Industry issues

January 1, 2008
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Beverage, retail associations fight Chicago bottled water tax
The International Bottled Water Association, the Illinois Retail Merchants Association, the Illinois Food Retailers Association and the American Beverage Association filed a lawsuit on Friday to overturn Chicago’s new bottled water tax. The first-of-its-kind tax went into effect Jan. 1 and adds 5 cents per container to bottled water sales. According to reports, the tax is intended to address environmental concerns and is hoped to raise about $10.5 million.
The associations argue that the ordinance unlawfully taxes a food product under Illinois law. In addition, they say the Illinois state constitution requires tax uniformity, meaning that a specific product cannot be taxed when other similar products are not, and that the money raised actually will be used for general revenue purposes rather than environmental causes.
“The Chicago bottled water tax is a bad idea for many reasons,” said IBWA President and Chief Executive Officer Joe Doss in a statement. “It is both unlawful and in violation of [the] state’s constitution and will significantly increase the cost of this healthy, safe product.”
“We're going to stand up for our customers, both retailers and consumers who are being forced to pay a tax on a healthy product like bottled water,” added Susan Neely, president of the American Beverage Association, in a statement. “We're not just going to take a tax like this without raising a challenge. It’s disconcerting that government spending is leading government officials to start taxing products that are good for you simply to cover their budget deficits. Like most Americans, we're confident Chicagoans are tired of being taxed for every facet of their life, including drinking more water.”
Republic, Capital Group join forces
Republic National Distributing Co., Atlanta, and the Capital Group of South Carolina are entering into a 50/50 joint venture to create Republic National Distributing Co. (RNDC) of South Carolina. The new company will be based in Columbia, S.C.
RNDC is the second-largest distributor of premium wine and spirits in the United States, with operations in 17 states and Washington, D.C. The Capital Group, employs 290 people and has subsidiaries in West Columbia, Easley, Myrtle Beach and North Charleston, S.C.
Peter Fawcett has been named chief executive officer for the new company and Charlie Bradford, who has been the RNDC state president in South Carolina, was selected as president.
PBG adds Batavia bottling group
The Pepsi Bottling Group, Somers, N.Y., plans to acquire Pepsi-Cola Batavia Bottling Corp., a family owned and operated business in Batavia, N.Y.
Pepsi-Cola Batavia serves New York’s Genesee, Orleans and Wyoming counties, along with parts of Livingston, Alleghany and Cattaraugus counties. It was founded in 1890 and is currently owned by Thomas and John Houseknecht. The Houseknecht family will continue to own and operate Loose Ends Vending Inc., an affiliated company. The transaction is expected to close during the first quarter of 2008. Terms of the transaction were not disclosed.
Miller to test craft-style ‘Lites’
Miller Brewing Co. will begin testing new craft-style light beers in February as part of the Miller Lite Brewers Collection. The company says consumers in Minneapolis, San Diego, Baltimore and Charlotte, N.C., will be the first to sample blonde, amber and wheat styles in the new collection.
Light beers are the largest-selling beer category in the United States, but to date, are only a small part of the craft and import segments. Sam Adams Light and Heineken Premium Light are notable exceptions, and will likely be the new line’s top competition.
“The brewer who can provide a more refreshing and drinkable craft style can stake out a whole new niche in the market,” Randy Ransom, Miller chief marketing officer, said in a statement. “That’s what we intend to do.”
The company says the new beers capitalize on three current beer trends: the popularity of light beer, a desire for more variety and the “premiumization” of the category. The line will be priced between mainstream light beers and craft beers.
Beam plant receives safety award
Beam Global Spirits & Wine’s Clermont, Ky., plant was awarded the 2007 Governor’s Safety and Health Award. According to the company, employees at the plant have worked 779,525 hours without a “lost-time” injury or illness. Corden Porter, deputy commissioner of the Kentucky Department of Labor, presented the award to company officials and employees.
"Health and safety are top priorities for our organization so we are grateful that the Kentucky Department of Labor recognizes and rewards their importance,” said Jim LeTourneau, manager of the Clermont plant, in a statement. “We are honored and proud to receive this award which gives special recognition to our plant and to our employees for outstanding safety and health performance. Each and every one of our employees deserves recognition for this accomplishment.”
Beam’s Booker Noe Plant also received the safety award in April.
New York city touts water quality
The city of Syracuse, N.Y., has launched a unique marketing campaign to promote the city as a prime manufacturing location based on the quality of its water. Greg Hitchin, of the Syracuse Economic Growth Council says the campaign, which is designed to market the new Clay Business Park, highlights the fact that the area has access to 8 million gallons per day of high-quality, low-priced water from Lake Ontario. “For a beverage or food-processing company, where water is vital to the manufacturing process, this is as good as it gets,” Hitchin says.
The marketing effort initially was targeted toward the food and beverage industry with ads and web banners, and will also include direct mail and additional advertising to site consultants and the corporate real estate trade.
Nightclub & Bar Show to become ‘Hub of Hospitality’
The Nightclub & Bar Convention and Trade Show this year teams with the International Restaurant Show, HotelWorld Expo & Conference and the International Coffee and Tea Expo as part of International Hospitality Week, Feb. 24-27, 2008 at the Las Vegas Convention Center. Show organizers say this year’s event will feature new product launches, a new demo stage on the show floor that will feature food and wine pairings, an AAMA Coin-Op pavilion and a series of Maker’s Mark/Small Batch Bourbon Classroom Tastings. In addition, Tuesday Feb. 26 will offer the “Shake it Up” battle of the mixologists in which contestants will present original recipes to be judged by a panel of leading mixologists.
Delivering keynote addresses during the show will be Hamish Dodds, president and chief executive officer at Hard Rock Café Worldwide; G.J. Hart, president and chief executive officer at Texas Roadhouse restaurants; John McDonnell, chief operating officer and executive vice president at the Patron Spirits Co.; Peter H. Cressy, president and chief executive officer at the Distilled Spirits Council of the United States Inc.; and Richard Rivera, chairman of the board of the National Restaurant Association.
In addition, six pre-show workshops will be held on Feb. 24, including:
Jon Taffer’s Marketing Dynamics 2008: As a return presenter, show organizers say Taffer’s approach to filling a restaurant or bar are legendary. His strategy includes "Four Walls Marketing," Dynamic Human Dynamics, and Reaction Management, Promotion and Marketing.
Building Brands, Driving Profits: Mike Ginley, president of Next Level Marketing, will share highlights of his custom on-premise research findings on what today’s on-premise beverage consumers want and how to best influence their purchase behavior. He will also provide information on how to develop and execute cutting-edge drink menus.
Promo Idea Exchange: Properly executed promotions are the topic of discussion in this open-forum workshop led by Jonathan Ressler, an on-premise veteran. The session will take operators step-by-step through planning, executing and evaluating a successful promotion, and allow them to swap profitable ideas with business experts.
Liquor Liability Boot Camp: Broken into four parts, this five-hour Basic Training program will feature expert panels, including an insurance company panel, an attorney's panel and an expert witness panel, and will focus on being proactive regarding lawsuits.
The Art of Mixology: Mixologist Tony Abou-Ganim and a panel of mixologist from around the world share insight on cocktail development.
Back of the House Tours: A VIP view of some of Las Vegas' most profitable properties. Get the inside scoop from their operations teams as you see first-hand how they make these hotels, casinos, restaurants, nightclubs and bars work together.
As part of International Hospitality Week, the show also will take advantage of events from the other participants, including the International Restaurant Show’s 9th Annual Las Vegas Culinary Challenge, the Southwest Regional Barista Competition at the International Coffee & Tea Expo, and the International Star Chef Challenge. For more information, or to register for the show, visit www.nightclub.com .
Van Stolk steps aside at Jones
Jones Soda Co., Seattle, announced Chairman and Chief Executive Officer Peter van Stolk has given up those titles as of the end of last month. Board members Scott Bedbury and Steve Jones have taken on the positions of chairman and chief executive officer, respectively, while the company searches for van Stolk’s replacement. Van Stolk will remain on the company’s board of directors.
“As I stated earlier this year, I planned to step down at the end of 2007,” van Stolk said in a statement. “I've worked hard this past year to lay the foundation for future growth with an increased product line and national distribution at the retail level. Recruiting a strong and seasoned CEO is the next step in that process, and utilizing the experience of Scott and Steve in that effort will help ensure a successful outcome. During the coming weeks, I will be focused on the transition and look forward to working with the board to continue to grow the company to bring it to its full potential.”
New online rules for spirits
The Distilled Spirits Council of the United States (DISCUS), Washington, D.C., announced new industrywide buying guidelines for placing online advertising and marketing materials on third-party Web sites to meet the industry’s 70 percent 21 years of age and older demographic standard.
“With online communication channels becoming increasingly present in today’s media landscape, this new Internet guideline will further assist beverage alcohol companies in meeting the code’s standard when using this rapidly evolving marketing tool,” says Distilled Spirits Council President Peter Cressy. “Over the decades, the spirits industry’s advertising code has evolved to meet the challenges of new media technology.”
The guideline provides standards for the appropriate use of Internet demographic measurement tools, including syndicated data sources; independent demographic surveys; and Web site “register user” databases. It will apply to all paid and unpaid placements under the control of the advertiser, including ads on third-party Web sites, video advertisements, audio mentions, Internet banners, pop-ups, sponsorships, user-generated content (including blogs) and “limited edition” Web sites.
GO FIGURE
2
Estimated percentage increase in spirits sales in 2007, according to an Associated Press report.
4
Number of beverage categories that made ACNielsen’s list of Top 10 Consumer Packaged Goods Sold in U.S. Retail Stores. Carbonated soft drinks were No. 1 on the list, refrigerated milk No. 2, bottled water No. 7 and light beer No. 9.
40
Percent potential drop in Colorado’s wine grape harvest in 2007 vs. the state’s record harvest of 1,515 tons in 2006, as reported by Rocky Mountain News. Unusually cold weather took a toll on the grapes, and the losses could climb as high as 50 percent before the final number is tallied.
41
Percent of survey respondents who associated “natural,” “organic” and “sustainable” product labels with “high quality,” according to Technomic Information Services. Seventy-one percent said such items were more healthful than conventional products, but only 18 percent said they were a good value.
75
Years since V8 juice first hit the market. The product celebrates its anniversary this year, and parent company Campbell Soup suggests the brand was ahead of its time, given that increasing vegetable consumption is a top health and wellness priority today.
3,123
Number of product placements by Coca-Cola in 2007 broadcast network TV, according to ACNielsen. That’s more than twice as many placements as the next highest company/category, which was 24-Hour Fitness Centers-Clubs.

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