Franklin Liquors
Wednesday May 22nd 2013
Industry News And Our Memorial Day Newsletter/Sale Items
SABMiller F13e results preview: Margins under the spotlight
Source: Barclays
May 21st
Stock Rating/Industry View: Equal Weight / Neutral
Price Target: GBP 38.50
Price (20-MAY-2013): GBP 35.86
Potential Upside/Downside: +7%
Ticker: SAB.L
After a Q4 volume and revenue IMS update on April 18th, SABMiller will release its full year results for the 12 months to end March on May 23rd. We forecast Revenue including associates of US$34,652m and EBITA of US$6,408m, 0.6% below consensus of US$6,447m. Clean EPS is estimated at 238.9 US Cents (consensus 238.7 cents). Although we remain positive on SAB’s medium/long-term top and bottom-line growth delivery, with some risk of disappointment around the H2 13e margin delivery and the F14e margin outlook, the risk/reward on the stock is skewed slightly to the downside in the short-term. After a strong run in SAB, (YTD +27%), we expect the stock may pause for breath and believe better returns can be made in Diageo for now. SABMiller trades on a CY14e PE multiple of 18.5x vs Diageo’s 16.3x.
Investment debate likely to focus on margins: Investor attention at the full year results is likely to focus on the H2 margin delivery and the outlook for F14e. Management’s initial guidance at last year’s full year results for broadly flat margins in F13e was a disappointment to the market. However, the November 2012 interim announcement saw the group beat margin expectations (+30bps in H1), while comments from the CFO that full year 2013e organic margin growth would be in the 25 to 50bps range seemed to increase market confidence in both the return of operational leverage and execution at SABMiller. However, with volume growth through H2 skewed to lower margin markets, and sharp step-ups in marketing and innovation investment, we believe full year organic margin growth may be at the lower end of market estimates. We forecast F13e organic margins +35bps and organic EBITA growth of 9.5%.
Forward looking guidance likely to be limited and COGS a risk given recent FX moves: SABMiller management tends to provide only limited guidance in its outlook statements. Looking forward, we forecast a combination of volume leverage, Business Capability and Foster’s cost savings to drive c.90bps of organic margin expansion in F14e. While spot price inflation for most raw materials remains benign, (management indicated flat COGS inflation for F14e at the H1 13 results), recent USD/ZAR weakness may lead to higher headline input cost guidance for F14e.
SABMiller F13e Divisional breakdown
Europe: Trading in the group’s European businesses is expected to have been tough in F13e. Although volume growth rates have tended to surprise to the upside on quarterly IMS updates, the price-reset strategy in the region at the beginning of the fiscal year is expected to have reduced EBITA margins by 160bps.
LatAm: After 140bps of organic margin expansion in H1, we forecast that the combination of higher H2 marketing expenses and weaker volumes will have held full year margin expansion to 96bps – only c.50bps in H2.
Australia: In its first full year of consolidation, we expect Foster’s to have contributed US$728m of EBITA; supported by a return of volume growth to the market towards the of the fiscal year.
Business Capability Programme: We estimate the group BCP cost saving programme to have delivered US$91m in the year, (cumulative US$250m).
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NOMURA CONSUMER (Excerpt)
Source: Nomura
May 22nd
Diageo
Buy, TP 2400p
Lord Shackleton
The great Lord has published a ‘proper update’ on Diageo looking at the potential story from here over the next couple of years as the new CEO makes his mark. The message is clearly one of ‘evolution not revolution’ but we do expect Menezes to put an even greater focus on emerging markets. Part of this will be driven by M&A and we would expect to see more bolt on deals in local spirits. The stock is not cheap, but what is. It’s certainly not going to stop me buying it with the story robust and in good hands.
We see an evolutionary rather than revolutionary process with the appointment of Ivan Menezes as CEO from 1 July. We expect Mr Menezes to put even greater focus on growth in emerging markets (which we expect to be at least 50% of revenues by 2015, excluding United Spirits) and for M&A to reflect this, with further moves likely in local spirits.
Spirits profit pool growth supports our estimates. Using our spirits industry profit pool growth estimates, we see an acceleration in the growth rates that the company’s geographical exposure should deliver, so the embedded EBIT growth rate of c6% today should accelerate to c7% by 2020. Including market share gains and further cost-cutting moves, we think this can support 8-9% organic EBIT growth, as in our estimates. The wide geographical footprint across emerging markets provides some portfolio protection (we estimate the largest emerging market Nigeria accounts for no more than 4% of EBIT).
M&A opportunity still there. We believe Diageo’s strong balance sheet (estimated net debt/EBITDA of c2x by year-end) offers scope for further M&A activities, especially in local spirits. Longer term, we still see potential for a quantum leap, possibly with Moet-Hennessy.
Diageo trades at a calendarised 2014E P/E of 17.1x vs spirits average of 18.4x. Our TP is unchanged at 2,400p; this includes no benefit from synergies from the United Spirits acquisition and potential for larger Scotch whisky sales India, which we estimate could add a further 60-100p of value per share over time.
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The Presidents’ Forum of the Distilled Spirits Industry Position in Support of the 21st Amendment to the U.S. Constitution
Source: Presidents’ Forum
May 21st
Alcohol is a unique product whose position in global society requires careful management, well thought out and executed regulatory regimes.
The Presidents’ Forum of the Distilled Spirits Industry and its members support an appropriately regulated industry.
In particular, the Presidents’ Forum of the Distilled Spirits Industry supports the 21st Amendment to the United States Constitution resulting three-tier and control state systems.
The 21st amendment has succeeded in its purpose to reintegrate alcohol into American society in the least impactful way and, while not perfect, its resulting system of state-based government controls, regulations, three-tier and control state systems continues to this day to protect American society while providing a competitive marketplace for alcohol with low barriers to entry.
About Presidents’ Forum:
The Presidents’ Forum of the Distilled Spirits Industry is an organization comprised of leading companies with common needs and interests in the manufacturing, importing, and marketing of distilled spirits products in the United States and around the world. Our companies represent approximately fifty percent of all distilled spirits sales in the United States.
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Winemakers must do more to tackle fraud
Source: Harpers
Written by Ed Robertson
Tuesday, 21 May 2013
Winemakers should act now to prevent fraudsters creating counterfeits of their products, according to Geert de Vries of KPMG.
Speaking today at the London International Wine Fair 2013 at ExCeL, London, de Vries, who works for KPMG’s risk services unit, said counterfeit alcohol costs the industry about £1 billion a year and accounts for up to 8% of all global beverage sales. The threat is only going to grow, he added.
With Brussels considering introducing new laws by 2020 requiring every bottle of alcohol to carry a unique code, he urged the industry to take action now.
De Vries said: “We can be sure that it [legislation] will come as it is the only way to deal with illicit trade.”
He added that by tackling fraud now, the drinks trade can not only save money but, far more importantly, can avoid reputational damage.
However, de Vries added that using unique QR codes, which can be scanned by a smartphone, is a far better way of tackling fraud than using special inks or holograms on the label.
He said not only are the codes effectively impossible for fraudsters to counterfeit but they also allow manufacturers to pinpoint the area where illegal copies are being sold.
De Vries added that using QR codes will also allow wine companies to start a dialogue with their customers which can also prove an effective marketing tool.
He said: “Having dialogue with customers is incredibly important.”
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QR codes can halt counterfeiting – expert (Excerpt)
Source: Just-Drinks
By Andy Morton
21 May 2013
Unique QR codes on alcohol packaging are the only way to eradicate fakes, a counterfeit expert has said.
Geert de Vries, from KPMG’s risk services unit, said today (21 May) that technology such as holograms, and special ink are “relatively useless”. However, QR codes scanned in-store by consumers can instantly alert producers to where fakes are being sold.
“(QR codes) will grow to be enormous,” de Vries said in a seminar at the London International Wine Fair. “The whole illicit trade can be stopped by unique codes.”
De Vries added that the European Union plans to introduce laws that ensure all alcoholic packaging carries a unique code. He said the laws will follow the introduction in 2017 of codes on pharmaceutical packaging, and could be in place by 2020.
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Coping with brand management: Diageo’s story
Alcoholic beverage giant Diageo talks to CMO about how its SmartBrand asset management platform has driven cost efficiencies and collaboration while still meeting rigorous alcohol advertising laws
Source: CMO
Nadia Cameron
22 May, 2013
Managing the brand assets of a company the size of alcoholic beverage giant Diageo is no mean feat. Rising sensitivity and complex legal requirements around how alcohol is marketed globally make it an even bigger challenge.
But the adoption and enhancement of an end-to-end digital asset management solution is helping to drive better collaboration across marketing creative and brand information in both a responsible and more cost-effective way.
With net sales of close to £10 billion, and more than 25,000 employees covering 180 territories globally, Diageo’s culture is diverse and its brand assets vast. The business was established in 1999 off the back of a series of mergers and acquisitions and now represents 370 brands including Smirnoff, Guinness, Johnnie Walker, Captain Morgan, Baileys and J&B.
Diageo first started working on asset management a decade ago, but the technology platform has gained both importance and significant new capabilities in the last two years as the global mandate for compliance beefed up. The company’s annual marketing spend tops US$1.5bn globally.
Diageo’s global brand asset management lead, Stephen McKillop, oversees SmartBrand, an end-to-end asset and rights management platform built using the Unify marketing application platform now owned by UK-based asset software vendor, North Plains. The company acquired Unify when it purchased management resource management vendor, Vyre, in December.
The SmartBrand project sits within the procurement division but is fully funded by the global marketing function led by Diageo CMO, Andy Fennel. It is mandated worldwide and acts as both a central repository for brand assets as well as a rights management platform, enabling internal staff and their agencies to view, approve and manage assets.
The initial impetus for SmartBrand was to reduce the risk of brand asset misuse and associated costs. “Any big organisation with multiple brands is always going to have first of all the difficulty in housing or sourcing assets,” McKillop told CMO. “The legal and marketing teams wanted a secure and locked down repository for our growing number of brand assets.
“We produce alcoholic goods, which are sensitive products, and we’re very proud of the Diageo marketing code. To make sure we are compliant with that in each and every country we operate in, so we needed an approval process where every piece of activity going forward to consumer was visible and signed off by appropriate approvers. We then decided to marry the asset library and approval tool together to create what we call ‘SmartBrand’.”
The SmartApprove component allows individual project owners to create a project, align agencies and approvers, upload low-resolution materials, request and receive approval, and fulfil that project. It then switches into the asset library and rights management piece, where agency partners provide commercial usage agreements, give Diageo marketers the rights to use and adapt those materials, then upload high-resolution materials to be processed into the library and made live.
Today, more than 8000 agencies use the asset library, and 5760 Diageo staff use SmartApprove.
Latest innovations
The biggest enhancement to SmartBrand this year is the ability for users to start adapting assets in the library. These capabilities will initially be restricted to adjusting templates for things like local pricing and menus, but the intention is to allow users to also adjust brand text in the future.
Diageo will first roll-out ‘SmartAdapt’ in Asia-Pacific to create regional menus, a process which previously had to be done by external suppliers and added unnecessary cost and usage right concerns, McKillop said.
“We have all these third-party solutions doing various elements of this but had little control over it,” he said. “There was a potential to use assets without correct usage rights or employ the right materials in the wrong way, which is clearly a risk.
“We want to launch adapt capabilities very carefully and sensitively. As we get better at it, we’ll allow people to start making customisations to text, which will need to be brought into the approval process. But in the first instance it’s about taking some of the wonderful assets we have and redeploying in them different regions.”
McKillop is starting with the smaller regions first and said it was important for his team to ensure adequate support, training mechanisms and server capacity before going global.
Other recent changes to SmartBrand include an overhaul of the user interface and dashboard, along with news stories and lightbox links. Secure collaboration tools have also been added to help the Diageo teams interact with multiple agencies on project development. An intuitive library search using predictive text and categorisation has also been deployed.
Sticking to the core objective
As the need for greater compliance and ensuring our marketing code is adhered to, the need for SmartBrand grows. “As we have become bigger and better and the library has filled up, we have a greater need for people to access that material, reuse it and adapt it,” he said.
While he’s keen to ensure SmartBrand sticks to its remit of end-to-end asset management, there are still further innovations on the cards. For example, McKillop said his team hoped to track brand assets better in the future, to see what happens once they have been downloaded.
It’s also important to remain on top of the compliance and legal aspects of brand assets. “It has become a harder environment in which to sell alcohol,” McKillop said. “We are a highly responsible company with no interest in doing otherwise. To make sure we do, our mandate has become stronger.”
McKillop agreed there was rising demand for faster approval and asset access processes, a reflection of the need for marketers to become more agile and respond to consumers in as real-time a way as possible.
“We do get requests that things have to be done today or uploaded today and we respond as best we can. It’s as much about having a great support team as a great tool,” he claimed. “We have had to adapt to people’s needs and so we have started to provide training in different languages, and make sure we have in-timezone support.
“SmartBrand is a mandated tool, so people will never love it, but we make it clear we will listen to people’s requests. If it’s beneficial to the wider community of users, we will implement those subject to budget. We do that all the time and adapt.”
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Johnnie Walker whisky is named world’s leading alcoholic drink
Source: STV
21 May 2013
Scotch whisky Johnnie Walker has been named the world’s leading alcoholic drink in an annual league table.
The brand, which originated in Kilmarnock, Ayrshire, has overtaken Smirnoff vodka thanks to growing demand in China and Eastern Europe, industry experts said.
The Diageo-owned whisky came out on top in the Power 100 annual survey of world drinks brands.
Nearly 10,000 brands of spirits and wines are researched to draw up a list of the 100 most powerful.
Drinks are rated by criteria including share of the market, potential for future growth and customer awareness.
Stuart Whitwell, of Intangible Business, which produces the Power 100, said: “The growth of Scotch whisky is mostly down to the rising middle classes in China whose thirst for premium brands reflects growing aspirations.”
Diaego moved production from the brand’s original home in Ayrshire to plants in Leven, Fife, and Shieldhall, Glasgow in 2009.
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Scotch whisky’s 25% sales slump in France ‘quite surprising’: Analyst
Source: Beverage Daily
By Ben Bouckley
21-May-2013
Mintel analyst Chris Wisson tells BeverageDaily.com that a 2012 slump in Scotch whisky exports to France is ‘quite surprising’ but insists the category’s global future remains bright.
April Scotch Whisky Association (SWA) data on 2012 exports reveals that exports fell markedly in 2012, down 70m bottles, despite a slight value sales increase to £4.3bn ($6.5bn).
The SWA blamed punitive taxation for the downturn, but market research firm Mintel said the 25% decline in exports to France was particularly problematic, since the nation is the largest export market for the category in
volume terms.
“The French figures are quite surprising, and I think that’s possibly less to do with the drink itself. That’s because another category (wine) has also seen a real downturn in usage among French consumers,” Mintel senior food and beverage analyst Wisson said.
“I think that the decline will slow, and it’s probably not indicative of a massive turn away from Scotch from the French consumer. But it’s probably more reflective of more health-conscious attitudes,” he added.
‘Not too difficult to join up the dots’
Noting gloomy French economic sentiment – and new taxes affecting Scotch in 2013 -Wisson explained that Scotch was also abig investment for consumers at £10-15 per bottle.
“That’s why Spain’s down massively as well. Two big countries that are struggling financially are massively down in Scotch sales. It’s not too difficult to join up the dots there really,” he said.
Despite the growing popularity of more affordable American whiskies such as Four Roses and Jack Daniel’s, Wisson said Scotch should “guard against trying to compete with those guys too closely”.
“Scotch has obviously got the history and the reputation, it’s made there according to certain process. If you were to lose that you’d struggle to compete with the likes of Jack Daniel’s, Red Stagg etc.,” he said.
But due to the Eurozone’s struggles, Wisson predicts that more affordable blended Scotch whiskies could come to the fore in markets such as France, Spain and even the UK, “while the typically costlier single malts are likely to grow at a quicker rate in emerging global markets with burgeoning middle class populations”.
Going to the dark (spirits) side: Flavor extensions
Wisson said the main global market threat to Scotch was the rise of flavored whiskies and dark rums, and cited Bacardi’s March launch of a honey-flavored Scotch-style in the US called Dewar’s Highlander Honey, although he said it can’t be marketed as a ‘Scotch’.
Such products were proving a lot more popular with younger drinkers, bringing in many more 18-24s and under 35s in general into the category, Wisson said.
“These flavour extensions seem to be driving a lot of growth in dark spirits, and golden and dark rum in much smaller than whiskey but it’s showing much stronger annual growth – simply because it’s a bit more fun, a bit less intimidating,” he said.
“I think many younger drinkers find whiskey a bit of an acquired taste, and a difficult thing to get into at that age.
Flavors take the edge of it and make it a bit more accessible,” he added.
But I think dark spirits as a whole category, if they’re going to continue to look at that, then they need to steer clear of some of these crazy vodka flavors such as ice cream or even fish!
Predicting a bright long-term future for Scotch, Wisson pointed to recent distillery investments from the likes of Chivas Brothers and Diageo to cater for future demand, specifically in single malts with their premium appeal in markets such as China and India.
And while the UK home market – 25m bottles in 2012 – remained crucial, Wisson said the Scotch’s wider success may depend on markets such as the US, Venezuela, Mexico and Eastern Europe, “which may also provide significant growth opportunities in coming years”.
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Drop in Scottish alcohol sales ‘due to multi-buy ban’
Wine in a supermarket Multi-buy alcohol promotions have been banned since October 2011
Source: BBC News
May 21st
The amount of alcohol sold in Scottish shops has fallen by 2.6% in the year since multi-buy promotions were banned, according to research.
A report by NHS Scotland and Glasgow University claimed the Alcohol Act was responsible for a 4% drop in wine sales and an 8.5% cut in pre-mixed drinks.
The act, introduced in October 2011, placed restrictions on how alcohol could be displayed and promoted.
Researchers said all potential reasons for the fall were taken into account.
Dr Jim Lewsey, from the University of Glasgow and co-author of Monitoring and Evaluating Scotland’s Alcohol Strategy, said: “Similar declines were not observed in England and Wales, where the Alcohol Act does not apply.
“The possible impacts of other factors, such as changes in income and alcohol prices, were taken into account.
“This provides evidence that the effects were associated with the act and not some other factor.”
Incentive removed
Mark Robinson, from NHS Health Scotland and study lead, said some retailers had responded to the multi-buy discount ban by selling individual bottles of wine for £3.33 instead of offering three bottles for £10.
He said: “However, the incentive for people to buy more alcohol than they may otherwise have bought was removed and wine sales decreased.”
He warned that despite the cut in sales, alcohol consumption remained high and alcohol was still sold at low prices.
“There is good evidence to show that the positive effects of the Alcohol Act would be enhanced by minimum unit pricing, which would prevent the sale of cheap, high strength alcohol,” he said.
The report’s interpretation of the figures has been disputed by the drinks industry.
Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “This report fails to show any evidence of the impact of Scotland’s ban on multi-buy restrictions on tackling alcohol misuse.
“The drop in sales of 2.6% attributed to the ban was described as ‘statistically non-significant’ by the researchers.
“The report acknowledges that there is currently no direct evidence linking multi-buy promotion to alcohol consumption in the off-trade.”
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Wanna vote for your favorite wine blog? Here’s how
Source: San Francisco Business Times
Chris Rauber
May 21st
Thirty finalists (some in multiple categories) in the 7th Annual Wine Blog Awards were announced Tuesday, including top wine business blog finalists The Gray Report, The Wine Curmudgeon, The Academic Wino, Horsemaster of Wine, and Fermentation: The Daily Wine Blog.
The Wine Blog Awards will be presented at the 2013 Wine Bloggers Conference in Penticton, British Columbia, on June 8. To cast a vote for the top wine business blog, or to pick a winner in any of eight other categories, go to the Wine Blog Awards.org site, which also has links to all 30 finalists in nine categories.
Votes will be counted until May 24.
The awards are administered by Joel Vincent, founder of the Wine Bloggers Conference, in collaboration with the conference.
Other categories inlcude Best Blog Post of the Year, Best Original Photography or Video on a Wine Blog, Best Wine Reviews on a Wine Blog, Best Single Subject Wine Blog, Best Winery Blog, Best Writing on a Wine Blog, Best New Wine Blog and Best Overall Wine Blog.
Among the other finalists: Chasing the Vine, Wines of Croatia, New York Cork Report, Been Doon So Long, and Jameson Fink.
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China may probe EU wine: report
Source: Eastday
2013-05-22
China is likely to make substantive moves this year toward initiating an anti-dumping investigation into wine imported from the eurozone, the China Security Journal reported on Tuesday.
The government may take a further step in pushing the probe in response to a strong call from the domestic wine industry and a string of anti-dumping cases brought by the European Union (EU) against Chinese products, the report quoted insiders as saying.
The Chinese Alcoholic Drinks Association announced last August that it had submitted a petition to the Ministry of Commerce, calling for an anti-dumping investigation regarding wine imported from the EU.
Chinese wine producers have been squeezed by stiff competition from their strong overseas counterparts and a persistent slump in their home market.
Exports now make up nearly one-third of China’s liquor market. Wine from the EU took up 58.7 percent of China’s wine imports in the first two months of 2013, customs data showed.
Most Chinese winemakers have posted disappointing financial figures. Yantai Changyu Pioneer Wine Co., a leading domestic wine brand, saw its business revenue and profit drop 3.34 percent and 5.57 percent year on year, respectively, in the first quarter of 2013, according to the company’s quarterly report.
Inspired by the prospect of anti-dumping investigations, China’s winemakers posted big gains in the stock market on Monday. Changyu rose by 7.44 percent to 42.33 yuan on Monday and shed a slight 1.23 percent on Tuesday.
China became the world’s fifth-largest consumer of wine in 2011 and is poised to become the second-largest liquor importer by 2015, according to International Wine &Spirit Research.
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Three new Masters of Wine announced
Source: the drinks business
by Andy Young
21st May, 2013
The Institute of Masters of Wine has announced three new Masters of Wine in the US and Australia, including only the fourth-ever double Master.
Institute of Masters of WineAlison Eisermann Ctercteko MW, from Sydney, Adam Lapierre MW, of San Francisco and Eric Hemer MW MS, from Lake Worth, Florida, have all now been admitted to the Institute as members.
Hemer becomes the fourth person to be awarded both the MW and and Master Sommelier qualification. The three other double Masters – Gerard Basset MW MS, Doug Frost MW MS, and Ronn Wiegand MW MS – also became Master Sommeliers before going on to achieve the title of Master of Wine.
Hemer is the educational director for Southern Wine & Spirits in Florida and teaches the Wine Certificate course at Florida International University. In addition to this he also organises and conducts wine seminars and judges competitions. Hemer’s dissertation was entitled: “What’s next for Argentina: can Bonarda achieve success in the United States on-trade market?”
Ctercteko is a wine educator and winemaker, who established and managed the Monument vineyard in Central New South Wales. She has also been a panel chair at the International Wine Challenge for the past six years, and lectures at the Sydney Wine Academy.
The title of Ctercteko’s dissertation was: “Monitoring the incidence and nature of screwcap closure damage, its effect on aromatic wine quality and the implications for storage and handling: an investigation of Sauvignon Blanc.”
Lapierre, who is the national sales manager (Fine Wine Division) at Frederick Wildman and Sons, began his career working for a large winery in New York’s Finger Lakes Region. This start, as well as time spent in the cellars ignited his deep interest in wine, eventually leading him to California, where since his arrival he has risen through the ranks at his employer to his current position.
Lapierre wrote his dissertation on: “Factors affecting brand loyalty among sommeliers in San Francisco, California”.
Penny Richards, executive director of the Institute, said: “We are delighted to welcome Adam, Alison, and Eric as the first new Masters of Wine of this, our 60th Anniversary Year.
“We are intensely proud of the commitment and application they have shown in achieving their success, and we hope to able to celebrate with them at our Annual Reception and Awards ceremony in London later this year. Well done to all of them.”
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LAURENT-PERRIER (=) FY 13 Results on 28 May
Source: Exane BNP
May 21st
TP: EUR69 . Upside: 9%
Beverages (-) . France . Price (17 May. 13): EUR63.5
We expect 0.4% volume and -0.2% price/mix growth in FY13 but see downside risk
In line with the guidance for renewed growth in Q4 we expect positive volume growth in FY13 and a flat price/mix, with 6.6% growth in revenue in Q4 (the thinnest trading quarter for Laurent-Perrier). However, we see downside risk to these estimates – even though our FY13 sales estimate is already the lowest of consensus – given the recent weak industry data (global volumes down 3.8% in calendar Q1, -6.9% for champagne houses).
Guidance for strong performance outside Europe implies LP may have gained share
Laurent-Perrier’s guidance for ‘renewed growth’ in Q4 is dependent on a ‘strong performance in non-European markets’ that usually account for a higher share of sales in Q4. We note, however, that champagne houses as a whole grew volumes by just 1% in the period in non-European countries.
Higher A&P and administrative costs will dilute EBIT margin by 280bp
Much of the margin deterioration in H1 was due to the lower yield on the group’s own harvest, something that will not be repeated in H2. However, a 17% rise in A&P (in line with the guidance) and the higher administrative costs that we expect will lead to a 280bp margin dilution in FY13.
No conference call – Analyst meeting on Tue 28 May 2013 at 8:30 CET
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The Bottled Asset Fund (BAF) Acquires Biondi-Santi Wine Collection
Source: Newsday
May 21, 2013
World’s Only Italian-Focused Wine Investment Fund Announces Largest Single Purchase in History of Italian Wine
The Bottled Asset Fund (BAF), the wine investment fund launched in 2010 and directed by Sergio Esposito, a leading authority on Italian wine, today announced the acquisition of a historic collection of vintages of Biondi-Santi Brunello di Montalcino valued at $5 million (?4 million). This 7,000-bottle acquisition spans 1945-1975 and includes hundreds of bottles of the cult 1955 and 1964 vintages, representing a unique addition to the BAF portfolio. It is the largest vertical collection sale in history of “blue chip” Italian wines from a single source and with perfect provenance, as well as the largest single purchase in the history of Italian wine.
The deal was struck on March 19, 2013, only a few weeks before the sad passing of Franco Biondi-Santi on April 7th, 2013. Mr. Biondi-Santi was the fourth generation patriarch of one of the world’s most important winemaking families. The Biondi-Santi estate is widely recognized as the creator of Italy’s most important wine, Brunello di Montalcino, and, more importantly, it almost single-handedly introduced wines for long-term ageing to Italian wine culture. The family was the first to adopt the “Bordeaux model,” whereby wines are re-tasted and re-corked every few years, often with media present to extend their brand exposure. This model fosters a much higher quality that leads to greater market exposure and price appreciation over the long-term. At the time of Biondi-Santi’s adoption of the model, the protocol was unique for Italian wines.
“Biondi-Santi’s collection is legendary,” said Mr. Esposito, Director of the BAF’s investment board and Founder and CEO of Italian Wine Merchants, the premier Italian wine consultant in the US. “I’m highly confident that we reached a fantastic deal for our investors and for Italy itself. The quality of these bottles directly from cellar is incredible and their value will undoubtedly increase throughout the years as they are an Italian natural treasure.” Mr. Esposito’s long-term goal is to elevate the status of Italian wine as an investment asset, creating consistency, transparency and objective value in the Italian wine market.
The market for Italian wine is growing globally, with export markets, especially Asia, driving up value. The BAF value is currently seeing stunning profits, upwards of 30% and is projected to return profits to its investors, net of fees, of over 30%. By the end of 2013, Vino Management Corporation, the administrative body behind BAF, plans to launch another fund with the goal to commit $25 million.
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Tales of the Cocktail Spirited Awards finalists revealed
Source: The Spirits Business
by Becky Paskin
21st May, 2013
Tales of the Cocktail has revealed the 180 international bars, bartenders, drinks writers, brand ambassadors and drinks experts nominated as part of the seventh annual Spirited Awards 2013.
The winners of the 2013 Spirited Awards will be revealed at Tales of the Cocktail
Recognising those that “represent the cocktail industry in exciting new spotlights”, the Spirited Awards will take place on 20 July during the annual Tales of the Cocktail festival (17-21 July) in New Orleans.
Ten finalists across 18 categories have been selected by American and International judging committees comprised of industry experts, although only the top four from each group, announced on 7 June, will be invited to the grand final at the Hyatt Regency New Orleans.
“Clearly the nominees for the 2013 Spirited Awards represent the best of the best in our industry,” said Paul Tuennerman, co-founder of Tales of the Cocktail. “Regardless of who the winner is, being recognized by one’s peers, above all, is simply put, an honor in its own right.”
The winner of each category will receive a Riedel Crystal trophy.
http://www.thespiritsbusiness.com/2013/05/tales-of-the-cocktail-spirited-awards-finalists-revealed/
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ABL Announces Business Seminar: “Digital Success – It’s in Your Own Backyard”
New conference program will discuss how simple technologies can expand a retailer’s customer base
Source: ABL
May 21st
American Beverage Licensees (ABL) announced today that it will host “Digital Success – It’s in Your Own Backyard,” a seminar on eCommerce outreach as part of the ABL Annual Conference on June 9, 2013. Beverage Media has been providing communication services to the industry in both print and online for decades. The seminar will be conducted by James Laurenti, eCommerce Manager.
“With the explosion of new brands in our industry today, managing shelves is critical, but it is just as important for retailers to manage the face they present to customers through their website,” explained Beverage Media Chairman William Slone, who will also be participating in the discussion. “Through our close relationship with the trade we can offer substantial content and provide straightforward guidance to retailers both experienced and just getting started with eCommerce,” he added.
James Laurenti explained, “About a decade ago, when many of the first wine retailers created websites to sell their inventory online, the goal usually was to sell wine to consumers in whatever states they could, and to take advantage of the sparse competition on the internet. Today, however, the online marketplace is far more crowded, and the retailer’s ripest opportunities to attract repeat, loyal customers exist in their local market.”
Mr. Laurenti will detail why a retailer’s eCommerce should be approached not as a separate business, but as an extension to a brick-and-mortar store. In particular, stores can use their websites to help target new local consumers who haven’t previously shopped with the store-a segment that represents the best opportunity to grow the existing loyal customer base.
This session is scheduled for 10:00AM, Sunday, June 9, 2013. The primary emphasis is on retailer websites, but all convention registrants are welcome.
For more information about the 2013 ABL Annual Conference or to register, visit us online at www.ABLUSA.org/Conference.
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Red Robin 1st-Quarter Net Falls 10% on Higher Costs
Source: WSJ
By Saabira Chaudhuri
May 21st
Red Robin Gourmet Burgers Inc.’s (RRGB) fiscal first-quarter profit fell 10% as the casual dining restaurant chain reported higher costs and expenses.
Red Robin has been changing its advertising, cutting costs, ramping up a loyalty program and increasing its bar business as part of a turnaround plan. Like the rest of the restaurant sector, Red Robin faces increasing pressure from commodity inflation and more cost-conscious consumers.
Ahead of the company’s quarterly report, analysts at B. Riley said they wouldn’t be surprised to see revenue upside given that the first quarter had 16 weeks versus the 13 weeks that most peers had.
On Tuesday, Chief Executive Steve Carley said seasonality shifts from changes in the company’s reporting period and media timing had a negative impact on guest traffic and earnings in the first quarter this year. Still, he said Red Robin remains encouraged by its strong guest counts relative to the casual dining category as a whole.
For the quarter ended April 21, Red Robin posted a profit of $9.48 million, or 66 cents a share, versus $10.6 million, or 71 cents a share, a year earlier. Revenue increased 2.3% to $306.3 million. Analysts surveyed by Thomson Reuters were expecting earnings of 66 cents a share on revenue of $306 million.
Costs and expenses rose 3.2% to $292.8 million, driven by rises in general and administrative among other items.
Same-store sales at company-owned restaurants rose 2.2%, marking Red Robin’s 11th consecutive quarter of same-store sales growth.
Guest counts decreased 0.6% on a comparable basis, while average guest check increased 2.8%.
Restaurant-level operating margin at company-owned locations widened to 21.5% from 21.2%.
Red Robin shares closed Monday at $49.01 and were inactive in recent premarket trading. The stock has risen 53% in the past 12 months.
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Brinker to create Canadian subsidiary
Company to buy back 11 Chili’s Grill & Bar units from franchisee
Source: NRN
Ron Ruggless
May 21, 2013
Brinker International Inc. said on Tuesday that it has agreed to buy back 11 existing Chili’s Grill & Bar units in Canada from its first international franchisee and is creating a Canadian subsidiary.
The 11 Chili’s, in the Canadian province of Alberta, are being purchased from Speedy Creek Ltd. of Edmonton, which first opened the brand in Canada in 1991. The deal is expected to close in June.
Those Alberta casual-dining units generate about $35 million in annual sales, Brinker said.
“For more than 20 years, Chili’s has been delivering signature favorites to Canadian guests and with this new agreement will continue to do so while Brinker accelerates the expansion of the brand in the region,” said Guy Constant, Brinker’s chief financial officer and president of global business development.
In addition to the 11 restaurants, Brinker said it will retain the Speedy Creek management team.
The company said Gerry Inglis, who has led Speedy Creek since the partnership began in 1991, will continue to oversee the acquired restaurants as president of Brinker’s Canadian subsidiary.
“The strength of the team and market presence established by Gerry will prove invaluable as we strategically develop Chili’s in a country eager for iconic brands from their neighbor to the south,” Constant said in a statement.
Brinker owns and franchises nearly 1,600 restaurants in 33 nations and two territories under the Chili’s and Maggiano’s Little Italy flags.
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NRF opposes credit card swipe fee settlement
Source: RT
May 21, 2013
The National Retail Federation has announced plans to formally oppose a proposed settlement of a federal antitrust lawsuit over credit card swipe fees charged by Visa and MasterCard. NRF is also urging retailers to carefully consider their own decisions before next week’s deadline set by the court.
“The proposed settlement does nothing to bring swipe fees under control, and would give Visa and MasterCard a legal blessing to continue their abuse of merchants and consumers indefinitely,” NRF SVP and general counsel Mallory Duncan said. “No settlement at all would be better than this one-sided ‘agreement’ written by the card companies for the card companies that would tie retailers’ hands for decades to come.”
While many retailers have already filed paperwork with the U.S. District Court in Brooklyn, N.Y., opposing the settlement, many small retailers have yet to act. Retailers who oppose the plan have until May 28 to say whether they will opt out of the money offered and accompanying restrictions on future legal action, object to proposed injunctive relief that comes with additional restrictions or – as NRF plans – do both. Under the class action terms of the proposed agreement, retailers who do not opt out by the deadline will automatically be considered to have accepted the settlement, and will give up the right to file future lawsuits over the fees and other restrictive rules.
NRF believes the proposed settlement fails to reform the price-fixing system under which Visa and MasterCard set the schedule of swipe fees followed by the thousands of banks that issue their credit cards. The organization also believes the proposed settlement fails to introduce transparency that would lead to competition to lower the fees. Rather than lowering the fees, the card companies have proposed that the fees be passed along to consumers in the form of a surcharge, even though most major retailers have rejected surcharges as the opposite of what they have sought during the years-long fight over swipe fees.
Retailers who do not opt out – and thereby become fully bound by the restrictions of the agreement – will be eligible for a share of $7.25 billion. But the figure amounts to less than three months’ worth of swipe fee charges, and the small retailers hit hardest by the fees would give up their rights for as little as a few hundred dollars.
The suit was brought in 2005 by 19 trade associations and individual retail companies, but a majority – including all six trade associations – rejected the settlement when it was proposed last summer. NRF, like most retailers, is not a party to the lawsuit, but has led the retail industry’s opposition to the settlement because NRF member companies would be dragged into its terms as part of the class action.
Averaging about 2%, swipe fees are a percentage of the transaction taken by banks each time a consumer swipes a credit card to pay for a purchase, and total about $30 billion a year nationwide. The fees have tripled over the past decade, and drive prices up for the average household by more than $250 per year.
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Illinois: Lake Forest eliminates ban on gas-station liquor sales
Source: Lake Forest Tribune
By Danielle Gensburg
May 21, 2013
Lake Forest’s City Council approved revisions to its liquor code Monday, changes that included removing a ban on alcohol sales at gas stations.
The revisions also called for language prohibiting aldermen and city officials from simultaneously sitting on a board and holding a liquor license, as well as limiting the number of events for off-premise liquor sales.
Much of the debate Monday night focused on allowing gas stations to petition for licenses, with some city officials saying they were concerned that removing the ban would not be consistent with the character of Lake Forest.
“A gas station is a very different business from a grocery store, Walgreens or CVS,” said Ald. Catherine Waldeck of the 1st Ward. “I don’t want to see our gas stations turn into a stop-and-go liquor store. I don’t like that, and I think it adversely effects who we are.”
Ald. David Moore, 2nd, and Ald. Michael Adelman, 4th, said they were opposed to having a code that excludes or eliminates a specific group of applicants from applying for a liquor license.
“If we start passing legislation on the quote, unquote ‘character’ of Lake Forest, then we’re going to get into trouble,” Adelman said.
Moore added that he initially became involved in city government because he disagreed with earlier decisions and opinions related to not allowing McDonald’s or Costco in the area, decisions he said also were based on the idea of preserving the city’s character.
“It’s wrong for the city to eliminate a class of applicants that the liquor commissioner-with the normal review process of granting or denying these licenses-could apply to anybody,” Moore said.
Andy Duran, executive director of LEAD/SpeakUP, an organization in Lake Forest dedicated to preventing risky behavior-such as alcohol and drug use-among young people, spoke at the meeting against allowing alcohol sales at the Shell gas station on the corner of Deerpath Road and Oakwood Avenue.
“This particular gas station is frequented often by youth walking into town from both Deerpath Middle School and the School of St. Mary everyday, after school,” Duran said in an email. “Granting a liquor license to the Shell station would make the amount of liquor-selling retail establishments in this area very dense.”
At the meeting, Duran said nearly 50 percent of the high school’s senior class participates in binge drinking every two weeks and asked the city council to help prevent this and protect the community’s youth.
Bill Loumbardias, the owner of the Shell station on East Deerpath Road, is seeking a liquor license to sell beer and wine. He said he is happy with the city council’s decision and hopes they will grant him the license after reviewing his plans and security measures.
“The City Council is great in that they understand the position of businesses, especially ones that have been here for 10 years,” Loumbardias said. “I’ve been here for such a long time and customers want it, so [it’s] great news.”
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North Carolina: No go on liquid nitrogen cocktails, ABC tells Charlotte’s Bubble
Source: Charlotte Observer
By Helen Schwab
Monday, May. 20, 2013
So, no liquid nitrogen cocktails after all.
The N.C. ABC Commission has decided that, although it couldn’t find any rules or regulations that expressly prohibit the use of the 321-degrees-below-zero substance in alcoholic beverages, it does have “broad powers to protect public health and safety,” said public affairs director Agnes Stevens.
So Bubble, which opened to the public Friday at the EpiCentre in uptown Charlotte, was sent an official notice that day, Stevens said Monday. If the commission gets a report from law enforcement officers that the place is serving its advertised N-tini, “or any other potentially hazardous alcoholic drink (such as a Flaming Alcohol Shot),” Bubble’s temporary alcoholic beverage permit “may be suspended or rejected,” according to the notice from deputy administrator Robert Hamilton.
Stevens said Bubble’s co-owner told an Alcohol Law Enforcement officer the restaurant would not serve the drinks. Bubble representatives could not be reached for comment on Monday for this story.
Last October, a British teen had her stomach removed after consuming two cocktails made with liquid nitrogen; an episode this month of the TV show “Grey’s Anatomy” brought the drinks back into conversation with a plotline echoing the British story.
Culinary and bar professionals and a toxicologist with the North Carolina poison center have said using liquid nitrogen in a way that allows any chance of consumption is dangerous.
The ABC Commission’s letter said the action is needed “due to the health, welfare and safety issues that would be directly related to these drinks.”
The commission’s letter specified the dangers of inhalation – “potential health effects that include nausea, vomiting, dizziness, suffocation, convulsions and coma” – and skin contact, which “can cause blisters and frostbite.”
The letter also said the commission is aware of injuries sustained by customers consuming drinks infused with liquid nitrogen.
Stevens said the letter was addressed to Bob Durkin, in whose name the permit is held, and was hand-delivered Friday by an ALE officer to co-owner Jim Kleinberg and general manager Bourke Floyd.
“The commission’s authority . allows discretion to protect the public from these kinds of dangerous activities, particularly for locations that are in the application/temporary permit status,” said Stevens. “This location has temporary permits.”
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Texas: More dry Sundays for Texas after liquor bill left to die in committee
Source: Dallas Morning News
By Ralph De La Cruz
May 17, 2013
As the state legislature lurches toward the finish line, it’s clear another session will soon end without passage of any bill allowing liquor sales on Sunday in Texas.
Houston Representative Senfronia Thompson’s HB 421 has actually been dead since mid-March when it was left to languish in the Licensing & Administrative Procedures committee by committee chairman Wayne Smith of Baytown.
It’s too bad. I’m not much of a drinker. But in a state that has a fierce sense of independence and individualism, seems Texans should be able to go to their nearby liquor stores on Super Bowl Sunday and buy a bottle of Maker’s Mark whiskey or Gusano Rojo mezcal tequila if they so choose.
But it’s not happening. So the Distilled Spirits Council has gone local. According to the DSC, 22 Texas communities faced votes Saturday on whether to allow the sale of beer and alcohol, basically going from “dry” to “wet.” And 18 of those jurisdictions voted “wet.”
The biggest of those was Plano, which passed the “Legal sale of all alcoholic beverages for off-premise consumption only” option by a 66%-34% margin.
According to the spirits council, that means 59 out of 65 local elections have gone its way in the past year, a 91% success rate.
And now, they’re taking their push onto social media, starting a Facebook page called, “End Texas Blue Laws.” It already has more than 20,000 “likes.”
I presume none belong to Rep. Smith.
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