Dear Client:br /br /In its fourth quarter and full year results, LVMH Moet Hennessy saw organic revenues decline br /-14% for the year and -6% for the fourth quarter for its wine and spirits unit. “2009 was a turbulent year,” said Christophe Navarre, head of LVMH’s wine and spirits unit. “Eighty percent of the drop in revenue was attributable to champagne sales going down, particularly prestige vintages, whereas cognac and spirits withstood the storm.” It was “both consumers changing habits” and “significant destocking of distributors and trade,” particularly in Europe and the US, that took a toll on full year results. He pointed out that champagne always suffers most of all wine and spirits categories when there’s a crisis. The champagne region’s shipments were down -4% in the fourth quarter overall. Christophe said it usually takes about 5 years for the champagne market to recover from a dip like this, but once the market recovers it posts more growth than in the past. Moet Hennessy’s goal is to “shorten the recovery time,” he said.br /br /Hennessy “demonstrated good resilience in 2009” and registered growth in Q4 thanks to “renewed momentum” in the US and China. Christophe noted that Hennessy is doing better than most of its competitors in the US and gained 4 volume market share points in 2009. Glenmorangie had an “encouraging performance” in the US in 2009, while Belvedere maintained “good resilience.” Meanwhile, sparkling wine had “good momentum” in the US. br /br /MH says it will maintain its pricing policy in 2010. When asked about future acquisitions, LVMH chairman Bernard Arnault said the company is focused on organic growth and “prices are still very high.”br /br /bFRENCH GROWERS ACCUSED OF SELLING FAKE PINOT NOIR TO GALLO’S RED BICYCLETTE/bbr /br /Thirteen defendants from France’ Languedoc region are accused of selling millions of dollars worth of tainted pinot noir to Gallo for its Red Bicyclette brand, a href="http://www.decanter.com/news/news.php?id=294567"reports /aDecanter. The defendants include executives from two wineries and five co-operatives, as well as negociant Ducasse and conglomerate Sieur d'Arques. Executives from Sieur d'Arques are the only ones denying the charges. Prosecutor Francis Battut told Decanter that “executives from Sieur d'Arques maintain they were unaware the wine they were selling to their American client was not Pinot Noir, even though one of their own winemakers admitted it. I think they were mocking the court.” br /br /After conducting a year-long investigation, Battut says the defendants “knowingly” cut pinot noir with less-expensive merlot and syrah. He recommended prison sentences and heavy fines to a three-person tribunal in Carcassonne. They will announce their verdict February 17.br /br /French imports have had a hard enough time in the US in recent years, and a case like this will only likely hurt them. There’s a concern that the TTB may require guarantees from the French government, similar to what happened with Brunello in Italy. It remains to be seen... br /br /bDIAGEO FINDS WAYS AROUND NETWORK ADVERTISING BANS/bbr /br /It’s true that Diageo and other spirits companies have many roadblocks when it comes to advertising during sports events but the world’s largest distiller has gotten around it by partnering with the Redskins in 2002 and buying advertising on local television stations that don’t prohibit spirits ads. An interesting a href="http://www.washingtoncitypaper.com/display.php?id=38422"article /afrom Washington City Paper details Diageo’s sponsorship deal with the Redskins, which allows for signs promoting Diageo brands to be installed at FedExField and for its advertisements to run on local television during Redskins-controlled programming. Former Redskins player Ken Harvey was also named “director of responsibility.” In this position, Ken directs community service projects and promotes Diageo programs such as “Safe Rides” and Fourth and Life.”br /br /Don’t forget Diageo’s other marketing a href="http://www.winespiritsdaily.com/2009/11/captain-morgan-nfl-pose-makes-headlines.html"scheme /athat took place this November, when Eagles tight end Brent Celek struck the “Captain Morgan” pose during a game with the Cowboys. Diageo offered to donate $10,000 to a player’s charity of choice each time they struck the pose on camera. Before the marketing ploy became official, the NFL cancelled it by threatening to fine players. "This was fun for us. But the NFL has longstanding relationships with beer, and they were looking out for their partners' interest," said Diageo spokesman Dan Sanborn.br /br /Despite criticism from alcohol watchdog groups, Dan says “80% of the NFL fans are legal drinking age plus, and more than 50 percent are between 25 and 54 years old.”br /br /bWASHINGTON POLICYMAKERS SPEAK ON PRIVATIZATION/bbr /br /You may recall that legislators in Washington are considering privatizing spirits sales to help pay for the $2.6 billion budget deficit. An interesting a href="http://news.opb.org/article/6653-wa-ponders-privatizing-liquor-sales/"article /aby OPB News presents commentary from Democratic Senator Tim Sheldon, who supports the initiative, and Rick Garza, deputy administrative director Washington State Liquor Control Board, who opposes it. Rick points to data that suggests control states do a better job of keeping alcohol away from minors, while Tim scoffs “I think that's an exaggeration of their success. Of course since they're in the business and they tax and they regulate they are going to give you the best story, because it's a monolithic monopoly that wants to always protect itself.” br /br /The fact that Washington spent millions of dollars five years ago on new ABC stores and a new distribution center could hurt privatization plans, not to mention the fact that Washington has started allowing spirits sales at some stores on Sundays. Gov Chris Gregoire is also not interested in privatization because it would take years for the state to see any savings. br /br /bDIAGEO REPORTEDLY OFFERED SWISS TAX DEAL TO MOVE HQ/bbr /br /The Swiss canton of Zug has reportedly offered Diageo huge tax breaks if they relocate their British headquarters to Switzerland, Mark Kleinman Skyy News first a href="http://blogs.news.sky.com/kleinman/Post:e6c2122f-3c81-4cf3-9b41-8374e1b808dd"reported/a. Authorities in Zug reportedly told Diageo that 200 of its top executives would be exempted from paying personal income taxes. The company would also have the opportunity to negotiate a corporation tax rate of less than 10%, which is better than what Britain currently has. In his blog, Mark said he was “assured” that Diageo “has no plans to accept the Zug offer.”br /br /A Diageo spokesperson said: “As we have said before, we see many advantages to remaining a British domiciled company, but we have also made clear time and again that it is important the Government takes steps to ensure this country remains and develops its position as a competitive place to do business.”br /br /bGLENROTHES AND CUTTY SARK SWAP OWNERS/bbr /br /Berry Bros. Rudd announced plans to sell its Cutty Sark blended Scotch whisky brand to The Edrington Group in exchange for Edrington’s The Glenrothes single malt brand. Edrington will retain ownership of The Glenrothes distillery. Once the transaction is completed, Edrington will acquire all of Cutty Sark’s distribution contracts. Maxxium will continue to distribute The Glenrothes in key international markets and is also expected to provide a distribution option for other BBR brands. The agreement is expected to be finalized by April 2010. Further financial details were not revealed.br /br /bVIRGINIA ABC CONSIDERS ALCOHOL MARK UP/b br /br /Gov McDonnell is in the process of reviewing former Gov. Timothy M. Kaine's proposed budget for 2010-12 that includes fee increases of more than $150 million. McDonnell won the election on an anti-tax platform, but says he is open to fee increases that are tied to the government service they fund. One fee proposal would be a 2% price markup on alcoholic beverages sold in state-owned liquor stores. The Kaine budget estimated that would raise $4 million in each year of the biennium. This increase can be done administratively without the budget and was supposed to start this week, but the Department of Alcoholic Beverage Control has decided to wait to see how much money might be needed. Virginia currently has a $4 billion deficit.br /br /bWSD BRIEFS:/bbr /br /COSTCO NAMES NEW PRESIDENT. Earlier this week Costco named Craig Jelinek president and coo earlier this week, which is viewed as possible succession for chief Jim Sinegal, the 74-year-old co-founder and ceo. The company also created an Office of the President, which includes Craig, Jim, chairman Jeff Brotman and Dick DiCerchio, a senior evp. The four men will coordinate on “major company matters.” A Costco spokesman said there have been “no heir-apparent discussions,” according to WSJ, but there is also speculation that a succession race was set-up between Craig and Dick DiCerchio.br /br /SMALL PRODUCERS SUPPORT SCOTLAND’S MINIMUM PRICING. Small, independent whisky and beer producers are supporting a proposal in Scotland for minimum alcohol pricing. The policy is part of the Scottish Government's Alcohol Bill (introduced in November 2009) and mainly targets cheap alcohol (often private-label) sold at supermarkets. The Alcohol Bill would also ban promotions that encourage binge drinking; encourage retailers to only sell alcohol to 21-year-old adults and older; and introduce a “social responsibility” fee on some retailers.br /br /THE BRITISH HIGH COURT ruled that Intercontinental Brands can continue using the Vodkat name provided it’s made clear that the product is not vodka. Recall that Diageo won a case against Vodkat last month, alleging it misled consumers into thinking it was vodka when in fact it’s only a vodka-based drink. In the European Union, vodka must be made of 100% distilled alcohol and at least 37.5% abv. In a statement, ICB direct Paul Burton said: “ICB will be asking the trade and all its customers to position Vodkat away from vodka, and alongside products such as liqueurs, other schnapps and light spirit products. This process has already started.”br /br /RESTAURANT CLOSURES IMPROVE. The number of US restaurants fell -0.3%, or 1,652 restaurants, to 578,353 locations in the fall of 2009 compared to the prior year, according to The NPD Group's ReCount data. The bright side, though, is that the rate of closures has improved from last spring when they dropped -1%, or 4,000 restaurants.br /br /SEVERAL HUNDRED SOUTH AUSTRALIAN VINEYARDS are ripping up vines in reaction to the country’s on-going over-supply problem. According to the Bureau of Statistics, about 360 growers ripped up an estimated 1,250 hectares of vines since the 2008 harvest. Most grapes were lost in the Lower Murray region, followed by Barossa Valley and Mounty Lofty regions.br /br /WAL-MART says it’s laying-off 300 workers in corporate affairs, finance, human resources, information systems and legal departments at its Arkansas headquarters. The company has cut almost 14,000 jobs in the past 13 months. The lay-offs are in effort to improve efficiency and performance as even Wal-Mart has struggled in the recession. Although it’s benefited from wealthier consumers trading down, Wal-Mart’s core consumers are also spending less and trading down.br /br /BACARDI USA MOVES TO NEW HQ. Bacardi USA today inaugurated its new headquarters in Coral Gables, Fla. The fifteen-story, Mediterranean-styled building houses more than 300 employees of the Bacardi Americas region who were “spread throughout seven different buildings” in the past, said chief John Esposito. The company said it will be seeking certification from the U.S. Green Building Council's 'Leadership in Energy and Environmental Design' (LEED) for the design of its environmentally friendly interiors.br /br /THE INDIANA SENATE version of a controversial bill died yesterday. The bill proposed a limited exemption to the ban on beer and spirits being sold in the same wholesaler house, and also would have provided "equity protection" for wholesalers. The house version was killed last week, so it looks like the bill is effectively dead for the year. To view our past coverage, click a href="http://www.winespiritsdaily.com/2010/01/volumes-of-ste-michelle-drop-2.html"here/a.br /br /A NEW JERSEY DIRECT SHIPPING PUBLIC HEARING is being held today by the Senate Law and Public Safety Committee. Senate Bill 766, based on the model direct shipping bill, which would allow consumers to order direct shipments from wineries. Currently in-state and out-of-state wineries are banned from shipping directly to residents.br /br /MORTON’S RESTAURANT GROUP has named Christopher Artinian president and ceo, replacing Thomas Baldwin, who resigned. Chris most recently served as vp of Eastern operations.br /br /SOUTHERN WINE SPIRITS has appointed Mary Barranco to the position of national director of training. This newly-created position will become effective March 1. Mary will report to Andrew Harman, vp of organizational development.br /br /DIAGEO’S CIROC VODKA is launching its first flavor extensions, “Red Berry” and “Coconut,” available nationally beginning February 1.br /br /COSTCO’S January same-store sales rose 8%, the company said today.br /br /br /Until tomorrow, Meganbr /br /“To invent, you need a good imagination and a pile of junk.”br /Thomas A. Edisonbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 4br /Sell days this month: 20br /Sell days this month last year: 20br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: -1br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-3582692179275862346?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /“It’s been a heck of a year, heck of a decade for spirits,” Discus chief Peter Cressy told analysts and reporters at the group’s annual briefing this morning. “It’s been a resilient year from my perspective,” he continued. Overall volumes for the spirits industry at the on- and off-premise grew 1.4%, while dollar sales were flat at $18.7 billion for 2009. The average growth of spirits volumes over the past decade was 2.6%, while the average growth of dollar sales was 5.2%.br /In 2009, spirits market share versus beer and wine grew 0.5 points by volume to 30.2% and declined -0.2 points by revenue to 32.9%. Peter attributed the slower growth to a lack of consumer confidence, which caused consumers to trade down and trade over from the on-premise to the off-premise. br /br /The off-premise was certainly more favorable for all alcohol categories, including spirits. Volumes of spirits grew 2.2% at the off-premise, which includes 75% of the industry, as Americans entertained more at home in 2009. That was offset by the on-premise sector—restaurants, bars, hotels and nightclubs—which continued to suffer with volumes declining -3%. New data from December suggests a 22 month high at the on-premise, “so there may be a bit of a turnaround,” said Peter.br /br /VALUE BRANDS TAKE SHARE IN 2009. “This was obviously the year of value brands,” said Discus chief economist David Ozgo in his presentation. Not surprisingly, value brands have the largest share of volume, 40.6%, of the US spirits industry, followed by premiums (36.4%), high-end (16.5%) and super-premiums (6.5%). Meanwhile, premium brands have the largest share of revenue, 36.4%, followed by the high-end (26.7%), value (21.9%) and super-premium (15%).br /br /Value brands grew strongly from 0.6% in 2008 to 5.5% in 2009. All other price categories saw declines last year, with the biggest drop coming from super-premium brands. Premium brands slowed from 3.7% in 2008 to 0.6% in 2009. The high-end saw declines from -0.6% in 2008 to -3.5% in 2009, and super-premiums slowed from +1.7% to -5.1%. High-end and super-premium brands lost 0.7 market share points by volume in 2009 to 23% of total US spirits volumes.br /br /One of the main reasons value brands took share in 2009 is that consumers increasingly moved away from the on-premise, which is where high-end super-premium spirits have the largest presence. David pointed out that although “a lot of the companies did a very good job of shifting their marketing focus from the on-premise to the off-premise...it’s a difficult task to pull off in a year and a half time.” At the same time, spirits companies were able “to offer quality value products in a recession,” which helped their bottom line.br /br /VODKA is the largest part of the spirits industry in the US, with 30% share of volume and 25% of revenue. As you might know, vodka saw trading down in 2009 with its high-end and super-premium brands suffering the most. Value brands volume grew 10.7% and dollar sales gained 6.7%. Premiums grew 5% in volume and 4% and sales. High-end brands, meanwhile, saw volumes decline -2.3% and sales fall -1.2%, while super-premium vodkas dropped -5.8% in volume and -1.9% in sales.br /br /RUM volumes grew 1.2% and revenues gained 0.8%. Like vodka, value rum brands grew the most in volume, up 4.4% and sales, up 6.7%. Premiums grew 1.4% in volume and 1.6% in sales. High-end rums saws the biggest declines, with volume down -9.6% and sales declining -7.8%. Volumes of super-premium rums fell -1% in volume and -0.8% in sales. It’s interesting to note that the losses experienced by high-end and super-premium rums were “almost equal” to the growth by premium brands, said Discus.br /br /TEQUILA value brands also saw “really fast growth,” said David, but that growth came off a small base. Overall tequila volumes grew 5.2% and dollar sales gained 3%. Value tequila brands grew 21% in volume and 20.1% in dollar sales. Premium brands grew 1.5% in volume and 1.3% in sales. High-end volumes declined -0.3% and sales fell -1%. Meanwhile, super-premium tequila actually gained 1% in volume and 1.3% in dollar sales. “Despite the fact that we’re going through a recession, we still saw growth in the super-premium category for tequila,” said David. br /br /WHISKEY, which has dollar share of 28% and volume share of 25% of the US spirits industry, saw value brand growth in all its categories aside from blended Scotch. Volumes of the whiskey category (including blended whiskey, bourbon, Canadian, blended Scotch, single malt Scotch and Irish whiskey) fell -0.7%. Dollar sales declined -1.1%. In terms of volume, premium priced brands were flat, while high-end whiskeys fell -2.7% and super-premiums declined -5.3%. Volumes were boosted by Irish whiskey (up 10.2%), single malt Scotch (2.5%) and blended whiskey (3.4%). Dollar sales were also boosted by Irish whiskey (12.3%), single malt Scotch (4%) and blended whiskey (3.1%). br /br /SHOULD SEE SLIGHT GROWTH IN 2010. Although Discus didn’t provide an outlook for 2010, they believe “there is light at the end of the tunnel. The question remains, how long is the tunnel?” In looking at past recessions since the 1970s, consumers historically trade-down when times are tough and then return to premiumization once they regain confidence. This typically results in premium spirits brands gaining share after a recession ends. br /br /Peter thinks the spirits industry will see “some return to growth and I think we’re going to see a slight return to premiumization this year. I think 2010 will be a solid year for us but we don’t want to project that it’s going to be a great year. We might be surprised but I think it’s going to be a steady year...the industry was well positioned to handle a recession...we have a chance for some very solid growth towards the end of 2010.”br /br /POLICY ISSUES AND TAX INCREASES. In his presentation, Peter supplied an overview of Discus’ initiatives to modernize alcohol laws across the country. Television advertising has opened up for the spirits industry, for example, while Sunday sales, tasting laws and other regulatory challenges have also been reformed. Peter said the industry remained committed to social responsibility, which helped increase “appreciation of moderate drinking” among consumers over the past decade.br /br /State level taxes, however, remain a major concern and Discus plans to “fight like heck.” “I think this is the biggest challenge for the industry,” said Peter. “We want that on-premise trade to come back,” he said, but it won’t happen with bigger taxes. The hospitality industry “lost something north of 300,000 jobs in this recession...there’s not a town, not a village that hasn’t had a restaurant or on-premise place close.”br /br /Peter noted that state budget deficits are breaking $180 billion, which means legislators will be looking for opportunities to raise taxes in 2010. “We are concerned. We see a threat for a nickel a drink tax in San Francisco. We think that would be terrible for that economy. It’s a tourist economy, hospitality economy,” he said. “We’re going to work very, very hard to convince public officials this is not the way to go...we’re getting a lot of grassroots support from retailers and wholesalers.”br /br /“It’s a misnomer to tax the products like it’s going to cure a problem. It doesn’t,” Peter continued.br /br /EXPORT GROWTH. Spirits have seen strong revenue export growth over the past decade, although exports were down -5.6% in 2009. The industry is projected to surpass $1 billion for the 3rd consecutive year in 2009. The most popular export categories are bourbon and Tennessee whiskey, while Canada and the UK have grown into the top two export markets.br /br /bWSD BRIEFS:/bbr /br /WA SENATOR ISSUES BILL TO HALT SPIRITS TAX INCREASE. State Senator Curtis King has introduced SB 6744 that would prevent the Washington State Legislature from forcing an increase in the markup on distilled spirits, according to Discus. Stay tuned...br /br /KENTUCKY DISTILLERS ASSOCIATION has named Chris Morris, master distiller for Brown-Forman, as its chairman. He will serve through December 2010.br /br /THE CHARMER SUNBELT GROUP has named Joseph Davolio evp, capability development. Greg Baird, the current evp of sales, was appointed evp, sales and marketing. br /br /br /Until tomorrow, Meganbr /br /“The habit of giving only enhances the desire to give.”br /Walt Whitmanbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 2br /Sell days this month: 20br /Sell days this month last year: 20br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: -1br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-8076401161583917258?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /Is the wine glass half empty or half full? Danny Brager, vp group client director, beverage alcohol at Nielsen, encouraged listeners to be optimistic and focus on the wine industry’s growth opportunities rather than its roadblocks during his presentation at the Wine Market Council’s 5th Annual US Wine Consumer Trends conference in Dallas. [Ed note: to view our coverage of John Gillespie’s presentation, click a href="http://www.winespiritsdaily.com/2010/01/millennials-drive-growth-core-consumers.html"here/a].br /br /WINE OUT-GROWS BEER AND SPIRITS. Although the wine industry has had it tough this past year, they posted more growth than beer or spirits. In the 52 weeks to December 12, dollar sales of wine grew 2.6%, beer grew 2% and spirits grew 1.4%. In terms of volume, beer declined -0.6%, while wine and spirits gained 1.2%. The rate of growth slowed for all three categories. Danny noted that consumers trading down and taking advantage of promotions has resulted in the rate of dollar and volume growth being closer together. Unlike beer, wine and spirits pricing is moving down. br /br /The wine industry should be wary of craft beers, which have grown dollar sales 13% in the past 6 months. There is an opportunity for wine and craft beers to battle for certain occasions, particularly among millennilas who don’t reserve wine for just “special” occasions. “Crafts are good marketers....we need to make sure we’re as intense about telling our story to compete effectively,” said Danny. Crafts are also popular among millennial consumers and have a lot of opportunity to grow among that generation.br /br /When it comes to off-premise channels, online, c-stores, drug stores and club stores are seeing the most growth for wine. The fastest growing price groups are 750ml bottles that cost $3-6 and $9-15. Wines priced above $20 are still weak but declines are lessening partly due to increased promotions. Many retailers are putting sharper emphasis in their advertising on wines priced less than $20. Meanwhile, 54% of wine volume was sold on promotion in the four weeks to December 12. When it comes to packaging, boxed wines are growing along with 187ml 4-packs and tetra paks.br /br /Domestic growth is exceeding imports by a relatively wide margin, especially wines coming from California and Washington. Wines from other small states, including Indiana, Missouri, Michigan and Wisconsin, are growing double digits, which Danny thinks “supports a general trend towards localization.” Over 50% of consumers say they try to buy locally made products to support their community and/or their state. Danny encouraged “local wineries to take advantage of this.”br /br /The top 3 importers (Italy, France and Australia) are not performing well. The clear growth leaders remain Argentina and New Zealand, which are now ranked #5 and #6 and growing at double digits.br /br /Varietal growth is led by rielsing, pinot noir and sauvignon blanc. They also have the highest level of positive buzz online. Malbecs, moscato, petite sirah and tempranillo are also gaining share, particularly malbec and moscato, which both gained 1 share point through December 12.br /br /ON-PREMISE OUTLOOK REMAINS UNCERTAIN. When consumers lack confidence, they tend to shy away from out-of-home entertainment. Increased ratings for the Food Network, higher cookbook sales (+9%) and increased traffic at food sites (+11%) show that consumers are cooking more at home with friends and family. “All this has created a ‘new normal’ focused at home,” said Danny. br /br /This certainly took a big toll on restaurants, bars and nightclubs, and was one of the most talked about trends in 2009. Danny said that consumer confidence is up slightly although they still have a long way to go. Unemployment is around 10% and current projections say unemployment will likely remain “stubbornly high” through 2010 and 2011. A lot of people don’t have spare cash, but if they do they’re most likely putting it in savings or paying down debt instead of spending. br /br /Thirty-four of 35 popular chain restaurants posted losses in the 52-weeks to December 21, according to NRN, although results were improving in Q4. Meanwhile, Technomic predicts that wine will declined -6.7% at the on-premise in 2010. The industry shouldn’t count on location growth to help it at the on-premise because the same numbers of restaurants are closing as they are opening, said Danny. As a result, accounts are competing aggressively by offering a variety of deals and discounts. “This could be problematic because people might become accustomed to that,” said Danny.br /br /However, increased competition on-premise is a good thing for the industry. A survey by GuestMetrics found that the average check with no beverage alcohol was $60, while the average check with beverage alcohol was $100. This profitable difference “speaks to power of our industry to help the on premise with their predicaments,” said Danny.br /br /OFF-PREMISE OFFERS GREATER OPPORTUNITY. Retailers have also become more aggressive and are even going after the restaurant business. Consumers, meanwhile, are experimenting less, using more coupons and promotional shopping. They’re also making few shower trips and reducing the value of their shopping basket. Upper income families, which are most important to the wine industry, are doing this to a lesser extent. Nonetheless, Americans are “desperately seeking value,” said Danny, which means they’re “redefining what’s discretionary and reevaluating their shopping lists.” Suppliers are obliging consumers’ desire for a bargain by waging big price wars and putting more emphasis on private labels. They are “relentlessly” focused on price and optimizing space to fit their strategy.br /br /Consumers are moving back to familiar territories. Nielsen looked at the top 10 wine brands in terms of dollars and they’ve managed to gain share over the past 2 years. In 2008 the top 10 brands had 26.3% share and in 2009 they had 26.5% share. This means that launching new brands is risky. “Line extensions with brands consumers are already familiar with may be a better way to go,” said Danny, but that will change in the future as things improve.br /br /Retailers are responding to the “at-home” shift by offering more prepared meals, fresh food and yes, even wine. Research shows that when wine is in a shopping basket, the overall basket price goes up. A whopping 4,000 more stores were selling wine in December 2009 versus a year ago, including Wal-Greens. In retailer stores that sell multiple goods, wine is the 9th highest growing category out of 122. Spirits come in at #20 and beer is #46.br /br /CORE WINE DRINKERS WILL CONTINUE SEEKING VALUE. Wine drinkers, including core wine drinkers, are consistently dining out less. They’ve scaled back on upscale dining the most, followed by casual and then independent restaurants, according to an online study of 600 core and marginal wine drinkers in October. Once consumers are at a restaurant, they’re ordering significantly less wine than in the past. According to Nielsen’s survey, 18% of consumers are ordering more wine by the glass, while only 4% are ordering more by the bottle. Most consumers (70%) are ordering bottles at the same price as in the past, while 22% are buying less expensive bottles. br /br /There’s a universal agreement among core and marginal wine drinkers that good quality wines are available at lower prices. Most core drinkers (43%) say they “will continue to buy wine that is less expensive than the wine I used to buy” once the economy turns around.br /br /When it comes to the off-premise, Core wine drinkers are still purchasing wine frequently and several bottles per trip, while marginals have trended down big time with both measures. Of the core wine drinkers who are spending less on wine, it’s because they’re looking for deals or good value at lower prices. Marginals say it’s because they don’t have the money.br /br /Core consumers buy wine in several different types of retail stores and are shopping more in mass merchandise stores, buying directly for a winery and shopping online. Marginals, meanwhile, are less adventurous. Core drinkers say they have about the same amount of wine stored at home while marginals have less. Danny pointed out that marginals likely depleted their at-home wine storage before buying more.br /br /WINE BUZZ GROWS ONLINE. Digital and mobile media is growing in importance as older consumers join social networking sites such as Twitter and Facebook. The number of consumers online grew 19%. Research found that once they’re online, the amount of time spent on social networking sites “has just exploded.” Facebook now has 89 million followers that are 21 or above. YouTube has 74 million, MySpace has 38 million and Twitter has 16 million. How does this apply to us? Nielsen found that “wine is discussed at a disproportionately high, and growing level within the online world,” especially on Twitter. Wine buzz is up 30% from last year which is ahead of buzz amounts for spirits (14%) and beer (20%). Nielsen found that French wines are “hugely” discussed online, but that “buzz” is not converted to sales. “Consumers love to talk about wines from France but they don’t necessarily buy them,” said Danny. Wine buzz from Australia is “very” low. There’s a “healthy” amount of talk about German, Spanish and Oregon wines which are generating sales. Seventy-five percent of consumers say they trust other consumer opinions online only second to a recommendation from a friend. “Having your advocates talk about your wine online can make a difference,” said Danny.br /br /bCO-FOUNDER DAN LEESE LEAVES 585 WINE PARTNERS /b br /br /Dan Leese, co-founder and president of 585 Wine Partners, left the company last Friday, according to a statement. The company was started in 2005 by Dan and Katy Leese and Doug and Becky Walker with a small group of investors when they purchased a controlling interest in Red Truck Wines from Cline Cellars. Katy Leese, co-founder and director of public relations and packaging, is also leaving, while chief operating officer Doug Walker is continuing with 585 Wine Partners. Dan will continue to play “a significant role” in the development of Red Truck, Picket Fence Vineyards, Bivio Italia and Steelhead Wines. Dan has been in the wine industry for 30 years and has served as president/managing director of Foster’s Wine Estates Americas and evp/managing director of Brown-Forman Wine Group’s U.S. Wine Business. According to the statement, “he looks forward to continuing his career in the wine industry.”br /br /bWSD BRIEFS:/bbr /br /BACARDI AND BROWN-FORMAN say they will end their distribution arrangements in Germany where Bacardi has distributed B-F’s brands. Instead, B-F is establishing its own distribution company in Germany, effective October 1, 2010. B-F is also in discussions with Bacardi and other distributors in additional European markets with contracts expiring in 2010, and expects to provide an update when the distribution arrangements are completed. According to a statement from Bacardi, the two companies’ cooperation will continue in the United States and the United Kingdom as well as a number of other markets worldwide.br /br /SKYY SPIRITS has added “ginger” to its Skyy Infusions line, which joins Citrus, Cherry, Passion Fruit, Raspberry, Grape and Pineapple infused flavors. Available nationwide in February, Skyy Infusions Ginger will be supported by a fully integrated marketing campaign featuring advertising, social media activities and on-/off-premise promotions.br /br /ABSOLUT VODKA is debuting “Berri Açaí” as its eleventh flavor, effective today. “From 2005 to 2007, the açaí fruit industry jumped from $3 million to $14 million and sales of acai products more than tripled to $66 million in the last year alone. Now is the perfect time to launch Absolut Berri Acai,” said senior brand manager of Absolut Vodka, Clare Kanter.br /br /HEAVEN HILL DISTILLERIES has launched Blackheart Premium Spiced Rum, based on the Blackheart character. “The core target for this rum embodies the rebellious nature of the Blackheart Rum. As the high-proof segment of the category grows, we believe Blackheart will be ideally positioned,” said brand manager Brittany Blevins. br /br /br /Until tomororw, Meganbr /br /“There are two tragedies in life. One is not to get your heart's desire. The other is to get it.”br /George Bernard Shawbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 1br /Sell days this month: 20br /Sell days this month last year: 20br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: -1br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-7805018948067088080?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br / br /"We're on offense in all of our businesses," said Fortune Brands chief Bruce Carbonari. Beam Global reported higher total sales in the fourth quarter, with gains from Jim Beam and Maker's Mark, and high single digit gains in Moen. Beam says that total spirits sales in the US are flat to up 1% in the US. Beam's US sales were up 4%, while case volumes were down 2%, reflecting higher pricing, and flat revenues. br / br /For next year, Beam management sees the spirits industry being flat to up 1%. "To the degree we're going to see upside, it's going to be in volume, rather than price or mix," says Bruce. Fortune says pricing and mix will remain under pressure in 2010.br / br /Bruce also said the holidays didn't bring any surprises. More volume shifted to off-premise, and promotion activity "was about what we expected.....There really wasn't a lot of difference in the spirits business itself" except the fact that spirits have outperformed beer all year. One surprise for Beam was the success of new Red Stag, which Bruce says "brought new consumers to the bourbon category," and "blew away our forecasts." They shipped more than 100k cases after the intro in May, which was three times what they forecasts. Margarita in a box also outstripped their expectations.br / br /Beam will be increasing its brand marketing spending double digits in 2010. Beam had pulled back on investment in the first half of 2009 as it restructured its business to "become closer to the consumer and customer." In 2010, look for more TV spending on Jim Beam and more "high profile" advertising for 9 year old Knob Creek. Beam also says it's more aligned with wholesalers as they "entered into new performance based contracts with our largest distributors" and "aligned business into fully integrated category teams. We see excellent prospects to improve performance in the spirits business."br / br /Regarding acquisitions, Bruce isn't ruling anything out, but it "will remain disciplined like we always have been." The deal flow has been normal but "finding quality acquisitions remains a challenge" but that they will look to round out their portfolio by "adding a rum" or a vodka.br / br /bINDUSTRY EMPLOYMENT EXPECTED TO IMPROVE IN 2010/bbr / br /BevForce, a career network for the beverage industry, and BevNet recently conducted a survey assessing current and future attitudes on beverage employment, staffing and job security. They found that although nationwide unemployment rates are still high, beverage industry members believe 2010 will be a better year than 2009 with few layoffs and internal restructuring. Other survey results revealed a positive view:br / br /. 75% of respondents anticipate positive growth for their company is 2010.br /. 67% of respondents think that their company will be hiring in 2010.br /. 75% of respondents feel secure in their current position, despite the current economic climate.br /. 6% of respondents think that their company will conduct a round of layoffs in 2010, while 25% conducted a round of layoffs in 2009.br /. 15% of respondents think that their company will go through a reorganization in 2010, while 34% reorganized in 2009.br /. 71% of respondents anticipate making new hires in 2010, while in 2009 67% hired new employees and in 2008 69% hired new employees.br / br /More than 1,000 beverage professionals in both the alcoholic and non-alcoholic space participated in the online survey, including wholesalers/distributors, manufacturers/suppliers, retailers and service providers. Respondents included primarily executive level, marketing and sales professionals in the beverage industry.br / br /bWSD BRIEF:/bbr / br /AUSTRALIA'S GRAPE CRUSH was down -5.4% in 2009, according to data from the Australian Bureau of Statistics. The vintage weighed 1.7 million tons, and yields dropped to 10.7 tons per hectare. The crush produced 1.2 billion liters of wine, down -5.9% from last year. Red and rosé production reached 630 million liters, down -6.8%, while white wine produced 542 million liters, down -4.5%. ABS reports that inventory levels remain at 1.9 billion litersbr / br / br /Until Monday, Meganbr / br /"It's really too bad a lot of crumby stuff is a lot of fun sometimes."br /J. D. Salingerbr / br /--------- Sell Day Calendar ----------br /Today's Sell Day: 20br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br / br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br / br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br / br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-628818976139089664?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /Overall volumes declined for Ste Michelle Wine Estates in the fourth quarter and full year, but flagship brand Chateau Ste Michelle posted mid-single digit growth. The winery’s new parent company, Altria, announced that Ste Michelle’s wine shipment volume fell -2.2% from the prior year period to 1.9 million cases in the fourth quarter ended December 31. This was “due primarily to the timing of shipments around year-end 2008,” said the company. Ste Michelle suspended shipments to take inventory prior to the closing of the UST acquisition, and wholesalers built inventories in the last few weeks of 2008 in advance of this suspension. For the full year, Ste. Michelle's wine volume declined 2.1% to 6 million cases, due primarily to wholesale inventory reductions, and declines at the on-premise.br /br /“We remained encouraged by Ste Michelle’s performance in a particularly challenging environment for the wine business...Adult consumers continued down-trading to less expensive wines and reduced their on-premise purchases at restaurants and bars,” said cfo David Beran in his prepared remarks. The company was pleased that Ste Michelle’s full year volumes grew by 10% at the off-premise, according to Nielsen scan data, “as adult consumers increasingly chose high quality and affordable wines.” Ste. Michelle grew 7% at retail in the fourth quarter, according to Nielsen.br /br /In looking at the individual brands, Chateau Ste. Michelle saw volume rise 4.5% in the fourth quarter and 5.3% in the year. Volumes of Columbia Crest declined -6% in Q4 and -7.9% in the full year. Net revenues for the wine segment were $132 million in the fourth quarter and $403 million for the full year. br /br /bINDIANA CONSIDERS CONTROVERSIAL BILL PROMOTING EQUITY PROTECTION FOR WHOLESALERS/bbr /br /Indiana legislators are debating controversial legislation that would allow beer and wine wholesalers to carry a limited amount of spirits, and provide wholesalers with equity protection.br /br /Upon leaving committee yesterday, the House Bill had three parts. The first part would allow a wine and beer wholesaler to sell new (not in previous distribution) spirits brands from a wine supplier with whom the beer wholesaler has done business for at least 10 years. The second part provides “equity,” not franchise, protection for wine and spirits wholesalers by providing that a terminated wholesaler is entitled to payment from a successor wholesaler (not the supplier) for the fair market value of brands transferred to the successor wholesaler. The third part eliminates the face-to-face requirement of Indiana’s direct shipping law. A similar bill passed the Senate committee yesterday but does not propose banning the face-to-face requirement.br /br /Monarch Beverage, a wine and beer wholesaler in Indiana, supports the first part of the bill because Gallo is now producing spirits. They proposed eliminating a ban that prevents wholesalers from carrying both beer and spirits but it didn’t pass committee.br /br /The second section of the proposed bill is championed by National Wine Spirits, which has the most to lose once Southern Wine Spirits enters the state. [Ed note: Recall that Indiana recently gave Southern a wholesaler permit to operate in the state]. The equity provision is opposed by Southern, Olinger Distributing, Discus, Diageo, The Wine Institute, Indiana wineries and the Indiana Retail Council which is primarily made up of large, national chains. br /br /Opponents of HB 1191 and SB 0244 struck a PR campaign , “Stop the Indy Bailout,” in attempt to halt these bills. They allege on the a href="http://stoptheindybailout.wordpress.com/"website /athat the legislation “will bail out two Indiana wholesale alcohol distributors (National Wine and Spirits and Monarch Beverage). The legislation creates a monopoly in the state by preventing any other wholesalers from competing for business in Indiana.”br /br /As it turns out, the Speaker of the House did not hand down the committee report today which means the House version is dead. The Senate version is alive and kicking so far. br /br /UPDATE ON SOUTHERN. We’ve learned that Southern has not yet begun operations in the state. There’s no word yet when or if they’ll set up operations in Indiana or merge with an established company. In a statement in December, Southern chairman and chief Harvey Chaplin said: "We are extremely pleased about the prospect of establishing operations in Indiana... We look forward to serving Indiana's licensees -- as well as all of the future supplier partners who will join us there...We are grateful that the IATC officials recognized Southern's qualifications, and we look forward to working closely with them as we establish operations in Indiana."br /br /bOUTSOURCING CHEAP WINE REACHES NEW HEIGHTS IN 2009/bbr /br /In reading coverage on the "State of the Industry" presentation at the Unified Wine Grape Symposium, a few things stood out to us. It’s well known that the wine industry experienced an exceptionally tough year in 2009, which led many California wineries, particularly the major wine companies, to source cheap grapes from other countries where over-supply outstrips demand. Cheap bulk wines allowed companies like Constellation and Gallo to tap further into the trading-down phenomenon and post growth in 2009. During the presentation, John Fredrikson of Gomberg, Fredrikson Associates said imported bulk wine grew 87% over the prior year to 25 million cases in 2009. Meanwhile California wine shipments dropped for the first time in 16 years. It’s believed that the industry won’t experience a major recovery until 2011 once the private sector starts hiring.br /br /As wineries in the US have struggled, so have wineries in other countries. This has led to an influx of imports competing for valued US consumers who are increasing their consumption of wine as other countries are decreasing consumption.br /br /Good news for the industry is that the $9-$13 wine market posted growth in recent months.br /br /[Sources included Wines Vines, The Press Democrat, Modesto Bee and North Bay Business Journal].br /br /bWSD BRIEFS:/bbr /br /BROWN-FORMAN filed a complaint against Meadowcroft Wines claiming their “Sumptuary” label is too similar in name to B-F’s “Sanctuary” label, which could cause confusion among consumers. Owner Tom Meadowcroft agreed to discontinue Sumptuary, which produces about 15,000 cases a year, to avoid any litigation. B-F agreed to let Meadowcroft sell off the remaining 900 cases of Sumptuary’s sole vintage, a 2007 Zinfandel. "Apparently corporate bullying and harassment is alive and well in the U.S.A.,” said Tom. "I am also frustrated that the U.S. Trademark office does not have more sense to uphold the rights of individuals to trademark names that are so dissimilar in meaning and intent."br /br /FREDERICK WILDMAN SONS has struck a deal to import Hecht Bannier wines of the Languedoc-Roussillon region of France.br /br /br /Until tomorrow, Meganbr /br /“Always do sober what you said you'd do drunk. That will teach you to keep your mouth shut.”br /Ernest Hemingwaybr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 19br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-8300153148219203113?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /You’ll recall that the 5th Circuit Court released a very important a href="http://www.alcohollawreview.com/wp-content/uploads/2010/01/5thCricuitWineCountry.pdf"decision /ayesterday that said the state of Texas is not in violation of the Commerce Clause by allowing in-state retailers to ship direct to consumers, but banning out-of-state retailers from doing the same. You can view our coverage of the ruling a href="http://www.winespiritsdaily.com/2010/01/5th-circuit-rules-against-out-of-state.html"here/a. Here’s what some of the industry trade groups had to say:br /br /SPECIALTY WINE RETAILERS ASSOCIATION: “We are very disappointed that this panel of the 5th Circuit Court of Appeals chose to limit Texas consumers' ability to access the wines they want, but which they cannot find in the state's wholesaler-controlled marketplace. We are carefully reviewing the decision and considering our next steps.”br /br /WINE SPIRITS WHOLESALERS OF AMERICA: “This unanimous opinion from one of the most respected circuits in the country clearly and forcefully reinforces WSWA’s view that the landmark 2005 Supreme Court decision in Granholm v. Heald preserved a state’s right to control the distribution of alcohol. This decision is a very strong affirmation of state authority under the 21st Amendment to regulate the distribution of beverage alcohol...The Fifth Circuit’s affirmation of the three-tier system and its recognition that Granholm is limited to products and producers mirrors earlier rulings by the Second and Fourth Circuits....”br /br /NATIONAL BEER WHOLESALERS ASSOCIATION: "NBWA is pleased to see that the Court recognizes the broad authority of the 21st Amendment and acknowledges that alcohol is different than other products. It is unfortunate, however, that there are numerous other cases in the courts where plaintiffs are trying to break down state alcohol laws including those designed to keep alcohol out of the hands of minors and those that work to ensure choice and variety for America's consumers.”br /br /bWSD BRIEFS:/bbr /br /KANSAS PROPOSES TAX INCREASE. A House tax committee is considering legislation that would double taxes on alcoholic beverages. The current tax rate on beer is 18 cents a gallon, 30 cents for wine and $2.50 on spirits. br /br /CONSUMER CONFIDENCE rose for the third consecutive month in January. The index rose from 53.6 to 55.9. Sentiment about present conditions and the labor market improved. More people expected job losses to abate (but they didn't expect new jobs to be created).br /br /br /Until tomorrow, Meganbr /br /“I am a kind of paranoiac in reverse. I suspect people of plotting to make me happy.”br /J. D. Salingerbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 18br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-5337310486485995213?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /The 5th Circuit Court of Appeals issued a a href="http://www.alcohollawreview.com/wp-content/uploads/2010/01/5thCricuitWineCountry.pdf"decision /atoday that settles a confusing lower court ruling on the issue of out-of-state retailers shipping direct to consumers in Texas.br /br /BACKGROUND. As you’ll recall, a Texas District Court judge ruled that the 2005 Granholm v. Heald Supreme Court decision applied as much to retailers as it did to wineries, meaning a state may not allow in-state retailers to ship wine directly to consumers but ban out-of-state retailers from doing the same thing. However, the judge ruled that the state can require out-of-state retailers to purchase the wines they intend sell to Texas residents only from Texas wholesalers. In the past, the Specialty Wine Retailers Association (SWRA) said, “The scheme is not only economically unfeasible, but would amount to an unlawful transaction. Retailers may not purchase wine from out-of-state wholesalers.” The plaintiffs, Siesta Village Market and some consumers, and the defendant, Texas ABC, both appealed the decision.br /br /THE DECISION. The 5th Circuit ruled that Texas does not violate the Commerce Clause by allowing in-state retailers to ship direct to consumers but banning out-of-state retailers from doing the same. Here are some highlights from the decision:br /br /“Because of Granholm and its approval of three-tier systems, we know that Texas may authorize its in-state, permit-holding retailers to make sales and may prohibit out-of-state retailers from doing the same.” br /br /“Our read of Granholm is that the Twenty-first Amendment still gives each State quite broad discretion to regulate alcoholic beverages. The dormant Commerce Clause applies, but it applies differently than it does to products whose regulation is not authorized by a specific constitutional amendment. Regulating alcoholic beverage retailing is largely a State’s prerogative.”br /br /The court then turned briefly to a separate provision regarding personal importing. Like other states, Texas limits the quantity of alcohol that an individual can purchase out-of-state and then bring back into Texas. The court found that this law cannot “limit the number of alcoholic beverages consumers may buy at an out-of-state retailer... We conclude that the incidental effect on foreign retail sales resulting from limits on quantities to be brought into Texas is at worst an acceptable balancing. The interests of Texas consumers in purchasing alcoholic beverages outside of Texas are recognized, but the State validly insists that the vast majority of the alcoholic beverages consumed in Texas be obtained through its own retailers.”br /br /DECISION AGREES WITH 2ND CIRCUIT. Recall in July when the 2nd Circuit Court upheld the decision of the Southern District of New York by rejecting an attempt by out-of-state retailers to ship direct to consumers in the state. That court found that “because New York’s three-tier system treats in-state and out-of-state liquor the same, and does not discriminate against out-of-state products or producers, we need not analyze the regulation further under Commerce Clause principles.”br /br /And there you have it...br /br /br /Until tomorrow, Meganbr /br /“Just because something doesn't do what you planned it to do doesn't mean it's useless.”br /Thomas A. Edisonbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 17br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-5895476597557300390?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /The wine industry can take comfort in the fact that consumption continues to grow in the United States, said John Gillespie, president of the Wine Market Council, at the Council’s 5th Annual Presentation of US Wine Consumer Trends in Dallas. Not only are older generations drinking wine, but the industry has a big champion in the millennial generation. By process of being younger, millennials were not as hurt by the economy and feel more comfortable spending money on wine as an affordable luxury. They don’t view wine as elitist and enjoy, rather than feel intimidated by, all the choices that wine presents. John also gave insight into what the “new normal” is for wine consumers, and what we can expect from marginal and core wine drinkers in the future. [Ed Note: The data that John presented is available to Wine Market Council members. The research comes from an annual tracking study performed by Merrill Research and online consumer focus groups conducted in October 2009.]br /br /THE NEW NORMAL. Over the past year people in the industry have debated the idea of a “new normal.” Are US consumers forever changed from the downturn? John gave a brief outline of what the “new normal” has meant so far: (1) Consumption continues to rise but there is an “undeniable” shift from the on- to the off-premise; (2) the $20 and $50 wine categories are demarcation lines at retail; (3) core wine drinkers are increasing, while marginal drinkers are bailing; (4) more imports are coming to the US in search of growth; (5) and direct to consumer wine sales are growing.br /br /CORE VS MARGINAL WINE DRINKERS. A theme of John’s presentation is that both core and marginal wine drinkers plan on continuing to purchase cheaper wines after the recession. In the US, about 43% of the population are “non-drinkers;” 15.9% are “core wine drinkers,” which means they drink wine once a week or more; 14.1% are “marginal wine drinkers,” which means they drink wine less than once a week; and 27% are beer or spirits drinkers. Core drinkers are by far the most important group to the wine industry because they account for most of the sales. br /br /“As core drinkers have been trading down in price points, they’re finding good quality wines they’re pleased with,” said John. Survey results show that 69% of core drinkers and 64% of marginal drinkers believe they “are finding good quality wines available at lower prices. Once the economy turns around, 43% of core and 32% of marginal drinkers say they “will to continue to buy wine that is less expensive than the wine I used to buy.” Thirty percent of core wine drinkers said “if the economy turns around, I will buy more expensive wines.”br /br /Not surprisingly, core and marginal wine drinkers mainly stick to domestics, but core drinkers are more willing to experiment with imports. Core drinkers are increasingly purchasing wines from Spain, Argentina and Chile.br /br /In looking at domestics, core and marginal drinkers are also purchasing wines outside of California. One out of four core drinkers and 1 out of 6 marginal drinkers are buying more wine from Washington, Oregon, New York, Vermont and/or Texas. When surveyed online, however, the majority of respondents say they prefer wines from California when compared to other domestics.br /br /Alternative means of purchasing wine are also growing rapidly. Thirty-one percent of core drinkers bought wine at a winery in 2009 and 11% bought wine through a website. John noted that “yes, these are small numbers but they’re growing rapidly.” Meanwhile, 83% of core drinkers belong to a wine club, and chances are that they belong to several different wine clubs. A large number of people “get a quarter or half of all the wine they purchase in a year from their wine club(s),” said John.br /br /WHERE SHOULD WINERIES PUT THEIR FOCUS? When asked by an audience member whether wineries should focus on maintaining core drinkers or transitioning marginals, John noted that it’s Wine Market Council’s job to move marginals to core consumption. Producers should instead focus on younger generations and core drinkers.br /br /MILLENNIALS ALREADY LOVE WINE. Right from the get go millennials have begun drinking wine at core consumption levels, while gen X and baby boomers have increased wine consumption with age. As John pointed out, 20 million of the 70 million millennials aren’t even at legal drinking age yet, so this is great news for the industry. “We have the pipeline full for core wine drinkers for the next 5 years, assuming the 20 million who aren’t 21 yet will follow in the older millennials’ footsteps,” said John.br /br /Last year 9% of the US population was trading off to wine. This means they were either choosing to decrease their consumption of beer or spirits while increasing consumption of wine, or choosing to drink wine on occasions when in the past they would have drunken beer or spirits. Interestingly, 32% of millennials traded over to wine, which means young people are increasingly favoring wine over beer and spirits.br /br /A series of focus groups taught Wine Market Council that millennials are much more adventurous than older Americans. For example, they consume more imports than other generations, are more likely to belong to a wine club, and dine out more often. Millennials view wine as an affordable luxury. They don’t see wine as elitist or unattainable but believe it denotes maturity and sophistication not given by beer or spirits. This age group is also the first truly gender neutral generation when it comes to drinking wine. br /br /Packaging can help motivate or deter a sale. Millennials find alternative packaging and interesting labels attractive, but if they come across a wine that seems marketed directly to them then they usually have a negative response.br /br /bSPIRITS VOLUMES GAIN 4.4% IN DECEMBER/bbr /br /Spirits volumes grew 4.4% year over year in the 4 weeks to January 9, reports UBS based on Nielsen off-premise scan data. Volumes were up 2.6% in the 52-weeks. Price mix declined -0.3% for the month but grew 0.2% for the 52-weeks. Meanwhile, dollar sales grew 4.1% in the month and 2.8% for the year. The percentage of market volumes sold on promotion grew to 47.7% in the 4 weeks.br /br /Diageo, Pernod-Ricard, Remy Cointreau, Skyy Spirits and Brown-Forman lost share at the off-premise, while Constellation saw gains. Diageo volumes grew 3.8% year over year in the 4-weeks but price/mix was down -1.2%. Diageo’s promotional activity increased to 57.5% of volumes sold on promotion, which UBS considers “an improved trend.” Pernod volumes grew 4.2%, with negative price/mix of -1.1%. Pernod also saw an increase in promotional activity to 54.9% of volumes.br /br /Skyy’s volumes fell -3.1% in the 4-weeks and grew 3.4% in the 52-weeks. UBS notes that Skyy Vodka was up against some tough comparables. Remy’s volumes fell -1.6%, while sales rose 1.5%. Volumes of B-F’s spirits grew 4.4% with price/mix falling -0.4%. Constellation’s volumes grew 2.8% and sales gained 6.9%.br /br /UBS forecasts “1% market volume growth, 0.5% value growth” in 2009. They rate Diageo and Constellation as “buy,” and B-F and Remy as “sell.”br /br /bWSD BRIEFS:/bbr /br /THE NATIONAL RETAIL FEDERATION projects that industry sales (which exclude automobiles, gas stations, and restaurants) will increase 2.5% in 2010 compared to the same period last year. Total industry retail sales for 2009 declined -2.5%. “As we continue to see signs of improvement throughout the U.S economy in 2010, overall sentiment will begin to lift, making way for slight increases in consumer spending,” said NRF chief economist Rosalind Wells. “While we still expect shoppers to continue to be frugal with their discretionary spending, retailers will soon be able to reap the benefits of leaner, smarter inventories and a year and a half of pent up consumer demand.”br /br /BACARDI LIMITED has donated $50,000 for immediate relief to aid victims of the devastating earthquake in Haiti.br /br /HEB HAS NAMED Craig Boyan as its new president and coo.br /br /INTERESTED IN THE BEER BUSINESS? Attend the industry's best conference on beer marketing, best practices, consolidation, and top management networking. Meet AB InBev's Dave Peacock, MillerCoors' Tom Cardella, Crown's Bruce Jacobson, and more, including Latino marketing, word-of-mouth, and financing consolidation. The Beer Summit 2010 is in Phoenix, February 28 to March 1. More information a href="http://www.beernet.com/beer_summit.php"here/a. br /br /br /Until tomorrow, Meganbr /br /“Just because something doesn't do what you planned it to do doesn't mean it's useless.”br /Thomas A. Edisonbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 17br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-2378314465607883103?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /As we mentioned last week, Missouri-based OakGlenn Vineyards is suing the state for alleged post-Granholm Commerce Clause violations. Iowa allows in-state wineries to ship direct to consumers but bans non-reciprocal states from doing the same. The only reciprocal state besides Iowa is New Mexico, so all other states are unable to ship direct to Iowans.br /br /The lawsuit was filed last week is a district court on behalf of OakGlenn Vineyards and two Iowa law students. The complaint alleges that Iowa laws “treat interstate sales and delivery of wine to Iowa consumers and retailers differently from intra-state sales and delivery of wine, discriminate against out-of-state wineries, require reciprocity under other states’ laws in order to obtain equal treatment under Iowa law, and provide economic advantages and protection to Iowa wineries and wine sellers, all in violation of the Commerce Clause of the United States Constitution.” The suit seeks a declaratory judgment.br /br /In order to become compliant under Granholm, the state is considering a href="http://www.desmoinesregister.com/article/20100121/NEWS10/1210346/-1/election08/Missouri-winery-sues-to-halt-Iowa-sales-law"legislation /athat would allow both in-state and out-of-state wineries to ship direct to consumers, but they must all pay a $1.75 per-gallon tax. Right now out-of-state wineries have to pay the $1.75 per-gallon tax when going through distributors, while in-state wineries avoid the tax by shipping direct. If passed, the proposal would add new taxes for in-state wineries. The Iowa Wine Growers Association is none too pleased, as you would imagine. Stay tuned as this story develops...br /br /IOWA CONSIDERS BANNING EVERCLEAR. In other news, the Iowa Alcoholic Beverages Commission will hear public comments tomorrow in consideration of banning or limiting Everclear and other high alcohol content drinks. The five-member panel is considering regulations that include consumer education, limits on bottle sizes and an outright ban. The review was prompted by a college student who was rushed to the hospital with a BAC of nearly 0.50 after he was forced to consume large amounts of Everclear during fraternity hazing.br /br /bWSD BRIEFS:/bbr /br /VIRGINIA SENATE BILL 443, proposed by Sen. Mark Obenshain last Friday, would privatize state spirits sales by forcing ABC stores to close and auction off their licenses to private retailers. There are currently 334 stores in the state. Liquor stores would have to be a certain distance from churches and schools, and there could not be more than one license for every 10,000 residents in an area. br /br /SAM’S CLUB WILL CUT 11,000 WORKERS, or 10% of its employees, chief Brian Cornell said in a letter to employees yesterday. The bulk 10,000 lay-offs will come from part-time, product demo jobs. Instead, Sam’s will outsource its in-club product sampling and demonstration to a third-party marketing company, Shopper Events. Sam’s also plans to eliminate more than 1,000 jobs by cutting its New Business Membership Representative positions by 2 per club. Recall that Sam’s already announced earlier this month it would cut about 1,500 jobs with its plan to shut 10 underperforming locations. The company as a whole employs more than 2 million people.br /br /WJ DEUTSCH TO IMPORT LUKSUSOWA VODKA. W.J. Deutsch Sons has signed an agreement with Wyborowa SA to become the exclusive U.S. importer for Luksusowa Vodka. Recall that W.J. Deutsch launched its new spirits division in July.br /br /ADMIRAL IMPORTS was appointed the exclusive US importer for Jacopo Biondi Santi, the great-grandson of Brunello’s father Ferruccio Biondi Santi, effective March 1, 2010. Jacopo’s wines include flagships “Sassoaloro” and “Schidione.” The current importer is Remy Cointreau USA.br /br /GLAZER’S DISTRIBUTORS has promoted Miron Sargent to president of Texas and Oklahoma. Miron is currently vp, spirits for Texas and has been with the company since 1986. Miron will report to Shawn Thurman, recently appointed as evp sales and marketing.br /br /TERLATO WINES INTERNATIONAL has appointed Nancy Reynolds as west coast national accounts manager. Prior to joining Terlato Wines, Nancy worked for Young's Market Co.br /br /br /Until tomorrow, Meganbr /br /“Aging is not 'lost youth' but a new stage of opportunity and strength.”br /Betty Friedanbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 16br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-20950358318502342?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /After a proposal to allow wine sales in grocery stores was dropped last March, New York Gov Paterson and other proponents have presented a “compromise” bill that they hope will pacify package stores. The state’s motivation, of course, is the one-time store franchise fee that Paterson’s administration says would generate about $92 million in the 2010-2011 fiscal year. Recall that after the grocery bill was squashed last year, Paterson implemented a tax increase on beer and wine, and a floor tax on wholesalers and retailers.br /br /The “compromise” would allow liquor stores to sell directly to restaurants, bars and c-stores; install an ATM machine on location; and open more than one liquor store in the state. Right now New York only allows one liquor license per business, hence no liquor chains in the state. Paterson’s proposal would allow liquor stores to form cooperatives to drive down costs through joint purchasing for volume discounts. It would also extend the credit window allowed by wholesalers to retailers from 30 to 60 days, which gives liquor stores more flexibility. In addition, they could sell wine publications and other wine products, newspapers, gourmet foods, gift baskets, mixers and cigarettes, among other things. br /br /Many package stores believe these “benefits” aren’t enough to offset the loss in sales they would experience if grocery stores are allowed to carry wine. Unfortunately for liquor stores, there are a lot of businesses that would benefit from the new law according to a Cornell University report. The study claims that in-state and out-of-state wineries would benefit from grocery sales, along with government revenues.br /br /CUT FUNDING FOR WINE FOUNDATION. Liquor stores aren’t the only ones who are angry about Paterson’s proposal. The New York Wine and Grape Foundation opposes Paterson’s plan to completely eliminate state support for the group. Last year’s budget cut their funding from $2.8 million to just under $1 million.br /br /bWSD BRIEFS:/bbr /br /WE REGRET TO REPORT THAT JEAN ARNAULT, father of LVMH chairman Bernard Arnault and member of the company's board of directors, passed away yesterday at the age of 90. There were no further developments available at press time.br /br /VA GOV REMOVES ABC APPOINTEE. Virginia’s new Gov Bob McDonnell released former Del. Franklin Hall from the state’s Alcoholic Beverage Control Commission as his first step toward shaking up Virginia’s alcohol system. Commissioners Susan Swecker and William Pantele are staying for now. A spokesperson for the governor said he “is committed to privatization of ABC, and that priority is being relayed to all potential candidates.” He is reportedly considering Republican appointee Sandra Canada. Recall McDonnell wants to privatize spirits sales and put the money towards transportation, although he is still trying to drum up support from lawmakers. br /br /NEW APPOINTMENTS AT GLAZER’S. Glazer’s chairman and chief Bennett Glazer announced that Shawn Thurman is appointed evp, sales and marketing. He will oversee Glazer’s top line performance in its 11 states. Patrick Moore is promoted to evp, brand development and will oversee corporate initiatives in malt beverages, fine wine, multi-cultural marketing, training and new brand development. Patrick is currently Glazer’s president of Texas. And finally, Phil Meacham is appointed senior vp, finance, operations and administration. All appointments are effectively immediately.br /br /br /Until Monday, Meganbr /br /“By the time a man realizes that maybe his father was right, he usually has a son who thinks he's wrong.”br /Charles Wadsworthbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 15br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-944526658211957615?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /Does wine have better future growth prospects than beer and spirits? Morgan Stanley thinks so after studying results from a consumer survey and wholesaler survey, along with GuestMetric’s on-premise data. In their survey, the majority of wine, spirits and beer wholesalers agreed that the wine and spirits categories offer solid, long-term growth but promotions, demand and inventories in Q4 have brought short-term risks particularly in spirits.br /br /In a note to clients, Morgan Stanley executive director Dara Mohsenian acknowledges that wine industry growth has slowed, but also believes that the market underestimates wine’s growth potential. Why are they upbeat? Because “we think the recent wine volume slowdown has been driven by macros, which is a temporary phenomenon, while long-term secular growth drivers are still in place.” They believe concerns over pricing “are overblown” and that mix “should turn positive in 2010 and beyond...import pricing should rebound as importers take pricing to offset negative FX, and we discount concerns over Australian oversupply given that Australia is only 7% of US volume.”br /br /Morgan Stanley predicts that wine volume will grow 3% and pricing will gain 1.8% in the next five years (2010-2014). They expect spirits volumes to rise 2.5% and price to grow 1.5%. And finally, domestic beer volumes should rise about 0.3% with pricing up 2.8%.br /br /Wine has the most “favorable perception” among consumers when compared to beer and spirits. It’s considered healthier to drink, more sophisticated, higher quality and increasingly more popular. In their survey, 66% of distributors agreed that wine has the highest long-term growth potential in the US. Twenty-two percent thought beer has the most growth potential and 13% chose spirits.br /br /Data from GuestMetrics found that wine is most sensitive to on-premise declines. Wine volumes declined -26% through October 2009 year to date in 11 key US markets that include Atlanta, Austin, Chicago, Dallas, Houston, Miami, LA, NYC, Phoenix, San Antonio and Washington DC. Imported beer’s on-premise presence fell -19% in volume, while spirits declined -12%. This means wine could have the most to gain once the on-premise improves. In its consumer survey, Morgan found that 31% of consumers would switch from beer to wine if their situation improves in the next 6 months. Sixteen percent would switch from spirits to wine.br /br /DOMESTIC BEER HAS MORE FAVORABLE PRICING OUTLOOK. When it comes to pricing, though, Morgan Stanley believes domestic beer "has the most favorable pricing outlook," followed by wine and then spirits. As we noted above, Morgan believes wine pricing will improve because “consumer trade up will eventually rebound and a weaker dollar should drive higher 2010 import pricing.” Why? For one, premium wine “rebounded coming out of the last recession,” and “super-premium wine growth has recently reaccelerated in scanner data.” br /br /SPIRITS HEAVILY PROMOTED DURING HOLIDAYS. Spirits, however, are reeling from heightened near-term promotions and recent inventory de-stocking, says Morgan Stanley. Interestingly, 100% of spirits distributors surveyed experienced an increase in holiday period promotions, while only 33% experienced an increase in promotion in the beer category. Yes, spirits is getting mighty aggressive on the pricing front. When asked if they believe higher spirits promotion are driving volume gains, 52% of distributors answered “no,” while 33% said “yes” and 13% said “not sure.” Meanwhile, 67% of distributors said retailers continued to de-stock spirits inventory over the holidays. When asked what change they expect in retailer inventory levels in 2010, 56% of distributors said “maintain current levels” and 44% said “reduce inventory.”br /br /CONSTELLATION. Morgan Stanley currently rates Constellation Brands as “overweight.” They believe Constellation’s revenue growth potential is “under-appreciated,” particularly with its “leverage to high-growth wine and imported beer segments.” They also believe the US wine distribution changes and enhanced portfolio mix “should drive rebounding market share.”br /br /BROWN-FORMAN. Meanwhile, Morgan rates Brown-Forman as “underweight.” They said that their “3.8% 5-yr revenue forecast is likely below market expectations, as we believe ad spend reductions will limit market share.” Note that B-F has shifted its advertising spend to the off-premise, which includes offering more value added packs. Recent scan data also highlights increased promotional activity. br /br /BEAM GLOBAL. Fortune Brands was rated “equal weight.” Morgan projects 2.8% spirits profit growth over the next 5 years. “We expect FO spirits market share losses given its skew to low-growth categories and lower ad spending than peers.” Distributor surveys also point to increased promotion and inventory risks. Morgan noted that Beam’s new sales organization, increased ad spend and divisional reorganization “should all help drive improved results, but is partially offset by the halo lost without Absolut distribution.”br /br /bREMY RAISES PRICES IN Q3, SEES IMPROVEMENTS IN COGNAC/bbr /br /Growth in cognac was offset by declines in champagne and temporary declines in liqueurs and spirits in the third quarter for Remy Cointreau in the nine months to December 2009. Despite the difficult economic environment, Remy “resolutely continued to implement its price increases and product mix improvement policy” in the period. Organic revenue was down -4.5%.br /br /The downward trend in cognac “slowed down significantly” in the US and Europe, while superior quality cognacs achieved the best performance overall. Champagne sales, “as anticipated, were affected by the crisis, but Piper-Heidsieck and Charles Heidsieck resolutely continued their pricing policy against a background of widespread price reductions,” said the company in a statement. They said that chamgpagne’s negative trend recorded in the first half of the financial year improved in the third quarter, likely helped by the holidays. Meanwhile, partner brands in the US “continued to grow” in the third quarter.br /br /Remy's guidance is for slight organic growth in current operating profit at the end of March 2010.br /br /bWSD BRIEF:/bbr /br /DIAMOND OAK WINERY SOLD. Real estate developer Bill Harlon has purchased Diamond Oak in Calistoga from Dinesh Maniar, reports WineBusiness.com. Although the purchase price was not disclosed, public records show that Bill assumed more than $10 million in debt owed to Metropolitan Life Insurance Company. The title for the property was transferred back in late December. Dinesh filed a bankruptcy petition in September on behalf of Diamond Oak.br /br /br /Until tomorrow, Meganbr /br /“By the time a man realizes that maybe his father was right, he usually has a son who thinks he's wrong.”br /Charles Wadsworthbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 14br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-6032298654522396243?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /Despite the downturn and fears from the industry, wines priced $20 and above posted the most growth in food stores in 2009, according to IRI’s most recent scan data in the 52 weeks to January 3. In fact, all premium and super-premium wines posted growth in 2009, while the lower end was a little more sporadic. Dollar sales of $20+ wines grew 11.4% and volume gained 15.2%. The second fastest growing price group was premium wines at $8-$15. Wines priced $8-$11 saw sales leap 5.9% and volumes grow 6.2%. Sales of the $11-$15 category gained 5.4%, while volumes rose 7.2%. br /br /Growth at the lower end was shakier, with downturns in economy wines and growth in fighting varietals. Wines priced below $3 grew a solid 3% in sales but volumes declined -1.9%, likely due to an average price increase of $1.58 per volume. Wines priced $5-$8 declined slightly, down -0.1%, in sales and volume, respectively. Meanwhile, wines in the $3-$5 range were the most successful in the low end, growing 5.6% in sales and 3.7% in volume.br /br /DOMESTICS GAIN IN BOX AND $20+. Strangely enough, domestic wines saw the most growth from box wines and super-premiums. Box wines above $2 grew the fastest with dollar sales gaining 25.1% and volume up 19.9%. The second fastest price category was table wines priced above $20, with sales up 14.1% and volume up 18.1%. Note that there was an average $11 price cut per volume in that category. The third fastest growing category was wines priced $8-$11, with sales up 7.7% and volume up 8.6%.br /br /In looking at just California wines, overall sales grew 5% and volume gained 3.1%. The fastest growing price category was above $20. The weakest category was below $3.br /br /Oregon saw the most growth in 2009 compared to California and Washington. Sales leaped 8.2% and volumes gained 10%. The two fastest growing categories were wines above $20 and wines $15-$20. The weakest were wines priced $3-$5.br /br /Washington dollar sales grew 6.4% and volumes gained 6.3%. The state’s fastest growing price segment was $11-$15, followed by wines priced $8-$11 and $20+. Wines $3-$5 posted the biggest declines by far, followed by the $5-$8 category.br /br /IMPORTS GAIN IN ECONOMY AND $11-$15. Imports were a different story. Wines that sold below $3 grew a whopping 34.2% in sales and 26.7% in volume despite a price increase. The second fastest growing group was wines in the $11-$15 range that saw sales grow 15.1% and volume rise 17.3%. The $11-$15 price category was on fire for most importers last year, which could be a result of an average price decrease of $2.76 per volume and consumers trading down. The next highest price category, $15-$20, also posted strong growth with sales up 9.1% and volume up 9.8%. br /br /The $5-$8 category posted the biggest decline, where sales dropped -3.8% and volume fell -3.7%. Like domestics, importers dropped prices in the $20+ segment but only managed slight growth in dollar sales and 5.6% in volume.br /br /Argentina was the fastest growing import and country overall. Sales gained 57.5% and volumes grew 44.1%. Their fastest growing price categories were $20+, $11-$15 and $8-$11. Interestingly, wines in the $15-$20 range posted some of the lowest growth but were still up double digits.br /br /The second fastest growing region was New Zealand. Sales were up 16.4% and volume rose 13.5%. The most popular priced categories were its least expensive offerings, which fall in the $5-$8 range, along with premium and super-premium wines, $11-$20+.br /br /Spain, Portugal and Chili had a great 2009. Spain saw sales grow 13.9% and volumes gain 18.3%. Spain’s fastest growing price category by far was $3-$5 in terms of dollar sales and $20+ in volume. Chile saw dollar sales rise 9.8% and volumes grow 8.5%. Chile’s fastest growing price segment was below $3 and $11-$15 in terms of both sales and volume. Lastly, Portugal saw sales grow 9.8% and volumes gain 2.5%. Portuguese wines that saw the most growth were priced $8-$15. Big declines came from wines priced $15-$20.br /br /The big three importers – Australia, Italy and France – all posted declines in grocery stores last year. France posted the biggest losses, with sales down -6.2% and volumes down -9.8%. Almost all price segments saw negative growth, with the biggest declines come from French wines priced $3-$8. France’s redemption came from $2+ boxed wines and the “magic” $11-$15 category. br /br /Australia saw sales declined -4.6% in 2009 and volume drop -3.6%. All price segments but one posted declines, with the biggest drops coming from wines priced $3-$5, $8-$11 and $20+. The only price segment that posted growth was $15-$20; perhaps a $12 average price drop per volume helped draw consumers to that category.br /br /And finally, sales of Italian wine dropped -2.7% and volume declined -4.8%. The biggest declines came from $5-$8, with sales down -7.9% and volume down -9.1%. The biggest growth came from $11-$15, with sales up 10% and volume up 9.8%.br /br /German wines posted sales growth of 2.9% and volume growth of 0.1% in 2009. Their most popular price categories were $11-$15 and $20+. South African wines disappointed with sales and volumes declining -20.8% and -26.1%, respectively.br /br /MALBEC OUTPACES OTHER VARIETALS. White wine saw the most growth in grocery stores last year, with sales up 5.1% and volume up 3.6%, while red wine grew 3.9% and 3.3%, respectively.br /br /With all the success coming from Argentina this year, it’s not surprising that malbec far outpaced all other varietals. Dollar sales of malbec grew 82.7% and volume rose 82.1%. Fume/sauvignon blanc was the second fastest varietal, followed by red blends/meritage, pinot noir and riesling. Cabernet posted mid-single digit growth, while chardonnay posted low-single digit growth and merlot dropped -1.8% in sales and grew only 0.2% in volume. As you can see, most of the categories did well in food stores although malbec was the only one to post double-digit gains. Varietals other than merlot that posted declines last year include chianti/Tuscan reds, syrah/shiraz and white zinfandel.br /br /NON-TRADITIONAL PACKAGES WIN. Some of the fastest growing packages in 2009 were tetra paks, 1 liter table wines, 3 liter boxed wines and the 4 liter boxed wines. The 1.5 liter boxed wine and 3 liter glass table wine bottle both lost share.br /br /BRAND WINNERS AND LOSERS. Some of the fastest growing wine brands in food stores last year (in no particular order) include Barefoot, Sterling Vintners, Folie a Deux, Black Box Wines, Rex Goliath, Red Diamond, Edna Valley Vineyard, Dancing Bull, Corbett Canyon box wine, Gnarly Head, Vendange box, St Francis, Golden Gate, Bay Bridge Vineyards, Cupcake Vineyards, Delicato box and Tisdale. Note they are almost all from California.br /br /Some of the wines that took the biggest hit last year include Turning Leaf, Bella Sera, Redwood Creek, Almaden box, Smoking Loon, Glen Ellen, Toasted Head, Bolla, Alice White, Gallo Family Vineyard Reserve, Pepperwood Grove, Rosemount Estates and Kendall-Jackson Grand Reserve. br /br /bMILLENNIALS CRAVE AUTHENTICITY IN MARKETING/bbr /br /Keynote speaker Nadira Hira, a reporter for Fortune, told listeners at the Direct to Consumer Symposium that the most important thing to remember in marketing to millennials is that they crave authenticity, according to an a href="http://www.pressdemocrat.com/article/20100119/BUSINESS/100119413"article /ain The Press Democrat. While millennials, or generation Y, are more open to wine at a younger age than baby boomers and generation X, they require a different type of marketing. For example, millennials tend to reject heavy advertising that comes on too strong. They’re more interested in exploring brands on their own, which makes them fickle consumers. They’re also computer savvy, so Nadira suggested that wineries get on social networking sites, set up a blog on their websites and access consumers’ mobile phones – as long as the message is authentic.br /br /bWSD BRIEFS:/bbr /br /WASHINGTON STATE is adding 5 new state liquor stores, 10 new contract liquor stores and reopening others as legislators consider privatizing spirits sales to fill budget gaps. Gov. Chris Gregoire didn’t seem too fond of the idea in a recent a href="http://www.winespiritsdaily.com/2010/01/look-back-at-novembers-wine-performance.html"interview/a, though. She told the Seattle PI that the state wouldn’t save any money by privatizing spirits sales and that the initiative would end up destroying small liquor stores.br /br /STE MICHELLE ESTATES has struck an agreement to import and market New Zealand’s Villa Maria Estate wines, effective yesterday. This is a part of Ste. Michelle’s “business strategy of owning or representing estate wineries who are leaders in their respective regions,” said the company. Privately owned Villa Maria was founded by Sir George Fistonich in 1961 and has been New Zealand’s most awarded winery for 30 years.br /br /RED BULL NORTH AMERICAN CEO Sélim Chidiac has opted to leave the company effective February 3 to head a gold jewelry brand in the Middle East. Sélim has been with the North American unit for 3 years. Red Bull said they will name a successor “at a later stage.” br /br /br /Until tomorrow, Meganbr /br /“The power of accurate observation is commonly called cynicism by those who have not got it.”br /George Bernard Shawbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 13br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-4417425154461264572?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /A new report from Deutsche Bank’s Jamie Isenwater says that the spirits sector has taken a short-term approach by cutting their marketing budgets during the downturn, which almost guarantees it will be expensive to rebuild once the environment improves. In the last 6 months, Pernod Ricard (Sell), Diageo (Hold), AB Inbev (Hold) and Campari (Hold) cut AP the furthest out of 30 European and US consumer staples companies, while Beiersdorf (Buy), Unilever (Buy), Henkel (Buy) and L’Oreal (upgraded to Buy) invested the most aggressively.br /br /Jamie says that Pernod and Diageo cut their organic marketing spend by -24% and -18% respectively in the first half of calendar 2009. “We remain underweight Beverages with a particular caution on Spirits given the aggressive cutting of AP spend seen on the back of the downturn,” said Jamie. “We see little earnings rebound for the Spirits sector as a result and struggle to see where earnings upgrades are likely to come from. Pernod Ricard remains a key Sell recommendation and we see little upside to Diageo at current levels.” br /br /LOWER AP EQUALS LOWER MARGINS. “When we analyze our entire consumer staples dataset we find a similar result – companies that cut AP see their operating margins fall over time,” said Jamie.br /br /The note points to a McGraw-Hill study of the early 1980s recession that says “companies that maintained or increased their advertising spend in 1980-81 grew over 50% faster in 1982 than those who cut spend and grew over three times faster by 1985. Whilst it may not be entirely surprising that increasing AP, increases sales growth...a study of the PIMS (Profit Impact of Market Strategy) database shows that those companies who increased marketing spend also increased profits and returns post-recession.”br /br /Deutsche Bank realizes that “in a difficult environment it can be very tempting for companies to cut marketing spend to protect profitability,” but that “the benefits of the cost savings are short-lived with profits dipping in the following year and again the year after as marketing spend needs to be rebuilt.”br /br /Why is AP spending so important? Deutsche believes it’s because “consumers are prepared to pay higher prices for brands they like and trust.” br /br /DIGITAL MARKETING GAINS IMPORTANCE. Note that traditional media spend on TV and billboards are becoming less important as companies invest more in digital and word of mouth marketing. Diageo has said that its Smirnoff brand will spend 20% of its advertising budget this year on digital media, compared with the 10% Diageo as a whole spent on advertising through digital channels last year, according to the report. It’s estimated that 12-13% of advertising is now online globally although it’s very difficult to measure. Companies are also putting more effort into “category management, customer relationship management, and more sophisticated interaction with retailers and consumers in an effort to ‘push’ branded products.” br /br /bWSD BRIEFS:/bbr /br /DIAGEO today won a case against UK-based Intercontinental Brands over its Vodkat spirits. Diageo alleged the brand misled consumers into thinking it was vodka. Vodkat is actually a vodka based brand with a 22% abv mix of fermented alcohol and vodka. In the European Union, vodka must be made of 100% distilled alcohol and at least 37.5% abv. ICB has already changed Vodkat’s packaging to read “Vodkat Schnapps” and says it will consider other truth in labeling measures. Unless ICB appeals the decision, a final ruling is expected next month. Regardless, this case shows that vodka is a protected category in the EU much like Champagne and Scotch.br /br /GOV CORZINE LEGALIZES SPIRITS TASTINGS. In one of his final gubernatorial acts, Governor Jon Corzine signed legislation last night allowing New Jerseyans the chance to sample distilled spirits at liquor stores, according to Discus. It allows adults to sample up to three separate one-half ounce servings of spirits in any one calendar day at a pre-planned tasting event. The law takes effect May 1.br /br /MEXICAN TEQUILA PRODUCTION fell -20% to 249 million liters last year from a bumper crop of 312 million liters in 2008, according to the Agriculture Ministry. Exports in 2009 were about the same as 2008 at 136.1 million liters. Exports of tequila made entirely from the agave plant grew 3.9% to 37.3 million liters.br /br /UK BANS “BINGE” PROMOTIONS. Starting in April, the UK will ban alcohol promotions that encourage binge drinking, such as speed drinking competitions and all you can drink events at the on-premise. In October on-premise locations will be required to offer drinks in smaller measures and tap water for free.br /br /NEW YORK GOV DAVID PATERSON is again trying to push wine sales in grocery stores in the 2010-11 state budget. He claims the state could bring in $93 million in the next fiscal year through a one-time fee paid by grocery stores for licenses to sell wine. It is being hotly contested in the state. br /br /BRINLEY GOLD RUM has signed a marketing agreement with Bedford Grove, LLC to distribute the brand in 28 states with an emphasis on the midwest and west coast.br /br /br /Until tomorrow, Meganbr /br /“Character is like a tree and reputation like its shadow. The shadow is what we think of it; the tree is the real thing.”br /Abraham Lincolnbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 12br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-6695522961499579395?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /In a victory for wineries and direct shippers, the 1st Circuit Court of Appeals ruled in favor of a lower court decision on Thursday that a Massachusetts volume cap is unconstitutional because it discriminates against out-of-state wineries. [Ed note: You can view our coverage a href="http://www.winespiritsdaily.com/2010/01/direct-shipper-victory-in-massachusetts.html"here/a]. The state is thus enjoined from enforcing its law that prohibits wineries producing more than 30,000 gallons from shipping if they have a wholesaler in the state. On its face it appears that wineries across the country can now ship to Massachusetts but other regulations may get in their way. So what now?br /br /THE NEXT STEP for Massachusetts is to change their law “so that all wineries, not only in California but across the nation that produce more than 30,000 gallons will have an opportunity to fulfill the wine choices of Bay State residents," Paul Kronenberg, president of FWC, a href="http://shipcompliantblog.com/blog/2010/01/17/huge-win-for-wineries-but-can-i-ship-to-massachusetts-now/"told /aShipCompliant Blog. br /br /ShipCompliant points out that the capacity cap was not the only thing hampering out-of-state wineries from shipping direct. “The consumer aggregate volume limit provision and, more importantly, the requirement that carriers obtain a permit for each of their delivery trucks have been in some ways just as problematic for wine consumers,” wrote Jeff Carroll, vp of Compliance.br /br /It turns out that FedEx and UPS have both chosen not to ship out-of-state wine to Massachusetts residents because of the delivery vehicle permit system. Although the state is now technically open for business, Jeff doesn’t expect FedEx or UPS to change their stance following this decision. br /br /The aggregate volume limit restricts the delivery of wine to about 26 cases per consumer per year for all wineries. This means wineries must keep track of the amount of wine each Massachusetts consumer has purchased from all wineries across the country. Obviously this is next to impossible and therefore acts as a huge deterrent for wineries.br /br /The state would need to pass legislation that eliminates the consumer aggregate volume limit and changes the delivery vehicle requirements in order to be truly open.br /br /FAMILY WINEMAKERS OF CALIFORNIA chairman Jim Gullett said in a statement: "This case was extremely important because it acknowledges that post-Granholm discriminatory laws like production caps cannot pass legal muster. We're gratified the court affirms the statute’s unconstitutionality.” br /br /Tracy Genesen, lead attorney with Kirkland Ellis on the case, said: “Today’s decision is a milestone for wineries and consumers in breaking down barriers to discriminatory interstate commerce. The 1st Circuit Court of Appeals concluded that the Twenty-first Amendment does not grant states the authority to enact facially neutral but discriminatory wine laws that would otherwise violate the Commerce Clause.”br /br /Now we await a decision by the 9th Circuit Court of Appeals: will it uphold a lower court ruling that said Arizona has the right to enforce volume caps and require face to face transactions? If so, the two appellate courts would be in conflict, which could ultimately lead to a hearing by the Supreme Court. The outcome remains to be seen. br /br /bVIRTUAL RETAILER VINFOLIO ENTERS “ASSIGNMENT” TO PAY DOWN DEBT/bbr /br /The founder of Vinfolio, a San Francisco based online wine store, a href="http://www.vinfolio.com/thewinecollector/2010/01/vinfolio-business-update-from.jsp"announced /aon his blog that the company entered an “Assignment for the Benefit of Creditors” on Friday evening, January 15. This state-level insolvency process is an alternative to filing Chapter 7 or Chapter 11 bankruptcy. It allows the assignor/debtor to transfer all or most of their property to a third-party/assignee that will apply money received to pay down debt.br /br /Founder Steve Bachman wrote that “it is important for you to know that key employees have been retained and our operations continue as we undertake this process...I’d like to apologize to you for this unexpected development and ask our loyal customers and users to be patient during the Assignment.”br /br /Although the company has experienced “three years of very rapid growth,” said Steve, “Vinfolio experienced a much more difficult sales environment during 2009. A few weeks ago, we found ourselves in need of additional capital on a very near-term basis. The company investigated several options but new capital could not be obtained on a necessarily compressed timetable.”br /br /Also on Friday, a group led by Jon Moramarco, the managing partner of BW 166 LLC, acquired the secured debt of the company. They issued a guidance to the Assignee that says: “The Vinfolio business is a unique and valued asset to the community of wine collectors and wine enthusiasts. We want to see the business continue its mission and have acquired the secured debt to help align everyone’s (creditors’, customers’, employees’, users’) interest in this outcome.” They wish to “preserve the goodwill” of Vinfolio’s customers and users by funding Vinfolio “in the near term while the Assignment process is ongoing.” The secured creditor is also waiving any rights to funds from the sale of Marketplace and fixed priced auction items from January 1 “and has asked that these funds be paid to the sellers in those sales as soon as practical.” The secured creditor “only have security in the assets owned by the company, and not in wines offered through the Marketplace or fixed price auctions, or wines stored by third parties with the business.”br /br /In September Vinfolio announced it had raised $4.5 million to fund an expansion in Asia. It had also raised $6.1 million in previous rounds of financing (both debt and equity). br /br /bWSD BRIEFS:/bbr /br /IOWA is the latest state to be sued for alleged post-Granholm Commerce Clause violations. OakGlenn Winery, located in Missouri, is suing Iowa to allow it to ship directly to consumers. Iowa does not allow out-of-state wineries to ship direct while allowing in-state wineries to do so. The suit isn't surprising as Granholm settled this very complaint. The suit seeks a declaratory judgment. br /br /BROWN-FORMAN laid off 12 employees at Fetzer Vineyards on Friday after deciding to outsource its trucking department to save money, reports The Press Democrat. They include 9 truck drivers, 2 mechanics and 1 manager and will be paid through January 31. Cherokee Freight Lines will take over January 19.br /br /US WINERIES REACH 6,223. According to the Wine Business Monthly database, the US gained 122 new wineries last year, reaching a total of 6,223 as of November 2009. This total is made up of 5,304 bonded wineries and 919 "virtual wineries." Bonded wineries, which are licensed by the TTB, grew 6% in 2009. br /br /BROWN-FORMAN is donating $100,000 to the American Red Cross to assist in relief efforts in Haiti. B-F will also match employee donations to the American Red Cross up to $20,000, which means the company and its employees will contribute as much as $140,000 to the Haitian Relief efforts.br /br /VSPT WINE GROUP, which is the second largest Chilean wine exporter, shipped over 1 million cases into the US in 2009 with the merger of Viña Tarapacá. Notable growth came from Viña San Pedro, which grew sales 35%.br /br /br /Until tomorrow, Meganbr /br /“It is as hard to see one's self as to look backwards without turning around.”br /Henry David Thoreaubr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 12br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-7238208179107214355?l=www.winespiritsdaily.com' alt='' //div

The 1st Circuit Court of Appeals upheld a lower court ruling yesterday in favor of Family Winemakers of California that says the state’s 30,000 gallon cap is unconstitutional. br /br /BACKGROUND. The Massachusetts legislature approved HB 4498 in 2006 over the veto of then-Gov. Mitt Romney. It stipulates that wineries who sell over 30,000 gallons a year must choose whether they want to sell wine through the licensed three-tier system, or to apply for a license to ship direct. They cannot, however, do both. After HB 4498 became law, Family Winemakers of California v. Jenkins was filed on September 18, 2006, stating that it violated the nondiscrimination principle of the Commerce Clause because it favored in-state wineries. Note that all the wineries in Massachusetts produce less than 30,000 gallons of wine a year. On November 19, 2008, Judge Zobel ruled that the production cap statute was unconstitutional and, later, enjoined the state from enforcing Sections 2, 18 and 19(F) of the Massachusetts General Law Chapter 138. The state appealed Judge Zobel’s ruling, and oral arguments were heard November 2 in the 1st Circuit U.S. Court of Appeals.br /br /THE DECISION:br /br /In its a href="http://www.familywinemakers.org/userfiles/Mass%201st%20CA%20Opinion.pdf"decision/a, the judges wrote: “We hold that 19F (the gallon cap) violates the Commerce Clause because the effect of its particular gallonage cap is to change the competitive balance between in-state and out-of-state wineries in a way that benefits Massachusetts's wineries and significantly burdens out-of-state competitors.” u Here are some of the bigger arguments that the appellate court struck down: /ubr /br /THE GALLON CAP IS NON-DISCRIMINATORY. The state argued that the gallon cap promotes competition because it opens the market to small wineries across the country. However, the court says the number of large wineries that are burdened by the law far outweighs the number of small wineries that benefit. “The discriminatory effect is because [the law’s] definition of ‘large’ wineries encompasses the wineries which produce 98 percent of all wine in the United States, all of which are located out-of-state and all of which are deprived of the benefits of combining distribution methods...These disadvantages exceed the benefits that out-of-state "small" wineries receive.” br /br /The court also contends that Massachusetts put the cap in place “to artificially limit the playing field in this market in a way that enables Massachusetts's wineries to gain market share against their out-of-state competitors.”br /br /DIRECT SHIPPING LEADS TO ILLEGAL ACTIVITY. Furthermore, the judges did not agree with arguments from the state that direct-to-consumer wine shipments could result in illegal activity: “These states also make the parade of horribles-style argument that a state's loss of control over the alcoholic beverage market ‘can lead to illegal activity, including shipment to underage individuals, the sale of adulterated products, and the possibility of organized crime involvement in disguised internet schemes.’ Massachusetts has not advanced any of these theories, and it is difficult to see the claimed causal relationship.”br /br /21ST AMENDMENT PROTECTS AGAINST COMMERCE CLAUSE. The state argues that the law is not explicitly discriminatory and is therefore protected under the 21st Amendment. The judges disagreed, claiming the law is discriminatory in both purpose and effect. Although the law “is neutral on its face,” the judges ruled that it’s not protected by the 21st Amendment: “Against this background, we hold that the Twenty-first Amendment does not exempt facially neutral state alcohol laws with discriminatory effects from the non-discrimination rule of the Commerce Clause. Nor, of course, are such laws exempt when they also discriminate by design.”br /br /WSWA’S REACTIONbr /br /The Wine Spirits Wholesalers of America (WSWA) issued a statement this afternoon “deriding” the appellate court’s decision for several reasons. For one, they feel states have the right to enact their own alcohol system. “It is the opinion of WSWA— and indeed other courts—that the 21st Amendment empowers states to make decisions on how alcohol is regulated within the states’ borders. The First Circuit decision undermines states’ authority under the 21st Amendment,” said chief Craig Wolf.br /br /Secondly, they feel the statute is non-discriminatory because it applies “equally to both in-state and out-of-state wineries, evenhandedly complying with the requirements imposed by the Supreme Court in its 2005 decision in Granholm v. Heald. Similar statutes were upheld in Kentucky and Arizona.”br /br /WSWA also addressed public health concerns. “WSWA also finds it troubling that the Court blithely dismissed public health and policy concerns expressed by New Jersey, Ohio, Rhode Island and Wyoming in their amicus brief filing.”br /br /Craig went on to say: “This is yet another example of judges believing it is their prerogative to substitute their individual judgments for the will of the people of the state as expressed through their elected legislators. Unfortunately, when courts refuse to defer to state authority under the 21st Amendment, that only serves to embolden those who seek to further deregulate the distribution of alcohol in this country.”br /br /THE BIG PICTUREbr /br /So how will this federal court decision affect other states? It will certainly add fuel to the argument against gallon caps. A district judge tossed out a challenge to Arizona’s 20,000 gallon volume cap and face-to-face transaction requirement in 2008. The 9th Circuit Court of Appeals heard arguments in September and we await their decision. Other states with production caps include Florida and Ohio. Florida has attempted to pass a capacity cap of 250,000 gallons for three years now but has not yet succeeded. Ohio has a capacity cap of 250,000 gallons. Regardless, this ruling is going to open up a lot more lawsuits.br /br /INTERESTINGLY, the hotly contested federal Senate seat vacated by the late Sen. Kennedy is sought after by the Attorney General, Martha Coakley. She is in a dead heat race with her GOP opponent. She is also defending the state's alcohol law. Says the Associated Press: "Attorney General Martha Coakley's office had appealed the earlier ruling by a federal district court judge on behalf of the Massachusetts Alcoholic Beverages Control Commission. The attorney general's office said in a brief statement Thursday that it would review the decision with the commission before commenting."br /br /To read about the issues at stake straight from the horses’ mouths, check out our November interview with Family Winemaker’s president Paul Kronenburg, general counsel Tracy Genesen and Craig Wolf, president of the WSWA, click a href="http://www.winespiritsdaily.com/2009/11/massachusetts-stakeholders-argue-three.html"here/a.br /br /bPRECEPT BRANDS ACQUIRES CORUS ESTATES VINEYARDS/bbr /br /Effective January 1, Seattle-based Precept Wine Brands has acquired Corus Estates Vineyards including its winemaking operations, accounting, sales, marketing and retail locations. Corus Estates Vineyards was owned and operated by the Baty family who has a 30 year history in the northwest wine industry. Dan Baty is also co-owner in Precept Wine Brands. The newly acquired brands include: Sawtooth Winery, Alder Ridge, 6 Prong, Zefina, Blue Pirate and Battle Creek.br /br /“Dan and his family felt that it was time to consolidate some of the efforts of their wine entities,” said Precept chief and co-founder Andrew Browne. “These additions to our Northwest portfolio will strengthen our commitment to producing, marketing and selling wine of outstanding value in the region. We feel posed for success with our core portfolio and the additions of these new brands.”br /br /The Baty family will maintain separate ownership and operations of their vineyard company, Winemakers LLC. Precept Wine Brands will continue to source grapes from Winemakers, and all of Corus Estates Vineyards’ Oregon facilities will also continue to operate under Winemakers.br /br /bWSD BRIEFS:/bbr /br /THE WASHINGTON STATE LIQUOR CONTROL BOARD (WSLCB) has requested legislation to prohibit pre-mixed, energy-enhanced malt beverages because “research suggests that alcohol-energy drinks create a dangerous mix – especially for youth,” said Sharon Foster, board chair. These beverages are typically sold in cans in convenience stores statewide. House Bill 2804 will be up for consideration during the 2010 regular session. Recall that the FDA sent a letters notifying 30 manufacturers of caffeinated alcoholic beverages that it intends to look into the safety of their products. If the FDA determines such products are not safe or lawful, it will take action to remove the products from the marketplace.br /Related WSLCB policybr /br /THE SOUTH DAKOTA legislature will consider HB 1002 to allow Sunday sales on- and off-premise statewide and also remove restrictions during holidays. The bill was referred to the House Committee on Commerce where it will first be considered. Currently, Sunday sales are only allowed by a local option vote. br /br /CONSTELLATION BRANDS has completed the sale of its Gaymer Cider Company business to CC Group PLC of Dublin, Ireland for a purchase price $70 million, subject to closing adjustments. The company expects to use the proceeds from the sale to reduce borrowings.br /br /br /Until Monday, Meganbr /br /“The gods too are fond of a joke.”br /Aristotlebr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 11br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-7624461548396268416?l=www.winespiritsdaily.com' alt='' //div

The idea of minimum pricing has been tossed around for years in the UK but chances of it happening seemed more likely over the past week. In what led to an influx of speculation from the press, the lower House of Commons Health Committee said in a new report that setting a minimum price for each unit of alcohol would be the most effective way of bringing down alcohol consumption in the UK. The World Health Organization (WHO) also a href="http://www.winespiritsdaily.com/2010/01/who-alcohol-strategy-up-for-review.html"supports /aprices increases along with other methods in controlling alcohol. br /br /Britain has been under a microscope for years for their allegedly lax alcohol system. Critics say alcohol is much too cheap and easy to purchase at any time, causing major problems with binge drinking. Britain’s four major supermarkets are often blamed for selling alcohol below cost. With price-fixing, alcohol would more than double at supermarkets. Prices would also go up at the on-premise but not as much since their prices are already higher. The plan would see the starting cost of drinks fixed at between 40 pence and 50 pence per alcoholic unit - leading to a six-pack of beer costing about £6 and a bottle of wine costing £4.50. Cheap bottles of cider could quadruple in price, a href="http://www.telegraph.co.uk/health/healthnews/6983707/Cost-of-cheap-alcohol-will-double-to-curb-binge-drinking.html"according /ato the Daily Telegraph. The money would go towards public health campaigns. br /br /The SNP have also proposed introducing a similar minimum price for alcohol in Scotland but were blocked by Labor. Andy Burnham, the Health Secretary, is the leader of the cause and hopes for support from conservatives. Members of the conservative Tory party advocate tougher licensing, marketing and labeling laws for alcohol drinks but it’s not known if they will support minimum pricing. They are expected to win the general election this year. According to the Daily Telegraph, ministers are working on a “staged process” to introduce minimum pricing. Initially, the drinks industry will have to increase warnings on labels, and then supermarkets and other retailers would be banned from selling alcohol at below cost. The minimum price will then be introduced as the third and final phase of the scheme. br /br /Prime Minister Gordon Brown and the Labor Party historically oppose these types of restrictions in favor of more liberal alcohol laws. As if to drive the point home, a spokesman for Prime Minister Gordon Brown said today: “We have no plans to introduce minimum pricing for alcohol.” This certainly spells relief for the industry but doesn’t mean we’ve seen the last of minimum pricing in the UK or compulsory health messages with recommended weekly alcohol limits on bottles. br /br /In response to the health report, the Wine Spirit Trade Association (WSTA) chief Jeremy Beadles said: “We believe that policies to address alcohol misuse are most likely to succeed if they focus on problem drinkers rather than particular products. Evidence from other countries suggests that higher taxes and prices for certain drinks do not change the behaviour of those who misuse alcohol.”br /br /bPERNOD H1: US SALES HAVEN’T BENEFITED FROM RECOVERY/bbr /br /In a first half trading statement today, Pernod Ricard said sales ending December 31 in the US “have not yet benefited from the economic recovery” although sales remained “well oriented” in other countries in the Americas. Melissa Earlam of UBS said Pernod’s statement on the US confirms “what we already know that Holiday trading has not been great.” br /br /Organic net sales declined -3% in the first 6 months. Sales in Q1 declined -4% but improved in Q2, declining -2%, “on a still challenging comparison basis.” Pernod said that mix was positive with a particularly better performance from spirits compared to wines and champagne. Business remained difficult in Europe, with however a good resistance in France and an improving trend in Eastern Europe.br /br /bMECKLENBURG ABC CHAIRMAN RESIGNS/bbr /br /After a href="http://www.winespiritsdaily.com/2010/01/latest-wine-spirits-headlines.html"rejecting /aa request to resign earlier this week, Mecklenburg ABC Board Chairman Parks Helms has agreed to resign his post after allowing a Diageo rep to buy dinner for a group of 30 Mecklenburg ABC employees, including himself, and their guests. According to WCNC, Helms sent his a href="http://www.wcnc.com/news/local/Parks-Helms-resigns-from-ABC-Board-81548612.html"resignation /aletter to Mecklenburg County Commission chairwoman Jennifer Roberts, saying that he would step down but violated no policy, procedure or law. Diageo faces fines as well.br /br /Yesterday the North Carolina ABC Commission banned all gifts from the spirits industry to ABC staff. Jon Williams, chair of the state ABC Commission, also lambasted Parks in the press, claiming he is an example of a “culture of entitlement” in the ABC system along with other high level employees. The father and son who run New Hanover ABC have also come under fire for large salaries and even larger bonuses. They’re also accused of flying first class and spending money on other luxuries at the NABCA meeting in Phoenix last May. br /br /Parks recently told investigators that he assumed the Mecklenburg board would pay for the dinner, to which Jon responded: “In other words, Parks Helms' statement is that he assumed the citizens of Mecklenburg County would pay the bill... There is no way the public should be expected to foot the bill for select employees and family members to have a party of seemingly unlimited price and extravagance.” Jon said that since taking this new position 3 months ago, he’s been surprised at the amount of time he’s spent dealing with “certain local ABC boards and their senior employees.”br /br /bWTO LAUNCHES DISPUTE SETTLEMENT AGAINST THE PHILIPPINES/bbr /br /The United States government has launched a World Trade Organization (WTO) dispute settlement against the Philippines’ discriminatory taxes on imported spirits, which can be as high as 43 times the tax rate applied to domestic spirits. This is in violation of a general WTO principal that says countries should not discriminate between imported and domestic products in their tax regimes. In 2008, U.S. spirits exports to the Philippines were valued at only $671,000. Globally, U.S. spirits exports surpassed $1 billion for the second consecutive year.br /br /“The Philippines has imposed a blatantly discriminatory tax on imported spirits for well over a decade,” said Peter Cressy, president of the Distilled Spirits Council. “These exorbitant taxes have made it nearly impossible for U.S. spirits exporters to break into the $3 billion Philippines spirits market.” Discus is “very pleased” that WTO is getting involved and looks “look forward to working closely with the Office of the U.S. Trade Representative as the dispute settlement process moves forward,” Peter continued.br /br /The first step in a WTO dispute is formal consultations between the parties. If that brings no resolution, the United States can ask that a panel be established to determine whether the Philippines has violated its WTO obligations.br /br /bWSD BRIEFS:/bbr /br /DIAGEO is delivering more than 45,000 pounds of food and emergency supplies to earthquake victims in Haiti tomorrow as a part of its Spirit of the Americas Humanitarian Aid program. The company’s specially commissioned 727 aircraft will leave Miami at 8:00am tomorrow morning. The supplies include basic medical care, beans, rice, cooking oil and Ensure. Diageo holds a minority stake in Braisserie Nationale d’Haiti S.A. that employs 1,300 people and brews Guinness and distributes brands such as Smirnoff, Johnnie Walker, Baileys and Tanqueray.br /br /NEW HAMPSHIRE LIQUOR STORES are cutting hours to help save money. Thirty of the 78 locations in New Hampshire will be closing early on some days or closing all together on certain days of the week, starting this Friday and lasting through May. br /br /WINE INDUSTRY LAUNCHES SUSTAINABILITY PROGRAM. The voluntary Certified California Sustainable Winegrowing program designed by the Wine Institute and CAWG sets the minimum standards for wineries and vineyards to be certified, reports The Press Democrat. An outside organization would verify their performance on a variety of socially and environmentally responsible practices. To date, 68% of California’s vineyards and 63% of the 240 million cases of wine it produces have participated in the programbr /br /DARRYL ROSEN is conducting a study to better understand the relationship between sales managers/supervisors and their salespeople. He’s prepared a confidential online survey and once the results are complete, we will share with WSD readers. Company leaders, managers and supervisors should click a href="http://www.surveymonkey.com/s/QSQ5XMX"here/a. Beverage salespeople should click a href="http://www.surveymonkey.com/s/QSQC3F8"here/a.br /br /br /Until tomorrow, Meganbr /br /“A business that makes nothing but money is a poor business.”br /Henry Fordbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 10br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-3823862558565250268?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /The World Health Organization (WHO), the United Nation’s public health arm, is considering a draft strategy that recommends that member states raise alcohol taxes and implement tighter marketing regulations to curb over-consumption. WHO’s executive board will examine the draft strategy next week and is expected to approve it. It will then be sent to WHO's annual assembly of health ministers in May for adoption. Note that their decision is not binding but opponents worry that some member countries may feel obligated to adopt WHO’s strategies.br /br /Wine, spirits and beer companies formed The Global Alcohol Producers Group in 2005 to engage WHO on their draft strategy. The industry views the draft as an “important and constructive step forward," but believes "an over-reliance on strict government controls such as over-taxation or advertising bans" could lead to bigger problems such as an influx in illegal alcohol sales, according to Reuters. Just look at what happened with Prohibition in the US. br /br /When it comes to marketing, alcohol producers believe self-regulation – similar to Discus’ code in the US – is an effective method. However, the Global Alcohol Policy Alliance disagrees and is reportedly “disappointed” that the WHO draft strategy recommends self-regulation as one of the marketing interventions.br /br /We took a look at the a href="http://apps.who.int/gb/ebwha/pdf_files/EB126/B126_13-en.pdf"paper /aand saw three key points that could greatly affect the alcohol industry or at least ruffle feathers: shrinking the availability of alcohol (that includes online sales); placing certain bans on alcohol marketing; and raising prices through tax increases. Other initiatives they support are positive for the industry and society as a whole. They include community awareness and leadership, improved health services response with treatment and prevention, and tough drunk driving policies to name a few. br /br /AVAILABILITY OF ALCOHOLbr /br /The WHO believes programs should be put in place to ensure that alcohol is not easily accessible but not overly controlled. They realize that overly restricted alcohol sales could turn consumers to the black market, similar to Prohibition. At the same time, WHO believes “commercial public availability of alcohol can...contribute to changing social and cultural norms that promotes harmful use of alcohol.” How the country intends on regulating the availability of alcohol depends on “local circumstances, including social, cultural and economic contexts as well as existing binding international obligations.” br /br /Several of their recommendations seem to mirror the traditional three-tier system in the US. For one, they recommend “restricting retail sales to licensed stores or public health-oriented non-profit government monopolies.” It seems WHO doesn’t support online alcohol sales. They also recommend restricting the number of on-premise and off-premise alcohol outlets; regulating days and hours of retail sales; increasing the legal age limit and laws against selling alcohol to a visibly intoxicated person.br /br /On a side note - during a panel at NABCA’s annual event last year, Dr. Peter Anderson, a European public health expert on alcohol issues, told listeners that “any changes that might occur that makes alcohol easier or cheaper would have negative consequences on consumption levels and harm...the U.S. is doing pretty well in how you regulate alcohol...be careful not to change that because it seems to be working quite well at the moment.”br /br /MARKETING ALCOHOLIC BEVERAGESbr /br /Similar to the availability of alcohol, WHO believes alcohol marketing should be limited particularly when marketing towards youth. WHO recommends “setting up regulatory or co-regulatory frameworks, preferably with a legislative basis, and supported when appropriate by self-regulatory measures.” Similar to what the industry does in the US, they recommend regulating the content and volume of marketing; regulating sponsorship activities; and setting up public agencies to oversee marketing.br /br /PRICING POLICIESbr /br /The big kahuna is raising prices. WHO believes raising prices “is one of the most effective interventions to reduce harmful use of alcohol.” However, the industry argues that if you raise prices too much than you risk hurting individuals who drink alcohol responsibly, risk putting companies out of business and risk turning consumers to illegal alcohol. Here’s what WHO has to say:br /br /“Consumers, including heavy drinkers and young people, are sensitive to changes in the price of drinks. Pricing policies can be used to reduce underage drinking, to halt progression towards drinking large volumes of alcohol and/or episodes of heavy drinking, and to influence consumers’ preferences. Increasing the price of alcoholic beverages is one of the most effective interventions to reduce harmful use of alcohol. A key factor for the success of price-related policies in reducing harmful use of alcohol is an effective and efficient system for taxation matched by adequate tax collection and enforcement.” br /br /They acknowledge that prices increases could affect demand and hurt consumer choice, impact sales and create a black market. To help battle those consequences, they recommend that tax increases “be accompanied by efforts to bring the illicit and informal markets under effective government control” and be supported by “information and awareness-building measures to counter such resistance” from industry members and consumers.br /br /They also recommend that tax increases fall “in proportion to the alcoholic content of the beverage,” which means taxes would be stiffer for wine and spirits than it would be for beer. This goes against the “equivalency” argument in the spirits business that says 1.5 ounces spirits, 12 ounces of beer or 5 ounces of wine constitute a standard drink. They also recommend the use of price promotions (which are huge in the UK) and the establishment of minimum prices for alcohol. The latter measure was considered in Scotland and eventually overturned. And finally, they support overthrowing duty free sales in international airports and imposing the same taxes as though the traveler had purchased the alcohol in that country.br /br /bNEW AND IMPROVED WINE STRATEGIES AT RESTAURANTS/bbr /br /There are several ways restaurants are using wine to battle declining traffic and smaller checks as outlined in a new a href="http://www.winemag.com/ME2/dirmod.asp?sid=nm=type=Publishingmod=Publications::Articlemid=8F3A7027421841978F18BE895F87F791tier=4id=05C3AE2D1E364D8DBCCBA962F5E94B4A"article /ain Wine Enthusiast. For one, restaurants have started offering more low-to-medium priced wines, such as bottles in the $25-$50 range. They’re ranging from new world countries, such as New Zealand and Argentina, local state producers and wines from lesser known regions in the old world. This goes for champagne and sparkling wine as well.br /br /Nowadays size matters. Restaurants are offering more wines-by-the-glass and smaller bottle sizes, while hoping that patrons “will be more adventurous if they’re buying a less expensive bottle, or better still, a reasonably priced glass of wine.” Another great way to get consumers to think outside the box is to offer wine flights. According to the article, restaurants are beginning to offer less expensive flights or “mini” flights that include 2 or 3 wines instead of 4 or 5. They’re also amping up promotions on wine and corkage fees and getting the word out on social media sites like Facebook and Twitter.br /br /bWSD BRIEFS:/bbr /br /LARGEST LIQUOR STORE MAY LOSE LICENSE. Owners of the largest liquor store in the world – DaveCo in Colorado – are coming under a href="http://www.kdvr.com/news/kdvr-liquor-store-011210,0,2269444.story"fire /afrom state liquor enforcement agents because family members own another liquor store in the state. “Hidden ownership” is illegal in Colorado, which means an individual can only have interest in one liquor store in the state. A lawyer for DaveCo said the family “misunderstood some of the facts,” but state officials say the family was aware of what they were doing. The state is requiring the family to sell or face losing their liquor license, so owners of DaveCo are taking them to court. The case will be heard later this month. br /br /DIME A DRINK PROPOSAL IN MARYLAND. Similar to a bill that failed in California, public health advocates are pushing a dime-a-drink (8 oz) proposal in the state of Maryland. Proponents say it would raise $200 million for the state, which is now facing a $2 billion shortfall. The money would go towards Medicaid expansion, services for the mentally disabled and prevention and treatment programs for alcohol abuse. The bill would add 60 cents to a six-pack of beer, about 55 cents to a bottle of wine and about 75 cents for 1.75 liter of spirits. A similar bill pushing a nickel-a-drink increase failed to pass last year.br /br /RED BULL APPOINTS ALLIED BEVERAGE ON PREMISE. Red Bull has appointed Allied Beverage Group its exclusive on-premise distributor in the state of New Jersey effective February 15, WSD has learned. In a company-wide memo Tom Fandel, corporate director, on-premise sales and marketing, said: “This monumental appointment is another step in our quest to grow, develop and maximize our On – Premise business. The opportunities that come along with Red Bull are numerous and we will examine and pursue all of them.”br /br /JIM BEAM MOVES MARKETING DUTIES TO STRAWBERRY FROG. Jim Beam has reassigned its creative duties to Strawberry Frog three months after splitting with Energy BBDO in Chicago, a href="http://www.adweek.com/aw/content_display/news/account-activity/e3i3fdb706572f41f0758054cac60647e5b"reports /aAdWeek. The reassignment includes Jim Beam, Jim Beam Black, and Red Stag by Jim Beam. Major media spending on Jim Beam products totaled $10 million in 2008 and about $6 million in the first 11 months of 2009, according to Nielsen. Those figures don't include online spending.br /br /SAM’S CLUB is closing 10 of its stores that are losing money in Idaho, Texas, Illinois, Colorado, New York, Arizona and California, where 4 stores will be closed. The closures result in 1,500 jobs cuts. They plan on adding 5-10 new clubs in fiscal 2011.br /br /PALM BAY INTERNATIONAL has been named the exclusive U.S. importer for Château Greysac, located in the Médoc hamlet of By, north of St. Estèphe.br /br /br /Until tomorrow, Meganbr /br /“From now on, ending a sentence with a preposition is something up with which I will not put.”br /Sir Winston Churchillbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 9br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. 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Dear Client:br /br /bMECKLENBURG ABC CHAIRMAN “WILL NOT RESIGN”/bbr /br /After reports and accusations surfaced weeks ago that a Diageo employee wined and dined several employees of the North Carolina Mecklenburg County ABC Board, chairman Parks Helms is declining to step down. You’ll recall that local paper Charlotte Observer unveiled that the Diageo rep spent $12,700 on the dinner in November at Del Frisco's steakhouse for 28 ABC Board employees and their guests. After news accounts, ABC employees and Helms repaid $9,334. Parks was the only Mecklenburg ABC director at the dinnerbr /br /In the latest a href="http://www.charlotteobserver.com/topstories/story/1175160.html"news/a, fellow ABC directors sent an email to Parks asking him to resign immediately “in the best interests of the Mecklenburg County ABC system.” They hoped to restore the county’s reputation and basically start over. In response he said that he “carefully considered your request that I resign as Chairman of the ABC Board so that you could ‘…begin to restore trust in the system and its management by the public,'” Helms wrote in an e-mail. ‘I respectfully disagree… and will not resign.”br /br /On Monday Mecklenburg County commissioners chair Jennifer Roberts said: “I would hope that Parks would give it serious consideration to remove himself… so we can all focus on the issues going forward.” Two groups have the power to fire him: the Mecklenburg County commissioners and the state ABC Commission. A spokeswoman from the state ABC commission told the paper that conversations are ongoing between the two. Interestingly, Parks was a former chairman of the Mecklenburg County commissioners.br /br /Last week Alcohol Law Enforcement agents issued a report alleging that Diageo, its North Carolina marketing director and the Mecklenburg ABC Board violated laws on giving and accepting anything of value. Since then the North Carolina ABC commission has launched a statewide investigation of other possible violations in Asheville, Greensboro, Winston-Salem and others. The violations range from overpaying employees to accepting gifts.br /br /bDOES THE WINE ADVOCATE PAY FOR MOST OF THE WINES IT REVIEWS?/bbr /br /Tyler Colman, publisher of Dr. Vino wine blog, wrote an interesting a href="http://www.drvino.com/2010/01/11/robert-parker-wine-advocate-samples-review/#comments"post /ayesterday questioning whether Robert Parker’s publication, The Wine Advocate, actually buys “more than 60%” of the wine they review as he claims. The Wine Advocate reviewed 16,474 wines last year with many bottles costing several hundred dollars a pop. Tyler did some math [editor’s note: check out the article to see his method] and estimated that it would cost Parker over $700,000 a year. The Wine Advocate also has 6 contributing writers “all of whom are presumably drawing salaries from The Wine Advocate.” br /br /Marvin Shanken has admitted in the past that Wine Spectator, which has more subscribers and “much” higher revenues than Wine Advocate, depends on free samples. A former assistant to Parker told the New York Times in 2006 that most of the wines he sampled were free but Parker later dismissed that claim on his message board.br /br /Tyler admitted that “unless Parker decides to release audited figures, there is no way of knowing whether or not he is buying ‘more than 60 percent’ of the wines that are reviewed in The Wine Advocate. I just thought it might be useful, in light of the discussion concerning this issue, to try to come up with some numbers.”br /br /bNEW YORK TARGETS UNLICENSED VENDORS SELLING FRUITY VODKA DRINKS TO KIDS/bbr /br /New York legislators are proposing 60 days in jail and harsher fines for barbershops and bodegas selling fruit drinks mixed with vodka to kids as young as 14. The concoctions are called “nutcrackers” or “nemos” if they’re frozen, and sell for $5-$10 a cup, the Daily News first reported. Besides selling to minors, most of the stores that sell nutcrackers don’t have a liquor license, which means the State Liquor Authority can’t prosecute them. Police also lack the resources in high crime areas, which is where most of this activity takes place. The legislation will be introduced by Assemblyman Adriano Espaillat in the senate. These criminals, who are most prevalent across upper Manhattan and the Bronx, could face losing their stores under the proposed legislation. Right now police only fine stores $200-$1,000 for selling alcohol to minors. br /br /bOREGON’S 2009 HARVEST EXPECTED TO OUTGROW 2008/bbr /br /Results from a survey of Oregon’s top 20 wine producers suggests the 2009 vintage will be well above what it was in 2008, a href="http://web.newsregister.com/news/results.cfm?story_no=257498"according /ato the News Register. Last year’s tonnage came in at 34,700, down -11% from 38,600 in 2007. The survey found that the state’s 20 largest wineries accounted for an estimated 1.53 million cases in 2009 as compared to 1.17 million cases in 2008. The top producer was King Estate, followed by the combined operation of A to Z/Rex Hill and Willamette Valley Vineyards.br /br /bWALGREENS AIMING TO SELL BEER AND WINE IN SAN FRANCISCO/bbr /br /Since announcing that Walgreens will again sell alcohol in places where it is legal, the company is a href="http://www.sfexaminer.com/local/Chain-store-wants-to-sell-alcohol-81205797.html#ixzz0cPesWtBF"facing /asome opposition in a major city – San Francisco. Walgreens is in talks with the city to sell wine and beer in 34 of its 64 locations amid concerns that it could hurt certain neighborhoods and small businesses. Approximately two-thirds of those 34 stores are in high crime areas with an already high concentration of stores that sell alcohol. San Francisco recently made it illegal for chain drugstores to sell tobacco items. Walgreens sued the city over the ban and lost – an appeal is pending. A local law requires new licensees to acquire a permit from a business already selling alcohol to help prevent over-consumption.br /br /bNEW YORK WINE INDUSTRY GENERATES BILLIONS FOR THE STATE/b br /br /The New York grape, grape juice and wine industries contributed over $3.76 billion in economic benefits to the economy of New York State in 2008, according to a study conducted by the Napa Valley-based Stonebridge Research Group. This is an increase of over 10% from the $3.4 billion documented in an identical 2004 study conducted by Barbara Insel, who now heads Stonebridge. The new study also shows that out-of-state wines sold in New York contributed an additional $3.26 billion, for a total economic benefit to the state of $7.02 billion from the grape and wine industries. To read more, click a href="http://www.winebusiness.com/news/?go=getArticlecms_preview=truedataid=70457"here/a.br /br /bAUSTRALIAN BULK WINE TAKES SHARE IN ’09/bbr /br /Bulk wine made up 39% of Australia’s exports last year, up from 26% in 2008, according to new figures from the Australian Wine and Brandy Corporation. Bulk wine grew by 119 million liters while bottled wine shipments declined by 53 million liters. Total wine exports grew 9% in volume. The Australian wine business suffers from over-supply, a strengthened Australian dollar and increased competition in its export markets.br /br /bREMY COINTREAU TO IMPORT ZUBROWKA VODKA/bbr /br /Central European Distribution Corporation has appointed Remy Cointreau USA to distribute Zubrowka Bison Grass vodka in the US, which is produced by CEDC in Poland. It reportedly derives its flavor from “bison grass,” a plant found in northern Poland. CEDC is the largest vodka producer in Poland and Russia and produces such brands as Green Mark and Absolwent.br /br /bWSD BRIEFS:/bbr /br /WIRTZ BEVERAGE ILLINOIS has hired Lynn McCarthy as director of training. She will develop and execute all employee and leadership training programs and report to Mark Switaj in his new role as vp of training and development, Wirtz Beverage Group.br /br /NEW JERSEY LEGISLATORS have passed a law (AB 3073/SB 1926) that would require first time DUI high blood alcohol content offenders to use ignition interlock devices if passed into law. Diageo issued a statement saying it supports the legislation.br /br /ASCENTIA WINE ESTATES ceo Jim DeBonis has appointed Todd Devincenzi as chief sales and marketing officer. The two worked together at Allied Domecq and Beam Wine Estates, according to a statement. Todd most recently worked for C. Mondavi Sons as their vp of sales.br /br /INTERESTING FACT: BROWN-FORMAN REPS rang the closing bell New Year’s Eve and toasted the decade and New Year with a Korbel and Chambord champagne cocktail along with 1,100 traders.br /br /br /Until tomorrow, Meganbr /br /A man who dares to waste one hour of time has not discovered the value of life. br /Charles Darwinbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 8br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. 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Dear Client:br /br /As a collective group, domestic wines were the only ones to post growth in November, according to IRI food, drug and c-store scan data in the four weeks to Nov 29. Dollar sales of domestics grew 4.9% and volume gained 3.1%. Meanwhile, imports declined -0.5% in sales and -0.4% in volume. Where domestics gained a share point in sales, imports lost a share point. br /br /On a domestic front, California, Oregon and Washington all did well in November. In terms of dollar sales California grew 4.9%, Oregon grew 4.8% and Washington rose 3%. In volume, Oregon grew an impressive 11.7%, Washington gained 5.4% and California rose 2.9%. California showed only slight improvement from October, but Oregon and Washington performed far better in November.br /br /Argentina again performed way above other imports (and domestics for that matter) in November, posting dollar sales growth of 58.2% and volume growth of 49.6%. New Zealand, Spain, Chile and Germany also posted solid November growth. br /br /Out of the big three importers, France did the best believe it or not. It seems the country is starting to pull it together in these troubled times. Dollar sales of French wine in November declined -1.2% but volume grew 2.7%. Australian wines saw sales fall -5.9% and volume declined -4.1%. Meanwhile, both dollar sales and volume of Italian wine declined -2.9%.br /br /WHITE WINE WINS AT THANKSGIVING. Despite the colder months and Thanksgiving holiday, white wine grew faster than red. Pinot noir and red blends/meritage showed the most growth, followed by cabernet and then zinfandel. Merlot had a disappointing month with dollar sales -3% (where it lost 0.8 dollar share points) and volume -1.1%. Syrah/shiraz fared even worse, with sales down -9.5% and volume down -7.7%. Out of the white wine categories, fume/sauvignon blanc showed the most growth, followed by pinot grigio/gris and chardonnay. The only IRI-tracked white wine varietal that declined in growth was white zinfandel.br /br /Dollar sales of chardonnay, fume/sauvignon blanc and red blends saw improvements in November compared to their year over year performance in October. Merlot, meanwhile, did far worse in November. Dollar sales of merlot declined -0.6% in October and -2.9% in November. All other varietals were relatively the same in both months.br /br /$20 AND ABOVE LEAP AHEAD. The most popular price category in November, it seems, was wines priced above $20. Wines in the $8-$20 also grew nicely, along with wines priced $3-$5. The weakest price categories were below $3 and $5-$8. Wines priced $11 to above $20 showed the most improvement in November compared to October. It looks like consumers were either willing to spend more during the holidays and/or suppliers were dropping prices. Boxed wines above $2 continue to be on fire.br /br /12-WEEK BRAND RANKS. The top 50 brands by dollar sales that showed some impressive dollar growth in the 12 weeks to November 29, which spans Halloween and Thanksgiving, include: Sutter Home (9.8%), Barefoot (27.5%), Franzia Box (9.1%), Beringer (7.8%), Chateau Ste Michelle (8.3%), Sterling Vintners Collection (26%), Francis Coppola (18.2%), Bogle Vineyards (12.2%), Folie a Deaux (57.7%), Inglenook Vineyard Coastal Estates (18.5%), J Lohr (13.1%), Black Box Wines (26.4%), Corbett Canyon (18%), Rex Goliath (41%), Edna Valley Vineyard (34.2%), Red Diamond (16.4%), Gnarly Head (21.2%) and Corbett Canyon Box (13.4%).br /br /bWA GOV HESITATES TO PRIVATIZE, VA FULL STEAM AHEAD/bbr /br /Although some politicos in Washington are throwing around the idea of privatizing the state’s spirits sales, Gov Chris Gregoire isn’t so fond of the idea. She made it clear in an a href="http://blog.seattlepi.com/seattlepolitics/archives/190379.asp"interview /awith Seattle PI that she doesn’t believe privatizing state run stores would save the state, which has a $2.6 billion budget deficit, any money. Auditor Brian Sonntag released a report last month claiming Washington could increase revenue from spirits sales and distribution by $350 million by privatizing state-run stores, but the revenue wouldn’t come into play until 2012. In the interview she said: "When you're in a tough time like this people put that idea out there, like that will save us. Auditor) Brian Sonntag's report doesn't show one penny for this biennium. Not one." Meanwhile, if Washington continues with its current alcohol system, it’s estimated that state and local governments will get $2.36 billion between 2012 and 2016 through its 315 state and contracted stores. Most of the money goes to the state, while about 19% goes to cities and counties.br /br /She points out it would cost a lot of money just to make the switch, and also believes it would put an end to all the mom and pop liquor stores. And finally, there’s always the issue of underage drinking. “You look at our minor consumption sales - we're well below any state that has it privatized, by like 10 percent....Number two, does it really get you any money in the long haul, and number three what are the social policy issues that are implicated here and is that the right direction?"br /br /VIRGINIA GOV-ELECT Bob McDonnell is a href="http://www.connectionnewspapers.com/article.asp?article=336487paper=62cat=109"ready /ato take his state’s spirits sales into private territory. He believes selling off Virginia’s ABC stores would generate $300-$400 million, which he plans on putting towards transportation costs. Former Gov Doug Wilder also called for privatizing spirits sales but it never came to fruition. Opponents fear the initiative would simply result in a quick injection of cash but would lose money for the state in the long term (similar to what Gov Gregoire said). Then there is the social responsibility standpoint. Some of the money from state-run liquor stores goes towards alcohol abuse related programs and law enforcement. There are also concerns that privatization would lead to an influx of liquor stores and fuel over-drinking, although McDonnell says regulations would be put in place to prevent that scenario. Now it comes down to the general assembly to determine whether Virginia will become a private-owned state.br /br /bUNEMPLOYMENT RATE HOLDS STEADY IN DEC; 85,000 JOBS LOST/bbr /br /The latest unemployment figures are in and it’s not pretty. Employers shed 85,000 jobs in December although the unemployment rate was steady at 10%. This means that an increasing number of unemployed people are giving up – once people stop looking for jobs, they’re no longer counted as unemployed. br /br /The industry as a whole and especially the on-premise won’t see much of a boost until unemployment improves and Americans gain back some confidence. Credit Suisse economist Jonathan Basile a href="http://finance.yahoo.com/news/Economy-loses-85K-jobs-as-apf-2245188994.html?x=0"told /athe AP that the latest unemployment figures “tells me that Main Street doesn't believe there's a recovery yet, because they're not out looking for jobs yet." Another troubling statistic says few Americans who are laid off will regain their standard of living.br /br /New jobs are slowly trickling in but it’s not significant enough to make a large scale difference. If you count the discouraged workers and part-time employees who would like a full-time job, the “underemployment” rate in December rose to 17.3%, up 0.1% from November. The average work week remains at 33.2 hours. A total of 4.2 million jobs were lost in 2009 and the unemployment rate averaged at 9.3% or 15.3 million people. The unemployment is expected to remain above 9% throughout 2010 and remain as high as 7.5% through 2012. br /br /bBEER INSTITUTE HEAD JEFF BECKER DIES/bbr /br /Jeff Becker, ceo of the Beer Institute, lost his battle with cancer yesterday. Jeff is an extremely well respected and well liked figure in the industry and will be greatly missed. Our thoughts and prayers go out to his friends and family. Jeff is survived by his wife Brenda and children Max and Megan. He was 52.br /br /Discus president Peter Cressy issued the following statement: “The Distilled Spirits Council and the entire spirits industry mourns the passing of Beer Institute President Jeff Becker and extends our sincere condolences to his family, friends and colleagues. Jeff was an outstanding leader, reliable ally and a dear friend. An articulate spokesperson for the entire beverage alcohol industry, his passionate voice and forceful presence will be sorely missed. Our deepest condolences to all who knew and loved him.” br /br /bWSD BRIEFS:/bbr /br /CASUAL CHAINS TAP INTO HAPPY HOUR. Good news for the industry – casual chains such as PF Chang’s, Ruby Tuesday, TGI Friday’s and others are looking to the bar for a much needed boost with new happy hour promotions, revamped bar areas, signature cocktails and free appetizers. Their goal is to grow traffic during a traditionally dead time, 3-5pm, and then hope customers stay for dinner. br /br /THE NEW JERSEY LEGISLATURE today passed a bill allowing consumers to sample spirits at liquor stores, Discus announced this morning. SB 2098 gives adult consumers the opportunity to sample up to three separate one-half ounce servings of spirits in any one calendar day at a pre-planned tasting event. Once signed by Gov Corzine, it will take effect May 1. br /br /br /Until Monday, Meganbr /br /A bird does not sing because it has an answer. It sings because it has a song.br /Chinese Proverbbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 6br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-8899482709073153075?l=www.winespiritsdaily.com' alt='' //div

Dear Client:br /br /Increased inventory at the US distributor level took a toll on third quarter sales to November 30 due to an expected inventory sales shift to the second quarter, Constellation chief Rob Sands said this morning. Organic net sales of branded wine declined -3% in North America. Recall that Constellation shifted $40-$50 million of inventory from the third quarter to the second quarter to ensure “maximum levels of customer service” for distributors and retailers after Constellation began its wholesaler consolidation in September. This resulted in higher than normal distributor inventories at the end of Q3. At the end of the call Rob said they will continue the distributor transition throughout the final quarter of the year, and that although it hasn’t been an entirely smooth process, “we believe it’s the right strategy to pursue for the long term.”br /br /Economic challenges and higher levels of promotional spending prior to the holidays were also factors in disappointing sales. Depletions were softer than expected in the beginning of the third quarter but improved just before Thanksgiving as Constellation’s marketing efforts took effect and promotional activities returned to more normal levels at the end of Q3. Rob said that although their planned promotional activities weren’t implemented until the end of the third quarter, many of their leading brands – including Robert Mondavi Private Selection, Rex Goliath and Kim Crawford – performed in line with the market.br /br /“On the wine side yes we’re seeing some improved performance; I think that’s generally a result of a lot of our efforts – for instance our distributor consolidation, increase in our promotional activities in the third quarter – these things are now kicking in and we’re really starting to see the positive impact of that in the late third quarter and we’ve seen some of the positive impact of that into December and holiday season. We’re pretty optimistic that things are working pretty well at this stage on the wine side,” said Rob.br /br /According to the latest 12-week IRI scan data, US wine grew 4% in dollar sales, while the above $8 wine category grew in the high single digit range. Rob noted that the on-premise remains challenging “although we think it’s stabilizing.” He also said that mass merchandisers and club stores are outperforming grocery stores at the off-premise.br /br /“We saw good promotions and displays for our brands during the holiday season and began to see improving depletions and marketplace trends in the US wine and beer as the quarter progressed,” said cfo Bob Ryder.br /br /Spirits organic net sales decreased -2% in Q3 mainly due to tough comparisons from Q3 2009. In the second quarter of 2009 Svedka experienced glass shortages due to a new bottle changeover. As a result, shipments were much higher in Q3 2009. However, spirits organic net sales for the first nine months of fiscal 2010 increased 18% with Svedka net sales increasing more than 40%.br /br /ROB ON TRADING UP. Rob said that many of the higher priced categories are performing better than the lower priced categories. Trading down exists more within price categories, which ultimately creates a negative mix shift. “Trading up has picked up and fundamentally there’s not trading down in that higher priced segments are growing much faster than lower priced segments, with the super premium plus category growing high single digits. That said, I would still say that within categories there is still some trading down going on...if you look at the $10-$15 segment, within that there could be some trading down towards the lower end of that segment versus the higher end...fundamentally there is trading up but within segments there is trading down...therefore there can be some negative mix shift which is the case, there is some negative mix shift in the business.”br /br /ROB ON WINE GROWTH FOR 2010. With all thing considered, including the on- and off-premises, Rob predicts that overall branded wine volume will grow about 1% in calendar 2010. “Around 1% by volume would be a good guess. Could be higher or a bit lower depending on the state of the economy and that’s for the total wine industry in the US. We’ll see IRI grow faster than that, we’ll see mass merchandise grow faster than that and probably on premise grow slower than that but, volumetrically probably 1% but dollars will be higher than that because of the general trend towards trading up.”br /br /bMOST WINE AND SPIRITS GIANTS POST SALES GAINS FOR 2009/bbr /br /In a rare glimpse at early results of year around off-premise scan data, the spirits category saw dollar sales rise 3.9% and volume rise 3.2% in the 52 weeks, according to Bill Pecoriello at ConsumerEdge Research. In looking at the top 10 spirits suppliers, dollar sales of Fortune Brands were flat and Bacardi posted -0.4% declines while the other companies were up for the year. Heaven Hill posted the most dollar sales growth for the year, up 8.3%. Volume, however, was a little shakier as spirits companies increasingly sacrifice volumes for dollar growth. In volume, Fortune (-1.5%), Bacardi (-1.5%), B-F (-0.9%) and Constellation (-2%) all posted declines for their spirits brands. Heaven Hill (4.8%), Moet Hennessy (4.8%) and Skyy Spirits (4.6%) were all tied for top volume growth. Diageo gained 3.2% in sales and volume, respectively, for the 52-weeks.br /br /Meanwhile, dollar sales of wine increased 5.3% for the year and 3% in volume. Out of the top 10 wine suppliers, Trinchero Wine Estates posted the biggest leap in dollar sales, up 17.1%, while Kendall Jackson was down -4.2%. In volume, Trinchero again posted the most growth, up 12.2%, while Constellation was down -0.4% and K-J declined -5.6%. All the other major wine suppliers were up in both sales and volume. EJ Gallo saw sales rise 7.6% for the year and volume rise 0.8%. Sales of Constellation were up 0.8%.br /br /The four-week data is another story. Bill noted that 5 of the top 10 wine producers had negative year over year pricing in the last four weeks. His results show that wine volumes deteriorated some in the latest 4 weeks with volumes up 3% versus a -1.6% decline a year ago. In the 12 weeks, volumes grew 2.8% versus a tougher comparison of +0.2%, said Bill.br /br /bMORE NEGATIVE PRESS FOR NEW HANOVER, NC/bbr /br /Another North Carolina county is coming under a href="http://www.starnewsonline.com/article/20100106/ARTICLES/100109830?Title=Liquor-company-marketer-says-he-bought-meals-for-ABC-officialstc=ar"investigation /afor reportedly allowing the same Diageo rep that paid for a pricey dinner in Mecklenburg County (about $12,700) to also take them out for meals (which is illegal in the state). The Diageo rep told state alcohol investigators that he also bought meals for officials with the New Hanover ABC, although they are denying such claims. New Hanover ABC officials are already under investigation for a salary related incident. br /br /QUICK BACKGROUND. As it turns out, the father and son who run the New Hanover ABC recently came under fire for especially large salaries and even larger bonuses. Recall that Billy Williams received $232,000 in salary a year, plus a $30,000 bonus. His son, Bradley Williams, received $115,500 and a $20,000 bonus. Although that county brings in the largest profit margins for the state and perhaps officials deserve a pay bump, they were paid more than the state ABC Commission chairman and the state administrator. Yesterday, three members of the county ABC which oversaw the Williams' salaries resigned. Interim ABC board members were assigned.br /br /In an Alcohol Law Enforcement report that mainly focuses on the Mecklenburg incident, the Diageo rep said he "has paid for meals for other North Carolina local ABC board employees," including employees in New Hanover, but did not specify how many meals or for whom they were purchased. The other counties named in the report are Asheville, Lenoir, Greensboro, Carteret County, Onslow County and the Triad ABC in Winston-Salem. The state ABC commission has asked Diageo to provide copies of any receipts to prove they paid for meals with New Hanover ABC officials but no word yet when or if those records will be handed over. Meanwhile, ABC Administrator Billy Williams said he went to lunch with a sales rep from Diageo over a year ago but paid for his own meal. Former board member Stephen Culbreth said he'd never been treated by Diageo representatives to a meal.br /br /bWSD BRIEFS:/bbr /br /KORBEL CALIFORNIA CHAMPAGNE said 2009 shipments increased 4.2% or 53,300 cases over 2008. The company said that preliminary analysis shows sales growth to be broad based, with significant increases in most major markets, including New York, Florida, Texas and California.br /br /COSTCO COMPARABLE SALES including gas prices and foreign currencies grew 5% in the US in December and 2% in the 18 weeks to January 3.br /br /RUSSIAN STANDARD USA has appointed Michael Stoner to the role of vp of marketing in the US. He will be based in the New York office and report to Leonid Yangarber, chief of Russian Standard Vodka USA. The company has also appointed Bob MacNevin as vp of national accounts and military. Bob formerly held a variety of executive positions at Pernod Ricard and Diageo. He will be based in New York and report to Dana Chandler, vp of national sales distribution.br /br /br /Until tomorrow, Meganbr /br /A bird does not sing because it has an answer. It sings because it has a song.br /Chinese Proverbbr /br /--------- Sell Day Calendar ----------br /Today's Sell Day: 5br /Sell days this month: 20br /Sell days this month last year: 21br /This month ends on a: Fri.br /This month last year ended on a: Fri.br /YTD sell days Over/Under: 0br /br /WINE SPIRITS DAILYbr /Subscribe or check back issues at: www.winespiritsdaily.combr /Send news and comments in confidence to: megan@winespiritsdaily.com br /br /© 2010 Wine Spirits Daily, all rights reserved. May quote with attribution.br /br /Follow me on Twitter http://twitter.com/WineSpiritDailydiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/20546773-928254440089245005?l=www.winespiritsdaily.com' alt='' //div