Beverage Industry

Industry Issues

June 1, 2005

Court Lets Winemakers Expand Shipments
In a much-anticipated ruling, the U.S. Supreme Court last month sided with winemakers, striking down laws in Michigan and New York that banned shipments from out-of-state companies. The five-to-four ruling said state laws that banned direct shipments from out-of-state wineries, but allowed them for in-state wineries was unconstitutional.
The case pitted the Commerce Clause of the U.S. Constitution against the 21st Amendment, which gives each state the right to regulate the sale and distribution of alcohol beverages within its borders. It also represented a battle between small winemakers who were in favor of direct shipments against wholesale companies that benefit from the three-tier distribution system. Under the court’s ruling, states still could ban direct shipments altogether, but they must apply the same rules to out-of-state and in-state companies.
Soft drink industry loses a veteran
Longtime soft drink executive Sidney Mudd died early this month in New Rochelle, N.Y. He was 88. Mudd had a more than 45 year career in beverages, including 43 years with 7 Up bottler Joyce Beverages, retiring as president of the company in 1984. He also served as president of the National Soft Drink Association from 1974 to 1976, and director of Keep American Beautiful.
Pernod is step closer to Allied deal
Pernod Ricard, Paris, has tightened its lead in the race to acquire Allied Domecq, with the announcement that London’s Diageo plc has agreed to purchase Bushmills Whiskey and the option to acquire Montana New Zealand wines in an exclusive agreement. The transactions are conditional on the completion of Pernod Ricard’s acquisition of Allied Domecq, and Diageo has agreed to not enter into discussions with any third party bidding for Allied.
The expected purchase price of Bushmills is approximately 295 million euro, and 469 million euro for the Montana wines. If the options are exercised, they are expected to close by the end of 2005 or early 2006.
Pepsi signs with Metromedia
Metromedia Restaurant Group, Dallas, has signed Pepsi-Cola to a multi-year contract as the official refreshment beverage supplier to more than 800 restaurants such as Ponderosa and Bonanza Steakhouses, Bennigan's and Steak & Ale restaurants.
This new partnership will add Bennigan's and Steak and Ale to the long-standing relationship Pepsi has enjoyed with the Ponderosa and Bonanza Steakhouses, and as part of the agreement, the restaurants will serve a complete line-up of Pepsi-Cola's fountain beverage products. BI
Oxygen takes water up a notch
West Windsor, N.J.-based Power-Water USA  formed as a water technology systems and beverage company. PowerWater owns the rights, title and interest in a proprietary design to produce pure distilled oxygenated water.
The company owns a process that infuses high-grade oxygen molecules into distilled water, which produces PowerWater. The company says the unique process manufacturers one of the highest oxygen content and clean- tasting bottled waters available.
California leads wine growth
Domestic wines are the overall winners in table wine growth, but Australian Yellow Tail is the top earner, according to Information Resources Inc.’s first  Table Wine Trendsetters Ranking. The study pinpoints the Top 25 most influential table wine brands based on volume growth, share of segment trends, merchandising effectiveness, front-line pricing stability, profitability, distribution gains, incremental sales, and sales velocity growth.
According to the report, California vintners are making a comeback through the purchase of brands or joint venture brands with Australian winemakers, the creation of new brands at different prices to compete with imports, and new, more relevant consumer packaging.
Key trends that emerged include:
 An increase in merchandising support appeared to contribute to the success of the Top 25 brands.
 15 of the Top 25 brands are domestic table wines from California.
 Imported table wine brands held 7 of the 25 spots, with Australia as the No. 1 import country of origin with three brands.
 The majority of brands (84 percent) are premium priced at $5.50 and above, while no brands in the $2.99 and below segment made the ranking.
 All table wine trendsetter brands grew by double digits or more in dollars over the 52 week period and 21 of 25 brands grew by double digits in volume.
 Nearly all (24 out of 25) brands increased their presence at retail with an increase in average items per store and increased distribution.
To qualify for the study, brands had to meet a minimum requirement of 100,000 9-liter cases sold.
“The wine market is incredibly dynamic and today’s winemakers are taking product development, marketing and retail execution to the edge of the envelope,” said Bump Williams, executive vice president and general manager, global consulting, beverage alcohol practice at IRI. “The brands on this year’s Top 25 have put traditional thinking to the wayside and delivered breakout performances through new and innovative thinking.”
Top 25 table wine trendsetters
RankTable wine brand
1Yellow Tail
2Mirassou
3Barefoot
4Sterling Vintners Collection
5Smoking Loon
6R H Phillips Vineyard
7Ravenswood Vintners Blend
8Francis Coppola
9Leaping Horse
10Crane Lake
11Columbia Crest
12Bella Sera
13Blackstone
14Alice White
15Schmitt Sohne
16Century Cellars By BV
17Bogle Vineyards
18Covey Run
19Black Swan
20Concha Y Toro Frontera
21J Lohr
22Estancia
23Louis Jadot
24Chateau Ste Michelle
25Foxhorn
Go figure
5.2
Millions of liters of wine exported from New Zealand in March 2005, the largest amount ever shipped in one month, according to New Zealand Winegrowers. That represents a 73 percent increase over the same period a year ago.
10
Percent demand for organic milk that is greater than the supply, according to the Organic Trade Association. Traditional supermarkets are experiencing greater shortages than local stores despite the price differences between organic and regular milk, the association reports.
33
Percent of Spanish brewer Mahou SA Groupe Danone intends to sell for 600 euro. Mahou was the last of Danone’s brewing interests and follows the sale of breweries in France, Belgium and Italy.
51
Percent of consumers who preferred store brands in a 10-city taste test conducted by Meyers Research Center for the Private Label Manufacturers Association. The test compared products in 12 categories, including orange juice, coffee, cookies, iced tea, cola, cereal, potatoes au gratin, ice cream, pizza, chicken nuggets and frozen broccoli.
74
Percent of health club members who also regularly go to bars and nightclubs, according to the Health Club Panel Network. Health club members also are 60-94 percent more likely to drink alcohol beverages – 60 percent more likely to drink vodka, 64 percent rum, 77 percent imported beer or tequila and 94 percent super-premium domestic beer – than the general population.
175
Number of products marketed last year as “low-glycemic” vs. two in 1999, according to Productscan Online. However Productscan’s Tom Vierhile predicts the glycemic index is too complex to be the next big diet fad. “Most American consumers never learned how to program their VCRs,” he says. “So why would they bother paying attention to their glycemic indexes?”