Beverage Bulletin October 2012

California Beverage Retailers Association

Beverage Bulletin

P.O. Box 56686

Sherman Oaks, CA 91413

(818) 788-8120

Ron Ziff, Editor

www.cbraliquor.org

October 2012

Flash! - AB/Inbev May Buy Pepsi

How Old are Wine Labels?

Good News on the 2012 Wine Grape Harvest

Bad News on the 2012 Wine Grape Harvest

Lance Armstrong Loses Michelob Sponsorship

Alleged Wine Counterfeiter Fights Back in Court

FDA Investigates 5 Deaths Linked to Energy Drink

Stand Off in the Coffee Market

Marketing Notes

Heineken Buys Asian Pacific

James Bond Switches to Heineken

World's Strongest Beer

Beer Sales Recover

Hard Cider Sales Grow

Scotch Sales Grow

Spain's Cork Industry Recovers

  1. 2.8 Million Wine Tasting Notes”

    Scientists Map the Genome of Barley

    Scientists Make Fuel from Distilling Waste

    Will Soda Tax Pass in California?

    Will Voters Require GMO Labels?

    Soda Companies Take on Mayor Bloomberg

    Soda Consumption by Children Drops

    Health News

    Grape Seed Extract to the Rescue?

    Recipe - Vanilla Old Fashioned

    and as always Tasting Notes and the Industry Calendar

     

    God made water, but man made wine.” –Victor Hugo

     

    AB/Inbev May Buy Pepsi

    As we went to press rumors were swirling that AB/Inbev has run out of breweries to buy and has been shopping for a takeover target. Pepsi is the rumored possible acquisition. Pepsi's profile matches past acquisitions. The company is loaded with assets, is troubled, and offers possibilities to cut expenses. It has been about a year since the acquisition of Modelo and Corona. More to come...

     

    How Old are Wine Labels?

    Wine labels are very much a part of our industry. Some are colorful, others formal and elegant, and others try to embody quality or flavor. Each is designed to sell to a market segment. But when was wine first labeled? It may have started with the ancient Egyptians. They traded goods with other traders from around the Mediterranean. Egyptian wine was stored in amphorae. Archaeologists of our time have translated the writing on the containers. They were labeled with their region of origin and their functional use. The labels read “Wine for Celebrations,” “Wine for Tax Collection,” “Offering Wine,” “Wine for Dancing, and “Wine for Important Functions.”

     

    Good News on the 2012 Wine Grape Harvest

    The 2012 harvest in Napa is nearly perfect. After 3 years of low temperatures and rain, this year had a near perfect climate with everything else falling into line. Ripening is not to early or too late. The near perfect conditions were felt up and down the West Coast with Oregon and Washington enjoying good harvests. New York and Canada also did well.

     

    Bad News on the 2012 Wine Grape Harvest

    The 2012 harvest in Europe is the worst in 50 years. Droughts in some areas, hail and rainstorms in others have ruined much of the crop. Yields in Champagne, Bordeaux, and Burgundy down as much as 40 per cent caused by cold wet weather. The harvest was off as much as 50 per cent in Southern France and Portugal due to drought and near zero rainfall. Many vintners in Southern France find themselves in financial difficulties.

    Lance Armstrong Loses Michelob Sponsorship

    In the wake of doping accusations, loss of championship titles and lifetime bans by cycling associations in the U.S. and internationally Lance Armstrong has been losing sponsors. This month Anheuser Busch/Inbev joined those deserting the former champion and withdrew Michelob's sponsorship. In its announcement, AB said it will continue to support anti-cancer charity, Livestrong, which was previously founded and head by Armstrong.

     

    Alleged Wine Counterfeiter Fights Back in Court

    Alleged wine counterfeiter Rudy Kurniawan's lawyer filed a motion to exclude evidence obtained by the FBI in his Arcadia, California home. At the time the FBI searched the home they found equipment and materials for counterfeiting labels, as well as dozens of bottles of cheap burgundy in process of being re-labeled. Kurniawan is accused of offering 100 bottles of counterfeit Burgundy at auction for $1.3 million. The investigation was handled by the FBI's Art and Collectibles unit. The legal defense is with Luis Li of nationally known L.A. Law firm, Munger Tolles and Olson. Lead partner Charlie Munger is a business partner of Warren Buffet.

     

     

    FDA Investigates 5 Deaths Linked to Energy Drink

    The FDA has opened an investigation into 5 deaths and a non-fatal heart attack that seems to be linked to Monster Energy Drink. The drink is sold in 24 ounce cans and contains 240 milligrams of caffeine, 7 times the amount in a 12 ounce cola drink. FDA regulations cap caffeine content of soda at 0.02% or 6 mg per ounce. There is no cap on caffeine content of energy drinks. The parents of 14 year old Anais Fournier filed a wrongful death lawsuit against Monster last week in Riverside, California. She died last December of cardiac arythmia caused by caffeine toxicity after consuming two cans of Monster. Monster counters that she had a pre-existing heart condition. Monster is the leading beverage in the category with a 35% market share. Monster is publicly traded and manufactured by Hansen Natural Corporation. Previously it had been rumored to be a takeover target of Coca Cola which distributes it nationally. In July the New York Attorney General started an investigation of Monster and competitors AMP made by Pepsi and 5-Hour Energy Drink. Some health officials are concerned about high caffeine drinks being sold to adolescents.

     

    Stand Off in the Coffee Market

    The Brazilian government estimates that the coffee harvest that ended in September is a record breaker. Meanwhile Brazil's growers have been holding back on selling in order to keep prices high. Shipments are down 17%. But the major roasters are also sitting on the biggest stockpiles in more than 2 years and are in no hurry to buy. The result is a standoff with brokers waiting to see which side gives in first. The break may come in the next 45 days as the harvest starts in Columbia and Central America.

    Marketing Notes

    Women have controlled our nation's pocketbook for decades. Now they also dominate earning power. Women hold the majority of jobs in the U.S. including 51.4% of managerial and professional jobs. In all but 3 major cities women age 30 and under earn an average of 8% more than men the same age. Women are getting more college degrees; 60% of Bachelors and Masters Degrees. 23% of working wives earn more than their husbands. These trends started about the Turn of the Century in 2000. The Great Recession has accelerated the trend. Is your company's marketing changing to take advantage of this change?

     

    Eating Alone. Did you know that eating alone has become as normal as eating together? Eating alone is fast becoming the new normal. The Hartman Group's analysis of how we eat as a culture shows that today a fairly astounding 46% of all adult eating occasions (up from 44% in 2010) are undertaken alone.

     

    Showrooming. A recent survey showed that 28% of customers say they regularly “showroom” items and then buy them at a lower price over the internet. Another 68% say they do it sometimes.

     

    New Wine Retailer. Amazon will enter the wine business in the near future. The company has tried several times before, but been stymied by differing state regulations. The current plan is to act as a marketplace for small to medium wineries. Amazon will act as an agent allowing the wineries to make the sale and will give them access to low priced shipping.

     

    Short Weight. Los Angeles City Attorney has reached a settlement with Ralphs for repeatedly failing to allow tare weight on sales of bakery, produce, deli, and meat items. Ralphs will be required to pay a penalty of $1 million, give $100,000 to the L A Food Bank, and maintain a compliance program for 4 years.

     

    Watching Weight. Australian winery, McWilliams is the first winery to sign a deal with Weight Watchers. The company will label four wines with removable Weight Watchers strips giving ProPoints values as well as including calorie counts on the back label. The program is initially contracted for three years.

     

    Heineken Buys Asian Pacific

    Heineken has paid about $4 Billion to Singapore based Fraser & Neave for 39.7% of Asian Pacific Brewers. Heineken now controls 95% of the stock in the brewer. Brands include Tiger Beer, Anchor, Baron's Strong Brew, ABC Extra Stout, Archipelago, and Bintang. The purchase also locks in distribution rights in the growing Asian market.

     

    James Bond Switches to Heineken

    Heineken has paid one of the biggest product placement fees in history to get its beer in the new James Bond thriller “Skyfall”. The fee totals $120 Million. $45 Million to have Daniel Craig drink one and Heineken is also footing the bill for a $75 Million worldwide ad campaign promoting the movie. A bit of perspective: the whole production budget for the movie was $150 Million. Heineken's fee is 80% of that. For that kind of money Craig's beer better have a head on it. Long time Bond fans will be disappointed; there are no Martini's, shaken or stirred.

     

    World's Strongest Beer

    Brewmeister Brewery in Aberdeenshire Scotland has produced the world's strongest beer. The brew is 65% alcohol by volume. That's 130 proof. It is thick, syrupy, and sweet. The owners, Lewis Shand and John McKenzie have named it Armageddon. It will be sold in 35ml bottles and recommend sipping it like brandy. They make the strong beer by freezing it and removing the water several times during a 5 week process. They also produce a 4% beer called Deeside Pale Ale and count Prince Charles as a regular customer.

     

    Beer Sales Recover

    Beer shipments are rising for the first time since 2008. According to the Beer Institute shipments are up 1.9% for the first 8 months of 2012 after being down 1.5% in 2011. The downturn of the last 3 years is attributed to the sour job market for young males in their 20's. The unemployment rate for this group was 15.2% in August. In contrast North Dakota is having an energy boom with unemployment at 3% and beer sales up 18%. Most of the growth is in Craft Beers. The number of breweries in the U.S. topped 2,000 for the first time since the 19th century. Another 1,300 are in the planning stages according to the Brewers Association.

     

    Hard Cider Sales Grow

    According to market research group SymphonyIRI one of the industry's smallest segments is showing amazing life. Hard Cider sales shot up 50% in 2011. The bad news for cider makers is that the 2012 apple crop is the smallest in 26 years.

     

     

    Scotch Sales Grow

    Scotch shipment to the U.S. were up 31% in 2011 and an additional 13% in the first 6 months of 2012. Single malt were a big part of the increase. Glenlivet, McCallan, Glenfiddich, and Balvenie as a group were up 9.5% in 2011. (Figures from Impact Databank)

     

     

    Spain's Cork Industry Recovers

    Spain's cork industry lost much of its business from 2008 to 2010 as plastic and screw cap closures took an increasing market share. Now, thanks to new standards set by The Catalan Cork Institute (ICC), the business is recovering. The institute was started by cork cutters in the cork producing regions of Catalonia, Andalucia, and Extremadura. The task assigned to the institute was to find a way of eliminating “cork taint” that spoils the taste of wine. The institute tests corks and has found ways to remove the chemical trichloroanisole which causes the problem.

     

    1. 2.8 Million Wine Tasting Notes”

      Website CellarTracker operates much like Facebook. You can find lists of what people have in their wine collections and read 2.8 million tasting notes posted by 230,000 members. It's possible to restrict your own readers only to friends that you have given a password. About 400,000 of the notes are written by professional wine critics.

       

      Scientists Make Fuel from Distilling Waste

      Two Scotch scientists have developed a method of turning the waste products from whisky distilling and turning them into biobutanol. Scientist, Mark Simmers, will serve as CEO of their company, Celtic Renewables. The biobutanol is better suited for fuel than bioethanol that is made from corn because it can be added directly to gasoline without further processing. It also bypasses the problem of deciding whether to use grain for food or fuel. Additionally, it provides a use for waste that previously had to be disposed of.

       

       

      Scientists Map the Genome of Barley

      Barley is a primary ingredient in Scotch, Irish, and Beer and the fourth most important cereal grain crop in the world after Corn, Rice, and Wheat. Mapping the genome is a major breakthrough and will lead to stronger, healthier, and bigger crops. Barley has been cultivated for more than 15,000 years. The scientists who did the work say that the 32,000 gene sequence is twice as complex as the human genome. Professor Robbie Waugh of The International Barley Genome Sequencing Consortium reported the work in the journal Nature. Professor Waugh said “This research will streamline efforts to improve barley production through breeding for improved varieties... better able to withstand pests and disease, and even provide grain better suited to beer and brewing.”

       

      Will Voters Require GMO Labels?

      On November 6 California voters will decide if food products made from Genetically Modified Organisms (GMO) have to be labeled when they vote on Proposition 37. If passed the decision will have national implications. Manufacturers will find it too expensive to label separately for California. Most packaged foods have at least some GMO ingredients. Major GMO crops grown in the U.S. include 93% of Soy Beans, 90% of Canola, 88% of Corn. That last one; corn is a major ingredient in many alcohol products. Bourbon, Vodka, Gin, and Cordials are all corn based.

       

      Will Soda Tax Pass in California?

      Taxes intended to reduce soda consumption and fight obesity have failed everywhere; but they keep coming close to passing. The latest attempt is right here in California. The issue will is in the form of ballot referendums on the November ballot in the cities of Richmond and El Monte. The issues have been endorsed by heavy hitters: The United Nations, American Heart Association, American Medical Association, and the New England Journal of Medicine. Center for Disease Control Commissioner Thomas Frieden says it is “the single most effective measure to control the obesity epidemic.” This is one the voters will decide on November 6.

       

      Soda Companies Take on Mayor Bloomberg

      New York Mayor Bloomberg tried and failed to get a soda tax passed. Then finally got a ban on carbonated sugared drinks in containers larger than 16 oz. From the New York City Health Board. It is set to go into effect in the spring. The American Beverage Association (ABA) has filed suit in New York state court to block the law. The ABA represents Coke, Pepsi, and other beverage manufacturers. Theater and restaurant groups have joined in the suit. The ABA fears that the ban could spread to other cities. Meanwhile, in a defensive move, the ABA is testing the roll out out of new vending machines in Chicago and San Antonio that give the calorie count of drinks.

       

      Soda Consumption by Children Drops

      Carbonated drink consumption has dropped among all age groups since 2006. The biggest drop was among 6 to 12 year olds. In 2001-06 55% drank soda. In 2007-10 the proportion dropped to 45%.

       

       

      Health News

      The number of cases of Gout is growing. The disease is sometimes caused by indulging in excessive food and drink. At one time the disease was limited to the wealthy who could afford the indulgences. It was known as “the king of diseases and the disease of kings.” A study in the journal Rheumatology shows that emergency room and hospital admissions for gout doubled between 1999 and 2009. Gout is a type of arthritis caused by uric acid accumulating in the blood because the kidneys don't process it. The uric acid then forms needle shaped crystals in and around joints resulting in extreme pain. Famous victims include Leonardo da Vinci, Henry VIII, Queen Victoria, and Laurence Olivier. The study was led by Dr. Philip Robinson who says “We are seeing the trend in all countries that have reported figures...It is related to the prevalence of obesity increasing worlwide due to people taking in too many calories and not exercising.” Alcohol raises the level of uric acid in the blood by increasing the amount produced by the liver. Beer is a particular problem. “We drink too much, eat the wrong food, do little exercise, and are overweight. I can remember only a small number of gout patients who were thin.”

       

      Grape Seed Extract to the Rescue?

      Grape Seed Extract is a by-product of wine making and known to contain non-toxic flavonoids which are also anti-oxidants. It is widely used by Europeans to reduce high cholesterol. Ongoing studies indicate that it also may be effective in fighting a group of human viruses called “norovirus.” Fresh produce is often contaminated with norovirus and it is possible the extract could be used as a natural compound to treat produce before sale.

       

       

      Recipe - Vanilla Old Fashioned

      Cocktails are enjoying a resurgence. Here's a new twist on an old favorite.

      Ingredients:

      One 1-inch piece of Vanilla Bean, split

      One 1-inch piece of Orange Zest

      ¼ ounce Simple Syrup

      2 dashes Orange Bitters

      2 ounces Bourbon

      Ice

      1 Orange Wheel

       

      In a rocks glass, muddle the vanilla bean and orange zest with the Simple Syrup and bitters. Add the bourbon and ice, stir and garnish with the orange wheel.

      Tasting Notes

      Wines of Argentina presented a tasting named Game of Grapes featuring 42 of the country's wineries. Some currently ship to the U.S. and others are looking for trade connections. We found all the wines good and drinkable. Most were reasonably priced. There were the familiar varietals; Cabernet Sauvignon, Sauvignon Blanc, and Chardonnay. But the types that showed off best were unique to Argentina; Torrontes, a white; and Malbec, a full bodied red. The Malbec vines produce a wine with characteristics that rival Merlot and Cabernet Sauvignon. The vines were imported from Europe to Argentina pre-phyloxera and are not grafted. The wines provide a new tasting experience. We found several good buys.

       

      Amalaya White 2011, Clean, fresh, a good white wine with seafood and light dishes. Unoaked, 85% Torrontes, 15% Riesling, $13.

      Colome' Torrontes 2011, Clean, fresh, slightly sweet. Good with food or can stand alone for a pleasant afternoon drink. 100% Torrontes, $16. Both are imported by The Hess Collection, contact David Shabelman, dshabelman@Hesscollection.com, (707) 265-3494.

      Urraca Malbec 2008, Good nose, deep garnet color, full body, well aged to a smooth finish, 100% Malbec, $20. It is already available in So Cal at a number of retail stores. Contact Jean Pierre Bieri jp@urracawines.com, (310) 397-0341.

       

      We also had the opportunity to attend the PMA, the biggest national fresh produce show in the U.S. right here in Anaheim. What we saw was a surprising delight. There were sure signs here that the country has reached the end of the recession and good times are ahead. Enterprising people have taken advantage of new technologies and developed new products and programs. There were over 900 booths. Of those only a handful showed bulk produce. The vast majority fell into three categories. 1) Branded, packaged, and cleaned fruit and vegetables. 2) Branded, packaged, and value added fruits and vegetables that were skinned, diced, sliced, and ready to prepare for the table. 3) Imported exotics from around the world; Dragon Fruit, Thai Basil, Purple Yams, Ugly Fruit, Emperor's Hand Citrus, Rambutan, and Finger Limes to name a few.

       

      There were GMO's being introduced and they look and taste great. We saw Big Red Strawberries the size of small apples, Tomatoes bred with two flat sides so they can be packaged in a tray, Bell Peppers that are shelf stable and can be stored and sold at room temperature, Cherry Tomatoes that grow in uniform size on uniform stems that fit a tray.

       

      As we come out of this recession consumers will opt for more eating experiences and more convenience. The future is nearly here and it looks tasty! Pictured below is Ron Ziff at the Avocados of Mexico booth sharing a laugh and an autographed copy of Chef Pepin's new Avocado cookbook.

       

       

      Industry Calendar

      11/4 Daylight Saving ends

      11/11 Veterans Day

      11/11 Pinot Days - LA

      11/14 Stars of Cabernet – Beverly Hills

      11/15 Stars of Cabernet - Orange County

      11/22 Thanksgiving

      12/9 Hanukkah (starts sundown 12/8)

      New Legislation for 2013

      Our industry has more laws controlling it than most industries. The State Legislature and the ABC give us license privileges and can take them away. 2013 has several new laws that you must follow. New alcoholic beverage laws will be introduced that will be effective in 2014. Many critical issues are pending. Is your business safe? Members are encouraged to look through the Legislative Bulletin. If there is a new law that is a problem for your business, call the association office now. The CBRA is your voice in Sacramento. If you are not a member, join today. The CBRA is your only voice when it comes to new beverage laws.

      Brands and Comments

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

       

      CBRA Membership Remains Open

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

      At CBRA we deal with licenses and regulations that affect the beverage business on a daily basis. That's why CBRA offers practical solutions, unique products, services, information, and timely advice for both large and small beverage businesses. With reasonable fees, superior service, and associates that are easy to reach, CBRA helps you to run your business better and easier. One of the most valuable services we offer is that call to the ABC to ask your question. We can ask that question and keep you anonymous. That's something you just can't do yourself.

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

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

       

      If you would like to be removed from this email list, please email to
      ron@cbraliquor.org with UNSUBSCRIBE in the subject line.