Liquor Industry News 2-1-13

Franklin Liquors


DOJ Starts Strong In Tough AB InBev-Modelo Fight, Attys Say


Source: Law360

By Melissa Lipman

Jan 31st


The U.S. Department of Justice laid out a strong case Thursday for why letting Anheuser-Busch InBev NV buy its relatively small U.S. rival Grupo Modelo SAB de CV would limit competition, but the suit is hardly an open-and-shut merger challenge, attorneys say.


The antitrust watchdog sued to block AB InBev’s $20.1 billion bid for the half of Grupo Modelo it doesn’t already own, warning the combination could cost consumers billions of dollars a year.


While Modelo is the third-largest player in the U.S. beer market, it still accounts for only 7 percent of sales, behind AB InBev’s 39 percent and MillerCoors LLC’s 26 percent. The government argues the deal would worsen conditions in an already highly concentrated market by removing the one major brewer that has continued to price aggressively in the face of AB InBev’s industry-leading annual price increases.


It’s too soon to know how InBev will counter the DOJ’s theory, but on its face, the agency’s well-crafted complaint puts the antitrust watchdog in a strong position to fight the deal, attorneys said.


“This is not a complaint that just sets forth, ‘Here are the market shares, here are the Herfindal [market concentration numbers] – block the merger,'” Baker Botts LLP partner Chris MacAvoy said. “Obviously the drafters of the complaint recognized from the get-go that the 7 percent market share number is not an eye-popping one and have taken that into account in explaining what the theory of harm is.”


“It’s no slam dunk, but DOJ has certainly put its best foot forward with this complaint,” he added.


On its face, the AB InBev-Modelo deal is not a particularly shocking one for the ever-consolidating beer industry. The U.S.-Belgian beer conglomerate already owns roughly half the company through two stakes in Modelo and its operating subsidiary. The company likewise holds minority voting rights in its rival and appoints nine members to Modelo’s 19-seat board of directors, according to the complaint.


And not only does Modelo only account for 7 percent of the U.S. beer market, but AB InBev also racks up a smaller slice of U.S. sales than Anheuser-Busch did before it merged with InBev in 2008.


At the time, the St. Louis brewer held roughly 50 percent of the market, according to the DOJ’s earlier complaint to force divestitures in the 2008 tie-up. Now the combined AB InBev accounts for just 39 percent of U.S. beer sales, according to Thursday’s complaint.


But the DOJ warned that the companies’ 46 percent combined national shares “actually understates the effect that eliminating Modelo would have on competition in the beer industry, both because Modelo’s share is substantially higher in many local areas than its national share, and because of the interdependent pricing dynamic that already exists between the largest brewers.”


The agency alleges that AB InBev and MillerCoors generally follow each other’s pricing strategies rather than fighting to undercut one another on price. AB InBev usually acts as a price leader, setting annual price increases in several segments of the beer market, the DOJ said. MillerCoors and others have generally followed AB InBev’s lead, but Modelo has historically put pressure on the company to keep prices steady through its aggressive pricing strategy, according to the complaint.


Eliminating Modelo would not only make it easier for AB InBev to raise its own prices, but it would also make it more likely that others would then follow suit, according to the DOJ.


“The way they pled it was pretty clever because Modelo’s nationwide share is not that big … but they pled this kind of coordinated-effects theory where Modelo is the maverick that’s holding out against AB InBev’s attempted price increase,” Squire Sanders partner Anthony Swisher said. “The way they plead it, you read the complaint and say, ‘Yeah, I can see that theory. That makes sense.'”


Part of what makes the complaint so compelling is the level of detail, narrative and even pie charts the DOJ included to make its case, according to MacAvoy.


“The staff clearly spent quite a bit of effort on it, in the sense that it’s well-crafted to tell a story,” he said. “The mechanism of alleged harm is described in quite a bit of detail, more detail than you frequently see in complaints, and I can’t remember the last time I saw diagrams of market share in the complaint.”


All those details point to a DOJ staff “that is strongly signaling that they are prepared to litigate,” MacAvoy said.


One key question as the case moves forward is how well the companies’ internal documents that the DOJ cites extensively hold up.


For example, the agency described AB InBev’s strategic pricing plan for the U.S. as a document “that reads like a how-to manual for successful price coordination.” The plan lists goals such as “yielding the highest level of followership in the short-term,” and “improving competitor conduct over the long-term,” according to the complaint.


If it turns out that those kinds of materials haven’t been taken out of context in the complaint, then the DOJ has a “pretty good coordinated effects case [because] the … internal documents suggest that that’s their entire pricing strategy,” Hogan Lovells LLP antitrust co-chair Janet McDavid said.


Though econometrics might well end up being important in this case, dueling expert evidence from economists can often be a wash in merger cases, according to WilmerHale partner Eric Mahr. That means that internal documents can end up being key in many cases.


“Courts will often find the most persuasive material to be the documents that people wrote when they weren’t considering a merger and when they weren’t under the lights of an antitrust review,” Mahr said. “That said, a handful of documents in a press release doesn’t make your case.”


Ultimately the case could come down to counsel, attorneys said. In that regard, the suit is shaping up to be a battle of the heavyweights. AB InBev’s firm, Skadden Arps Slate Meagher & Flom LLP, has already assembled an eight-attorney team including Steven Sunshine and two other veterans of Sprint Nextel Corp.’s challenge to the AT&T Inc.-T-Mobile USA Inc. merger, Gregory B. Craig and James A. Keyte.


Meanwhile, Modelo’s counsel on the transaction included Cravath Swaine & Moore LLP’s  Christine A. Varney, the former head of the DOJ’s Antitrust Division.


“It’ll be very interesting to see how they’re going to litigate this in court going against two very strong firms,” Mahr said.


Bill Baer, who was confirmed to run the Antitrust Division at the beginning of January, is still filling some key positions. That includes the litigation deputy position created by Varney and previously held by Joseph Wayland, who tried the DOJ’s H&R Block Inc. merger challenge.


“It will matter quite a lot who trial counsel is for both the merging parties and the division,” McDavid said. “At the moment, we don’t know who lead trial counsel will be. The division is still trying to hire a litigation deputy, and it has a lot of cases going to trial in the next few months, including this case.”


While the outcome is far from clear, attorneys said the DOJ’s latest merger challenge is sure to be a fun one for observers.


“It will be a great case to follow,” Mahr said. “It presents a number of very contestable substantive issues concerning interdependent pricing and mavericks and will be an interesting start to Bill Baer’s tenure.”




U.S. Sues to Block Big Beer Merger


Source: WSJ


Jan 31st


U.S. regulators are fighting Anheuser-Busch InBev’s $20 billion deal for Grupo Modelo. John Kell joins the News Hub to discuss why the Justice Department wants to stop the merger. Photo: AP


The U.S. government sued to block the world’s biggest beer maker from spending $20 billion to get even bigger, the latest deal to fall prey to global antitrust regulators.


The surprise lawsuit seeks to block Bud Light maker Anheuser-Busch InBev NV’s ABI.BT -7.79% deal with the Mexican company that owns the Corona brand, and comes just a day after concession talks with the government broke down.


U.S. authorities said they want to prevent any overcharging by the global giants that dominate mass-market brews.


Defenders of the companies said U.S. consumers have plenty of choice. Belgium-based AB InBev said the government’s action was “inconsistent with the law, the facts and the reality of the marketplace.”


Beer specialists were divided on whether the merger could survive, with some speculating that AB InBev could relinquish further control over Corona sales in the U.S. to assuage concerns about pricing dominance.


The suit caused a sharp drop in shares of AB InBev and its would-be merger partner, Grupo Modelo GMODELO.MX -6.76% SAB of Mexico. It hit shares of Constellation Brands Inc. STZ -17.39% even harder because the wine and spirits producer was set to expand as part of a side deal in the merger.


Regulators have taken a hard line on some recent deals. The Justice Department in 2011 forced AT&T Inc. T +0.90% to drop its acquisition of rival cellphone provider T-Mobile USA, while European regulators blocked the merger of Deutsche Börse AG DB1.XE -0.33% and NYSE Euronext NYX +0.38% last year. In January, United Parcel Service Inc. UPS -2.39% abandoned its bid for Dutch delivery company TNT Express NV TNTE.AE +1.93% after European objections.


The U.S. beer industry is largely controlled by two big players: AB InBev, owner of Bud Light and Budweiser, and MillerCoors, maker of the Coors Light brand. Modelo, whose Corona is the best-selling imported beer in the U.S., runs a distant third, with 7% of U.S. beer sales, according to the Justice Department. Together, AB InBev and Modelo would control about 46% of U.S. sales.


The Justice Department’s 27-page lawsuit, filed in a Washington, D.C., federal court, portrayed Modelo as an important competitor that puts pressure on AB InBev to maintain or lower prices, especially in California, New York, Texas and some other markets. AB InBev has complained in internal strategy documents about pressure from Modelo’s pricing tactics, the department said.


The department said that when AB InBev raises beer prices, MillerCoors usually follows followed suit, while Modelo has been resistant. AB InBev internal documents “show that it is increasingly worried about the threat of high-end brands, such as Modelo’s, constraining its ability to increase.pricing,” the lawsuit said.


The lawsuit sets the stage for a major court fight unless the sides can find a way to resolve their differences. “We intend to vigorously contest the DOJ’s action in federal court,” AB InBev said. Grupo Modelo issued a comment echoing AB InBev.


Should the acquisition agreement fall apart as a result of the antitrust challenge, AB InBev may have to pay Modelo a $650 million breakup fee, according to the agreement struck in June.


Some industry watchers scoffed at the U.S. government’s logic, saying supermarket shoppers and bar hoppers can choose from a wide variety of beers. “Are you going to tell me because they increase the price of Corona there aren’t other beers you can buy as a substitute?” said Jeffrey Golman, vice chairman of Mesirow Financial and head of investment banking at the Chicago bank. “It seems like an overreach.”


But Stephen Axinn, an antitrust lawyer with Axinn Veltrop & Harkrider LLP, said the government made a strong initial showing.


“The fact is you may have 50 different brands of beer on the shelf, but they’re only coming from a few sources,” Mr. Axinn said. He said that for AB InBev to win the case, it would have to demonstrate that the deal isn’t likely to give it enhanced pricing power. Given the internal company documents cited by the Justice Department, “that might be a difficult thing to do,” he said.


AB InBev made the deal for Grupo Modelo last summer, hoping to augment its position in the fast-growing Mexican market while expanding the reach of Modelo brands globally. AB InBev already owns a 50% economic stake in Modelo but controls fewer than half of the voting shares. It proposed to get full control by buying the rest of Modelo from the Mexican families that control it.


The companies had hopes for approvals because the Justice Department gave its blessing to two large beer deals in 2008. It allowed the combinations of Anheuser-Busch and InBev, maker of Stella Artois and Beck’s, after finding the two companies engaged in little head-to-head competition in the U.S. The department also cleared a joint venture that combined the U.S. operations of SABMiller SAB.LN +0.24% and Molson Coors Brewing Co. TAP -0.90%


And Grupo Modelo made a further arrangement to address antitrust concerns. It said it would sell its half stake in a U.S. distributor that imports and markets Corona in the U.S. That distributor was to become wholly owned by Constellation Brands, meaning that the price of a Corona Extra in the U.S. would be decided separately from the price of a Bud Light.


But the Justice Department didn’t buy it, saying the arrangement would preserve only a “façade” of competition because Constellation would still rely on AB InBev for its beer supply.


AB InBev and the Justice Department were in active negotiations to resolve their differences as recently as Wednesday night, said one person briefed on the matter. Taking some in the AB InBev camp by surprise, the government then pulled the plug, this person said. The sides were “just too far apart,” said the department’s antitrust chief, Bill Baer.


U.S. authorities filed suit to stop a $20.1 billion deal between Budweiser maker Anheuser-Busch InBev and Corona maker Budweiser and Grupo Modelo’s Corona.


Some beer-market watchers said AB InBev could offer additional concessions, perhaps giving up or restructuring its 10-year option to buy the U.S. rights for all Modelo brands from Constellation’s Crown subsidiary.


“If they would make that clause go away, it would give Crown more stability,” said Joe Thompson, president of Independent Beverage Group in Hilton Head, S.C. “You could have a very viable competitor, even a third major U.S. supplier.”


He said AB InBev could also be pushed to sell a big brewery to Crown to give it production capacity.


Others said a settlement may be hard to come by, especially given that earlier negotiations faltered.


“There is no simple solution and this is for a lot of marbles,” said Benj Steinman, publisher of Beer Marketer’s Insights, a trade publication. “You’ve seen a lot of speculation on concessions, everything from breweries to brand, but it’s not clear what parameters [DOJ] would even consider.”



Constellation Brands Brought Back to Earth by Suit


Source: WSJ

Jan 31st


For months, Constellation Brands Inc. STZ -17.39% has been basking in the expectation that its revenue would soon double, thanks to a side transaction related to Anheuser-Busch InBev’s ABI.BT +1.80% takeover of Mexican brewer Grupo Modelo GMODELO.MX -6.76% .


But Constellation’s star fell Thursday as antitrust authorities said they would sue to block the beer merger. Constellation shares ended the day down 17.4%, at $32.36-a much steeper selloff than the ones sustained by AB InBev and Modelo, which were down 5.9% and 6.5%, respectively.


Constellation’s role was part of the strategy to assuage potential antitrust concerns raised by the proposed $20.1 billion Modelo acquisition. Constellation already owned half of Crown Imports LLC, a joint venture with Modelo that imports and markets the Mexican brewer’s beer brands in the U.S. Under the plan, the rest of Crown would be sold to Constellation for $1.85 billion, meaning that Constellation would control distribution, marketing and pricing for all Modelo brands in the U.S.


Buying all of Crown would mark a transformative moment for Constellation, which owns Robert Mondavi, Clos du Bois, Blackstone and other wines, along with spirits brands including Svedka vodka, and has annual sales of about $2.65 billion. Control of Crown could open the door for Constellation to add to its portfolio of beers through acquisitions or partnerships with other brewers. Under the deal, the Victor, N.Y., company would get a bigger piece of the action with Modelo Especial and Corona, beer brands that have outperformed the U.S. market.


Constellation’s shares ended 2012 with a 71% gain, as investors cheered the plan. On Tuesday of this week the shares had finished at a record high of $39.42.


Options activity in Constellation shares on Thursday indicated investors weren’t counting out the deal just yet. Options traders set up a number of big trades looking for Constellation shares to recover recent losses and even achieve new highs through the spring and summer.


Constellation had contended last month that the deal would close by the end of March, a timeline that is now off, and the acquisition anything but certain.


Constellation said is “disappointed” by the development but “we ultimately look forward to an expeditious resolution.”




STZ: DOJ Lawsuit Takes the Fizz Out of STZ


Source: CITI

Jan 31st


DOJ Files Lawsuit to Block ABI-Modelo Deal. Today, the U.S. Department of Justice filed a civil antitrust lawsuit which challenges ABI’s proposed $20.1 billion acquisition of Grupo Modelo. As a reminder, ABI was to acquire the remaining ~50% stake in Modelo which it does not already hold, while STZ would acquire the 50% stake in Crown Imports currently held by Grupo Modelo (bringing STZ’s stake in Crown to 100%). Both ABI and STZ had stated that the transaction was expected to be completed in calendar 1Q13; however, both have released statements indicating that is no longer the case.


DOJ Key Objections: Lack of Price Competition. The DOJ has argued that the deal would result in an absence of price competition. They cite internal documents from ABI that indicate a lack of price increases from Corona in the past as having weighed on ABI’s premium business. The DOJ argues that with the acquisition, Crown will have no incentive to maintain this competitive pricing stance, and that it would likely result in ABI and MillerCoors coordinating on higher pricing. The suit also noted that it was Modelo, not Crown, that has been the driving force behind this historic price competition between the ABI and Modelo brands, calling into question Crown management’s willingness to compete on price.


Doesn’t Look Like Crown/STZ Did Themselves Any Favors. Included in the DOJ filing were quotes from STZ and Crown management that the DOJ has used to support their case, including:


Crown CEO, post acquisition announcement: “our #1 competitor will now be our supplier [.] it is not currently or will not, going forward, be ‘business as usual.'”


Crown executive, June 2012: “Constellation’s plan for annual price increases “put at risk the relative success” of the Momentum Plan.” [Crown’s Momentum Plan involved narrowing the price gap between Modelo and lower-priced premium domestic competitors to gain market share.]


STZ CFO, Dec, 2011: expressed a belief that Crown could follow ABI’s price increases, but worried that “Modelo gets a vote as well.”


Timing and Outcome Remains Uncertain. We maintain our Neutral rating on STZ.




Global Beer:  DoJ lawsuit; Delayed not Dead


Source: UBS

Jan 31st


DoJ files lawsuit challenging Modelo acquisition

DoJ challenges ABI’s acquisition of Modelo by filing an anti-trust suit. They claim it would “substantially lessen competition in the market” with “less competition and higher prices for American consumers”. The document focuses on the differences in pricing strategy between ABI (US price leader) and Modelo, which the DoJ claims has not joined ABI’s price increases. DoJ claims also that ABI has been challenging Corona with its own innovation in the form of Bud Light Lime.


What outcome do we see? We don’t assume a deal breaker

We still believe a deal will happen, but completion is likely to be delayed beyond Q1 13 and may require concessions. We did expect some concessions, especially re the 10-year call option to buy Crown that ABI is most likely to have to give up. ABI disputes the suit and we believe is willing to offer reasonable concessions. DoJ’s sentence “the companies’ attempt to fix this anticompetitive deal through the sale of Modelo’s existing interest in Crown and a temporary supply agreement is not sufficient to prevent consumer harm”. We see the word “temporary” as key.


What is the most extreme downside risk for ABI?

For ABI were the deal not to happen at all and we apply a sector average multiple of 17.5x to 2013E EPS pre Modelo, the stock valuation would be ?63 (assuming no buy backs). If ABI bought back shares worth US$10bn this would add 8% to 13ECY EPS. Our PT is ?73 (based on DCF valuation), Buy rating.


What does it mean for Constellation?

Concessions by ABI are likely to fall into STZ’s favour, we reiterate Buy, PT$42, (14x FY14e EPS). Should the deal not happen, it may be difficult for Modelo to buyback the business from STZ. Black sky scenario suggests “ex-deal” valuations of $26 (lose Crown), $30 (buyback of Crown at 8-x) and $34 (renewal -add 10 y).




GS Research –  Americas: Beverages: Nielsen Notables: Sales bounce back, except energy and MNST


Source: Goldman Sachs

Jan 31st


Soft drinks, beer and wine all grow above trend; calendar shift reversal from last period a main driver

For the four weeks ending January 19th, 2013, LRB sales in AOC (all outlet channel-excludes c-store) were up +3.1%, driven by +3.7% volume growth. Beer sales were up +7.1%, on +5.1% volume and +1.7% price/mix; super-premium beer grew +15.9%. Wine sales increased +13.0%, split between +7.5% volume and +5.1% price. These trends point to a bounce- back from December, as both months have been affected by the calendar shift: this period covers December 23rd and 24th-major holiday buying periods for beverages-while last year’s period does not.


CSDs up +1.7%, the best growth since April, led by KO

Total CSD sales in Nielsen-tracked AOC channels were up +1.7%, on +0.8% volume and +0.9% price/mix growth. KO led the category, with sales up +2.9%; DPS sales increased +1.9%, driven by +2.9% volume, while PEP lagged slightly at +1.5%. The non-carb segment was again stronger than CSDs, with category up +4.0%, on the back of +5.9% volume and -1.8% price/mix drag. KO again led, with sales up +7.3% (+6.5% volume, +0.8% price/mix), while PEP grew +5.0% (+2.8% volume, +2.2% price/mix) and DPS lagged, at +2.0%, which is well above 52-wk average of -4.2% sales decline.


Energy was a notable exception – sales growth to +5.1%; MNST sales also slow to +5.1% against a robust year-ago comp

MNST AOC sales were up only +5.1% this period, the lowest figure of the year and below 12-wk trend of +7.8%. However, this comparison is the toughest of the year for MNST, with Jan ’12 sales up +25.8%. On a two-year stack, sales grew +30.9%, a sequential improvement. Red Bull sales grew +5.5%, while KO’s NOS offering grew +30.0%.


Beer (+7.1%) and wine (+13.0%) get major holiday boosts

Beer sales were strong this period as the holiday spending boost is factored in. ABI sales grew +6.4%, while TAP sales increased +3.5%, on +2.6% volume and +0.9% price. SAM sales grew +15.8%, driven almost entirely by volume. STZ beer (+9.4%) and wine (+12.1%) sales rebounded nicely this period, against a particularly tough (+14.9% last year) beer comp. In beer, TAP lost 93bp of sales share, while STZ (16bp) and SAM (12bp) gained share.




US Beer – Nielsen data:  Strong volume in January post weak December


Source: UBS

Jan 31st


US beer sales +7.1% in four weeks to 19 January

Nielsen off-trade data for US beer shows market volume +5.3% for the 4 weeks to 19 Jan. This period includes Christmas and reverses the calendar drag we saw in the weak Dec data. Last 12 week volume growth is +1.5%, in line with 52 week. Price/mix grew +1.8% for the 4 week period y/y, above the 12 week trend of +1.6% but below the 52 week trend of +2.4%. Promotional activity dropped significantly for the market (-210bps in the month) and for key players.


ABInBev takes share again vs MillerCoors and leads on price/mix increase

ABI volume grew +5.1% y/y (+1.7% last 12 week trend, +0.7% last 52 week trend), taking share consistently from MillerCoors which was +2.6% y/y (12 week -0.6% and 52 week -0.5%). ABI price/mix growth of +1.3% was a touch below its last 12 week trend of +1.4% and above MillerCoors +0.9% and imported beers. ABI sales grew +6.4% y/y for the 4 weeks, outperforming MillerCoors +3.5%. Volume sold under promotion fell -210bps y/y for the market, with ABI -150bps and MillerCoors -270bps. Within premium light, Bud Light volume grew +4.6% y/y, below Coors Light +8.7%, but better than Miller Lite (+1.3%). Bud Light Platinum held 1.1% market value share in line with last 12 weeks. Crown Imports (STZ/Modelo) volume grew +9.7% for the month y/y (last 12 weeks +3.8%) but had slightly weaker price/mix (-0.4% vs. 0.1% last 12 weeks). Heineken volume grew +8.3% (last 12 weeks +3.4%) with price/mix -0.1%.


Next catalysts: Beer Institute domestic shipment data on 28 February

Heineken FY12 results on 13 February, commenting on US import segment. MillerCoors trading update on 14 February and ABI FY12 results on 27 February.




Walsh speaks up for the little guys ‘crippled’ by Brussels


Source: The Times


Feb 1st


As he enters the final furlong at Diageo after almost 13 years at the helm, Paul Walsh is becoming more vociferous on issues ranging from Europe to corporate taxes.


The once diffident captain of industry, who is expected to hand the reins to his No 2, Ivan Menezes , in the second half of next year, asserts that Britain’s place is within the EU, although he agrees with David Cameron that there is a need for big changes in Brussels.


“I don’t see why we should continue to have a Niagara of regulation thrown down from Brussels to SMEs in this country, when we are trying to promote SME growth,” he said. “Companies of our size can handle what is thrown at us. We grumble, we don’t like it, but we’ve got the infrastructure to get on with it. But the little companies are crippled by it. I think we’ve got to say ‘stop’.” Mr Walsh said that, although Diageo was a beneficiary of more than 120 free-trade agreements between the EU and other jurisdictions, “the countenance of Brussels needs to change towards industrial competitivesness and away from governance and bureaucracy”.


He admitted that he would prefer not to have a referendum on the issue but accepted that it was the right thing to do. “I don’t know how, politically, you couldn’t give the UK people the right to vote on this,” he said.


Speaking as head of the world’s largest Scotch whisky maker, he was also adamant that Scotland should remain part of the UK. “I don’t think it makes sense, though that’s for the Scots.


“My view is that any government, be it run from Holyrood or Westminster, will need to pay attention to the needs and vibrancy of the Scotch whisky industry. It takes £135 a second in export revenues and that will go up again this year.”


The Diageo boss also expressed concern at the “risk of a witch hunt” about taxes, arguing that tax was “a matter of law, not of judgment”. He said that Diageo always paid its “fair share” and added: “If you want to go down a certain tax structure, I believe in a system of pre-clearance, where you go to the revenue and say that’s what we’re doing.”


There has been speculation that, when he steps down from Diageo, Mr Walsh would seek a FTSE 100 chairmanship. He confirmed that it would be something he would like to do, possibly in tandem with a role in private equity, although he appeared to play down suggestions that he could one day take the chair of Unilever, where he is already on the board.


Given his track record at the world’s biggest drinks group, he should find he has plenty of roles to choose from.




Diageo cautious on deals after ending Cuervo talks


Source: Reuters

By Emma Thomasson

Thu, Jan 31 2013


Diageo (DGE.L: Quote, Profile, Research, Stock Buzz), the world’s biggest spirits group, signaled a more reticent acquisition strategy following a recent buying spree, saying it wants to develop its own tequila brand after ending talks to buy a stake in Jose Cuervo.


Diageo will announce details later in the year of its plans for the tequila market after it said last month it would not buy a stake in top-selling brand Jose Cuervo, which has a distribution deal with Diageo due to end in June.


“An organic play is the best entry into the tequila category for us,” Chief Executive Paul Walsh told Reuters television.


“The main thrust of our attention will be the creation of our brand, not dissimilar to what we have done with Ciroc,” he said, referring to the premium vodka it launched in 2003 and which recorded 62 percent growth in the 2011/12 financial year.


Faced with sluggish demand in recession-hit European economies, Diageo has been snapping up brands particularly in the growth markets of Africa, Asia and Latin America, where it aims to make around half of its turnover by 2015.


That strategy helped the maker of Johnnie Walker whisky and Guinness beer report sales growth of 5 percent to 6.04 billion pounds ($9.5 billion) in the half year to December, as strong demand in emerging markets made up for contraction in Europe.


In November, Diageo paid $2.1 billion for a majority stake in India’s largest spirits company United Spirits, and it has also secured smaller deals for producers of baiju, cachaca and raki in China, Brazil and Turkey.


Chief Financial Officer Deirdre Mahlan said the acquisition was on track and she expected a response from the Indian regulator by the end of the first quarter.


Diageo’s biggest rival Pernod Ricard (PERP.PA: Quote, Profile, Research, Stock Buzz) has said it also plans to expand in the thriving Indian whisky market, but will do so mostly through organic growth, chief executive Pierre Pringuet told Reuters in an interview in November.


Walsh said Diageo would proceed with caution on any future takeovers: “We will only do the acquisitions that we are confident will be accretive to our growth rate and will add value for shareholders.”


Walsh declined to comment on whether Diageo will seek a deal with U.S. group Beam (BEAM.N: Quote, Profile, Research, Stock Buzz), home of the world’s No.2 tequila brand Sauza as well as Jim Beam bourbon whiskey, but told CNBC the company already had a full portfolio in North America.




Shares in Diageo, which trade at 16.8 times expected earnings to 17 times for Pernod Ricard and 25 times for Remy Cointreau (RCOP.PA: Quote, Profile, Research, Stock Buzz), were up 1.5 percent, compared with a 0.4 percent firmer European food and beverage index .


“We continue to be positive on the Diageo story due to its strong and resilient business model and its growing exposure to faster growing markets,” said Shore Capital analyst Phil Carroll.


“However, we believe market sentiment may be lower in the short-term as the M&A story becomes less obvious and uncertainty remains over the U.S. economy in particular.”


Analysts at Canaccord Genuity noted that Diageo shares have underperformed Pernod by 13 percent in the last three months.


“Aside from western Europe, momentum is reassuring, particularly in the light of fears about a recent slowdown in the U.S.,” they wrote in a note. “There is scope for a relief rally here, and we would switch into Diageo out of Pernod.”


Pernod, the world’s no. 2 spirits group that makes Absolut vodka and Mumm champagne, said last month it faced slowing growth in Asia. It reports results on February 14.


Underlying sales in North America, which accounts for around a third of Diageo sales, grew by 5 percent. CFO Mahlan said Diageo was not concerned about the unexpected fourth-quarter contraction in the U.S. economy, in particular a weak December.


“Our team in the U.S. think this was related to the fiscal cliff. We currently don’t anticipate a change there,” she said.


However, Mahlan said Diageo was not seeing an improvement in crisis-hit southern Europe, where sales fell 19 percent in the period, pulling sales to the region as a whole down 2 percent despite fast-growth in Turkey, Russia and eastern Europe.


She added, though, that results in Europe had been hit by one-off technical factors in Diageo’s July-December first half, that should not be repeated in the second half.


Underlying sales in Asia, which accounts for about 14 percent of the total, rose 6 percent, weighed down by a contraction of the whisky market in South Korea.


Diageo reiterated its medium-term guidance – including a targets for 6 percent average organic sales growth – saying its confidence supported a 9 percent hike in interim dividend.




Diageo to plug deficit with £400m contribution


Source: Professional Pensions

By: Taha Lokhandwala

31 Jan 2013


Diageo is to make a one-off £400m contribution to its pension scheme in order to help make good a billion pound plus deficit, its interim results have shown.


The results showed the deficit had increased by £37m to £1,122m in the last six months of 2012. The decision for the additional contribution was made after a triennial valuation last November.


The contribution is separate to a £45m annual service cost contribution and a £25m profit share from its maturing whiskey Pension Funding Partnership, which was set up in 2010 (PP Online, 1 Jul 10).


Diageo chief financial officer Deirdre Mahlan explained the timing of the contribution was appropriate due to the strength of the company’s balance sheet and the low interest rate environment.


She added: “The contribution enables Diageo to improve the funding position of the UK pension scheme.”


Diageo said the deficit increase was due to a fall in the discount rate as liabilities increased by £33m to £1,140, but was partially offset by a rise in the value of assets.


Last year, Diageo said it expected its deficit to fall by £100m in the first six months of 2012 after changes to way it calculates future benefits.




Full takeover of Ketel One unlikely – Diageo CEO (Excerpt)


Source: Just-Drinks

By Olly Wehring

31 January 2013


The head of Diageo has reiterated the company’s preparedness to take full control of Ketel One, as the deadline approaches for its JV partner to take out the stake sale option on the vodka brand.


This option is set to expire on 9 June this year.


Speaking exclusively to just-drinks today (31 January), however, Diageo’s CEO, Paul Walsh, said that he does not see the Nolet family exercising the option. “All I would say is that they are very happy with the relationship, as are we,” he said. “I don’t see that (the option being taken) happening.”




Guinness lager is a let-down for Diageo


Source: The Independent


Fbe 1st


Diageo might be the world’s biggest drinks company but it admitted yesterday it is struggling to turn Guinness into a lager.


Guinness Black Lager, a version of the stout which gives it the fizz of lager, was launched in the US in 2011 and in Ireland last year, but sales have been “disappointing”. There are no plans for a UK launch.


Deirdre Mahlan , the chief financial officer, said: “When people taste it they really like the liquid but you have to educate the consumer . actually finding the right trigger can sometimes take a bit of time.”


Overall sales of Guinness were down and the group lost share as it refused to cut prices in tough markets. But Diageo’s huge roster of spirits were much stronger, with US drinkers in particular snapping up premium vodkas Ciroc and Ketel One. Diageo sales rose 5 per cent to £6.04bn in the half year to December. Its shares rose 24p to 1,877p.




RTD decline hampers Diageo


Source: TheShout

By James Atkinson

Fri, 01/02/2013


The ready-to-drink category continued its decline for Diageo Australia for the six months ended December 31, 2012.


The RTD category – or more specifically the Smirnoff Signature Serves product – was called out by managing director Tim Salt as the ‘achilles heel’ of the business in 2011-12, a year in which the company made several related redundancies in its innovation team.


The global parent yesterday said RTD continued its decline in Australia by one per cent in the first half of 2012-13.


But Diageo Australia’s net sales increased two per cent as the business continued to shift focus to spirits, which grew three per cent.


“Diageo [Australia] continued to win share in spirits, with the biggest gains in scotch, as marketing spend focused behind super premium and investment behind reserve brands increased 33 per cent,” the company said.


“The price increases put through in August resulted in seven percentage points of positive price/mix.”


Globally, Diageo achieved five per cent organic net sales growth with one per cent organic volume growth.


“These results reflect the global strength of our strategic brands, our leadership in the US spirits market and our increasing presence in the fastest growing markets of the world,” said chief executive Paul S Walsh.


“Our expanding reach to emerging middle class consumers in faster growing markets was the key driver of our volume growth, while net sales growth was driven by our pricing strategy and premiumisation, especially in the US.”




LVMH’s Arnault warns over currency wars


Source: FT

By Scheherazade Daneshkhu in Paris

Jan 31st


Bernard Arnault struck an upbeat note on Thursday, expressing “confidence” in the year ahead for LVMH, the luxury goods group he heads, but warned of the risk of currency wars that could strengthen the euro and penalise French exporters.


The billionaire chairman and chief executive was speaking after the close of trading in Paris, as LVMH reported a 12 per cent increase in 2012 net profits to ?3.4bn.


This was slightly below expectations. Operating profit from recurring businesses was ?5.9bn, up 13 per cent, on sales of ?28.1bn – both were in line with expectations.


Sales of the group, whose brands include Dior, Louis Vuitton and Dom Pérignon champagne, were 19 per cent higher in reported terms and by 9 per cent on a like-for-like basis.


Mr Arnault said the group’s performance had been “remarkable” given the economic slowdown in Europe. He was optimistic about 2013, but said the euro was likely to strengthen to the detriment of exporters.


“There is a risk of currency wars, of competitive devaluation, which could lead to a scenario in 2013 in which a certain number of currencies weaken,” against the euro. A stronger euro “is unfortunately predictable it seems to me …. and risks having an impact on the business of French exporters,” he said, adding that LVMH would be able to raise its prices to compensate.


Mr Arnault has recently been at the centre of a political storm in France over his application for Belgian dual nationality which he has denied is linked to rising taxes under the Socialist government of President François Hollande. But he declined to answer a question about why he wanted a Belgian passport.


He also said there were no plans to change the structure of the group, which has been criticised for being overly complicated. “I don’t find it very complex for a business of our size,” he said.


Asked about relations with Hermès, the silk scarves and handbags group, which has called on LVMH to sell its 22 per cent stake in the family-controlled company, describing it as “an attack”, Mr Arnault said relations were “peaceful.” “I hope this view will be shared in the future by the managers of Hermès,” he said.


The two sides are in a legal dispute. Hermès’ complaint is focused on the way in which which LVMH entered its capital suddenly in 2010 and alleges insider trading and manipulation of its share price, against which LVMH has counter-complained for “slander, blackmail and unfair competition”.


Mr Arnault said that economic growth in China had been affected by the change in political leadership but expected growth to pick up this year.


Demand in Asia is being closely watched by analysts, given luxury goods groups’ increasing reliance on the region for growth, particularly in China. Last week, Richemont, the Swiss luxury goods group, said sales growth in Asia had stalled during the last three months of 2012.


LVMH said sales in Asia – which accounts for 28 per cent of sales, excluding Japan – rose 8 per cent in the fourth quarter. This was an improvement on the previous three months. It said the US had been particularly strong.


The fashion and leather goods business – mainly Louis Vuitton, which accounts for half group operating profit – reported a 6 per cent rise in operating profit to ?3.3bn.


All the other divisions reported double-digit operating profit growth, which will stoke analysts’ concerns that LVMH’s main profits motor, Louis Vuitton, is slowing.


The dividend is raised by 12 per cent to ?2.9 a share.


LVMH also said that Pierre Godé, deputy chairman and Mr Arnault’s right-hand man, is to become deputy chairman of the group’s Italian operations. The 68-year-old will remain LVMH deputy chairman.




Belvedere sales help deliver ?1.26bn profit for LVMH


Source: The Spirits Busines

by Becky Paskin

31st January, 2013


LVMH Moet Hennessy Louis Vuitton, the owner of Ardbeg, Glenmorangie and Hennessy Cognac, has recorded strong growth across all brands at the end of its 2012 financial year.


LVMH brands like Belvedere vodka helped deliver a healthy ?1.26bn profit for the group


Revenue for the group as a whole, which also includes fashion label Louis Vuitton and Christian Dior, rose by 19% to ?28.2billion compared to the previous year.


LVMH’s wine and spirits portfolio itself recorded organic sales growth of 11% to ?4.1bn, attributed to ‘volume growth, improved product mix and a policy of adjusted price’.


Profits for the drinks portfolio grew by 14% to ?1.26bn during the period.


The group reported that Hennessy Cognac had a ‘good year’ across all regions and expressions, Belvedere vodka maintained momentum outside its core US market, while single malt Scotch whiskies Glenmorangie and Ardbeg both recorded ‘rapid increases’ in their own core markets.


Bernard Arnault, chairman and CEO of LVMH, said: “2012 was another remarkable year for LVMH, especially in the context of the economic slowdown in Europe.


“All of our businesses demonstrated excellent momentum driven by innovation and the quality of their products, thereby strengthening their positions in traditional markets while continuing to develop in new ones.”


The group added that it would continue to rely on its long-term strategy to strengthen its high-quality products for the year ahead.




Maine: Maine gov rejects liquor wholesaler offer


Source: Associated Press

Jan 31st


Maine Gov. Paul LePage has rejected an offer from the state’s wholesale liquor distributor to guarantee the state $320 million over 10 years if the state extends its contract without a bidding process.


Maine Beverage Co. President and CEO Dean Williams said he could guarantee annual state liquor revenues of $32 million, with the potential for an additional $4 to $6 million annually. Maine Beverage has held the wholesale liquor contract for the past decade, but it’s set to expire next year.


In response, LePage said the state can do better by putting the contract out to competitive bids.


The owner of Lewiston-based Dirigo Spirit, which plans to bid on the contract when it comes open, also said Maine can get a better deal than what Maine Beverage is offering.




Pennsylvania: Local beer distributors leery of Corbett license proposal


Source: The Mercury

By Frank Otto

Friday, 02/01/13


A regular customer named Kathy perused the drink fridge at Riverside Beverages Thursday afternoon, scanning each soft drink.


“Bill, don’t you have the personal size of ginger ale?” she asked aloud over her shoulder.


Bill Ludy, standing behind the counter, said he thought he might be out.


“But let me check in the hallway real quick,” he said.


A few minutes later, he emerged through a doorway with a few bottles of the ginger ale.


“I’ve got a sick kid,” Kathy explained her need for the drinks to Ludy.


Personalized service Ludy and other area beer distributors have offered or years could disappear if a proposal by Gov. Tom Corbett to revamp the way Pennsylvania allows liquor and beer sales passes in the state Legislature.


Kathy was just one of the customers of a handful that Ludy joked with and greeted by name as they walked into his North Coventry business on Thursday.


“We know all our customers on a first-name basis,” Ludy said. If you come here more than twice in a month, I’m going to want to know who you are. We’re all local … we know the local issues.”


With Corbett’s plan opening licenses up to large chain retailers, Ludy can’t see his family business surviving.


“If Wal-Mart competes against us, I’m out of business. We fold up, we go away,” Ludy said. “This business is generated around volume. We have a hard enough time buying the volume to get the discounts now.”


Bill Lucchesi of Frank Smith Beverages on Shoemaker Road in Pottstown said his business may be safe because he does enough volume and has a niche clientele that large retailers wouldn’t be able to touch.


“I think what’s going to happen is you’re going to have a large number of the smaller distributors close down,” Lucchesi said. “We’re bigger, we’d be fine. The smaller businesses, they’d go away.”


The personal service his distributor provides and the selection, which includes a wide range of craft brews, ensures a customer base, he believes.


“We have our loyal base of customers,” Lucchesi said.


Operating in the shadow of Wal-Mart and Weis, two stores that could potentially bid for licenses to sell beer, Lucchesi was confident he could undersell those stores on six-packs, especially when it involved craft selections.


“The big thing for us, mixing up the six-packs of craft beer,” he said.


Ludy said he hasn’t seen his volume of sales go down recently, but he has noticed a change.


“We’re not selling $15, $20 cases of beer,” he said. “We’re selling the $10 case.”


As such, he feels there’s no way he could undersell a large retailer.


Wendell W. Young IV, the president of United Food and Commercial Workers Local 1776, the union for the state’s liquor store employees, weighed in on the subject.


Because the large retailers make profit on other items, they might be able to undercut distributors.


“The big box stores will sell the beer at cost until all the distributors around are gone,” Young said.


Frank Smith Beverages would be interested in expanding into liquor and wine sales under Corbett’s plan, according to Lucchesi. To do so, they’d likely expand the store and have to install new cases and storage.


However, Lucchesi said that would be a “big cost outlet.”


“This is all predicated on being a bigger guy,” Lucchesi said.


“If you’re not in a position where you’d get the funding…” he said before shaking his head.


One local distributor, who declined to be named, doesn’t fall under the “bigger guy” net.


“It would affect us a lot,” the distributor said. “First of all – the price.”


Lucchesi said there was no way he could get the kind of money that would be required to bid on one of the liquor licenses or the enhanced license that permitted the sale of six-packs.


“Plus, we would need whole new equipment for six-packs,” the distributor said.


Without selling six-packs, much business would be lost to the stores that could, whether they were beer distributors or Wal-Mart.


William C. Wertz, a director of communications for Wal-Mart, released a statement when questioned about the governor’s proposals.


“At this point we are in the process of reviewing the proposal,” he wrote in an email to The Mercury. “We are always looking for opportunities to expand our product base to better serve our customers.”


Without the six-packs or the enhanced license, a local distributor who asked not to be identified, said he probably won’t be able to stay in business.


The plan proposed by Corbett would eliminate the liquor store jobs of those in the state’s 620 state stores, according to the Associated Press.


“Almost all of the 5,000 (employees) will lose their jobs,” Young said. “Also, (the) three warehouses Pennsylvania operates: those workers will lose their jobs.”


Young said there will be no place for those workers to find employment because he doesn’t see large retailers needing extra help if they do take on beer and wine sales.


“They’ll reallocate their own workforce and own workspace,” he said. “They’re not going to hire any more of those people.”


Elsewhere, Young does not envision enough state jobs to take over for those workers.


Ludy agreed.


“All those people are going to be on unemployment,” he said. “Who’s going to pay for that?”


He called the proposal made by Corbett a “Band-Aid approach” to a bigger problem with modernizing liquor laws.


Young also doesn’t agree with Corbett’s figures, specifically the $1 billion revenue stream that the governor promised for public education. Modernizing the laws, Young said, will require some significant costs which he doesn’t believe the governor hasn’t taken into account.


As such, Young said there are several other ways laws might be modernized while protecting the workers he represents that have been looked into by state legislators.


After dutifully operating for so many years under the previous laws that have been lampooned as antiquated and strange, the smaller beer distributors say they feel cheated by Corbett.


“You’ve got these people who have been doing this for years and years,” Ludy said. “All of a sudden they come and say the rules are changing. That’s not fair.”




Pabst beer owner goes after Twinkies (Excerpt)


The famous snack cake will likely be heading to auction within weeks. Will the new owners rekindle consumer interest?


Source: MSN Money

By Jonathan Berr

Jan 31st


Do Twinkies and beer go together? They do for C. Dean Metropoulos & Co., the private equity group that owns Pabst Brewing Co.


The company, along with Apollo Global Management, another private equity shop, has submitted a “stalking horse” bid of $410 million for parts of Hostess Brands’ snack business, including the iconic cream-filled sponge cake.


Hostess, which has filed for bankruptcy protection, is selling all its assets after failing to reach an agreement with one of the unions representing its employees. Bankrupt companies accept “stalking horse” bids to set a base floor for auctions and prevent other bidders from lowballing a purchase price.


The bid, which also covers other Hostess brands such as Ho Hos, Zingers and Suzy Q,  includes five bakeries. Other companies will be allowed to make offers on the business, and the outcome will likely be decided by a bankruptcy court.




Drinking Mirror: New app projects how drinking alcohol affects faces


Source: ABC 7

By Autria Godfrey

February 1, 2013


A new smart phone app says it shows the physical signs of aging caused by your favorite beer or glass of wine.


This free app, called the Drinking Mirror works on anyone, but it was actually designed to target women who drink heavily.


Could how much you drink be written all over your face?


The Drinking Mirror, rolled out by the Scottish government as part of a health campaign, allows users to upload a photo and then, based on how much booze they admit to drinking in a week, they can see what they’ll look like in ten years.


Admitting to six to 10 glasses a week morphs a flawless face into one with deep set wrinkles, red eyes and cheeks. And piles it on the pounds.


Dr. Tina Alster, a D.C. dermatologist says, there is some truth to the cringe-inducing image staring back at you.


“Alcohol has been shown to diminish the elasticity of your skin so that you show more wrinkles, also makes your skin a little bit more sensitive to the sun, so that you end up with more freckling or blotchiness to your skin.” Alster says.


Alcohol leads to vasodilation, a dilation of blood vessels, making them bigger. And that’s why when people drink you see their faces get flushed, and if you do that enough time the flushing doesn’t go away. It stays.


While the outrageous images might go a bit overboard, drinkers who spoke with ABC7 say they understand why and they support someone cutting back on the booze, even if it is to bypass the botox.


Alster says the images should be taken with a grain of salt, and that a drink or two a week won’t do any long term damage.


The Scottish government says the app encourages people to take a look at how small changes can have a huge impact on their health.




Burgundy 2011: Decanter’s verdict


Source: Decanter

by Adam Lechmere

Thursday 31 January 2013


Burgundy 2011 is seductive, the best whites ‘pure and willowy’, the reds lively and charming, Jeannie Cho Lee MW says in her summing up of the vintage for Decanter.


While Cho Lee’s conclusions are positive she does not dole out unstinting praise: she makes clear the vintage is ‘yin and yang’ – both reds and whites are not homogenous.


‘Lack of consistency is one of this vintage’s weaknesses,’ she writes in the March issue of Decanter, on sale on Wednesday 6th February.


Most producers, she says, ‘crafted light-bodied [red] wines that were charming and easy to taste from barrel’, but ‘2011 tested grower’s skills and experience and the wines range from sublime to thin and unremarkable.’


The whites were ‘a joy to taste’, with charm and balance ‘despite the challenging summer weather’.


The red 2011s are characterised by ‘lightness in body, shape and mouthfeel and the focus on purity’. Some communes did better than others. Beaune, for example, is ‘a mixed bag’ with some wines that are light-bodied and pure while others are ‘thin’, Nuits-St-Georges is similarly mixed, but Vosne-Romanée showed great consistency, producing wines with supple tannins and flavours that are ‘accessible even at a young age’.


The vintage report on the whites, published in the February issue of Decanter, and will be live on Monday 4th February, states they’re capable of equal excellence – but they can also be ‘dilute and short’.


The Chardonnay crop was bigger than the very low Pinot Noir yield, and while Cho Lee tasted few whites that were dilute, there were some that were ‘thin and lacking in flavour’.


Philippe Prost of Bouchard encapsulated the balancing act such a light vintage demands of vintners: ‘In 2011 one needs to take care. Purity can be neutral, like crystal water.’


‘Taking care’ meant a good deal of work both in vineyard and winery. Harvest date was crucial, and almost everyone chaptalised to reach even 12% or 12.5% alcohol.


In Chablis, the cool summer meant vignerons had to work hard to achieve ripeness but the best wines have ‘clarity and minerality’. Village Meursault is ’round and approachable. perhaps a bit easy’, but the best producers (Cho Lee namechecks Arnaud Ente and Guy Roulot) produced wines with elegance and precision. Puligny Montrachet was the most consistent, with ‘delicate, layered and aromatic’ wines: good value at every price.


Overall, across red and white wines, Decanter’s conclusion is that Burgundy 2011 is an early-drinking vintage with elegance and charm, the whites with great aromatic appeal and expressiveness, the reds with ‘a brightness to the fruit that recalls 2010 encased in a lighter body’.


Above all the wines are approachable. ‘Overall, the [red] vintage produced wines with lively aromatics, vigorous red berry fruit, clarity of site expression offering early-term drinking pleasure,’ Cho Lee says.


And one Chablis producer told at the London tastings in January, ‘this is a vintage that will please many palates. With its definition and fruit purity, even newcomers to Chablis will be seduced.’


Jeannie Cho Lee’s article on red Burgundy 2011 can be found in the March issue of Decanter, on sale on Wednesday 6th February.



Ornellaia, Dom Perignon, Yquem in Sotheby’s sale


Source: Decanter

by Richard Woodard

Thursday 31 January 2013


Ornellaia, Dom Perignon and Chateau d’Yquem, direct from their cellars, are the highlights of Sotheby’s first New York auction of 2013.


Among the nearly 200 lots shared by the three wines are multiple formats of Ornellaia’s 25th anniversary 2010 vintage, sold to benefit the Royal Opera House Foundation in London.


The 76 lots in the 23 February sale cover every vintage from 1990 to 2010, including magnums, double magnums, imperials and a 12-litre bottle of the 2010 vintage – the first of its kind produced by Ornellaia.


The Dom Perignon lots span four decades, among them rare bottles and magnums of Oenotheque wines from the 1966 vintage, as well as the first chance to buy magnums of Dom Perignon Rose 2002.


Chateau d’Yquem’s contribution includes nine litres of the yet-to-be-bottled 2011 vintage in the chosen format of the winning bidder – from half-bottle to imperial.


The sale also includes three out of the 200 magnums of ‘Y’ or Ygrec, Yquem’s dry white wine, produced from the 2011 vintage.


Sotheby’s Wine CEO Jamie Ritchie said: ‘There can be no better provenance than this and we are delighted to start the New Year with a sale that includes wines direct from the cellars of Ornellaia, Dom Perignon and Chateau d’Yquem.’




Drinking Wine Through Time, From a Chore to a Choice


Source: The New York Times


January 31, 2013


Wine is old, ancient, neolithic. It has been consumed throughout recorded history. Yet wine as we know it today is relatively new. Where it originated, what it tasted like and represented, and how it was transformed over time are explored in Paul Lukacs’s fascinating new book, “Inventing Wine: A New History of One of the World’s Most Ancient Pleasures,” published in December by W. W. Norton & Company.


One thing is clear from Mr. Lukacs’s work: most wine for much of history was vile, nasty stuff. If an ancient critic had etched a tasting note to describe the wine that most people drank, it might have read, “Wretched, horrible, vinegary, foul.” Yet people drank it anyway, because they had no choice. Other beverages like water and milk were disease ridden. Wine might have tasted awful, but alcohol was a built-in disinfectant.


It was not until the Renaissance, writes Mr. Lukacs (who, when not researching wine, is an English professor at Loyola University Maryland in Baltimore), that familiar notions of discrimination came to be. Only then did wine connoisseurs, a minute group to be sure, begin to associate particular styles and qualities in wine with specific places, an early idea of terroir. And only then did astute wine drinkers begin to perceive that some wines could be appreciated intellectually and emotionally rather than just physically, and that the best wines conveyed a sense of balance, length and depth.


But it was really with the Enlightenment in the 18th century, when a series of revolutions began that would transform our understanding of grape-growing, wine production and wine storage, that wine began to resemble what we now take for granted.


“We’re all children of the Enlightenment, not Plato and Aristotle, but Locke and Rousseau,” Mr. Lukacs said over lunch recently in Manhattan. “That’s when modern wine emerged.”


Other changes occurred as well. As the water supply became safer, it was no longer necessary for people to consume wine. It became a choice. One could savor rather than drink, and so wine had to become more appealing. Nonetheless, through the early 20th century the vast pool of wine could be divided into two groups: a small amount of fine wine, or vin fin, which appealed to discriminating tastes, and most other wines, vin ordinaire, cheap and plentiful but not very good and often pretty bad.


“The gap between top wines and others was phenomenal,” he said.


Wine enjoyed a brief golden age in the 19th century with the rapid rise of a middle class with economic resources and cultural aspirations. But it hit a roadblock in the late 19th century as disease assailed European vineyards, to be followed by world wars, economic depression, a fashion for spirits and cocktails, and Prohibition. Yet wine rose again in the second half of the 20th century.


Perhaps a bit smugly, as we shared a bottle of Il Frappato, a delightfully fresh red from the Sicilian producer Arianna Occhipinti, we agreed that we were lucky to be living in the present, perhaps the greatest time in history to be a wine lover. Sitting in a New York City restaurant, we had access to a greater diversity of wines, from more places and in more styles, than at any time in history.


Il Frappato was a perfect illustration of how much the world had changed not just over 2,000 years, but in the last 25. In the 1980s, few people had even heard of the frappato grape, and most wines from Sicily were regarded as heavy, oxidized or just plain bad. Sicily might have been one of the last bastions of vin ordinaire. Yet today, it is a fount of thoroughly exciting wines.


Mr. Lukacs, 56, who grew up outside Philadelphia, said he had always been inclined toward wine. His father, who was Hungarian, drank wine regularly. But Mr. Lukacs said he really became interested during his graduate years at Johns Hopkins, when he joined a book study group that quickly transformed into a wine group.


“What interested me about wine is that it’s intellectually very, very rich,” he said. “You don’t need to know, but you want to know.”


Along with his academic pursuits, he went on to write a wine column for The Washington Times for 19 years and to publish two other wine books, “American Vintage: The Rise of American Wine” in 2000 and “The Great Wines of America: The Top Forty Vintners, Vineyards, and Vintages” in 2005.


Among the most interesting points Mr. Lukacs makes in “Inventing Wine” is that the idea of “tradition” in wine has been thoroughly mutable. The notion of Bordeaux’s illustrious past, for example, was very much a 19th-century creation by owners who built chateaus in older architectural styles in an effort to convey a sense of legacy. Current wine marketing, with its emphasis on heritage and continuity, draws from the same source.


Why did wine taste so bad for so long? As anyone who’s ever tried to make wine knows, exposure to air, to dirt and to myriad other substances can cause wine to spoil. Not so it becomes unhealthy, just repellent. And so, for ancient and not-so-ancient winemakers, the challenge was, after fermenting grape juice into wine, to prevent the wine from spoiling.


Up until the 19th century, when glass bottles could be mass-produced, Mr. Lukacs writes, this was nearly impossible. Vessels of old, made of clay or wood, could hold large quantities of wine. But once you began to draw down the contents, air entered the picture with all its microbial companions. In an effort to compensate for sour, vinegary flavors, ancient vintners added all sorts of flavorings. Spices, yes, but also pitch and ash, and even lead and lye. Wealthier clients might afford a better brand of additives, like spices and herbs.


Eventually, ancient vintners discovered techniques for making longer-lasting wines, like drying grapes before fermenting them, somewhat reminiscent of modern wines like Amarone. These dried grape wines became highly sought after and came to be emblems of social privilege, foreshadowing, Mr. Lukacs writes, wine’s future role as a status symbol.


“It was a way of distinguishing one’s tastes from somebody else’s,” Mr. Lukacs said over lunch. “Even in the ancient world, there were real distinctions between what the patrician drinks and what the plebeian drinks.”


Some things never change.




Analyst Says US Wine Production, Consumption Up


Source: AP

February 1, 2013


U.S. residents now make up the largest wine market in the world, consuming 13 percent of all that’s produced globally, according to an analyst who spoke Wednesday at a major wine industry gathering.


Jon Fredrikson told executives at the Unified Wine and Grape Symposium that U.S. production increased 2 percent last year to help meet demand.


“This market was brutally competitive,” Fredrikson told the crowd.


Bulk wine imports from Argentina helped slake the thirsts of U.S. consumers, followed by Chile and Australia. New Zealand has boosted its planted acreage by almost a quarter and is expected to become a bigger player, especially with production of sauvignon blanc.


Wine consumption is decreasing in France and Italy, so increasingly foreign producers are aiming for the U.S. market.


Overseas wines now account for 35 percent of sales in the U.S.


According to the Press Democrat of Santa Rosa (, Fredrikson said consumers were driven to cheaper imports by grape shortages in the U.S. in 2010 and 2011 that resulted in higher prices for domestic wines.


Even the Charles Shaw label – known affectionately as “Two Buck Chuck” – was forced to raise prices this month by 50-cents per bottle.


One of the biggest sales success stories was Modesto-based Gallo, which saw sales increase by 9 percent in 2011 and 5 percent last year.




To Decant or Not to Decant


Source: WSJ


Jan 31st


For wine lovers, there are many established norms that always seem to provoke heated discussion. Should you serve only white wine with fish? Does wine need to be chilled? And, the classic restaurant tussle, is your wine corked?


But perhaps the most universal flash point is that of decanting. As with all matters vinous, the answer is never straightforward. On one side are the pro-decanters, among whom I count myself, who argue that all wine improves with decanting, while the aesthetic appeal of a shimmering decanter adds to the theater of an evening. Others dispute this, saying decanting can actually deaden the wine’s flavors, losing some of its character.


The two principal aims of decanting a wine are to remove any sediment and aerate the wine. The latter will help draw out its nuanced flavors, soften the harsher, spicier, bitter notes and invigorate the wine. Whether you are decanting a mature or young wine will affect how you pour it into the decanter.


All wine that will throw sediment should be decanted; this includes red Bordeaux, Rhône, Rioja, vintage Port and heavy grape varieties such as Cabernet Sauvignon and Syrah. Also-and this is open to discussion-young wines.


In my experience, exposure to air unfurls the complex layers of flavor in young fine wine. A wine that was tight, closed and rather difficult to taste can, with time in the decanter, transform its personality. The smell changes, becoming replete with ripe fruit; the bitter tannins subside; and the wine opens up, revealing its true character.


Generally, I have found this to be the case with Old World wines from the classic regions of Europe, as opposed to New World wines, which change less in the decanter. White wines can also be decanted. Old Rieslings, white Rioja and young Chardonnay all improve with aeration.


If you prefer your white wine chilled, there are various decanters that will fit in a fridge, or you can buy an ice-pocket decanter, which has a small built-in capsule for ice that will help keep your wine cool. I prefer my whites lightly chilled and find that a bottle that has been in the fridge for an hour or two benefits from decanting, to take the chill off.


How long you should decant a wine for before serving depends on the age and type of the wine. When reviewing wines, I always prefer to decant. A recent example was with an Italian red wine made by Cantine Paradiso. On the first night, the wine was impenetrable, tasting hard, closed and bitter. On the second night, it still wasn’t quite there, but by the third evening, I could taste a host of intriguing flavors.


There are those who believe certain vintages should be decanted at breakfast, hours before they will be drunk at dinner. Sadly, there are no hard and fast rules on this and it is really down to personal preference. Certainly, very old wine should be decanted just before serving, as exposure to oxygen can cause it to lose its flavor quite quickly.


Young wine can withstand up to three or four hours or, in some cases, days. I am in favor of decanting shortly before I serve the wine-that way I can taste it immediately and track its evolution in the glass. If it turns out to be particularly impenetrable, I can always leave it for the following evening.


Choosing Your Decanter


This is purely about aesthetics. The shape, size and look of a decanter will not affect the wine inside. The traditional decanter, a glass vessel that holds one bottle of wine, has changed very little in design since the 18th century. There are a range of decanters on the market, from traditional shapes, such as ship’s decanters and Claret jugs, to modern, sometimes overly elaborate designs. But any vessel will do-even, if pushed, a jug.

Caring for Your Decanter


Decanters should be washed and rinsed with hot water after use. Drying a decanter can be particularly tricky; although the outside can be wiped clean with a dry cloth, the inside needs a little more attention. You can drain a decanter by placing it upside down on a draining stand. Another way is to buy drying crystals; these come in a long, thin packet and, when hung inside the decanter, absorb all its moisture. To remove troublesome stains, there are various decanter brushes available. For encrusted wine from the night before, fill the decanter with a handful of uncooked brown rice, pour in hot water and swirl around. Finally, microfiber polishing cloths will help add a shine to your glass.




Is Beer the New Wine?


Source: Huff Post



When a 12,000-square foot, 300-seat beer hall opens in Silicon Valley, you know beer’s time has come.


When dark chocolate and salt-water taffy are manufactured in beer flavors, when beer is paired with caramels at trendy urban bars, you really know beer’s time has come.


OK, its time began literally ages ago, possibly in Neolithic times when grains were first farmed. Evidence that beer was being made 6,000 years ago includes “a pale yellowish residue in the grooves of a sherd” found in an archeological site in Iran’s Kangavar Valley, according to Max Nelson’s book The Barbarian’s Beverage: A History of Beer in Ancient Europe. Go Kangavar!


And now beer bars are rising everywhere like foam. So sudsy, so class-blind, yet so delicious, artisanal and diverse: Will beer (and its offspring, such as the ever-trendier cider) snap wine’s stranglehold as The Alcoholic Beverage That Counts at long last?


I recently met Ted Kim (depicted below), whose Steins Beer Garden — that massive Sili Valley suds hub — is set to open in late February or early March. Kim spent six months touring Europe to sample and study its brews. (Hey, business trips are tough.) At the restaurant, Chef Colby Reade’s comfort food will augment the gushings of thirty taps — and more.


“For most Americans, the first association they make with beers is frat parties and hangovers. But there’s so much more to it than that,” Kim told me while pouring a resplendent, golden-sunshine apple lambic that was about as different from Bud as unicorns are from slugs.


Which foods pair best with which beers?




Serrallés USA Promotes John Eason to Chief Operating Officer, Executive Vice President


Source: Catch 21

Jan 31st


Serrallés USA announced today that John Eason has been appointed effective immediately to the position of Chief Operating Officer, Executive Vice President at Serrallés USA, the US operations of Destilería Serrallés of Ponce, Puerto Rico.  Previously, John Eason has served the company in the capacity of Vice President, National Sales Manager since 2008 where he’s overseen consistent double digit growth of the Don Q brand to over 240,000 cases nationally, the successful launch of Caliche Rum in a joint venture with nightlife entrepreneur Rande Gerber and a sales & marketing alliance with Death’s Door Spirits.




Pub chains feel the chill


Source: FT

By Duncan Robinson

Jan 31st


Pub chains Mitchells & Butlers and Enterprise Inns endured contrasting fortunes over Christmas and the new year as winter weather made life difficult for both groups.


Enterprise Inns suffered a sharp drop in net income with the group hampered by the knock-on effect of one of its distributors going under in October. The collapse of Waverley, which supplied the group with wine and spirits, resulted in a direct loss of £1m in net income.


Overall like-for-like net income fell 4.4 per cent – £5m in total – for the 17 weeks to the end of January, with poor weather weighing on sales. Enterprise estimated that it had lost £1.5m in net income from beer sales alone due to recent poor weather.


Simon Townsend, chief operating officer at the group, said: “Two bad weeks of sales could of course be made up if we have cracking weather on the bank holidays.”


The poor performance sent the group’s shares down 8 per cent to 90.7p, with the decline exacerbated by profit-taking following a recent rally.


Pub and restaurant rival M&B fared better, with the group’s turnround plan starting to result in stronger sales.


Sales for the 14 weeks to January 5 rose 1 per cent year-on-year, with M&B’s increased focus on food paying off with a 2.4 per cent sales jump in the category. Drink sales, however, declined 0.5 per cent year on year.


While others in the sector turned to discounting to lure in customers, M&B maintained margins by steering clear of increasingly aggressive promotions. Alistair Darby, M&B’s new chief executive, said: “We have promotional activity going on at any time, but we’re no more aggressive than last year,” he said. “We’re not convinced that [aggressive promotion] will give us a profitable sales uplift.”


The group enjoyed a stronger than expected end to 2012, with sales on Christmas day alone up more than a tenth. Shares in M&B were up 11 per cent to 328.7p in afternoon trading.


The market reaction will come as a boon to Mr Darby, who joined from rival Marston’s in October.


M&B’s relationship with shareholders has been strained in recent years, with shareholder Joe Lewis, the currency trader and owner of Tottenham Hotspur, leading a boardroom coup against the company’s former chairman in 2010.


Mr Darby, however, said shareholders had been supportive since his appointment. “Their board representatives have been very positive. It’s been an absolute pleasure. People said it would be tough, but I have no complaints at all.”




Tennessee: Haslam Would Sign Supermarket Wine Bill If Passed


Source: NewsChannel 5

Jan 31, 2013


Gov. Bill Haslam says he will sign a proposal to allow wine to be sold in supermarkets into law if it is passed by lawmakers this year.


The Republican governor told reporters Thursday that he’s neutral on the measure, but that he won’t stand in the way of it becoming law.


Legislation was filed Thursday that would allow Tennesseans to vote on whether to allow supermarkets and convenience stores to sell wine.


State Sen. Bill Ketron of Murfreesboro and fellow Republican Rep. Jon Lundberg of Bristol on Thursday introduced their bill to end the exclusive right of liquor stores to sell wine in Tennessee. Grocery store sales would be limited to wine with an alcohol content of no more than 18 percent.


The measure would put the option of whether to allow wider wine sales to voters in local cities and counties.


The bill, if passed, would give municipalities in those communities that currently allow retail package stores, liquor-by-the-drink establishments or both to hold a referendum on the sale of wine in retail food stores during the next general election. The authorization law would take effect on Jan. 1, 2014 and would allow a referendum to be held after that date.


“Rep. Lundberg and I strongly believe that Tennesseans deserve the opportunity to vote on this issue,” Sen. Ketron said. “Currently, municipalities decide whether to allow retail package stores or liquor-by-the drink in their communities, so it makes sense to also take the issue of where to sell wine to the voters.”


A petition with 10 percent of the county’s registered voters who voted in the last gubernatorial election would have to be submitted to the county election commission where the referendum is to be held.


Thirty-six states, including six of Tennessee’s border states, allow the sale of wine in retail food stores. Kentucky will soon join the list due to a recent federal court ruling which deemed its liquor laws unconstitutional.


The Republican House and Senate speakers support the change.


Opponents argue that the change is “is a ploy by out-of-state corporations to circumvent representative government”. Leaders from the Tennessee Wine and Spirits Retailers Association (TWSRA) said the legislation would unfairly disrupt the existing business rules that liquor store owners invested under.


“These out-of-state chains like Walmart and Kroger are determined to get more profit out of the state of Tennessee, no matter what the cost,” said Chip Christianson, Vice President of legislative affairs for TWSRA. “This is a highly complex issue that has enormous ramifications on the public safety and small business of our state.  Tennessee legislators have studied it intensely for 5 years and still have not found a viable solution.  So now the out-of-state chains want to bypass them and take it for a simple yes or no vote.  This is not a simple issue.  Legislators must realize what these corporations are trying to do and stop them in their tracks.”


TWSRA leaders claimed the difference in alcohol content was one of the main reasons the state put wine in specialty retail stores, and to put it on the shelves of grocery and convenience stores would make the beverages more available to minors.




Tennessee: Wine and Spirits Retailers Cry Foul on Wine in Grocery Stores Bill


Source: NewsChannel 5

Jan 31st


Locally-owned businesses point to out-of-state corporations that are driving the move to weaken state’s system for alcohol control


Tennessee business owners representing nearly 600 local businesses that employ 3,000 citizens called on legislators to oppose a bill that would allow communities to vote via referendum to allow wine sales in grocery and convenience stores. The Tennessee Wine and Spirits Retailers Association (TWSRA) said the legislation, announced today by Senator Bill Ketron and Representative Jon Lundberg, is a ploy by out-of-state corporations to circumvent representative government and split the state on an issue of critical importance to the public health and small businesses of Tennessee.


“These out-of-state chains like Walmart and Kroger are determined to get more profit out of the state of Tennessee, no matter what the cost,” said Chip Christianson, vice president of legislative affairs for TWSRA. “This is a highly complex issue that has enormous ramifications on the public safety and small business of our state.  Tennessee legislators have studied it intensely for 5 years and still have not found a viable solution.  So now the out-of-state chains want to bypass them and take it for a simple yes or no vote.  This is not a simple issue.  Legislators must realize what these corporations are trying to do and stop them in their tracks.”


Wine and spirits retailers say that regardless if wine in food stores is decided on the state or local level, it is a measure that will radically change the state’s system for controlling and selling high-proof alcohol and the welfare of local communities.  A coalition of more than 125 police chiefs and sheriffs in large cities and small towns across Tennessee has also come out in strong opposition to the legislation.


In announcing the bill, the grocery corporations acknowledged that the wine they wish to sell will have up to 3x the alcohol content of the beer currently on their shelves.  Christianson said this vast difference in alcohol content is the reason that the state put wine in specialty retail stores to begin with.  This is not a product that should be readily available on the shelves of grocery and convenience stores, said Christianson.  He said the wine these stores will be allowed to sell will not only include higher-end bottles, but also the low-end and box wines that young people regularly use to become quickly intoxicated.


“This issue has far more implications than most people realize,” said Christianson. “There are a range of complications to this bill that impact the way high-proof alcohol is controlled, current rules by which current wine and spirits store must abide, and ultimately the well being of our communities.”


“It’s disturbing to think these out-of-state corporations are working to bypass our legislative system,” Christianson continued. “They are skilled marketers and regularly convince consumers to buy their products whether they’re good for them or not.  Now they’ll be using that same marketing money and power town by town to convince citizens that allowing high-proof alcohol on their shelves is good for the community.  But really the only thing it’s good for is padding the bottom line of these out-of-state chains.”


Currently there are nearly 600 wine and spirits stores in Tennessee that employ more than 3,000 Tennesseans.  By law, these stores must be owned by Tennesseans.


“Tennessee wine retailers have owned and operated our shops for years.  We feel a sense of responsibility to the health and well being of our state.  We give back to our local communities in both tax dollars and charitable contributions.  We work with local law enforcement to make sure our towns and cities are safe,” said Christianson.  “The state of Tennesseehas put considerable time and resources into promoting our local farms, restaurants and industries.  Local wine retailers and our employees are also central to our state’s economic health.  We call on legislators to see through the tactics of Walmart, Kroger and other out-of-state chains and stand together for the well being of our state.”




Kentucky: Lawmaker – No shock probation for drunk drivers who kill


Source: WDRB

By Lawrence Smith

Jan 31, 2013


A Louisville legislator says people convicted in deadly drunk driving accidents should not get shock probation. She is part of an effort to make sure those who kill others while driving under the influence do not get out of jail early.


Supporters of the bill say shock probation for drunk drivers who kill cheapens the lives of the victims.


Last September, Robert Kempf apologized in court for driving drunk and killing his passenger, Michael Carr. Kempf pleaded guilty to manslaughter and was sentenced to seven years. His attorney said he would seek shock probation.


“Being in jail for seven months, he has sobered up and come to grips with a lot of things,” said attorney Mark Inman last year.


But if Rep. Julie Adams has her way, shock probation would not be an option. She’s co-sponsoring a bill that would prohibit anyone found guilty of DUI murder and manslaughter from getting shock probation.


“I think that shock probation is reasonable in so many instances within our criminal justice system,” Adams said. “I just happen to think that in this instance it is not appropriate.”


The bill got a hearing on Jan. 31 in Frankfort. Debbie Moskwa came from Michigan to Kentucky in support. Her son was killed by a drunk driver in 2002. The driver was convicted but got shock probation after eight months.


“It wipes away everything,” Moskwa said. “My son’s life was devalued. My son was just traveling through on vacation, and he lost his life. It was stolen from him.”


This is the sixth time the bill has come before the General Assembly.


“I’m keeping my fingers crossed,” Adams said. “These women are not going away. I told them that I would be their advocate in Frankfort. I’m hoping that 2013 is a good year but if not, we’ll be back next year.”


“My goal here, my mission, is that no other family  has to suffer from shock probation after losing a loved one and having to deal with that issue as well,” added Moskwa.


The bill does allow one exception: when the victim’s next-of-kin agree to shock probation.




Arizona: Arizona Cocktail Week 2nd annual edition is February 16 – 22 2013


Source: AZ Cocktail Week

Jan 31st


Nationally renowned spirit gurus such as Steve Olson, Tony Abou Ganim and Charlotte Voisey, name a few will partner with Arizona’s home-grown talent to provide educational seminars, interactive tastings, cocktail competitions, pool parties, and more. Over 30 events will take place statewide.


In addition, Arizona imbibers can purchase a $10 Arizona Cocktail Week wristband to partake in specials at bars, restaurants and lounges across the state. Throughout the entire week, the Arizona Cocktail Week Wristband provides access to the best shaken, stirred and mashed concoctions, at the best price. Wristbands can be purchased at




Canada: Nova Scotia does about-face, says stores will be able to brew wine, beer on site


Source: The Canadian Press

By: Michael MacDonald and Melanie Patten



Stung by a public backlash, Nova Scotia’s NDP government has ordered the province’s Crown-owned liquor agency to drop its legal bid to shut down two small businesses that allow customers to produce wine and beer in their stores.


Justice Minister Ross Landry confirmed Thursday the Nova Scotia Liquor Corp. must drop its request for injunctions against Wine Kitz Halifax and Water ‘n’ Wine in New Glasgow.


Landry said the government had to reverse course because so many people had come forward to protest the agency’s approach.


“Nova Scotians have spoken out loudly,” said Landry, whose district includes New Glasgow. “As a government, we have been very open to the idea that if the status quo is not working, we look at new ways of moving forward.”


It was an abrupt turnaround for a government that only weeks earlier had insisted the liquor agency was justified because the law had to be upheld.


Employees at Wine Kitz Halifax cheered when they learned of the news.


“I’m thrilled beyond belief because it’s been a bit of a nightmare,” owner Ross Harrington said in an interview.


However, Harrington said he was skeptical of the government’s motives.


“It’s an about-face to save face. The reality is it’s been handled poorly from the beginning,” he said.


“The NSLC, at the hand of the NDP government, has been unduly empowered to take this action. They’re a huge corporation. I’m not a threat. For them to be so petty, it’s disturbing.”


As well, Harrington said the government’s about-face doesn’t soothe the sting of lost business since he stopped offering in-store brewing. He pegged the loss at about $18,000 plus about $10,000 in legal fees.


“To be out of pocket to defend your livelihood and then they admit they’re wrong or they made a mistake, and not compensate me for it?” he said. “That’s just insult to injury.”


Liberal Leader Stephen McNeil said the government should have acted sooner, considering the liquor agency had also hired undercover agents to make wine at the stores before launching the court action.


“If this was really about listening and supporting small businesses, it would have never gone this far,” he said. “There’s a level of common sense that should have been applied to this and they don’t seem to have any of that.”


The government introduced regulatory changes in 2011 giving the agency the authority to seek a court order to prevent businesses from allowing customers to use brew kits on their premises.


Three weeks ago, the liquor agency launched legal actions against the two firms, arguing the in-store brewing and wine-making process was unregulated and unsafe.


The ensuing court case uncorked a torrent of condemnation among opposition parties, entrepreneurs and hobbyists who argued the law was anti-competitive and picked on small businesses.


Landry said the government will study the law in other provinces and develop new regulations that will allow on-site fermenting.


According to the Nova Scotia government, in-store wine and beer production is permitted in five provinces: Prince Edward Island, New Brunswick, Ontario, Saskatchewan and British Columbia.


Conservative Leader Jamie Baillie said the store owners and their customers are owed an apology from the government.


“It’s a sign of a much larger problem, which is a government that causes real hardship and expense to our small businesses, treating them and their customers like criminals,” he said.


“This government wasn’t listening to the people. They were listening only to the Nova Scotia Liquor Corporation, which wanted to squash some small, independent home-brew companies.”


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