Wine & Spirits Daily

Diageo Reaffirms Commitment to Beer

noreply@blogger.com (Harry) — Fri, 09 May 2008 18:58:00 +0000

Any rumors of Diageo selling its beer unit were laid to rest today after the company announced plans to invest £520 million ($1 billion) in a new brewery near Dublin. Once it is completed in 2013, the new brewery will be the largest in the country, says Diageo.

The company also plans to renovate its famed Dublin brewery at St. James’s Gate (which produces Guinness for the Irish and British markets) and close two smaller breweries, Kilkenny and Dundalk, by 2013. When the program is completed St. James’s Gate will be the second largest brewery in the country.

The new brewery near Dublin will produce Guinness for export markets (such as Asia and Africa) and make ales and lagers for the Irish market.

“This will be the single biggest capital investment made by Diageo in its supply infrastructure since the company’s creation 10 years ago and will enhance the cost competitiveness of our global beer operations. It represents a major vote of confidence in our beer business and in Ireland as a global brewing centre of excellence for our company,” said ceo Paul Walsh

“It will marry 21st century solutions to our 300 years of brewing tradition, craft and heritage in what I believe will be a winning combination.”

Walsh said the new brewery site has yet to be determined and the group is looking at a number of options. The move will raise its Irish annual brewery capacity by 20% to 9 million hectoliters, with 6 million from the new brewery.

Surplus land on parts of the St. James’s Gate site as well as in Dundalk and Kilkenny will be available for redevelopment. It is estimated to have a current value of approximately €500 million (£400 million).

Upon closing Kilkenny and Dundalk, Diageo says its Irish brewing workforce will be cut from 450 to 250 by 2013.

“Both of these breweries have played a critical role in the historic success of Diageo’s beer brands in Ireland but currently do not have the scale necessary for sustained success in increasingly competitive market conditions,” said Diageo in a statement.

WILLIAM GRANT APPOINTS NEW CHAIRMAN

Peter Gordon, the great, great grandson of company founder William Grant, has been appointed non-executive chairman of William Grant & Sons. Gordon became a member of its board in 2003. He replaces another family member, Charles Gordon, who will transfer to the newly created position of Life President.

CHAMPAGNE ROEDERER BUYS CALIFORNIA VINES

Champagne house Louis Roederer has acquired 27 acres of vineyards in Anderson valley (near Sonoma) in northern California to expand its operations. Pinot Noir is reportedly produced on 17.5 of those acres. In total, the French company now owns 486 acres of vineyards in the valley. Transaction details were not disclosed.

WSD BRIEFS:

COCKTAIL MIXER STIRRINGS HAS APPOINTED Robert Swartz, former VP of sales at Terlato Wines International, as ceo.

THE CALIFORNIA ASSEMBLY has unanimously approved legislation to help nonprofit organizations hold fundraising events involving donated California wine.
Assembly Bill 1964 now moves to the state Senate for further review.

Until Monday, Megan

“Well-timed silence hath more eloquence than speech.”
Martin Fraquhar Tupper

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

U.S. Getting Tougher for Imports

noreply@blogger.com (Harry) — Thu, 08 May 2008 21:36:00 +0000

Which imports are suffering due to economic weakness? Which varietals are posting growth and which ones are dropping off?

IMPORTS SCALE BACK. After years of speedy growth, imports showed signs of slowing in the four weeks to April 5 2008, according to Nielsen scan data. Dollar sales of domestic wine grew 5.5% in April 2008, while imports were up only 2.8%, which is considerably lower than its year performance. For the 52 weeks to April 2008, growth of domestics (+5.4%) and imports (+5.2%) were only a hair apart.

In terms of volume, domestics grew 2.2% in the four weeks to April 2008 and imports declined -0.6%. In the 52 week period, domestics rose 2.2% and imports grew 2.3% (another big disparity).

As we reported earlier this week, the period to April 7, 2007 was a different story. In the four weeks to April 2007, imported wines were starting to creep up on domestics and post slightly higher growth. Domestic growth trailed imports with dollar sales growing 10.7% for domestics and 11.9% for imports. In the 52 weeks to April 2007, however, domestics grew 7.2% and imports were up 6.1%.

In terms of volume, domestics grew 6.2% in the four weeks to April 2007 and imports jumped 9.4%. In the 52 week period, domestics rose 2.5% and imports grew 4.3%.

It looks as though the weak U.S. dollar and global supply problems have made conditions in the U.S. harder for imports. After swallowing price increases for several months, importers and retailers have starting passing it on to consumers, which may drive cost-conscious buyers to lower categories or cheaper, domestic brands.

SOFTNESS IN THE BIG THREE. The big three importers, Australia (which was once thought invincible), France and Italy, are all seeing smaller growth in 2008. In the four weeks to April 2008, dollar sales of Australian imports rose only 0.6%, while volume increased 1.2%. Quite differently, Australian dollar sales in the four weeks to April 2007 grew 4.9%, while volume rose 6.1%.

Value of French wine was flat in the month of April 2008, while volume was down -3.3%. In 2007, meanwhile, dollar sales of French imports showed promise, up 5.9%, while volume grew 2%.

Lastly, Italian wine sales delivered the most growth out of the big three, rising 1.2%, in April 2008. Volume, on the other hand, was down -3.8%. In the four weeks to April 2007, Italian dollar sales grew a whopping 15.7% and volume increased 12.6%. Clearly, pricing is up for French and Italian imports, most likely stemming from the weak USD and strong euro.

Imports that showed the most dollar sales growth in the four weeks to April 2008 hail from countries such as Argentina, Germany, New Zealand, Portugal and Spain. In the same period last year, the countries posting the most dollar sales growth were South Africa, New Zealand, Spain, Portugal, Italy, Germany and Argentina.

RED & WHITES, NECK AND NECK. Another noticeable trend in April 2008 was the difference in growth between red and white wine (not to mention the pace of growth). In 2007, red wine was growing at a faster pace then white wine. Today, red and white are practically neck and neck.

Dollar sales of red wine grew 5.1% in the four weeks to April 2008, while white wine grew 4.9%. However, in the four weeks to April 2007, red wine dollar sales increased 12.4% and white wine sales jumped 11.3%. Red and white wine growth in April 2007 more than doubled growth in April 2008.

Red and white wine both posted volume growth of 2.3% in the four weeks to April 2008. In April 2007, however, red wine volume grew 9.2% and white wine rose 7%. The rate of growth for red wine is four times less in 2008 than it was in 2007. Similarly, white wine grew three times faster in April 2007 than in April 2008.

SIDEWAYS AFFECT ALL OVER AGAIN. In April 2008, Pinot Noir and Riesling are still the two fastest growing varietals. In dollar sales, Pinot Noir grew 18% in 2008 and Riesling grew 18.4%. By volume, Pinot Noir increased 21.2% and Riesling rose 16%. The only difference between 2007 and 2008 is the rate of growth.

As far as the big varietals are concerned, only Merlot showed a slight decline in growth in the four weeks to April 2008. Dollar sales of Merlot declined -0.7% and volume declined -0.8%. Dollar sales of Chardonnay grew 3% and volume rose 2.5%, while Cabernet Sauvignon rose 7.1% and 6.4%, respectively.

In April 2007, Merlot posted solid dollar sales growth (6.6%) and volume growth (7.9%). Chardonnay and Cabernet also posted solid growth, just at a faster pace.

Dollar sales of Pinot Gris/Grigio (8.5%), Fume/Sauvignon Blanc (8.1%) and Zinfandel (5.4%) all posted growth. In terms of volume, Pinot Gris/Grigio rose 6.5%, Fume/Sauvignon Blanc grew 5% and Zinfandel increased 4.4%.

DIAGEO’S ORGANIC NET SALES RISE 7%

Diageo’s statement for the nine months ended March 31, 2008 was rather brief. Organic net sales grew 7% and were “in line with the performance seen in the first half of the year ending June 30, 2008.”

Said Paul Walsh, Diageo ceo:

“Trading in the third quarter continued in line with the first half and we are therefore maintaining our guidance for 9% organic operating profit growth for the current fiscal year.

We continue to believe that the diversity and strength of our brands, the success of our marketing campaigns, our superior routes to market and our global reach will be key in delivering our performance.”

No acknowledgement of the economic slowdown here boys and girls. CFO Nick Rose has said in the past that Diageo is “very optimistic” about sales in the U.S. Paul Walsh has also stated that consumers view spirits as an “affordable luxury” and that premiumization will continue in the U.S. amidst a slowdown.

“Everyone is focused on subprime, monoline, $400bn write-offs ... to a lot of people it's a total irrelevance. They don't understand it, and they don't want to understand it," said Paul Walsh during Diageo’s first half earnings report in February.

WSD BRIEFS:

LITTLE BLACK DRESS WINES, owned by Brown-Forman, is adding a 2006 Pinot Noir sourced from France, and will introduce Chardonnay in a traditional Burgundy package with the 2007 vintage release. LBD also plans to test an Italian-sourced Pinot Grigio version, one of the most popular varietals in the line. With the addition of Pinot Noir, Little Black Dress Wines current varietals will now include Chardonnay, Pinot Grigio, Syrah Rose, and Merlot. The wines are line priced nationally at $9.99 suggested retail, with Syrah Rose available in limited markets.

ILLINOIS OPENS DIRECT SHIPPING. Beginning June 1, wineries holding an Illinois Winery Shipper's License may ship up to 12 cases of wine annually to adult residents. The act, signed this week by Governor Rod Blagojevich, permits wineries producing under 25,000 gallons per year to self-distribute up to 5,000 gallons annually directly to Illinois retailers. This includes both in-state and out-of-state wineries that have a Wine Shipper's License, according to Wines & Vines.

Until tomorrow, Megan

“I believe in looking reality straight in the eye and denying it.”
Garrison Keillor

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

SVB Remains Optimistic in ‘08

noreply@blogger.com (Harry) — Wed, 07 May 2008 17:52:00 +0000

So far, 2008 is looking like an unpredictable year. Some people in the industry think the recession will have little impact on wine, while others contend it will leave a huge stamp on the U.S. wine biz. What about fine wines versus high-volume wines? Will imports manage to power through the recession? And how will the industry bounce back?

Silicon Valley Bank’s (SVB) annual State of the Wine Industry Report addresses all these questions. Researchers use data, experience, knowledge of the wine industry and an extensive survey to help give insight on current conditions and trends as well as a forecast for the coming year.

In the beginning, the report notes that the wine industry is “experiencing both short term cyclical and economic shocks.” Not only are we headed into a recession, but the wine biz has morphed from a small, part-time industry into a $30 billion business with loads of M&A activity. So what does that mean for the future of the industry?

Some of the key takeaways:

1. SVB feels the next 12 months will be generally positive for the wine industry despite downward economic trends.

“Financial performance of the fine wine segment will be marked with moderate growth rates falling from last year’s cyclical highs.”

“Outside of recession fears, the industry is optimistic. While we generally support their optimistic view, we suggest many may be overly optimistic and we offer a note of caution. A recession is upon us and sales growth rates will likely moderate.”

“Yet overall, wine is still an affordable luxury even in a bad economy. So while wine is not recession-proof — like electricity and visits to the doctor — people still continue to consume wine even during difficult times, and our experience is that wine continues to demonstrate volume growth.”

2. Nonetheless, SVB expects to see a small deterioration in the fine wine segments as supply runs low and consumers become more cost conscious.

“For fine wine, we expect 2008 growth rates in the low-teens and slightly lower profits.”

“Concerns in this segment include everything from high costs of sought after vineyard properties, foreign competition, brand proliferation, a weak USD, grape shortages, distribution over-consolidation, regulatory processes impacting free trade, and evolving — yet still inefficient — Internet and consumer sales models. However, in the long term, we expect sales growth to be in the 4-6 percent range for the wine industry as a whole.”

3. High volume wine producers will experience improving trends as the weakening economy forces value-conscious buyers into lower-priced and moderately-positioned price segments. However, low-end producers will likely have a harder time selling their wines in the long term.

“Improved conditions for growers selling into the higher volume segments are expected this year. This is due to a weaker U.S. dollar (USD) slowing bulk imports, lower volumes in the tank from prior harvests, and a strong demand for wines in the $9 - $14 range. However, growers producing grapes destined for wines with price points under $8 will likely find business conditions more difficult in the long term.”

4. Overall consumption of both foreign and domestic wines in the U.S. has reached $30 billion. This is a result of consumer acceptance of imported wines, an increasing number of millennials drinking wine and trading up.

5. As restaurant sales take a hit during the economic downturn, wines will not perform as well on-premise. The NPD Group, a consumer marketing research firm, found that less than 40% of meals purchased in restaurants are currently eaten on-premise. SVB predicts that if this trend continues, the on-premise sales of wine will shift more into direct or off-premise purchases for home consumption.

“Analysts support specific regional weakness in Nevada, Florida, Michigan and California — all four were also among the highest mortgage default rates per household in the country.”

6. The U.S. wine industry has seen an onslaught of imports in recent years. However, domestic producers might get a (albeit short) break as the weakening USD is becoming increasingly troublesome for importers, especially given more cost-cautious buyers.

“Over the long term, if the USD remains weak and nominal pricing of foreign wine continues to climb, the increased cost of shipping may become so great that it will begin to deter imports. That may slow the onslaught of imports temporarily; however, foreign producers continue to make progress in this market at a time when all the signs indicate they should not...It is an opportunity that should not be taken lightly.”

7. Distributor consolidation continues to pose problems for small wineries. SVB found that many wineries producing fewer than 10,000 cases annually are entirely shut out of distributor markets and are going the direct to consumer route as a result.

“Unfortunately, fine wine producers are faced with a mountain of compliance issues to ship direct, and a cold shoulder from the national distribution system.”

To end things on a good note, we leave you with this positive message from the report: wine prices are expected to hold stronger than in past recessions.

“As we review the impact of the changing economy, there is one major difference between the last two recessions and the current one. Supply is currently in balance or short in most major varietals. As a consequence, while we do expect the normal disruption as the venues of wine sales shift, we expect prices to hold better than during the past recessions, and imports will have a more difficult time filling demand gaps because of the weak USD.”

ROBERT PARKER ANGERS BORDEAUX WITH LOW SCORES

U.S. wine critic Robert Parker has angered many Bordeaux producers with B+ or lower ratings of the 2007 vintage.

"There is unquestionably little need to buy these wines as futures, unless dramatic price reductions occur. I don't expect that to happen," said Parker in his annual vintage review, titled "2007 Bordeaux: Who Will Buy Them and at What Price?"

Winemakers in the area claim it’s very hard to sell wine scored below a 90. One Bordeaux wine broker told the AFP that Parker “has assassinated some of the wines."

In total Parker only gave three wines (Chateau Pape Clement white, Haut-Brion and Chateau Climens) 100 point scores, and all three were for whites, in a town best known for its reds. Bordeaux's top five, first growth wines, received the following ratings: Chateau Margaux earning a 92-94, Chateau Haut-Brion a 91-94, and Mouton-Rothschild a 90-94. Chateau Lafite and Chateau Latour both got a 90-93.

ROSEMOUNT DROPS DOUBLE-DIGITS IN U.S.

Foster's Group Ltd.'s wine sales in the U.S. dropped in the four weeks through April 19, signaling that a recovery for the company's American wine division is still some way off, Bloomberg reports, based on the Australian Financial Review.

Wine sales at supermarkets and retailers, which make up about 27% of U.S. sales, dropped -4%, the Review said, citing figures from Nielsen. The Rosemount brand suffered the biggest slide in sales, falling -20.7%.

WSD BRIEFS:

FUTURE BRANDS announced the appointment of Tony Truzzolino to vice president, sales – east region. Truzzolino, a 25-year veteran of the beverage alcohol industry, joins Future Brands from Beam Global Spirits & Wine, where he was vice president, commercial development.

GEMINI SPIRITS & WINE announced that effective May 1st, 2008 it will be handling the U.S. brand building activities for Tortuga rums from the Cayman Islands.

NEWTON VINEYARDS appointed Chris Millard as winemaker yesterday. Newton’s wines include Unfiltered Chardonnay and Bordeaux-style red wines from the estate on Spring Mountain in St. Helena. Millard joins Newton Vineyard from Sterling Vineyards, where he was senior winemaker.

WASHINGTON D.C. COUNCIL IS CONSIDERING A BILL that would let restaurant-goers in the District put a cork in a bottle of wine and take it home. Forty-eight states including Maryland and Virginia already have such laws in place.

TO READ A NOSTALGIC PIECE ON ROBERT MONDAVI by Alan Goldfarb, the last man to interview him, click here.

Until tomorrow, Megan

“Punctuality is the virtue of the bored.”
Evelyn Waugh

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

Wine Growth Slowing

noreply@blogger.com (Harry) — Tue, 06 May 2008 19:34:00 +0000

How is wine performing during the weak economic climate? Are consumers still trading up? According to Nielsen’s food, drug and liquor scan data, wine and even high-end wine is still growing but at a much slower rate. To get an idea of the difference, we took a look at Nielsen data in the period to April 5, 2008 and April 7, 2007.

OVERALL TABLE WINE. Table wine continued to post growth in the four weeks to April 5 but at a slower rate than the 52 week period to April 5. Table wine dollar sales grew 4.7% in the four weeks, but were up 5.4% for the year.

In terms of volume, the four week period saw growth of 1.5% while volume jumped 2.2% in the 52 weeks. It takes longer for trends to show up in 52-week data, while four-week numbers tend to reflect current trends. Case in point? Growth of wine in the U.S. is stalling and isn’t showing signs of turning around (yet).

Let’s take a look at the same period last year. In the four weeks to April 7, 2007, dollar sales jumped 11.1%. In the 52 weeks to April 7, 2007, dollar sales grew 6.9%. Volume increased a whopping 7% for the month and 2.9% for the year to April 2007. Volume growth of table wine in 2007 was almost five times more than in 2008.

TRADING UP. High-end wines reached a new record of growth in 2007. Since then, the rate of growth has slowed. It turns out that consumers are still trading up, just not as much as they were last year.

Higher-priced wines continued to post growth in April 2008, but at a much slower rate than in April 2007. In the four weeks to April 2008, dollar sales and volume of wines priced $15 and above rose 8.1%. Wines priced $12-14.99 saw sales climb 7.8% and volume rise 5.5%. Meanwhile, wines in the $9-11.99 range increased 7.5% in dollar sales and 5.3% in volume.

Dollar sales of wines prices $6-8.99 grew 1.9%, followed by $3-5.99 (3.7%) and $0-2.99 (1.2%). Volume of wines prices $6-8.99 grew 0.6%, followed by $3-5.99 (1.5%) and $0-2.99 (-0.6%).

The difference between 2008 and 2007 is vast. In the four weeks to April 2007, the $15 and up category grew 26.9% in value and 26.3% in volume. Dollar sales of wines prices $12-14.99 grew 20.3%, while volume jumped 20.1%. Wines in the $9-11.99 range rose 15.1% in value and 14.4% in volume.

All of the lower priced wines grew faster in 2007 as well, aside from the $0-2.99 price segment. Dollar sales of the $6-8.99 category rose 8%, followed by $3-5.99 (7.8%) and $0-2.99 (0.3%). Volume of wines priced $6-8.99 grew 9.2%, followed by $3-5.99 (7.3%) and $0-2.99 (0.2%).

Stay tuned for more Nielsen wine data tomorrow...

ARIZONA CHANGES DIRECT SHIPPING LAW

Arizona made a small change to its direct-to-consumer wine shipping regulation, effective immediately, according to ShipCompliant. Under the original law, Arizona residents could not receive direct-to-consumer wine shipments unless they purchased the wine on-site, and shipments did not exceed 2 cases per consumer per year.

The new law allows wineries to ship to Arizona consumers, as long as the consumer has physically visited the winery at anytime during the calendar year prior to placing the order. Arizona consumers who have visited the winery may place off-site orders and have shipments sent to them as long as they do not exceed the 2 case limit. If Arizona consumers wish to have additional wine shipped to themselves in subsequent years, they will need to physically visit the winery each year.

CALIFORNIA GRAPE GROWERS EXPECT LOWER HARVEST

April was a tough month for California winemakers, who were faced with a series of unusually late frosts. The damage is still being assessed but most growers expect a smaller-than-average harvest this year. It could be June before growers know the full extent.

SACRAMENTO VALLEY FARM CREDIT has merged with Farm Credit West, an agricultural lending cooperative almost five times its size, creating a company that spans 15 California counties and has assets of more than $4.6 billion. The new operation carries Farm Credit West's name and plans to move its headquarters to Roseville.

Until tomorrow, Megan

“Punctuality is the virtue of the bored.”
Evelyn Waugh

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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.

French Millennials Stray from Wine

noreply@blogger.com (Harry) — Mon, 05 May 2008 20:15:00 +0000

As U.S. wine consumption continues to grow, France – typically thought of as a country synonymous with wine – is drinking less wine then ever before as young adults turn to beer and spirits. Unlike in the U.S., French millennials (young adults aged 21 to 31) aren’t so hot on wine. Since 1980 French wine consumption has decreased by more than 50% from 120 liters per capita to today's rate of 55 liters per capita, according to Winebusiness.com’s Daily News Links. As a result, French wine producers are having a harder time finding a market in their own country.

A qualitative research project was jointly organized by Sonoma State University and Montpellier in an attempt to find out why French millennials aren’t drinking wine. Here are the top reasons why young French adults are choosing not to drink wine.

1) Many French millennials consider wine to be a drink for older people. As a result, they prefer to drink other beverages (beer or spirits) but will still have a glass of wine with their family several times per month.

2) According to winebusiness.com, several interviewees referenced the strong anti-alcohol movement that has been in effect in France since 1991. The impact on wine consumption has been particularly strong and led some young consumers to steer clear of wine altogether.

3) Some French millennials simply do not like the taste of wine. In fact, when they did drink it, most said they preferred sweet white wines such as muscat, moelleux, or Sauternes.

4) Also, good wine tends to be too expensive while beer is cheaper.

5) Surprisingly many of the young French adults said wine is confusing.

On the positive side, most respondents said they never drink wine without food. They also described wine as a drink for relaxation with friends and family.

A few recommendations to help boost France’s domestic wine industry included: starting a Buy Local Wine Campaign; launching a national French wine brand at a premium price point; enhancing wine education and culture in schools and universities; offering smaller bottles on-premise; and making labels more colorful.

GEORGIA SHIPPING BILL AWAITS GOV. SIGNATURE

A Georgia bill that would allow direct to consumer wine shipments has passed the legislature and awaits a signature from Gov. Sonny Perdue. If passed, Georgians could order as many as 12 cases of wine a year directly from wineries over the internet or telephone. Gov. Perdue is notoriously conservative but has not stated an opinion on the wine bill. The Christian Coalition did not oppose the internet bill and will reportedly not ask Perdue to veto it (unlike the Sunday sales bill).

Under current law, Georgia residents are required to make face to face purchases at wineries in order to have wine shipped home. Georgians who visit a winery can ship as much as five cases of wine home. Similarly, Georgia wineries can't ship wine to customers unless they show up at the winery to buy it.

The Senate also gave final approval Monday to legislation allowing wineries with tasting rooms to serve beer and liquor.

SPIRITS STILL TAKING SHARE FROM BEER AND WINE, BUT AT A PRICE

Even with this lousy economy, spirits is taking share from beer and wine. If you look at YTD IRI scans of spirits, wine, and beer in supermarkets, spirits has 3.6% growth as compared to 0.8% for both wine and beer and a 1.2% growth for total alcohol, says Morgan Stanley's Bill Pecoriello. In the latest 8 weeks, spirits drove 40bps of volume share while wine share declined 10bps and beer share declined 20bps. Ah, but at what price? It ain't easy being cheap. The average price per volume increased a paltry 1.5% for spirits, 2.5% for beer, 4.4% for wine and 3% for total alcohol.

HISPANIC POPULATION GROWING ORGANICALLY

Hispanics now account for more than 15% of the U.S. population, and the increase is largely the result of births from Hispanics already in the country, according to new Census Bureau data.

In an annual report, the Census said there are 45.5 million Hispanics in the U.S., up from 35.7 million in 2000, when they made up 12.6% of the population. It said growth among Hispanics was responsible for half of the U.S. population gains between 2000 and 2007.

BOTTLED WINES FROM AUSTRLIA SLOW

The Australian wine industry is facing a host of problems as the rising Aussie dollar, drought and foreign competition result in mounting pressure. Bottled wine exports are still growing but at a declining rate and some experts believe the growth may stop within two months, according to news.com.au. Cheaper brands are taking the biggest hit while premium wines are less impacted by the exchange rate.

Importers and retailers in the U.S. have tried to swallow extra costs from the exchange rate but eventually higher prices had to be passed to the consumer.

LAWRENCEBURG DISTILLERY TO BOTTLE SEAGRAM’S VODKA

Lawrenceburg Distillery, owned by Caribbean rum producer Angostura, has signed a contract with Infinium Spirits to begin bottling Seagram’s Vodka. Recall that Pernod sold the brand to Infinium Spirits in 2005.

Bottling operations began in April 2008. LDI expects to produce 1 million cases of Seagram’s Vodka in the next year, increasing total plant production from 1.7 million cases to 2.6 million cases.

FLORIDA REMAINS THE SAME

The Florida legislature adjourned Friday (May 2) without passing a direct wine shipping permit bill, which means wineries can continue shipping as they have been since 2006.
Several bills were considered for direct wine shipping, but most included a capacity cap on annual production for wineries – something winery advocates strongly oppose.

THERE’S A GREAT ARTICLE ON THE PETER MONDAVI Jr. family in the LA Times by Jerry Hirsch. To check it out, click here.

Until tomorrow, Megan

“In politics, absurdity is not a handicap.”
Napoleon Bonaparte

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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.

Growth of Ultra-Premium Spirits Slow

noreply@blogger.com (Harry) — Thu, 01 May 2008 16:31:00 +0000

Higher priced spirits showed signs of slowing in the four weeks to March 8, 2008, according to Nielsen U.S. food, drug and liquor scan data. The total spirits category grew 2.6% in value to almost $500 million and 1.6% in volume to 3.6 million cases. Excluding prepared cocktails, the industry gained 2.7% in sales and 1.7% in volume.

Value priced spirits gained 1.2% in dollar sales in the four weeks to March and lost -0.3 share points. Volume was up 0.8% and also lost -0.3 share points.

Mid priced spirits increased 2% in value and 2% in volume. It lost -0.2 share points in dollar sales and gained 0.1 volume share.

Premium spirits grew 3.3% in dollar sales and 2.9% in volume. As far as share goes, premiums gained 0.2 points in value and volume.

Ultra-premium spirits continued to be the fastest growing category in terms of value although growth is slowing. Ultra-premiums gained 5.7% in dollar sales and 1.7% in volume. The category also gained 0.4 dollar share points but volume was flat in the four weeks to March 8.

One of the hottest topics in the spirits industry right now is whether trading up will slow or evaporate in the ensuing recession. Will consumers start trading down to lower-priced brands and save the extra money for gas? Data seems to support this theory although ultra-premium and premium brands are still growing. In the four weeks to March 8, spirits growth showed signs of slowing for all price categories excluding value brands.

In the 52 weeks to March 8, value brands gained only 0.8% in dollar sales, but rose 2.3% in the 13 week period and 1.2% in the four week period. This suggests that value brands are starting to growth at a faster rate.

Every other category, however, is showing signs of a slowdown. Mid-priced brands increased 4% in the year to March, but gained only 3.5% in the 13 weeks and 2% in the four weeks. Premium brands went from gaining 5.3% in the 52 weeks, to 5.1% in the 13 weeks and 3.3% for the month.

Ultra-premiums saw the biggest dip in dollar sales. In the 52 week period, they grew 10.9%. In the 13 week period, ultra-premiums grew 8.6% and in the four weeks to March they grew 5.7%.

In terms of volume, ultra-premiums saw the biggest dip. In the 52 weeks, ultra-premium grew 7.8%, but grew only 1.7% in the four weeks to March. Premiums went from 4.5% for the year to 2.9% for the month. Mid-priced spirits increased 3.3% in volume for the year, but grew only 2% in the four week period. Lastly, value brands went from gaining only 0.2% in the 52 weeks to March 8, to growing 0.8% in the four week period.

So, with all that said, let’s take a look at the actual spirits themselves. The tequila category continues to be on fire. In the four week period, tequila grew 11.6% in dollar sales and gained 0.5 share points. In terms of volume, tequila was up 7.2% and gained 0.2 points.

Vodka, meanwhile, was the second fastest growing spirits category in March. Dollar sales of vodka grew 5.2% in the four weeks to March 8, while volume climbed 5%. Dollar share grew 0.7 points and volume share was up 1.1 share points. Could it be that premium and ultra-premium vodkas are losing their momentum?

Dollar sales of whiskey grew 2.6% in value but share was flat. Irish whiskey continues to show the most growth in the whiskey category, up 23.1%, while Scotch was down -0.6%. Whiskey grew 0.3% in volume and lost 0.3 share points. In volume, Irish whiskey grew 23.2%, while Scotch declined -4.4%.

Gin grew 1.7% in dollar value, while share was flat. Volume of gin declined -1.1% and lost -0.2 volume share points.

Lastly, rum value grew 3.1% and gained 0.1 share points. Volume of rum increased 2.4% and also gained 0.1 points.

Until Monday, Megan

“Be sincere; be brief; be seated.”
-Franklin D. Roosevelt

--------- Sell Day Calendar ----------
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Sell days this month: 22
Sell days this month last year: 23
This month ends on a: Fri.
This month last year ended on a: Thurs.
YTD sell days Over/Under: 0

Pernod Does Well Despite Economy

noreply@blogger.com (Harry) — Wed, 30 Apr 2008 19:37:00 +0000

Pernod’s overall third quarter earnings looked good despite softness in the U.S. Premium brand growth, strong pricing and strength in emerging markets helped Pernod rebound.

Pernod’s premiumization strategy gained momentum in the third quarter as the 15 strategic brands grew twice as fast in value (12%) as in volume (6%), which was helped by price increases and improved mix.

The French company acknowledged that the U.S. market has become “more difficult” as consumers continue to cutback spending and the U.S. dollar weakens. Beefeater, Chival Regal and Kahlua were hit the hardest in the third quarter, but those brands have struggled for awhile now. In all, North America organic growth reached 4.5%.

Depletions of Kahlua in the U.S. fell -6%. Nielsen data showed Kahlua volumes down -1%, while NABCA reported a decline of -10%. Beefeater’s depletions fell -4% in the U.S., with Nielsen down -1%. Stolichnaya’s depletions were down -1% due to price increases, the company said. Nielsen reported volume down -1%.

Spirits brands like Jameson, The Glenlivet, Malibu and Wild Turkey, which have performed well in recent years, experienced “vigorous growth” in the third quarter.

Nine month depletions for Jameson grew 23% in the U.S. Nielsen data shows Jameson growing 30%, while NABCA reported a 16% jump in volume. The Glenlivet, meanwhile, showed “continuing dynamism in the US” with depletions gaining 4%. Nielsen was up 4% and NABCA grew 2%. Malibu’s depletions increased 3%, with Nielsen up 9% and NABCA growing 15%.

Wine brands Montana, Perrier-Jouët, Mumm Napa and Campo Viejo all performed well in the U.S. Depletions of New Zealand’s Montana wine grew 19% in the third quarter. According to Nielsen, volume growth was up 28%.

Despite a softening economy, Pernod saw “continuing growth in the US, against the background of an increasingly difficult environment, due to the dynamism of premium brands.”

Pernod said very little about the Absolut acquisition in its earnings statement.

WAL-MART GAINS MORE AFFLUENT CUSTOMERS

In an analyst briefing, Eduardo Castro-Wright, CEO of Wal-Mart's U.S. division, told listeners that more affluent shoppers are going to Wal-Mart during the economic slump.

Shoppers with a household income of more than $55,000 to $70,000 are categorized by Wal-Mart as more affluent than its core customers, according to Dow Jones Newswires. Castro-Wright cited company research that showed that the number of more affluent shoppers increased 0.7% in February and was up 2.2% in March.

The company’s emphasis on low prices is keeping its core consumers loyal, while at the same time attracting more affluent shoppers looking to save. Wal-Mart also said it is in the position to keep those shoppers when the economy improves.

Wal-Mart said it will continue to focus on name brand labels despite having its own private label brands.

CRILLON IMPORTERS LAUNCHES GRANDE ABSENTE

Now that the U.S. is once again selling Absinthe, the famed “green fairy” is making a comeback. Starting this May, Crillon Importers is launching Grande Absente, Absinthe Originale in the U.S. Grande Absente is made in Province from an authentic, 148-year-old French recipe that features a full measure of the legendary botanical wormwood and other regional botanicals. The new absinthe is 138 proof and will be available nationwide for approximately $70 for a 750 ml bottle packaged with a complimentary gold-plated absinthe spoon.

“It’s a myth and a crutch that absinthe is supposed to taste bad,” said Jim Nikola, senior vice president of marketing, Crillon Importers.

I WILL BE OUT OF TOWN and out of pocket the rest of the week. See you Monday!

Until tomorrow, Megan

“It is absurd to divide people into good and bad. People are either charming or tedious.”
-Oscar Wilde

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YTD sell days Over/Under: 0

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

EU Adopts Wine Sector Reform

noreply@blogger.com (Harry) — Tue, 29 Apr 2008 20:02:00 +0000

The European Commission formally adopted new EU wine sector reforms today as a way to take back share from new world wine producers. It follows the agreement reached by ministers in December 2007 after a long, drawn-out set of negotiations and compromises took place. The reform will take effect August 1.

One of the most controversial elements of the package is that the government will pay less-successful wineries to dig up vineyards and voluntarily leave the business. The scheme will last for three years and apply to a maximum of 175,000 hectares of vineyard in the EU.

The reform will also put an end to crisis distillation spending beginning 2012. In the past, the EU paid for thousands of liters of unwanted wine to be turned into industrial ethanol. The system cost about €1.269 billion annually and soaked up two-fifths of the EU’s wine budget.

Under the new plan, the EU will give national governments an allocated sum of money to spend on their wine sectors. The money can only be spent on promoting EU wines abroad, modernizing the production chain and other measures including harvest insurance plans.

Northern producers have also agreed to reduce the amount of sugar they use to fortify their wines.

A council statement said: “The reform provides for a fast restructuring of the wine sector in that it includes a voluntary, three-year grubbing-up scheme to provide an alternative for uncompetitive producers and to remove surplus and uncompetitive wine from the market.”

“The reform will allow us to concentrate on taking on our competitors and winning back market share,” said Mariann Fischer Boel, Commissioner for Agriculture and Rural Development and mastermind behind the reform plan.

In the past decade, EU wines have lost share of the world wine trade and are hoping to make a comeback. In 2007, the EU held 62% of the global market share, down from an average of 79% between 1986 and 1990, according to the Organisation International de la Vigne et du Vin.

“Now we can get on with the final preparations for the entry into force of the new system in August. Instead of wasting money getting rid of unwanted surpluses, the reform will allow us to concentrate on taking on our competitors and winning back market share. I hope the Member States will make good use of the new tools available," Fischer Boel continued.

VINUM CAPITAL PARTNERS LOOKS FOR ACQUISITIONS

Equity fund manger Vinum Capital Management has formed Vinum Capital Partners, a $250 million private equity fund looking to acquire mid-size premium and super-premium wine properties producing between 20,000 and 150,000 cases a year. The company is interested in California’s North Coast and Central Coast regions, in addition to properties in Oregon and Washington.

"The focus of this fund is to acquire wine properties efficiently, grow them effectively with expertise and necessary growth capital, and ultimately sell them to strategic and financial acquirers,” said Thomas Thornhill, Managing Partner of VCM, who is also chairman of the Mendocino Wine Company and a former partner at Montgomery Securities.

The company is interested in wineries with solid brands but inadequate capital or eagerness to exit the business.

"Our objective is to help provide liquidity for family-owned businesses. Many of them have been in business 20 to 40 years and there may not be a second generation able or willing to take on the business," Thornhill continued.

The VCP team has strong experience in winery operations, vineyard management, financial management, and M&A transactions. It consists of winery professionals – whose experience includes Mondavi, Gallo, Beringer, Ravenswood, and Schramsberg – and investment professionals who collectively have bought, sold, managed, or brokered over $1 billion in winery transactions.

VCM's investment partners include Justin Faggioli, formerly coo of Ravenswood; Scott Setrakian, formerly director of Golden State Vineyards; and G. Craig Vachon, a financing and M&A expert. The fund's portfolio management team includes Bill Foster, formerly from Beringer; Jonathan Pey, formerly from Robert Mondavi and Fosters Wine Estates; Doug Rogers, formerly from Gallo, Southcorp, and Brown-Forman Wines; and Bob Steinhauer, formerly from Beringer and one of the leading viticultural experts in the world. Strategic Advisors include Don Brain with VinREIT and Global Wine Partners; and Tom Hakel, formerly with Stag's Leap Wine Cellars.

WSD BRIEFS:

EVANS & TATE SHAREHOLDERS will be asked next month to vote on a restructuring deal that will leave them holding just over 5% of the collapsed winemaker. They will also be asked to approve a name change to ETW Corporation intended to re-brand the company, which has been struggling to rebuild since falling into financial trouble in 2005 and closing its doors last year. According to local reports, if shareholder reject the plan and fail to pass any of the 12 resolutions, E&T will likely go into liquidation.

MARYLAND GOV. MARTIN O’MALLEY decided last week to temporarily postpone signing a law that would continue to classify RTDs as beer. If the bill is vetoed, the drinks will be taxed at $1.50 a gallon, the same rate as spirits, instead of the 9 cents a gallon of beer.

Until tomorrow, Megan

I had a monumental idea this morning, but I didn't like it.
Samuel Goldwyn

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

Australia Taxes RTDs Like Spirits

noreply@blogger.com (Harry) — Mon, 28 Apr 2008 21:26:00 +0000

The Australian government has raised taxes on RTDs (ready-to-drinks) by 70% as a way to curb binge drinking among teenagers. The tax hike is effective immediately. Under the increase, RTDs will be taxed at the same rate as spirits, from $39.36 per liter of alcohol content to $66.67.

The new initiative is a part of Australian Prime Minister Kevin Rudd’s $53 million strategy to curb alcohol abuse. The government claims teenagers prefer RTDs, although the industry maintains 80% of the RTD market is young men over 25 who drink spirits mixed with cola.

Lion Nathan, Coca Cola Amatil and Foster’s Group distribute several RTD brands, and will likely be hard hit by the new tax.

The increase is expected to raise more than $2 billion in extra revenue over the next four years, which will reportedly be used to fund Australia's largest ever investment in preventive health, focusing on alcohol, smoking, diet and exercise.

RUTH’S CHRIS CEO FIRED

Craig Miller was ousted last week as chairman, ceo and president of Ruth’s Christ Steak House Inc. Ruth’s Chris confirmed in a statement that Miller had left the company but did not give a reason. Miller told the Orlando Sentinel that he was fired.

"I'm shocked," Miller told the Sentinel in a telephone interview late Thursday. "It's not every day you get terminated without cause."

"I'm not sure why the board decided to do this, but they did," he said.

According to the Sentinel, the board was displeased with Miller’s financial stewardship.

Miller said he was told last Wednesday (April 23) by the board.

The company, meanwhile, said it had hired a firm to begin an immediate search for Miller's successor. In the interim, Ruth's Chris has formed an executive committee that will provide leadership through the transition. The steakhouse chain also said Robin Selati, a managing director with Madison Dearborn Partners, the company's largest shareholder, will return to the role of chairman of the board. Selati held the position from April 2005 until September 2006.

To read more background, click here.

PENN. CONSIDERS WINE VENDING MACHINES

The Pennsylvania Liquor Control Board is considering proposals for a contractor to operate up to 100 wine kiosks throughout the state. Comparable to a refrigerated vending machine, the kiosk would hold up to 500 wine bottles and would be placed in grocery stores and similar locations. The kiosk has security identification measures such as fingerprints and biometric readings, according to the AP. Users would have to register and purchases would have to be made with credit card, debit card or PLCB gift card.

The five-year contract proposal calls for the kiosks to be operated at no cost to the state or Liquor Control Board. Vending machines selling alcoholic beverages have been in use in Japan, Singapore and some European countries, but security issues and restrictive liquor laws have made their development and use elsewhere limited.

RECESSION BEHAVIOR CREEPS INTO ALCOHOL

An article in the New York Times says Americans are finding “creative ways” to cut costs on routine items like clothing and grocery, including alcohol.

Sales of inexpensive domestic beers, like Keystone Light, are up. Sales of higher-price imports, like Corona Extra, are down, according to IRI data. Some consumers, meanwhile, are skipping alcoholic beverages altogether.

“The number of people ordering an alcoholic drink fell to 31% last month from 42% last summer, according to a survey of 2,500 people conducted by Technomic, a restaurant industry consulting firm,” according to the article.

WSD BRIEFS:

VINOSHIPPER.COM now offers 350 wines from over 100 wineries located in 13 states. VinoShipper.com is responsible for all of the compliance reporting and taxes for its clients when shipping directly to consumers.

CEO OF NY STATE LIQUOR AUTHORITY resigned last week. Joshua Toas, known as a tough reformer, will depart May 22.

Until tomorrow, Megan

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

--------- Sell Day Calendar ----------
Today's Sell Day: 20
Sell days this month: 22
Sell days this month last year: 21
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This month last year ended on a: Mon.
YTD sell days Over/Under: 0

WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com

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

Control Spirits Weaken in March

noreply@blogger.com (Harry) — Fri, 25 Apr 2008 17:01:00 +0000

Spirits volumes in control states fell -5.2% in March, reports UBS analyst Melissa Earlam based on NABCA data. Comps year over year were not challenging, with 3% growth in March 07. March 2008 was depressed by several reasons, including one less Saturday in the month and the fact that Michigan (15% of Control State volumes) and Utah (2%) had one less week of selling days in March year over year. Market volume growth in the year to March 2008 increased 2.1%

Both Diageo and Pernod lost share in vodka and rum, but gained share with whiskey.

Diageo’s March performance fell below the market at -5.9%. The company lost some volume share, notably in vodka (-3.5% decline y/y vs category decline -1.7% y/y), rum (-8.7% vs category -5.5%), and tequila (-11.3% vs category -5.4%). Melissa noted the decline is likely related to price increases introduced over the last several months.

Diageo gained some share in Canadian whisky (-3.9% vs category -6.8%), cocktails (-7.7% vs category -8.9%) and cordials (- 6.8% vs category -8.3). It broadly held share in Scotch and gin.

Pernod, Brown-Forman, Campari and Remy all lost share in March. Pernod’s volumes declined -8.3% in 2008, but grew 1.3% year over year in 2007. The company gained share in Scotch and Irish whiskey; but lost share in vodka (-9.3%), gin (-8.4%), rum (-5.9%), cordials (-9.5%) and brandy/Cognac (-52.8% vs category -10.6%) where it is de-emphasizing VS growth.

B-F volumes declined -7.6% (vs -0.9% in 2007). Campari declined -6.2% and Remy -9.3%.

UBS has buy ratings on Diageo, Pernod, Brown-Forman and Campari

“While we expect a slowdown in US spirits growth in a recession, we forecast market volume growth of 1.7% and 4.5% sales for 2008,” said Melissa.

ARIZONA JUDGE STRIKES VOLUME CAP CHALLENGE

Larger out-of-state wineries lost a court case in Arizona this week when a judge ruled that the current law does not give in-state wineries an unfair advantage. Judge Mary Murguia struck down a lawsuit seeking to overturn the current 20,000 gallon cap on wineries that can ship directly to consumers and retailers. The 20,000 gallon cap allows most Arizona wineries to ship direct, so out-of-state wineries argue the law is discriminatory and impedes interstate commerce.

According to AZ Central.com, Judge Murguia acknowledged that a 2006 law might be of more benefit to wineries in Arizona than elsewhere, but she ruled that the statute, by itself, does not discriminate.

"The simple fact that there are more out-of-state wineries than in-state wineries that produce more than 20,000 gallons of wine per year and are thus required to adhere to the three-tiered distribution system in order to gain access to Arizona's wine market does not by itself establish patent discrimination in effect against interstate commerce," the judge wrote.

"In fact, the number of out-of-state wineries that produce less than 20,000 gallons of wine per year and are thus able to take advantage of this direct-shipment exception dwarf the number of instate wineries that are able to take advantage of the exception," she said.

A decision has not yet been made whether to appeal. The suit was filed on behalf of Black Star Farms as well as several locals.

GOVERNMENT RELEASES DRUNK DRIVING REPORT

The Midwest reportedly has the highest number of drunk drivers according to a government study released earlier this week. In all, about 15% of U.S. adults have driven under the influence of alcohol in the past year. Another 4.7% of the drivers were discovered to be under the influence of illegal drugs, according to the survey by the Substance Abuse and Mental Health Services Administration. The study was based on information from the National Survey on Drug Use and Health.

Wisconsin is the state with the worst drunken driving rates in the country, with 26.4% of adult drivers reported driving under the influence of alcohol in the previous year. Wisconsin is closely followed by North Dakota (24.9%), Minnesota (23.5%), Nebraska and South Dakota.

The survey found that Utah had the lowest incidence of drunken driving. Only 10% of adult motorists were reported to be driving under the influence. Arkansas, West Virginia, North Carolina and Kentucky all had drunken driving rates of less than 11%.

Research professor Eric Goplerud told the AP that religion may be the reason there is more drunk driving in northern states. Religions and denominations in the south typically discourage drinking, which isn’t as common in the upper Midwest.

WILL KETEL ONE MAINTAIN ITS MYSTIQUE?

Business Week featured an interesting story on Ketel One yesterday and the effectiveness of its “white space” ads. The article also explores how the Nolet family and Diageo will come together and make Ketel One an even bigger vodka in the U.S. than it already is.

“The campaign's origin speaks to how much the brand runs in the veins of the Nolet family. In 2003, M&C Saatchi pitched the campaign on a single poster, lots of white space, no bottle, and a headline written in the Gothic-looking Bradley typeface: ‘Dear Ketel One Drinker. Thank you.’”

“The challenge confronting the Nolets is finding a way to retain the mystique that comes from not being understood by everyone while striving to double sales in the next five years with Diageo's help,” says Business Week journalist David Kiley.

To read the entire article, click here.

Until Monday, Megan

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

--------- 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: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0

WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com

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

Beam: Absolut Not a Must Have Brand

noreply@blogger.com (Harry) — Thu, 24 Apr 2008 19:36:00 +0000

How is the economy affecting Fortune Brands’ spirits portfolio? That’s the million dollar question. Most of the spirits companies (other than Brown-Forman) have been reluctant to admit that the U.S. economy has taken much of a toll. The general consensus is that consumers view spirits as an “affordable luxury.” Sure, there might be a slowdown in value spirits brands, but premium and super-premiums continue to grow. In an age of premiumization and trading up, spirits companies are generally more concerned with their premium and up brands anyways. Most spirits companies also seem to think they will have no problem bouncing back from a slowdown and that the dawning recession is merely temporary. Declines in the on-premise are perhaps the biggest thorn for distillers, but most claim it’s not a significant change.

“What we have seen a little bit is a little less consumption at bars and restaurants and more people buying at their local liquor store, but it's not that significant,” Fortune ceo Bruce Carbonari told WSJ earlier this month.

In the first quarter, spirits sales were flat in the U.S., but Fortune says some of that was a result of larger-than-usual seasonal reductions in distributor inventories.

"While our reported spirits sales were relatively flat, shipments of spirits were adversely impacted in the U.S. by larger-than-usual seasonal reductions in distributor inventories that don't reflect the health of our brands in the marketplace," Carbonari said in a statment. "Had distributor inventory movements been consistent with the prior year, our worldwide spirits sales would have been solidly higher.”

Spirits sales increased at the premium end of the portfolio, reflecting favorable mix shift and Fortune’s continued focus on growing premiums. On a depletions basis, Fortune’s global premium brands grew in the U.S. and demonstrated strong growth in the U.K., Spain and Germany, as well as in Russia, India and China.

Fortune expects U.S. spirits shipments to bounce back in the months ahead. However, given the uncertain U.S. economic environment, Fortune is narrowing its full-year target range. It is now targeting diluted EPS before charges/gains to be in the range of flat to down at a high-single-digit rate. That's versus $5.06 for 2007.

THE NUMBERS GAME. In the smallest seasonal quarter for the company, net sales were up high single digits in the U.S., reflecting large seasonal reductions in distributor inventories. Depletions were higher in the U.S. for key premium brands, said the company.

First quarter depletions for Jim Beam were off in the first quarter, but Fortune is still expecting another strong year for Beam. The next generation of Jim Beam’s market campaign will rollout in the second quarter.

Sauza had lower shipments overall in the quarter due to inventory movements and tough comps. Depletions were strong in the U.S., however, and super-premium Sauza Hornitos continued to see strong growth.

Courvoisier increased double digit net sales on strong increases in the U.S. Maker’s Mark also experienced strong depletions overall.

WEAKENING ECONOMY. There was a lot of economy talk in today’s conference call. Overall, Fortune maintains that the economy has not had a large impact on spirits sales, although it has taken a toll (albeit it small) on value brands and the on-premise. Florida and California in particular have experienced a slowdown.

“We have seen no significant changes in the U.S. market...we’ve seen some change on-premise versus off-premise...geographic slowdowns correlates to the housing market, which we are seeing most heavily in Florida and California, especially on-premise,” said Carbonari.

“We have not seen the softening U.S. economy have a meaningful impact on total consumer demand...we benefit from our strong premium position,” cfo Craig Omtvedt.

“We had a good Christmas season...we have not seen trading down. The premium brands grow more than the value side and we’ve seen this trend for awhile now. The cocktail is still an affordable luxury and people aren’t willing to give that up. We’ve seen very little trade down at this point,” said Carbonari.

INVENTORY REDUCTION. “Seasonal inventory comes down after the holiday season, at the end of the year...it was further down then we normally would have expected but that’s all it is...the depletions are still strong,” said Carbonari with regards to the inventory reduction.

ABSOLUT. Carbonari mentioned the company is “very comfortable with the outcome” of the V&S deal. Although Fortune believes Absolut would have been a good fit for the company, the final price was too high and would not bring good returns for shareholders. Instead, Fortune said it would focus on building premium spirits brands and repurchasing shares.

Carbonari reiterated that Fortune’s U.S. distribution deal with Vin & Sprit has significant protection until 2012. Pernod has also assured Maxxium that V&S will remain in the J-V for two more years.

Without Absolut, all is not lost. Carbonari reminded listeners that Fortune is the fourth largest spirits company in the world; doing excellent in the U.S.; and has leading positions in bourbon, tequila, cognac, scotch, Canadian whiskey, cordials and liqueurs.

When asked if Pernod has contacted Fortune about exiting the Future Brands J-V, Carbonari said: “There has been no discussion on that.”

BRAND ACQUISITIONS. When it comes to brand acquisitions, Fortune said it prefers to grow organically. But that doesn’t mean the company won’t pounce on a brand that would enhance its portfolio (such as bourbon) or fill any weaknesses (vodka or rum).

“If we can add on certain categories, either enhancing our strength in bourbon, tequila, or cognacs, we’ll do that. If we have the opportunity to look at various vodkas or rum where we aren’t that strong, we’ll do that as well. We have the financial flexibility to do that...the Absolut deal wasn’t a must-have acquisition,” said Carbonari.

LVMH ACQUIRES WATCH, IS LIQUOR NEXT?

LVMH announced today it has signed an agreement to acquire Hublot group, a top of the range watchmaker. After its earnings last week, LVMH ceo Bernard Arnault said the company may take advantage of the worsening economy and pick up a liquor or watch brand. So does this mean LVMH will or will not acquire a liquor brand now?

“There might be opportunities in a difficult market for a group like ours to round out our portfolio," especially if smaller, family-owned companies decide to sell, he said to Bloomberg.

He declined to specify any companies LVMH may be interested in.

NORTH COAST VINEYARDS COULD LOSE 10%

Grape producers in California’s North Coast vineyard region fear they may lose as much as 10% of their crops after enduring the worst spring frost since the early 1970s. But the real impact won't be known until June, when the first grapes start to actually show and farmers can take a count of what they expect to harvest.

Among the hardest-hit areas were Sonoma County vineyards in valley locations such as Dry Creek and Alexander. Farmers usually turn on their frost-protection machines a couple of times a year, but so far this year some had to activate them as many as 30 times.

JEPSON WINERY FOR SALE

Investment group Dbon Mendocino LLC is selling Jepson Winery less than three years after acquiring it. The winery, which is also licensed as a vodka and brandy distillery, hit the market last week for $10.5 million. Dbon originally bought Jepson with plans to develop high-end estates, but the soft housing market and building restrictions in Mendocino County halted those plans.

Until tomorrow, Megan

“A little drama wins more friends than boring.”
Scott Westerfeld

--------- Sell Day Calendar ----------
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This month last year ended on a: Mon.
YTD sell days Over/Under: 0

WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com

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

Industry Squabbles Over Standard Drink

noreply@blogger.com (Harry) — Wed, 23 Apr 2008 17:56:00 +0000

As WSD reported yesterday, the Distilled Spirits Council (DISCUS) issued a press release urging the TTB to alter its proposed requirements for alcoholic drink labels. Mainly, Discus and other consumer and trade advocate groups want labels to list the amount of alcohol per serving, the definition of a standard drink and the U.S. dietary guidelines on drinking.

A newspaper ad campaign launched yesterday (April 22) and was signed by 18 public health, nutrition and consumer organizations and officials urged Treasury Secretary Henry Paulson to change the labels on alcoholic drinks to include such information along with the products' nutritional details.

The TTB’s current proposal only requires that companies include nutritional information (carbs, calories, fat, ingredients) on the back of labels, much like you find on the back of all food and non-alcohol drink products.

Other trade groups, including the California Wine Institute and the Beer Institute, disagree with Discus and think labeling the amount of alcohol per serving could confuse consumers. Here’s what they had to say, according to the Associated Press:

"Use of fractional measurements of beverage volume and absolute alcohol content to prepare drinks or to make product comparisons requires complex calculations," the Beer Institute said in its January comments to Treasury, adding that this is "likely to mislead consumers."

Both trade groups also feel the standard drink size information does not have meaning for consumers, especially when they order a mixed drink in a bar.

Wendell Lee, general counsel for the Wine Institute said "Consumers may think they're getting a standard drink" at the bar but "it's not what happens in the real world."

TERLATO FAMILY INTRODUCES LUKE DONALD WINES

Terlato Wines has launched a new California wine in partnership with professional golfer Luke Donald. The new brand, named Luke Donald Collection, includes a Claret-style red wine blend from Napa Valley to release in April 2008 and a Chardonnay that will be released in March of 2009. Bill Terlato and Luke Donald are “longstanding” friends, according to the company, which helped inspire the new collection.

“We considered the possibility of making a wine together several years back," said Terlato. "Luke was always interested in fine wine and food, and expressed his interest in learning more about the winemaking process...We weren't interested in a celebrity endorser. We wanted Luke to be involved in the development of the wine from start to finish.”

The grapes used in crafting the Luke Donald Claret are 100% Napa Valley fruit, sourced primarily from renowned Napa Valley vineyards, including the Rutherford and Stags Leap District appellations. Suggested retail price is $40. A Luke Donald Collection Chardonnay from Carneros is scheduled to be released in spring 2009.

EOS Estate Winery Hires Director of Winemaking

The EOS Estate Winery of Paso Robles announced that Nathan Carlson will serve as its Director of Winemaking. In this capacity, Carlson will lead EOS’s winemaking teams, overseeing production of the Central Coast wine portfolios. Carlson has more than 10 years of winemaking experience on the Central Coast, most recently managing the two million gallon facility at Tolosa Estate.

In other news, EOS will complete a $5.3 million project this summer to convert its entire facility to solar power.

“EOS has taken a bold step to become the first large winery in Paso Robles to commit to using only solar power,” the company said.

TEQUILA HERRADURA OFFICIAL TEQUILA OF KENTUCKY DERBY

Churchill Downs has selected Tequila Herradura as the “Official Tequila for Kentucky Derby 134”, becoming the first tequila maker to sponsor the Derby. Herradura, which translates to horseshoe in Spanish, will join other official Brown-Forman brands at the Kentucky Derby 134 and Churchill Downs’ Derby-related events, including Woodford Reserve Bourbon, Early Times Mint Julep, Finlandia Vodka, Korbel California Champagne and Fetzer Wines.

PANNOTIA VINEYARDS UNVEILS GERMAN RIESLING

Pannotia Vineyards is releasing a German Riesling to help round out its international portfolio. Pannotia Vineyards Riesling 2007 debunks the too-sweet myth of traditional Riesling varieties, making it drier than most other Rieslings without losing any of Riesling's richness or character, says the company. Pannotia Riesling comes from the Rheinhessen region. It is priced at $11.99 and will be available nationally June 1, 2008.

EUROPEAN DRUGMAKER BUYS RESVERATROL COMPOUND

GlaxoSmithKline Plc, Europe's biggest drugmaker, agreed to buy Sirtris Pharmaceuticals Inc. for about $720 million. Sirtris, based in Cambridge, Massachusetts, develops drugs that activate sirtuins, a class of enzymes involved in aging, Bloomberg is reporting. Its most advanced compound is a formulation of resveratrol, a substance found in red wine and plants that is thought to slow the effects of aging. Glaxo will get a foothold in a new area of research that may lead to treatments for diabetes, muscle wasting and neurodegeneration, the company said.

WSD BRIEF:

NYC STATE LIQUOR AUTHORITY is reportedly supporting community boards that approve liquor licenses only if the establishment closes by 2am. This means that more NYC bars could potentially be forced to close before the traditional 4am, reports the New York Post.

Until tomorrow, Megan

“It's amazing that the amount of news that happens in the world every day always just exactly fits the newspaper.”
Jerry Seinfeld

--------- Sell Day Calendar ----------
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Sell days this month: 22
Sell days this month last year: 21
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This month last year ended on a: Mon.
YTD sell days Over/Under: 0

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.

Discus Urges Standard Drink Labels

noreply@blogger.com (Harry) — Tue, 22 Apr 2008 18:08:00 +0000

Discus along with other consumer and public health groups (MADD, Consumer Federation of America, Dr. C. Everett Koop’s Shape Up America! and National Consumers League) is urging the TTB to reevaluate it proposal for alcoholic drink labels.

Under the TTB’s current proposal, companies would not be required to disclose the amount of alcohol per serving. The proposal would also prohibit a company from featuring “standard drink” information on labels. A “standard drink,” according to Discus, equals 1.5 fluid ounces for 80-proof distilled spirits, 12 fluid ounces for beer and 5 fluid ounces of wine. Spirits companies are in favor of the “standard drink” label because it dispels the idea that spirits are stronger then beer and wine.

Instead, the TTB would require that companies include nutritional information (carbs, calories, fat, ingredients) on the back of labels, much like you find on the back of all food and non-alcohol drink products.

The beer and wine industries are generally against the proposal for several reasons. One, a nutritional label would be expensive, particularly for small brewers and wineries. Two, they argue the “serving size” is misleading because the average consumer will drink more then what is suggested. Nutritional information also shines a negative light on beer and wine because they generally have more calories, for example, then a shot of liquor (without the mixer).

“We agree with public health organizations and consumers groups that alcohol per serving and standard drink information should be on any serving facts panel – not just the amount of calories, fat, carbohydrate, and protein,” said Peter H. Cressy, president of Discus.

In all, Discus wants the TTB to make the following changes:

1.) Serving sizes are 1.5 fluid ounces for 80-proof distilled spirits, 12 fluid ounces for beer, 5 fluid ounces of wine

2.) The amount of alcohol per serving is required to be disclosed in the “Serving Facts” panel

3.) The text in the panel states “a standard drink contains 0.6 fluid ounces of alcohol.”

MAINE DOUBLES WINE TAX

Maine Governor John Bladacci signed a bill that dramatically increases the tax on soda, beer and wine to help pay for a state health insurance program for small businesses and the self-employed. Excise taxes on beer will increase from 42 cents per gallon to 54 cents per gallon; wine excise taxes go from 30 cents to 65 cents per gallon; the syrup used to make soda will be taxed at $4 per gallon, and bottled soda will be taxed at 42 cents per gallon. The new revenues will be used to help fund a state health insurance program, Dirigo, the state motto.

DIAGEO LEADS MILLWARD BROWN TOP 10 BRANDZ

Diageo’s premium brands monopolized the first Millward Brown top 100 Brandz report for global spirits in 2008. Smirnoff took the lead, followed by Bacardi, Jose Cuervo, Johnnie Walker and Baileys. The top three markets for Smirnoff were the U.S., Great Britain and Canada.

Making up the rest of the top ten list was: Jack Daniels (#6), Absolut (#7), Chivas (#8), Gordon's (#9) and (#10) Martini.

NEW WINE TELEMARKETER SPRINGS UP IN CALIFORNIA

Jeff Stevenson (former venture capitalist turned vintner) and Richard Brucker (wine telemarketer) have launched a new wine telemarketing company, Provino Premium Wines, aimed at helping boutique winemakers spread the word and sell their wines. Provino was launched earlier this month, according to North Bay Business Journal, with a dozen artisan wineries. The company plans to double the wineries in the first three months.

Provino has hired Garrett Day, formerly the buyer for Michigan-based online wine retailer WineBuys.com and Napa's Ambrosia Catalogue of Fine Wine, now called The Winetast-ing Network. In addition, Provino plans to start with six contract salespeople who will be able to earn a stake in the firm.

A NEW WAY TO TRAVEL WITH WINE

I was at the airport on my way to Napa the day the TSA banned all liquids on airplanes (much to my dismay). On the way home I stored the wine I had bought in my checked luggage, wrapped in clothes and surrounding by shoes. Luckily nothing broke. However, there are now simpler ways to check wine bottles if you decide not to ship them home.

BottleWise Duo (designed by BottleWise) allows travelers to safely transport wine inside their checked luggage. You can check out the features at bottlewise.com.

In a survey conducted by BottleWise, the company found that 25% of people no longer buy wine when they are traveling by air. A little over 40% wrap bottles in clothing or bubble wrap and place it in their checked luggage. Only 18% ask the winery to ship the wine directly to them, while 10.4% reported no impact because they never travel with wine.

FREEZING TEMPS COULD SPELL TROUBLE FOR NORTH COAST VINTNERS

Frosty temperatures along the North Coast in California have kept vintners busy with frost-protecting devices, such as water sprinklers and wind machines in March and April. The extent of the damage won’t be known for several weeks, however. The worse case scenario? The early freeze could potentially result in a grape shortage. Stay tuned...

WSD BRIEFS:

ESTONIAN VODKA, SAAGA 1763, recently debuted in New York, California, Texas and Florida, as well as duty-free markets, at an estimated national average retail price of $33.99.
per 750-ml. Saaga 1763 is being distributed by Lieber Brothers in New York, Mexcor International in Texas, Prana in Florida and MHW Importers in California. Saaga is advertising in lifestyle publications, trade outlets and through word-of-mouth in the industry.

ORZEL VODKA, a premium vodka launched by Heritage Brands of Fort Lauderdale, is slowly making its way through the U.S. Produced in Poland by Polmos Lublin, Orzel will premier in Miami Beach today and hit Florida stores this week. It will also be sold in New York, New Jersey, Texas, California, Illinois and Georgia.

SAKE2ME, the first single-serve, ready-to-drink infused sake drink, is making its debut in Texas. Sake2Me is already distributed in California and Wyoming, and will soon make its way to Nevada, Arizona, Utah, Washington, Oregon, Hawaii, Montana and Michigan.

SONOMA-CUTRER WILL ONLY OFFER STELVIN SCREWCAPS at restaurants in Texas and Nevada for its vintage 2006 Russian River Ranches Chardonnay.

Until tomorrow, Megan

“To be stupid, selfish, and have good health are three requirements for happiness, though if stupidity is lacking, all is lost.”
Gustave Flaubert

--------- 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: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0

WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com

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

Vijay Mallya Wants Flavored Scotch

noreply@blogger.com (Harry) — Mon, 21 Apr 2008 20:59:00 +0000

Speaking to the World Whiskies Conference last week, Mallya challenged the Scotch industry to open itself to Irish and American whiskies. He said the whiskey industry must unite and drop its stodgy image to make Scotch more appealing to younger demographics, the Scotsman reported. If not, Scotch could lose out to vodka or other categories.

Mallya suggested the industry experiment with natural additives and ingredients to create a “spectrum of flavors” – a practice that purists are very much against. He also called for a global whiskey association.

"The SWA spends too much time worrying about whether whisky is spelt with an 'e' or not when it should be broadening the appeal of Scotch whisky to take on other categories head on,” he said, as quoted in The Scotsman. “As an industry we should be looking at ways of making Scotch whisky far more appealing to a younger audience.”

"I have to say in the past the SWA has been a bit heavy-handed in its relations with India. Confrontation does not work in India, it just leads to stubbornness with a situation that a no is a no for the sake of politics,” he continued.

He of course refers to India’s clash with the Scotch industry, which claimed India imposed unfair tariffs on imports. The UK managed to have the national tax abolished last year, but Indian states have since imposed their own high duties on whiskey and other alcoholic imports.

WHO RELEASES DRAFT RESOLUTION ON ALCOHOL

The World Health Organization has released its draft resolution on reducing the harmful effects of alcohol, Harpers is reporting. The executive committee (compromised of 34 member states) of the WHO met in January and drafted a resolution to be submitted for adoption at the 61st World Healthy Assembly in Geneva, May 19-24, 2008.

The draft resolution makes a number of recommendations and requests. The main points are
as follows:

• Submit to the 63rd World Health Assembly in 2010, a draft global strategy to reduce harmful use of alcohol that is based on all available evidence and existing best practices...

• This strategy should optimally combine available measures and interventions that target the general population, vulnerable groups, individuals and specific problems

• This strategy's aim is to support and complement public health policies in Member States, with special emphasis on an integrated approach to protect at-risk populations, young people and those affected by harmful drinking of others

• To ensure that the draft global strategy will be composed of a set of proposed measures recommended for states to implement at a national level taking into account the national circumstances of each country,

• To collaborate with member states as well as with intergovernmental organizations, health professionals, non-governmental organizations and economic operators on ways they could contribute to reducing harmful use of alcohol.

BOSTON BANS BOTTLE SERVICE

Boston’s licensing board chairman Daniel Pokaski is banning “bottle service” at nightclubs, claiming the service violates state and city alcohol laws. Pokaski says bottle service forces alcohol consumption and violates the city’s “happy hour” law that bans establishments from serving more than two drinks at a time to patrons. A letter will be sent to club owners alerting them that the service is banned, according to local reports.

"We're not New York and we're not South Beach," he said. "The city of Boston has a lot more to offer than just getting people inebriated."

BAROSSA VALLEY LAUNCHES E MINOR CHARDONNAY AND SHIRAZ

The producers of the E&E Black Pepper Shiraz are introducing the latest addition to the Barossa Valley Estates portfolio: 2006 E Minor Chardonnay and 2005 E Minor Shiraz. Considered the "little brothers" of the E&E Black Pepper, both wines are sourced from select vineyards from within the grower co-operative in the Australian Shiraz region.

Barossa Valley Estate is owned by Constellation Wines Australia. E Minor wines are available nationally for a retail price of $12.99.

TEXAS WINES EVOLVE, BENEFIT FROM TECHNOLOGY

Here are some interesting facts: Texas is the fifth largest grape and wine producing state in the U.S. and has more than 220 family-owned vineyards in a $1 billion industry. How do we know this? Well, besides being from Texas, Bloomberg published an interesting piece on Texas wines today. Most (95%) of the wines are consumed in Texas, but producers are hoping to change that. For one, winemakers are using technology to help produce all wines, such as Rieslings and Pinot Noirs, despite the intense heat of Texas.

As reporter John Mariani put it: “I had a chance to taste about 50 Texas wines...and I came away impressed with how they have evolved over the past decade.”

“I also wondered if too much Texan swagger is getting in the way of planting the best grapes in the best vineyards. Wineries are trying to grow dozens of varieties, from pinot grigio to Riesling, in climates that can be unsuitable to them,” he continued.

NORTH CAROLINA MAKES A NAME IN WINE

North Carolina wines have received rave reviews lately in the press, according to the News & Observer. The Today show’s food editor Phil Lempert said North Carolina’s coastal region was even poised to replace Napa once global warming kicks in. Many of the North Carolina producers disagree with the comparison and insist on making their own mark on winemaking.

Jim Hofman, author of the online site Wine Trails USA, also said North Carolina wines “are among the best in the United States.”

The state has 70 wineries and ranks 10th in the nation for wine and grape production. The 2007 vintage is supposed to be especially good.

PALANDRI WINE GROUP FINDS BUYER

Global Wine Holdings has purchased “certain assets” of the ailing Palandri Wine Group (based in Australia), according to administrators Deloitte. Premium wine company Palandri Wines went into voluntary administration in February with millions of dollars in debts to 2,500 creditors.

Global Wine is a newly-formed private company controlled by Chinese entrepreneur Xibo Ma. Xibo was formerly the second largest shareholder of Palandri.

WSD BRIEFS:

CHINESE ENTREPRENEUR SPENT A RECORD $500K ON 27 BOTTLES OF WINE, London-based Antique Wine Company told Reuters. The anonymous buyer purchased a mix of vintages of Romanee Conti, a Burgundy wine and one of the world’s most exclusive. It is the highest price that has ever been achieved for a single lot.

PATRON HAS EXPANDED ITS DISTRIBUTION INTO SPAIN AND RUSSIA, the company said today. Distributors in the countries will carry Patron tequila and Pyrat rum.

Until tomorrow, Megan

“I am prepared to meet my Maker. Whether my Maker is prepared for the great ordeal of meeting me is another matter.”
Sir Winston Churchill

--------- 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: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0

WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com

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

Weekly Headline Round-Up

noreply@blogger.com (Harry) — Fri, 18 Apr 2008 17:42:00 +0000

DIAGEO CAPITALIZES ON HILARY’S PUBLICITY STUNT

An article in Ad Age calls Diageo “as shameless as politicians,” claiming the company “pounced” on the free publicity after Hillary Clint’s shot-and-a-beer act earlier this week. As you’ll recall, Hillary took a shot of Crown Royal and drank a beer in front of TV cameras in an Indiana bar, and Diageo is apparently using the incident as a marketing opportunity (do you blame them?).

"It used to be that whenever the cameras came around, you'd see the politicians hiding their drinks behind their back," said a Diageo spokesman to reporter Jeremy Mullman. "But she was using it ... as a way of touching the people."

While Diageo isn’t planning to use Clinton’s image in any Crown Royal ads, the company reportedly plans to send bottles of its obscure Jeremiah Weed Bourbon Liqueur to all three remaining presidential campaigns. Diageo hopes to boost the brand through sampling, word-of-mouth, and a brand website launched yesterday.

When asked why the company wasn't using the "watershed" moment to promote Crown Royal, the spokesman pointed out: "Well, you all are doing that for us."

ROBERT PARKER TOUTS FRENCH WINES AS THE BEST

Infamous American wine critic Robert Parker thinks French wines are the best in the world, outperforming California and every other region. In an interview with Le Figaro newspaper, he said: "French wines remain the benchmark for all countries producing great wines. Their boldness and intrinsic quality are indicators that influence winemakers in other countries," reports the AFP.

"French wines have considerably improved in quality, even during difficult years," said Parker, considered the world's leading Bordeaux expert.

With that said, he wasn’t too impressed with the 2007 vintage. He told the newspaper that the majority of the 2007 production was bland, "with a hereby taste... Overall, they are disappointing." Ouch.

VIRGINIA LAUNCHES STATE WHOLESALER

Virginia wineries have found a way to sidestep independent wholesalers through the Virginia Winery Distribution Company, a private, nonprofit state wholesaler that begins operation this week. The Virginia General Assembly agreed to the new venture last year after the state banned direct wine shipments in 2006. Virginia wineries that choose to participate may distribute up to 3,000 cases of wine per year through VWDC, which is associated with the Virginia Department of Agriculture and Consumer Services.

The VWDC basically acts like a less-expensive wine wholesaler for small Virginia wineries. Wineries will continue to market their wine to shops and restaurants, but will place orders and make wholesaler deliveries through the VWDC. The VWDC will provide electronic purchase orders and invoices, collect and remit taxes, and submit government reports. By contract, VWDC and the winery share delivery workers, bonded warehouse space and delivery vehicles. The cost to Virginia wineries using the services of VWDC will be $5 per transaction initially, reports Wine Business. So far, 52 wineries and farm wineries have signed up to use VWDC, with 18 more pending.

WSD BRIEFS:

FANTESCA ESTATE & WINERY HIRED HEIDI BARRETT as the new winemaker, according to local reports. Robert Parker, Jr. named Heidi “The First Lady of Wine” after she became the only winemaker ever to have received five perfect scores from the top wine critics in the country. This marks her first venture since leaving Screaming Eagle.

TESCO WILL LAUNCH 10 additional Fresh & Easy stores in Las Vegas.

Until Monday, Megan

“All the world's a stage and most of us are desperately unrehearsed.”
Sean O'Casey

--------- 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: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0

Remy Retains Momentum in U.S.

noreply@blogger.com (Harry) — Thu, 17 Apr 2008 18:27:00 +0000

Remy Cointreau said the US “retained its momentum” in the 12 months to March 31. The company reported 11.5% organic growth for Cognac, followed by 4.3% growth for liqueurs and spirits and 15.4% growth for Champagne.

The company said it continued to benefit from its position in cocktails in the US and Europe, while Cognac held steady in the U.S. despite 5-10% price increases. Piper-Heidsieck Champagne achieved the strongest growth in its traditional markets, including the US where “demand remained strong.”

Meanwhile, Partner Brands including Russian Standard vodka and Edrington Scotch continued to grow strongly in the American market.

Remy said it has benefited from its strategic plan to sell less-profitable brands in order to focus on premium spirits and Champagnes in recent years. Analysts worried yesterday that Remy’s results would follow in the path of LVMH, but the company did surprisingly well despite the economy.

"It seems that the weakness in third-quarter cognac volumes was indeed a matter of phasing and some inventory reductions by wholesalers in the U.S., and not entirely end-demand driven," noted Goldman Sachs analysts.

“Due to this US shipment phasing, we expect a weaker Q109FY. Remy continues to see premiumization in the US. A key difference in the US (based on Control States data) is that Remy has only 26% of volumes from lower growth VS and Hennessy over 90%,” said UBS senior analyst Melissa Earlam in a note.

BEAM GLOBAL DEFENDS BOURBON AT WORLD WHISKY CONFERENCE

In a statement today, Beam said it hosted the first “Great Whisk(e)y Debate” ever held in Scotland. The debate was hosted for the World Whiskies attendees to discuss the history, heritage, qualities and tasting notes of Bourbon whiskey and Scotch whisky, the company said.

Fred Noe (great grandson of Jim Beam) “vigorously defended” bourbon, while Scotch whisky was championed by Richard Paterson, third generation master blender of the Dalmore Scotch Whisky distillery. The debate was moderated by Jim Kokoris, former president of the Kentucky Bourbon Circle.

Beam Global ceo Tom Flocco told the audience during his keynote speech “that loving one is not cheating on the other. In this industry, you really can serve two masters...Kentucky produces 95% of the world’s bourbon; almost two-thirds of it comes from us.”

The company called bourbon “one of the world’s most loved and misunderstood whiskeys.”

Flocco continued, “We house the world’s finest portfolio of Bourbon and Scotch whisky...This is a win-win for us and for our distributor and retail...We will continue to host Great Whisk(e)y Debates around the world as consumers discover and discuss the finer qualities of all whiskeys.”

FORTUNE CONSIDERING SEVERAL ACQUISITION OPPORTUNITIES

After Fortune passed on an opportunity to acquire Absolut last month, the company is exploring new business opportunities in the spirits segment. CEO Tom Flocco told Just-Drinks that the company is looking at the following categories: vodka, premium and super-premium rum and gin, and Irish whiskey.

When asked if Beam was interested in acquiring Stolichnaya, Flocco said: “Stolichnaya is a good brand, but it is a brand that, based on what I've read, some smart people worked very hard to get out of the dual ownership structure...but if it were to become available, would we look at it? Sure.”

Recall that Pernod Ricard spent almost three years in negotiations with SPI to buy the Stoli brand.

LVMH EXPECTS “SIX MONTH RECESSION”

As we reported yesterday, LVMH’s wine and spirits sales sank -15% in the U.S. during the first quarter after the company raised prices and was hit with de-stocking issues. Management remained confident, nonetheless, that figures would rebound later in the fiscal year. When asked about the economic slowdown, ceo Bernard Arnault said he expects the U.S. will experience a six-month recession with growth picking up at the end of the year. He added that LVMH has a policy of taking price increases in the markets hit by a slowdown.

LVMH says it may take advantage of the worsening economy and pick up a liquor or watch brand, Bloomberg reports.

“There might be opportunities in a difficult market for a group like ours to round out our portfolio," especially if smaller, family-owned companies decide to sell, he said.

He declined to specify any companies LVMH may be interested in.

JESS JACKSON PARTNERS WITH NAPA TRUCKERS

Jess Jackson (owner of Kendall-Jackson) has formed a joined-venture with Napa trucking firm Biagi Brothers to control the distribution of his brands and other premium wines in California, reports the Press Democrat. The new company, Vin Lux, is distributing more than 60 domestic and international wines handled by Jackson’s distribution arm, Regal Wine Co. Vin Lux will operate from a warehouse in Napa and another in Southern California, and serves 9,000 on-premise accounts with a fleet of 35 trucks. The company hopes to attract other winery clients by offering a higher level of service, including hybrid delivery trucks and sophisticated wine tracking systems.

Jackson began self-distributing all of his wines in California in 1996 after a high-profile break with Southern Wine and Spirits.

THE WINE GROUP TAKES ON NEW SPANISH WINE

The Wine Group (TWG) has become the exclusive distributor for Spanish wine producer Osborne in the U.S. Two of Osborne brands, Montecillo and Solaz, currently rank among the top five Spanish wine brands in the U.S. market. The rest of its portfolio includes Osborne (Jerez y Oporto), Senorio del Cid (Ribera del Duero y Rueda) and other brands of brandies and spirits.

The transaction was executed by the New York-based Mergers and Acquisitions Advisory group of Rabobank International, a division of Rabobank Nederland.

WSD BRIEFS:

BELVEDERE GROUP has reportedly had discussions with a major vodka distillery in Russia about terms and conditions of a possible combination. If the project moves forward, said the company, it would allow Belvedere to strengthen its position 'very significantly' in the world’s number one vodka market. Reports have speculated that Belvedere is in talks with Kristall.

INERTIA BEVERAGE GROUP announced today that it has opened its REthink Compliance tool for use free of charge to any winery, fulfillment house or compliance company. The service allows wineries to ensure they are in compliance with shipping regulations in fifty states and generates necessary paperwork to ship direct.

NYC MENU LABELLING WILL GO INTO EFFECT April 21 after a federal judge ruled in favor of the city’s health department yesterday. Despite legal challenges by the New York State Restaurant Association, the city will require chains of 15 stores or more to post calorie contents on their menu boards. The regulation will not be enforced until June 4. The NYSRA plans to appeal the decision.

SNOOP DOG AND MYSTIQUE BRANDS has signed a long-term brand partnership to promote Landy Cognac in North America. This marks the latest in a long line of spirit brand endorsements by hip-hop artists.

CORNELL UNIVERSITY PLANS TO LAUNCH A TEACHING WINERY at the Cornell Orchards this fall for students studying enology and viticulture.

Until tomorrow, Megan

“All the world's a stage and most of us are desperately unrehearsed.”
Sean O'Casey

--------- Sell Day Calendar ----------
Today's Sell Day: 14
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0

WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com

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

Pernod Tests Banks with Loan

noreply@blogger.com (Harry) — Wed, 16 Apr 2008 21:09:00 +0000

The 12 billion euro ($19 billion) loan for Pernod Ricard's acquisition of Vin & Sprit is set to test the company's banking relationships, sources told Reuters today. The loan is the largest non-investment grade corporate loan in Europe. As a result, many consider it a test by for European lending as money remains scarce.

Pernod will leverage its strong cash flow and consider selling some of its non-core brands or brands from V&S. Pernod has a strong borrowing track record and relationship banks are expected to support the deal.

"This is an off-market deal; it's not priced correctly, so it will hang on relationships, but it's clearly a company people want to do business with, as it's a good performer and they do business often," a banker told Reuters.

"This is the least risky deal Pernod has ever done; they're buying a successful brand, there is no overlap, and the distribution network is already in place," another banker said.

FRESH & EASY BREEZY IN THE U.S.

Tesco said it’s had a solid start with its new U.S. Fresh & Easy stores, despite critics who claimed the retailer was doomed. People especially thought Fresh & Easy was failing after Tesco halted the rollout of new stores last month. However, Tesco said it is “very encouraged by the start Fresh & Easy has made” in its earning statement.

"The response of customers to our offer has surpassed our expectations...sales are ahead of budget and sales densities are already higher than the US supermarket industry average, with our best stores exceeding $20 per square foot per week," said the company yesterday.

"We begin the new financial year confidently - with a good start in the UK, excellent progress in our established international markets and promising early performance from our investments in future growth, particularly in the United States, China and Turkey," said Tesco ceo Sir Terry Leahy.

PAUL WALSH BATTLES INDIAN LEVIES

Talks have reportedly heated up again between the Scotch Whisky industry and India. Diageo ceo Paul Walsh (and chairman of the Scotch Whisky Association) said that although progress towards a fair market was made last year, challenges remain, according to Just-Drinks. Recall that India abolished the additional duty on imported spirits, but individual states in the country have since introduced their own exorbitant taxes.

He warned that Indian states must “ensure the introduction of non-discriminatory tax treatment of domestic and imported products.” If they are unable to do so, he said the Association “will not hesitate to return to the WTO in the future to secure fair market access in line with international trade rules and standards.”

"Countries that are increasingly taking the benefits of a rapidly globalizing world on one hand, cannot look to protect their own domestic industries and markets on the other," he continued. Touché.

INDIA’S REBUTTAL. Just-Drinks is also reporting that Vijay Mallya, head of India’s UB Group, accused the Scotch Whisky Association of being a “paranoid organization.”

"We in India not only welcome the Scotch whisky industry, we acknowledge the Scotch whisky industry, and we wish to wholly co-operate with the Scotch whisky industry,” he said.

"If that were not the case, I would certainly not have invested GBP600m (US$1.17bn) in acquiring Whyte & Mackay."

LVMH WINE & SPIRITS DISAPPOINT

LVMH’s wine and spirits segment did not fair so well in the first quarter. U.S. sales fell
-15%, partly due to bigger than expected de-stocking by retailers and price increases. Executives were optimistic, however, saying they expect “much better figures” the rest of the year.

WSD BRIEFS:

CONSTELLATION WILL CUT 30 JOBS AT WIDMER’S WINE CELLARS in Naples, New York by the end of May. Most of the affected jobs are in production, but some are in the wine gift shop and tasting room. The lay-offs are a part of Constellation’s new initiative to premiumize its wine portfolio and off-load value and regional brands.

THE WHITE HOUSE WILL SERVE Sebastiani Vineyards and Winery’s rich, oak-aged 2005 Dutton Ranch Chardonnay at a dinner honoring Pope Benedict XVI’s first visit to the United States and his 81st birthday. The pope reportedly won't be able to attend the dinner, a Bavarian feast in honor of his German heritage.

THE DOLLAR FELL TO A RECORD LOW against the euro after European inflation accelerated in March. The dollar has dropped more than 13% in the past year amid the fallout from the collapse of the subprime housing market.

Until tomorrow, Megan

“A lie can travel halfway around the world while the truth is putting on its shoes.”
Mark Twain

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