Beverage Bulletin August 2014

California Beverage Retailers Association

Beverage Bulletin

P.O. Box 56686

Sherman Oaks, CA 91413

(818) 788-8120

Ron Ziff, Editor

www.cbraliquor.org

August 2014

This month's stories include:
Headlines - Scottish to Decide the Fate of Scotch, North Coast Harvest Starts Early, Drought Update, Dollar Tree Buys Competitor and Enters the Industry

Celebrities in the Industry - Miranda Lambert, Grace Hightower DeNiro, Madonna, Matthew McConaughey, Alex Rodriguez, and Rihanna.

Popular Culture – Six New Books, TV - Star Trek beer, Golf - Rory McIlroy

Wine - Grape Harvest Near Normal, No More Chinese Chateaux, Treasury Legal Battles, Gallo Family Wealth, Climate Change in Australia, Steady Rise in Bordeaux Prices, How Much is That Empty Bottle Worth?, Climate Change Affecting Cork Trees, Counterfeiter Case Sentencing, Wine Auctioneer Grand Theft, Cuban Sommeliers Tour California, Instant Champagne
 

Beer - 6 Pack a Week, This Bud's for AB/Inbev, New Record Beer Mile, Beer Camp, Japanese Brewers Switch to Cocktails, Scots Try to Win Soccer with Beer, Stone Brewing Expands to Berlin, The Ingredients Kept Secret for 100 Years Revealed, Tap Beer at Home

 

Spirits - Scotch Museum Planned, The Whisky That Will a Launch Ship, Scotch Contest, Drambuie to be Sold, Pernod-Ricard Franchises Local Spirits, Airline Drink Sales, High Proof Spirits, Fake Alcohol in the UK, Craft Distilling Increases

Second Hand Drinks, UK to Try Fuel From Spent Grain

 

Other Food and Beverage - Voters to Decide Soda Tax, Chinese Investors for Vita Coco, Mid-calorie Coke, Orange Juice Sales Continue to Fall, Snacks Are the New Eating Standard

 

The Changing Market - Data Breaches, Bumper Grain Crops: Lower Prices, Smart Credit Cards, In-Store or Online?, Amazon Drones

 

Health - Red Wine Heart Healthy, Wine Dental Healthy

...and as always, Tasting Notes and the Industry Calendar

Beer cuts across all social lines; people really like beer. Other beverages – Merlot, martinis – go in and out of fashion, but as a psychologically refreshing libation, beer is the Rock of Gibraltar.” - Joe Queenan, Columnist for the Wall Street Journal

Headlines

Scottish to Decide the Fate of Scotch

Scotland will vote on September 18 on becoming an independent country after an agreement between the Scottish Parliament and the UK. The ballot question will read “Should Scotland be an independent country?” Scotland and England came together in 1603 when King James VI inherited the English throne and combined the two kingdoms. The two countries became joined in 1707 when their Parliaments passed The Acts of Union. What is at stake now is whether they will separate, what currency will be used, will Scotland be part of the European Union, how to divide the national debt, and how to untangle the taxes and businesses of both countries. That last item is what concerns our industry. Scotch can only be made in Scotland. It represents roughly 25% of all current UK exports and a major amount of taxes. Most of the distilleries are owned by companies outside of Scotland. Most of the laws governing the industry might end up in England. There will be major disruptions in distribution to Europe and elsewhere depending on ownership, taxes, duties, what currency will be used, and whether Scotland would be in the European Union.

North Coast Harvest Starts Early

The North Coast grape harvest kicked off in Napa and Sonoma Counties on July 30. This is the earliest in several years. In 1997 it started on July 23 and in 2004 on July 26. Vineyard managers are hoping for stable weather as the harvest continues over the next 3 months. A tight labor market is forcing managers to schedule 14 hour work days as workers start picking pre-dawn. Starting wage is usually about $12 an hour for pickers. Experienced workers are paid by the basket on a piece rate. They can pick up to $24 an hour.

Meanwhile, the managers are constantly testing samples to ensure getting grapes at their peak of flavor and at the proper brix. The crop is expected to be about the same as last year's in size. Sparkling wine grapes are being picked now. Still wine grape picking will start sometime between the 3rdweek of August and the 1st of September. Wineries are bottling at a furious rate in order to have empty tanks ready for the crush.

 

Bud break was early this year. There were a few late showers to give enough surface moisture. Then the spring and summer weather continued with temps in the 80's and 90's daytime and 50's at night. Managers are calling the year's weather “text book perfect.”

 

Drought Update

Holders with senior water rights in the San Joaquin Valley have made a “compassionate sale” to struggling farmers. Water prices in the valley have escalated to $2,000 an acre foot over the last few weeks. Farmers from the San Joaquin River Water Exchange Contractors Authority have water rights dating to the 1800's. The group sold 13,500 acre feet for only $250 an acre foot to the Friant Water Authority, on the east side of the valley, which has 15,000 farmers with zero allocation. They could have insisted on $27 million more. Steve Chedester, Executivev Director for the selling group said “This water could have gone for a lot more money, but there is a dire need for people to help each other.”

 

The numbers are starting to come in on the results of the drought:

70% of the losses have been south of the Sacramento-San Joaquin Delta. $810 million is being lost in crop revenues, $203 million lost in livestock and dairy revenue.

Surface water deliveries to farms have been lower by 6.6 million acre feet this year.

Farmers have made up 5 million acre feet through ground water pumping at a cost of $454 million. Groundwater pumping will account for 53% of total deliveries this year.

 

One of the problems with groundwater pumping is that the amount of the remaining underground reserves is unknown. One prediction is that at the current rate of usage, there won't be groundwater reserves in another generation. What we do know is that if the drought continues, the water table will be lower next year. The California Water Foundation has released a report along with warnings. The West San Joaquin Valley land has been collapsing this year because of groundwater pumping. The foundation says that once an area collapses, it will not refill with water.

 

Vineyard managers are concerned that another year of drought could be a disaster and many vines will die. There are communities that could run dry this year.

 

There were several recent developments in the courts and local governments.:

  1. The Sacramento Superior Court ruled that the State Water Resources Control Board has to regulate groundwater pumping in the Scott River basin of Siskiyou County. An environmental group had sued the board claiming that groundwater pumping had reduced water flow in the river endangering wildlife.

  2. The California Appeals Court has ruled that the State Water Resources Control Board has the authority to cut the use of senior water rights owners when wildlife is threatened.

  3. The California Water Board has issued a Proposed Notice of Emergency Rulemaking in which it ruled it had the right to curtail use by all water users.

  4. Assembly Member Roger Dickinson has introduced AB1738 to cover groundwater issues.

  5. Senator Fran Pavley has introduced SB1168 the Sustainable Groundwater Management Act. Pavley is chair of the Senate Water Committee.

  6. Assembly Member Achadjian has introduced AB2453 to create a Paso Robles Basin Water District to regulate groundwater usage.

  7. The State Water Resources Board set a $500 fine for hosing off sidewalks and allowing landscaping water to run onto the street.

     

Dollar Tree Buys Competitor and Enters the Industry

As we went to press Dollar Tree announced that it will be buying competitor, Family Dollar, for $8.5 billion. Dollar Tree also announced that it will be rolling out Beer & Wine to its stores in 2015. Whatever the beer & wine section looks like, it will have an impact on the lower price segment of the industry. The combined chain will have 13,000 stores and $18 billion in sales.

 

Celebrities in the Industry

Country Singer Miranda Lambert owns her own wine company, Red 55 Winery. She releases new wines in conjunction with albums. Varieties include Kerosene, white table wine; Country Road 233, Merlot; White Liar, Chardonnay. Her recent tour was sponsored by Crystal Light. For the tour she created Randa-Rita, made from Bacardi Light, Raspberry Lemonade Crystal Light, and Sprite Zero. Don't feel like a drink? Then choose Miranda Lambert Coffee.

 

Grace Hightower DeNiro founded Coffees of Rwanda to help Rwandan farmers create a sustainable growing system. She pays higher than fair-trade prices for the beans. She and her team are in the process of redesigning the product package. It has been renamed Coffee of Grace.

Vita Coco, the #1 coconut water in the U.S., owes part of its growth to celebrity investors Madonna, Matthew McConaughey, Alex Rodriguez, and Rihanna. The stars participate in ad campaigns and have a piece of the action.

 

 

Popular Culture

Books

How to Make Moonshine – Master the art of making moonshine at home, by George Jenkins. Covers what moonshine is, its history, famous moonshiners in history, recipes and methodology. Available through Amazon $2.99.

 

Death & Co. Modern Classic Cocktails, with More than 500 Recipes by David Caplan. A definitive guide to contemporary craft cocktails as served in a critically acclaimed night spot. This New York East Village restaurant & bar has a gentleman at the door that decides who gets in & who doesn't, for no apparent reason. Those that get in prefer to sit in the bar and watch the action. You're in California, so this book is the next best thing. Hard Cover from Ten Speed Press, $40. Will be released October 7.

 

Food & Wine: Weeknight Chefs by Food & Wine Editors, hard cover $32.95. 100 simple dinner recipes and wine pairings from 25 of America's top chefs.

Food & Wine: Best of the Best by Food & Wine Editors, hard cover $32.95. The best recipes & wine pairings from 25 of the past year's cookbooks chosen by the F&W staff.

 

A Curious History of Food and Drink by Ian Crofton, hard cover $22.99. A history of the stuff we all like by an one of the best at telling tales and keeping the reader amused.

 

Gentlemen Bootleggers by Bryce T. Bauer 282 pages $27.95. A history of Prohibition along with the popular thinking of the day, “Nullification” or just refusing to recognize the law. Once the Volstead Act was enacted, it set the government against many of the citizens who wanted to drink anyway. The book recounts many of the stories of the time and leaves out the bad parts, like the Valentine's Day Massacre. Among the tales: Herbert Hoover would stop in at the Belgian Embassy each evening for cocktails; it was technically on foreign soil. Another story involved Al Capone, who pleaded guilty in the Chicago Federal Court to selling alcohol. The government proved its case, a crime had clearly been committed, the defendant had confessed, and the jury refused to convict him. Liquor was smuggled across the border from Canada and copper stills in every state poured forth what the people wanted. The book tells the story of the industry's growth through the period.

 

Windows on the World Complete Wine Course by Kevin Zraly, 368 pages, $27.95. This is the latest, updated, version of the 1976 original work reviews hundreds of wines, mostly under $30; provides the latest information on vintages; and includes user friendly smart phone tags, videos, and audio guides. Kevin Zraly draws on his lifetime experience as a wine educator to put an entire wine education in print.

 

TV

The Federation of Beer is boldly going where no brewer has gone before: to brew a new line of Star Trek beer. The first item in the line is Klingon Warnog. The brew is supposed to capture the true character of the Klingon Empire. It will be available this month in Indiana and Washington State. National distribution is planned. It could be beamed to a store near you.

Golf

Rory McIlroy won the 143rd British Open Tournament in Liverpool. He is now in rare company as one of 3 players that have won the tournament at age 25 or younger. The other 2 are Jack Nicklaus and Tiger Woods. The competition was started in 1860 and early winners received Silver Belts or Medals. Later the trophy was changed to represent that the winner was as good as fine wine. A silver Claret Jug has been awarded ever since 1873. The winner's name is engraved on the trophy which stays at St. Andrews and he takes home a replica.

Bobby Jones holding the Silver Claret Jug after winning the 1927 British Open.

 

 

 

 

 

 

 

 

 

 

 

Wine

Grape Harvest Near Normal

California table grapes are harvesting surprisingly well despite the drought. That bodes well for the part of the harvest we are concerned with: Wine Grapes. The ripening and picking has been running 1 to 2 weeks ahead of normal. Quantity and quality seem to be good. In a normal year, 40% is harvested before September 1 and 60% after. The total harvest is predicted to be slightly over last year. The 2013 harvest was 116.2 million boxes. 2014 is expected to bring in 116.5 million boxes.

No More Chinese Chateaux

The Chinese government of Xi Jinping has been exposing and stopping corruption as part of its current reforms. Now the probe has moved into the wine industry. Haiching Holdings LTD. and Rave Sun Group have been accused of taking $43 million in public funds that they were given to invest in foreign high tech companies and using it instead to buy 14 Bordeaux Chateaus and the other French wine properties. If this situation progresses as others have, the investigation will likely lead to arrests of Chinese businessmen and government leaders.

Treasury Legal Battles

A shareholder class action suit has been filed against Treasury Wine Estates in Sydney, Australia. The legal firm Maurice Blackburn is representing more than 600 shareholders in claims that the company withheld information on heavy write-downs on U.S. business in 2013. At the time Treasury took a $160 million write-down which included the dumping of $35 million in cheap wine in landfills. Most of the loss came from ongoing obligations to distributors that had been forced to overstock and later sell wines at reduced prices. A separate class action suit is already underway in Victoria, Australia by attorney, Mark Elliott. The suits are one more problem for Treasury while it tries to fend off a takeover by KKR. Treasury owns the brands: Penfolds, Rosemount, Lindemans, and Wynns, as well as several California labels.

 

Treasury is also fighting in China, one of its biggest markets, over the rights to its marketing name for Penfolds. In China the wine is sold as Ben Fu, which means “Chasing Prosperity.” Chinese distributor, Panati Wine, claims prior rights to the name.

Gallo Family Wealth

The Gallo family has been named the 25th richest family in the U.S. by Forbes Magazine. Assets of the family owned company are estimated at $9.7 Billion. Annual sales are $3.6 Billion and employment of 5,000. The company owns 9 wineries and its own glass plant, as well as numerous properties across 4 states. The current CEO is Gina Gallo, granddaughter of founder Julio Gallo.

 

Climate Change in Australia

A study by the U.S. National Academy of Science says that up to 73% of Australian land currently used for vineyards could become unsuitable for grapes by 2050. Climate change will make it too hot and dry. The situation has caused a land rush in Tasmania. The island south of Australia has a much cooler climate that is warming up and becoming very hospitable to winemaking.

Steady Rise in Bordeaux Prices

At wine symposium earlier this year, Christian Seely, spoke on the sustained growth of Bordeaux wine prices. From 1986 to 2012, first growths release prices have risen 700%, second growths 340%, third growths 180%, and generic Bordeaux wines 25%.

How Much is That Empty Bottle Worth?

Top 10 Empty Bottles. Prices compiled by Drinks Business from prices offered on eBay.

  1. Stag's Leap Artemis Cabernet Sauvignon 6L $280

  1. Michelob Test Foil Can $325

  1. Moet & Chandon Champagne 9L $400

  1. Patron Silver Tequila 15L $425

  1. Courvoisier Cognac 1 Gallon $500

  1. Johnnie Walker Red Scotch 4.5 L $550

  1. Camus 2000 Baccarat Crystal Decanter $750

  1. Veuve Cliquot Yellow Label 15L $900

  1. Armand de Brignas Ace of Spades 15L Champagne $7500

  1. Remy Martin Louis XIII Black Pearl $8000

    Climate Change Affecting Cork Trees

A study by a group of researchers from the University of Lisbon was published in the Journal of Experimental Botany showing that the bark of cork trees has been getting thinner over the past 20 years. Apparently, it is the result of climate change. The trees seem to be producing chemical compounds that protect them from UV rays instead of growing bark. The bark also seems to be lower quality. The conclusion is that in order to stay in business, the cork industry may have to move to colder climates along with the wine industry. Planning should start now because it takes about 25 years for a cork tree to start producing a good annual crop of bark suitable for sealing bottles.

Counterfeiter Case Sentencing

Sentencing for wine counterfeiter, Rudy Kurniawan, in the New York U.S. District Court has been postponed. The legal arguments now center around his motivation and how much wine he faked. The defense says he did it because he craved attention and liked being around wealthy people. They also say the prosecutors exaggerated the amount at $20 million. The court has ordered the repayment of $20 million. The prosecution says that once he got money for his fakes, he flaunted it, buying fancy cars and other luxuries. The defense asks that sentencing be limited to time served, 2 years 3 months, because he will be deported after prison time anyway.

 

In a separate announcement Kurniawan will pay a settlement to millionaire, Bill Koch, who has been fighting the counterfeit wine industry. Koch has also reached a settlement with auctioneers Acker Merrall & Condit.

Wine Auctioneer Grand Theft

New York wine auctioneer, Joshua Krummenoehl, has been arrested and charged with grand theft. He ran the auction company, WineGavel.com which auctioned wines stored in Napa. He used the proceeds himself instead of turning the money over to the sellers. The California Attorney General alleges that he stole $500,000 between February 2011 and April 2012. He is due in court on August 28.

Cuban Sommeliers Tour California

Californians Building Bridges hosted 20 sommeliers from Cuba on a tour of the North Coast in July. The event was called Cuban Sommelier Summit and co-hosted by the Wine Institute. More than 20 wineries provided tours and tastings. Dinners were held at Wente Bros, Buena Vista, and Beringer. The group heard speakers including Michael Mondavi. Current U.S. and Cuban regulations allow the export of California wine to Cuba as an agricultural product.

Instant Champagne

A new and inexpensive method for removing waste yeast from champagne and sparkling wine in only 15 minutes has been developed in Slovenia. The yeast is first infused with iron-oxide nanoparticles. The iron oxide particles bond to the surface of the yeast cells, which can then be removed from the wine by super magnets. The process takes only 15 minutes instead of 60 days of riddling and hand labor now required.

Beer

6 Pack a Week

FinancesOnline reports that Americans spend an average of $350 a year on beer. That works out to roughly a 6-pack a week. But, that's an average. If you didn't drink your share, there's someone else that had to make up for it.

This Bud's for AB/Inbev

AB/Inbev has bought a small Czech brewer. Pivovar Samson AS, was a third company that had claim to the name “Budweiser.” Samson is located in Ceske Budejovice, the town that gave birth to all three Budweisers. This purchase will settle some of the name disputes. Meanwhile, AB/Inbev continues its legal battle over the name with Czech government owned Budvar. Over 100 lawsuits are in progress in more than 50 countries. Both companies have won and lost some already. AB/Inbev produces and sells roughly 300 times as much beer as Budvar.

New Record Beer Mile

James “The Beast” Nielsen has broken the record for the 5 Minute Beer Mile in San Francisco. He did it in 4:57! The Beer Mile started on college campuses in the 1980's and has become an underground cult event. Competitors have to chug a 12 ounce can of beer, run a lap, then repeat 3 times. Jim Finlayson of Canada set a record of 5:09 in 2007. Australian Josh Harris broke that record with a time of 5:02 in 2012. The sport has only 10 official rules including “Runners who vomit are disqualified.” Patrick Butler is the official record keeper and records the sport's news and events on Beermile.com.

Beer Camp

This summer Sierra-Nevada Brewery is hosting “Beer Camp Across America.” The beer camp is actually 7 separate beer festivals starting in Chico, California and ending at Mills River, North Carolina. Stops were scheduled at Denver, Chicago, Philadelphia, and Portland, Maine. More than 2700 craft brewers were invited to participate. Brewers could only pour 2 varieties at any one festival. 108 breweries took part in Chico. Beer Camp admission was limited to adults over 21 at a ticket price of $65.

Japanese Brewers Switch to Cocktails

Japanese brewers are turning to canned cocktails as beer sales slide. Sales of beer have declined for the last decade and craft beer hasn't picked up the slack in Japan. In order to maintain volume the major breweries are pushing canned items like wine spritzers, pineapple rum mixtures, and high balls. The country's tax structure makes the canned drinks as cheap as beer. Suntory is releasing 23 new items this summer, up from 17 last year. Asahi and Kirin are releasing their own range of new drinks.

Stone Brewing Expands to Berlin

Stone Brewing of Escondido will be opening a brewery and pub in Berlin, Germany. CEO, Greg Koch, said they scouted 130 locations before settling on the Berlin spot. The building renovations and brewery installation are expected to cost $25 million. Stone brews a number of beers including IPA, Belgian Style, and Stout.

The Ingredients Kept Secret for 100 Years Revealed

AB/Inbev and Miller/Coors have both announced that they will list the ingredients in their beers online. The announcements came after a grass roots petition on the blog, FoodBabe.com requesting the list, gathered 40,000 signatures within 24 hours.

Scots Try to Win Soccer with Beer

In an effort to get the 2022 FIFA World Cup Soccer Tournament played Scotland a special beer was created by BrewDog Brewery. A suitcase filled with it was sent to FIFA President, Sepp Blatter, in Zurich to impress him with their bid.

Tap Beer at Home

SYNEK has developed a system that will provide draft beer at home. The system consists of a tap, dispenser, and plastic pressurized bags similar to the bags used in bag-in-the-box wines. You have to fill the bag with your favorite beer. The company will be ready to ship the systems in early 2015.

Spirits

Drambuie to be Sold

The McKinnon family has put Drambuie up for sale. The potential buyers include Wm. Grant & Sons and Remy-Cointreau. The brand is reportedly worth $100 million. Drambuie and the McKinnon Clan date their history back to July 1746. Prince Charles Edward Stuart (Bonnie Prince Charlie) had been defeated in battle and was on the run across Scotland. John McKinnon helped the prince escape from the Isle of Skye. In gratitude, the prince gave him the recipe for his private liqueur. The family used it privately until 1873 when it began being served in the Broadford Hotel on Skye. One of the customers called it “Drambuie”, a Gaelic word, that means “the drink that satisfies.” The name has been with the drink ever since.

Scotch Museum Planned

The Glasgow Distillery and Visitors Centre will be built on the banks of the River Clyde in the heart of Glasgow. The site will also have a whisky museum, an interactive experience, a retail specialty store, cafe, and whisky tasting bar. The project is part of the Clydeside revitalization project. Construction will begin later this year after the Glasgow 2014 Commonwealth Games. The building site was formerly occupied by the Pump House. Historically, all goods going into the port were required to pass through the Pump House to get to the bridge that connected with the docks. That ensured the government was able to collect its taxes.

The Whisky That Will a Launch Ship

Queen Elizabeth II will smash a bottle of Bowmore Islay Scotch against the hull of the biggest ship ever built by the British Navy. The ship is being dedicated as the HMS Queen Elizabeth. The bottle of Scotch will replace the traditional bottle of Champagne. The ship was built in Scotland and the event may be, in part, an effort to influence the Scottish independence vote scheduled for this Fall.

Scotch Contest

Chivas Regal held a bartending competition in 12 countries. The finals were here hosted by the U.S. Bartenders Guild and took place in New York City. The winner, American bartender, Masahiro Urushido, was crowned “2014 Chivas Master.” The competition was judged on preparation, palate, creativity, food pairing, service, and delivery.

 

Pernod-Ricard Franchises Local Spirits

Pernod-Ricard will be franchising its distilled spirits business. The company wants to take advantage of two trends; craft distilling and buying local. It will be setting up local entrepreneurs in major cities around the world. It will provide equipment, recipes, and high proof distilled spirits ready to be cut with local water and bottled. Pernod will cover the expenses and will get 80% of the profit as the product develops. The brand will be called “Our”. The first franchise will be in Berlin run by Pauline Hoch and Jon Sanders bottling “Our/Berlin Vodka.” A 350 ml bottle will cost customers 13 (about $17.70 U.S.). There are already 150 contracts in place to supply bars, restaurants, and stores.

Airline Drink Sales

GuestLogix did a 5 month study of airline passengers to track their onboard purchases. 8 million transactions were tracked between November 2013 and March 2014. Spirits, wine, and beer accounted for 57% of all sales during the period. The breakdown was spirits 34%, wine 13%, beer 10%. Non-alcoholic beverages accounted for only 1% of total sales. The other 33% was split between headphones, food, and other items. Tracking the sales by destination showed that travelers to Las Vegas spent the most on drinks; an average of $93.

High Proof Spirits

The state of Maryland has made the sale of distilled spirits 190 proof or higher illegal. Charles Barkley (D Montgomery County) sponsored the bill at the request of a group of 10 college presidents. Everclear and other high proof spirits will no longer be available. High proof spirits have been banned in California since shortly after the end of Prohibition.

Fake Alcohol in the UK

A wave of fake alcohol valued at about 1 billion has been causing big problems in the UK. Bottles what appear to be cheap Vodka are sickening, killing, and blinding people. The Vodka is actually methanol, chloroform, bleach, nail polish remover, or anti-freeze. In an investigation of 415 liquor stores in Staffordshire authorities found fake alcohol at 75 of the stores. The methanol is particularly dangerous because the body turns it into formic acid which attacks the nervous system. The surge in illegal product is coming from former drug dealers, who have moved out of the drug trade under pressure. The profits in fake alcohol are much greater and the penalties, if caught, are a lot less.

Craft Distilling Increases

As of the end of 2013 there were more than 500 Craft Distillers nationwide. Most produce Bourbon. But a growing number are making Vodka, Gin, Bitter, and Liqueurs.

UK to Try Fuel From Spent Grain

Celtic Renewables has signed a contract with the British Government and received a 1.2 Million grant to develop bio-fuels that are compatible with current autos from distillery wastes. Distillery wastes are primarily spent grain. That's grain that has had the starches fermented into alcohol. Spent grain has been used for centuries as livestock feed or, fertilizer, or burned for heat.

Second Hand Drinks

A second hand shop called Liquor Off has opened in Tokyo. The store buys unwanted bottles of liquor that are still sealed and resells them for 50% of the original price. The store stocks a hodge podge of unwanted gifts and bottles that lay forgotten in closets for years. It is believed to be the first business of its kind.

 

Other Food and Beverage

Voters to Decide Soda Tax

Berkeley voters will decide in November whether to impose a tax on soda drinks. The tax would be a penny per ounce. The measure's promoter, Vicki Alexander, says that Berkeley will be the first city in the country to impose the tax. She hopes to educate people and fight obesity. Ms Alexander says “We are very excited to see that day happen.” Opponents say education has nothing to do with it. The money will go directly to the general account. “It's a money grab” says Ted Mundorff, CEO of Landmark Theaters.

 

San Francisco will vote on a 2 cents per ounce tax on soda in November. The measure was placed on the next ballot by the County Supervisors on July 23 by a 6-4 vote. It requires a 2/3 vote. If passed, the tax will raise between $31 million and $52 million a year. The money is slated to be used for nutrition, disease prevention, health, recreation, and school physical education programs. Richmond and El Monte defeated similar measures in 2012. San Francisco and Berkeley are much more liberal and could be the first to pass soda taxes.

Chinese Investors for Vita Coco

All Market, Inc.,owner of Vita Coco, is selling a portion of the company to Reignwood Group, a Shanghai company. Vita Coco is the #1 brand of coconut water in the U.S., with a 40% market share. Current sales are $300 million annually. The Vita Coco's aim is to be the first global brand of coconut water. 20% of sales come from outside the U.S. in the U.K., Canada, Germany, Japan, Australia, and the Philippines. Reignwood will distribute the product in China where coconut water has yet to be a factor. Reignwood also has the exclusive Chinese distribution of Red Bull. Coconut water is the clear liquid from inside young coconuts. It is fat free and differs from coconut milk, made from mature fruit that is heavy in fat. Coconut water is a natural sports drink, used for re-hydrating and rich in potassium. Early in the growth of Vita Coco the company invited in celebrity investors who participated in ad campaigns; see Celebrities in the Industry above.

Mid-calorie Coke

Coca-Cola will be introducing in Coke Life the U.S. Coke Life is a mid-calorie soda sweetened with stevia and sugar. It has been tested in Argentina and Chile and found to be effective in getting consumers back to the diet drink category. It will be sold in both the U.S. and UK this year.

Orange Juice Sales Continue to Fall

June 2014 sales were 8.3% lower than the same month a year ago. Sales are now at their lowest point in the 12 years the beverage has been tracked. At one time Americans juiced oranges daily for breakfast. Then Bing Crosby made Minute Maid frozen concentrated juice a staple breakfast drink. Today consumers are replacing it with Acai, Mango, flavored water, and even energy drinks.

Snacks Are the New Eating Standard

The Greeks first standardized eating habits at 3 meals a day. That held constant until about a century ago when people started taking breaks, eating at sports and entertainment venues, and food manufacturers created packaged foods to take along. Cracker Jack, potato chips, other fare came into the culture. The past few decades the trend has accelerated. Today, Americans are snacking more and eating fewer formal meals. In 1970 10% ate 3 or more snacks a day, in the 1990's it was 20%, by 2010 the figure rose to 56%. A 2013 survey by Hartman found that 48% of Americans skipped a meal at least 3 times a week and 63% decide what to eat less than an hour before the meal. Changing tastes have forced manufacturers to create limited calories packs, snack size portions, nutritional snacks, and trail mixes. In 2013 nutritional snacks were up nearly 10% over a year before. 55% are now eating a mid-morning snack like yogurt, snack bars, or a baked item like bagels or donuts. Chips and fruit are afternoon fare. Candy and Ice Cream still reign supreme at night. The snack trend has been a fertile ground for new businesses. Companies like graze.com, tera.com, and naturebox.com take orders over the internet and deliver direct to homes and offices. The offerings provide more than 100 choices. To compete and keep its share of market, General Mills has opened nibblrbox.com.

The Changing Market

Data Breaches

Data Breach problems continue for corporations. The sheer volume of the problem is overwhelming. Neiman-Marcus had to sort through 60,000 security alerts to find a breach in 2013. Today big companies are experiencing 10,000 to 150,000 security alerts per day. It takes roughly 3 months to find a breach and another 4 months to make sure it's fixed according to Brian Foster, Chief Technology Officer of cyber security company, Damballa.

Bumper Grain Crops: Lower Prices

A huge grain crop looms over the food and beverage industry as most of the country experienced plentiful rain and mild growing conditions. The corn crop is expected to be 13.86 billion bushels, down slightly from last year's record 13.93 billion bushels. Soy beans are predicted at 3.8 billion bushels. The big crops will make the poultry business profitable and could lead to sharply lower prices on chicken. Lower grain prices will also produce lower costs for food oil production and the most important by-products of food oil production: Bourbon, Vodka, and Gin.

Smart Credit Cards

By the end of 2014 120 million new Smart Credit Cards with chip and pin will have been issued. New card reader terminals are required to process the cards. New terminals can cost retailers from $99 to $500 each. The changeover has to be made for 2 reasons. First, credit/debit card security for customers. Second, beginning in October 2015 credit card companies will shift responsibility for losses to retailers if a loss is deemed to be avoidable by using the new readers.

In-Store or Online?

Moody's reports that for most businesses both an online presence and brick-n-mortar stores. Businesses average only 6% of their volume online. The report suggests a 7% share by 2016. Factors influencing the totals include customer fear of using credit cards online. The report did not indicate whether Amazon Inc. sales were included in the numbers.

Amazon Drones

On July 9 Amazon sent a letter to the FAA requesting permission to run a test of drones in and around Seattle. The drones reportedly can travel up to 50 miles per hour and deliver a package weighing 5 lbs. The company has been testing them in an enclosed space for agility and collision avoidance sensors. Amazon wants to start delivering packages within 30 minutes of order under the name “Prime Air.” Currently, the FAA allows drone use only on a limited basis for law enforcement and atmospheric research. Amazon lost $126 million in the second quarter as it continued spending heavily on research projects.

 

Health

Red Wine Heart Healthy

Cardiologist William McCrea of Bath, England, prescribes two glasses of red wine a day for his heart patients. The doctor believes the practice has reduced second heart attacks by 50% and the risk of stroke by 20%. If his patients don't have any on hand Dr. McCrea pours a little from a bottle he carries as he makes his rounds.

Wine Dental Healthy

Several dental practices in New York have started serving wine to patients in the waiting room. They find that a glass of white or red relaxes the patient and takes away some of the dread of visiting the dentist. DNAinfo recently published an article on Manhattan dentists Marini and Manci. Wine is also offered at the Dental Boutique and Park South Dentists. Dr. David Janash says it “It creates a welcoming spa-like environment and makes patients more comfortable.”

Tasting Notes

Each month we are out there looking for wines that “over deliver”; wines that offer more than others in their category and price level. We search out the wines that you can buy to help build your business; wines that make customers happy and keep them coming back. These are wines we rate as good buys and best buys. Check our notes. The opinions in the reviews are our own and unsolicited. We receive no compensation from wineries or brokers. This month there were several wine tastings that showed some very nice wines available at reasonable prices. The prices shown are approximate retails.

 

This month one of the year's outstanding tastings took place. It is always exciting to

see new wineries in a new tasting arena. The Garagiste Festival at LA's Union Station was just that. The name originated in France where small winemakers would make their wines in garages and make their own rules as they worked. Here in California a Garagiste is a winery that makes less than 1500 cases a year. Usually a lot less. With each of the wineries reviewed below, we have indicated the total number of cases of all varietals. At this event 54 wineries were showing their finest. For many it was their first or second vintage. All were of outstanding quality. Unfortunately, we only have space to review a few of the best. Melanie Webber(424-603-4340) is to be complimented for putting on a fabulous festival.

Alma Sol (300 cases Paso Robles) Sauvignon Blanc 2013 was bright, fresh, and had clean flavors. $21. Contact John or Lisa Shaw in info@almasolwinery.com (818) 231-2749.

 

Ascension Cellars (350 cases Paso Robles)Viognier 2012 was bright and crisp. 60% Viognier, 20% Marsanne, 20% Roussane. Contact Erick Allen or Brian Sauls info@ascensioncellars.com (805) 296-7520.

 

Bon Niche Cellars (1100 cases Paso Robles) Chardonnay Santa Lucia 2011 $35 full body, heavy character, good food wine. Contact Joyce or Wally Murray acquire@bonniche.com (805) 286-7798.

 

Cholame Vineyards (800 cases Paso Robles) Grenache Blanc Bright, good body, heady at 14.9% ABV. Contact David Dubois email from the contact page at www.cholamevineyard.com or call (805) 610-1122.

 

Old Creek Ranch (1500 cases Santa Barbara) Albarino 2012 $22. A white that is crisp and citrusy. Barbera 2011 $35. 100% Barbera, will age well, mellow, good color and nose. Contact John or Carmel Whitman at winery@oldcreekranch.com or (805) 649-4132.

 

Seven Angels Cellars (800 cases Paso Robles) Unorthodox 2012 $22. A white blend of Viognier, Picpoul, and Greache Blanc. Dry, clean, bright. Contact Greg or Pamela Martin at greg@sevenangelscellars.com or pamela@sevenangelscellars.com or (805) 835-4054.

 

Cloak and Dagger (1000 cases Paso Robles) “Novus Ordo Seclorum” 2011 $40, a red blend of Sangiovese 78% and Syrah 22%. This wine was beautiful! It was our favorite at the entire Garagiste Festival. Soft, full body, deep color, good nose. There were only 25 caes of this gem produced. Contact Ray Schofield at (424) 644-0489 or theconspiritor@cloakanddaggerwines.com

 

Industry Calendar

8/16 – Long Beach Grand Cru – Long Beach

8/17 Family Winemakers – San Mateo

8/17-19 Western Foodservice Expo-Anaheim

8/18 Wines of Danger - SFO

9/ California Wine Month-Statewide

9/6 Mt Veeder Tasting – Napa

9/9 Rhone Rangers - LA

9/11-13 Latin Foodfest-San Diego

9/18 Kobrand Tour d'Italia - SFO

9/24 Rosh Hashanah Sundown

9/25 Rosh Hashanah

10/3 Kol Nidre Sundown

10/4 Yom Kippur

New Legislation for 2014

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. 2014

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

introduced that will be effective in 2015. 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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