New York: Cuomo – WIGS Out

Posted on | January 27, 2012   Bookmark and Share
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Gov. Andrew Cuomo hasn’t included selling wine in grocery stores (known as WIGS) in either of his two budgets and now we know why: He thinks it’s bad for small businesses.

“I think it would be disruptive to many stores, mom-and-pop shops,” he said. “I don’t think the benefit outweighs the cost.”

It was Cuomo’s first explanation of why he doesn’t support letting supermarkets sell wine, which is legal in many states. He indicated briefly last year he didn’t support it.

Under former Gov. David Paterson, the issue was a prominent one during budget fights in 2009 and 2010-with the state estimating revenue of about $300 million through the sale of liquor licenses to grocery stores.

It was also one of the most expensive lobbying efforts at the Capitol-with supermarkets pushing for the law and liquor stores fighting it. Wegmans spent more than $3 million in 2009 and 2010 to push for the bill’s passage, but it didn’t happen.

New York is the third largest producer of wine in the country and it is a burgeoning industry. Some wineries had supported the legislation, while others opposed it, fearing that supermarkets wouldn’t promote New York-made wines.

Source: Politics on the Hudson

by Joseph Spector

Starbucks Expands Wine and Beer Sales to GA, IL and CA

Posted on | January 24, 2012   Bookmark and Share
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Starbucks Expands Wine and Beer Sales to GA, IL and CA

Starbucks, the company that proved there’s no such thing as paying too much for a cup of coffee, is expanding its experiment with wine and beer.

The company said [on January 23rd] that it will start selling wine, beer and “premium” foods, like small plates and hot flatbread sandwiches, at four to six stores in Atlanta and another four to six in southern California by the end of the year. That builds on the company’s recent announcement of the same plans for about half a dozen stores in Chicago.

Starbucks first tested the wine and beer concept at a store in its headquarters city of Seattle in October 2010. It now serves beer and wine at five stores in Seattle and one in Portland, Ore.

The company hasn’t released numbers on whether the new drinks have increased traffic, but it says the change has been popular with customers.

Wine and beer lists will differ by region. The stores in Washington state and Oregon serve Dead Guy Ale and Stella Artois lager, among other drinks.

The coffee giant says the alcoholic offerings, which won’t be available until the afternoon, will help it attract evening customers and expand its appeal to community groups and book clubs looking for space to meet.

It could also be a way to attract higher-end customers, a tack many companies are taking as the middle class is squeezed by the weak economy. Starbucks said in a news release that it selected stores “where it is relevant for the neighborhood.”

Source: USA Today

By Stephen Brashear

Poll Shows Support for Liquor Privatization in Utah

Posted on | January 23, 2012   Bookmark and Share
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A new poll could add fuel to the debate over privatizing liquor in Utah.

A poll released Friday by the political website claimed 58% of registered voters think Utah should not control liquor sales. Only 37% insisted the state keep control, said the poll conducted by Dan Jones & Associates.

“We were a little bit shocked by that as well,” said Bryan Schott,’s managing editor. “And it cut across all the ideological lines.”’s poll found 50% of Republicans support a “free market” approach to liquor sales, 44% supported state control. Democrats overwhelmingly supported it, 79% to 20%. Independent voters supported the “free market” 61%  to 35%, who backed state control.

Amongst LDS Church members, 49% supported state control. But said a surprising 45%  did not want state control of liquor.

“It’s always nice to see a poll in support of what you’re working towards,” said Rep. Ryan D. Wilcox, R-Ogden, who is planning legislation that could include some level of privatization of liquor stores in Utah.

Wilcox, who is a non-drinking LDS Church member, said he believes the free market should sell liquor. He insists the state can regulate it.

“I’m uncomfortable with the state being in the retail business of alcohol,” Wilcox told FOX 13 on Friday. “Yes, I believe the state does best when we focus on our specific role as a state. In this case, I believe the state does a good job of public safety, focusing on law enforcement, focusing on appropriate regulation.”

Wilcox said the bills he is drafting are gaining support in the state House. The Senate, meanwhile, is looking at overhauling the agency that controls and sells liquor in Utah, the Department of Alcoholic Beverage Control.

“There will be some restructuring in the DABC,” said Sen. John Valentine, R-Orem.

Valentine told FOX 13 he is planning legislation that would overhaul the agency, including who would control the DABC. The agency has been mired in scandal for the past year, over allegations of mismanagement. A criminal probe is under way. Some lawmakers have branded the DABC’s troubles “corruption.”

“I can confirm that the governor and myself and members of the House have been in active discussion about what to do with the restructure,” he said. “We have some disagreements.”

Source: FOX 13 News

January 20, 2012

Obama to Seek Authority to Merge Agencies

Posted on | January 17, 2012   Bookmark and Share
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President Obama’s plan to split up Alcohol & Tobacco Tax & Trade Bureau, giving its tax collection mission to the Internal Revenue Service and its “protect the public” functions to Food & Drug Administration is part of a larger plan to be unveiled this morning.


President Obama’s plan to split up Alcohol & Tobacco Tax & Trade Bureau, giving its tax collection mission to the Internal Revenue Service and its “protect the public” functions to Food & Drug Administration is part of a larger plan to be unveiled this morning.

Obama will say he is responding to public concern that government has grown too big by asking Congress to give him authority to merge agencies. Under the proposal, to be disclosed in a speech this morning, Obama would propose agencies be consolidated. Congress would then have just 90 days’ to vote on the proposal on an up-or-down basis.

A White House official told The Associated Press the first consolidation would involve Commerce Department agencies that focus on business and trade as well as the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corp. and the Trade & Development Agency.

Obama will position the proposal as creating one agency that will “help business thrive,” the AP said.

Obama will note that Presidents held such authority for about 50 years, until it expired during President Ronald Reagan’s term.

The proposal to create a superagency will eliminate roughly 1,000 jobs and save $3 billion over 30 years by eliminating overhead, human resources and similar functions.

Source: NABCA / Beverage News Daily

Jan 13th

Coors Light Becomes No. 2 Beer

Posted on | January 10, 2012   Bookmark and Share
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The iconic Budweiser brand continues a long slide out of favor with American drinkers, falling to third place.

If Anheuser-Busch InBev (BUD 0.00%) isn’t panicking yet, it should be. This is the first time in nearly two decades that Anheuser-Busch hasn’t controlled the top two beers in the country. The King of Beers is on its way to becoming court jester.

Budweiser has seen sales drop for years, and ran into serious trouble in 2009 and 2010. Last year wasn’t as bad, but shipments still fell 4.6%, according to trade publication Beer Marketer’s Insights. Coors Light shipments rose less than 1%, but that was enough to move it into second place.

The No. 1 brand is still the ubiquitous Bud Light. But since 1988, shipments of the Budweiser label have dropped by more than 60%. Ouch.

Coors Light and Budweiser are still neck and neck. Coors Light shipped 18.2 million barrels last year and Budweiser shipped 17.7 million.

“Anytime you can dethrone the king, it’s special,” a MillerCoors spokesman told Advertising Age. An Anheuser-Busch spokesman was less celebratory, saying the company was on track with a strategy to stabilize Budweiser.

Investors seem to be losing a little enthusiasm for beer stocks, Beer Marketer’s Insights reports. Anheuser-Busch is still doing better than any other brewer, but its gains slowed to 10.5% last year from 18% in 2010. SABMiller (SBMRF 0.00%) was up less than 1% last year, and Heineken (HINKF 0.00%) fell 14%.

What can Budweiser do to turn its decades-long slide around? The company seems to be trying everything from dressing up its cans with bow ties to telling drinkers to “Grab some buds” in new music-heavy commercials. Anheuser-Busch even handed out free samples of Budweiser at trendy bars and restaurants.

Meanwhile, Coors Light has pushed a cool and refreshing theme, introducing cold-activated bottles and cans.

While Budweiser is slipping, craft beers are still riding a huge wave of momentum. Boston Beer Co. (SAM 0.00%) shares have absolutely been on fire since October, rising more than 30%.

Source: MSN Money

By Kim Peterson

Mon, Jan 9, 2012

Beverage Media 75th Anniversary Historical Essay

Posted on | January 5, 2012   Bookmark and Share
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Prohibition, Then Repeal: From Three Tiers, One Publication Emerges

The Roaring Twenties. Flappers shimmied and millions danced the Charleston. Meanwhile, thousands of illicit speakeasies poured a veritable flood of swell cocktails, cold beer and fizzy Champagne to thirsty imbibers as the Prohibition-era ban on beverage alcohol was widely ignored by otherwise law-abiding citizens. Indeed, soon after inception, the 18th Amendment to the U.S. Constitution was judged an epic national failure in social engineering. In reaction, a new political movement gathered force: Repeal. And with the 21st  Amendment’s passage on December 5, 1933, Prohibition ended.

 With wine, spirits and beer now legal, two brothers, Philip and Max Slone, both practicing lawyers, became adept specialists in handling licenses and other regulatory matters for a new generation of aspiring tavern and restaurant owners in New York. Sensing a great need in the metropolitan New York marketplace for accurate news and insights relevant to licensees, the Slone brothers proudly launched in 1936 the first trade publication of its kind—Bar & Grill Journal—which evolved over the next 75 years into a unique network of 34 state-based beverage alcohol publications combined with a range of 21st-century communications services.

 In noting the origin of the company, William Slone, chairman of Beverage Media Group Inc., explains, “After Repeal, the responsibility for all beverage alcohol production split into two critical areas. At the national level, federal authorities established a sweeping set of laws to regulate the production of wine, spirits and beer as well as adjudicate, if necessary, interstate commerce issues. But, at the same time, owing to the strong states’ rights language of the 21st Amendment, responsibility for the distribution and sale of wine, spirits and beer was securely placed in the hands of state and local authorities. These developments created the particular structure of our beverage alcohol industry we all work in today.”

 Jason Glasser, chief executive officer, adds: “Over our 75 years, the unique strength of Beverage Media comes from the fact that we have always mirrored the structure of the U.S. wine, spirits and beer trade. Taken together, our print, online media and host of other communications services are national in reach, but extremely local in addressing specific markets.”

 The Slone brothers’ intimate association with all three tiers of the industry set the stage for a publication that grew with the beverage alcohol industry, connecting suppliers, distributors and licensees with timely trade news and information. In the following decade-by-decade review, we look back at some of the most notable highlights during 75 years of Beverage Media publishing history.

 The 1930s: From Forbiden Fruit to Liquor-Fueled Capitalism

Prior to Prohibition, brewers, distillers and vintners comprised the fifth largest business grouping in the United States. One year after Repeal, in 1934, on a combined basis, the beverage alcohol and hospitality industries had been responsible for generating millions of new jobs in the depths of the Great Depression and funneling hundreds of millions of dollars in direct and indirect federal, state and local tax revenues to financially strapped government agencies. In fact, by the mid-1930s, one-third of all federal tax receipts were sourced from federal alcohol excise taxes alone.

Not surprisingly then, from 1933 to 1940 there was a frantic race to rebuild breweries and distillers and replant uprooted vineyard acreage in California and elsewhere. All this required huge capital investments. Restarting these businesses resulted in a financial tidal wave so encompassing that in 1933, Fortune—the new business magazine launched by visionary publisher Henry R. Luce, of Time magazine fame—devoted a cover story to the country’s biggest distillers, brewers and vintners. Anheuser Busch, Brown-Forman, National Distillers, Pabst, Schenley, Schlitz and Seagram, among others, soared in value.

During the decade, American consumers faced shortages of aged whiskey and imported wines, so new categories—such as, younger-aged, blended whiskies like Rittenhouse Rye as opposed to more costly “un-cut,” aged whiskies like Old Charter— filled the gap until distillers could catch up with demand. Meanwhile, post-Repeal, licensees were coping with complicated federal, state and local alcohol regulations.

It was the combination of these developments—regulatory, commercial and legislative—that telegraphed to the Slone brothers a clear publishing opportunity, one which they seized with passion.

With each issue, the magazine invited its readers—comprised of not only licensees, but also the distributors and suppliers who served them—to a spirited (pun intended) conversation about the news and trends of the day. The publication, besides its growing revenues from a steadily rising subscription base, also pulled in more pages of advertising from distillers, brewers and vintners, as well as allied industries, including a whole range of related products and services to assist new licensees in establishing themselves in their communities.

The 1940s : The Industry Responds to War

Cover after cover of Beverage Media during World War II showed strong, patriotic images in support of our troops. And in dozens of its articles, Phillip and Max Slone advised licensees about how to cope with wartime shortages. For example, grain sales to distillers and brewers were at first rationed, then severely reduced as part of the accelerating effort to redirect every available foodstuff or strategic material toward the war. Articles also covered how licensees could efficiently recycle glass bottles, cardboard containers and wood cases, even holiday wrapping paper.

In early 1940, the Slone brothers had changed their publication’s name from Bar & Grill Journal to Beverage Media; the new title reflected their determination to widen editorial coverage to the entire beverage alcohol business.

Following the war, Beverage Media addressed a variety of concerns affecting both licensees and veterans returning home.
And, as a sign of the publication’s growing influence, in 1947 Beverage Media announced the launch of a separate Upstate New Yo r k e d i t i o n for on- and off-premise licensees.

Shortly after expanding in New York, Phil and Max Slone called upon their brother Harry to head west—to New Jersey. Harry opened and oversaw the New Jersey Beverage Journal.

The 1950s: Post-War Growth and Affluence – When Whiskey and Beer Reigned Supreme

Although the decade began with the Korean War (1950-1953), overall the United States economy was poised for tremendous expansion in the ’50s. Suburbs bloomed in former cornfields, factories operated at near capacity, unemployment dropped to record lows and pay packets grew year after year. Rising affluence drove consumers to enjoy some of the finer things in life, and the covers of Beverage Media in this decade amply illustrated the decade’s most popular libations, enjoyed at summer picnics, around the Thanksgiving table and during the key year-end holidays.

With Dwight D. “Ike” Eisenhower in office as President (1953-1960), it was a peaceful period when larger-than-life personalities dominated the drinks business—giants such as August “Auggie” Busch of Anheuser- Busch, Lewis “Lew” Rosenstiel of Schenley Industries, Samuel “Mr. Sam” Bronfman of Seagram Distillers, John Martin of Heublein, and Ernest and Julio Gallo of E & J Gallo Winery, to name but a few. These men—perhaps emblematic of a “Mad Men” man’s world—were genuine empire builders.

As advertisements in Beverage Media show, it also was an era when whiskey—especially American whiskies, blends and bourbon—dominated the market along with regional beer brands. Wine was not as widely appreciated as it would be in the decades to come; although the Gallo brothers and other Italian and ethnic wine producers were beginning to make inroads in the general market with generic varieties christened Hearty Burgundy and Mountain Chablis, their core business was still proprietary fortified wine brands like Thunderbird or Canandaigua’s Richards Wild Irish Rose. These fortified and jug wine brands of the 1950s established a strong foundation for America’s growing awareness of fine wines, a trend accelerated by noted wine importers and writers such as Frank Schoonmaker, Jr. and Alexis Lichine, as well as by pioneering New York City retailers like Sherry-Lehmann, Morrell’s, and 67 Wine & Spirits, among others.

By the end of 1959, total U.S. spirits sales hit nearly 100 million 9-liter cases; wine sales reached nearly 70 million 9-liter cases; while beer sales reached approximately 87 million 31.5 gallon barrels.

The 1970s: America Discovers Table Wine, Light Beer and White Spirits

During the Nixon and Ford administrations, both U.S. and foreign-owned beer, wine and spirits companies continued to enjoy robust growth. And while there were some very early signs of consolidation—when one major drinks company gobbled up a smaller competitor—there was not a great deal of merger and acquisition activity yet at the supplier and distributor levels.

One of the most dramatic developments of this exciting decade was America’s discovery of the pleasures of wine, exemplified by the “I’ll-have-a-glass-of-white-wine-please” order at bars or restaurants. Significantly, this was the decade whensales of table wine (both generic and varietal wines) overtook fortified and dessert wine sales for the first time since Repeal.

In the beer realm, growing health concerns prompted consumers to migrate to low-calorie or light beers, while environmentally conscious consumers started to assert pressure on industry leaders to come up with better materials for recycling and earth-friendly production processes.

Keeping in tune with the times, Beverage Media coverage included debate over controversial Federal Excise Tax increases, trendy new cocktails and exclusive newsmaker interviews with wine, spirits and beer executives. Meanwhile, white spirits—vodka, gin and rum—rose in prominence as the foundation of popular if simple bar drinks, namely the Screwdriver, Gin & Tonic and Rum & Coke.

The 1970s, in retrospect, represented a brave new era for advertising. Spirits got edgy, with Early Times encouraging drinkers to “Make Yourself a Swinger” and a Sauza Tequilamodel promising “If you’ve got the salt, I’ve got the Sauza.” Orson Welles became known to a new generation of Americans not so much for his films as for his TV ads touting Paul Masson, in which he intoned, “We will sell no wine before its time.” (Ironically, Welles was dropped in the early 1980s when he admitted publicly that he actually did not drink Paul Masson wine.) And beer got funny, with a series of TV commercials featuring former professional athletes arguing over whether Miller Lite “tastes great” or is “less filling.”

The 1980s:  Boomers, A New Generation of Wine Lovers, Cocktailians and Micro-Beer Lovers

As millions of prosperous baby-boomers reached legal drinking age, their arrival gave rise to a new generation of brands, with the skyrocketing rise of Absolut Vodka perhaps the most noteworthy example. Powered by simple yet evocative advertising, Absolut managed to separate its vodka, even though the product is technically tasteless and odorless. Then the brand shook up the category in an unprecedented way, introducing the first flavored vodka, Absolut Peppar, in 1986; the vodka flavor parade began, and continues to accelerate 25 years later.

During this go-go decade, both domestic and foreign suppliers initiated a sweeping series of mergers and acquisitions to drive costs down, increase economies of scale and improve their route to market. Notably, beginning in the mid-eighties, French businessman Bernard Arnault combined two iconic luxury companies, Louis Vuitton and Moët Hennessy, into one global giant—LVMH. In 1987, The Seagram Company, Ltd., controlled by the Bronfman family, engineered a then eye-popping $1.2 billion acquisition of Martell Cognac.

Meanwhile, scores of small, family-owned beverage alcohol wholesalers faced unrelenting pressure to either grow or succumb to buy-outs. As the costs of labor and transportation increased, and as the retail and hospitality tier experienced waves of consolidation of their own, less efficient wholesalers started to sell out to competitors or simply close their doors.

Over time, the strong got bigger and stronger. Surviving distributors strived to achieve statewide coverage, and soon the industry saw the rise of big, multi-state distributorships. For wine and spirits, Southern Wine & Spirits of America emerged as the second tier’s leader, while other players including Glazer’s, Charmer, NDC and Wirtz also built massive multistate operations. In the beer sector, Reyes Holding LLC and Ben E. Keith, among others, likewise built up strong multi-state wholesaling operations.

In wine, wine coolers cooled off at the end of decade as so-called “fighting varietals” began cropping up in California, led by Glen Ellen and Kendall-Jackson. In spirits, the decade saw a definite rise in status for bartenders—er, make that mixologists— evident in the 1988 release of the romantic drama Cocktail, starring Tom Cruise.

The 1990s: Boom Times for Wine, Luxury Brands and the Rise of the Internet

If there was one single “tipping point” in the 1990s, it came early on, with CBS’s now-famous November 1991 60 Minutes broadcast exploring the so-called “French
Paradox,” which suggested that French men and women live longer lives and enjoy lower rates of heart disease despite their notoriously higher-fat diets and relatively little exercise. Why? Well, wine, and especially red wine, seemed to be part of the answer, according to doctors interviewed by Morley Safer in the news piece.

Faster than you can uncork a bottle, sales of wine, and particularly reds, shot
up across retail shops, supermarkets and restaurants. It was good news for winemakers around the world, and in retrospect is credited with tilting the American palate from white wines toward red, and for launching the decade-long rise in popularity of Merlot.

Meanwhile, in the same year, after an epic lobbying battle, the U.S. government increased the federal excise tax (FET) on beverage alcohol, putting pressure on the overall sales of beer, wine and spirits. The decade also saw a marked rise of anti-alcohol campaigns.

During this decade, the company continued to serve the needs of the local licensee via its still growing list of state publications. Working closely together, Bill Slone, Jason Glasser, former IBM executive Michael Roth and now third-generation family member Jody Slone undertook a host of initiatives to enhance the capabilities of the company, including: improving communications among its publications and, simultaneously, launching new editorial and marketing products driven by the latest technologies. According to Roth, “Our growing suite of services introduced in the late 1990s enabled us to communicate with our subscribers both in print and online.”

Meanwhile, in the pages of Beverage Media, editors tracked the highly profitable growth of premium, super-premium and luxury wine and spirits brands, while also tracking the growth of new Internet-related sales channels and the challenges, and opportunities, they offered.


And, of course, consolidation continued at all three tiers of the industry. Allied Domecq was formed via a 1994 merger between Allied Lyons of the UK and Pedro Domecq of Spain, only to be itself auctioned off to Pernod Ricard in 2005, which then spun off a number of brands to Fortune Brands (Beam) and Diageo, the latter company the result of a dramatic 1997 merger of two British giants in the global drinks business, Guinness and Grand Metropolitan.

The decade/century ended anticlimactically, with a feared Millennium-induced shortage of Champagne—much like the threat of the so-called Y2K computer bug—never materializing.

The 2000s: Industry Acceleration as Everyone Gets Online

Amidst all the Millennial excitement, the Internet boom ushered in a complex new sales channel: online ordering. The powerful, ever-widening reach of this new technology intensified industry debate, primarily in the wine sector, over direct-to-consumer shipments that bypassed both distributors and licensees.

The issue reached the U.S. Supreme Court, which in 2005 ruled (on a 5-4 vote) that states must give out-of-state wineries the same legal treatment accorded to instate wines. In what became known as the “Granholm” decision, the Justices ruled that, in this situation, the Federal Interstate Commerce law trumped the 21st Amendment, and that regulations in Michigan and New York were discriminatory. Far from being definitive, however, the ruling essentially pushed the responsibility of resolving direct-shipping issues back to individual states, setting off new legal battles in this ongoing and divisive issue.

As the decade started, “drinking less and drinking better” was wine’s catch phrase; but indeed Americans were drinking more wine every year—with rising consumption embracing everything from cult Cabs to Two-Buck Chuck. In spirits, absinthe returned (legally); bourbon experienced a small-batch-fueled renaissance; and vodka flavors went wild, both in an explosion of branded varieties and the rise of bar-made infusions. Tequila showed off its premium side as Patron became the first $40+ tequila to hit the million-case mark.

Consolidation Continues

At the global level, mergers activity in the drinks business also continued, seemingly unabated. Seagram was sold to a French conglomerate, Vivendi, in 2000, which in turn, auctioned off such iconic brands as Mumm, Perrier-Jouët and Martell to Pernod Ricard, among others. In 2002, SAB, a South African brewing conglomerate, acquired Miller Brewing, from Philip Morris, creating SABMiller. In that same year, Grupo Campari of Italy acquired a controlling interest in Skyy Spirits, eventually gaining majority control in 2005. In 2004, Bacardi paid a reported $2 billion to acquire Grey Goose from Sidney Frank, while in the same year Constellation Brands bought Robert Mondavi Corp. for $1 billion.

Next, Molson, Canada’s leading brewer, merged with Coors in 2005, which in turn merged with SABMiller, in 2007, to create MillerCoors. Then, in the biggest drinks deal of the decade, Anheuser-Busch was acquired by In-Bev, a Brazilian-based worldwide brewing giant, for a mind-boggling $52 billion.

A Look Forward

Against this backdrop of boom and bust marketplace turbulence, Beverage Media Group shifted its focus to becoming a technology company as much as it was a publishing company. By creating an online exchange, Beverage Media was now able to support suppliers, wholesalers and retailers with an e-commerce system that would increase operational efficiency for buyers and sellers. The company also launched into the business of hosting and designing websites for retailers to sell wine, spirits and beer efficiently to consumers.

Reflecting on the evolution of the company his father and uncle founded in 1936, Bill Slone recalls talking to his father one day about the railroad companies that were once a dominant factor in the nation’s economy. On hearing his son’s account, Max asked, “Why don’t they dominate any longer?” After Bill hesitated, Max said, “They thought they were in the railway business, but they weren’t. They were in the transportation business.” Laughing today, Slone says his father’s insight is still true; he applies it to Beverage Media, noting, “We have to keep in mind we are not in the printing or web business, we are in communications!”

Summing up, Slone says, “We have a unique position here at Beverage Media, because we really touch all three tiers of the industry, and we have an opportunity to connect everyone in this great business; it’s in our DNA and we take on this role with great passion.”

Click here for a  pdf version with great images from Beverage Media’s long history.

Did The Treasury Defend Its Bureau?

Posted on | January 5, 2012   Bookmark and Share
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As reported last year, President Obama’s Office of Management & Budget is plotting to split up Alcohol & Tobacco Tax & Trade Bureau, moving TTB’s “protect the public” functions – which include label approvals, formula review, product testing and similar duties—to the Food & Drug Administration and its tax collection responsibilities to Treasury’s Internal Revenue Service.

Treasury was to provide guidance to OMB on how easy – or how hard – this would be by last Wednesday, Dec. 28th.

The question we asked Treasury was whether it defended its bureau in responding to OMB. Treasury declined all comment. Not surprisingly, TTB isn’t talking either.

But among our Washington sources, two scenarios were discussed. The first had Treasury making at least a pro forma attempt to preserve TTB in its current configuration.

The second scenario had the proposal to split-up TTB originating in Treasury. In this view, President Obama is looking for some agencies to “abolish” in order to project himself as seeking to reduce the federal government. Every cabinet officer was ordered to offer suggestions, and one of Treasury’s suggestions was to split up TTB.

From a cynical political perspective, splitting up TTB is ideal: Obama could posture himself as having wiped out a federal agency that “duplicated” other agencies’ functions – while in reality doing nothing to reduce the federal government’s reach or even its headcount.

Source: Beverage News Daily / NABCA

Jan 4th

New Products & Promotions: January 2012 Edition

Posted on | January 3, 2012   Bookmark and Share
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Cockburn’s Port (pronounced Co-burn) has introduced an updated look. A longer neck is inspired by the brand’s original bottle, and the Cockerel embossing is now bolder and larger. The label is in a brighter white and underscored with a red line to increase visibility on store shelves. SRP Cockburn Special Reserve: $18.99; SRP Cockburn Fine Ruby: $13.99; and SRP Cockburn Fine Tawny: $13.99


Every day is Earth Day at CottonWood Creek Cellars, producer of two super-value wines made from certified organic grapes. Winemaker John Allbaugh says the CottonWood Creek White Table Wine and Red Table Wine are classic California wines that pair well with food. The wines are also environmentally-friendly, packaged in ultra-lightweight bottle, sporting a label made of recycled paper and finished off with a natural cork closure.


Winebow has brought Bruichladdich’s Botanist Gin to the U.S. The distillery is well-known for its Islay single malts. The artisanal gin is flavored with 31 botanicals, 22 of which were locally harvested, including subspecies of juniper, bog myrtle, wood sage, peppermint and others. The Botanist Gin is bottled on Islay at 46% ABV with Islay spring water and without chill-filtration. SRP: $35


Cape Classics has introduced an addition to the successful Jam Jar line with Jam Jar Moscato. The white complement to Sweet Shiraz, Jam Jar Moscato is made for consumers who want a white wine with a sweeter flavor profile. The wine uses fruit from South Africa’s Western Cape, and has flavors of peach, apricot, lychee and orange blossom with a hit of balancing acidity. SRP: $11.99


Paso Grande Cellars presents a new line of wines from Chile. The brand features a dark, exotic Carmenère and a well-structured Cabernet Sauvignon from the Rapel Valley, a full-bodied Chardonnay and an aromatic Sauvignon Blanc from the Maule Valley. Paso Grande Cellars is imported by Vinum International and marketed by Domaine Napa Wine Company.


DFV Wines has relaunched its Delicato wine brand in a modern package, with retro style—Domino. The change marks a shift toward innovation for the company, while Domino continues to offer consistent Delicato quality. The Domino portfolio of California wines includes Chardonnay, Pinot Grigio, Moscato, Shiraz, White Zinfandel, Merlot and Cabernet Sauvignon. SRP: $6.99


Big, Bold & Beautiful: Cask Strength Variations Reward Spirits Lovers

Posted on | January 3, 2012   Bookmark and Share
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In the simplest terms, the proof of a distilled spirit in the U.S. is the percentage of ethanol in the solution multiplied by two: 40% alcohol by volume = 80 proof. But beyond the basic math, proof can be an factor in flavor, a mark of value, a marketing strategy and even a defining characteristic for some spirits.

Much of the current trend of higher proof spirits can be attributed to producers of single malt Scotch and small-batch bourbon. In an effort to present the distillate in its most authentic form, producers began offering “cask strength” and “single barrel” offerings, bottled at full strength rather than customarily diluted at the distillery, just before bottling, to a tidy round number, like 80, 86 or 90 proof. These higher proofs are usually the domain of collectors  and connoisseurs.

“I don’t have market data, but everything I’ve been exposed to suggests that bourbon drinkers buy 100 proof and higher because they like more flavor—a whiskey that is stronger, richer and deeper in flavor, with more bourbon and less water,” says Harlen Wheatley, master distiller of Buffalo Trace and Sazerac.

Standing Out From a Crowd

Proof can be helpful in differentiating between similar products in a large portfolio like Sazerac’s, with standard 80 and 90 proof spirits at the entry and 93.7 proof Blanton’s and the latest release of George T. Stagg Kentucky Straight Bourbon Whiskey 15 year (142.6 proof) as premium offerings.

Wheatley notes that most drinkers heed the distiller’s advice to dilute such spirits. “We don’t as a rule of thumb suggest drinking 145 proof whiskey. It can be consumed that strength, but it is so hot that it is an awful strong drink. We really advocate adding water or ice,” says Wheatley. His personal taste is for bourbon watered to about 90 proof, a number that Sazerac refers to as “Kentucky proof.”

In some cases, proof is so closely identified with a product that it becomes the name, as with Wild Turkey Bourbon and their core 80 proof and 101 proof iterations. In the process of reformulating the classic Wild Turkey 80 from a blend of mostly four- and five-year old bourbons to include older whiskies aged up to eight years, Wild Turkey associate distiller Eddie Russell bumped the proof from 80 to 81. “We wanted to make people understand that it is not the old 80. That means a new package and a new proof. People order the product by the proof so they will be asking for the 81,” says Russell. In addition to the standard proof blends, Wild Turkey offers Rare Breed at barrel proof (usually ranging from 108 to 110).

While drinkers won’t be ordering it by proof, Beam’s new Devil’s Cut brandishes its 90 proof strength prominently on the label, suggesting it serves as an important point of differentiation.

Foolproof Flavor?

The notion that fuller proof spirits offer bigger flavor spawned the idea that alcohol equals flavor. In a widely cited article, Jason Wilson in The Washington Post suggests that “alcohol delivers flavor, just as fat does in food.”

It’s a logical notion, but not factually correct. “I would disagree with that idea. I don’t believe that proof gives you flavor at all. I’m sure you’ve seen white whiskey off the still, but it does not give you any flavor. To get all those good flavors you have to age it in the barrel. That’s where flavor really comes from,” says Russell.

Indeed, it’s perfectly possible to have flavorful low alcohol spirits, and neutral tasting high-proof spirits, given that ethanol is essentially flavorless. It’s accurate to say that the flavors in a higher proof spirit are often less diluted, but we should be careful about telling consumers that more alcohol means more flavor.

What proof does have in common with fat in food is calories, with ethanol clocking in at 7 calories per gram, just below fat’s 9. Therefore, reducing proof is one of the single most effective ways of reducing spirit calories, a concept utilized by low-cal spirits like Voli Vodka, which conserves calories by offering a 60-70 proof product, compared to a more typical 80. (see How Low Can You Go?)

Proof Positives

While the idea of diverse proof levels may be well established in the world of whiskies, categories like Cognac and vodka are far more homogenous in their proof. Nearly all vodka is bottled at the minimum 80 proof, excepting a few 100 proof offerings from Absolut, Smirnoff and Stolichnaya and specialty products like Belvedere Intense and 160 proof Devil’s Springs Vodka. These products are often utilized for on-premise infusions.

During its recent history as a luxury sipping spirit, nearly all Cognac, including even the highest marques, has been bottled at 80 proof, diluted for sipping neat. Taking a cue from mixologists enraptured with higher-proof whiskey, like Rittenhouse Bottled-In-Bond Rye Whiskey 100 Proof and Wild Turkey 101, Cognac Ferrand 1840 Original Formula has been designed specifically for mixing, with 45% ABV or 90 proof.

“We discovered that Cognac was drunk at higher proof back in the 19th century.  We looked at many of these old bottles, which reached about 50% alcohol and we decided that the 1840 was the best representation to recreate a cocktail Cognac,” says Guillaume Lamy, vice president North America at Cognac Ferrand.

According to Lamy, proof resonates with today’s bartender’s and many are eager to mix classic cocktails using the spirits as they existed. “We did not invent the product, but dragged it out of history,” says Lamy.

Top mixologists at New Yorks destination like Employee’s Only, Daniel and Apotheke are also embracing Louis Royer “Force 53,” bottled at 106 proof, according to Estelle Ngo, brand ambassador, Louis Royer Cognac. “Not only does the spirit stand up well in a cocktail, but it represents a value. The price difference from our 80 proof VSOP to the 106 proof is only $4. Consumers are very interested in the trying the product and because the price difference is not that significant,” says Ngo.

Proof has traditionally played an important role in the rum category, where over-proof rums like Bacardi’s popular 151 are used for everything from pyrotechnic cooking to making fortifying tiki drinks, with the spirit’s ability to stand up to heaps of blended and shaved ice. The burgeoning spiced rum category seems to be taking hint from
rum’s history pages as well.

When Steven Grasse, CEO of Quaker City Mercantile in Philadelphia conceived Sailor Jerry Spiced Rum, its 92 proof was one of several points of difference from category leader Captain Morgan, along with price and flavor profile. “Sailor Jerry has a really interesting unique story and all the different parts add up to the bigger picture. We were always intrigued by the story of high-proof rum and navy rum. We combined that with Sailor Jerry the person and reflected that research in a more manly, stronger proof,” says Grasse.

Avoiding Pitfalls

Now, the category seems to be bordering on an obsession of successively high proof launches: Blackheart Spiced Rum is 93 proof, The Kraken is 94 proof, while Captain Morgan offers a 100 proof Spiced Rum and Admiral Nelson has introduced a 101 proof product.

“There is an arms race with new entries in spiced rum and higher proof,’ says Grasse. “It risks becoming a gimmick and I think that is dangerous because the industry can get its arm slapped, like a Four Loko situation.”

Indeed, the proliferation of high-proof spirits carries the seeds of its own peril as some states are taking notice of extremely high-proof products and their impact. Several already have proof bans in place, including Ohio (bans 151), Minnesota (bans above 160), California (bans above 153) and Florida (bans above 153). A 2010 study the Iowa Alcoholic Beverages  Commission also looked at options for limiting high-proof alcohol sales, including eliminating alcohol sales above 151 proof or limiting sizes of high proof products.

These signs of pushback suggest that suppliers, marketers and re-sellers alike need to be mindful of image. Emphasis at all three tiers needs to be on character and craftsmanship, not strength alone. Coupled with consumer education, higher proof can mean greater flavor, more diversity, new usage and superior cocktails, provided the products rely on more than potency in their message.

Merlot, The Comeback Kid: With Suppliers Pushed to Recast Its Image, Merlot is Still a Force

Posted on | January 3, 2012   Bookmark and Share
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Last fall, director Alexander Payne finally released a new movie, The Descendants. It’s about Hawaii, which was a relief to wine producers everywhere. Payne’s last movie was Sideways (2004); in that film, one line of dialogue from one character changed some people’s perception of Merlot overnight.

But the “Sideways effect,” though real, was always overstated. California Merlot sales rose 5.2% between 2005 and 2009, according to Impact Databank—though all wine sales rose 18.2% during the
same period.

That said, Merlot is still America’s third-favorite grape, responsible for 12.4% of all varietal-wine sales, according to Impact Databank. Pinot Grigio has roared up into fourth, yet at 7.8%, it’s still far back of Merlot. And there’s still more than 2.5 times as much Merlot sold in this country as Pinot Noir. However, there are plenty of stores that simply can’t sell
much Merlot.

Easy to Drink, Tougher to Sell

“Merlot. It sucks,” says Wilfred Wong, cellarmaster for Beverages & More. “People are so anti-Merlot-ish. We had a wine that we produced just for us. Under the Merlot name, it was not very popular at all. We renamed it without calling it Merlot, and then it sold.”

There seem to be three key factors in Merlot sales: price, brand and region (as in where you are, not where the Merlot is from).

Price is most important. Below $20, Merlot seems to be selling as well as ever. E. & J. Gallo Winery introduced Red Rock Merlot in 2006 and it has taken off quickly, growing to a 106,000-case brand with the 2009 vintage, which has a $13 SRP. Red Rock’s success seems not tied to region at all; a company spokesperson says it sells best on both coasts and in Illinois and Texas—essentially where the most wine drinkers are.

Above $20, having an established brand is crucial—and it may help to not be in a coastal “elitist” city. “Merlot is pretty strong for us,” says Justin Vann, manager of a Central Market in Houston. “At least 25% of our California red sales are Merlot. And to put it in perspective, we have about 300 different Merlots. But there are maybe five of the expensive brands that are doing well. The others are gathering dust.”

Vann came to Central Market from a high-end steakhouse and says, “The high-alcohol Merlots, those are going down a little bit. We do a ton of business with Nickel and Nickel. We can’t keep that on the shelf. Duckhorn and Nickel and Nickel are my two big ones.”

Carol Reber, chief marketing officer for Duckhorn, says despite popular perception, sales of over-$20 Merlots are actually up nationwide by 6.5% over the last 52 weeks. “Merlot sells more than Zinfandel and Syrah combined in the over-$20 price point,” she points out.

And Merlot, once the king of by-the-glass buys, is beginning to reassert itself among the cognoscenti, says Carol Teich, assistant beverage director of the three-state Napa Valley Grille restaurant chain. “We offer St. Francis Merlot as our lower price point at $11 a glass all the way to $17 a glass by Peju,” Teich says. “The mid-priced Merlot at $14 a glass by Sterling Vineyards is our best seller. We are happy Merlot is back.”

Replanting and Recalibrating

Doug Shafer, president of Shafer Vineyards, says his brand’s sales never stopped, but they did slow down. “We’ve always been around eight or nine thousand cases and it stayed there,” Shafer recalls. “Instead of selling out in nine or ten months, it was taking 12 or 13 months. But it never got to a point where it stopped selling. And now it has picked back up. “I talk to a lot of steakhouse guys and they’ve said Merlot is doing well because the guys on expense accounts. They can’t buy wines over $100 sometimes now, and they can get a really good Merlot for $80,” Shafer says. “All they want is a really good wine. Merlot fills the bill.”

Shafer was one of many people to say that the style of Merlot has changed for the better since the pre-Sideways days. Today, California has nearly 7,000 fewer acres of Merlot than it did in 2004, a 13% drop, according to the USDA. Some hot weather counties like Madera (-31%) and San Joaquin (-11%) have grafted over to other varieties, which is good because indifferently grown Merlot was largely responsible for its bad reputation.

“The whole bashing of Merlot really helped the varietal,” Shafer asserts. “All those negociants buying Merlot from all those bad spots—weedy, bad wines—they’ve all gone away. It was a short-term tough deal. Long term, great for the variety.”

It should be noted, however, that San Joaquin County, in the hot Central Valley, still has more Merlot planted than any other county in the state.

Surprisingly, Napa (-10%) and Sonoma (-17%) counties have also dropped in Merlot acreage since 2004, which is a reflection of two things: the big money from there is in Cabernet Sauvignon, and Merlot takes more work to sell.

“We’ve been having modest growth in Merlot since the end of ’08,” says Peter Mondavi Jr., whose family owns Charles Krug Winery. “But it’s definitely not an easy sell.”

Mondavi notes something Duckhorn and Shafer would agree with: that the style of Merlot Charles Krug makes—very Cabernet-like—is a big help. Charles Krug has Merlot vineyards in St. Helena, Yountville and Carneros, and is able to blend each vintage differently to keep the bigger, heavier style consistent.

“In Carneros, you get a little more hang time so it gives you more intensity of fruit,” Mondavi says. “I wouldn’t say it gives you a great vintage every year. It’s on the margin sometimes, but most of the world’s great wine regions are on the margin. Fortunately we do have vineyards in the warmer parts of the valley.”

How does Charles Krug’s sales staff convince skeptical buyers? “They pop the cork,” according to Mondavi. “There’s no substitute for popping the cork. This happens to me all the time: ‘I don’t have a place for Merlot.’ Well, just try it.”

Merlot By Any Other Name

To be fair, many skeptical wine buyers are just speaking for their customers who haven’t gotten past Sideways.

Jennifer Frank is co-owner of California Wine Merchants in lower Manhattan’s Financial District. The store sells 95% California wine, yet Frank says, “When we first opened, nobody wanted anything to do with Merlot. As a California store, we had to represent it, but it was a really tough sell. It might be a New York thing. It’s easier when it’s disguised in a Bordeaux blend.”

Frank says she holds tastings every Friday night and that has helped to change some customers’ minds. But she says she still has better results selling higher-end Merlot-based wines like Blackbird that don’t say “Merlot” on the label.

“Blackbird is really good wine. People love it,” she says. “It’s kind of the same thing for us with Syrah, which is a tough sell, but as soon as it’s part of a Rhône blend, they’re interested.”

Beverages & More’s Wong agrees with Frank: proprietary names sell better in his stores. Wong says the new trendy red varietal is Malbec. But a look at the USDA’s California Grape Acreage report quickly quashes any thoughts that it will replace Merlot anytime soon in California. There are only 1,600 acres of Malbec planted in the entire state. Nine separate counties have more than that much Merlot.

“The hit that Merlot took is history,” says wine industry analyst Vic Motto, CEO of Global Wine Partners. “When you’re looking at premium Merlot, it seems to be doing fine.”

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