Connecticut Sunday Sales Law Passes House, Moves To Senate

(by Shanken News Daily) Connecticut’s proposed Sunday alcohol sales initiative has taken another step toward passing, clearing the state’s House of Representatives last week with a 116-27 vote. The initiative, House Bill 5021, allows for alcohol sales on Sunday and certain holidays, the ability for retailers to own three liquor licenses instead of two and a task force to study other liquor law reforms. The bill will now move on to the full Senate, where it must be passed by midnight on May 9, the last day of session.

The legislation is a scaled down version of Connecticut Governor Dannel Malloy’s original sweeping proposal that allowed nine liquor licenses per retailer, the sale of beer in c-stores, extended bar hours until 2 a.m. and eliminated minimum pricing, among other changes. Some supporters still hope those measures will be reinserted into the final version of the bill now being considered by the Connecticut Senate.

Jameson, Malibu Pace Pernod Ricard USA In Third Quarter

(by Shanken News Daily) Jameson Irish whiskey continues to drive Pernod Ricard USA’s progress, with 23% organic sales growth in the nine months through March. Pernod's top 14 strategic brands were up 5% in the U.S. over the same period. The Glenlivet single malt Scotch and Malibu rum also delivered healthy U.S. growth, with each rising by 9%. Malibu’s recent sales lift has been led by innovations such as its new Malibu Red and Malibu Sunshine extensions, Pernod said.

In an encouraging sign, Kahlúa liqueur returned to U.S. growth in the three months through March after sliding by nearly a quarter of a million cases over the past five years. On the other hand, Pernod’s largest brand, Absolut, which rebounded in 2010 after two down years, is continuing to face intense competition in its core U.S. market, and declined 1% over the first three quarters of Pernod’s fiscal year, which ends in June. Absolut has lost half a million cases in the U.S. since 2007.

Globally, Pernod Ricard posted a 9% organic sales increase to €6.32 billion ($8.4b) in the nine months through March. China (+22%) and India (+25%) continue to be the top growth areas for the company. On a brand basis, Royal Salute (+24%), Martell (+23%), Perrier-Jouët (+21%), The Glenlivet (+18%), Jameson (+17%), Chivas Regal (+12%) and Ricard (+11%) were among Pernod’s biggest gainers worldwide over the past nine months.

U.S. Virgin Islands legislature Votes To Increase Government Subsidies For Beam Inc.’s Cruzan Rum Distillery

(News Brief by Shanken News Daily) The U.S. Virgin Islands legislature has voted to increase government subsidies for Beam Inc.’s Cruzan rum distillery, located in St. Croix. Under the measure, the USVI will pay 25% of the distillery’s federal excise taxes for bulk rum production, compared with 18% under a previous agreement. The new deal, set to run through 2018, is the most recent development in an ongoing rum subsidy war between the USVI and Puerto Rico, triggered after Diageo relocated rum production for its Captain Morgan brand from the latter territory to the former. As a result, Puerto Rico has since enhanced its own rum production incentives, luring an increasing number of rum contracts from surrounding Caribbean neighbors, including the USVI.

Pinnacle May Become Beam’s Biggest-Volume Brand By Year-End

(by Shanken News Daily) Beam Inc.’s announcement this morning (04/23/2012) that it will pay $605 million to acquire Pinnacle vodka and Calico Jack rum from White Rock Distilleries has instantly transformed it into a leading vodka player in the U.S.—and Pinnacle also could become Beam’s biggest-volume brand in the U.S. market by year-end, overtaking its flagship Bourbon. Shanken News Daily tweeted news of the deal early today.

Thriving on the dynamic performance of its Whipped dessert-flavor range, Pinnacle sold 2.7 million cases on 93% growth last year, according to Impact Databank. White Rock CEO Paul Coulombe recently told Shanken News Daily he expects “at least 50% growth” on the brand for 2012, and that prediction was made before Pinnacle gained the scale advantages of Beam’s 18-million-case U.S. portfolio. Growth of 50% this year would bring Pinnacle to just over 4 million cases, well ahead of Jim Beam Bourbon, which rose 4% to 3.4 million cases in 2011. The deal comes just three months after Beam became a major player in the fast-rising Irish whiskey category when it acquired Cooley Distillery for $95 million.

Beam CEO Matt Shattock said the company will “substantially increase brand investment” in Pinnacle, which unveiled its first TV ads this year behind a $7-million 2012 ad budget under White Rock. Since losing the U.S. joint distribution (with V&S Group) of Absolut in 2008 when Pernod Ricard bought that brand, Beam’s presence in the U.S. market’s top spirits category has been limited to Gilbey’s, Pucker, Effen, Vox and, recently, Skinnygirl vodkas (the company revealed in recent days it would transition its low-priced Kamchatka and Wolfschmidt vodka brands into liqueurs). On a pro forma basis, including Pinnacle and Calico Jack, Impact Databank estimates Beam’s U.S. volume is now above 22 million cases.

Meanwhile, White Rock has achieved its second blockbuster vodka sale in five years. In 2007, it divested Three Olives vodka to Proximo Spirits for an undisclosed sum. Following that deal, White Rock quickly reloaded its vodka stable with Pinnacle. It remains to be seen if the Maine-based brand-builder can again start from scratch now that it’s sold off its top two brands (Calico Jack was up 16% to 400,000 cases in 2011). One possible contender to replace Pinnacle is White Rock’s newer Epic vodka brand, released last year and priced a few dollars less per bottle, roughly even with Heaven Hill’s Burnett’s in the $10 segment. Epic already has Cake, Gummy, Whipped and Orange Whipped flavors. “We think we have more expertise in vodka than elsewhere, and it’s also where most of the growth lies,” Coulombe said.

Besides Epic, the White Rock stable also includes Raynal brandy (-24% to 65,000 cases in 2011), McClelland’s single malt Scotch whisky (+2% to 55,000 cases), Tenure vodka (-14% to 30,000 cases), Baja Cream liqueur (-14% to 30,000 cases), El Charro Tequila (+36% to 30,000 cases) and Blackmaker liqueur (+50% to 15,000 cases).

Though Officially Neutral, WSWA, DISCUS Execs Warn Of Privatization’s Unintended Consequences

(by Shanken News Daily) Executives from the Wine & Spirits Wholesalers of America (WSWA), the Distilled Spirits Council (DISCUS) and the American Beverage Licensees (ABL) traded views on the recent trend toward privatization of beverage alcohol control states at an industry briefing in Washington, D.C., yesterday. While each of the participants expressed official neutrality in the privatization debate, Washington state’s recent move to end its retail and wholesale spirits monopolies was questioned not only on policy merits but also on the methods used to achieve it. Costco, the chief backer of that initiative, was the target of ample criticism during the discussion.

On the policy side, WSWA president and CEO Craig Wolf argued that vertically integrating the supplier and wholesaler functions, as will happen under Washington’s plan, benefits only large chain businesses like Costco at the expense of other industry participants and consumers and threatens to undermine the existing regulatory balance. “Unfortunately some interests have tried to hijack the recent privatization movement and destroy the balance (between the tiers) by tilting the beverage alcohol system in favor of one party or another,” he said. “That’s something that WSWA has vehemently opposed.”

The issue of lost revenue from Washington’s spirits business activity was also raised. “How do you possibly expect to have the same revenue—absent the contribution of the retail and wholesale businesses—without some extraordinary fee or tax structure?” DISCUS president and CEO Peter Cressy asked, suggesting that Washington’s experience will prove instructive to would-be privatizers looking ahead. Wolf added that, because of new taxes and fees aimed at replacing that lost revenue, current supplier and wholesaler estimates were that spirits prices would rise by between $4 and $20 a bottle in Washington after privatization takes effect June 1 (echoing comments made to Shanken News Daily in recent months by local spirits companies like Dry Fly Distilling).

Meanwhile, John Bodnovich, speaking for smaller retailers as executive director of the ABL, said that because Washington’s privatization was enacted by referendum, it didn’t receive the same level of public debate it would have if taken up by the legislature. He also took umbrage with its requirement that spirits sellers have at least 10,000 square feet of retail space. (While that requirement will clearly hinder some mom-and-pop retail operations, it’s also been cited as a way to keep convenience stores and gas stations out of spirits retailing.) Bodnovich too predicted higher prices and fewer choices for Washington spirits consumers after June 1.

Total Wine & More Opens Its Third Orange County, California Location

(News Brief by Shanken News Daily) Total Wine & More has opened its third Orange County, California location with a new store in Huntington Beach. The 22,000-square-foot outpost will feature more than 8,000 wines, 3,000 spirits and 2,500 beer offerings—including rare microbrews and imports—and offer a range of educational consumer programs. The new Orange County location joins Total Wine’s existing 79 stores in 11 states. The retail chain recently announced plans to enter the Dallas, Texas, market this summer, as well as New Mexico and newly privatized Washington by year-end, which will bring its footprint to 14 states. Total Wine is aiming to double its annual sales to $2 billion within five years.

U.S.-Colombia Free Trade Agreement Becomes Effective May 15th

(News Brief by Shanken News Daily) The U.S.-Colombia Free Trade Agreement, which becomes effective May 15, will open an emerging market to U.S. spirits exporters. Colombia’s current 15% tariff on U.S. produced brandy, gin, liqueurs and certain other spirits will be eliminated on that date. Looking ahead, the 15% tariff on U.S. whiskey, rum and vodka will be reduced to 14% in 2014 and lowered by 2% annually after that, until it is completely eliminated. Colombia will also recognize Bourbon and Tennessee whiskey as distinctive products of the United States. U.S. exports to Colombia increased by 10% last year to $1.3 million, according to the Distilled Spirits Council.

FTC To Review Major Producers’ Digital Marketing Tactics

(by Shanken News Daily) The Federal Trade Commission is requiring 14 major beverage alcohol advertisers to provide details on their use of digital media and data collection for the first time as part of an ongoing study of the effectiveness of the agency’s voluntary guidelines aiming to reduce underage consumers’ exposure to alcohol ads.

Diageo, Pernod Ricard, Anheuser-Busch and others have been directed to report advertising expenditure and placement data, as well as background information about business practices, to the FTC by June 11. Past FTC inquiries on traditional alcohol advertising have led Discus, The Wine Institute and the Beer Institute to introduce their own guidelines governing advertising activity, including on digital and social media platforms.

New York State Liquor Authority (NYSLA) Introduces Interactive Online Map

(News Brief by Shanken News Daily) The New York State Liquor Authority (NYSLA) has introduced an interactive online map of the state’s licensed liquor retailers, bars and restaurants, which number about 55,000 venues. The map, which will be updated daily on the NYSLA website (www.sla.ny.gov), will help new licensees by allowing them to explore potential locations’ proximities to other licensees, as well as comply with distance requirements related to licensed establishments near churches and schools, according to state senator Daniel Squadron, who supported the project. The map also includes individual locations’ disciplinary histories and pending license applications.

Anchor Distilling Launches Pink Pigeon Rum

(News Brief by Shanken News Daily) Anchor Distilling has launched a new super-premium rum brand, Pink Pigeon ($34.99 a 750-ml.), into select U.S. markets. Produced by Mauritius’s Medine Distillery (and owned by the U.K.’s Berry Bros. & Rudd), Pink Pigeon is made from molasses and blended with handpicked Bourbon vanilla from Madagascar and the Reunion Islands. The brand, which is aimed toward the mixology segment, is named for the rare and endangered Pink Pigeon found off the coast of Africa. Currently available in California, Arizona, Florida and Nevada, Pink Pigeon will extend into additional markets in the coming months.

Desert Diamond Distillery Awarded Gold Medal For Their Barrel Reserve Rum

Press Release:

Desert Diamond Distillery has been awarded a Gold Medal in the San Francisco World Spirit Awards for their Barrel Reserve Rum, which was just bottled in February of this year. The new Barrel Reserve, out of D3's very first barrel, is a harbinger of incredible things to come...garnering a Gold in such a prestigious event as the San Francisco World Spirit Awards is setting the bar high for this family owned and operated small micro-distillery. When you consider that every Spirit that D3 has on the market has won an award, it is easier to come to terms with the fact that D3 rum, a rum made right here in the United States of American, in Arizona, in the Mohave Desert, is something that is going toe to toe with rum from the Caribbean islands.

Our "Roll out the Barrel" event at the end of January was well attended with 51 friends of the Distillery attending, and they were the first to taste and toast our newest addition, the Barrel Reserve rum. Little did they know (mabye they guessed?) that less than 3 months later, we would be reporting that this very special rum, out of our very first barrel, has been judged a Gold Medal winner, one of only four Golds this year from the SFWS awards. We plan to have another "Roll out the Barrel" event in about four months to celebrate the "birth" of our next barrel. Please visit us on facebook or the web to be on our email list.

Deborah Patt
www.desertdiamonddistillery.com
702-335-7448 cell
928-757-7611 d3
Visit us on Facebook
Twitter: @D3Spirits

Anchor Distilling Looks To Expand With Artisanal Focus

(by Shanken News Daily) San Francisco-based Anchor Distilling is aiming to become a one-stop artisanal spirits shop for independent-minded bars and restaurants in the United States. With a portfolio of 35 craft spirits suppliers, Anchor’s volume grew by 30% last year. Anchor president David King says the company expects to outpace that performance this year, growing to around 70,000 cases.

Anchor Distilling is the spirits arm of Anchor Brewers & Distillers, created in 2010 when former Skyy vodka executives Tony Foglio and Keith Greggor purchased Anchor Brewing from home-appliance heir Fritz Maytag and combined it with their existing marketing company, Preiss Imports. Foglio serves as chairman of the group, while Greggor is CEO. London drinks merchant and marketer Berry Bros. & Rudd also holds a significant minority stake in Anchor.

Included in Anchor Distilling’s portfolio are Berry Bros.-owned brands like No. 3 Gin, The King’s Ginger Liqueur, Pink Pigeon rum and, most recently, the Glenrothes single malt, which Anchor will begin marketing in the United States on May 1. (Glenrothes was previously handled by Campari America.) Anchor-owned brands like Old Potrero American whiskey and Junipero gin are also part of the mix, as are agency labels like Chinaco Tequila, Luxardo liqueurs, Hirsch Bourbon and the BenRiach and GlenDronach single malts.

“Our whisk(e)y portfolio is up nearly 40% year on year, and there are huge opportunities,” says King, a Berry Bros. veteran. “Glenrothes is a 10,000-case brand—the largest in our portfolio but still tiny in the context of the U.S. market. It’s about 12% of our total sales, so it will be a key part of our whisk(e)y stable but won’t dominate the portfolio.” Anchor prefers to use a “range” or “category”-oriented strategy rather than pushing individual brands, because its customers tend to be less brand-centric than the industry at large, King says. Along with its whisk(e)y brands, No. 3 Gin and Luxardo, particularly its Maraschino cherry variant, have been among its growth drivers.

“I think the big spirits brands will continue to do well off-premise,” King says. “But in the urban on-premise people are often seeking an experience that’s more difficult to replicate at home. In cities like New York, Chicago and San Francisco, there are lots of new bars and restaurants popping up that don’t stock the big brands. So our specialty is selling into those ‘craft’ accounts.”

Anchor intends to continue extending its brand list to serve the increasingly adventurous on-premise consumer. “We can handle a few more suppliers, and we’re on the lookout,” King says, adding that entry into new spirits categories is likely. “I think Mezcal is an interesting area. With its smoky note, it can be like the Islay single malt of Tequila,” he says. “And, despite being partially owned by two former Skyy executives, we don’t have a vodka. I also think there’s potential around smaller producers of Cognac and Armagnac as the economy continues to recover.”

Pernod Ricard USA Introduces Melon Margarita To Their Malibu Premixed Cocktails Line

(by Shanken News Daily) Pernod Ricard USA has introduced a new flavor extension to its Malibu premixed cocktails line, Melon Margarita. The new product will retail for $19.99 a 1.75-liter pouch. The Malibu cocktails range, launched last June, also features Tropical Sea Breeze, Rum Punch, Caribbean Cosmo and Tropical Mojito variants. The Melon Margarita cocktail follows two recent extensions to the core Malibu rum brand, Malibu Red and Malibu Sunshine. After reversing a decline in 2010 with 1.9% growth, Malibu rose 5.6% in the U.S. last year to 1.7 million cases, according to Impact Databank. The brand does approximately half its global business in the U.S.