSITE TRAFFIC. Rick Garza basically seconded everything Anne said. As the Deputy Administrative Director of Washington State Liquor Control Board, he said their goal was “to drive everyone (wholesalers, suppliers, retailers) to our internet site...so creating web based programs or applications was something we always wanted to do...having this legislation adopted gave us funds to put this system in place.”

In all it was about a six month process to move to automation. Washington started with wineries and breweries in-state, and then moved to in-state and out-of-state wine shippers and consumers. He agreed that “customers have been very happy with the electronic system.” It has resulted in a “reduction in workload.”

DIAGEO ACQUIRES THE REST OF STIRRINGS

Diageo increased its 20% stake in the cocktail mixer group to 100%. Financial details were not disclosed. Larry Schwartz, president of Diageo USA, said the purchase “creates more synergies” and “fits squarely within our at-home strategy.” As people drink more at home, spirits companies like Diageo, Fortune and Brown-Forman are selling more pre-mixed cocktails.

Stirrings brands will join all Diageo brands in its distributor houses across the country. Steve Rust, senior vice president of Reserve Brands, will oversee sales for the brand and Bob Swartz will stay on as ceo of Stirrings.

DUCKDORN DEVELOPES CHEAPER WINES FOR THE RECESSION

A new article in MarketWatch outlines the steps Dan Duckhorn is taking to deal with the recession. He’s been in the biz for 30 years but has never seen anything “quite as challenging.” He reiterated that people are buying cheaper wine and interestingly “a lot of that is being made up by imports.” I’m assuming he means cheaper wines from Chile, New Zealand and Argentina.

Even more interestingly, he admitted that “we probably overstepped our bounds, all of us, and reached out too far in price.” Duckhorn usually sells for about $50-$100 a bottle, so now the company is exploring price points and “our ability” to go down in price by launching more affordable extensions to its Decoy and Migration labels, and even considering adding a Chardonnay to the portfolio. The question over whether these new wines will age as well, he doesn’t think people really care anymore. According to Dan, “wine cellars are being depleted” because consumers now want “instant gratification.”

SPENDING UNLIKELY TO BOUNCE BACK AFTER RECESSION

A new report by Rabobank supports what Dan said in his interview with MarketWatch. As we’ve heard from other outlets such as Nielsen, Rabobank doesn’t think consumers will magically bounce back to their old spending habits after the recession. Sure, things will improve, “but many of the pre-recession spending trends were somewhat unsustainable. I think consumers have changed,” said Rabobank's Food & Agribusiness Research and Advisory (FAR) Executive Director Stephen Rannekleiv.

Of course just two years ago all we heard about was trading up among consumers. Now it’s the opposite (not to say that trading up has completely diminished). "This increased price sensitivity of consumers comes on the heels of an unprecedented trend of trading up. Where you saw consumers willing to spend more for small luxuries and premium products," he continued.

Between 2003 and 2008 bottles priced more than $15 a bottle saw the most sales growth while value wines (priced below $3), were in decline. Now it’s just the opposite. Wines above $15 are growing a little less than 2%, while wines below $3 are up 8%.

FRED FRANZIA GOES AFTER YELLOW TAIL

As I’m sure you’ve probably heard (and we’ve reported in the past) the infamous Fred Franzia of Bronco Wine Company is launching Down Under by Crane Lake to compete directly with Yellow Tail. It’s an Australian Chardonnay that sells for half the price of Yellow Tail, which retails at about $6. If asked whether the low pricing was sustainable, Fred responded “I heard the same thing about Two Buck Chuck seven years ago. If you choose to be competitive you make yourself competitive.”

WSD BRIEFS:

FOSTER’S GROUP IS USING LANDMARK to run a national ad campaign for the 31 vineyards and 2 wineries the company is trying to sell. Lankmark has reportedly teamed up with agribusiness real estate specialists seeking potential buyers. Credit Suisse analyst Larry Gandler said that the properties will most likely sell for less than the book value of A$240 million.

STE. MICHELLE WINE ESTATES has named Constant as Vice President for Global Accounts Development. Lou joined Ste. Michelle Wine Estates in 1997 as State Manager for New York.

Until tomorrow, Megan

“A dog owns nothing, yet is seldom dissatisfied.”
Irish Proverb

--------- Sell Day Calendar ----------
Today's Sell Day: 13
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Marin Critiques Industry on Social Responsibility

2009-06-16T17:52:00.001-07:00

Dear Client:

Two representatives from the Marin Institute spoke on a panel at the NCSLA yesterday, where one of the ladies – Michele Simon, Research & Policy Director for the Marin Institute – outlined problems with Discus’ self-imposed Code of Responsible Practices Semi-Annual report and the “We Don’t Serve Teens” program.

In her speech, Michele outlined what she considers “various myths,” which includes: alcohol advertising is intended for adults; education is the best solution to prevent underage drinking; self-regulation is effective; and the first amendment gives the freedom for advertising.

She specifically went after Discus on the issue of self-regulation, which she says “tends to get in the way a lot when it comes to talking about advertising.

“We found there are a number of barriers to effective self regulation: lack of public awareness, lack of an independent review, subjective nature of guidelines, lack of penalties and enforcement of power.”

Michele’s main beef, or at least the topic of her presentation, was with youth exposure to alcohol advertising on television.

As you know, Discus members follow a voluntary code that says the following: “Beverage alcohol advertising and marketing should be placed in broadcast, cable, radio, print, and internet/ digital communications only where at least 70 percent of the audience is reasonably expected to be above the legal purchase age (determined by using reliable, up-to-date audience composition data).”

PROBLEMS WITH THE CODE FROM MARIN’S PERSPECTIVE. However, Michele found that “so few complaints” were registered despite the large amount of ads in Discus’ most recent report. Also, she said companies that violated Discus’ code got “nothing more than a slap on the wrist,” and those companies with a member on the board “were three times less likely to be found in violation of the code.”

“We are saying it’s time to stop relying on self regulation and put more effective rules in place,” she said.

She also said out-of-home advertising is not an absolute right protected by the first amendment, “but a balancing act between competing interests.”

WHEN ASKED ABOUT THE “WE DON’T SERVE TEENS CAMPAIGN” Michele acknowledged that “we’re not up here saying companies aren’t genuine in their desires and efforts to fix this problem,” but the campaign “is an inadequate solution to this problem.”

Of course, we don’t think the industry claims that “We Don’t Serve Teens” is a complete solution to the problem. There’s no denying that it has been a positive step by the industry among many other initiatives.

PHIL TERRY LAUNCHES A DEFENSE. Luckily, NBWA chairman Phil Terry was also on the panel and came to the industry’s defense. Phil pointed out that the Federal Trade Commission report “just came out that said we’ve reduced the percent of youth exposure to television advertising” as a voluntary effort. He also stated that the industry’s interest in reducing youth exposure to advertising is “genuine” and also “in our economic interest.”

UPDATE ON CONSTELLATION’S WINERY SELL-OFF

Constellation Australia says it’s managed to sell about a third of the wineries and vineyard it put up for sale last year. Spokeswoman Sherilee Davies said the company has another plan for vineyards that aren’t selling: “What we are doing, given that some of the vineyards haven't sold, is we are actually taking the action to remove some vines ourselves, from our company-owned vineyards.” Constellation plans to remove about 180 hectares of vines in South Australia.

ARGENTINEAN GOVERNMENT GIVES MILLIONS TO SMALL PRODUCERS

The Argentinean government has set up a program to help fund small winery producers, showing just how important the wine industry is to its economy. The government will fund US$230 million to help these wineries modernize, which stems from a $180m loan from Inter-American Development Bank and 50% of future wine export duties. Despite Argentina’s success in the United States, export have reportedly fallen 20% according to Decanter.

Until tomorrow, Megan

"One hopes not to disturb the sweet repose of the Muses' favorite wine connoisseur at this uncivilized hour, and please believe that this humble working slob prays forgiveness. But ahh me, how one envies the exalted who've already achieved beyond measure, and whose riches and fame afford such luxurious leisure as yours."
-Duke Ellington

--------- Sell Day Calendar ----------
Today's Sell Day: 12
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

WINE & SPIRITS DAILY
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Send news and comments in confidence to: megan@winespiritsdaily.com

© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.

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Spirits Holding up Off-Premise as Pricing and Mix Slide

2009-06-15T15:06:00.000-07:00

Dear Client:

Supermarket spirits sales continue to hold up during the recession, with May volumes post a 2.3% gain, according to Nielsen scans reported by UBS analyst Melissa Earlam. That coincides with a 12 week trend of up 2.4% and a 52 week trend of up 2.5%. So spirits volume gains are staying fairly steady, although April trends were a big higher, up 3.4%, reflecting Easter timing.

However, pricing and the trading up mix are slowing more dramatically, with pricing and mix only up 0.7% in May compared to up 1.7% in April. But the 52 week trend in pricing and mix is up only 0.9%, so "it appears last month’s improvement in mix, may have been a one off," writes Melissa. "A number of value brands have re-accelerated at the expense of premium brands," she adds. Diageo, Pernod, Brown-Forman, and Remy all lost share, while Campari (Skyy) and Constellation gained.

"For 2009, we estimate 1% market volume growth and 1.6% value growth for the US market. Nielsen volumes growing ahead of the total market is expected as volumes shift from the on-trade to the off-trade," says Melissa.

IS IT TIME FOR SPIRITS ADS ON NETWORK TV?

Cable TV and local network affiliates have been raking in the revenues in these tough times by accepting spirits ads in addition to beer and wine ads. But the national networks have historically stayed away, for fear of alienating viewers. That is changing, as network advertising revenue is off about $250 million, or 4.2 percent, in the first quarter compared to last year, reports the NY Post.

"With the economy and what's happening to corporations, more and more people are accepting liquor advertising," said Matt Carroll, the chief marketing officer at Patron to the Post. "Everyone who has traditionally not [accepted spirits advertising] now is," he said, as Patron runs ads on NBC-owned stations on shows like "The Tonight Show with Conan O'Brien."

CBS dropped its self-imposed ban on spirits and aired an ad during the Grammy's in Feburary after 10 p.m. in 15 major markets. Still, none of the broadcast networks air totally national ads for spirits. "We're optimistic that the barrier will fall of its own anachronism," said Frank Coleman, of DISCUS. "If the owned-and-operated stations are taking them, clearly the networks are seeing that it's just profit left on the table."

CONSTELLATION’S EXECUTIVE COMPENSATION FOR 2009

Constellation chief Rob Sands made about $6.36 million in compensation in fiscal 2009, according to the AP. His pay package was up 2% from last year, but Rob along with his brother Richard and other execs didn’t receive a bonus. Richard, meanwhile, had compensation valued at $6.86 million in fiscal 2009. He made $7.3 million in fiscal 2008 when he switched from ceo to chairman.

BACARDI AND MIAMI HEAT AGREE TO COURTSIDE ADVERTISING

The NBA has lifted its ban on courtside advertising by spirits companies, and Bacardi and The Miami Heat are the first to make the switch. Bacardi signed a 7 year deal with the Miami basketball team last year that included a provision allowing courtside advertising should the NBA lift its restriction on spirits. The courtside signs will make an appearance for the 2009-2010 season and gives the team an additional 10% in revenue. The spirits ads can now appear on camera but on a few conditions. One, they must be limited to responsibility messages or feature a simple brand plug without a tagline. Three or four other courside deals are reportedly pending.

RED WINE INGREDIENT A WONDER DRUG

That's what the Daily Telegraph has uncovered. While not exactly new news, the revelation was uncoverd by Professor Lindsay Brown of the University of Queensland, who conducted a "mini review" of a number of recent studies about the health benefits of red wine. Of course the key ingredient is resveratrol, "which in small doses acts as an antioxidant protecting organs but in larger quantities kills dangerous cancer cells." The bad news is that old age begins at 27, which is when mental powers start to decline. The good news is that drinking red wine at 27 helps slow the process. Red wine appears to contain a number of antioxidants which are good for your health but that resveratrol was the most powerful. They concluded that it "shows therapeutic potential" for cancer and heart disease and may aid in the prevention of age-related disorders that affect the brain and the body.

"I think that red wine has both some mystique and some historical symbolism in the west and of course, some various pleasures attached to its ingestion, all of which give it a psychological advantage edge, food-wise," said prof. Brown. He said "not many of us can or will eat a couple of cups of blueberries a day for years on end" but we were happy to have a glass of wine.

WSD BRIEFS:

UBS CUT Remy Cointreau to neutral, saying while the worst is over, a recovery is not in sight. UBS still expects organic sales to decline for Remy in 2010, forecasting a 4.9% organic sales decline in 2010. "While management is rightly sticking to its strategy of taking price to build brand equity, we believe that it remains the most vulnerable stock in the sector to trading down," said analysts.

THE NEW ZEALAND GRAPE harvest in 2009 has been held at the same level as the year before to support the wine industry in the face of global recession, the industry said on Monday. The volume of grapes harvested was 285,000 tons, above initial forecasts but in line with 2008's crop.

BRAZILIAN CACHACA industry is asking the U.S. government to officially recognize cachaça, as currently the TTB requires the phrase "Brazilian rum" on the label. Cachaça can only be made from fresh cane juice, where rum can be made from molasses.

FOSTER’S GROUP APPOINTED DAVID DEARIE as its new managing director of Australasian Wine. The former managing director of Brown-Forman’s Western Europe and African businesses will lead the Australian and New Zealand wine business. He will take his new position in July.

Until tomorrow, Megan

“Where we have strong emotions, we're liable to fool ourselves.”
-Carl Sagan

--------- Sell Day Calendar ----------
Today's Sell Day: 11
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Jack Daniel’s Barrels through Recession

2009-06-11T12:52:00.000-07:00

Dear Client:

Brown-Forman chief Paul Varga said he’s “pleased” with the company’s fiscal 2009 results ended April 30 “given today’s global economy...our our underlying operating income growth rate continues to be in the top tier of major wine and spirit companies.” He also sent a strong message to analysts and shareholders: “Most importantly, in an environment where good health cannot be taken for granted, Brown-Forman remains a strong and healthy company.”

Overall, benefits of price increases were partially offset by higher costs for grain and fuel. B-F also reallocated spending and adjusted its promotional mix to benefit brands, markets and channels that showed the most immediate potential for growth. The adjustments included increased spending for value-added packaging and selective consumer price promotion programs. The company also tightened discretionary spending and performance-related costs, such as incentive compensation.

Recall that B-F laid-off a considerable amount of employees (6%) in April, and offered early retirement to some U.S. employees. As cfo Don Berg was quick to point out, fiscal 2009 was one of the “more challenging and volatile years we’ve experienced in some time.”

Some of the biggest factors in the fiscal year and the fourth quarter were: shift to the on-premise; strengthening U.S. dollar; consumers trading down; and retailers and distributors reducing inventory (more pronounced outside of the U.S.). Globally, inventory levels decreased over 200,000 cases at the retail level and 80,000 cases in the United States.

IMPROVEMENTS IN THE U.S. B-F saw improvements in markets that were first hit by the economic downturn, like the U.S. and Germany for example, but countries like the UK, Spain and Italy that came later were soft in the fourth quarter.

“Some of the markets that came in later to the economic downturn we’re starting to see some impacts. Those that came in early we’re seeing positive results,” said Don.

JACK POSTS GROWTH IN VOLATILE MARKET. In one of the biggest triumphs for B-F: Jack Daniel’s gained share in 2009. Jack’s depletions were flat in the U.S. although consumer takeaway remained strong, said the company. Nielsen volumes grew 4% during the fiscal year, while NABCA numbers grew 2%. We’re “pleased on a consumer basis that Jack improved year over year in such a volatile market,” said Don. Jack increased market share of whiskey and among its larger competitive set (including Absolut, Bacardi, Jose Cuervo, Ketel One, Smirnoff, Grey Goose, etc.).

“A year ago we saw almost a flat level of performance in April for NABCA for Jack...fast forward 12 months in April 2009 it was up 1.7%...we consider performance across year to be a strong one...there’s a lot of discussion going on with trading down so I think the performance of Jack against that backdrop is strong,” said Paul.

In terms of pricing for Jack, Paul said they are trying to strike a balance between price increases and offering value to the consumer.

“We are going to look at market by market for the best price opportunities and we look much more closely because of the sensitivity at the consumer level...we think it’s a combination of the two. Find the best way to take prices up and it’s appropriate to give value to the consumers in an environment where they’re looking for it.”

Fourth quarter depletions for Jack Daniel’s declined in the low-single digit range globally, which was an improvement from the third quarter where depletions were down in the high-single digits.

SOCO STRUGGLES IN OFF-PREMISE. Southern Comfort depletions were down -5% globally, while the U.S. experienced mid-single digit declines. B-F said that inventory reductions represented about 3% of the decline. Based on Nielsen data, Soco was down only -2% in the U.S. and NABCA was down only -1%.

Don noted that Soco “suffered from the switch to the off-premise” because consumers are less likely to make complicated cocktails at home. As a result, B-F is introducing a ready-to-drink Southern Comfort Hurricane and Sweet Tea.

GENTLEMAN JACK, WOODFORD AND EL JIMADOR. In addition to introducing RTDs, B-F is offering more value added packs and consumer price promotions at a measured target basis at retail. Jack Daniel’s, Gentleman Jack, Woodford Reserve and El Jimador were boosted by these efforts and did particularly well in the United States.

Globally, Gentleman Jack fiscal depletions grew over 20% but slowed throughout the year to high-single digits in the fourth quarter, associated with a weak economic climate.

With regards to the retail channel, Don said: “We really focus a lot of our efforts improving topline sales and getting competitive at off premise channel. We’ve really tried to gear up our creativity in that area by leveraging our assets we have today.”

Stronger consumer takeaway were suggested and inventory reductions continued in fourth quarter. Gentleman Jack, El Jimador and Woodford Reserve all showed strong depletion growth in the quarter.

EXCISE TAXES, FEDERAL AND STATE. During the questions and answer portion, Don commented that “nothing is really clear” when it comes to a proposed flat federal tax increase on wine, spirits and beer. “There are a lot of discussions going on right now. Most discussions are related to the health care bill and we’re keeping a close eye on it,” he said.

On the state level, said Don, “all the states are in budget shortages and we’re one of the areas they are looking at in terms of making up budget shortfalls...we are lobbying pretty heavily through Discus...”

“We’ve lost three states and won in some pretty important ones. We are seeing some increases at the state excise tax level.” He pointed out that the repercussions are “much broader than just the effect on our industry alone and a lot of jobs are at stake when excise taxes go up.”

Paul agreed that “we’ve tried to outline the regressive nature of some of these taxes,” noting that it’s still early.

READY-TO-DRINKS. Tim Ramey of D.A. Davidson asked Paul if consumers view RTDs as a trade down or trade up opportunity. “They look at it more from a convenience factor. Perhaps, Jack for example where we have a larger RTD segment, it’s all at premium prices. I don’t know that it is value driven but convenience driven,” said Paul.

CONSUMER STILL TRADING UP. Paul said there is still trading up activity despite the recession. “It’s interesting. We’re seeing that some of our higher priced items have a higher growth rate than some of our larger items...on some level I think the environment is more difficult for consumers to trade up but it doesn’t mean it’s not occurring.” He named Woodford Reserve, Gentleman Jack and Sonoma Cutrer as examples in the U.S.

“I don’t know that it’s fair to declare that trading up is completely done. I continue to see nice pockets of it for the right brand positioned the right way...I think a lot of this will depend on when you see the traffic in the on-premise globally picking up...hinges on how frequently people are doing their drinking on-premise.”

B-F PROJECTS MODEST GROWTH IN 2010. In fiscal 2010 B-F projects “modest underlying growth in operating income” despite the belief that the consumer and trade environment will continue to be challenging. The results are expected to be “significantly impacted” by the strengthening of the U.S. dollar in the middle of fiscal 2009. Other influential factors include the improvement or deterioration of the economy and changes in distributor and retail inventory prompted by credit and cash pressures. In all, it projects fiscal 2010 earnings per share to be in the range of $2.60 to $3.00.

“Longer term, we remain confident about the growth opportunities for our brands and our company,” said Paul.

NEW VINE BACK IN BUSINESS

New Vine Logistics is back in business thanks to funding from Inertia Beverage Group, reports the San Francisco Business Times. New Vine emailed customers last night that they will begin shipping orders on June 11. The message also said that “New Vine Online will be open for order submission as of midnight tonight.”

DELAWARE AND NJ PROPOSE TAX INCREASES

State lawmakers in Delaware have proposed raising alcohol taxes by two cents per 12-ounce can of beer, three cents per 5-ounce serving of wine, and 15 cents per bottle of spirits, effective Sept. 1. Another bill wants to change the license fees for selling alcoholic beverages, which have been the same since 1955.

Meanwhile, the New Jersey Restaurant Association and New Jersey Taxpayers Alliance and other industry members are protesting a proposal to increase the excise tax on wine and spirits by 25%. Governor Corzine is reportedly backing the bill.

Until tomorrow, Megan

“What people say, what people do, and what they say they do are entirely different things.”
Margaret Mead

--------- Sell Day Calendar ----------
Today's Sell Day: 9
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Constellation Charged with “Deceptive” Marketing

2009-06-10T13:27:00.000-07:00

Dear Client:

Constellation Brands has agreed to settle with the Federal Trade Commission on charges that its advertising for Wide Eye Schnapps (a caffeinated alcohol drink) “was deceptive, unsubstantiated, and in violation of federal law.” According to a statement from the FTC, the proposed settlement bars Constellation from making these allegedly “deceptive claims” that “consumers who drink Wide Eye will remain alert when consuming alcohol.”

“Constellation Brands fueled the misperception that mixing alcohol and caffeine helps people stay alert,” said Eileen Harrington, acting director of the FTC’s Bureau of Consumer Protection. “The truth is that alcohol and caffeine could be a dangerous mix, and a claim like that can have very serious consequences.”

Constellation has apparently promoted Wide Eye in internet videos and other internet advertising as well as print ads, but discontinued the product several months ago because it wasn’t successful. Constellation said that Wide Eye was approved by the TTB and that the product name and tagline followed the Discus Code of Responsible Marketing.

In a statement to the media, Constellation said the following: “The U.S. Federal Trade Commission and Constellation Brands have entered a consent order regarding the marketing of Constellation’s Wide Eye product. Prior to product launch, Constellation had obtained all required U.S. Alcohol & Tobacco Tax & Trade Bureau (TTB) approvals for Wide Eye, including the Wide Eye brand name, advertising tagline and formulas. The product’s brand name and tagline were subsequently found to be in accordance with the voluntary DISCUS Code of Responsible Marketing Practices in light of TTB’s prior approvals. Due to limited commercial success, however, Constellation had ceased production of Wide Eye several months ago. Constellation has fully cooperated with the FTC and will abide by the consent order.”

Nonetheless, the FTC maintains that “there is no credible scientific evidence to support the claim that consumers who drink Wide Eye will remain alert.” As a result, Constellation agrees under the settlement to not make any such claims unless they are “substantiated.”

Doesn’t this sound similar to the Attorneys General case against Sparks and Tilt last year? At the Legislative/Public Affairs Report panel with NABCA General Counsel James Goldberg and VP for Public Policy/Communications Steve Schmidt in May, they warned that Attorneys General could soon start turning their attention to industries other than malt beverages (ahem, wine and spirits).

The agreement will be subject to public comment for 30 days, beginning today and continuing through July 10, 2009, after which the Commission will decide whether to make it final. To file a public comment, click here.

UPDATE ON BILLINGTON AND WINEBOW

We spoke with Winebow’s Marilyn Krieger, Director of Public Relations, who clarified a few points on our story yesterday. Billington Wines was in fact not acquired by Winebow. Instead, Billington “ran into some financial difficulties and will cease to exist.” After working with Billington for more than 15 years, Winebow secured the importation rights to Bodega Catena Zapata's wines, and has secured national commitments from Cousiño-Macul, Alma Negra, Claus Kespelher, and Yealand. These brands will be part of a new Winebow division, Emerald Wines, headed by Winebow's executive vp and chief sales and marketing officer, Frank Shobe.
Winebow hired half of Billington’s former employees for this new sales division. Alex Bartholomaus is the general manager and Alfredo Bartholomaus is the brand ambassador of Emerald Wines.

NORMAN BRINKER PASSES AWAY

Brinker International is mourning the loss of its company namesake, Norman Brinker, who died Tuesday at the age of 78. “Norman's legacy to the foodservice industry will live on through the brands he helped grow and expand across the globe,” said the company. It all started in 1983 when he joined a small company called Chili's and built it into the portfolio restaurant organization we now called Brinker International. Norman is known for “single-handedly” creating the casual dining niche with the creation of Steak and Ale in 1965.

"From CEOs and Directors to servers, dishwashers and cooks, Norman was an inspiration to many, many people throughout the restaurant industry," said Doug Brooks, president and chief of Brinker International. "All 125,000 BrinkerHeads are mourning the loss of our beloved leader and friend."

Founded in 1975 and based in Dallas, Texas, Brinker owns or franchises nearly 1,700 restaurants in 29 countries and two territories and employs more than 125,000 people. Its restaurants include Chili's Grill & Bar, On The Border Mexican Grill & Cantina and Maggiano's Little Italy. Brinker also holds a minority investment in Romano's Macaroni Grill.

REMY HAS TOUGH FISCAL YEAR

Cognac sales in Remy’s fiscal year ended March 31 declined -13.6% organically to €311.9 million. The company said that sustained price increases did not fully offset the volume declines noted in the US and Russia, or the impact of destocking as a result of leaving Maxxium. Luckily, Remy Cointrea ceo Jean-Marie Laborde said he thinks the destocking trend will end in one or two months, which would be good news for the French company along with all other alcohol beverage groups.

Liqueurs and Spirits division achieved a current operating profit of €53.2 million with a turnover of €196 million, an operating margin of 27.1% (25.1% in the previous year). It was helped by price increases and improvement in product mix and the streamlining of marketing investment. Cointrea was “more affected due to the proportion of US sales.” Metaxa, Mount Gay Rum and Passoa “held up well,” said the company, because they are “less exposed in the on-trade.”

In a press conference, Laborde said he sees no signs of improvement in the company’s champagne portfolio, with overall sales down -9.2% in the fiscal year.

Lastly, its partner brands declined -20% in turnover due to the cessation of two distribution contracts in the US.

In fiscal 2010 Remy says it will continue its “value strategy, now based on a substantially restructured and controlled distribution network, and to continue its strategy of carefully selected price increases for its premium brands.” It declined to give an outlook based on the volatility of the current market.

WSD BRIEFS:

NEW DATA FROM THE AUSTRALIAN WINE AND BRANDY CORP says the United States is now Australia’s biggest wine export market by value, beating out the United Kingdom. Exec Paul Henry thinks that trend is likely to continue since the U.S. is expected to be the largest wine market in the world by 2010.

THE HENRY WINE GROUP said its newly appointed chairman Fred Reno has promoted Peter Baedeker from senior vp of sales to president. Fred most recently held that position over the past 15 years. The company is also welcoming back Will Henry, the oldest son of founder Warner Henry. Will, 43, who worked in sales for The Henry Wine Group from 1989 to 1993, will assume the newly created position of vp, business development.

ST. SUPERY VINEYARDS & WINERY has appointed Ron Johnson as senior vp of sales beginning June 1. Ron has more than three decades of wine industry sales and marketing experience, with positions at Sebastiani Vineyards & Winery, Allied Domecq Spirits, The Wine Alliance, and Southern Wine and Spirits. He will report to chief Emma Swain.

GUESTMETRICS HAS SIGNED A STRATEGIC ALLIANCE with Technomic, a “leading consulting firm in foodservice.” The partnership will allow both companies to develop detailed reports using GuestMetrics's aggregated point-of-sale data from over 2,500 restaurants, bars and other on-premise accounts in 10 market nationally.

WE’LL HAVE COVERAGE OF B-F’S fiscal earnings tomorrow so stay tuned...

Until tomorrow, Megan

“We do not know what we want and yet we are responsible for what we are - that is the fact.”
Jean-Paul Sartre

--------- Sell Day Calendar ----------
Today's Sell Day: 8
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

MADD Separates from the Century Council

2009-06-09T16:09:00.000-07:00

Dear Client:

Mothers Against Drunk Driving (MADD) are cutting ties with the Century Council over ignition interlocks according to a new article in the Wall Street Journal. They’ve asked the group to “stop proclaiming that it’s MADD’s partner in the Campaign to Eliminate Drunk Driving,” and stop using MADD’s logo on its website.

The problem hinges on ignition interlocks and the blood alcohol content of first time offenders. In all, MADD wants the Council to support bills that mandate interlocks for all first-time offenders, while the Council thinks there should be some exceptions.

MADD claims the Council has “hindered” its efforts in opposing state legislation that would impose harsher penalties on first time offenders. The group says that the Century Council pledged “to stay neutral” on these types of measures. MADD also accuses the Council of placing “too much emphasis on so-called hardcore drunken drivers” versus all people who drink and drive. As you know, the Council is funded by distillers like Diageo but has always had a good relationship with MADD in the past.

In the article, MADD’s ceo Chuck Hurley said the group gets “deeply offended” when the Century Council “gets in the way of our efforts to get the drunk drivers off the road.” His language seems rather harsh to us since it’s everyone’s goal in the industry to prevent drunk drivers. In response, Ralph Blackman, chief of the Century Council, said: “Given the fact that we have the same end goal in mind, it's unfortunate that we are having a debate over tactics.”

MADD has led a campaign since 2006 to convince states to pass legislation that would require first-time offenders to install ignition interlocks in their cars. The Century Council supports this initiative, but only for first-time offenders with blood alcohol content of at least 0.15% (almost twice the legal limit of 0.08%). The Council also maintains it is neutral on bills that apply to lower level offenders.

The main problem, according to MADD, is that the Council has openly opposed ignition interlocks in a few states for first time offenders with a BAC of below 0.15%. Apparently, MADD wants the Council to say nothing at all on the matter if they are not in total agreement.

The WSJ provided this link to the letter.

BILLINGTON WINES SOLD TO WINEBOW

This is one that slipped by us while we were attending the NABCA conference in late May. Sources tell us that Billington Wines (known for their wines from Chile and Argentina) was acquired by Winebow. As a result, Winebow was named the exclusive importer for Bodega Catena Zapata of Argentina. Alex Bartholomaus is reportedly the manager of the new company. Billington had 54 employees and hopes that a majority of them will transition to Winebow.

We understand that Billington owed a considerable amount of money to Catena and was trying to avoid filing for bankruptcy. In addition, Catena named E&J Gallo the new importer for its Alamos wines in January which were previously handled by Billington. This was a big hit to Billington along with the economic slowdown.

It’s not clear exactly how the two companies are integrated. We understand that the new incarnation of Billington (called Emerald) will handle some of Billington’s brands, while others will be handled by Winebow.

DEUTSCHE BANK LOWERS STAKE IN FOSTER’S

Deutsche Bank sold some of its shares in Foster’s Group on behalf of Molson Coors, cutting below its previously “substantial” 5% stake in the struggling company. Deutsche didn’t disclose its new investment level. Ceo Peter Swinburn said in the past that the arrangement gives Deutsche ownership of the shares but gives Molson Coors exposure to Foster’s stock price and dividends.

When Deutsche first increased its stake in September it was a mystery what company was behind the move, but Molson Coors was later revealed. This led to speculation that Molson Coors would perhaps acquire Foster’s beer business if and when the company separates it from wine. The possible acquisition looks less likely now, at least for the time being as Foster’s sorts out its business.

WSWA LOBBIES CAPITOL HILL THIS WEEK

The Wine & Spirits Wholesalers of America (WSWA) is rallying a large caucus of wholesalers for its Legislative Fly-in scheduled for Wednesday, June 10. The main issues they will address to Congressional reps include Last-in, First-out (LIFO) and proposed Food Safety Legislation. In a statement, chief Craig Wolf said “the repeal of LIFO would have calamitous repercussions on the industry’s many family-owned businesses.”

In all, LIFO allows companies to assume that their most-recently produced or purchased goods are the first to be sold. The WSWA is also against a proposal that would group beverage alcohol in a plan to overhaul regulations governing the nation’s food supply.

SOCO LAUNCHES HURRICANE AND SWEET TEA RTDs

Southern Comfort is launching two new ready-to-serve cocktail (RTDs): Southern Comfort Hurricane Cocktail and Southern Comfort Sweet Tea Cocktail. The products will hit shelves nationally in mid-June. Distillers have amped their investment in RTDs since on-premise sales took a nosedive with the recession. In the period to May 2, Nielsen reports that RTDs grew 72% in retail stores.

PROPOSAL TO INCLUDE VINTNERS IN FEDERAL TAX BREAK

A California legislator (Rep. Mike Thompson) is proposing a bill that would make the American Recovery and Reinvestment Act apply to vintners and orchard farmers. The Act now only applies to crops that are harvested within the first year they are planted (which doesn’t apply to grapevines, fruit and nut trees). If passed, it would extend tax breaks to those farmers as long as they planted their crops in 2009.

OREGON EXTENDS SURCHARGE THROUGH 2011

The Oregon Liquor Control Commission has decided to extend a 50-cent surcharge on all bottles of liquor into 2011. Mini bottles have a 25 cent tax increase. The surcharge was initially expected to end in late June.

WSD BRIEFS:

CAMERON HUGHES WINE (ultra-premium negociant) has named Regal Wine Company (owned by Jesse Jackson) its distributor of record. Regal will handle Cameron Hughes’ Lot series and its new brand, The Flying Winemaker.

CORRECTION. We want to clarify that P.i.n.k. Vodka is still on the market (it never left). As we recently reported, P.i.n.k. has been acquired by Prohibition Beverage.

Also, Skyy Spirits has a total of 115 employees with 62 residing in San Francisco.

Until tomorrow, Megan

“A hotel isn't like a home, but it's better than being a house guest.”
William Feather

--------- Sell Day Calendar ----------
Today's Sell Day: 7
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Foster’s Americas SVP Bruce Herman Departs

2009-06-08T16:29:00.000-07:00

Dear Client:

Foster’s Wine Estates announced this afternoon that Bruce Herman, senior vice president of U.S. sales, will resign October 1. The company said he will continue in his current role through June and then transition into a temporary position overseeing strategic sales projects. Foster’s also noted that “a search has begun for a replacement,” but did not indicate if they were looking inside or outside of the company. Bruce has “managed the Foster’s sales team through a series of significant changes” since 2004, said Stephen Brauer, Foster’s Americas’ managing director (who recently replaced Scott Weiss). Stephen also said that Bruce has “led the organization with the utmost professionalism...I wish him well in the future.” Foster’s did not indicate where Bruce is headed next or why he decided to leave the company.

SKYY SPIRITS HQ SLATED FOR SAN FRANCISCO

Gruppo Campari has chosen San Francisco for its revamped North American headquarters, which includes two spirits distilleries and about 350 employees, reports the San Francisco Business Times. Skyy Spirits chairman and ceo Gerry Ruvo says the company will likely add between 10-15 jobs after acquiring Wild Turkey from Pernod Ricard for $581 million. Some of the new jobs will be in marketing, sales, accounting and other office positions. Skyy currently has 62 employees, with the majority already living in San Francisco. The company also plans on hiring new sales reps in branches nationwide.

TENNESSEE GOV SIGNS BILL TO ALLOW DIRECT WINE SHIPMENTS

Tennessee Governor Phil Bredesen signed legislation allowing wineries to ship up to three cases of wine per year to consumers in the state. The license to ship direct includes a $300 one-time cost for wineries and goes into effect July 1. Previously, Tennessee prohibited out-of-state wineries from shipping direct, including onsite shipments. Gov. Bredesen also recently signed a measure into law that allows Tennesseans to buy up to five cases of wine at licensed out-of-state wineries and bring them back home with them.

STIFEL NICOLAUS UPGRADES STZ

Stifel Nicolaus analyst Mark Swartzberg upgraded Constellation Brands today to “Buy” from “Hold,” based on its valuation and free cash flow. Shares rose $0.29 or 2.38% to $12.50 in afternoon trading. He admitted in a note to clients that “little has been going well” with the company, but believes that “expectations” for Constellation are too low. Risks include a proposed increase on federal alcohol taxes.

PARKER TO STAND TRIAL JULY 10

A French judged has ordered wine critic Robert Parker to stand trial July 10 for allegedly defaming former assistant Hanna Agostini. As you’ll recall, Hannah co-authored a book titled: "Robert Parker: Anatomy of a Myth." In response to the book, Robert wrote on his website that Hannah “could end up stagnating in prison” as a result of charges she faced for an alleged forgery in a wine trafficking affair. She claims these allegations are not true. In March Robert was fined 2,000 euros by a Paris court for violating Hannah’s presumption of innocence.

FRANCE WINS ROSE BATTLE AGAINST THE EU

France (backed by Italy and Spain) won its fights against a proposal from the EU that would allow European wine producers to blend red and white wine to create rose. Producers have lobbied for months, after which EU Agriculture Commissioner Mariann Fischer Boel said in a statement: “It's become clear over recent weeks that a majority in our wine sector believe that ending the ban on blending could undermine the image of traditional rose. I am always prepared to listen to good arguments -- that's why I am making this change.”

FRED FRANZIA FINDS FAULT WITH THE NEW YORKER

Fred Franzia has taken offense with his recent profile in The New Yorker that focused (in his opinion) too heavily on criticism from people in the Napa Valley industry, he told the Modesto Bee. He believes the article didn’t provide enough background on why consumers enjoy his wine, mainly because the reporter “doesn’t understand that somebody can enjoy a $2 bottle of wine.” In addition, he confirmed to The Bee that Bronco Wine Company aims to increase its output to 100 million cases a year over the next 15 years as consumption increase and state shipping rules relax.

DELAWARE PROPOSES WINE IN GROCERY STORES

A new bill to allow wine in grocery stores was introduced in Delaware last week. Proponents say it would raise about $10 million in its first year, namely through a one-time fee of $100k per store. There would be a biennial renewal fee of $5,000. So far this type of measure hasn’t worked in other states (such as New York), so we’d be surprised if it passes in Delaware.

Until tomorrow, Megan

“A book is a version of the world. If you do not like it, ignore it; or offer your own version in return.”
Salman Rushdie

--------- Sell Day Calendar ----------
Today's Sell Day: 6
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Part II: A Talk with Philadelphia Distilling

2009-06-05T13:01:00.000-07:00

Dear Client:

In the first part of our interview yesterday we sat down with the boys at Philadelphia Distributing, best known for their Blue Coat gin: Andrew Auwerda, Robert Cassell and Tim Yarnall. In April Alain Barbet, the former chief of Pernod Ricard Americas, jumped on board as the company’s senior advisor, and since then it seems like we’ve heard their name everywhere. To check out yesterday’s interview and background on the company, click here. Otherwise, sit back and enjoy as you, dear reader, are a fly on the wall.

WSD: Who are your competitors?

ANDREW: (Laughs). Anyone who sells gin, for Bluecoat. We don’t really, personally feel that the other craft distillers are our competition – not that they aren’t but we’re not trying to compete with them, we’re trying to compete with the giants. Guys that are smaller of course we’re competing with them on the shelf. We’d be happy to help someone else; we could all gang up and take the big guys.

TIM: I would say our competition really is the newer gin brands that people know about. I wouldn’t necessarily say its Tanqueray or Sapphire, although the people drinking those brands would like Blue Coat and I think we convert a lot of them, but in order to get Blue Coat introduced to consumers at the on-premise channel you have to find those on-premise accounts that are carrying other new brands that are widely distributed like Hendrick’s or Plymouth. That’s where I would put us. Other artisan or craft spirits don’t have distribution to where people are really going to know who they are.

WSD: Craft brewers are a very tight knit group and often work together. Do you see that in micro distilling?

ANDREW: Oh yeah. In fact, I would say even the big companies we’ve had relations with – even if its casual meetings – have really helped even on the technical side when we’ve had issues. Robert has made some great contacts with Brown-Forman. I’m slightly surprised that when you get underneath the tough competition, when it comes down to people and people needing things or help in an area, even the big companies have helped us when asked, quite frankly. The whole industry seems cordial and professional in that sense.

ROBERT: I certainly see the beginnings of that but because there are not a whole lot of us by comparison. Three years ago there were only 40 of us and now there are 200. When we all get together it’s certainly an open forum of discussions and techniques and what’s working for you.

WSD: Robert, is it harder to be a craft brewer or distiller?

ROBERT: You of course have your similarities in brewing and distilling but in the same point there are things you’d never do as a brewer that you would of course do as a distiller. Even if you’re talking about the yeast strains themselves. As a distiller you’re really trying to maximize your alcohol yields from any fermentable sugars.

But one of the things I think is a lot of fun about being on the cusp of this craft distilling trend is creating different takes and styles of products. Even from a consumer point of view, it’s really fun to watch and be involved in.

Even in terms of recipe formulation, the biggest thing I learned as a brew is how you’re handling your raw materials. Hops, for example, has a great amount of bitterness potential but if you use it as an otherwise non-traditional point in the brewing process you get these great aromas even though it wouldn’t normally be used in a bittering process. I’m taking that same application in ways of twisting certain raw ingredients to give you a distinctive set of flavors.

WSD: What kind of challenges as a distiller did you face that you didn’t expect?

ROBERT: Some of the things I would say maybe unexpected are just the laws in general whether it’s state licensing or federal licensing. They are much, much stricter in my opinion as a small craft distiller compared to small brewers. Right off the bat when you’re competing in the open market, small wine makers and craft brewers have a sliding scale evaluation for their excise tax rate. Anywhere from 65-80% lower than what a larger company pays but distilled spirits is the same across the board regardless of your size. That’s kind of a benefit that small brewers get to take advantage of, the tax rate. That’s a big thing.

WSD: On the Beefeater bottle you have the man in a red coat. Is Blue Coat gin going against that?

ANDREW: That was some of the tongue in cheek version of the name. Clearly we are the Continental Army, the people that fought the red coats and won and gave us our American independence. The brand is about being courageous and sort of showing spirit and willing to take risks. That is what I think of when I think of Blue Coat. Certainly it was George Washington and the Continental Army specifically we were thinking of. It fits because we are Philadelphia Distilling and the birth place of America, and yeah, quite frankly, why all this red coat gin? Beefeater and Bombay. I mean, we won the war, we can make our own gin. The force should be ours. On Memorial Day we should be drinking Blue Coat, not Beefeater – come on.

WSD: How do you get your wholesalers to focus on your brand when you’re up against Diageo and other major spirits companies?

TIM: It’s a lot of really putting feet on the street and going out and doing work with the individual sales rep. It’s about letting them see the success you can have with retailers and trade accounts as well as with consumers in markets where we’re able to do tastings. And when you can have the wholesale rep see consumers getting it excited, it gets them excited too. In the big picture sense it’s a lot of what I guess you would call guerilla marketing. A lot of grassroots, build it from the ground up, viral, word of mouth buzz that we try to generate. It’s much harder for a company like ours than a company like you mentioned Diageo or one of the really big suppliers to get attention from a wholesaler because we don’t have the huge products. We feel it’s more valuable and more credible and really will have more longevity to allow the buzz and word of mouth to takeover.

WSD: In roughly the past ten years or so vodka sales have surged while gin has been flattish. How do you intend on making gin hip again, particularly among the younger generation?

ANDREW: Basically just introducing them to Blue Coat. I think we have a gin that is classic yet elegant and right for the American palette. I think we could do that, not just any gin. I think we have a great shot of getting the new generation to drink Blue Coat but not necessarily drink all gins. And at the very least from a strategic point of view we’re trying to gain market share in a category as you said that is flat but at the same time growing that category by bringing in people that have never had Blue Coat gin before. I think we’re just different enough to have that effect on people.

I think it will help us if more craft distillers get out there and more names get known and more people want Blue Coat gin. Certainly I hope more people drink gin but right now we’re trying to get our part of the market share and we think we can grow that share by introducing it to young people that don’t have the preconceptions of people that are in their 40s, 50s and 60s. A lot of them have a negative thought of gin. I do so many events and interact with a lot of public and it’s real interesting because a lot of them have not had gin in 20 years. It’s something like they got sick once on cheap gin and they don’t touch it again. I think vodka walked through that door and made it simpler but I think those people that haven’t tried gin in 20 years are some of the easier customers to turn it on. If you tell them it’s Blue Coat and they have it and like it they can’t believe it’s gin. ‘I thought I hated gin, why do I love yours?’ There’s something about Blue Coat that gets the customer that thought they hated gin and the whole category.

WSD: What are your plans for the rye vodka, Pen 1681?

ANDREW: We’re just going to do Pennsylvania, Delaware and New Jersey where we have distribution. I’m determined to make it work in terms of building the business but we’re going to take it slow and make Blue Coat our priority nationally and internationally. It’s not that we don’t think it’s great, we don’t want to overstretch ourselves. It was made here, made from indigenous ingredients that come from 200 miles away. That appeals to customers like me. Distributors have plenty of vodka and I don’t think we have that reason for being in San Antonio. If you want a local vodka, you have Tito’s. Quite frankly, we just started in November and need to build our brand in Pennsylvania. We’re not one of those companies that just like to ship product and hope it sales.

WSD: Robert, what’s a typical day for you? Do you spend a lot of time in the lab?

ROBERT: This is one of the things that is a parallel of craft brewing, you wear every hat. When you’re a small distillery and start from the ground up and building up you wear every hat. One day I may be doing pipe work, the next day I’m doing lab work. In the same sense, one day you’re doing the distillation and next day you’re hand bottling and corking. It’s very much all hands on deck and multi-tasking.

WSD: Thank you for your time.

INERTIA BEVERAGE GROUP STRIKES DEAL WITH NEW VINE

In a new twist of events, Inertia Beverage Group (and not 1-800-Flowers) has struck with Silicon Valley Bank to acquire its debt position in New Vine.

“In order to address New Vine’s customer needs and allow for their systems and operations to get back online and shipments flowing immediately, IBG will provide interim cash funding to New Vine pending final documentation,” said IBG President and chief Ted Jansen. “Operations are already gearing up and we are confident in the ability of New Vine’s operational team and employees to quickly respond.”

Recall that 1-800-Flowers.com was initially the frontrunner to acquire New Vine but plans feel through at the last minute. Financial detailers were not available.

Wine Industry Insights reports that many employees laid-off from New Vine had already filed complaints with the Division of Labor Standards (DLSE) Enforcement of the California Department of Industrial Relations. Other employees said they were pooling their money and searching for a class-action labor attorney.

As far as Amazon goes, the wine site was almost ready to launch before New Vine went under. It’s not clear if Amazon had anything to do with Inertia acquiring the remaining shares of New Vine, or when or if the new site will go live.

CHIEF OF CONSTELLATION INTERNATIONAL SET TO LEAVE THE COMPANY

Jon Moramarco, chief executive officer of Constellation International, will leave the company effective June 30, 2009, Constellation said in a statement today. "Jon has been a highly valued member of the management team since 1999 and his strategic insight, knowledge and vast wine industry experience have helped us build a portfolio of brands that is unrivalled in the industry," said Rob Sands, president and ceo. "Jon's significant contributions are very much appreciated and we thank him for his many years of service."

Meanwhile, Paul Hetterich will oversee the international business of Constellation Europe, Constellation Wines Australia and Constellation New Zealand as executive vice president, business development, corporate strategy and international. Reporting to Hetterich, will be Troy Christensen, who will assume responsibility for Constellation Wines Australia in addition to his current duties as president of Constellation Europe; and Joe Stanton, chief of Constellation New Zealand. John Grant, president of Constellation Wines Australia, will report to Christensen. The reporting changes are effective immediately.

"As we continue to evaluate the organization and look to position the company for long-term success, refining and simplifying our international organization provides opportunities for increased synergies within the U.K. and Australian markets," Rob continued. "We anticipate significant benefits from a leaner and more flexible international organization as we continue toward our goal of improving efficiencies, profit, cash flow and return on invested capital as well as paying down debt."

Reasons for Jon’s departure weren’t given but it sounds like he was let go as a part of Constellation’s reorganization.

WSD BRIEFS:

PRECEPT WINE NAMES NEW PRESIDENT. Precept Wine Brands says Mike Williamson, ceo of Long Shadows Vintners in Walla Walla, will serve as the company’s new president and coo.

RUSSIAN STANDARD VODKA is reportedly suing former ceo Carlo Radicati following an internal audit by the company during his tenure. Carlo was with the company between April 2007 and July 2008 before abruptly leaving the company.

WE WANT TO THANK the North Caroline Beer and Wine Wholesalers for having us speak at their annual distributor conference.

Until Monday, Megan

“What is a cynic? A man who knows the price of everything and the value of nothing.”
Oscar Wilde

--------- Sell Day Calendar ----------
Today's Sell Day: 5
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Alert: 1-800-Flowers.com May Purchase New Vine Logistics

2009-06-04T10:59:00.000-07:00

Dear Client:

Sources are telling the San Francisco Business Times that 1-800-Flowers.com, the parent company of Napa’s Wine Tasting Network Services, is close to securing a deal to purchase New Vine Logistics. According to the article, “an announcement is said to be imminent.” Wine Tasting Network provides winery and wine club direct marketing services, as well as fulfillment and e-commerce services to wineries and wine retailers. On June 1 Chris Edwards, WTN’s vp and general manager, said in a statement that the company Network “is owned by a solidly performing publicly traded company, 1-800-FLOWERS, and has secure financial strength that will provide endurance over the long run. With our multiple national distribution centers, ongoing investment in technology, and commitment to green business practices, we are well positioned for growth.”

Until later, Megan

“You have to know how to accept rejection and reject acceptance.”
Ray Bradbury

--------- Sell Day Calendar ----------
Today's Sell Day: 4
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

A Talk with Philadelphia Distilling on the Burgeoning World of Craft Spirits

2009-06-04T08:07:00.000-07:00

Dear Client:

You’ll recall in April when we announced that Alain Barbet (former chief of Pernod Ricard Americas) signed up as senior advisor for Philadelphia Distilling, producers of Blue Coat American Dry Gin, Penn 1681 Rye Vodka, and Vieux Carré Absinthe Supérieure. If you’re like us, you’ve never heard of Blue Coat Gin before Alain jumped on board. So why did he join Philadelphia Distilling? For one, the small company is on the forefront of the craft distiller industry (which we think will blow up in the next 5 years or so). And like craft brewers and boutique wineries, they spend a lot of time and energy on producing “authentic” brands with locally sourced, organic materials.

The idea started about four years ago when Robert Cassell (master distiller) approached his (very close in age) uncle, Andrew Auwerda, the former President of Tony & Tina Cosmetics. After spending six years working for craft brewers, Robert realized craft distilling could be the future of the business. Andrew (president) helped draw up a business plan and asked friend Tim Yarnall to jump on board as vice president.

Earlier this month the company celebrated its third anniversary of shipping product. They are currently in 19 states and 2 countries (France and Bermuda). Here is a list of the states they’re in, including respective wholesalers: Pennsylvania (Capital Wine & Spirits), New Jersey (R&R Marketing), New York (Empire Merchants), Connecticut (Brescome Barton), Massachusetts (Martignetti-pending), Delaware (United Distributors), Maryland / D.C. (Chesapeake Beverage Group), Virginia (RNDC), Georgia (Ultimate Distributors), South Carolina (SWS), Florida (Artisan Brands), California (Wine Warehouse), Arizona (Piper Premium Beverages), Colorado (SWS), Louisiana (Glazer’s), Ohio (Heidelberg Spirits) and Indiana (Crossroad Vintners).

WINE & SPIRITS DAILY: As a craft distiller, is it hard to be profitable compared to the big guys?

ANDREW AUWERDA: Absolutely (laughs). We are not profitable and we’re not a big spender either in terms of what we’d like to do with marketing and distributor programs. We are looking to raise capital to do exactly that. I know some other brands that we’ve seen like Pink Vodka and others that have started with some pretty good profits and marketing but are no longer here. We’ve taken the slow route – losing money but trying to stay ahead of it. We’re getting there but we’re not there. Certainly it’s very tough and even harder now in this type of market. I think people have less disposable income and trying to craft an unknown brand I think is even more of a leap for customers to do, at least that’s what we’re hearing.

We don’t complain about the economy either, I don’t try to use it as an excuse, but I do think it’s happening. We’re growing really nicely and I would like to do more marketing now because it will pay off later when people do have a few dollars or they have a job or they become aware of us again.

WSD: How many cases are you averaging a year with Blue Coat?

TIM YARNALL: We’ve been in the market for about three years and probably did about 1,000 cases the first year, grew to about 3,000 the second year and 5,000 last year. This year I think we’ll have approximately 10,000 nine liter cases. The growth is obviously solid.

WSD: That’s great.

TIM: A lot of it is new market stuff. Our existing markets have had strong repeat business and for us, fortunately, the way the world is right now and the economy has had I think less effect because a lot of our business is still new. People are still being introduced to the brand for the first time. So, repeat business is strong and a lot of our growth obviously is just new business.

WSD: Is it hard to get distribution as a smaller brand?

ANDREW: Very. I would say it has been the most challenging thing for us to get the distributor of the big three in each state to consider it [Blue Coat], to take it on and to actually do something is a lot of hurdles. And just to get in the door. Quite frankly we think we have a great product and great reviews and a great package but that’s not enough.

TIM: Yeah, it’s harder I think to get the attention of the wholesaler for the first time. It’s challenging certainly when you’re a company that brings volumes in from some of the bigger suppliers were there’s more of an immediate audience. For us it really falls back on the brand proposition because we’re not able to go out and offer a huge revenue stream immediately for people. So for us, the good news is that once we get in front of them there’s a strong response to the brand proposition, whether it’s the spirits itself, the packaging, the pricing and the fact that we’re American organic. The hard part is getting the first meeting.

WSD: Where were you before entering the spirits industry?

ANDREW. I was in the cosmetics industry and this was completely entrepreneurial, start from scratch. We didn’t buy an old distillery or anything, just blank canvas. We really believe in craft distilling as a mega-trend just lift craft brewing. It’s definitely an easy comparison, we just think craft distilling is 25 years behind micro brewing trends, so we’re hoping to be on the front of that. Be the Sam Adams of micro distilling.

We saw what happened with everyone getting interested in wine. The fact that micro brewing is even in this economy continues to gain share. That’s a big trend. Why wouldn’t we have that in spirits? It doesn’t make sense. I believe there is a slow trend towards gourmification and that can relate to buying organic salads to organic milk to craft distilled spirits. People know it’s handcrafted and not machine mass produced and there’s something about it. It is qualities that you provide when people get to enjoy a fine cigar and we fit right in there.

ROBERT CASSELL: I originally went to college for nuclear medicine but then took an interest in brewing. I worked for a brew for about 6 years or so. The last two places I worked for were regional micro breweries, Harpoon Brewery and Victory Brewing in Pennsylvania. While I was golfing with a friend we were making observations about the amount of boutique wineries and craft brewing but not so much in spirits. So that idea festered for a period of time and eventually I approached Andrew about the concept and he helped me revise the business plan. During that time I went to Scotland to Harry Watt for the distilling program for the practical studies course.

ANDREW. I’d sold my business and I had a couple of ideas on my plate and considered it and felt this one was the right fit in the end. I started investing money and getting this off the ground in terms of business organization. Robert is my nephew. I’m the youngest of a very large family of ten and my oldest sister’s oldest child is Robert, so he’s the oldest of the next generation and I’m the youngest of the older generation.

TIM: Before starting the company I worked for Bloomberg Financial Markets – Bloomberg LP here in New York – a financial media company. Andrew and I have been friends – I actually used to work at that company with his wife so we kind of knew each other on a social level. I saw Andrew at a wedding of a mutual friend and we were talking about the business he was starting to get going and I like the idea and decided it was time to step into the entrepreneurial world and go for it. I left my job there and started the company about a month later with Robert and Andrew.

WSD: I read somewhere that you got your still in Scotland?

ROBERT: Yeah, Foresights is the company we got our stills from, which is the same people that did stills for Glenlivet and even Brown-Froman’s Woodford Reserve.

WSD: So why are you using whiskey stills to produce gin?

ROBERT: Well one thing I felt the batch distillation process with making gin gives more complexity to the spirit itself and that’s definitely something I wanted to have in a spirit. So it wasn’t just a neutral spirit with some essential oils dumped in a tank and mixed up. I wanted something crafted and that had distinction.

WSD: Are you seeing a peak in interest from distributors in your product and in craft distilling as a whole?

TIM: I think so. I think wholesalers are starting to see that the consumer is starting to demand that more and more. When we do tastings in the field the consumer response is overwhelming. People are really interested in micro distilled spirits – things that are unique and different from brands that have been around forever. They’re inviting and open and willing and wanting of that. There’s more interest today than three years ago for sure. Who know where’s it’s going to go down the road. We feel that the consumer ultimately will be the one that makes the decisions. And for those wholesalers who haven’t picked up on the fact that these smaller brands are a place where they’re going to be able to grow their business – they’re all growth brands because they’re new brands – will eventually pick up on that.

We’re excited about where craft distilling is going. Some of these companies have been doing this a lot longer than we have but we were still kind of early in it especially with a brand like Blue Coat where there weren’t as many gins as vodkas especially at the time. A few years ago it seemed like there was a new one [vodka] every week.

For us to be able to come out with an American premium small batch item. It’s exciting to see the consumer response because I really do firmly believe that this is going to go the way craft beer did back in the ‘80s. That’s just my experience from being in the field.

WSD: Where are you priced for Blue Coat?

ANDREW: Generally between $25-$30, depending on the state and our arrangement.

WSD: So why gin?

TIM: I think a lot of small distillers did vodkas to begin with because that’s such a big category and most of them felt it was a way to generate business while they worked on other brands. For us, the whole business was to put something out there that we can develop on an international level and gin seemed to make the most sense. We wanted to do something that everyone else wasn’t doing. I think within their own local markets people are starting to offer gins, but because the category isn’t as big you’ll probably never see as many gins as vodkas. But who knows what will happen with the gin category. People at least in the industry are dying for something besides a vodka. We make a vodka and love vodka too but we think there is more of an opportunity at least for the general consumer with gin. In the beginning when we would talk to on and off-premise people, they were like ‘okay, I’ll listen to you but just not another vodka.’

ROBERT: Gin was always in the running. Blue Coat was the name we had since the original business plan. As a company we certainly plan to slowly bring on new spirits. But one of the things we’re trying to do here is to slowly release new products and aggregate each one and really focusing on each product. So far it’s worked out well for us well, both in a product and sales point of view. It’s definitely learning from some of the things I learned on the craft beer side, moving forward and applying them there.

WSD: Do you do anything special when you enter a new market? Do you use shelf talkers, display cards, and other types of marketing? Billboard? Radio?

ANDREW: Absolutely. We definitely do a shelf talker because I think it’s important to tell a brand’s story and some of the attributes and awards. We train the distributor staff and we try to as many events as possible. We actually do these media dinners where we invite 3-4 key mixologists from the industry and 3-4 key writers or bloggers or spirits enthusiasts, some retailers sometime. Basically people that are interested in spirits come and have dinner with us. It’s kind of casual but we tell our story, we share about the botanicals, talk about distilling while enjoying beautiful cocktails and pairings with delicious foods.

TIM: We don’t do much in terms of media buys and advertising. We concentrate a lot of our awareness campaign with editorial reviews, a lot of competitions, a lot of tastings and a lot of event marketing. It’s really more for us about getting the product in people’s mouths then it is putting it on the billboard. We feel there is more credibility and more opportunity for us to succeed on a lot of different levels if you do it grassroots than advertisement.

STAY TUNED FOR THE SECOND HALF of our interview tomorrow...

WSD BRIEFS:

PERNOD RICARD’S TIA MARIA, has reportedly begun with an investment memoranda being circulated to potential buyers, according to Reuters. Sources estimate the brand would fetch about EUR 200m-EUR 250m, with first-round bids expected by the end of the month. Potential buyers include C&C, Illva Saronno, Fortune Brands and Suntory, with the last two companies more likely to make the move.

FRENCH EXPORTS STRUGGLE ABROAD. French exports have taken a real hit in the United States since the economic downturn began. Since consumers are drinking less at on-premise establishments, wholesalers and retailers are less willing to re-stock their inventory. According to Reuters, Yves Dumont, the non-executive chairman of Laurent-Perrier SA, said Champagne makers will also see a -20% decline in sales by volume this year. Of course high-end wines are suffering the most.

ARTISAN SPIRITS COMPANY LOTUS VODKA says it has secured investment from Mercurio Capital Partners, which the company will use to “accelerate its expansion across the United States and begin expanding overseas.” After launching two years ago, Lotus has expanded from its base in San Francisco to become available across California, Nevada, New Mexico Pennsylvania and Arizona, and is currently launching in New York.

Until tomorrow, Megan

“You have to know how to accept rejection and reject acceptance.”
Ray Bradbury

--------- Sell Day Calendar ----------
Today's Sell Day: 4
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

More on New Vine’s Surprising Departure

2009-06-02T14:31:00.000-07:00

Dear Client:

As you know, it was announced yesterday that New Vine is closing, much to the shock of investors, customers and even employees. This development likely puts an end to Amazon’s supposed foray into the wine business since the two companies planned on partnering once the site launched. The deal was never solid enough for Amazon to move forward, according to sources. It looks like New Vine put all its eggs in one basket and was never able to bring the deal into fruition.

A source told Wine Industry Insight that “the potential costs and hazards of wine and all the red tape outweighed the benefits. There was simply too many unknown factors — including the need to rely on a third party — for [Amazon] management to gain the required comfort level. That could change if the company decided to do it by itself and control the process. Still, the overhead with wine squeezes margins too tight. And a book never breaks or goes sour.”

In addition to the Amazon debacle, New Vine was also hurt by declining business due to the economic downturn.

In a letter to customers, New Vine said: “We regret to inform you that New Vine is in a state of financial crisis and has been forced to cease operations.”

Out of New Vine’s 200 customers, small wineries will take the biggest hit since they tend to rely more on direct to consumer sales and lack the capitol of larger wine companies. As you can imagine, former customers are very angry.

Since we reported on the story yesterday, several new developments have surfaced:

One, this may not mean the end for New Vine. Jason Eckenroth, chief of Ship Compliant, told Wines & Vines that “I think this took everybody by surprise.” But he believes they are “not out of business. They are looking for more capital. It’s not a dead horse.”

Meanwhile, Compli Beverage Inc president Rachel Rey says her company will offer free direct shipping compliance services to former New Vine customers for orders placed during May. Those companies will need to file reports within the next ten to twenty days.

In all, the company laid-off about 120 employees and is in the process of returning wines to former customers.

In a statement, Kathleen Hoertkorn, founder of New Vine Logistics, said the following: “New Vine Logistics is currently working with customers to transfer all services to another means of legal direct shipping, and in the meantime, is finalizing all work, including compiling of reports, reconciling inventory and invoices, and performing all of the necessary business operations for the months of May and June.”

She also maintained that the company “truly believed that they would have been funded and were not expecting to have to cease operations,” in response to allegations that they knew they were in financial trouble.

MAINE’S DIRECT SHIPPING BILL AWAITS GOVERNOR’S SIGNATURE

The house and senate have approved HB696 that would allow wineries to ship up to 12 cases of wine a year to state residents, reports Ship Compliant. The bill is waiting for Governor Baldacci’s signature before becoming law. Ship Compliant also noted that a similar bill in Tennessee is waiting for the governor’s signature as well. If the bill passes in Maine and Tennessee, they “will join Kansas in the ranks of previously prohibited states who have adopted favorable direct shipping laws in 2009,” said Ship Compliant.

NY LEGISLATOR ATTEMPTS TO OVERTHROW FLOOR TAX

Luckily, a New York legislator is looking to overturn the newly introduced “floor tax” that requires wholesalers and retailers to pay a one-time surcharge on the beer and wine they were carrying May 1. Basically they are being taxed twice. The provision was passed as a part of New York’s 2009-2010 state budget and charges 11 cents per gallon on wine and 3 cents per gallon on beer. As a result, distributors and retailers are canceling inventory orders which in turn makes things more difficult for suppliers.

A spokesman from the state told local papers that the floor tax was meant to prevent “hoarding” prior to a tax increase. The bill would not alter the new excise tax rates on wine and beer sold after May 1. Those are 14 cents per gallon of beer and 30 cents per gallon of wine.

JACK POWERS DIES AT 82

We regret to report that Jack Powers, the former chairman and coo of Heublein (now Diageo), died May 23 at the age of 82 after battling Myeloma for four years. He is survived by his wife Eileen, and by their children, Cecilia Owen and Jennifer Powers. From his previous marriage, he is survived by John Powers, Jr. and Maribeth Moody.

FORMER UNITED DISTRIBUTORS CHAIRMAN DIES

We also regret to report that Jennings Hertz Jr., former chairman of United Distributors, died Saturday (May 30) of heart failure at 83. The company was originally founded by his father in the 1940s. According to his obituary, Jennings was a huge patron of the arts in Atlanta. In addition to his son Doug, Jennings Hertz is survived by a daughter, Patty Reid, and her husband, Doug Reid; Doug Hertz’s wife, Lila; five grandchildren; and a great-grandson.

WSD BRIEFS:

DFV WINES ADDS BODEGAS BAIGORRI. DFV Wines has been named the exclusive U.S. Importer for Bodegas Baigorri of Rioja, Spain. DFV Wines will import three Baigorri wines, Crianza (SRP $22), Reserva (SRP $35) and Baigorri De Garage (SRP $60) to select markets nationwide.

VEEV LAUNCHES FIRST AD CAMPAIGN. VeeV, which touts itself as the “World’s First Açaí Spirit,” is launching its first ad campaign June 15. It includes a sequence of product-led advertisements in both out-of-home locations as well as in key online media, and will be available in LA, Chicago, San Francisco, New York and Miami. It has a $1 million+ budget between June and September.

Until tomorrow, Megan

“Happiness is nothing more than good health and a bad memory.”
Albert Schweitzer

--------- Sell Day Calendar ----------
Today's Sell Day: 2
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

New Vine Collapses, Amazon Deal Unlikely

2009-06-01T14:05:00.000-07:00

Dear Client:

New Vine Logistics (which assists wineries in shipping direct to consumers) suspended operations Friday and informed winery clients via email that it would not be processing any new orders, according to Winebusiness.com.

Recall that Amazonwine.com had planned on partnering with New Vine once the website and its foray into the wine business officially began (which was expected sometime this summer). Initially it was thought that Amazon would unveil its new business in October of 2008. The word on the street is that Amazon’s delay caused New Vine to go under. The company spent millions to upgrade their technology and hire employees over the past 18 months, but unfortunately never agreed to a specific launch date with Amazon. New Vine hoped to compensate by laying-off a big chunk of its employees, including Amazon hires, and cutting salaries over the past couple of months. Clearly it was too little too late.

As a result, it’s looking less likely that Amazon will enter the wine business at all, particularly not anytime soon.

In the email to clients, founder Katie Hoertkorn said: “We extend our sincere apologies as New Vine has abruptly gone into a state of financial crisis and is currently working on the plan forward to communicate further updates about the state of the company and how best to interface with New Vine for all of your inquiries,” says Winebusiness.

Meanwhile, a skeleton crew is “working on contingency plans for an orderly wind down.” New Vine has an estimated 200 wine shippers, with producers making up about half.

ROSES POSTING GROWTH AMID RECESSION

For the 52-week period ending April 4, U.S. retail sales of imported rosé wines rose by 42%, compared with an almost 5% increase of all table wines during the same period, according to the CIVP/Provence Wine Council based on Nielsen data.

The findings support projections made by Vinexpo that concludes worldwide consumption of rosé will continue over the next few years, rising a projected 10%, from 565 million bottles in 2008 to 620 million bottles in 2012.

France currently produces 28% of all rosé wines by volume. Provence is the leading French region for rosés labeled AOC and produces 38% of these wines.

Recall that on June 19 the European Commission will vote on pending legislation that would allow producers to blend white and red wines to create a “Blended Rosé.” Authentic rosé would continue to be produced in the traditional way, by macerating red grapes and removing the juice before it becomes heavily colored. The European Commission has suggested that rosé wine produced in this manner would be labeled “Traditional Rosé.”

FRANCE STILL SETS THE STANDARD. On another note, Dorothy Gaiter and John Brecher at the WSJ say the quality of rosés are greatly improving. Rosés from France still “set the standard,” while they’ve also “been impressed” with new rosés from Spain.

In a tasting of American rosé wines from the 2007 and 2008 vintages, these were their favorites: Beckmen, Toad Hollow, Bonny Doon, Belle Glos Wines, Heitz, Etude, Lewis Cellars, Ponzi Vineyards and Sinskey.

NOBILO LANDS TITLE OF TOP SELLING SAUVIGNON BLANC

Nobilo has become the biggest selling sauvignon blanc in the U.S. according to an article in a local New Zealand paper. Since Constellation acquired the brand in 2003, it’s spent about $300 million developing its Marlborough vineyards and associated infrastructure. Last month Nobilo surpassed sauvignon blancs by Kendall-Jackson and Clos du Bois, says Constellation NZ ceo Joe Stanton. Monkey Bay and Kim Crawford took the fourth and fifth spots in US wine sales.

Altogether, Constellation expects to send nearly one million cases of NZ wine to the US this year, about 90% of it Marlborough sauvignon blanc, which is around 40% of this country's total wine exports to the US.

Stanton said although total wine sales were declining in the US, sales of New Zealand sauvignon blanc were increasing because it offered high quality, at a reasonable price.

"It's a reflection of the quality of our sauvignon blanc which producers in other countries are struggling to match," he said.

ST. SUPERY RE-HIRES FORMER WINEMAKER

St. Supery announced that Michael Scholz will return as winemaker June 1. Michael is known for creating St. Supery’s signature Sauvignon Blanc and worked for the winery from 1996 to 2001. “It’s not often you get the opportunity to bring back a winemaker who had such a profound impact on your winery’s success,” said Emma Swain, president. Michael noted that the opportunity to return to St. Supery “is like coming home.” Michael is originally from Australia and is the sixth generation to grow up on his family’s vineyard in the Barossa Valley.

INDUSTRY LOSES A LEGEND

We regret to report that Jim Richards, the co-founder of Paloma Vineyards along with his wife Barbara, lost his battle with cancer Thursday at the age of 77. He is best known for Paloma’s Merlot, along with its Cabernet and Syrah. Jim was born in Grand Fields, OK but grew up in Texas.

Until tomorrow, Megan

“The Internet is like alcohol in some sense. It accentuates what you would do anyway. If you want to be a loner, you can be more alone. If you want to connect, it makes it easier to connect.”
Esther Dyson

--------- Sell Day Calendar ----------
Today's Sell Day: 1
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues
This month last year ended on a: Mon.
YTD sell days Over/Under: -2

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Wild Turkey Deal is Official

2009-05-29T12:36:00.000-07:00

Dear Client:

Pernod and Campari announced today that the Wild Turkey transaction has been completed after receiving approval of US and Italian antitrust authorities. In all, Campari paid $581 million for the bourbon brand that helped to “cement its position among the leading companies in the U.S.” The deal was originally announced April 8.

“We at Gruppo Campari are proud to take ownership of this iconic brand and look forward to its inclusion in our portfolio of top global brands including Campari and SKYY Vodka as well as our stable of regional leaders. With the addition of Wild Turkey, our US presence and international reach will be dramatically strengthened. We plan to further build the Wild Turkey brand globally and realize the full potential of this authentic, award-winning American whiskey,” said chief Bob Kunze-Concewitz.

Wild Turkey is a global brand with a total volume above 800,000 nine-liter cases sold in over 60 markets. The US is the brand’s largest market, accounting for almost one-half of the brand’s sales; Australia and Japan are respectively its second and third largest markets. The acquisition also includes American Honey which is doing particularly well in the US.

JUSTICE SOTOMAYOR: POSSIBLE WHOLESALER ADVOCATE

With all the controversy surrounding Obama’s recent Supreme Court nominee, it appears that Justice Sonia Sotomayor has also ruffled feathers in the wine industry depending on what side you’re on. Tom Wark (director of the Specialty Wine Retailers Association) noted on his Fermentation Blog that Justice Sotomayor was part of a three judge panel of the 2nd Circuit Court of Appeals that said New York’s direct shipping legislation is lawful in Swedenburg v. Kelly. Recall that the legislation required wineries from out-of-state to set up a brick and mortar store in New York in order to ship direct to consumers.

“This case was eventually appealed and joined to a similar case out of Michigan and heard before the U.S. Supreme Court. In a 5-4 decision, the Supreme Court overruled the Sotomayor panel stating that New York's form of blatant discrimination against out-of-state wine shippers violated the Commerce Clause of the U.S. Constitution,” said Tom.

Clint Bollock, formerly with the Institute For Justice and who also argued on behalf of wineries in the Swedenburg case, wrote in an article that claims Sotomayor’s position on the issue is an example “‘of a restrained judicial impulse.’” This is example will likely be used to defend “Justice Sotomayor's credentials as a moderate,” said Tom.

However, he argues that “that the Swedenburg case demonstrates, perhaps, an anti-free trade bias on the Justice's part... It will be interesting to see if the Swedenburg case comes up in the confirmation hearings and how it might be used. If nothing else, the nomination of Judge Sonia Sotomayor gives the direct shipping issue a small push into the sunlight again.”

It’s clear that Sotomayor is a fan of states’ rights and made a decision in favor of wholesalers. With wine shipping legislation swarming all over the country, we could see more cases reaching the Supreme Court, making her appointment particularly important.

Here are some highlights from the Second District Court’s opinion in the Swedenburg case:

“The inquiry, in our view, should not allow the protective doctrine of the dormant Commerce Clause to subordinate the plain language of the Twenty-first Amendment...

"But business efficiency must give way to valid regulatory concerns in this unique area of commerce. Under this scheme, out-of-state wineries will incur some costs in establishing and maintaining a physical presence in New York, costs not incurred by in-state wineries. These effects, however, do not alter the legitimacy of section 2’s delegation of authority. While it may be an additional expense for out-of-state wineries to be present in New York, they gain access to a market not available to others – direct sales to consumers...

“We hold that the challenged regulatory scheme is within the ambit of the powers granted to states by the Twenty-first Amendment. New York’s regulatory scheme allows licensed wineries, whether in-state or out-of-state, direct access to a market of sophisticated oenophiles. The scheme does so in a non-discriminatory manner, while targeting valid state interests in controlling the importation and transportation of alcohol.”

PATTI FETZER MAKES HER OWN MARK

The Press Democrat featured an interesting story on Patti Fetzer, the fifth of eleven Fetzer children born to Kathleen and Barney Fetzer. Fetzer Vineyards made its first commercial release in 1968 after Barney (a former accountant) and Kathleen (a housewife) restored an old ranch in Redwood Valley with grape vines. Barney died of a heart attack in 1981, and his kids grew the business from 200,000 cases a year to 2.2 million by the time Brown-Forman stepped in. B-F bought Fetzer in 1992.

According to the article, Patti has endured much heartache: the early death of her father, the untimely death of her first husband in 2005 and the death of her brother Bobby last year in a fatal rafting accident.

In 2003, she launched Patianna Organic Vineyards, 3,000 cases of sauvignon blanc grown on her own land in Hopland. Kenwood Vineyards, Groth, St. Supery, Benziger, Wattle Creek, Sterling, Clos du Bois and Bonterra all buy grapes from her. Patti’s property has been farmed organically since 1988 and was certified in 1993. In 2000 it also earned Demeter biodynamic certification.

SVEDKA VOLUMES JUMP 72% IN APRIL

Svedka is still on fire despite consumers’ economic woes. It’s particularly notable as other major vodka brands (Grey Goose, Ketel One, Smirnoff, etc.) continue to feel the heat. Constellation’s darling grew 72% in April in control states, where it is now the number 13 selling vodka. Nationally in 2008 SVEDKA sold more than 2 million 9 liter cases and jumped from the #5 selling import to #3 passing both Ketel One and Stoli, according to Bob Shea, senior vp national sales director at Spirits Marque One (owned by Constellation).

CONSTELLATION SELLS LANDMARK VINEYARD TO DEVELOPERS

Constellation has sold its Stony Hill vineyard to developers who plan on building a housing development on the property. Some locals are up in arms mainly because it is South Australia’s oldest commercial vineyard site. Spokesperson Sheralee Davies said the property is only 0.8 acres and not viable: "Water access is a challenge and the small vineyard has become increasingly expensive to maintain." She noted that it was a “tough call” but necessary. "We have had to make some tough calls across the board and this is one of them."

WSD BRIEFS:

DIRECT SHIPPING BILL ADVANCES IN MAINE. A bill (LD 1008) that would allow wineries to ship directly to consumers in Maine has won initial approval from the House. After obtaining a license, wineries can ship up to 12 cases of wine a year. The bill faces further House and Senate votes.

DELAWARE CONSIDERS PROPOSAL TO ALLOW WINE SHIPMENTS. Rep. Deborah Hudson of Delaware has introduced HB 180 that would permit in-state and out-of-state wineries to ship up to 24 9-liter cases to residents in the state. Currently, Delaware residents must order wines through a package store or arrange to have shipments delivered to a package store.

FRANCE ADDS NEW AOC. France has added a new appellation in the Allier region: Saint-Pourçain. In all there are over 470 AOCs in France. The region produces around 3m bottles per year and is the first AOC in the Auvergne region.

Until tomorrow, Megan

“The only people for me are the mad ones, the ones who are mad to live, mad to talk, mad to be saved, desirous of everything at the same time, the ones who never yawn or say a commonplace thing, but burn, burn, burn like fabulous yellow roman candles exploding like spiders across the stars...”

-Jack Kerouac, On The Road, 1957

--------- Sell Day Calendar ----------
Today's Sell Day: 21
Sell days this month: 21
Sell days this month last year: 22
This month ends on a: Fri.
This month last year ended on a: Fri.
YTD sell days Over/Under: -1

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Credit Suisse Predicts Possible Suitor for Foster’s

2009-05-28T12:07:00.000-07:00

Dear Client:

Credit Suisse has named Pacific Beverages (j-v between Coca-Cola Amatil and SABMiller) the most likely suitor for Foster’s Group. Amatil said last week that it makes sense to combine soft drinks and beer, but Foster’s isn’t currently attractive because of its “relatively high share price,” according to an article in the Sydney Morning Herald. Amatil would have help from SABMiller through its joint-venture, and its largest shareholder Coca-Cola would certainly lend a hand to a possible buyout. Credit Suisse estimates potential cost savings of 80 cents a share from an Amatil/SABMiller merger. Recall that Molson Coors also holds a 5.3% stake in Foster’s Group.

Meanwhile, Foster’s Group is telling several growers in northwest Victoria that contracts will not be renewed after they’re expired. The company has met with many growers and put its own Sunraysia vineyards on the market.

According to ABC News, spokesman Troy Hey said: "It's some tough times hitting our industry at the moment, and we as Fosters are taking some of those hits, as are individual growers." He said the company “is trying to flag the situation” and also pointed out that "at least we were out last year at this time, giving some price expectations and demand forecasts that were fairly dire."

CBS NEWS OUTLINES DOMINO EFFECT OF RECESSION IN THE WINE BIZ

The CBS Evening News featured an interesting story on the wine industry with former Brown-Forman public relations exec Jim Caudill on center stage.

The news clip shows how Twin Oaks Country Inn in Wisconsin is seeing a decline in its once popular house wine due to lagging restaurant sales. The wine is produced by Fetzer Vineyards, which is currently housing a “mountain” of unsold cases of wine. Winery Director Mike Haering admits the pile will likely keep getting higher.

The reporter notes that Fetzer’s energy saving initiatives has helped its bottom line, but the wine company is down -6% “of what we expected to do for our plans. That's the equivalent of 2.5 million bottles," said Mike.

Consequently, Butch Cameron's fleet of 50 trucks that move wine for Fetzer and other California wineries is down -40% in revenue or about $2 million. Workforce was cut from 60 employees to 25.

Lastly, the piece turns to Jim Caudill who was recently laid off from Brown-Forman. He said that not only did he lose his steady source of income (some six figures), but half of his 401k has disappeared and his house has gone down in value. Nonetheless, Jim said he and his wife are going to fight to stay on their property in Northern California where they raise horses. He also expressed his surprise at getting laid off by B-F.

CONTROL STATES’ APRIL VOLUMES BENEFIT FROM EASTER

Control states grew an impressive 7.5% in volumes in April, mainly benefiting for the timing of Easter, reports Melissa Earlam of UBS based on NABCA data. Diageo’s volumes grew 9.4% in April. The spirits giant took share in rum (14.9% vs category +6.9%), cocktails (19.2% vs category 10.4%) and Scotch (-0.2% vs category -0.7%). The company did particularly well in vodka (12.8%). Diageo lost some share in Canadian whiskey (5.2%vs category 6.5%), but especially saw declines in gin (0.1% vs category 5.2%) and tequila (1.9% vs 7.2%) compared to the rest of the industry.

Pernod’s volumes grew only 1.9% in April. It again gained share in Irish whiskey (19.3% vs 14.3%), Scotch (0.6%), rum (9%) and notably Cognac/brandy (13.8% vs category 4.9%). Pernod lost share in vodka (-2.1%) due to higher prices and less promotional activity for Absolut. It also lost gains in gin (3.4%) and cordials (-0.8%vs category 2.5%).

Brown-Forman saw volumes grow 2.6%, while Remy declined -1.4% and Skyy grew an impressive 16.7%. Skyy vodka remains strong in the U.S. Melissa forecasts market volume growth of 1% and 1.6% market sales growth in 2009.

WSD BRIEFS:

WHITE ROCKET WINE COMPANY, a division of Kendall-Jackson that markets to Millennials, has launched Acre, a new ultra-premium wine brand available in Chardonnay, Cabernet Sauvignon and Merlot. “Acre joins our portfolio of unique brands targeted to new wine consumers,” says Gary Glass, president of White Rocket Wine Company. “In these challenging times when consumers are seeking value it is our mission to offer great quality wines in well designed packages at compelling prices.”

BYOB BILL STALLS IN TEXAS. Perhaps Texans won’t be allowed to bring their own wine to restaurants that already serving alcohol. SB 2523 passed the senate in late April but is expected to be left pending in a house committee. The session ends June 1. Restaurant owners, meanwhile, believe they should be able to decide whether customers can bring their own wine or not. Under the bill, restaurants would have been allowed to charge a corkage fee for opening and serving the wine, but the consumer could take what's left after meal ends. The bill did not include beer or spirits.

REFRESHER ON ILLINOIS TAX PROPOSAL. Just a quick refresher on the proposal to raise alcohol, soft drinks and candy taxes in Illinois: the bill has passed both the senate and the house and awaits a signature from Gov. Pat Quinn. Proponents of the bill project it would raise $600 million per year and help fund a massive transportation spending package. However, Gov. Quinn has said he’s hesitant to raise the alcohol tax. Stay tuned...

ENTREPRENEUR MAGAZINE HAS NAMED VOODOO TIKI in a list of “100 brilliant companies.”

Until tomorrow, Megan

“Most human beings have an almost infinite capacity for taking things for granted.”
Aldous Huxley

--------- Sell Day Calendar ----------
Today's Sell Day: 20
Sell days this month: 21
Sell days this month last year: 22
This month ends on a: Fri.
This month last year ended on a: Fri.
YTD sell days Over/Under: -1

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.

Follow me on Twitter http://twitter.com/WineSpiritDaily

Pernod Staying the Course, Avoiding Price Cuts

2009-05-27T14:42:00.000-07:00

Dear Client:

Pernod’s chief Pierre Pringuet said it’s too early to forecast an economic recovery and expects demand to be flat or slightly below in 2009. However, he said April trading was slightly better than March, and especially better than January or February.

Pernod is still concerned with paying down debt. Pierre confirmed that Pernod is still in talks about future divestitures but nothing is definite yet. Of course he didn’t go into details during a call with analysts this week.

Managing director of brands Thierry Billot said the company is focused on the premium segment and on categories that drive spirits growth. It’s also aiming to tap into the expectations of “new economies” consumers (such as Russia, parts of Asia and Latin America).

NO PLANNED PRICE CUTS. Pernod says it is still not planning to cutting prices abroad and in the U.S. despite the fact that many of its competitors are already going down on price. The company is more focused on the long term instead of the short term, which has many analysts nervous.

According to Thierry’s presentation, the U.S. on-premise declined -10% while the off-premise grew 2% in the period to February 2009 according to the company’s estimates and Nielsen and NABCA data.

Meanwhile, Pernod has considerably strengthened its presence in the U.S. with a new distributor footprint. In all, it has re-aligned to a smaller number of multi-state distributors, which has given Pernod USA immediate synergies with no additional headcount, said the company. It is with SWS in most of the states, followed by Republic, Glazer’s and then other small wholesalers. It also realigned its sales force to distributors with a new control state division.

BACARDI’S CMO TO LEAVE IN JULY

Stella David, chief marketing officer of Bacardi Limited, has decided to leave the company at the end of July. “For 15 years, she has been a loyal and successful executive and she will be missed. We thank her for her dedication to the company and brands and wish her every success,” said Séamus McBride, oresident and ceo of Bacardi Limited.

The company said that “a successor will be announced in due course.” A reason for Stella’s departure wasn’t given.

GRAPPA GETS A BAD WRAP

Believe it or not, grappa is a growing category and well known Italian producers are jumping on the bandwagon, according to an article in the Washington Post. Journalist Jason Wilson compares Grappa’s reputation to tequila, nothing that many people drink a low-quality tequila or grappa for their first time and therefore have a bad experience. “Good, premium grappa, however, can be a lovely and complex spirit, just like premium tequila. Yet, as with tequila, it will be an uphill climb to convince people of that,” he wrote.

Last year legislators in Italy proposed legalizing homemade grappa, which caused grappa distillers to go “ballistic.” They’re trying to repair grappa’s image and believe homemade production would deteriorate the progress they’ve made. The legislation has not yet passed.

Many of Italy’s big name winemakers like Antinori, Michele Chiarlo and Banfi produce a grappa but they’re not necessarily that great. Grappa is produced from grape pomace, which is the skins, seeds and pulp of grapes after the juice has been extracted. The key is knowing how to handle pomace properly, according to the article, which includes storing it in an airtight container and keeping it fresh. Jason said that if the grappa has a “pet shop” aroma, it was most likely produced from moldy or stale pomace. A good grappa should smell at least slightly of grapes and not feel too oily.

Jason summed it up by saying, “I'm glad I've revisited grappa, but I'll stick to the distilleries that are committed to grappa as their main spirit and not as a sideline.” He named Poli, Nardini, Nonino and Capovilla as good examples.

WINES IN SOUTHERN HEMISPHERE GAIN SHARE

Wines from the southern hemisphere (which includes Australia, New Zealand, Argentina, South Africa and Chile) continue to gain market share, according to the International Organization of Vine and Wine (OIV). These countries now account for almost 25% of the world market and saw exports rise over 3% last year. However, OIV expects wine production to fall -6.1% in 2009, with the biggest decline coming from Australia. Faced with droughts and bushfires, Australia’s wine production will fall about 11.5% in 2009. Bad weather and the global economy have forced volumes down in South America as well. Meanwhile, South Africa exported about 412 million liters of wine in 2008, up 32% from the prior year.

FOSTER’S CLO SET TO LEAVE IN JULY

Foster’s Group announced today that Martin Hudson, the company’s Chief Legal Officer and Company Secretary, will leave Foster's on July 3. Martin joined Foster’s in 2005 after the company acquired Southcorp. In a statement Foster’s said it’s looking for Martin’s replacement.

"On behalf of the Company, I thank Martin for his contribution to the Group and wish him every success for the future," said chief Ian Johnston.

A reason for his departure was not given.

ECONOMISTS PREDICT RECESSION WILL END H2 2009

A leading group of economists are supporting what we’ve already heard in the industry, which is that economic growth will start to rebound in the second half of 2009. According to a report released by the National Association for Business Economics Outlook, 3 out of 4 expect the recession will end by the third quarter of 2009. Meanwhile, 19% predict that a turnaround won’t occur until the fourth quarter, and 7% said it may not come until early 2010. The panel forecasts that a total of 4.5 million jobs will be lost in 2009, which pushes the unemployment rate to 9.8%. Modest gains in 2010 will reduce the rate to 9.3% by year's end, the report predicted.

TESCO CHIEF TAKES PAY CUT DUE TO FRESH & EASY FLOP

The chief of Tesco, Sir Terry Leahy, took a £370,000 pay cut last year after Fresh & Easy failed to hit performance targets in the U.S., reports the Daily Telegraph. In addition, Tim Mason, who runs Fresh & Easy, received only 45% of the potential maximum of his salary. As a result, his total pay and bonus package fell by £745,000over the year. The company blames Fresh & Easy’s less than spectacular performance on the recession, particularly on the west coast.

WSD BRIEFS:

THE CHARMER SUNBELT GROUP has partnered with CBS Radio on a new media campaign that promotes legal and responsible consumption of alcohol. CSG invited government officials, legislators, and local law enforcement to voice an important message of zero tolerance regarding underage drinking and drunk driving in their communities. These messages will be broadcast in ten states where CSG and CBS operate, including AZ, FL, NY, PA and Washington D.C., as well as online.

OREGON LIQUOR CONTROL COMMISSION HAS APPOINTED Alex M. Duarte (3rd Congressional District) and Ron Roome (2nd Congressional District). The two new members were nominated by Gov. Ted Kulongoski and confirmed by the legislature. Currently, Alex is Corporate Counsel for Qwest Communications International in Portland, while Ron has been a lawyer at Karnopp Petersen LLP in Bend since 1988 and has been litigation partner since 1994.

JIM BEAM RED STAG is partnering with Kid Rock in his Rock N' Rebels Tour, which will hit 25 U.S. cities this summer. The partnership will officially begin June 14 when Kid serves as Grand Marshal of the NASCAR Sprint Cup Series race, while Red Stag is scheduled to launch in June.

FRANCE WAS SUPPORTED BY ITALY, SPAIN, Greece and Switzerland yesterday in opposing a European Union proposal to allow producers to mix red and white wines to create rose. A vote is slated for June 19 or June 26. France still needs the support of Germany and Spain to even have a chance in blocking the move.

THE SAINT JAMES COMPANY announced plans to acquire New Zealand’s Gravitas Wines through its Samson Acquisition Company. Gravitas was founded in 1995 by Martyn Nicholls and is best known for its Pinot Noir.

BOISSET FAMILY ESTATES is now offering Fog Mountain in a 1 liter PET bottle in the U.S., claiming it is the first California wine to do so. Fog Mountain is 100% Merlot and will be available in June.

TERLATO FAMILY VINEYARDS announced the inaugural (2007) vintage of its Pinot Noir, which hails from The Russian River Valley.

Until tomorrow, Megan

“After I'm dead I'd rather have people ask why I have no monument than why I have one.”
Cato the Elder

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Today's Sell Day: 21
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This month ends on a: Fri.
This month last year ended on a: Fri.
YTD sell days Over/Under: -1

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