Beverage Bulletin March 2011

California Beverage Retailers Association

P.O. Box 56686

Sherman Oaks, CA 91413

(818) 788-8120

www.cbraliquor.org

 

March 2011

 

Industry News

This month we cover a government investigation, economic news, predictions of heavy inflation, new restaurant and retail entries into the industry, new tax schemes, marketing news, sake and the earthquake in Japan, William and Kate Royal Wedding, and general industry news. Tasting notes with good values and one great find are included.

 

LOS ANGELES- LA City Planning Department and the ABC are investigating and looking to close some businesses that were licensed as restaurants that served food and alcohol as an incidental item. Some of these are instead operating as clubs, serving drinks only, and no food. Patrons have been turned down when trying to order food and in one case exotic dancers were using the “kitchen” as a room to change costumes. This is a violation of license privileges since state law requires that food be served in restaurants.

 

WASHINGTON — A new economic impact study shows America's beer industry, made up of brewers, beer importers, beer distributors, brewer suppliers and retailers, directly and indirectly contributes $33.2 billion annually to California's economy. Commissioned by the National Beer Wholesalers Association (NBWA) and the Beer Institute, the study shows that the industry generates nearly 229,746 jobs in California - which accounts for $10.5 billion in wages and benefits. The industry also contributed $6 billion in the form of business, personal and consumption taxes in 2010.

 

Burger King is quietly testing new concept restaurants. Called “Whopper Bar”, the restaurants serve burgers made with a choice of 30 toppings and glasses of beer. The first Whopper Bar opened in Orlando, followed by 6 more in other major cities. An eighth outlet is on the drawing boards for Las Vegas. The company also plans to experiment with wine sales. A Whopper sold in this setting sells for $7 to $8 plus the price of beer.

 

Walmart has announced plans to open several hundred grocery stores over the next 3 years. There are two size profiles planned.; mid-size stores of 30 to 60,000 feet and 20 to 25,000 foot stores. The company indicated that there are “thousands of opportunities” nationwide. The first stores are planned for the South side of Chicago and some university campuses. Walmart has a history of opening 20 to 30 stores in a one day “blitz.”

 

Can a new Sales Tax in another state affect California businesses and consumers? I hope not! Among many proposed sales tax exemption changes, Connecticut Governer Dan Malloy is proposing a new tax treatment on the use of store coupons and discounts. He essentially wants to slap a new sales tax on the original price of a good or service rather than on the discounted price. Right now, Connecticut sales tax is calculated after retailers’ coupons and discounts are deducted from the sales price. Consumers are only taxed on what they actually spend. Governor Malloy is proposing that the state eliminate this treatment and calculate the tax due BEFORE coupons and discounts are applied. Should the proposal pass, consumers will be paying taxes on the FULL price of an item. Other states that are strapped for cash are watching. If California made the same change, a consumer who heads over to Vons or Ralphs to purchase a taxable item that is on sale would pay tax on the original price, not the price actually charged. Or, the gentleman who takes his wife to a white tablecloth restaurant to get a “buy one get one free” meal would end up paying tax on both. Can a state really do this? Clearly they think they can. However, they are also going to have to change state tax law, specifically the definition of a sale. Right now, the definition of sales tax is that it is to be levied on the actual price paid by consumers.

 

Soft Drink consumption declined for the 6th straight year in 2010. National consumption fell from 13.9 billion gallons to 13.8 billion gallons. That is a decline of 100 million gallons or .8%. Coca Cola is still in #1 market position, but Pepsi fell to #3 in market share. While Diet Coke has moved up to the #2 drink sold in the U.S. Pepsi plans a counter attack by scheduling a 30% increase in ad money for 2011.

U.S. Wine Sales rose to 330 million cases for 2010 lifting gallonage by 2% and retail value by 4%. This puts total U.S. Wine Sales ahead of France for the first time. French wine sales totaled 321 million cases. Individually French wine drinkers still out-consume Americans. Per capita the French drink 12.2 gallons each year compared to Americans who only sip 2.6 gallons.

 

Food prices are ready to undergo heavy inflation. They jumped 3.9% in February 2010 hitting a 37 year high. Basic commodities and ingredients are fueling the increase. Wheat prices are up 80% from a year ago. Corn, rice and other grains are also on the rise. The causes are multiple: the fall of the US Dollar, slowing growth in crop yields, rising commodity prices, regional freezes, international demand and higher transportation costs caused by unrest in the Middle East and rising oil prices, global warming, and increased use of bio-fuels in the near future. Retailers will feel pressure to raise prices, while consumers are expected to push back. Restaurants will feel the pinch because menu prices can't be increased as quickly.

Pabst Brewing Company plans to introduce Colt 45 Blast in April. The beverage will have fruit flavors and 12% alcohol. The brand will be promoted by Snoop Dogg under a long term agreement. The brand is a new entry in a category that is under pressure from state regulators across the country.

 

 

RIKUZENTAKATA, Japan —Yasuhiko Konno, 64, owner of Suisen sake brewery, Lost all to the Tsunami. Now he vows to Rebuild. This was his sake brewery, one of the best in Japan, with a history that goes back hundreds of years. "I will do everything I can to bring us back for business, to start up again," he says. As the initial shock and sorrow of their tragedy fades, the small towns hit hardest by the disaster are beginning to think about the future, and it will be men like Konno who lead the way. He feels that traditional, hand-brewed sake, which is sold as a beverage but also used at weddings and in offerings to the deceased, is a part of Japan's heritage, and he has a responsibility to somehow carry on. As a business owner, he also provided for his 67 employees, 11 of whom are still missing. Konno also lost his home and stays at a community center a few blocks away. Each day he stops by all of the local refugee camps, checking the lists of names and asking for information about the missing. After the powerful earthquake rocked his brewery last week, he gathered his employees in the traditional garden, then let them leave for the day to check their homes. About 20 minutes later the 10-foot waves came. "I never imagined a tsunami would reach this far," he says of the spot 1.2 miles inland.

 

The April 29 Royal Wedding of Prince William and Kate Middleton will feature two cakes. The official one will be a traditional multi-tiered fruit cake made by Leicestershire baker Fiona Cairns. Miss Middleton has asked for it to be decorated with edible flowers - an English rose, a Scottish thistle, a Welsh daffodil and an Irish shamrock. There will also be a family childhood favorite of the prince's - an unbaked chocolate biscuit cake by McVitie's made to a secret Royal Family recipe.

 

 

Tasting Notes

 

This month we participated in several quite different and very notable wine tastings. We tasted a number of very good to fine wines. As always we were looking for good values. Wines that are true to type, sound, will age for a couple of years, go well with food, and make retail customers happy because they are a good value for the price. That's a tall order, yet we found some at each of the tastings.

 

The month kicked off with the Paso Robles Grand Tasting Event at the Vibiana. The Paso Robles area is coming on strong with some promising labels. Ancient Peaks Winery was pouring 2010 Sauvignon Blanc. This wine is fresh, clean, and has grassy undertones. We rate this as a good value. ($12) contact Lauren Burkhart at (805) 365-7045 lauren@apwinery.com

 

Peachy Canyon 2008 Incredible Red Zinfandel. It truly is incredible; with deep color, full body, and the flavor of berries. Another good value.(11.99) Contact Josh Beckett at (805) 239-1918 josh@pechycanyon.com

 

Good values also come in pairs. Treana and Hope Family Wines were showing Liberty School Chardonnay and Cabernet Sauvignon. These wines have been around for quite a while. The winery has been bottling them for Caymus as a secondary label. When Caymus decided to concentrate on their main label, Hope bought the rights and continued production. These are sound wines for everyday drinking and a good value at $12. contact Kenneth Farestveit at (408) 377-2327 kenneth@hfwines.com

 

The Spanish Toro region put on an outstanding show at Bazaar restaurant in the SLS Hotel. The wines were of exceptional quality and were matched by a table of tapas provided by Bazaar. There were a large number of fine wines being poured that are in search of importers. Here we had to restrict our recommendation to wines already available in California. Bodega Cyan offers two good values. Cyan 100% Tempranillo 2005 (14.99) is full bodied with a deep purple red color and full body. Cyan Calera 100% Tempranillo 2004 at $29.99 is a good value. It is produced from 90 year old vines, spent 18 months in oak and 22 months in the bottle. It has a lovely dark purple hue, elegant deep mellow tones, and can spend several more years improving in the bottle. Contact Serena Campbell (415) 331-4906 serena@usawinewest.com

 

Primeurs 2010 tasting at Campanile in Los Angeles featured the debut of French wines of the 2010 vintage. Again we restricted our comments to wines that will be available in the California marketplace. The big question was: Could we find a good value among French wines that are showing high retails due to the weak dollar? We were very delightfully surprised with a great find! Chateau Le Bon Pasteur, Pomerol is that wine. It has a deep reddish purple hue, the full bouquet of ripe bing cherries, deep flavors, full body with mellow tannins unusual in a young wine, and good legs. We were told it will sell at about $65 retail. This fabulous wine compares well with other growths selling at many times the price. We are told that Chateau owner Michel Rolland selected grapes from special parcels within the vineyard, fermented the juice with its own natural yeasts in small barrels, then blended the resulting wines to achieve the finished product. The result was spectacular! It is ready to drink now or lay down for many years. The Chateau informs us that the wine will be available in California through Transat Trade. (310) 516-6799. Contact Guy Azera at thewinesource@msn.com

 

Industry Calendar

04/04 Christermon Golf Tournament-Mission Viejo

04/04Santa Rita Hills Tasting – LA

04/11 Vibrant Rioja Tasting - LA

05/06 Wine Warehouse tasting SFO

05/26 Wine Warehouse tasting OC

05/27 Wine Warehouse tasting LA

Promotional Opportunities

 

Two religious Holidays are coming in April. Easter is on April 24th. This is one of the biggest wine sales opportunities of the year. Passover starts April 18 at sundown and goes to April 25 at sundown. Passover offers the opportunity to feature specialty Kosher Foods and Kosher Wines. Restaurants can put on special Easter Dinners and book large family gatherings for April 18 and 19 for the first two nights of Passover.

 

Legislation

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

Brands and Comments

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

CBRA Membership Remains Open

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

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

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