Johnson Bros. Expanding into New York in February

FILED JANUARY 19, 2017

The New York market is going through a transitional period these days, and Johnson Brothers has decided to strike while the iron is hot. The Minnesota-based distributor is opening up the market on February 1 with Nestor Imports and Prestige Beverage Group.

The New York branch is in the process of building a team and will be managed by Eddy Rivera, formerly at E&J Gallo Winery. Johnson Brothers tells WSD it will be using "established third party logistics partners" for deliveries.

"We look at this as a great opportunity," says Johnson Bros. coo Todd Johnson in a release. "Everyone wants to have choices --and we want to be that choice-- to serve as a viable alternative for customers and suppliers in New York."

You'll recall, earlier this week WSD broke the news Johnson Bros. is expanding into West Virginia as well [see WSD 01-17-2017]. The distributor's footprint is now across 23 states, including: AL, AZ, CA, CT, FL, HI, IA, ID, IL, KY, MA, MI, NE, NC, ND, NM, NV, NY, RI, SD, WA, WI and WV.

Our more astute readers may have noticed New York was already included in yesterday's list of states where Johnson Bros. operates. The distributor tells us it was on the list because they own Nestor Imports, which operates in New York.

PERNOD'S IRISH DISTILLERS TO INCREASE CAPACITY BY 30% WITH $11.2 M INVESTMENT

Pernod Ricard subsidiary and Jameson producer Irish Distillers has announced an $11.2 million investment into its Midleton Distillery in Cork, Ireland. The investment will see the addition of three new copper pot stills, which will increase capacity by more than 30%. The additions will operational by June 2017.

"We are seeing growth accelerating across Jameson and the wider single pot still Irish whiskey range, such as Redbreast and Green Spot, and we will continue to direct our focus here. With our increased capacity, we are confident that the category will hit the ambitious targets set by the Irish Whiskey Association - increasing exports to 12 million cases by 2020 and 24 million cases by 2030," says Irish Distillers chairman and ceo Jean-Christophe Coutures.

Since 2012, Irish Distillers has invested more than $265 million in its facilities across Ireland, including Midleton Distillery, Fox and Geese bottling facility, Dungourney maturation site and the Old Jameson Distillery tourist site in Dublin.

REMY COINTREAU COMES DOWN FROM ITS US HIGH

Coming off about two years of sunny double-digit growth, Remy Cointreau's portfolio in the US slowed slightly to "high-single digits" in its third quarter ended December 31. "This third quarter slowdown reflect a normalization of our depletion trends," said Remy Cointreau cfo Luca Marotta on the earnings call this morning.

The flagship Remy Martin brand grew double-digit organic sales growth in the Americas. Luca said in the US volume depletion trends (sales to retailers) are normalizing toward high-single-digit growth, and the brand continues to gain share in the Cognac category. Remy is performing particularly well in California, Texas and Florida, though control states are "a little bit more complicated," he added.

On par with large portfolio, Cointreau depletions have been slightly slowing as well, down from 5% increases last year to 3%-4% growth in the US for fiscal 2016. Luca noted its best US markets are Pennsylvania, Michigan, Ohio and Georgia.

Meanwhile, Mount Gay has been going through the process of exiting the low-end of the portfolio, according to Luca, so its depletion trends have been volatile from month to month. But it did manage to post "positive" sales growth for the full nine-month period in the Americas.

Recall, Remy Cointreau recently picked up single malt whisky producers Domaine des Hautes Glaces [see WSD 10-27-2016] and Westland Distillery [see WSD 12-01-2016]. When asked to comment on their role in the larger portfolio, Luca said: "Like any baby, we need to grow. So, the first quarters and semesters or years of the acquisition, won't play a huge role in terms of bottom line, at least, do not expect a positive impact from the acquisition on the profitability."

On the whole, Luca said there is a "clear appetite" for the categories Remy represents, so they are "very, very positive in terms of momentum [in the US], not only now but in the next coming years."

SVB: MILLENNIAL PALATES COULD MOVE AWAY FROM BLENDS

Continuing our coverage of Silicon Valley Bank's (SVB) annual State of the Industry report, evp & founder of SVB's wine division Rob McMillan goes further into the red blend trend and how aging millennials might affect it.

Even though cabernet sauvignon is the fastest growing varietal, red blends specifically in the $8 to $11 price segment is the "hottest spot." While cabernet, and most other varietals are seeing the most growth in the $11-$15 segment.

Brands owned by large suppliers such as Gallo's Apothic and Constellation Brands' The Prisoner have driven red blend trends over the years because the category allows them to be flexible with varietal make-up and place of origin, but still be able to maintain quality and margin. SVB claims "many of the red blends being produced now include significant, if not dominant, qualities of merlot and syrah," two varietals that have not performed well on their own in recent years. "It's really the jug wine craze of the 1960s on steroids," writes Rob.

With all this talk about red blends, several webcast attendees asked what about white blends? V2 Wine Group president Dan Leese suggested the reason that white blends don't do nearly as well as red is a matter of shelf placement off-premise. He argues red blends gets their own section, but white blends typically falls under 'other whites,' and "'other whites' is not a place off-premise you want to be," said Dan.

THE MILLENNIAL FACTOR. There has been much discussion over the years on whether millennials--which is set to become the largest wine drinking demographic in the 2020s--would change the wine category for good, or if their tastes would evolve as the mature. Rob claims "their palate maturation looks like a sequel to the baby boomers' entrance to wine." He says millennials started with moscato and moved on to red blends and boxed wine, while baby boomers started with wine coolers and moved to white zinfandel and chardonnay, and settling on merlot. "Where [millennials] move next is anyone's guess, but I suspect we will see growth in cabernet and foreign wines in the short term," writes Rob.

With that question settled as far as SVB is concerned, Rob bring up another pertinent question going forward: what happens when the baby boomers move down the premium price ladder after retirement and collide with millennials moving up the price ladder. "Can the large wine companies produce consistent and remarkable wines in mass quantities to meet the premium consumer demand of tomorrow?"

WSD BRIEFS:

KOVAL DISTILLERY BUYS SECOND LOCATION adjacent to its current location for more than $4 million, reports the Chicago Tribune. The expansion will increase its production capacity from 70,000 gallons to 100,000 gallons, which is the current cap on craft distillers in Illinois. It will also more than quadruple their current square footage, from 11,000 square feet to 45,000 square feet. Koval president Sonat Birnecker says the new facility will likely include a new tasting room as well. The deal closed late last month and expansion will start in about a year and a half.

OLD BRIDGE CELLARS ADDS CHAMPAGNE COLLET TO PORTFOLIO, per a release. Sales, marketing and import company Old Bridge Cellars will represent eight Champagne Collet wines nationally, including one NV Brut Rose (srp $50), a Blanc de Blancs (srp $50), The NV Brut Art Deco (srp $45), the Brut Vintage Collection Privee (srp $70) and Esprit Couture (srp $100) among others. This deal took effect January 1.

Until tomorrow,
Your Editors

Emily Pennington - emily@winespiritsdaily.com
Sarah Barrett - sarah@winespiritsdaily.com

"Reality is merely an illusion, albeit a very persistent one." -- Albert Einstein

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