ADI Forms PAC to Tackle Excise Tax Issue

FILED JULY 23, 2015

Craft spirits organization the American Distilling Institute (ADI) has created a lobbying arm for the first time in its 12-year history. In the past, the group has rallied support for craft-centric legislation and contributed to state lobbying efforts around the country, but this is the first time ADI has hired a professional lobbying group.

Within two weeks of announcing the news to its members, ADI has received $250,000 in pledges from 37 craft distilleries that will go to forming a Political Action Committee (PAC) representing small, independent distilleries. ADI calls the new group the Spirits of 76 and it will work on the "single most important" issue for craft distillers: federal excise tax parity. ADI also stressed that none of the funds will be used at ADI headquarters for staff or overhead. 100% of the funds raised will go to the lobbying and Political Action Committee efforts in DC. And although the PAC will depend on ADI for initial funding, the new group will be under the control of the contributing distilleries.

You'll recall, there are several FET parity bills that have been introduced this year. The American Craft Spirits Association (ACSA) partnered with DISCUS to support the Excise Tax Reform Act of 2015 (HR2520), which would cut a break for both small and big suppliers [see WSD 05-26-2015 ]. The Michigan Craft Distillers Association has thrown its support behind a similar FET parity bill called Distillery Excise Tax Reform Act (S1444), which is similar to HR2520, but primarily helps small distilleries. And Senator Ron Wyden (Oregon) introduced S1562 to help small distillers, brewers and wine producers with an FET reduction.

In addressing the existing FET parity legislation, ADI says: "There are at least three other bills that have been introduced and rumors of another half-dozen that are in the process of being drafted. A clear idea of proposed legislation is needed by the craft distilling community so craft distillers can decide on what legislation to support and act with one unifying voice."

ADI's establishment of a PAC makes things a little more complicated for the American Craft Spirits Association (ACSA). You'll recall, ACSA -- known initially as the American Craft Distillers Association -- was established in 2013 by several of ADI's leading members after they were unable to form a trade organization within ADI [see WSD 08-06-2013]. In addition to the fact that ACSA is not-for-profit and ADI is a for-profit company, one of the primary differences between the two groups was that ACSA has taken up lobbying efforts for the category and ADI had not.

We'd like to hear from you on the FET parity issue. Are the number of groups behind the effort a good sign or are there too many competing interests? You can email your thoughts on the issue (or any other issue for that matter) to emily@winespiritsdaily.com .

TURRENTINE 2015 WINE CROP REPORT: FEWER GRAPES FOR SALE IN NORTH COAST

The 2015 wine harvest is upon us and Turrentine Brokerage has issued a crop update for California's primary growing regions as well as the bulk market.

NORTH COAST: Harvest in the North Coast is expected to begin a little earlier, and one major difference from the law few seasons is that the crop size is erratic thanks to a cold spell during bloom. Cluster count are above average, but hard to quantify average cluster weight due to poor set and variability from vine to vine. "Overall, we have fewer grapes actively for sale this year than the last couple vintages. Most of this is a function of the longer-term contracts signed since 2012, when the market became extremely short in the North Coast," writes Turrentine's North Coast broker Mike Needham.

CENTRAL COAST: The overall crop in Paso Robles is lighter than last year. Cabernet sauvignon projections are 30%-40% below average with some vineyards off as much as 50%. Yield for sauvignon blanc are expected to be below average as well, maybe off by as much as cabernet sauvignon. "There is still supply of most varieties, however, as the crop size continues to be realized, deals are being made, and the supply becomes smaller every day," writes Turrentine's Central Coast broker Audra Cooper.

BULK MARKET: The inventory of bulk wine for sale has been "fairly consistent" in the last 12 months, and there are still some gallons dragging on the market from 2012 and 2013, per Turrentine's bulk broker Marc Cuneo. Red wine and pinot grigio are what many buyers are focusing on.

"With the 2015 harvest approaching, sellers are more motivated to move wine than they have been leading into the 2013 and 2014 harvest and are looking at all opportunities. The challenge is that due to the soft consumer demand for wines priced under $7.00 per bottle and three large harvests in a row, there continues to be a lack of demand for large volumes at the value-end, which normally cleans up the market," writes Marc.

To read the report in its entirety, click here.

CONTROL STATE TRENDS SHOW STRONG REBOUND

After hitting a low point of 1.6% volume growth in May, control state spirits volume were up 4% to 4 million cases in June - an abnormally high number, according to NABCA. Although 4-million cases months are not unheard of, they usually occur during high volume months like December, July, August, May, November and October. Spirits sales for June also improved over May, up 6%. Though Price/mix in June was 2%, down from 2.7% in May.

Wine also delivered a much better month. Volumes were up 3.3% for the month, following -0.6% in May. Rolling 12-month volume growth was at 1.3%, a slight decrease from May's 1.4%.

WSD BRIEFS:

SUNTORY SELLS LOUIS ROYER TO TERROIR DISTILLERS FOR $110 M. Suntory Holdings has confirmed the sale of Louis Royer SAS to France's Terroir Distillers for nearly $110 million. Terroirs Distillers own brands such as highland Queen, Tullibardine, Geisweiler, Rhum Charrette, Moyroud etc. Suntory said the sale will be completed by the end of August.

MARK ANTHONY BRANDS MAKES EXECUTIVE APPOINTMENT. Mark Anthony Brands, whose portfolio includes Heitz Cellars, Long Shadow Vintners and Rodney Strong Vineyards among others, has installed Jason Bronstad as its new vp of sales, replacing Brian Smith who is leaving the company. Jason has been with Mark Anthony since 2010 and most recently held the role of gm of South Central Region.

Until tomorrow,
Emily

"I have met many entrepreneurs who have the passion and even the work ethic to succeed" but who are so obsessed with an idea that they don't see its obvious flaws. Think about that. If you can't even acknowledge your failures, how can you cut the rope and move on?" -- Kevin O'Leary.

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