Beverage Bulletin November-December 2013

California Beverage Retailers Association

Beverage Bulletin

P.O. Box 56686

Sherman Oaks, CA 91413

(818) 788-8120

Ron Ziff, Editor

www.cbraliquor.org

November/December 2013

This month's stories include:

Headlines-New Director at ATF, Ten Strategies to Capture Holiday Business, Wine That Made America, Rare Whiskey Stolen, Romanee-Conti Counterfeiters Caught,

Wine Lockers Looted, TGI Fridays to be Sold

 

Celebrities in the Industry-Frank Sinatra, Jay Boberg, Jean-Nicolas Meo

 

Popular Culture-Famous Restaurant Closes, Book Review, Film Features Trappist Wine

 

Wine-Wine Produced for 3,000 Years, Caution on Fake Wines, Rudy Kurniawan Trial, Wine Shortage May Loom, Global Warming Might Affect Wine Grapes, Water Shortage in San Luis Obispo, Mexico Wine Grapes Endangered, Caymus Fined $1 Million, U.S. Wine Consumption by Variety, California Wineries Push China Sales, Sotheby's to Auction Rare Wines, One Billion Bottles of Yellow Tail,

New App to Measure Alcohol Consumption, New Paper Wine Bottles, Wine Grapes Stolen, Women Drink Wine More than Men, 2013 A Good Year for California Wine

 

Beer-AB/Inbev Sales Down, Florida Brewery Fire, Beer Sales Rebound, Carlsberg Shopping Breweries

Spirits-Doolittle's Raiders Celebrate with Hennessy, Scotch Find a Use for Whisky Waste, Beam Reports Change in Brand Sales, UK Breaks Up Smuggling Ring, Kosher Scotch, Diageo Ads on NBC

 

Other Food and Beverages-2013 Turkey Facts, Starbucks to Pay Kraft $2.8 Billion,

Japanese Restaurant Scandal, End of Welfare Program Impacts Grocers, Natural Food Chain Sold, Champagne Forces Water Change, Power Struggle in Sugar Industry, Coffee Prices Continue to Fall

 

The Changing Market-Holiday Sales Look Bright, Post Office to Deliver Sunday, Walmart Convenience Stores, Safeway Pulling Out of Chicago

 

Health-Americans Eating Healthier, German Health System Pushes Warm Beer, FDA to Ban Trans-fats

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

 

 

A New Year's Eve Toast...

I drink to our pasts, yours and mine, and to ours. The wine is strong, time is strong too.”

-George Dillwyn Parrish (1896-1941) American Painter and Book Illustrator

 

Headline News Stories

New Director at ATF

President Obama appointed B. Todd Jones as the new Director of the Bureau of Alcohol, Taxes, Firearms, and Explosives. He has been Assistant Director for the past 2 years and is the first permanent Director in 7 years. The bureau has been through 5 Interim Directors. In a statement he said that he will be concerned with enforcing firearms regulations, auditing FFL's (Federal Firearms Licensees), and working with other agencies to control cigarette smuggling. Cigarette smuggling has become an immensely profitable business due to the high taxes that are being avoided. It is feared that the profit has been used to fund Al Qaeda and Hezbollah.

 

Ten Strategies to Capture Holiday Business

With the holidays upon us, it's not too late to make some last minute changes to ensure a good season. Here are some suggestions:

  1. Products and services for every budget. Have gift ideas that range from $10 to over $200. Don't let a customer get away and make his/her choice somewhere else.

  2. Have holiday and gift packs in stock. They take the thinking out of what to get.

  3. Bundled products or services. Have package deals where a customer can get wine with a book about wine, or an assortment of several wines or beers that match a theme.

  4. Consumer Loyalty Programs. These work for both retail and restaurants. Get a customer started now and they will be back again & again next year.

  5. Customers are shopping early this year. Promote early to set the tone and take advantage of it.

  6. Have Supplies on Hand. Sales depend on having bags, gift wrap, and all the small stuff. Check your inventory and prevent crises over the coming weeks.

  7. Be Sure Your Website is Customer Friendly. Many sales start online. If your site is difficult to navigate, a rushed customer will move on. A complicated site gives a bad impression of your business.

  8. Make the Customer's Experience Easy. Have your address, phone number, email, and hours on every web page and every ad.

  9. Write Your Ads Early. Give it plenty of time to be proofread and corrected. An ad written in a rush will have key information left out or mistakes left in. Ad bad ad will give customers a laugh, but will send them away.

    10) The Web and Social Media Have Changed the Way People Shop. Get people to link with you on Facebook or Twitter. Get their email address on the first visit. It may be your only chance.

 

 

 

Wine That Made America

The Smithsonian Magazine has released a list of “101 Objects That Made America.” It includes Neil Armstrong's spacesuit, Abraham Lincoln's top hat, Charles Lindberg's Spirit of St. Louis, Irving Berlin's Piano, and Lewis and Clark's compass. But, most notably, included are bottles of California 1973 Vintage Wines that won the “1976 Judgment of Paris,” a blind tasting against the finest French wines. The wines are Stag's Leap Napa Cabernet Sauvignon 1973 and Chateau Montelena Chardonnay 1973. The Smithsonian credits the victory with putting California wines in the forefront of world wines and increasing the number of California wineries from 330 in 1975 to 3,574 in 2012.

 

Rare Whiskey Stolen

200 bottles of Pappy Van Winkle 20 year old Bourbon worth $25,000 were stolen from the Sazerac warehouse at the Buffalo Trace Distillery in Franklin County Kentucky. The whiskey was stolen from a locked area in what is thought to be an inside job. Only 6,000 to 7,000 cases are sold each year at $119 a bottle. This batch was scheduled to be shipped on allocation for the holiday season.

Romanee-Conti Counterfeiters Caught

A Romanee-Conti counterfeiting operation was broken up by Europol, Italian police and four other police forces. A father and son in Italy,whose names were withheld, were arrested and are awaiting extradition to France. Both are wine merchants. They are responsible for selling at least 400 bottles for about $2.8 million. Individual bottles drew up to $12,000. Police are continuing the investigation and may make arrests of others involved in the distribution of the wine. The wine was sold in Russia, Hong Kong, Belize, and Switzerland. The trail of crime led through the Netherlands, Germany, Cyprus, U.K., and France. Prosecutors say the sentences could be 10 years.

Wine Lockers Looted

George Osumi has been jailed for stealing $2.7 million from customers wine lockers at Legend Cellars in Irvine, CA. He pleaded guilty to dozens of counts of theft. He reportedly broke into the lockers on three occasions and replaced expensive wines with cheaper wines. The thefts took place between 2008 and 2012. The company advertises the storage facilities are “monitored by camera, motion detection, and local security patrol, 24 hours a day.” Separately, the company had fired him when they found he embezzled company funds.

 

TGI Fridays to be Sold

Carlson Restaurants, the corporation that owns TGI Fridays has put it on the auction block. Fridays has 900 outlets in 60 countries and employs 80,000 people. The company has annual sales of $2.5 billion and profits of $115 million. The chain is the latest casualty in the casual dining segment. Carlson will still own 1300 hotels including Radisson Hotels, Park Plaza, and Country Inns and Suites, as well as Carlson Wagonlit Travel Agency with a total of 175,000 employees.

 

 

Celebrities in the Industry

 

 

Frank Sinatra always had a glass of Jack Daniels with him on stage in his later years. Now Jack Daniels is returning the favor. There is a special limited edition of Sinatra Jack Daniels with extra age that will be on allocation.

 

California music executive Jay Boberg has partnered with Jean-Nicolas Meo on a project to produce 300 cases of Pinot Noir this year from Oregon Willamette Valley Dundee Hills. They expect to produce 14,000 cases in 2014. The wine currently has no label. Boberg was the head of MCA Records division of Universal Music from 1994 to 2003. Meo is owner and winemaker of one of the top wineries in Vosne-Romanee.

 

Popular Culture

Famous Restaurant Closes

Los Angeles is losing part of its history when The Proud Bird, an iconic and famous restaurant closed November 21. The restaurant has served as a watering hole for aviation greats from Southern California and the nation. Patrons have included Jimmy Doolittle, Charles Lindbergh, Neil Armstrong, Chuck Yeager, Tony Levier, and Paul Tibbets Jr., pilot of the Enola Gay. It had a special banquet room set aside for members of the Tuskegee Airmen. It was founded in 1958 by David Tallichet, who flew B-17s over Europe during WWII. The restaurant has fallen victim to local and federal laws. Federal law requires that LAX, which is the landlord, collect rent at market rates. That means an increase to $500,000 a year. Los Angeles ordinance requires that all employees of companies on LAX property pay a minimum wage of $16 an hour. The restaurant just couldn't afford to pay for all of this and maintain competitive menu prices.

 

Book Review

Guide to Urban Moonshining: How to Make and Drink Whiskey by Colin Spoelman and David Haskell. $16. The authors tell the reader that it's illegal, then give step by step instructions. Build your own still; then go through the byzantine process of getting state and federal permits or just go ahead and quietly make and drink your own. The book tears down the curtain of secrecy and tells how the big distillers make many brands at a range of prices in the same plant with the same ingredients and equipment. And finally the book includes a wide variety of easy to mix cocktail recipes.

 

 

 

Film Features Trappist Wine

Writer/director/producer John Beck showed his new documentary film, “Monks of Viña” at the Napa Valley Film Festival. The film chronicles the work of a group of Trappist Monks at the New Clairvaux Winery outside of the town of Viña, 100 miles north of Sacramento. In centuries old tradition they tend grape vines in a vineyard originally planted by Leland Stanford. The grapes are vinified by their only employee, Aimee Sunseri, who was educated at UC Davis. She proudly produces Tempranillo and Albariño wines for the New Clairvaux Winery. The monks observe a tradition of silence only broken by their haunting chants, which serve as the background music for the film. Watch for it in small art theaters.

 

Wine

Wine Produced for 3,000 Years

The island of Cyprus has made a wine called Commandaria for the last 3,000 years. The wine was called other names until the 12th century when the Knights Templar moved their Commandery (headquarters) to Cyprus. Records show that Commandaria was served at the marriage of the Crusader, Richard the Lion Hearted, in 1191.

Caution on Fake Wines

Maureen Downey, head of Chai Consulting, and an expert on authenticating fine wines, spoke on the subject of fake wine at the Hong Kong International Wine and Spirits Fair. She said there is a lot of fake wine that is in circulation; much of it now in the hands of collectors in Asia. She noted a few cases that have been exposed over the past several years. Rudy Kurniawan had been selling more than a million dollars worth a year from 2002 to 2012, when he was arrested. One of the wines he faked was Mouton-Rothschild 1945. But, he wasn't alone. It is one of the most counterfeited wines. His recipe for this classic was 50% Pichon-Lalande 1988, fresh 25% Napa Cab, 25% oxidized Bordeaux. Khaled Rouabah made his own B&G Chateau Margaux 1900 in seemingly unlimited quantities. She said what we have seen so far is “just the tip of the iceberg.”

Rudy Kurniawan Trial

Rudy Kurniawan's trial for counterfeiting wine is scheduled to start December 9. His lawyer, Vincent Verdiramo, has asked judge Richard Berman to allow Kurniawan to be examined by a team of forensic psychiatrists. Attorneys Jason Hernandez and Joseph Facciponti have objected and said that this is either an attempt to delay the trial or plead insanity and avoid trial altogether. The trial is shaping up to be a spectacle. Testimony is expected from Aubert de Villaine of Romanee-Conti, Laurent Ponsot of Domaine Ponsot, and Christophe Roumier of Domaine Georges Roumier. The purported fakes include 1934 Romanee-Conti, 1947 Ch. Petrus, and pre-1982 Clos St. Denis. Clos St. Denis was first bottled in 1982.

Wine Shortage May Loom

A report from Morgan Stanley Research says that there is a worldwide shortage of wine in the foreseeable future. In 2012 consumption outstripped production by 300 million cases. Among the factors: European production has fallen by 25% since 2004; the U.S. and China have quadrupled their use since 2008; in 2012 consumption grew 2% in the U.S. and 9% in China; U.S. produces 8% and consumes 12% of world supply; bad weather in France and Argentina caused a 10% reduction in the 2012 crop. There are currently 1 million producers worldwide making 2.8 billion cases a year. An analysis by other industry experts claims that the report fails to break out the type of wine that will be in short supply and the shortage will be in bulk low end wines.

Global Warming Might Affect Wine Grapes

A report in the Proceedings of the National Academy of Sciences says global warming might reduce the area suitable for growing wine grapes by 2050 by 25% in Chile, 51% in South Africa, 60% in California, and 73% in Australia. Note the words “might” and “2050”.

 

Water Shortage in San Luis Obispo

The San Luis Obispo County Supervisors have issued an emergency water regulation limiting the planting of new crops to a 1:1 ratio of water usage to water saved elsewhere in the water basin. The ordinance will be effective for 45 days and can be extended for up to 2 years. After review, the supervisors have exempted small farms under 20 acres with some conditions. Over the past 16 years the water table in the county has dropped 70 feet. New wells will be monitored and metered.

Mexico Wine Grapes Endangered

Mexico's Guadalupe Valley is in danger of losing nearly 50% of its wine grape producing area. The Ensenada Local Council is currently in negotiation with developers who want to build a luxury resort and spa on the land. The development would include a golf course, hotel, and mall. The valley has a climate similar to California. It produces 1.6 million cases a year, of which 80% is exported.

Caymus Fined $1 Million

Caymus will pay $1 million fine to Napa County for bottling too much wine. The county permit allows the winery to bottle 42,000 cases a year. Actual production has been 830,000 cases because the winery has been using the bottling plant to package wines grown in other parts of the state. The settlement includes the fine and a 5 year period to come into compliance. The company is building a new facility in Solano County and will relocate all bottling there.

 

 

 

U.S. Wine Consumption by Variety

U.S. wine consumption for 2012 by variety was:

Chardonnay 21%

Cabernet Sauvignon 12%

Merlot 9%

Pinot Grigio/Gris 8%

Moscato 6% (+33% for the year)

Red Blends 5% (+22% for the year)

Malbec 1% (21% for the year)

Foreign wines were up 2% by volume, 6% by value.

California Wineries Push China Sales

Earlier this month a delegation of 60 California wineries showed 110 brands at Prowine China 2013 in Shanghai. The Wine Institute sponsored a pavilion that hosted wineries and associations from Napa Valley, Paso Robles, and Santa Barbara. U.S. exports to China in 2012 totaled more than $73 million; 90% from California. 2012 sales were up 18% from 2011.

California Wineries for Sale

There are reports that a large number of California wineries are up for sale – quietly, without a for sale sign on the door. Well heeled investors are out looking for prestige properties. Meanwhile some vintners, having spent years building the business from scratch are caught in a cost squeeze and the current situation provides a way out.

Sotheby's to Auction Rare Wines

Sotheby's Finest and Rare Wines Sale is taking place this month. Two groups of wine are featured. The first is 2 lots of 6 bottles of Chateau Gruaud Larose 1865. They were on board the Marie-Therese, which sank near Indonesia in 1872. The bottles were recovered in 1991 and returned to the chateau where they were given new labels, corks, and wax capsules. Each lot is expected to bring at least $3,500. The second group is 74 lots consisting of 270 bottles of Moet & Chandon Blanc and Rose' representing every year back to the founding of the house in 1743. The champagnes are estimated at $160,000. Also included are 3 lots of 2 bottles each of Moet Grand Vintage Collection 1914, each of which is expected to bring $10,000.

One Billion Bottles of Yellow Tail

John Casella, Managing Director, announced that Casella Wines has celebrated the bottling of its 1 billionth bottle of Yellow Tail Wine. The company noted that 1 billion bottles have been sold in less than 11 years and 10 billion glasses have been enjoyed. Yellow Tail is distributed in 50 countries and is the largest selling imported wine in the U.S. The company was also presented with a special commemorative bottle by Amcor Glass Company, which has supplied the 1 billion glass bottles.

New App to Measure Alcohol Consumption

Jacob's Creek Wines has an app that is available to Smart Phones. With this app it is possible to measure how much alcohol is being consumed regardless of the glass size, shape, or quantity of fill. Simply point the phone's camera at the glass, trace the glass shape, trace the fill shape, and choose what type of wine is in the glass. To get the app go to https://itunes.apple.com/au/app/the-wine-line-by-jacobs-creek/id64970852...

 

New Paper Wine Bottles

GreenBottle, a UK company, is supplying bottles made from compressed recycled paper. The bottles use only 15% of the energy it takes to make glass, are completely compostable and recyclable after use, printed with natural inks. They will also withstand up to 3 hours in a wine bucket. Truett-Hurst, a California Wine producer is the first to use them for a wine named Paper Boy.

Wine Grapes Stolen

Chateau Suau, Second Growth Sauterne, reports that thieves tore down a fence and harvested 3 full rows overnight, 10% of its crop. The only lead is that the work was done professionally. Owner, Corrine Biarnes said “The fence was trampled. But picking the grapes was done very cleanly. It's very professional.”

Women Drink Wine More than Men

The Wine Market Council estimates that 53% of people who drink wine two or more times a week are women. “Core wine drinkers” who drink a bottle a week make up only 16% of the market but account for 91% of sales.

2013 A Good Year for California Wine

The Wine Institute reports that the 2013 California harvest was equal to 2012 in quantity and quality. The year started with even Winter rains, followed by a dry Spring marked with very few frosts, Summer heat was very even going into the Fall days producing an early harvest in most areas. The total harvest should be more than 4 million tons. According to some growers the fruit is small with intense flavors since the last rains were in December 2012. The wines are expected to be exceptional.

 

Beer

 

 

 

 

AB/Inbev Sales Down

AB/Inbev reported that total gallonage for the most recent quarter was down 1.3% as case sales were off in every market except China. The North American market was off 1.9%. In China the company had an 8.9% volume increase. Overall, earnings were up slightly due to an emphasis on premium and craft beers and the addition of Corona to the portfolio.

Florida Brewery Fire

Yuengling Brewery in Tampa, Florida was hit by a late night fire that did $1 million damage to a storage building. All the workers were evacuated safely. Yuengling is the oldest continuously operating brewery in the U.S., founded in 1829. The company is headquartered in Philadelphia.

Beer Sales Rebound

Beer increased in sales during 2012 or the first time in several years. Total volume increased 1.2% to 2.8 billion cases. Much of the growth came from craft beers with sales up 14.4%. Craft beer now accounts for 6.3% of the category. Growth also came from the super premium labels, retro brands, and imports. Restaurant beer sales were up, pushing on premise sales to a 2.5% gain.

Carlsberg Shopping Breweries

Carlsberg is shopping for more breweries to solve its sales problems. Sales are down in its key markets throughout Europe. Sales in Russia fell after the company bought the country's biggest brewer and then Russia added massive taxes to reduce beer drinking. Carlsberg is faced with two choices; 1) Overpay for brewers in emerging markets or 2) Try to convince Molson/Coors to end its U.S. deal with SAB/Miller. Either choice will be expensive and have a low return on investment.

Spirits

 

 

 

Doolittle's Raiders Celebrate with Hennessy

On April 18, 1942 Lt. Colonel James Doolittle led 80 airmen in 16 B-25s on a raid over Japan in retaliation for the Japanese attack on Pearl Harbor. In 1956 Doolittle was given a bottle of 1896 Hennessy(the same as his birth date) for his 60th birthday. The raiders have met every year since and promised they would drink the cognac at their final reunion. There are 80 silver cups, each engraved with a flyer's name. Each year the cups of those that have died are turned upside down. This year the 3 surviving crew men, all in their 90s, met at the Air Museum in Dayton, Ohio and shared the bottle with their own engraved cups on stage in front of a cheering crowd.

Scotch Find a Use for Whisky Waste

Scientists from Herriot-Watt University in Scotland are working on using the waste from whisky distilling, which is usually toxic, to make feed for farmed salmon. A pilot program will be launched in 2014.

Beam Reports Change in Brand Sales

Beam reports a major shift in sales of some of its brands during the first 9 months of its fiscal year. Makers Mark +17%, Canadian Club +10%, Courvoisier -7%, and the Skinny Girl line -29%. Teacher's Scotch had a major decline due mainly to a restatement of sales in India. Beam just concluded a major internal investigation into financial irregularities in its India operations. The results of the investigation have not been disclosed, however, Beam has fired its India CEO and temporarily shifted operations management out of the country as it completely restructures the division.

UK Breaks Up Smuggling Ring

UK authorities have broken a major smuggling operation in southeastern England which diverted wine, beer, and spirits that were scheduled for export. The ring led by two brothers, had evaded more than 6.4 million in taxes. In a sophisticated operation, the group relabeled the bottles by pasting counterfeit domestic labels over the export labels.

Kosher Scotch

Several Scottish distilleries are having their whisky certified Kosher in order to break into the Jewish whisky drinking market. Rabbis supervise the malting of the barley and bottling process for compliance with dietary laws. The distillers include Glenrothes, Glenmorangie, Ardbeg, Bowmore, and Auchentoshan.

Diageo Ads on NBC

Diageo has contracted with NBC to run hard liquor ads on network TV. There are a number of conditions attached. The ads will appear after 9PM; actors must be over 30; the company must also run ads promoting designated drivers and drinking moderately.

Other Food and Beverages

2013 Turkey Facts

1)The price of turkeys is up this year due to two factors. A) Farmers raised smaller flocks because sales were down for the last 3 years. B) Feed is 70% of the cost of raising a turkey and the previous year's corn crop is this year's feed. Last year the price of corn hit an all time high of $8 a bushel. This year corn dropped to $4 a bushel, but only a small portion of that will be fed to the birds in 2013.

2)Butterball is the #1 in the market and processes 18% of the country's turkeys.

3)There is a shortage of large fresh birds this year. The turkeys just stopped gaining weight. No one knows why.

4)Tyson is the largest U.S. supplier of meat. It expects to save $500 million on chicken feed alone in the coming year because of lower corn prices. That's really not chicken feed!

 

 

 

Starbucks to Pay Kraft $2.8 Billion

Starbucks has lost an arbitration case and has been ordered to pay Kraft Foods $2.8 billion. This ends a 3 year battle between the companies, however, Starbucks may appeal. Starbucks and Kraft made a deal in 1998 to distribute Starbucks coffee. In 2010 Starbucks decided Kraft wasn't doing well enough and offered Kraft $750 million to terminate the relationship. In 2011 Starbucks terminated unilaterally. Kraft sought arbitration. The ordered settlement is for $2.23 billion in damages plus $527 million interest and attorneys fees. The deal would have expired in 2014 on its own.

Japanese Restaurant Scandal

A mis-labeling scandal is rocking the Hospitality and Foodservice industry in Japan. It started when a customer at a Prince Hotel in Tokyo complained that “scallops” he was served were actually some other kind of shellfish. He posted his complaint on a restaurant reservation website. From there it suddenly took on a life of its own. The Prince chain of 32 hotel restaurants has now admitted in a series of revelations that it served mis-labeled scallops to 3600 people in April & May 2013 alone and that it routinely mislabeled 55 menu items back to 2005. To date the company has refunded $1.1 million to customers who were served fraudulent foods.

 

Then it was revealed that the Hankyu-Hanshin chain of 17 hotels and 111 restaurants mislabels 47 menu items. The company president first announced on national TV that he was taking a 20% pay cut and executives were cut 10%. Then 3 days later he resigned. Komeda Coffee, a chain of 500 cafe's apologized for serving orange juice instead of other more expensive citrus products.

 

The press has had a field day, investigated chain after chain and finding menu cheating all over the country, and proving that big companies were not honest; just big. Finally, Prime Minister, Shinzo Abe has asked the consumer protection agency and the health ministry to hold a full investigation of the entire industry.

End of Welfare Program Impacts Grocers

The SNAP program, which issued about $5 billion in food stamps a year to 48 million Americans, has expired. Grocery chains braced for lower spending as the end of the program pinches low income consumers. Kroger said it may have to lower prices to maintain volume. Total food stamp benefits are about $120 billion a year. Walmart pulls in 18% of the total.

Natural Food Chain Sold

The 8 store San Francisco Bay area chain, New Leaf, has been sold to the 16 store New Seasons chain of Portland Oregon. The purchase price includes cash and equity, but was not disclosed. New Leaf is a natural foods chain and features Organic Beer and Wine.

Champagne Forces Water Change

The Beverly Hills Drink Co. sells water labeled Beverly Hills 90H20 and called it “The Champagne of Waters.” The water sells for $4.99 retail and $12 or more in restaurants. The water comes from the Sierra Nevadas and contains a perfect balance of minerals found in water; calcium, potassium, magnesium, and silica. Jon Gluck, President of the company, says it is “a new level of water.” Sam Heitner, director of the Champagne Bureau says “Champagne only comes from Champagne.” The Champagne Bureau has sent a letter to the water company asking that the slogan be removed. The water company still feels its water is superb, but has removed the slogan.

Power Struggle in Sugar Industry

The sugar industry is having a power struggle. The government support price is 21¢ per pound through a formula of subsidies and guaranteed loans. The current price is 22.2¢ and the world market is at 14¢. The government support protects 142,000 sugar growing and production jobs. The U.S. price has been about double the world price since 2000. Other high costs for utilities, labor, packaging, freight, and health care have taken the profit out of candy manufacturing. For the past 3 years candy makers have been moving out of the country. It is estimated that for each sugar job saved, three candy jobs are lost. Meanwhile sugar producers have no place to sell their goods and are starting to default on federal loans. Producers defaulted on about $120 million in September. As of October 1 the government still had loans on 503,250 tons and may have to take delivery of 70% as producers default.

 

 

 

Coffee Prices Continue to Fall

Arabica Coffee prices continued in free fall to the lowest level in 7 years as huge harvests came in from Central America and Colombia. Colombian production was up 43% from 2012. Brazil has had two years of bumper crops and the flowering has started for the 2014 crop, which looks to be even bigger. Prices peaked at $3.0615 a pound in May 2011. Today the price is $1.0150 against a production cost of $1.10 to $1.15.

 

The Changing Market

Holiday Sales Look Bright

A survey by the International Council of Shopping Centers (ICSC) indicates that shoppers are starting early on holiday gift purchases this year. 62% plan to finish shopping by December 16. Black Friday and Cyber Monday look to be big. Our prediction: This will be a very good year for alcohol retailers; but not a great year. Wine, whiskey, and bar supplies will be sold to serve to holiday guests, not as a key gift purchase. In a great year, shoppers go through a spell of avoidance, putting off spending until the last minute. Then there are some “must” gifts to get, and in the final days before Christmas a bottle of good wine or whiskey is a good and easy choice. With holiday shopping spread over a few weeks, restaurants at all levels should do well as shoppers reach dinner time without home food prepared.

Post Office to Deliver Sunday

Amazon and the U.S. Post Office have teamed up for Sunday package deliveries this year as Amazon and internet sales continue to reshape the nation's business. Packages are the one profitable part of the USPO business. The program was announced on November 10; started immediately; and will provide extra postal jobs, extra convenience for customers, and a boost for both entities.

Walmart Convenience Stores

Walmart has Stores, Super Centers, and Neighborhood Markets. Now the company is trying another store concept; Convenience Stores. The world's largest retailer is opening a convenience store with a limited variety including milk, bread, and eggs, and gas pumps in order to “learn.” It will be interesting to see what Walmart does with this learning experience.

Safeway Pulling Out of Chicago

Safeway has announced that all of its Dominicks stores in the Chicago area that have not been sold will be closed permanently on December 28. The company has already sold 4 stores to Albertsons. It is expected that some of the remaining 68 stores will be sold to Roundy's, Kroger, and independents.

Health

Americans Eating Healthier

NPD has released a report showing that Americans are eating healthier in the past 10 years. This may slow the trend toward obesity and other health problems. Notably fruit has moved into the #2 position on the list of foods consumed. The whole list is: #1 Sandwiches, #2 Fruit, #3 Vegetables, #4 Carbonated Soft Drinks, #5 Milk, #6 Coffee, #7 Potatoes, #8 Salty Snacks, #9 Fruit Juice, #10 Cold Cereal. Numbers 4, 5, 6, and 9 are all beverages. The report says that the number of Americans that are overweight has not grown since 2003 and the number of adults who are obese has not grown since 2011. We are not losing weight, but have stopped gaining weight. Americans spend an average of 70 minutes a day eating.

 

 

 

German Health System Pushes Warm Beer

Josef Hecken, chairman of the division of the German Health System that decides which treatments will be offered has started a controversy by saying that a “bottle of warm beer” can sometimes be more effective than psychotherapy. He was criticized for his remarks by Dieter Best, President of the Psychotherapists Association, who said the statement was “unspeakable.” Hecken then backed off and said his remarks were “unfortunate” and misunderstood. He then added “sometimes the old home cure of a bottle of warm beer helps me.”

FDA to Ban Trans-fats

The FDA has announced that it will ban trans-fats from food products as unhealthy. Trans-fats have been identified on labels since 2006. Many consumers have shunned them since then and sales of food containing them fell drastically. Now regulations will likely finish them off. In 2003 Americans consumed 4.6 grams of trans-fats a day. By 2012 the number fell to 1 gram a day. Trans-fats are still present in baked goods, microwave popcorn, frozen pizza, and ready to use frosting. These will all have to be reformulated when the regulations go into effect.

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.

 

The Simply Italian U.S. Tour showcased over 60 Italian Wineries. Most were looking for distribution. These wines were very good and should be available here. We picked one of the best to review. Poggia Torselli poured a 2010 Chianti Classico from 100% Sangiovese grapes. It was dry, had good color, and would complement a meal. The winery also showed Torsellino del Poggio 2011; a red blend of 85% Sangiovese and 15% Cabernet Sauvignon. It also was dry, good color, good nose, and a good food wine. Contact info@poggiotorselli.it

 

At the Unified Grocers Sell-abration we found two products well suited to our industry. Tillen Farms showed a line of 5 different Oregon cherries. They were Merry Marachino, Bada Bing, Rainier Reserve, Pink Blush, and a Bourbon Infused Cocktail Cherry. These will make for distinctive cocktails in upscale bars. All the cherries are “clean”; they have no artificial ingredients and are preservative free. 13.5 ounces $6.99. Contact Tim Metzger at Metzger Specialty Brands tim@tillenfarms.com or (212) 957-0055.

 

Vineyard Fresh is a new product that keeps wine fresh when the consumer doesn't finish the bottle. It comes in a spray can and is 100% Argon Gas. Two quick bursts of the inert gas into the bottle replaces oxygen and creates a barrier against the air. Simply re-cork the bottle and it stays good for two to 3 weeks. Each can treats up to 50 bottles. $15. Contact Gary Gottfried at gary@vineyardfresh.com or (440) 463-4663.

 

 

Industry Calendar

11/28 Thanksgiving

11/28 Hannukah

12/2 DM Wine Tasting – Woodland Hills

12/5 80 years ago this day President Franklin Roosevelt announced that the 21st Amendment to the U.S. Constitution was ratified by ¾ of the states.

12/7 Pinot Days Tasting – Southern California

12/18 Tasting Panel-Champagne Tasting-LA

12/25 Christmas

12/31 New Year's Eve

2014

1/14 Australia Today-SFO

1/19-21 Winter Fancy Food Show – SFO

1/18-19 Asian American Expo-Pomona

1/23-25 ZAP-Zinfandel Experience-SFO

1/30 Benvenuto Brunello Tasting – LA

2/19-21 NAFEM Show – Anaheim (Foodservice Equipment)

2/24 Royal Wine Kosher Wine Tasting - LA

3/6-9 Natural Products Expo-Anaheim

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 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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