Beverage Bulletin April 2013

California Beverage Retailers Association

Beverage Bulletin

P.O. Box 56686

Sherman Oaks, CA 91413

(818) 788-8120

Ron Ziff, Editor

www.cbraliquor.org

April 2013

This month's stories include:

A Quote from Mark Twain

Supreme Court Decision on Blood Alcohol tests

Mouton Cuts Prices

Fresh 'n Easy on the Block

Food Waste

Top Rated Superbowl Commercial

Celebrities in the Industry

 

Wine: California Tastings in China, Latour Withholds 2012's, French Wine Consumption Drops, New York Court Decides Millionaire Wine Collector Lawsuit, Does Fracking Hurt Grapes?, Lanson and Wimbledon, Small Crop Spikes Balsamic Prices, Treasury Estates Opens Wine Bars in China

 

Beer: Top 50 Craft Beers, AB/Inbev Modelo Merger Approved, AB/Inbev Sues CVC Capital Partners, New Can for Budweiser, Miller/Coors Product Placement on TV, New York Yankees Disappoint Beer Gurus, Heinekens Electronic Beer Bottle, New Contract Brewery

 

Spirits: Spirits Sales Slow in Asia, Contaminated Cognac Found by Chinese, Man Steals and Drinks Pre-Prohibition Whiskey, Royal Wines New Passover Spirits, New Record for Scotch Exports

 

Other Beverages and Food: Passover Coke Missed Again, New Laws Loom for Energy Drinks, Travel Costs in Moscow are Highest, Bottled Water Sets Record, Men Use Credit Cards More Than Women, Low Calorie Sales Increase in Restaurants, Menu Nutrition Numbers Wrong, Feds to Enforce Menu Information, Labeling Trends and Diets, Overrated New Foods, A Century Mark, New Tax Proposed for Soda in California, Change Asked for Milk Labels

 

Health: Heart Disease from Energy Drinks?, Beneficial Ingredient in Red Wine Identified ...and as always, Tasting Notes and the Industry Calendar

 

 

 

I always take Scotch Whisky at night as a preventive of toothache. I have never had the toothache; and what is more, I never intend to have it.” -Mark Twain

 

Headlines

Supreme Court Decision on Blood Alcohol tests

The US Supreme Court has affirmed the decision of a Missouri court that police cannot force a driver to submit to a blood alcohol test. The 8-1 decision rejected the position of the Obama administration and over 30 states which argued that a warrant was not required because alcohol would dissipate from the blood stream. The ruling is that the test would be an unreasonable search under the 4th Amendment. The totality of the circumstances is what counts. The court re-affirmed its 1966 decision that an officer was allowed to test without a warrant because he was busy transporting an accident victim to a hospital. As before, the police will be required to get a warrant before forcing an unwilling driver to be subjected to a blood test when there is not another condition present.

Mouton Cuts Prices

Chateau Mouton Rothschild has released its 2012 vintage wines with prices sharply lower than the 2011 vintage. The top wine reduced by 33%. The wines at ex-negociant pricing per bottle are Mouton at 240, Petit Mouton €66, Ormes de Pez €25, and Rauzan-Segla €36.5. The move may affect the entire French Wine market.

 

 

Fresh 'n Easy on the Block

Tesco has finally announced the pending closure of the Fresh 'n Easy chain. In its annual report on April 15 the company listed various closings and one time charges to even out the books. It has set aside 1.17 billion to pay for the closure of all US facilities. (About $1.4 billion) It said it had some interest from potential buyers. There is no indication whether the stores will be sold as a unit or individually. There are 199 stores (some never opened), a 900,000 foot warehouse, a central kitchen, and USDA grade meat facility. If Tesco can hold the transition costs to $1.4 billion, it will bring the total cost of the adventure to about $5 ½ billion plus having held the company in near paralysis for 8 years.

 

 

Food Waste

There is a lot of talk about food waste. What are the numbers?

Americans throw out $165 billion worth of food each year

Waste is 50% higher today than in the 1970's

20 lbs per person is wasted each month

52% of Fruits and Vegetables are wasted

25% of U.S. Methane emissions come from food rotting in landfills

 

 

Top Rated Superbowl Commercial

We watched the Superbowl commercials for the Bud ads. But the ad that struck home for most Americans, and pay dirt for Dodge Ram was “God Made a Farmer.” It featured farming scenes and a recording of a 1978 speech by Paul Harvey and has been watched by over 15 million online. (Our industry's farmers grow grapes for wine and grain for beer & whiskey.) In case you missed it, it is well worth the 2 minutes to watch on YouTube. See it at http://www.youtube.com/watch?v=AMpZ0TGjbWE

 

 

Celebrities in the Industry

 

 

 

Country music star, Kenny Chesney is launching a rum. Blue Chair Bay Rum is owned by Chesney. The rum is bottled and aged in casks in Barbados. It will be introduced in 3 flavors in May and expanded to 30 markets later this year.

 

 

 

Drew Barrymore was a celebrity guest at the Pebble Beach Food and Wine Festival. Then she also made a guest appearance behind the table pouring her Barrymore Pinot Grigio at the Grand Tasting event.

 

Wine

California Tastings in China

Governor Brown led a California trade delegation to China April 9-12 and participated in trade tastings and VIP receptions. This was followed by tastings April 12-20 put on by Napa Valley Vintners in Shanghai, Beijing, Hanghzhou, and X'ian. The Wine Institute will be following with consumer and educational events, and trade & media tastings in Shanghai, Beijing, Ningbo, and Hong Kong May 20-27. China is the 5th largest export market with $74 million wine sales during 2012. Total wine exports were $1.4 billion.

Latour Withholds 2012's

Chateau Latour has gone ahead with its controversial new program, announced last year, of selling no wine until it is ready to drink. The 2012's have been held in cellar and the chateau is selling off the remaining stock of 1995's.

 

French Wine Consumption Drops

What's happened to French wine consumption? It is still selling well worldwide but falling year by year in France. In 1980 51% of French drank wine almost daily. By 2012 the number dropped to 17%. Now 38% say they have never drunk wine. Per capita consumption was 160 liters a year in 1965. In 2010 the figure dropped to 57 liters. That is still the highest of any nation. At the dinner table tap water ranks #1, bottled water #2, wine #3, and soda a very close #4. In a study The International Journal of Entrepreneurship three generations were profiled on their attitude toward wine. People in their 60's and 70's grew up with wine and consider it an essential part of a meal. People in their 40's and 50's consider wine an occasional splurge or indulgence. They feel they drink less but better and spend more per bottle. Younger people don't have any interest in wine until their late 20's; consider it just another product and want to see the value before they buy. The study showed similar trends in Spain and Italy.

 

New York Court Decides Millionaire Wine Collector Lawsuit

A New York court has settled a lawsuit between two wine collectors. Bill Koch had paid $3.7 million in 2005 in an auction for Eric Greenberg's wine cellar. Koch later sued alleging that Greenberg had committed fraud and was guilty of false advertising. He said that 24 of the bottles that changed hands were fakes and Greenberg knew it. The jury awarded Koch $379,000 damages that covered costs plus $1000 per bottle and $12 million in punitive damages. Koch had spent over $10 million on the lawsuit in an effort to clean up wine industry auction irregularities.

 

Does Fracking Hurt Grapes?

Some vintners in the Central Coast are beginning to worry about fracking in nearby properties. Fracking is a process where water and chemicals are hydraulically forced into the ground to break up shale rocks and release petroleum. The shale formations are also a perfect location with good drainage for vineyards. The question is whether the fracking will destroy drainage, contaminate ground water, and leave behind chemicals that could affect the vines. 17,000 acres of federal land in Monterey County were recently leased for fracking. More will be auctioned later this Spring.

Lanson and Wimbledon

This year Lanson will celebrate 25 years as the official champagne of Wimbledon. In honor of the event the company is shipping bottles with specially designed jackets that keep the wine cold. In 2010 the company celebrated its 250th anniversary. At the time it published a guide, The Little Black Book of Champagne. You can get a copy by filling out a form on the website http://lansonchampagne.com

 

Small Grape Harvest Spikes Balsamic Prices

The short wine grape crop in Italy for the past 2 years has caused price pressure on balsamic vinegar as producers compete with wineries for grape must. The short crop resulted in a 12% cost increase in 2011. On top of that, 2012 was the poorest vintage for the past 60 years. Small crops throughout Europe resulted in cost increases of more than 70%. The Consorzio Aceto Balsamico di Modena is hoping for relief with this year's crop. Skyrocketing prices could put many producers out of business.

 

Treasury Estates Opens Wine Bars in China

Treasury Estates is planning to open wine bars in China to get consumers to drink its wines. Total sales of wine in China were up 20% to $41 billion in 2012. Treasury's Chinese sales were up 31% in the same year. Per capita consumption was 1.4 liters per person compared to 53.2 liters per person in France. Chinese consumption is predicted to reach 2.1 liters in the next 3 years. Treasury's Penfolds Grange sells in China for 7594 yuan or $1222 a bottle and Rosemount Diamond label 160 yuan or about $1.

 

Chinese wine consumption reached 159 million in 2011. That's a 142% increase from 2007. Vinexpo predicts sales of 252 million cases by 2016 as growth slows to about 40% annually. French wines dominate at 48% of sales. Overall, still wines account for 99.5% of total sales. Champagne is expected to grow exponentially going forward.

 

Beer

Top 50 Craft Beers

The Brewers Association announced that craft beers were over 6% of the total US beer market in 2012 and listed the top 50 craft brewers by volume. Here they are: 1.Boston Beer 2.Sierra Nevada 3.New Belgium 4.Grambrinus 5.Deschutes 6.Lagunitas 7.Bell's 8.Matt 9.Harpoon 10.Stone 11.Brooklyn 12.Boulevard 13.Dogfish Head 14. Abita 15.Shipyard 16.Alaskan 17.New Glarus 18.Long Trail 19.Great Lakes 20.Firestone Walker 21.Anchor 22.Rogue 23.Summit 24.Full Sail 25.SweetWater 26.Victory 27.Oskar Blues 28.Cold Spring 29.Flying Dog 30.Founders 31.Ninkasi 32.Craftworks 33.Odell 34.Bear Republic 35.Stevens Point 36.Blue Point 37.Southern Tier 38.Lost Coast 39.Karl Strauss 40.BJ's Chicago Pizza 41.Breckenridge 42.North Coast 43.Left Hand 44.St. Louis 45.Saint Arnold 46.Ballast Point 47.Big Sky 48.Allagash 49.Uinta 50.Troegs

 

 

 

AB/Inbev Modelo Merger Approved

The AB/Inbev has reached an agreement with the Justice Department on its merger with Modelo. Justice had contended that the original deal could have led to higher consumer prices by eliminating a US competitor. Modelo's pricing tactics had forced AB to maintain or lower its prices. The divestiture is one of the largest ever required by anti-trust authorities. The battle had been for California's huge business which is heavily influenced by immigrants. The current deal will force AB/Inbev to sell $2.9 billion in assets to Constellation Brands including US rights to Modelo's labels and the Piedras Negras brewery where they are produced. Justice feels this will give Constellation “the freedom and capability to compete vigorously.”

AB/Inbev Sues CVC Capital Partners

AB/Inbev is suing buyout firm CVC Capital Partners for money it believes it is owed from a 2009 deal. AB/Inbev had sold its operations in Hungary, Romania, and the Czech Republic for $2.2 billion. CVC had agreed to make additional payment if the company made extra profits after the deal. CVC later sold the company, then known as Star Beverage to Molson for $3.4 billion. AB/Inbev claims that triggered the payment. CVC denies the claim. The issue will be fought in UK's English Commercial Court.

New Can for Budweiser

Budweiser will be packaged in a new pinched can during May. The can shape mimics Bud's logo shape. The new can will hold 11.3 ounces; a savings of .7 ounce on each can, and will come in 8 packs.

Miller/Coors Product Placement on TV

Miller/Coors has entered a l year long agreement with Turner Broadcasting. Look for the brands and logos to appear as product placement on camera. They will be sitting on tables, shelves, in bars, even on sides of trucks that drive by in the background in TV shows on TBS, TNT, CNN, and TruTV as well as on sports specials.

 

 

 

New York Yankees Disappoint Beer Gurus

The New York Yankees are getting a thumbs down from beer aficionados. Yankee Stadium has added a “Craft Beer Destination.” The stand offers only specialty beers from MillerCoors. There are no small batch Craft Beers. The price: a crafty $12 a cup!

Heinekens Electronic Beer Bottle

Heineken's has introduced a new interactive beer bottle. The bottle is called “Ignite.” It is sensitive to motion and the activity around it. The bottle has 8 embedded LED lights. It lights up or flashes when someone drinks, says “cheers”, or puts it down on a bar top. It can also be remotely activated. The bottle can be refilled to do its tricks again and again.

New Contract Brewery

Yucaipa Co. is investing in Brew Hub LLC of St.Louis. The company is planning on spending $100 million over the next 5 years to develop 5 regional breweries that will brew Craft beers on a contract basis. The first brewery will be a 75,000 barrel facility in Lakeland, Florida. Brew Hub needs at least 6 major Craft Brewers to crank each site.

 

Spirits

Spirits Sales Slow in Asia

Spirits sales seem to be slowing in Asia for a variety of reasons. China is under pressure from the new Xi Jinping government to cut back on displays of wealth and conspicuous consumption. Imported spirits only account for 2% of the Chinese market. But that 2% is huge by western standards. Pernod Ricard, Remy Cointreau, and Diageo all report sales that are flat or slightly down. Koreans are trading down to Vodka and Beer. Similar trends are being reported throughout Asia.

 

Contaminated Cognac Found by Chinese

Chinese authorities have blocked shipments of Remy Martin and Camus due to their content of Phthalates. Phthalates are chemicals used to make plastics flexible. It is thought that the chemicals may get into the alcohol during the bottling process as the cognac is transferred through plastic pipes.

 

 

 

Man Steals and Drinks Pre-Prohibition Whiskey

Patricia Hill had purchased an old Georgian mansion in Pennsylvania and wanted to renovate it and turn it into a bed and breakfast. 9 cases of Old Farm Rye Whiskey were found hidden in a wall. Ms Hill had caretaker John Saunders move the cases to another place on the property. Months later she discovered that more than 4 cases were still there, but the bottles were now empty. She reported the loss to police, who questioned Saunders. He first denied the theft and later confessed to drinking the missing liquor. He has been charged with theft and possession of stolen property. Preliminary hearing has been scheduled. The whiskey was made by the West Overton Distilling Co. that closed in 1919 when Prohibition went into effect. It has been valued for auction at about $4,000 a bottle.

Royal Wines New Passover Spirits

Royal Wines (Kedem) recently debuted a new Kosher for Passover Gin and Vodka. Both spirits had to be made from sugar cane because fermented grains could not be used. The gin had to be reformulated with a blend of herbs and spices that are able to be used during Passover. Both are marketed under the name Distillery 209 and made by Arne Hillesland.

New Record for Scotch Exports

Scotch Whisky exports hit a new record of $6.5 billion in 2012, up 87% in the last 10 years. $1.1 of the total was to the US, the #1 market for scotch.

 

Other Beverages and Food

 

 

 

Passover Coke Missed Again

Coca Cola was not able to make Kosher for Passover Coke for the second straight year. Kosher Coke is made with cane sugar instead of high fructose corn syrup. Corn products are not used by observant Jews during Passover. Coke has had to reformulate its syrup to leave out a carcinogen. The caramel in the product needs to be reformulated with cane sugar and then approved by state authorities in California. Once that is done the company says it intends to roll the new product out nationally during Passover. Purist Coca Cola fans of all faiths look for the product every spring. “Maybe next year we can get Coke that tastes like yesteryear” say the thirsty. Until then fans of “old coke” will have to search for Mexican Coke which is still made with cane sugar.

New Laws Loom for Energy Drinks

Senator Dick Durbin (D Ill.) is lining up support for a bill he will introduce to regulate energy drinks. The Dietary Supplement Labeling Act will require companies to get FDA approval of the drinks by brand. It will require the filing of a complete list of ingredients and a sample label. Companies have come under fire for failing to list or give an analysis of Taurine and Guarana; two ingredients high in caffeine derivatives. The drinks have been accused of being responsible for health problems and deaths among teenagers. Senator Durbin says he wants to insure transparency in the labeling of products that currently are unregulated.

 

 

 

Moscow Marriott Grand Hotel

 

Travel Costs in Moscow are Highest

TripAdvisor rates Moscow as the most expensive city to visit. For travelers hotel and food prices are astronomical. The Moscow Marriott is a reasonably priced venue. There you will find a continental breakfast at $40, Breakfast buffet $60, Bottle of Evian water $15, club sandwich with fries $27, coffee $10 a cup (no refills), tea $20 a cup, slice of chocolate cake $22. The prices listed are at the coffee shop in US dollars. There is also a white table cloth restaurant if you dare. If you want to spend the night, a room is $1263; also available at a discounted rate of $575.

Bottled Water Sets Record

Bottled water is now 30% of American intake. In the early 1990's it was only 16%.

 

Men Use Credit Cards More Than Women

Technomics reports that men use credit cards for for food in restaurants 64% of the time, groceries 55% of the time, and takeout 45% of the time. Women use them about 10% less at each venue. When buying other things women use them more. 6 out of 10 women use credit cards for non-food purchases.

Low Calorie Sales Increase in Restaurants

The Robert Wood Johnson Foundation funded a study on sales of high and low calorie menu items in restaurants. They found that restaurants offering more low calorie choices had a 5.5% increase in sales while those offering fewer choices lost 5.5% in sales. Overall lower calorie items increased 2.5% more nationwide to $18.7 billion while high calorie items fell 4.2% to $31.2 billion.

Menu Nutrition Numbers Wrong

The New York Times did a study of 5 popular food items to see how accurate the menu nutrition information was. 5 items is hardly an extensive survey, but they found that in 4 out of the 5 the numbers were in no way accurate. The NY Times lab tested the food. What they found was that the restaurants came up with their numbers by adding up the counts for each individual ingredient. This tends to be inaccurate because counts on paper are often outdated and employees put the meals together by hand. The resulting plates varied widely from the menu; often by factors up to 50%. The bottom line is that restaurants are on the honor system to list the right numbers. No one checks unless there is a complaint or a whistle blower. In a study of how people reacted to the new menus Reuters found that diners ordering from calorie labeled menus ordered lower calorie items and ate less.

Feds to Enforce Menu Information

Federal regulations requiring chains with 20 or more restaurants to post calorie counts on menus will go into effect in early 2014. Several chains have already started complying. They include McDonald's, Denny's, Au Bon Pain, and Panera.

Labeling Trends and Diets

Datamonitor reports that new grocery products are staying away from the term “diet” but are labeling more products as “low or no fat” or low in other attributes like sodium, MSG, gluten, sugar, salt, or calories. NPD Group found that fewer women are dieting. In 1992 34% of women said they were on a diet. In 2012 the figure dropped to 23%. NPD also reported that 30% of Americans now try to eat foods that are “gluten free.” The problem? Some doctors say eating gluten free food makes it harder to lose weight. Gluten is a protein found in some grains. Americans got 186 trillion calories from branded food and beverages in 2007; 83% from food, 17% from beverages. Food manufacturers have pledged to lower the figure by 1.5 trillion calories by 2015.

Overrated New Foods

Zagat has listed 8 totally overrated menu ingredients: Kale, Cumin, Bone Marrow, Sunchokes, Squash Blossoms, Crème Fraische, Octopus, and Saffron.

A Century Mark

This is also the 100th anniversary of Income Tax and the first prize put in a Cracker Jack box. Which do you prefer?

New Tax Proposed for Soda in California

State Senator Bill Monning (D Carmel) has introduced a bill to tax sweetened sodas 1 cent per ounce. He says his proposal will fight obesity. A study in 2010 in the journal Contemporary Economic Policy indicated it would take a burdensome 58% tax to reduce soda consumption enough to lower the average body mass index (BMI) by only 0.16 points. If this passes the government will be getting fat.

Change Asked for Milk Labels

The U.S. dairy industry has petitioned the Food and Drug Administration to be able to sweeten chocolate milk with artificial sweeteners without labeling the milk as low calorie but showing the additives under ingredients. Currently it must be labeled “reduced calorie” or “less sugar.” The industry feels these are turn-offs for kids. Consumer groups are opposing the petition based on transparency in labeling.

 

Health

Heart Disease from Energy Drinks?

Cleveland Clinic researchers report that carnitine, a chemical found in meat is involved in cholesterol and arterial plaque. Carnitine is used by the body to transport cholesterol through the blood stream to the liver where it is flushed from the body. Some carnitine is changed to trimethylamine N-oxide(TMAO) in the intestines. TMAO turns LDL cholesterol into plaque that coats the arteries causing heart disease. The relationship to the beverage industry is that some energy drinks contain carnitine as an ingredient because it is thought to give an energy boost.

Beneficial Ingredient in Red Wine Identified

The beneficial effects of red wine on blood pressure are caused by polyphenols, not alcohol. A study published in Circulation Research by Spanish scientist Gemma Chiva-Branch at the University of Barcelona tested wine with and without alcohol and found that both lowered blood pressure. The study did not look at other effects of red wine.

 

Tasting Notes

 

The Angeles Wine Agency showed a number of Imports and California wines. We reviewed a few that we consider good buys. Bodegas Benegas from Argentina poured a Juan Bodegas 2010 Malbec that was full bodied, fruit forward, young, and will age nicely for several years at a retail of $10 to $12 it rates a Best Buy. Contact Doug Elliott at Barrelhead Ltd. douglas@barrelheadimports.com or (212) 581-6656 or (646) 229-4483.

 

Weygandt-Metzler Importing tasted an excellent portfolio of wines from France and Spain. Every one of them showed well. Again, there was a wine we would rate as Best Buy. Domaine des Cassagnoles is a Vin de Pays sustainably grown in clay-limestone soil. The wine is a blend of 40-50% Columbard, 25-30% Ugni Blanc, and 20-25% Gros Manseng. This white will pair well with food or just provide a pleasant afternoon break. You can make a lot of consumers very happy with this one at $9.99 retail. This is an excellent wine despite its bargain price. Contact Danielle McKee danielle@weygandtmetzler.com or (818) 486-3455.

 

Industry Calendar

4/26-27 Cabs of Distinction – Paso Robles

4/29 Sta Rita Hills -LA

5/5 Cinco de Mayo

5/9 Burgundy tasting – LA

5/9 Wines of Portugal - SFO

5/10 Mexican Mothers Day

5/12 Mothers Day

5/13-14 Sta Rita Hills SFO

5/13-17 Vino California – LA

5/14 Vino LA grand tasting-Skirball Center

5/27 Memorial Day

6/7 Sonoma County Grower trade show & BBQ -Shone Farm

6/8-9 LA WineFest

6/12-13 Unified Grocers Expo- Long Beach

 

New Legislation for 2013

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. 2013

has several new laws that you must follow. New alcoholic beverage laws will be

introduced that will be effective in 2014. 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 Statewide Association of Licensees. We're #1!

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