Scotch Faces American Boycotts

FILED AUGUST 1, 2009

Dear Client:

The Daily Telegraph is reporting that Americans are boycotting British goods after a Scottish judge released Lockerbie bomber, Abdelbaset Ali Al Megrahi, last week. It claims that protesters are urging US citizens to boycott a number of items including Scotch in favor of U.S., Canadian or Irish whiskeys. The Scotch Whisky Association (SWA) told the paper that although it’s “closely monitoring” the situation, it “feels any action or impact on sales is likely to be short-lived.”

In the article, Campbell Evans, SWA director, said: "We have been faced with other boycotts in the past and found they haven't lasted. We appreciate what lies behind this action. In the heat of the moment it is understandable."

We remember a few years back when Americans actively boycotted anything French-related, including wine, when we invaded Iraq. It apparently took a significant bite out of sales but its debatable how much of the decline can be attributed to boycotts.

AUSTRALIAN WINE BIZ FACED WITH “BRUTAL” RESTRUCTURING

The Australian wine industry “needs to be smaller,” said Stephen Strachan, chief of the Winemakers Federation of Australia, in an article by the Herald Sun. This will require a “brutal” adjustment period over the next two to three years where the country will seek to eliminate some of the more unprofitable wineries, much like the European Union recently did. He told the paper that “we’ve had this period of substantial growth but you'd have to put some very large question marks over whether enough of it was profitable - and I think the evidence is that it hasn't been.” A lot of what they described as “tax-driven and lifestyle vineyard and winery ventures...will unravel,” which includes both new and young businesses. Over-supply of grapes and the appreciation of the Australian dollar against the U.S. dollar have largely hurt the industry, not to mention recent droughts.

Already major companies like Foster’s Group and Constellation Brands along with mid-sized companies are seeking to sell Australian vineyards and brands. This has resulted in an influx of properties on the market, which ultimately drives down value.

Foster’s Group announces its earnings tomorrow, so stay tuned...

WASHINGTON WINES GROW ABOVE INDUSTRY

Recent Nielsen data shows that Washington States have increased 9.1% by value during the past year, a figure almost double that of overall wine sales, which increased 4.7%. The figures come from Nielsen’s off-premise wine sales in the four weeks to July 2009. Nationally, volume sales of Washington wine are also up 6.8%, compared to the 2.4% volume increase for overall wine sales in the U.S. It's worth noting that the value increase of Washington wine sold is more than the volume increase, suggesting that consumers are buying more Washington wine at a range of price points.

DIAGEO’S BEAULIEU VINEYARD APPOINTS NEW WINEMAKER

Beaulieu Vineyard has appointed Jeffrey Stambor as head winemaker. He takes over for Joel Aiken, who has been with Beaulieu Vineyard since 1982 and winemaker since 1985. Stambor joined Beaulieu Vineyard in 1989 and has been responsible for the red Bordelaise program for the winery's Napa and Reserve wines. Aiken, meanwhile, will begin a new career in wine consulting. His first task will be consultation on crafting Georges de Latour Private Reserve Cabernet Sauvignon from the new Reserve Winery.

WSD BRIEF:

THE DISTILLED SPIRITS COUNCIL spend spent more than $1.2 million in the second quarter lobbying on drunk driving prevention and other issues, according to a recent disclosure form. The trade group also lobbied on advertising, alcohol sales to the military, excise taxes and trade agreements among other issues, reports the AP.


Until tomorrow, Megan

“I respect faith, but doubt is what gets you an education.”
Wilson Mizner

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