Liquor Industry News 6-19-13

Franklin Liquors


Wednesday June 19th 2013

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Pennsylvania: McIlhinney Plan Makes Major Changes to Liquor Bill


Source: Politics PA

Written by Carl Feldman, Contributing Writer

Jun 18th


If you can’t beat ’em, undersell ’em.


Senator Chuck McIlhinney (R-Bucks) unveiled his amendments to Senate Bill 100 Tuesday, making substantial changes to the law passed last March by the House.


His plan would not immediately sell off the Commonwealth’s 621 retail stores. Instead, he would create new licenses and allow other retailers to compete with the state stores.


Closure those decisions will be left up to the Liquor Control Board who over the next two years could determine which stores to close based on their sustainability.


“The only formula for cutting stores is the LCB determining if the private sector fills the demand,” said McIlhinney, who chairs the Senate Law and Justice Committee.


McIlhinney said he differed from Governor Tom Corbett and House Majority Leader Mike Turzai – who wanted the state system to be sold immediately – because he believes Pa. can get more for its money. He previously said he would have voted against HB790, the House’s liquor bill.


He had backup.


“If we were board members of a corporation with those valuations at that price our stockholders would sue us,” said Senate President Pro-Tempore Joe Scarnati (R-Jefferson).


Scarnati and McIlhinney said that the system may be worth far more than the current estimated $550 million, given the amendment’s provisions for the continuation of the state liquor wholesale system for the next two years.


McIlhinney’s proposal also does away with bidding for state liquor licences. The new legislation provides for the payment of an annual fee paid by the licence holder which varies depending on the services the license holder is licensed for.


The new licensing fee regimen makes it $8,000 for a wine and spirits license, $4,000 for wine or spirits, and $2,000 for specialty spirits.


“We heard most from existing licence holders and hear most about maintaining the value of their licence,” he said.


With the price of a liquor license bidding up into the hundreds of thousands in some locations, the new fees in many places will be a major drop in cost. McIlhinney said that those lost revenues will be recouped by increased sales.


Store hours would increase from the current closing time of 9pm to 11pm and would be able to be open on Sundays. Sales in grocery stores would be permitted, and could be purchased at any register, but the store must continue to have a license for consumption and seating accommodations. There is package reform allowing for restaurants, hotels, and eating places to sell up to four six packs, or two twelve packs.


The amendments would also eliminate the Johnstown Flood Tax, the 18% tax on all wine and liquor sales and put all excess revenue from the previous year into a fund for property tax freeze on senior citizens.


When asked if he had the votes needed to pass through the Senate, McIlhinney responded, “I have enough votes to get it out of my committee.”


Senate Majority Leader Dominic Pileggi (R-Delaware) said they did not currently have the 26 votes needed to pass the Senate but did offer his support.


“Senator McIlhinney has done a great job and this is an excellent starting point.”


This sentiment was echoed by Governor Tom Corbett in a statement released after the press conference.


“Senator McIhinney’s legislation is another important step in giving Pennsylvanians what they want: choice and convenience,” he said.


If Senate Republicans want to deliver a bill to the governor’s desk before the summer recess though they will need to work quickly. Only 12 days remain in the current session.


Senate Democrats remain unified in their opposition to the Republican’s plan in a statement from Senator Jay Costa’s (D-Allegheny) office, also released in response to McIlhinney’s announcement.


“The plan offered by Senator McIlhinney confuses the issue and raises significant questions about lost revenues and wine and spirits expansion into to tens of thousands retail outlets without control,” he criticized.


Costa wasn’t alone. Capitol police had to empty the room prior to the event and agreed to readmit only 10 of the UFCW 1776 workers who sought to protest the measure. The union represents state store employees.


McIlhinney also took a shot from Matt Brouillette, President & CEO of the conservative Commonwealth Foundation think tank and a strong supporter of privatization.


The plan, “falls short in delivering the convenience, selection, and pricing that Pennsylvanians demand,” Brouillette said.


“His proposal, which keeps the state-owned and operated liquor stores as well as the government-run wholesale monopoly of wine and spirits cannot be considered privatization.”




Pennsylvania: Highlights of Sen. Chuck McIlhinney’s liquor privatization plan


Senate liquor plan Sen. Chuck McIlhinney, R-Bucks, describes how his liquor privatization proposal would generate money for the state.


Source: Patriot News

Jan Murphy

June 18, 2013


Sen. Chuck McIlhinney, R-Bucks County, unveiled a liquor privatization plan today that would allow beer distributors to sell six-packs and the 14,000 current licensed establishments the opportunity to buy expanded permits to sell wine and/or spirits.


It also proposes directing money made off these changes to freezing senior citizens’ property taxes, funding rape crisis and domestic violence programs, and establishing a Safe Ride Home grant program.


McIlhinney was joined by Senate Republican leaders in announcing the plan at a Capitol news conference. Senate Majority Leader Dominic Pileggi, R-Delaware County, admits the Republicans lack the 26 votes needed to pass the plan out of the Senate now but will work on rectifying that.


The following are some highlights of his plan:


Allow delis and eateries to get a licenses to sell up to 4 bottles of wine for off-premise consumption and sell wine for on-premise consumption.


Allow beer distributors to obtain licenses to sell wine and/or spirits in any quantity or size.


Allow restaurants and hotels to obtain permits to sell up to four bottles of wine and up to two bottles of spirits.


Allow for specialty shops to open selling one specific kind of spirits.


Sets annual license fees of $2,000 for specialty shops; $4,000 for wine or spirit licenses and $8,000 for wine and spirit permits. There would be no upfront fee.


Establish consistent hours for liquor sales from 8 a.m. to 11 p.m. and Sunday hours.


Allow restaurants, hotels and delis to sell up to four six-packs or up to two 12-packs.


Allow for direct shipment of wine to people’s homes.


Eliminates the 18 percent Johnstown Flood tax on wine and spirits.


Requires the PLCB to order whatever product a license holder wants.


Removes the requirement for grocery stores that have a restaurant license to maintain a separate checkout for beer, wine or spirit purchases.


Gives an 18 percent discount on wholesale wine and spirit purchases to licensed establishments, allowing them to sell those products at a lower price than state stores.


Authorizes the PLCB to close state stores not deemed profitable over the next two years when a study would be done to evaluate the impact of divestiture of the wholesale and remaining retail system on the commonwealth’s finances.




Beverages: Keeping an Eye on CPI


Source: CITI

Jun 18th


Alcoholic Beverage Prices Were Up Again – The CPI for Alcoholic Beverages (Off-Premise) increased 1.2% in May, and has shown a ~1% increase for thirteen consecutive months, dating back to May 2012. The CPI for Alcoholic Beverages (On-Premise) increased 2.2% this month, down from the 2.6% increase seen in the previous month. The CPI for Beer (Off-Premise) increased 1.3% this month, just below the 1.4% increase seen in the prior month. The CPI for Spirits (Off-Premise) was up 1.2% this month, above the 0.9% increase seen in April. The CPI for Wine (Off-Premise) increased 1.0% in May, below the 1.3% increase seen in April.




MillerCoors Updates Earnings Outlook, Mix Aims


Source: Stifel

Mark D. Swartzberg

Jun 19th


In its analyst meeting Tuesday afternoon, MillerCoors (42% owned by Molson Coors, 58% owned by SABMiller) upped its view of anticipated revenue and EBITA growth over the next three to four years, saying it targets volumes averaging flat to down 1% annually (was down 1%-2% annually), revenue per barrel averaging up 2%-4% annually (was up 2%-3%), and EBITA margin expanding 30-60 bps annually (was up 25-50 bps annually).


We consider management’s revenue outlook sound since the price/mix assumption is supported by ABI’s aims and effectiveness and the volume target anticipates continuing contraction of share in a category we expect to be flat to slightly up. We also continue modeling weaker volume this year – down 2.5% – given 1H trends and 2H comparisons and reiterate our 12 month target of $60 per share.


The company emphasized plans to defend share, mainly by moderating declines of Miller Lite, sustaining growth of Coors Light, and increasing mix of Blue Moon, Leinenkugel, Redd’s, Third Shift, and other above-premium brands.


Management also plans to extract costs from its economy portfolio by eliminating non-core brands and reinvesting behind core economy brands (e.g. Keystone Light, Miller High Life). Additionally, PET packages will be rolled out in place of glass for large-format singles, reducing breakage and freight costs (a case of 40oz PET bottles weighs 12lbs less than glass).


Our Molson Coors estimates are in-line with MillerCoors management’s revenue view, and we anticipate the equivalent of approximately $0.08-$0.12 more annual EPS than that implied by MillerCoors’s management’s margin outlook, or 2%-3% of our 2014E EPS. We leave our estimates unchanged given the size of the difference and potential upside from other sources (e.g., wholly-owned cost-cuts announced last week, slightly ahead of our model).


We reiterate our Buy rating and $60 price target (13.0x 2014E EPS of $4.36). TAP shares are at a larger discount than usual to their Staples peers (e.g. P/E relative to the S&P 500 Consumer Staples Index reflects a 12-16% discount to the three-year, five-year median), and we view deleverage and continuing improvement in Europe (volume positive year-to-date through April, likely through May too) as catalysts for the shares.


Target Price Methodology/Risks


Our 12-month target is $60 per share, or 13.0x 2014E EPS of $4.36.


Risks. Canada lost share to value brands in 1Q and was weak in April. We believe our reduction of Canada volume and profit estimates after 1Q reflects this pressure, but it could be greater than anticipated.




SABMiller to get bite of Kopparberg Brewery apple


Source: BD Live

by Zeenat Moorad

18 June 2013


SABMILLER, the world’s second-largest brewer by volume said on Tuesday it had entered into a co-operation agreement with Kopparberg Brewery for the long-term licensing of Kopparberg cider products.


This is in line with the global brewing giant’s aim to grow its categories, particularly in developing markets.


“All Kopparberg cider products, including Pear and Naked Apple, will be available for distribution, and the co-operation will take place in various markets where Kopparberg does not have an existing interest,” SABMiller said.


Sweden-based Kopparberg Brewer distributes to more than 40 countries worldwide.


“As one of the largest cider producers in the world, I see this collaboration as something very positive and I am confident that together with SABMiller will continue to develop the cider market in the world,” Kopparberg Brewery CEO Peter Bronsman said.


The first SABMiller operation to sign a local distribution agreement is Australia, and others will follow in the coming months, the maker of Miller Lite, Grolsch and Peroni said.


The Kopparberg brand is already available in South Africa.


Cider of Sweden South Africa, which trades as Kopparberg South Africa is the official distributor of Kopparberg in the country.


“We launched two of the variants in Johannesburg and Cape Town. We are about to launch into KwaZulu-Natal,” Kopparberg South Africa general manager Gavin Schorn said.


In May, SABMiller said it would continue to develop and differentiate its beer and soft drink brand portfolios, “leveraging local insights to bring the right products to each market and capture value”.


As tough economic conditions prevail in the mature beer markets of Europe and the US, SABMiller reported a 10% increase in group revenue to $34.5bn for the financial year to March 31, benefiting from African and other emerging markets where it earns about 75% of its profit.


Earlier in 2013, its Chinese joint venture, China Resources Snow Breweries agreed to buy the brewery of Chinese beer maker Kingway for $864m (R7.6bn).


The deal, which included Kingway’s production and sales business, as well as seven breweries is meant to bolster CR Snow’s market position in the booming Guangdong region and add scale and market presence in other cities.




Quick Note – Molson Coors (TAP US, Buy) – Raised guidance from MillerCoors


Source: Nomura

June 19, 2013


European Beverages

Stock Rating: Buy

Target Price: USD 61.00

TAP.N (USD 49.99)

Ian Shackleton – NIplc


The message from the MillerCoors investor day was similar to that from MolsonCoors’ own event last week – cost cutting/margin targets ahead of our estimates, a strong message on investing in innovation and brands, a business model which is adapted for the “small is beautiful” trend in beer, an upbeat management team. Although Q2 volume is likely to be weak, both for MillerCoors as well as for MolsonCoors, we continue to believe that our FY13 EPS estimate looks robust. We continue to see a story where the shares can rerate from current 11.4x FY14 PER towards 14x, still at a discount to the beer average of c.16x; this supports our TP of USD61.


Positive tone from MillerCoors investor day

MillerCoors (joint venture between SABMiller and MolsonCoors) hosted its US investor day in New York yesterday evening. Although the basic planks for growth are very similar to those set out in the last investor day in December 2011, the mood from within the company has changed remarkably, which would appear to reflect a much improved Q1 performance, ahead of competitor AB Inbev, and not far behind the total US beer industry. For SABMiller US now represents c.12% of EBIT, but for MolsonCoors it was 46% of EBIT in 2012


Guidance revised upwards

MillerCoors has revised up some of its three-year medium-term guidance; it now expects volumes to be flat to -1% (v previous negative

-1-2% in short term); price/mix +2-4% (v previous +2-3%) and margin guidance now +30-60% pa (v previous +25-50bp). In December 2011 the company described the industry as facing a “volume challenge like never before” and particularly mentioned the threat from other alcohol (wine and spirits); now the company expects beer industry volumes to be flat to slightly up but with the company losing some share due to its mix. For cal 2013 we assume MillerCoors volume declines -0.4% v a flat market, price/mix +3% (midpoint of new guidance) and margin growth of 20bp (now looking very conservative below the medium-term range).


Cost savings programmes evolving

Since its formation in 2008, some $900m cost savings have been achieved, with $127m in the last five quarters. Integration of IT systems (from legacy Miller and legacy Coors) is still a factor but company emphasised further saving programmes on energy, standardisation of packaging and on logistics. At its own investor day last week, MolsonCoors set cost savings targets for its 100%-owned businesses; excluding Millercoors, co is targetting USD40-60m pa over five years (total USD200-300m) with a runrate at the top of this range over the first three years (say USD50-60m). Including the share of Millercoors, this means that in years 1-3, the total savings should be at least USD60-70m pa, well ahead of our modelling. Co accepts that some of this will be reinvested; the historic reinvestment rate was c.60% and we think it should be similar in future. However, this does indicate 40% will fall to the bottom line. These programmes start in 2013, and we believe that the benefit will build over the quarters (Q1 had minimal benefit).


Wholesaler and customer relationships building

The company remains committed to working through third-party wholesalers in the US. Company indicated a new working relationship with its top seven wholesalers (accounting for 17% of volumes), as well as a new customer focus on independent small formats where competitor AB Inbev has traditionally been strong.


Increasing focus on above-premium

In 2012 above premium accounted for 7% of MillerCoors volumes v 30% for the industry, with 5% in craft v industry 9%, 2% in imports v industry 13% and under 0.5% in speciality v industry 8%. However, with the Tenth and Blake separate sales structure now in place for c three years, we see this helping improve the weighting to above premium, with company aiming to be more in line with the industry by 2016.  Key drivers here will be key brand Blue Moon (now nearly 2m barrels), Leinenkugel, Crispin cider, Peroni import beer and Batch 19. However, company is also now developing more “mass” brands like Redds and Third Shift which tend to price index at 100-150, whereas much craft indexes over 150.


Premium light – aim to keep overweight position

With 57% of volumes in premium light v industry at 35%, company will seek to remain overweight in this segment as it overindexes in profit (63%). Miller Lite has continued to decline especially in the ontrade where it is traditionally strong (29% of volumes); however, Coors Light is aimed to grow current share from 8.2% to 10% of total market.


Economy – reducing SKU’s

With 31% of volumes in economy v industry 24%, company aims to reduce SKU’s where it has 3x more than AB Inbev but 30% less overall sales. Company will seek to simplify its portfolio over the next three years.




Quick Note – Carlsberg (CARLB DC, Buy) – Innovation / R&D investor event


Source: Nomura

June 19, 2013


European Beverages

Stock Rating: Buy

Target Price: DKK 720

CARLb.CO (DKK 512)

Ian Shackleton – NIplc


Despite the recent weakening of the RUB vs Euro (potentially taking c.1% off EPS), we see FY13 guidance of EBIT before special items of “around DKK 10bn” as still realistic. We believe that current trading has been mixed in Q2 given poor weather in parts of Europe (GB and France, although better weather in Scandinavia and Russia) as well as continued volatile Russian beer production data in early Q2. Although we see scope for a re-rating of the shares as concerns over Russia abate, it may be that Q2 reporting (due 21 August) is not a key catalyst.

Valuation – 2014 PER 12x v sector ave16x


The company hosted an investor event in Copenhagen yesterday on its innovation and R&D (research and development) activities. Since the appointments of CEO Rasmussen ex-Gillette and CMO ex-Coke, we have seen company brand marketing skills at the more advanced end of global beer. This genuinely does appear to be driving market share gains now across Europe, as was visible with recent Q1 results. We believe that innovation is a key element of the company’s ambition to be the fastest growing global beer company over the medium term. With integrated research, development and commercial innovation capabilities in place, we see the company pursuing an ambitious innovation agenda, with a strong innovation pipeline to capture future growth opportunities.


Innovation in beer lags other FMCG

Currently Carlsberg’s innovation rate is approximately 10pc of net sales over the past three years. Within the group, we see a higher innovation rate in E Europe vs W Europe.  The company sees an opportunity to close the gap on innovation vs other FMCG companies, with an objective to reach 15pc over the medium term.


Innovation – a key priority for Carlsberg

The company has integrated research, development and commercial innovation capabilities. Since the establishment of a Group Sales, Marketing and Innovation function a few years ago, we detect a more collaborative approach to innovation. We believe this is starting to result in some interesting moves in innovation, with the company able to move more quickly on innovation vs several years ago. The company is building a new development centre which will be opened in q1 2014. This should lead to a faster roll-out of innovation.


Importance of craft in innovation

We see a key challenge for global brewers is to get to grips with a “small is beautiful” approach after many years of focus on efficiency gains from scale. Carlsberg would consider that 25 of its 500 brands could be viewed as craft by the consumer. With its strong focus on local brands, as well as some global brands, we see Carlsberg in a strong position to navigate some of the challenges here.


Scientific approach to return-on-marketing investment

The company is rolling out a more scientific approach to analysing drivers of volume growth, with an overall aim to embed a culture of ROI decision-making for above-the-line (ATL) and below-the-line (BTL) marketing. ROMI (used by several FMCG companies) is currently being piloted in a few markets and being rolled out across the group.  Under ROMI, c.70pc of brand marketing spend is captured although a lower amount of trade marketing. The company believes that ROMI can improve ROI by 20pc by fine-tuning brand investments.


Brand drill-down

The company has five global brands (Carlsberg, Tuborg, Somersby, Grimbergen, and Kronenbourg 1664) which it manages centrally and 495 local brands managed locally. The company provided examples on where it is succeeding with brands:


Examples of recent speciality innovation:

– Somersby cider – core range of apple, but company is considering innovation beyond apple variants including fruit flavours. Somersby has been rolled out to 35 markets now. In 2012, Somersby grew 77pc globally.

– Carlsberg Citrus – lower strength beers are growing in the UK market (2.8pc abv) with premium pricing. Co has taken a 19pc share of low abv beer in nine weeks in the UK. This brand took less than six months to develop.

– Radler – we would see Radler as a powerful recruitment tool for females and young adults. The brand carries a higher margin vs mainstream beer. The company has rolled out Radler in nine markets, and sees an opportunity to expand out of lemon into orange and grapefruit.

– Seth and Riley’s Garage Hard Lemonade – the company developed this brand in Sweden, now being rolled-out across five markets. The brand grew 42pc in 2012.

– Skoll by Tuborg – the company has developed a new generation of beer mixes including vodka and citrus beer, with strong on-trade presence in parts of Scandinavia. Took 15 months to develop


Celebration platform:

– Grimbergen (Abbey beer)- commands a 250+ price index vs mainstream beer. The brand is in 30 markets with 31pc revenue growth in 2012.

– “Raw” (non pasteurised, non filtered beers) – the company sees the freshness segment as another area of growth, to address the needs for fresh products. Initially, this was developed with the Baltika brand in Russia, however non-pasteurised brands are now rolled out in seven markets.

– Provenance platform – eg Czech beer Zatechki Gus.Originally rolled out in Russia, now in four markets with further expansion plans. Provenance is a key growth area in E.Europe.

– Jacobsen craft beer. Launched in three markets. 54pc growth vs 2010. Price index 300+ vs mainstream. The company is in particular targeting the meal occasion.


Experience platform:

– The company is focused on ensuring consistency of draught product at the point of sale. The company has developed a proprietary one-way PET DraughtMaster keg system (10-20 litres) with a 31 day shelf-life (vs traditional keg 5 days). The DraughtMaster system is currently rolled out in Italy first and is being trialled in 17 markets. Over the medium term, we believe the company could roll it out to markets where it does not have assets or infrastructure.




American Beverage Licensees Conference Brings Industry Together


Alcohol Retailers Meet with Members of Congress, Industry in Washington, DC


Source: ABL

Jun 18th


Beer, wine and spirits retailers and members of the alcohol industry from across the country gathered at the American Beverage Licensees Annual Conference June 9-11 to hear from public officials, industry leaders and an array of experts on policy and business issues facing beverage retailers.  


Congressman Tom Petri (R-WI), Chairman of the Subcommittee for Highways and Transit of the House Transportation and Infrastructure Committee, delivered a keynote address covering a wide array of topics including the current state of politics in Washington and business before his subcommittee, including highway safety policy, the costs involved with transportation reauthorization and new technologies being developed for use in automobiles.


A series of panel discussions provided attendees with opportunities to hear from more speakers than ever before at an ABL conference – 25 speakers and sponsors in all over a 1 ½ day program.  The Alcohol Industry Leaders panel featured CEO’s from the industry’s leading trade associations.  Dr. Peter Cressy, President & CEO of the Distilled Spirits Council of the United States; Joe McClain, President of the Beer Institute; Craig Purser, President & CEO of the National Beer Wholesalers Association; and Craig Wolf, President & CEO of the Wine & Spirits Wholesalers of America addressed federal and industry issues facing their members and suggested ways in which they thought the industry could work cooperatively to address shared concerns.


The Political Reporters panel featured 4 journalists who cover politics and government in Washington, DC.  Tory Newmyer of Fortune, Anna Palmer of Politico and Pete Schroeder of The Hill talked about current issues before Congress and in the media, and provided insights on how journalists cover politics and lobbying.  The panel was moderated by Mike Melia, Senior Broadcast Producer of the PBS NewsHour.


On another panel, Craft Producers shared their insights on their businesses, their relationships with retailers and where they see the future of craft products.  Bill Butcher, Founder of Port City Brewing; Rob Deford, President of Boordy Vineyards; and Wes Henderson, COO of Angel’s Envy Bourbon, spoke candidly about the challenges they’ve faced in getting their businesses to where they are today, and the opportunities they see for future growth including trends such as session beers, retro spirits recipes and regional definitions of American wines.


Individual educational speakers also conducted seminars throughout conference.  Former law enforcement officer Bill Georges provided his perspective on the current state of the fight against drunk driving, which was especially topical following the National Transportation Safety Board’s recommendation on May 14 to lower the legal BAC limit to .05%.  Martin Johnson, a retired detective and Department of Homeland Security educator, spoke on how licensees can prevent the successful use of false identification within their establishments.  Later, Neil Trautwein, Vice President and Employee Benefits Policy Council at the National Retail Federation, discussed the impact of the Affordable Care Act on small business owners and retailers.


Updates on ABL’s federal affairs effort by ABL Executive Director John Bodnovich; a seminar on grassroots lobbying by Adrian Hunte of the Hunte Law Group; and a presentation on the economic impact of direct retail alcohol sales by economist John Dunham of John Dunham & Associates added to conference’s emphasis on policy issues and information.


Building on the knowledge they gained during the conference program, ABL members and conference attendees took to Capitol Hill on June 11 to meet with members of Congress and their staff.  Over forty meetings with Congressional staff and members took place, concluding with a reception on Capitol Hill.


“With the conference coming to Washington for the first time, the emphasis was ABL’s mandate to speak for retailers on alcohol and small business issues,” said John Bodnovich, ABL’s Executive Director.  “Focusing on the positive aspects of the beverage alcohol industry, we brought the message of America’s beer, wine and spirits retailers to the nation’s capital.”


The conference also offered the opportunity to learn about products and network with other retailers and members of the industry.  A reception sponsored by the National Association of Beverage Importers, breakfasts by Beverage Media and Proximo Spirits, and the MillerCoors annual luncheon brought conference attendees together.  The International Bottled Water Association provided attendees with bottled water to keep them refreshed throughout the conference.


ABL and its members were afforded the opportunity at the conference to recognize retail and industry leaders in two unique ways.  Honored for their excellence in retailing, ABL was proud to recognize the Brown-Forman Retailers of the Year during the conference general session.  Nominated byABL’s state affiliates, the Retailer of the Year awards recognize those dedicated small business owners who serve as the face of the industry to millions of Americans.  


The ABL Top Shelf Award Banquet, sponsored by the Distilled Spirits Council of the United States, served as a fitting end to the conference, with the 2013 ABL Top Shelf Award being presented to Craig Wolf, President and CEO of the Wine & Spirits Wholesalers Association for his outstanding work for the industry and his service to the country in the United States Army Reserve.  During a pre-dinner reception, over two dozen craft distillers from across the country conducted a tasting of their products.  




Sonoma County grape value jumps 41% in year




Monday, June 17, 2013


A strong grape harvest and growing demand for young vines boosted Sonoma County agriculture above $821 million in value in 2012, a 41 percent increase over 2011, according to a new report from the county agricultural commissioner.


The jump was driven largely by a record year for wine grapes, with 267,000 tons worth almost $583 million, an increase of 60 percent over 2011, which was considered a poor year.


“We’re in a recovery phase after 2010 and 2011 were so low … everyone’s feeling good,” said Karissa Kruse, president of Sonoma County Winegrowers.


Sales from plant nurseries jumped about $9 million in 2012, to $33.5 million. That was driven by huge demand for grape vines, both rootstock and varietals for grafting, a potentially lucrative new market for the county.


Santa Rosa’s Novavine has nearly doubled its sales in three years, from 3.5 million vines to about 6.5 million this year and next, CEO Jay Jensen said. Even after expanding its facilities, the company is sold out for 2014 and is accepting orders for 2015.

“It goes back to the recession,” he said. “A lot of vineyards and large operators just didn’t do plantings,” resulting in huge pent-up demand.


Now that the economy is turning around, and a longstanding surplus of bulk wine for value-priced labels is used up, producers nationwide are in a frenzy of replanting, and some are setting up large new vineyards for bulk-wine production, he said.


Sales are particularly strong in Texas and the Mid-Atlantic, though the company is shipping as far as China, he said.


Agricultural Commissioner Tony Linegar will present the annual crop report to the supervisors todayTuesday. He said the numbers in the report probably represent the new status quo for the Sonoma County’s agriculture sector for years to come.


After years of growth in vineyard acreage, the amount of easily planted land is used up, he said. The acreage probably will stabilize a bit above 60,000. It was just over 59,000 in 2012 and hit a high of around 63,000 before the recession, a number that growers agree is probably close to the upper limit of the county’s available vineyard space.


Troubled older farm sectors, such as the once powerful apple and dairy sectors, seem to have reached a stable floor after years of decline, Linegar said. Farmers in both categories have been selling into niche markets, including the increasing demand for Sonoma County apples in hard cider production, and tapping into the value-adding power of the organic label.


“We do have to have more specialized, more boutique, high-end products to make it profitable to farm,” he said, now that bulk production of staples such as milk and apples has moved to other regions and overseas.


Apple farmer Lee Walker concurred. About three years ago, he decided to close his family farm near Graton but then agreed to give it one last chance, focusing on sales of fresh apples to high-end markets and direct to consumers. That strategy worked surprisingly well and kept the business open, he said, particularly because Sonoma County’s signature variety, Gravenstein, has become a high-demand specialty crop.


Economic analysts say the crop report understates the overall value of agriculture to the economy. Ben Stone, Executive Director of the Sonoma County Economic Development Board, said agriculture probably accounts for about a third of the $18 billion in economic activity every year if you consider the secondary effects of wine production, which is considered manufacturing, tourism and the ripple effects on the retail trade.


The Sonoma County Farm Bureau, the Winegrowers and the Sonoma County Vintners are working on a report to more accurately determine the value of farming to the county economy, said Lex McCorvey, executive director of the farm bureau.


“The value of crops produced is only the tip of the iceberg,” he said. “When made into wines, cheeses or other consumer products, our diverse crop base actually generates billions of dollars and creates thousands of jobs in Sonoma County.”




Frescobaldi releases wine made by prisoners


Source: the drinks business

by Lucy Shaw

3rd June, 2013


Prominent Italian wine producer Frescobaldi has partnered with a group of prisoners on a tiny island in the Tuscan Archipelago on a white wine project.


Having planted vines on the island a number of years ago, inmates of the remote penal colony of Gorgona have made 2,700 bottles of Frescobaldi per Gorgona DOC, a Vermentino and Ansonica blend.


The vines are planted in a corner of the island to the north of Elba, where Napoleon was exiled by the British.


Despite their hard graft, the prisoners will not be allowed to drink the wine, which will instead be sold to restaurants and bars around Italy.


Thirteenth generation family member and the company’s vice president Lamberto Frescobaldi, who worked on the project, describes the wine as “intense, with a marvellous character.”


The Frescobaldi family, one of Italy’s oldest and most respected wine dynasties, were hands on throughout the project, offering the island’s 50 inmates advice on planting, picking and winemaking techniques.


Marchesi de’Frescobaldi is the first company take part in a scheme launched last year in which businesses invest in the island to give prisoners skills that will help them get a job after they’re released.


In addition to winemaking, the prisoners work on a farm producing cheese and olive oil.


The project was welcomed by Anna Maria Cancellieri, the Italian minister for justice, who said it could be replicated at other prisons.


“Initiatives like this have a constructive effect on inmates, allowing them to specialise in an area of work that will be useful to them once they leave prison.


“For prisoners who do not find work, the rate of repeat offending is 80%,” she said.


Italian prisons are the third most overcrowded in Europe after Serbia and Greece.


“We need to go ahead with this model because we want to show the world that Italy’s prisons are worthy of a civilised country,” Cancellieri added.


Many Italian islands have been used as prisons in the past, both for political prisoners and common criminals. Gorgona is one of the few still in operation.


Public access to Gorgona is forbidden without special permission and boats must keep 1,600ft from the shore.




Marciano Brothers And Christian Navarro Announce Purchase Of Legendary Wine Business Wally’s Wine & Spirits


Fashion leaders and wine connoisseurs purchase Los Angeles’ beloved wine and spirits business from retiring founder Steve Wallace


Source: PR Newswire

June 18, 2013


Maurice and Paul Marciano, brothers and co-founders of global denim lifestyle brand GUESS, together with renowned wine personality Christian Navarro,  announced their purchase of Wally’s Wine & Spirits, the world-famous wine and spirit merchant in West Los Angeles from acclaimed founder, Steve Wallace. Opened in 1968, Wally’s is the largest retailer of wines and spirits in Los Angeles and has become an institution for wine collectors around the globe.  


The partners purchased the business and its assets from retiring founder, Steve Wallace. Maurice Marciano explained, “My brother Paul and I have been buying wines from Wally’s for twenty years, dealing extensively with Steve and Christian. When we heard that Steve was thinking of retiring, we immediately contacted him and expressed our interest in purchasing the business, but only on the condition that Christian would remain in a leadership role.” As part of the acquisition, Christian Navarro has been appointed president. Wally’s Wine and Spirits will maintain its well-known name and service.


“Steve built Wally’s into the institution it is today through his commitment to customer service and an absolute belief in product,” said Paul Marciano. “That focus on offering the best product with the best knowledge has garnered him the trust of thousands of discerning customers around the world and is something my brother Maurice, Christian, and I are absolutely committed to protecting and building upon into the future.”


Maurice and Paul Marciano are wine connoisseurs with a specific passion for wines from Bordeaux and Napa Valley.  Maurice Marciano recently purchased a boutique winery in Napa Valley where he  produces a Bordeaux-style red wine.  His first release will be a 2012 vintage that is expected to debut in 2014.




BJ’s marks 200th club opening


Source: RT

June 18, 2013


BJ’s Membership Club is celebrating its 200th store opening with its latest location at 5200 Red Tip Road in Fayetteville, N.C. The club will feature a fresh bakery, BJ’s Cafe, deli, optical services, rotisserie chicken, tire center, gas station and Verizon Wireless Kiosk.


In recognition of the 200th store opening, BJ’s will host grand opening celebrations from Friday, June 21 through Sunday, June 23. The events will be open to members as well as the public. BJ’s will have a variety of foods and beverages for people to sample, Kellogg’s Tony the Tiger and Toucan Sam will be on hand, as will balloon artists and face painters. BJ’s will also give away reusable shopping bags while supplies last and provide information about the club’s selection of organic and all-natural foods.


“An important part of our company is giving back, and BJ’s takes great pride in being a good corporate citizen and supporting the communities in which we live and work,” said Fayetteville GM Jerry Bullock. “We take our responsibility to our new neighbors, who make up this great city, very seriously and look forward to becoming part of the fabric of Fayetteville.”


The new club has also partnered with the VanStory Hills Elementary School as part of BJ’s Adopt-a-School program. The school will receive a $1,000 donation to enhance educational programs and curriculum objectives, a shopping cart full of items from the school’s wish list valued at $1,500 and a free membership.  


Additionally BJ’s has joined with Feeding America to provide wholesome and nutritious unsold food to food banks throughout the company’s 15-state footprint. The Fayetteville Club will donate its unsold food to the Second Harvest Food Bank of Southeast North Carolina, and to kick off the relationship, BJ’s is presenting the food bank with a $2,500 donation.


BJ’s also is providing $2,500 gift card to the USO of Fayetteville to help support the Airport Travel Center, which every month serves more than 3,000 troops and families who are leaving or arriving to the area.


Lastly, BJ’s is donating $2,500 to the Junior League of Fayetteville to sponsor the league’s annual fundraiser – the Holly Day Fair. The funds raised by the event supports the league’s child mental health programs.


The Fayetteville Club joins eight other BJ’s Clubs throughout N.C. The club will open Monday through Saturday, 9 a.m.-10 p.m. and Sunday, 9 a.m.-8 p.m.


BJ’s operates 200 warehouse clubs and 113 gas stations in 15 eastern states.  




Virginia: Va. alcohol regulators make moonshine bust


Source: Times Dispatch

June 18, 2013


More than 300 gallons of moonshine has been seized from the home of a Pittsylvania County man, according to the Virginia Department of Alcoholic Beverage Control.


Besides the illegal spirits, ABC agents and Pittsylvania County Sheriff’s Office deputies also found 18 weapons and cash during the raid Monday at the home of Ronald Way Bray.



The ABC’s special agent in charge, Kyle Blanks, said undercover operatives purchased moonshine from the 63-year-old Bray in the months leading to the bust, which yielded 339 gallons.


Media reports said the seized moonshine was packaged in 1-gallon containers similar to milk jugs. The raid occurred in a rural neighborhood.


“Moonshine isn’t limited to the back woods,” Blanks said in a news release. “We’ll continue to follow up on illegal whiskey leads wherever they take us in the commonwealth.”


Officials said they will seek charges against Bray that include the illegal sale of alcohol and possession of untaxed liquor, among other counts.


A telephone listing could not be found for Bray.






Source: DISCUS

Jun 18th


Higher sales and hospitality taxes included in the state budget will harm local businesses and send consumers into New Hampshire, according to the Distilled Spirits Council (DISCUS), which today urged Governor LePage to veto the bill on behalf of the state’s significant hospitality community.


“By raising additional taxes on Maine consumers, legislators are treating the hospitality industry like a virtual ATM,” said DISCUS Vice President David Wojnar, noting that Maine spirits consumers already pay more than their fair share of taxes.  “These tax hikes strike right at the heart of hospitality businesses and we strongly urge Governor LePage to reject any bill that would further punish the hospitality industry which is only now regaining a foothold after the recession.”


Increasing the General Sales Tax rate from 5% to 5.5% (impacting all beverage alcohol) and hiking the Rooms & Meals Tax from 7% to 8% will simply add to the already burdensome spirits tax rate in which 67% of the typical purchase price for a bottle in Maine already goes to taxes of some kind. Maine currently has the 9th highest spirits tax rate (total tax burden) in the country, according to DISCUS.


“Increasing taxes on the hospitality industry at this point will only drive more customers across the border into New Hampshire,” Wojnar said, pointing out that Maine competes with New Hampshire on price.  He noted that New Hampshire’s total spirits tax burden is 59% — or eight points less than Maine’s high rate.   


Wojnar also said the tax hikes would harm Maine’s craft distilling industry made up of a growing list of seven small producers.


“The hospitality industry is the backbone of Maine’s economy,” Wojnar said. “It’s our hope that Governor LePage will veto any additional taxes that would negatively impact hospitality businesses, employees and their customers.”




United Kingdom: Hi-Spirits Named Most Innovative Supplier by JD Wetherspoon


Source: Hi-Spirits

Jun 18th


Hi-Spirits has been named Supplier of the Year for Innovation by JD Wetherspoon, one of Britain’s biggest managed pub operators.


Jeremy Hill, chairman of Hi-Spirits, was presented with the prestigious accolade by Wetherspoon’s commercial director Paul Hine at the pub group’s annual supplier awards ceremony. The company, which operates around 900 pubs, singled out Hi-Spirits from its wide range of food and drink suppliers in recognition of the high levels of brand support Hi-Spirit’s provides.


“Wetherspoon’s is recognised as being at leading edge of innovation in the UK pub sector,” said Hill, “and is regularly first-to-market with new products and serves. The Wetherpoon’s team rightly expects its suppliers to be at top of their game, and so we’re delighted to have been recognised with this award.”  


Wetherspoon pubs stock a range of products supplied by Hi-Spirits, including Buffalo Trace Bourbon, which is a ‘house pour’ across the entire business.

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