Beverage Bulletin April 2011

California Beverage Retailers Association

P.O. Box 56686

Sherman Oaks, CA 91413

(818) 788-8120

www.cbraliquor.org

 

April 2011

 

Industry News

This month we cover The Royal Wedding in London; Bordeaux 2010; restaurant economics; new taxes; Walmart pricing; and general industry news from California, China, and Japan. As Always you'll find the Industry Calendar, Promotions, and Tasting notes with good values.

 

FLASH! What is the Royal choice of beverages for the wedding of William and Kate? Pol Roger NV will be served. This is quite a coup for Pol Roger. Royal weddings from Victoria and Albert to Charles and Diana have poured Bollinger. Pol Roger NV sells for about $50 a bottle here in the states. It is rumored that a local English wine will be served at the pre-wedding breakfast. The couple has decreed that there will be NO beer served. Wedding guests include members of the food and beverage industry; John Haley, the owner of Kate's favorite pub in her home village of Bucklebury; Basil Charles, a bar owner on the private Caribbean island of Mustique where the couple has spent romantic weekends; and Chan Shingadia, Kate's family grocer.

 

The big news in the wine industry is that the Bordeaux 2010 vintage seems to have been a great year! 2010 following 2005 and 2009 as great years and the recovering world demand are giving the Chateaus something to celebrate. “The climate during the summer was exceptionally dry and sunny without extreme temperatures” according to Denis Dubourdieu, Director of the Institute of Vine and Wine Sciences at the University of Bordeaux. "For red wines, the taste is strong with wonderful color and beautiful aromas. Warm, not hot with cold nights is the secret for the great taste of Bordeaux."

 

The Wall Street Journal reports that restaurants are becoming caught in a squeeze between rising commodity prices and customer resistance. Chain eateries are just recovering from the recession and are not in a position to raise menu prices. Yet commodity prices are increasingly volatile and are taking a bigger bite of the total plate cost. The key ingredients driving price increases are wheat and soy beans. These two items are pushing the cost of flour, mixes, and animal feed. Meanwhile China has become a net importer of shrimp for the first time in history causing prices to hit 8 year highs. Chain restaurants have borrowed several techniques from retail to protect the bottom line. They are forming buying groups to increase price clout, adding backup suppliers to keep pressure on wholesalers, and buying ahead or holding back purchases in commodity markets. In produce some are trying to make farm direct deals to cut out the middle men or looking for ways to save money on manufacturer packaging. Chains like Darden, Texas Roadhouse, Starbucks, and others consider the moves a matter of survival as the industry ramps up to new efficiency levels.

 

New taxes! The Board of Equalization has passed a new interpretation of wine taxes effective January 1, 2012. It states that “wine products that contain distilled alcohol from a source other than the agricultural products in the wine will be taxed as distilled spirits.” That would seem to include Port and Sherry and other fortified wines unless the added alcohol is from the same wine grapes. The tax would go from 20 cents up to $3.30 a gallon. This is going to be a headache for wineries and importers. Some products will have to be re-formulated or discontinued unless consumers are willing to pay the difference.

 

The Los Angeles County Health Department has announced new higher fees for both retail and restaurants. The new fee schedule is set to be approved by the Board of Supervisors on May 10.

 

Walmart is trying to regain customers after 7 straight quarters of losing volume. The strategy: It will reduce prices to bring it below Target; it will meet or beat competitor's ad prices without making customers bring in a competitor's ad; it is bringing back 8500 items that have been discontinued.

 

Fetzer Vineyards, Mendocino County's largest winery, will be sold for $238 million to a Chilean wine company eager to expand its presence in the United States. Brown-Forman Corp., a Kentucky spirits conglomerate that has owned the Hopland winery for almost two decades, announced a deal March 1 to sell Fetzer and related brands to Vina Concha y Toro S.A.

 

Wine consumption in China is growing at such a fast rate that the country is predicted to drink more than one bottle per person in 2014. The amount of wine bought doubled between 2005 and 2009 and is set to rise by another 20 per cent by 2014 to become the world's sixth-largest consumer of wine. A total of 1.38 billion bottles of wine are expected to be consumed in 2014.

 

Food and Beverage products from Japan are experiencing severe shortages. In many cases it is the packaging materials that are in short supply, not the products themselves. Corrugated boxes, cardboard, plastic bottles and caps are all in high demand and short supply. The worst situation is in plastic film. The petrochemical company that supplied film makers was heavily damaged in the Tsunami.

 

How high are commodity prices here in the U.S.? Evidently, high enough to make fresh produce worth the risk. A gang of thieves hijacked six tractor-trailer loads of tomatoes, a truck full of cucumbers from Florida growers, and a truck of meat. The total value was $300,000. The hijackers showed the grower's employees fake bills of lading and convinced them to load their trucks. The goods disappeared without a trace. Authorities believe there was a buyer ready to take delivery.

 

Sprouts Markets has merged with Henry's Markets bringing the chain to 99 stores located mostly in San Diego, Orange, and Los Angeles Counties. Henry's was formerly part of Smart and Final. As the deal closes both Sprouts and Smart and Final chains will be owned by Apollo Investors.

 

Trends used to start on the West or East Coast and take years to cross the country. Today many people are watching food shows on TV and what they see can become a trend in a matter of days. They come into supermarkets, restaurants, and specialty stores asking for new ingredients, combinations, or styles of cooking. And a trend can end just as quickly.

 

One trend that has been a long time coming is a change in the type of bread people eat. White bread took center stage in the 1930's when commercially sliced bread was introduced. Over the past 10 years Whole Wheat has been making a comeback. Sales of Wheat bread grew 11.1% nationally in 2010 and sold more than White bread for the first time in almost 80 years.

 

A Harris Poll taken in March revealed that 29% of Americans 21 and older drink alcohol at least once a week. Of those 5% drink daily and 10% several times a week. 22% say they do not drink. The percentage of respondents who drink say they drink:

Beer 63%, Domestic Wine 54%, Vodka 41%, Rum 34%, Tequila 28%, Imported Wine 28%, Champagne 17%, Cordials 17%, Bourbon 15%, Gin 14%, Scotch 11%, Cognac 8%, Brandy 7%.

 

Help Send Kids to Camp!

 

May 2 marks the 8th annual Wilshire Blvd. Temple Golf Tournament. To date this tournament has raised over $500,000 to send needy kids of all kinds to camp and other summer activities. You can help with something as simple as donating a few bottles of wine, a gift card, restaurant gift card, or some other item that can be used as a prize for the golfers. There are also a few spots left to play. Call Ron Ziff for information, (818) 693-5561.

 

 

Tasting Notes

 

This month we participated in several quite different and very notable wine tastings. We tasted a number of very good to fine wines. As always we were looking for good values. Wines that are true to type, sound, will age for a couple of years, go well with food, and make retail customers happy because they are a good value for the price. That's a tall order, yet we found some at the Vibrant Rioja Tasting of Spanish Wines. The tasting was held at the very trendy Hatfield's on Melrose Avenue in Los Angeles.

 

Specialty Cellars was pouring two very reasonably priced wines. The first, a Tempranillo from Berberana, labeled Carta de Oro Seleccion had a full body and good color was fruity with hints of berries. It should retail for about $8.99. The second wine was a Crianza from Marq de la Concordia. This wine had a very full body, good nose and deep color, would go well with food. It should retail for about $12.99. For either of these wines contact Lou or Eileen Goldberg at eileen@divinewines.com or (310) 779-9556, or contact the importer, Bob Castellani at bobc@specialtycellars.com

 

One of the best wine values at the tasting was B.V. Noe Coupage Rioja 2008 from Beckman. The wine is a blend of 50% Grenache and 50% Tempranillo. The Grenache gave it a heavier body than we found in other Rioja wines. It had a good nose, deep color, and delicious blackberry flavor. It should retail for $12.99. Contact Jacques Rifkind at sabersabor@aol.com or (818) 425-5608.

 

 

 

Promotional Opportunities

 

Cinco de Mayo is the time to promote Tequila, high end sipping Tequila, Triple Sec, Margaritas, chips, and guacamole.

 

Mothers Day is May 8 and Mexican Mothers Day is May 10. In many areas Mothers Day is a big sales opportunity. Family gatherings are times feature extended cocktail hours and table wine with dinner. This is the time to feature wines that are not specialized, but have more general taste appeal so everyone can enjoy them. This type of wine will do well in either restaurant or home settings. Retailers should remind customers to fill in any missing bottles in home bars.

 

Plan ahead now for Fathers Day, Summer Weddings, and June Graduations. Father's Day is the time to feature those aged bourbons and single malt scotches that Dads love. Graduation celebrations can include good wine or champagne. Summer weddings offer the chance to sell large quantities of champagne in restaurants and hotels. But, don't forget that for every one wedding there are dozens of anniversaries. I used to aim my June Champagne promotions at couples celebrating anniversaries. By featuring champagnes at several key price levels, sales of single bottles hit several hundred cases during the month.

 

Industry Calendar

 

05/02 Austria Uncorked Tasting – LA

05/02 Ribera Spain Tasting – LA

05/05 Cinco de Mayo

05/06 Wine Warehouse tasting SFO

05/08 Mothers Day

05/10 Mexican Mothers Day

05/18 Viva Vino Tasting - LA

05/26 Wine Warehouse tasting OC

05/27 Wine Warehouse tasting LA

05/30 Memorial Day

06/17 Beverage Industry Golf Cup-Tustin

06/5-7 Dairy Deli Bake Trade Show 2011-An

06/8-9 Unified Grocers Trade Show -LB

06/19 Fathers Day

 

Legislation

Our industry is more controlled by laws than most others. The State Legislature and the ABC give us license privileges and can take them away. New alcoholic beverage laws are being introduced, passed, and sent to the Governor. Many critical issues are pending. Is your business safe? Members are encouraged to look through the Legislative Bulletin. If there is a new law that is a problem for your business, call the association office now. The CBRA is your voice in Sacramento. If you are not a member, join today. The CBRA is your only voice when it comes to new beverage laws.

Brands and Comments

The CBRA Newsletter has not accepted any payment from any of the brands mentioned in this edition. The editor, Ron Ziff, welcomes comments at ron@cbraliquor.org

CBRA Membership Remains Open

Now, more than ever, access to your industry is important. The CBRA is California's only statewide association of licensed retailers, and our membership continues to be open for the first time in 20 years.

At CBRA we deal with licenses and regulations that affect the beverage business on a daily basis. That's why CBRA offers practical solutions, unique products, services, information, and timely advice for both large and small beverage businesses. With reasonable fees, superior service, and associates that are easy to reach, CBRA helps you to run your business better and easier.

California Beverage Retailers Association – We know how to get it done.