Beverage Bulletin April 2012

California Beverage Retailers Association

P.O. Box 56686

Sherman Oaks, CA 91413

(818) 788-8120

Ron Ziff, Editor

www.cbraliquor.org

 

April 2012

This month's stories include:

White House Press Dinner Wine Selection

How noise affects flavors

Wine experts taste it differently

When a Bartender has a bad day

Actress sues distiller

James Bond's changing taste

Coca Cola's Windfall Stockholder

Bordeaux price futures and Chateau Latour

Beam buys Pinnacle

Record Scotch Price

Infusing Flavors

Top Distributors Gain Sales

10 Fastest Dying Industries

Frugality wears thin on Consumers

Are Consumers Financially Comfortable or Strained?

Pressure on Tesco

Pensions Liability at Safeway

New Age Verification System

3 Summer Drink Recipes

Greek Wines hit the Market

Internet Sales and a Floating Back Bar on the Internet

and as always Tasting Notes and the Industry Calendar(with tastings coming up)

 

Seen in Restaurants, Wine Tastings and Bars

Many of you watched the White House Correspondents Dinner on C-Span Saturday Night April 28. The menu included special breads, salad, Filet Mignon Texas Style and artisan side dishes. We were waiting for the wine selection. It was...drum roll...Estancia Chardonnay, Estancia Cabernet Sauvignon. An excellent choice!

 

How noise affects the eating experience. A study conducted by Unilever and the University of Manchester wanted to find out whether background sounds affect the perception of flavor. They found that people rated foods less salty and less sweet as noise levels increased. When noise levels decreased, the perception of those tastes increased. The results indicate that noise has a somewhat masking effect on taste. This is one of the reasons why airplane food doesn’t taste very good.. The deafening roar of the engines can make the food taste less sweet and less salty.

 

Wine Experts Can Taste It. A study has found that specialist oenophiles (you and me!) have a much more acute sense of taste than other people. It could be genetic. The means that apparently detailed descriptions of wine by experts as having the taste of currants, licorice or even wet sweat socks may not be wrong just because ordinary people can't taste them. It could be that their palates experiences the characteristics of a wine in a completely different way. Researchers suggested that the findings may call into question the whole existence of wine experts. Professor John Hayes, director of Pennsylvania State University's sensory evaluation center, said: “What we found is that the fundamental taste ability of an expert is different. And, if an expert's ability to taste is different from the rest of us, should we be listening to their recommendations?"

 

A Bartender's Bad Day. New York bartender Michael Neff from The Rum House says “If you're having a bad day, my job is to listen to your woes and commiserate as much as possible. If I'm having a bad day, I have to suck it up, wait until my shift is over, and hopefully find a friendly bartender somewhere who can do the same for me.” and "If the most important part of the cocktail comes from the bartender, its execution is subject to the same moods we are. I cannot make a good cocktail if I am in a bad space. Believe me, I've tried. In the rare moments that I have been in an unshakable funk, my drinks are not delicious. When this happens, I have to hold an emergency meeting with myself. Maybe walk around the block or sneak a quick shot of Fernet. Anything that will bust me out of my mood, so I can walk back behind the bar with the confidence necessary to deliver the service that people have the right to expect from me."

 

Seen at The Movies

Actress Alicyn Packard is suing Belvedere Vodka for using her image in an ad. The ad showed a man attacking a woman. The ad was captioned “Unlike some people, Belvedere goes down smoothly.” The ad was widely criticized for being insensitive to rape and violence against women. Belvedere removed the ad and apologized to everyone except Ms. Packard. She is suing under a California law that prohibits the use of a person's image without their permission.

 

Shaken not stirred. In the new James Bond film, “Skyfall,” Bond will be reaching for a bottle of Heineken instead of his usual martini. The change in drinks is due to a reported six-figure cross-promotional deal with Heineken.

 

Coca Cola Stock Certificate Could be Worth $130 Million

In 2008 Tony Marohn bought a stock certificate for a few dollars. After doing some research he found that his antique Palmer Union Oil Co stock certificate could be worth $130 million. Marohn traced Palmer Union Oil to Coca-Cola, by way of mergers of long-forgotten companies such as Petrocarbon Chemicals Inc and Taylor Wine Co, according to court documents.

Marohn died in 2010, and but his family in California has taken on the legal battle with Coca-Cola Co, saying it is entitled to about 1.8 million shares of the soft-drink maker. If upheld, Marohn's estate would become among the largest non-institutional investors in Coca-Cola.

"The claim of Mr. Marohn's estate that it is entitled to millions of dollars in Coca-Cola stock - based on a canceled stock certificate for a long-defunct oil company purchased at an estate sale - is meritless and unfair to the Company's millions of legitimate shareholders," said a Thursday statement from Coca-Cola.

Bob Kerstein, who runs the scripophily.com website, which researches and sells antique stock certificates, said he gets lots of inquiries from people who want to redeem old certificates. "We get people who have blank stock certificates and they think they have hit the lotto," said Kerstein. He said he has to break the news to them they need to be on record with the company as well. Bob Kerstein's name may sound familiar to beverage industry veterans. His father was Max Kerstein, long time publisher of the Beverage Bulletin.

David Margules, the Wilmington, Delaware, attorney for Marohn's estate, said he thinks he can persuade Judge Strine that the law favors his client. Marohn's certificate was endorsed and assigned, but the transferee was left blank. Marohn filled in his name and began digging through corporate records. He eventually wrote to Coca-Cola to demand 1.8 million shares of common stock for his 1,625 Palmer Union Oil shares. The company refused, and sued Marohn in Delaware's Chancery Court in 2009 seeking a declaration he was not entitled to the company's stock. Marohn's estate filed papers last week showing courts have upheld that a person who was issued a stock certificate and then endorsed and assigned it -- but left blank the name of the transferee -- essentially transformed the certificate into a bearer stock. By writing his name on the stock, Marohn became the legal owner, his estate argued.

Bordeaux Price Futures in Doubt

Some of Bordeaux’s top châteaus have said they will release their 2011 wines at much lower prices than last year. Two things make a price reduction a strong possibility; declining interest from China and a vintage of mixed quality. Last year the French found a lack of interest from Americans. Now they are looking to re-kindle some business from the U.S.

The big surprise came from Chateau Latour. As of 2013 Latour will not sell futures. Starting with the 2012 vintage the Chateau will only sell wine that is ready to drink. French law requires a change in business conditions offered to be announced a year in advance.

Beam Buys Vodka Producer

Beam has purchased Pinnacle Vodka from White Rock Distilleries for $600 million. The deal includes Calico Jack Rum. Pinnacle is distilled from French wheat and imported, then infused with 30 different flavors. Beam already owns Skinnygirl cocktails, Cooley Iriash, Sauza Tequila, Maker's Mark, and Courvoisier.

Bottle of Scotch Draws Record Price

Glenfiddich celebrated its 125th anniversary at a private charity event and auction on Liberty Island, New York. At auction was a 55 year old bottle of Glenfiddich Janet Sheed Roberts Reserve; one of only 11 bottles of this single malt in existence. The scotch was bottled to honor the 110th birthday of the granddaughter of William Grant, founder of the company. The winning bid was $94,000 from Mahesh Patel, a whisky investor. Proceeds went to charity.

Spirits Infusion

Cooking vacuum-sealed foods in a temperature-controlled water bath is now being used by a growing number of bartenders to flash-brew infused spirits, bitters, tinctures, and even unusual garnishes. Infusions were the subject of an article in last month's newsletter. Bartenders found that if they were steeping, it would just take too long; five to six days in order to achieve flavor. They found that in three to four hours an infusion can be completed, and it will be more intense.

The method can be used for infusing in-season fruit, like strawberries, blood oranges, butternut squash, black Mission figs, or pumpkins all work, as well as herbs and other flavorings. The only problem seems to be the equipment cost. Some restaurants have a $2,000 immersion circulator and water bath in the kitchen. However, few stand-alone bars have the space or the budget for it.

The Economy

The U.S. top 10 wine and spirits distributors account for 63% of the market and showed a 7% growth in 2011. In 2012 they expect to match or exceed that. The wholesale end of the industry expects to renew the consolidation that was taking place prior to the recession.

 

The 10 Fastest Dying U.S. Industries The recession, tight finances, and cheap imports have all helped speed up decline in outmoded domestic industries. Here's the list:

  1. Photofinishing. Average decline over 10 last 10 years - 11.4%. Reason: Digital Cameras.

  2. Appliance Repair. Average decline over 10 last 10 years - 5.7%. Reason: Declining prices for new replacements. New appliances have averaged 2.4% annual price drop.

  3. DVD & Video Game Rental. Average decline over 10 last 10 years - 6.6%, expected to accelerate to 14% declines in the coming years. Reason: Consumers are switching to online, streaming, and video-on-demand.

  4. Money Market and other banking modes. Average revenue decline over 10 last 10 years - 6.9%. Result: Banks have been shifting to commercial banking or closing.

  5. Newspaper Publishing. Average decline over 10 last 10 years - 6.4%. Reason: Competition from instant news on the web.

  6. Recordable Media Manufacturing. Average decline over 10 last 10 years - 7.4%. Reason: Consumers are switching to saving on hard drives.

  7. Hardware Manufacturing. Average decline over 10 last 10 years - 4%. Reason: Cheap imports. The imports now account for slightly over 50% of the market.

  8. Shoe Manufacturing. The transition is almost complete. Cheaper imports now account for 95% of the market. 75% of the total sales comes from China.

  9. Group Costume, Team Uniform Manufacturing. Average decline over 10 last 10 years - 6.7%. Reason: Cheap imports.

  10. Women's and Girl's Clothing Manufacturing. Average decline over 10 last 10 years - 8.2%. Reason cheap imports.

Frugality fatigue” is driving a rise in retail sales among consumers who’ve “grown tired of putting off discretionary purchases,” said Russell Price, a senior economist at Ameriprise Financial Inc. Recent gains, including a 6.5 percent increase in February, from a year earlier, have been bolstered by improvements in consumer confidence and the labor and stock markets, along with some stabilization in home prices, he said.

 

What's in your Wallet? A new report from marketing research group, NPD, is entitled “The Growing Divide: Restaurant Behaviors of the Financially-Comfortable and Financially-Strained.” The study of 5,251 consumers, shows that 56 percent define themselves as financially-strained and 44 percent as financially-comfortable. Seventy-five percent of the financially-comfortable and 92% of the financially-strained consider themselves controlled spenders. A sizable percentage of the financially- strained have relatively high household incomes.

 

 

Seen at the Grocery Store

Tesco the UK parent company of Fresh and Easy Markets has a new CEO, Philip Clarke. Under pressure from major stockholders over $3.5 Billion spent in the U.S., Clarke has announced he will turn the company around. The U.S. operations are 185 Fresh and Easy's located in California, Nevada, and Arizona. With 45 more stores opening by February 2013; for a total of 230. The division has spent $2 billion so far opening stores and lost over $1.5 billion on operations during the 6 years since entering the market . He stated that "The U.S. is moving in the right direction, but I'd like it to move faster, I need to demonstrate to shareholders, who have been very patient with us, that we can do it." His current plan is to halt expansion until the division moves into the black. Multiple U.K. media outlets have reported dissatisfaction among key Tesco shareholders including Legal & General Investment Management, its fourth-largest shareholder with a 4% stake. Others have already sold their stock, including former fifth-largest shareholder Invesco Perpetual, after Tesco issued a profit warning in January.

What happens when a grocer retires? The Wall Street Journal did a study of companies with unfunded pension liabilities. Most are not public, so finances are not known. But public companies can be analyzed and Safeway was analyzed for this study. Last year Safeway paid over $312 million into multi-employer funds last year as well as over $176 million in regular pension contributions. The report says that even under federal accounting guidelines benefits will have to be re-negotiated with unions. With the added risk that other companies in the same multi-employer plans could fail the Journal calculates a potential shortfall of $4.55 Billion. The company is in no danger, but the risk exists.

 

7-Eleven has rolled out a new age verification system to its franchise stores. The system scans a 2-D bar code on the back of a driver's license to verify birth date and card validity. "On the first day, we were amazed at how much easier it is for employees to just simply scan on our register screen, and it reads 'OK,' meaning you could sell to the person," said Jay Brar, president of the Sacramento Valley 7-Eleven Franchise Owners Association. Brar added that new system is "a huge relief" and is more convenient than the previous manual method. Brar also noted that the system provides extra protection to store operations. "Our livelihood depends on it," he said. "We have to be very careful with identification. We have to see it. Otherwise, we are looking at penalties for selling."

The technology does not store personal identification about customers, according to 7-Eleven. The system is being tested in the Sacramento area. If it goes as planned, it will be rolled out nationwide. Keith Jones, senior director of regulatory affairs for 7-Eleven joined with the California Office of Traffic Safety to set up the new program. It spent $1 million to update registers at no cost to the franchisees.

Summer Drink Recipes

Dirty Banana Cocktail

7 Large Ice Cubes

4 Scoops Vanilla Ice Cream

1 oz crème de Cacao

1 oz crème de banana

1 oz Kahlua

 

In a blender add ice cubes and ice cream and blend. Add liqueurs and blend until combined. Serve in martini glasses. Top with whipped cream and sliced banana.

Makes 2 servings.

 

 

Bananas Foster Cocktail

1 Scoop Vanilla Ice Cream

1 oz Captain Morgan Spiced Rum

½ oz crème de Banana

1 Banana cut in chunks
Caramel syrup or ice cream topping

Put all ingredients in a blender. Blend until the mixture is smooth. Swirl caramel syrup in the glasses. Divide the mixture between the glasses. Drizzle with more caramel, then sprinkle cinnamon-sugar on top.

 

White Wine Cocktail

 

cocktail picks

 

1/3 cup blackberries

 

1/3 cup blueberries

 

1/3 cup raspberries

 

2 cups cranberry juice cocktail

Place a layer of each blackberries, blueberries, and raspberries into each section of an ice cube tray and then fill with fruit juice. Cover tray with plastic wrap; poke a cocktail pick through wrap into each section. Freeze at least 2 hours and up to 24 hours. Remove cubes from tray. Put in a wine glass and fill with white wine. Serve.

Greek Wines Hit the Market

Greece is known in this country for Retsina. A white wine flavored with resin. This combination is generally not to American taste. Now the Greeks are making a move to export some of their other wines to the U.S. The most common types are below.

Assyrtiko is white wine with mineral and citrus taste and aroma and crisp acidity. It is grown primarily on the island of Santorini on volcanic soil.

Moschofilero is a grape with deep pink skin used to make whites and roses. It has mineral and floral notes. It is the only grape grown in some parts of the Peloponnese. The area is surrounded by mountains and cooled by ocean breezes. The ripening period is long making for dry wines.

Agiorgitko is a red grape used for wines that range from light rose to dark red wines. The tannins are light and flavors medium bodied and mellow. The wines are similar to merlot.

Xinomavro is a rich black grape with intense full bodied flavors that are similar to Italian wines or Cabernet Sauvignon. It has high tannins and acidity. The grapes are grown in northern Greece at altitudes of 500 to 1300 feet.

Muscat wines from the island of Samos in the eastern Aegean sea are sweeter and used for dessert. Not as well known as other dessert wines they are often available at half the price. They pair well with cheese, dried fruit, and nuts.

 

On the Internet

Lot18 is an internet wine sales site that is coming on strong. Founded in November 2010 the company is run from New York, has over 100 employees, deals in 500 wineries, and a volume of over $1 million each month. How do consumers set up an account with the company? They don't. You can only get an account by being referred by an existing customer. The company is adding 1,000 new customers a day. From the customers point of view the wines are selected and described on the site. From a small winery's point of view it's a way to reach a national audience. The winery is selling direct to the consumer. Lot18 works as an agent collecting a commission on each sale.

 

American Cocktails is a website promoting good drinks made from good spirits. The site features a “Floating Back Bar” with pictures of what they consider are the finest product. Click on a picture and get a complete product description. Click again and get recipes. http://www.americancocktails.com/

 

Tasting Notes

We participated in a number of tastings this month. The quality of wines being shown continues to improve. While we also noted a definite upward pressure on prices. We found many wines worth writing about and a number of good buys.

 

The World Malbec Day tasting in Los Angeles was held at Terroni Restaurant. Malbec is the primary grape grown in Argentina. The variety originated in Italy and was brought to Argentina in the early 19th century. It was imported pre-phyloxera and the vines need no grafting because they are grown at an altitude of over 3,000 feet. Some vineyards even produce well at 9500 feet. In Argentina the climate is warm enough to grow grapes at these lofty heights. The vines produce a grape with the best characteristics of Cabernet and Merlot. The flavors are deep, wine is full bodied with a deep ruby color.The Malbec vines produce generously. We tasted several excellent wines that sell in the $12 to $50 range. We found a good buys in the Pulenta Malbec from Mendoza 2011 $16-$18 good with food; Valentin Bianchi Particular Malbec $30; and Colome Estate Malbec 2010 $30. To get information on these and other fine Argentine Malbecs contact Cristina Vallina, Deputy Consul General Argentine Republic at arconsul@pacbell.net or (323) 954-9155.

 

Jordan is holding a series of tastings around the country to celebrate the winery's 40th anniversary. The wines featured were the currently available Cabernet Sauvignon 2008 and Chardonnay 2010. The Cabernet is full bodied with good nose and color, yet it could use another couple of years to reach its potential $52. We also tasted the1979 and 2003 cabernet from 6 liter bottles. They were fantastic! Age does well for this wine. The Chardonnay was fresh, clean, and crisp $29. The chardonnay is a wine to serve for company and celebrations. For information info@jordanwinery.com or call Shawn at (800) 654-1213.

 

At the tour des deux rives Bordeaux Prestige Tasting by Winebook we had the opportunity to taste 25 wines, in one room, ranging from Chateau Puy-Blanquet 2008 $25 to Mouton Rothschild 2005 retail from $1000 to $1500. The experience of tasting all these wines together was unique. Among those poured were Chateaux Pichon-Lalande, Clerc Milon, Palmer, Ducru Beaucaillou, and Haut Bailly. We found several wines that we favored: Ch. Bernadotte 2004; Light nose, light body, good balance, dark color, good with food $20-$25. Reserve de la Comtesse 2005 very dry, medium body, good with food or can stand alone $60. Croix de Beaucaillou 2005 90+% cabernet, good nose full body, $75. Clerc Milon 2004 full body, good nose, deep color, full flavor $70. Contact Etienne de Nantes edenantes@winebookus.com (510) 587-2000.

Industry Calendar

4/30 Sta Rita Hills tasting-LA

5/2 Wine warehouse tasting- SFO

5/5 Cinco de Mayo

5/7 Passport to Cabernet tasting-SFO

5/7 Wine Warehouse tasting-Orange County

5/7 Vibrant Rioja tasting- LA

5/10 Mexican Mother's Day

5/13 Mother's Day

5/14-19 Viva Vino tasting-LA

5/14-20 American Craft Beer Week

5/16 Howell Mountain Tasting & Auction-Napa

5/17 Fathers Day

5/28 Memorial Day

6/3 Rhone Rangers tasting-LA

6/11 Taste of Mendocino-SFO

6/17 Father's Day

6/20-21 Unified Grocers Expo-Long Beach

7/4 Independence Day

New Legislation for 2012

Our industry has more laws controlling it than most industries. The State Legislature and the ABC give us license privileges and can take them away. 2012 has several new laws that you must follow. New alcoholic beverage laws are being introduced that will be effective in 2013. 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. One of the most valuable services we offer is that call to the ABC to ask your question. We can ask that question and keep you anonymous. That's something you just can't do yourself.

Join or renew your valuable membership today. You can't afford to delay.

California Beverage Retailers Association – California's Only Association of Licensees. We're #1!

 

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