2019 Market Update | day 73

Posted in Beer, Industry, Spirits, Wine.

Premium spirits to boost global consumption

The soaring popularity of whisky, gin and flavoured spirits is forecasted to enable global spirits consumption to reach a value of US$366 billion in 2022, according to a new report from Vinexpo and IWSR.

This marks a value increase of 14.9% between from 2017-2022, with a compound annual growth rate (CAGR) of 2.8% for the same period. Volume spirits consumption is estimated to hit 3.2 billion nine-litre cases, a 1.2% rise from 2017-2022, with a CAGR of 0.2%.

The data has been released as part of the latest Vinexpo/IWSR wine and spirits report.

Insight from the report shows that ‘local’ spirits categories such as baijiu account for nearly 90% of global spirits consumption, but “international spirits are eroding this share”, particularly in the Asia Pacific region.

Between 2017 and 2022, consumption of imported spirits will grow by 12% to reach 399 million cases globally.

In terms of categories, IWSR and Vinexpo predict that all premium-plus categories – except vodka – will grow over the next five years. In particular, whisky, gin and flavoured spirits are expected to make “big advances”, hitting 65.9m cases, 9.5m cases, and 2.4m cases respectively.

As the ‘drinking less but better’ trend continues, value growth is expected to significantly outperform volume. However, according to IWSR, consumption of pure alcohol is set to rise, suggesting drinkers are moving from wine and beer into spirits.

For wine, value growth is also forecast to outperform volume across all regions, reaching US$207bn by 2022 (2.7bn cases).

The IWSR/Vinexpo research predicts that the US will “inch forward” as the world’s most valuable wine market, while China will overtake France as the second most valuable market by 2020.

UK findings

The report also sheds some light on the UK market for spirits, which is set to record “steady growth” in the five years to 2022.

Gin’s “phenomenal rise” is forecast to continue, boosted by pink variants, and will enable the category to grow by 12.8% to 8.5m cases as it takes share from vodka, which is expected to reach 7.9m cases.

Mezcal is “likely to grow faster than Tequila”, the report claims, while “top-end” blended Scotch whiskies are expected to benefit from producers’ efforts to change consumer perceptions.

Industry members can find out more about the trends affecting the global spirits industry at the upcoming Vinexpo Bordeaux show, which will take place on 13-16 May 2019.

Constellation Brands (STZ) | Neutral – Updating Our Model; But Still Subject to a Lot of Change

  • CITI
  • Wendy Nicholson
  • 14 Mar 2019 

We Are Lowering 4Q and Full-Year Fiscal 2019 EPS Estimates

We are lowering our FY19 EPS estimate to $9.16 (+5% YoY). Of note, STZ’s FY19 EPS guidance for $9.20-$9.30, as offered in January 2019, excluded any impact of the Canopy Growth equity earnings. At CAGNY, STZ offered its preliminary expectation that the Canopy Growth results would likely represent a $0.10 headwind to STZ’s fiscal 4Q19 results. This is the entire reason for our 4Q estimate change today.

We Are Also Lowering Our Fiscal 2020 and 2021 EPS Estimates

There are a ton of moving pieces to the STZ story right now, and we look forward to STZ’s 4Q19 results and conference call on Thursday, April 4 to get an update on many of them. For now, our FY20 and FY21 EPS estimates become $9.45 (+3% YoY) and $10.67 (+13% YoY), respectively. As such, our new CY20 EPS estimate is $10.34 (+13% YoY). Embedded in our FY20 estimate is our forecast for (i) 7% sales growth and a 39% operating margin for beer, (ii) 1% sales growth and a 27% operating margin for wine, i.e. no asset sales, (iii) $451 mm in interest expense, up from $389 mm in FY19, (iv) $2 mm in equity losses, in contrast to $26 mm in equity income in FY19, (v) a 19% tax rate, and (vi) ~1% fewer shares outstanding. We acknowledge that our estimates are subject to significant change based on lots of factors, including potentially higher spending to drive growth in the core beer business, the timing of and proceeds from STZ’s sale of part of its wine business, as well as the equity income or losses to be recorded by STZ as a result of its investment in Canopy Growth.

Rolling Forward Valuation to CY20 (Target Price Had Been Based on CY19 Previously); Maintaining Neutral Rating

Given our CY20 EPS estimate of $10.34, the ~15x market multiple based upon the Street’s forecast for S&P 500 2020 EPS, and our belief that STZ should trade at a 20% premium to the market (no change to our target valuation), we derive our $186 target price. With an ETR of less than 15%, we maintain our Neutral rating.

Neutral

US$170.66

Expected share price return

9.0%

Target price

US$186.00

Investment strategy

We rate the shares of STZ Neutral. We very much like STZ’s strong portfolio of leading brands, and welcome STZ’s initiatives to improve their results by: (i) taking over full control of the Crown Imports business following ABI’s purchase of Modelo, (ii) driving continued depletion growth through new brand and product introductions, and (iii) selectively adding accretive, margin-enhancing brands to its existing portfolio of alcoholic beverages. While our enthusiasm for the business had been somewhat tempered by the weak results seen over the last few years for the company’s wine business, having control of the beer business should prove to be highly accretive and drive an acceleration in earnings growth. That said, we believe this good news is largely priced into the stock.

Valuation

STZ has traded at an average 31% premium to the S&P 500 over the past five years, ranging from a 7% premium to a 77% premium. Given our CY20 EPS estimate of $10.34, the ~15x market multiple based upon the Street’s forecast for S&P 500 2020 EPS, and our belief that STZ should trade at a 20% premium to the market, we derive our $186 target price.

Risks

While STZ is a leader in the U.S. wine industry, the company’s stock has historically been fairly volatile, driven we believe by STZ’s generally inconsistent sales and earnings growth, reflecting the impacts of acquisitions and divestitures and multiple restructuring programs.

Potential reasons the stock could materially underperform our target price include: (i) U.S. consumer weakness and/or consumer trade-down within STZ’s portfolio, (ii) disruption from STZ’s ongoing distributor consolidation, (iii) significant increases in import/export duties or other taxes on alcoholic beverages, and (iv) sizeable increases in STZ’s input costs.

In citing reasons why the stock could materially outperform our target price, if our sales and EPS growth estimates proved too conservative, STZ’s outperformance could help boost the stock price.

Davide Campari (CPR IM) – Notes from the Road

  • Jefferies
  • Edward Mundy, ACA, Elsa Hannar 
  • March 14, 2019

Key Takeaway

Time spent recently with management confirms our view that CPR is a well-run, focused family controlled business with a clear strategy combining org growth through brand building with value-accretive M&A. Growth outlook, underpinned by Aperol, remains favourable and GM expansion from positive sales mix should provide resources to reinvest behind brand building. Whilst there is a lot to like, shares are not cheap at 32.9x 2020 PE.

Insights 

Aperol – outlook remains attractive 

Whilst we acknowledge a number of growth engines at Campari, Aperol is one of the strongest growth drivers for the business, accounting for nearly 70% of group F18 growth. Fundamentals appear solid, with growth broad based; the three-stage model (recruitment/deseasonalisation/new usage occasions) is proven and working. Refer to our report for Aperol growth by market and key sensitivities.

Aperol – colour by key market 

Core markets are growing 15-20% (Italy/Germany) given new usage occasions and deseasonalisation; high potential markets are growing 25-70% (US, UK, Spain, France, Australia); seeding markets are growing high DD (Netherlands, Scandi, Czech, Poland, Latam). In the US, focus to date has been a few cities on the coasts (eg NYC, Miami, LA, San Fran, San Diego); 2019 priorities are to continue with existing markets and explore new markets (eg Las Vegas or Chicago).

Other brands 

The negroni trend remains strong; in some markets, such as Italy, Aperol is acting as a recruitment tool for the Campari brand. The outlook for Wild Turkey remains favourable, with co overindexing to cocktails such as the Old Fashioned / Manhattan vs simple mix bourbon and cola. Grand Marnier turnaround is on-track; more expensive aged variants will become increasingly available. Skyy US destock should end 2Q/3Q. Espolon and Bulldog are performing well.

Margin outlook – 50bps EBIT growth sustainable 

Co reiterates guidance of 50bps organic margin expansion in F19. Co should benefit from healthy GM expansion from positive sales mix, offset by investments in brand building and commercial initiatives. Co is also looking to drive efficiencies through procurement (non-COGS related), net revenue management, IT and finance; however, savings will be reinvested behind growth.

M&A – company more selective than historically 

M&A has been highly focused, with a preference for buying dusty, unloved brands rather than trophy assets. We estimate acquisition firepower of c?1bn (to 3.5x net debt to EBITDA vs F18 2x) which offers firepower c.?1bn (Grand Marnier ?684m). We believe that co is more selective than historically; brand needs to be the right geography, price positioning with an attractive on-premise skew. On disposals, co has already sold a number of non-core assets; over time we see potential for more disposals or reducing exposure to lower margin agency brands (c5% of sales).

3 Biggest Wineries Drag Down CA Wine Volumes

  • Wine & Spirits Daily
  • March 14, 2019

Total wine volumes from domestic wineries were up just 1.3% in the US in 2018. “Overall it’s a softer wine market than we’re used to,” said Gomberg, Fredrikson & Associates editor and BW166 founder Jon Moramarco during GFA’s annual review webinar today.

The lion’s share of US wine comes from California where volumes were up 1.1% for the year. But the three biggest wineries in California-Gallo, Wine Group and Constellation-are lagging behind the rest of the industry. Those three represent about 53% of total California wine volumes (down from 56.3% in 2017). 

Volumes from the top three were down nearly 5% in 2018, while volumes from other wineries in California were up almost 9% for the year.

What gives?

Jon said it’s largely due to the fact that the big suppliers play more in the low end (below $9). “When you look at the softness in the under $9 the big three really drive a lot of that market and control a lot of that market and that’s where they’re seeing declines,” he said. That’s exactly why Constellation is looking to offload its low-end brands [see WSD 02-21-2019].

GROKKING TWE’S ROUTE-TO-MARKET CHANGES. Jon said he’s been asked several times how Treasury Wine Estates is doing after its route-to-market shakeup. You’ll recall, TWE changed up 40% of its distributor network last year and now self-distributes for about 25% of its business in the US, including in California [see WSD 01-30-2018].

So far, it looks like they’ve been impacted the most in California. Volumes in the state were down more than 29% in 2018 and domestic shipments of their California wines were down 5%. Meanwhile, out of state volumes were up 3.1%.

Though Jon noted that TWE has also made some changes in what brands they’re focusing on and that it’s “hard to draw final conclusions from this.”

Stay tuned for more from the webinar, including private label stats, views on alternative packaging as well as the opportunities and challenges facing the industry.

MillerCoors Believes it Can Win the War Against A-B, Here’s How

  • Beer Business Daily
  • March 14, 2019

It didn’t take long for the corn talk to start at MillerCoors’ Distributor Convention in Tampa yesterday morning. We had our first corn reference about 15 seconds in. 

Chief Gavin Hattersley cracked a joke as he took the stage to kick things off, welcoming the crowd of 3,000 to MillerCoors’ “CORNvention.” It was one of many early morning wisecracks from Gavin. You could say he had a little spring in his step. 

He wasn’t the only one, the majority of people up on the big screen at MCDC seemed a little charged up. 

It was quite a contrast from the last time we saw MillerCoors brass up on stage – that was their abbreviated distributor meeting during NBWA in San Diego late last year. What explains the difference? Besides a new year and new CMO, Michelle St. Jacques, the only big event we can point to between now and then is CornGate. 

Indeed, Gavin sent his thanks to A-B. “Anheuser-Busch galvanized all of you and all of our employees across the country,” he told the crowd. 

While the attacks from A-B may have lit a fire in MillerCoors’ belly, Gavin insisted that they “will win in 2019 because of how we are working together, the actions that we take. Not just because of what [Anheuser-Busch] did to us.”

What are these “actions” that Gavin and company are taking? There’s three big ones the top brass emphasized throughout the meeting. 

1. Move Faster

2. Take More Risks

3. Connect Better with Consumers

Gavin claimed they’ve executed on all three of these so far in 2019.

“Do we have more work to do? Absolutely we do. Is the war that ABI started over? Not a chance. But what the past six weeks has shown, is that we can win when we move faster. We can win when we take more risks. We can win when we connect better with our consumers. What the past six weeks has shown, is when we do that, we can win the war.”

VAST MAJORITY OF CONSUMERS THINK BREWERIES LIKE AB INBEV AND HEINEKEN CAN’T MAKE CRAFT BEER

The vast majority of beer drinkers in the UK don’t believe that large-scale producers like AB InBev can make craft beer, according to a survey by the Society of Independent Brewers (SIBA).

The report, which said that 98% of consumers think a beer brewed by any major brewer can’t be considered craft, casts doubt on the marketing of smaller breweries that have been bought by or received investment from large-scale firms in recent years. Some 43% of the survey’s respondents said that a craft beer could only be made by a small brewery, while 42% said a craft brewer must be independent. This figure is actually down from 46% in a similar survey SIBA carried out in 2017.

SIBA’s craft beer report focused on the prevalence of large brewers either launching their own “crafty” products, such as Guinness’ Hop House 13 lager, or buying up smaller producers as more consumers shift away from mainstream lagers.

The integrity of the craft beer movement is a highly emotive subject within the brewing industry. Last summer, north London brewery Beavertown sold a 49% stake in its business to Heineken for £40 million, which would go towards a new state-of-the-art brewing facility as well as securing a brewpub at Tottenham Hotspur Stadium, a first for any independent brewery. After announcing the deal, several bottle shops decided to stop selling Beavertown’s beers, while other breweries also pulled out of the London producer’s upcoming beer festival, Beavertown Extravaganza.

“People are used to buying beers from across the UK in their favourite pub, bar or retailer, and for them it is the size and independence of that brewery which defines whether or not it is a craft beer.” Mike Benner, SIBA’s chief executive, said.

The survey, which was carried out last month, found that just 2% of consumers surveyed said that craft beer could be made by a global brewer.

Almost half of UK drinkers said they now prefer craft beer to mainstream lagers an ales in a survey carried out by Brewhouse & Kitchen in October last year, but depending on where they work, industry insiders have very different ideas on what it means to be “craft”.

However, SIBA allows members to carry an Assured Independent British Craft Brewer logo on its products, as long as the beer producer in question is “truly an independent brewer who is a sole trader, a partnership, a limited company or a public company but is not a subsidiary of a larger firm with attendant or other subsidiary brewing interests.”

“SIBA launched the ‘Assured Independent British Craft Brewer’ seal asa way of differentiating beer from truly independent craft brewers from the mass produced products of global brands – many of which are now being marketed as craft,” Benner said.

“This new research shows that if consumers were fully aware of what they were buying then they wouldn’t consider any beers from the global beer companies as craft, something which is hugely important for supporting and growing the independent beer market.”

In the US, the Brewer’s Association launched its own seal of independence in 2017. A string of independent brewing trade associations across Europe fighting back with their own independence brewers seals alongside SIBA, the UK industry body said.

Previously independent brewers that have been sold to global drinks giants :-

Fuller’s – bought by Asahi for £250m in 2019

Fourpure – bought by Lion in 2018

London Fields – bought by Carlsberg for about £1m in 2017

Lagunitas – Heineken completed takeover in 2017

Meantime – bought by SAB Miller for £50m, then sold to Asahi in 2016

Camden Town Brewery – sold to AB InBev for £85m in 2015

Goose Island – bought by ABInBev in 2011 for $40m

Sharp’s Doom Bar – owned by MolsonCoors since 2011

HEINEKEN OPENS FIRST $100M BREWERY IN MOZAMBIQUE

Heineken has opened its first brewery in Mozambique, representing a US$100 million (?85 million) investment in the African beer market.

Heineken has opened its first brewery in Mozambique following a US$100m investment.

Located in the province of Maputo, between the Marracuene and Manhiça districts, the brewery will have a production capacity of 0.8 million hectolitres.

It recently started to brew Txilar, a new beer specially made for Mozambican consumers made using local maize grown in Catandica district in the central province of Manica, and will also continue to produce international brands including Heineken, Amstel, Sagres and Strongbow.

With a GDP growth of 3.5% in 2018, Heineken believes that Mozambique’s socio-economic fundamentals are “encouraging”, with beer consumption currently at 10.5 litres per capita.

“We believe in Mozambique,” said Jean-François van Boxmeer, chairman of the executive board/CEO of Heineken N.V. “The population is young and vibrant, the middle-class is growing and living increasingly in cities, the economic perspectives are encouraging and the beer market has a great potential to grow. The construction of Heineken’s first brewery is a major step for the company’s presence in the country.”

Heineken began its move on Mozambique in late 2016, establishing a sales and marketing office there to import international brands including Heineken, Amstel, Sagres and Strongbow.

The brewery is currently employing 200 people, 96% of which are Mozambican, with the brewery also expected to support further indirect jobs through its entire value chain.

North Carolina: North Carolina Brewers, Wholesalers Reach Franchise Law Reform Compromise

North Carolina craft brewers and wholesalers have reached a compromise in a contentious years-long dispute over the state’s self-distribution and franchise laws.

After filing a lawsuit two years ago challenging the constitutionality of a state law requiring brewers who sell more than 25,000 barrels to forfeit self-distribution rights and sign with a wholesaler, Craft Freedom LLC – a trade group consisting of Olde Mecklenburg Brewery and NoDa Brewing Co. – has struck a deal with the North Carolina Beer & Wine Wholesalers Association that could create an additional brewer classification for “mid-sized independent breweries” selling fewer than 100,000 barrels annually.

Under the bipartisan Craft Beer Distribution & Modernization Act – introduced in the Senate (S.B. 246) on Wednesday and the House (H.B. 363) today – North Carolina breweries producing more than 25,000 barrels annually would not be required to sign with a wholesaler.

Currently, breweries that produce 25,000 barrels or less are allowed to self-distribute. Under the proposed legislation, the cap would increase to 50,000 barrels annually. Additionally, a company that exceeds the 50,000-barrel cap but sells fewer than 100,000 barrels would be allowed to self-distribute its first 50,000 barrels. Those companies would be required to work with a wholesaler for the remaining 50,000 barrels, however.

“Out of conflict has grown resolution to establish a framework that allows existing and new microbreweries to become economic engines for our state and provide a clear pathway to grow and prosper,” NoDa Brewing Company co-founder Suzie Ford said during a press conference Thursday.

North Carolina Beer & Wine Wholesalers Association executive director Tim Kent called the compromise “great news” for consumers, craft brewers, wholesalers and lawmakers.

“This agreement will essentially resolve a contentious issue that the General Assembly has had to deal with for about a dozen years,” he added.

In a press release, Olde Mecklenburg founder John Marrino said he believes Craft Freedom achieved its goal of modernizing state laws that now “give a variety of options to breweries of all sizes in all corners of the state.”

In May 2017, NoDa and Olde Mecklenburg, acting under the Craft Freedom LLC banner, filed a lawsuit alleging that the self-distribution cap and franchise laws that bind breweries into nearly unbreakable contracts with their wholesalers, were unconstitutional and “artificially suppressing” the craft brewing industry. The lawsuit was filed after lawmakers stripped provisions out of a bill that would have increased the self-distribution production cap to 200,000 barrels annually and allowed smaller brewers to more easily break their wholesaler contracts.

If passed, the Craft Beer Distribution & Modernization Act would signal the end of Craft Freedom’s lawsuit.

“This legislation would be basically the reconciliation of any differences that these parties have had,” Craft Freedom attorney Drew Erteschik said during the news conference.

Lawmakers as well as representatives from Craft Freedom and the N.C. Beer & Wine Wholesaler Association acknowledged Thursday that the lawsuit opened a dialogue between the parties that resulted in 23 months of negotiations and eventually the compromise bills.

“We’ve had an opportunity to talk to each other,” Kent said. “But more importantly, we’ve had an opportunity to listen to each other.”

Asked if wholesalers would miss out on sales as a result of the deal, Kent replied, “No, I don’t think so.”

Meanwhile, Ford said the proposal “opens up a lot of possibilities” for NoDa – which has not yet surpassed the 25,000-barrel threshold – to expand its business.

“We’ve never been anti-distributor,” she said. “They fulfill something that we can’t necessarily do. For us, we will be able to look at the whole state and really see what we’re going to do with our distribution partners.”

Speaking to Brewbound, she said the proposed law changes gives NoDa “tons of room to grow slowly and as we see fit” without taking on distributors.

Also included in the legislation is a provision that would allow beer companies producing fewer than 100,000 barrels annually to sell their offerings at their manufacturing facility as well as up to three affiliated retail outposts. Additionally, beer companies that distribute more than 25,000 barrels annually would be required to show “good cause” to terminate their distribution agreements.

Breweries that distribute up to 25,000 barrels annually would still be allowed to exit their distribution agreements without showing “good cause” by giving five day’s notice and paying “fair market value,” defined as “the highest dollar amount at which a seller would be willing to sell and a buyer willing to buy.”

The deal in North Carolina comes a month after the Texas Craft Brewers Guild, which represents the state’s nearly 300 craft breweries, and the Beer Alliance of Texas, a powerful wholesaler lobbying group, reached a “stakeholder agreement” that could potentially allow off-premise sales of up to two cases of beer (576 fl. oz.) per person, per day at the Lone Star State’s manufacturing breweries. Those sales would count against an existing 5,000-barrel cap for on-premise taproom sales.

Florida: Lawmakers Say Florida Alcohol Rules Need An Update

A number of bills that would make changes to Florida’s alcohol rules are moving through the legislature. But many of them make exceptions to the state’s three tier system that separates manufactures, distributors and vendors.

When it comes to alcohol, Rep. Holly Raschein (R-Key Largo) says Florida’s law need an update.

“I think that this bill today, we are updating prohibition era laws, we are opening up the free market, we are removing barriers for the little guys, the small businesses,” Raschein says

Raschein is behind a bill that would let craft distilleries ship their products out of state, offer sales at festivals and fairs and let distilleries get licensed as manufacturers as well as a distributors or exporters. Jeremy Craig runs the Copper Bottom craft distillery with his wife and parents.

“All we’re really trying to do is level the playing field. We really just want to be able to sell our products. We’re asked constantly, we’re just outside of Daytona Beach in Holly Hill Florida, we’re asked every day if we can ship our product out of state. Most of the people who come to our tasking room are tourists. Unfortunately, now with the regulations of baggage, most people can’t take a bottle back with them so we’re asked constantly if we can ship. The other thing that’s to our disadvantage is we can’t sell cocktails or any kind of mixed drinks,” Craig says.

Craig says letting craft distilleries do what other companies like craft breweries already do would help him grow his business, creating jobs and driving tourism. And Phil McDaniel with the St. Augustine distillery agrees. He says the changes in Raschein’s bill could also help to highlight Florida’s agriculture industry.

“Florida will one day be famous not only for our beautiful beaches and sunshine but also the wonderful rum that’s made from Florida sugar cane and the whiskey made from our wheat and corn,”McDaniel says.

But the measure is getting pushback from distributors and retailers who say there’s no reason to further interrupt the state’s three tier system, which separately licenses manufactures, distributors and retailers. Scott Dick represents ABC Liquor. Despite what some distillers say, he’s worried the measure won’t result in a level playing field.

“We can’t as retailers ship product out of state and we favor that restriction. However, if there is going to be lifting of restriction we ask that all retailers be treated the same and allow not only ABC but also the independent retailers to profit from that side of the business,” “Dick says.

Sen. Jeff Brandes (R-St. Petersburg) has a similar bill in the Senate. He says the changes to the three tier system will be minimal.

“Look if it was up to me we would get rid of the three tier system because it is an archaic prohibition era issue, but this doesn’t seek to do that. This seeks to allow craft brewers and craft wineries to implement,” Brandes says.

And Brandes says the overall impact on the state will be small because only a handful of craft distilleries are in operation. Palm Coast Republican Senator Travis Hutson says for him the issue is simple.

“Too many times a lot of say we’re free market principled, we’re for small business and then all the sudden an alcohol bill gets up and some of us get really weak kneed. You have to be for your principles, you have to be for what you campaigned on and I believe this bill does that,” Hutson says.

Brandes’ bill also increases allows wine to be sold in larger containers. Another with similar bill language in the House is also moving forward.

Women Wholesalers Share Workplace Strategies and Challenges

Panelists at a Women of the Vine & Spirits session discuss paths to success for women in the distributor tier

In Women in Wholesale: Taking Charge of Your Future, a workshop session held on March 12 at the Women of the Vine & Spirits Global Symposium at the Meritage Resort & Spa in Napa, California, Barbara Marti, the director of supply chain customer service at Southern Glazer’s in Miami, shared a story from when she was starting out in the workforce. Her Cuban-born father gave her some advice: Do what you’re told and don’t make waves-just be happy that you have a job. “Every time he said something like that,” said Marti, “I thought, ‘That’s not me.'”

Marti began her career in wine 27 years ago as a secretary at Southern Glazer’s, which was then Southern Wine & Spirits, and she soon discovered that the men in the office had an outlook that was similar to her father’s. “Back then, there was a lot of ‘Hey baby, how you doing? Can you make some copies for me?'” said Marti. “That’s all they thought I was good for-making copies and answering phones.”

Marti knew better. She did what she was told, but she also worked harder than anyone else in the office and offered to help her boss with whatever needed doing, just to make sure she was noticed for more than her copy-making ability. Her success story, as well as those of other women in the wholesale wine business, was the basis of the interactive workshop, which was hosted by the Women’s Leadership Council of the Wine & Spirits Wholesalers of America and moderated by Philana Bouvier, the senior vice president of new business development for Young’s Market in Tustin, California. On the panel with Marti were Hillary Wirtz, the director of diversity and inclusion at Breakthru Beverage Group in Chicago, and Jessica Cyr, the assistant vice president of sales operations at Martignetti Companies in Taunton, Massachusetts. The session invited participants to share both their challenges and their strategies for workplace empowerment.

Working hard to prove oneself in a male-dominated business was a recurring theme. Wirtz, who left a teaching job to join her family’s distribution company in 2011, had to find her own way when she started out in the business. “I had to develop my own reputation as Hillary,” she said, “and not just as a family member-and build my own network of guidance and support. I had to find great leaders to learn from.”

Now a leader in the company herself, Wirtz lives by three principles: perseverance, humility, and being comfortable with being uncomfortable. “I was never told that I couldn’t have a seat at the table or be part of the company,” she said, “but I think I was just conditioned that way. As I grew and evolved, there was an opportunity for me to break the mold and drive change.”

Embracing discomfort was an important element of Wirtz’s professional evolution. Rather than hunkering down in roles she excelled at, she challenged herself to take on other positions within the company, from sales representative to manager to community events and partnerships. “With each new role,” she said, “I was completely terrified, but I knew that stepping totally out of my comfort zone was good for me. It was the only way I was going to learn and grow.”

While the panelists acknowledged that roadblocks still exist for women in the wholesale business, they also emphasized that the climate is shifting-that women are not only getting a seat at the table but actively creating a more inclusive environment too.

“We’re under a lot of stress in this tier of the marketplace,” said Cyr, who emphasized that it is important for women to initiate “courageous conversations” at work to address issues like discrimination and move things forward. “We have a lot of opportunity to improve and change with the times.” To help empower women in the wholesale business, Cyr’s company now hosts the Women’s Beverage Alcohol Symposium in Massachusetts each year.

During the interactive part of the session, in which audience members shared their own stories and strategies, Stephanie Block of Republic National Distributing Company, headquartered in Grand Prairie, Texas, spoke about RNDC’s women’s leadership forum. “We have a very rigorous, two-year training program where we identify top female talent throughout our organization,” she said. “We have a robust training period, and not only do we network across the country with each other, we also make sure that the women are [getting] in front of our top leadership.”

Bouvier wrapped up the discussion with a challenge to the attendees. “We have three commitments we’d like you to make today,” she said. “Educate yourself and embrace things that are outside of your comfort zone. Find someone in your organization and make it a point to empower and encourage them.” And finally, she said, take the initiative to elevate yourself within your career and the company you work for. “Continue to be kind to yourself-we should always speak kindly of ourselves, to ourselves.”

Tina Caputo is a writer based in Northern California who covers wine, beer, food, and travel. She was formerly the editor in chief of Vineyard & Winery Management magazine, and her work has appeared in Wine Enthusiast, Visit California, Sonoma magazine, the San Francisco Chronicle, and many other publications. She also produces the podcast Winemakers Drinking Beer.

New Orleans: Sazerac preparing for opening of downtown facilities

  • City Business 
  • March 14, 2019

Developers of a downtown cocktail museum have unveiled a literal sign that it’s almost ready to open.

A 14-foot high LED sign illuminates the Sazerac House Homeplace at the corner of Canal and Magazine streets, where the New Orleans-based company in 2016 purchased two vacant buildings.

The museum, set to open this fall, will tell the history of the Sazerac as well as other original New Orleans brands. The 50,000-square-foot space will also have a gift shop and Sazerac company offices, with a projection of 60 employees eventually working there, 45 of which will be new positions.

The style of the sign is “reminiscent of the theaters and shops that were a signature feature of Canal Street during its heyday as the commercial hub of New Orleans,” a news release said.

Trapolin-Peer Architects, ASI Signage Innovators and Ryan Gootee General Contractors are working on the project.

The Sazerac Company has said it plans to keep as many of the buildings’ original design elements intact during the renovation, including wood floors, high ceilings, oversized windows and ornate support columns.

The company has projected 100,000 visitors in the museum’s first year of operation.

https://neworleanscitybusiness.com/blog/2019/03/14/sazerac-preparing-for-opening-of-downtown-facilities/

Fevertree Drinks PLC (FEVR.L) – Gin tailwinds to continue

  • Morgan Stanley
  • Richard Felton, CFA, Olivier Nicolai
  • March 15, 2019

S

tock Rating Overweight

Price Target 4,000p

Based on new analysis of spirits cycles, we expect the strong growth of gin in Fever-Tree’s main markets to continue, underpinning double-digit growth potential even in Fever-Tree’s most “mature” markets. We think Fever-Tree’s best-in-class growth and returns are sustainable. Stay Overweight. 

WHAT’S CHANGED?

Fevertree Drinks PLC (FEVR.L)

Price Target

From: 4,200.00p 

To: 4,000.00p 

We like Fever-Tree’s attractive growth profile and business model. As the best positioned player in premium mixers, in our view, Fever-Tree offers exposure to an attractive category that is underpenetrated and is driven by broader premiumisation trends across the spirits sector. Its asset light business model generates best-in-class ROIC, which we believe is sustainable. 

We expect growth to moderate and become more diversified. Between FY14-18e, the UK has delivered slightly over 60% of Fever-Tree’s growth. Moving forwards, we expect a more diversified growth profile, with an acceleration from the US, where in the last 12 months Fever-Tree upgraded its organisation (moved from agent model to setting up its own operations) and route to market (exclusive agreement with SGWS, the largest spirits distributor in the US). We are also encouraged by signs from Continental Europe which saw an acceleration in H2 18 and where the popularity of gin continues to spread. 

But in the UK, “mature” still means double digit growth. The UK is Fever-Tree’s most mature market, with a penetration rate of premium mixers >40%. We expect growth to moderate from 53% in FY18 to 15% in FY19e but still forecast another three years of double-digit growth as Fever-Tree benefits from the ongoing popularity of the gin category which, based on new analysis of historical spirits cycles, and underlying consumer trends, we expect to continue growing strongly.

While valuation might seem challenging, our PT implies ~50% upside potential. We think the growth potential for Fever-Tree is underappreciated, and we view Fever-Tree’s asset light, high returns business model favourably. We set our £40.00 price target based on our DCF methodology, with the risk reward skewed to the upside, in our view. We nudged down our price target to £40.00 (from £42.00) to reflect a slightly more moderate growth ramp for Fever-Tree’s US business, but continue to see a significant opportunity for premium mixers in that market. 

Next Catalyst: Fever-Tree will publish FY18 results on 26th March. The company has already published a full year trading update in January (our thoughts here).

Protecting Our Investment in College Students – what steps should we take?

  • Public Action Management
  • by Pamela S. Erickson
  • March 14, 2019

This month we are releasing a short report on college drinking. It addresses the fact that while we have made remarkable progress on underage drinking, in general; excessive drinking in college remains stubbornly high. 

Some of the success for reducing drinking for young kids may be attributed to efforts promoted by the 2003 “Call to Action” report by the National Research Council/Institutes of Health, titled Reducing Underage Drinking, a Collective Responsibility. It clearly stated that effort would be needed from a wide range of community stakeholders in order to achieve progress. That did seem to work, so maybe we could use the “collective responsibility model” to make progress on college drinking. 

As next steps, this report suggests the following: 

The successful effort to reduce underage drinking for younger teens involved people and organizations in states and communities throughout the country having the courage to take on strategies that made a difference, such as enforcing minor in possession laws, conducting alcohol compliance checks and adopting commercial liability laws for serving/selling to minors. Communities were free to develop their own approach to reducing underage drinking. The federal government provided funding to local coalitions and money to local law enforcement. 

They also launched a national media campaign and provided research results, help for parents and suggested community/school programs. The results did not come instantly, but over a period of years. It was slow, but it worked. Key messages conveyed the fact that alcohol use can damage the adolescent brain and that if a child starts drinking before the age of 15, they are much more likely to be alcohol dependent. Finally, the powerful influence of parents, as documented by surveys and research, was recognized.

Some next steps in reducing college drinking might be the following:

1. A Commitment to Effective Action. There is substantial information about what is effective in addressing this issue. The College Alcohol Intervention Matrix (AIM), produced by the National Institute on Alcohol Abuse and Alcoholism (NIAAA), illustrates the effective strategies that could be used for this issue.

2. A Conference Series. The federal government funded an annual conference on underage drinking which gave communities and professionals research information, ideas and inspiration.

3. A National Message Campaign. A set of key messages helped elevate the issue; and, provoked communities and colleges to work harder on the issue. 

4. Engage Stakeholders such as Parents and Alumni as a Source of Support. Some think parents can’t do much because the youth are technically adults and are often far away. This report cites recent research suggesting that parents remain an effective influence on their children. Others fear the reaction of alumni to any change, but it seems more likely that alumni would champion successes of their college and there are many ways they can help.

Go to www.healthyalcoholmarket.com to download your copy of the report.

WSTA: Brexit extension ‘necessary under all scenarios’

The UK spirits industry has breathed a sigh of relief after MPs voted to reject a ‘no-deal’ Brexit, but has urged parliament to extend Article 50 in another vote later today.

Yesterday, MPs voted by 312 to 308 to reject leaving the European Union under any circumstances.

The vote followed another rejection of UK prime minister Theresa May’s Brexit deal on 12 March. UK trade group the Wine and Spirit Trade Association (WSTA) said that while the deal was “flawed”, its rejection cast the drinks industry into “deeper uncertainty”.

Another Commons vote will take place tonight on whether to ask the EU permission to delay Brexit beyond 29 March, a move urged by the WSTA.

If passed, the EU will need to agree the length of the extension.

Mile Beale, chief executive of the WSTA, welcomed MPs’ rejection of a ‘no-deal’ Brexit, which the trade group had been ardently campaigning for, and said it is “imperative to pass emergency legislation to put this into effect before 29 March”.

However, he said the wine and spirits industry “still lacks clarity” over what its trading landscape will look like post-Brexit, meaning MPs should vote to extend Article 50 – a move he said is “necessary under all scenarios”.

“It is now crucial that the government heeds the will of the House and works towards a new consensus,” said Beale.

May will make a third attempt to get her deal through parliament in the next week.

Yellow Tail named most powerful wine brand in the world

Yellow Tail has topped Wine Intelligence’s Global Wine Brand Power Index for the second year in a row.

And fellow Aussie brand Jacob’s Creek wasn’t far behind it, up four places on the list to No.3.

Another notable climber in the index was JP Chenet, up three places to No.5.

Building on feedback from over 20,000 wine drinkers in 20 markets – representing the views of 390 million wine drinkers globally – the second year of the study found that the US, Chile and Australia remain the dominant source countries for powerful wine brands.

Wine Intelligence notes: “In terms of what has changed, there is a consistent and overall drop in the calculated Global Wine Brand Power Index score itself from 2018 to 2019. This has been driven by one key shift: the ongoing decline in wine brand awareness among wine drinkers.”

The report blames smartphones for the trend. 

“This shift is, in part, driven by a process called cognitive off-loading, where we rely increasingly on instant, online resources to retrieve information as and when we require it,” Wine Intelligence notes.

“This leads to us no longer needing to store and remember as much information in our memories, as a ‘mega-encyclopaedia’ is now available at our fingertips via our smartphones, diluting the need for us to commit less necessary or important facts and pieces of information to our memory. This is reflected in the world of wine, where consumers are aware of fewer wine brands than they were 10 years ago – despite a rising involvement level with the category.”

Commenting on the report, Wine Intelligence CEO Lulie Halstead said: “It’s interesting to see that wine brands, as a whole, have a challenge on their hands to hang onto their spot within consumers’ minds.

“The high-ranking brands in this list tend to have distinctive imagery, solid and consistent branding and tend to be the ones doing well, or very well, across multiple markets. This last observation also supports other evidence that we observe: despite market and cultural differences, wine drinkers have a strong tendency to value similar things in their wine brands across markets.”

Casella’s Yellow Tail brand debuted its third consecutive Super Bowl campaign – Tastes like Happy – in January. More than 111 million Americans tune in for the big game, which makes it one of the most lucrative advertising opportunities in the the US, next to the Olympics. 

In 2017, Yellow Tail became the first wine brand in nearly 40 years to advertise at the Super Bowl.

NAPA VALLEY RED KNOCKS CHATEAU D’YQUEM OFF TOP SPOT AT VIVINO

A Napa Valley 2015 Cabernet Sauvignon has knocked a 1976 Chateau d’Yquem Bordeaux Sauternes off the top spot as the highest rated wine on wine review app and marketplace, Vivino.

The 2015 Scarecrow from Rutherford, which is made by winemaker Celia Welch, scored the highest rating on the US-based marketplace, which is based on reviews and ratings from the app’s users.

It is currently not for sale on the UK-version of the site, but can be bought online from between £566 and £822 a bottle.

Second on the list of the most highly rated wines in 2018 was a Burgundy Côte de Nuits Red, Domaine de la Romanée-Conti’s La Tâche Grand Cru 2000, who also won a place in the top five with their Domaine de La Romanée-Conti Grands-Échezeaux Grand Cru 2011. Others included a Tuscan red, Soldera Sangiovesa Toscana 2006 and a Chilean Cabernet Sauvignon, Vinedo Chadwick red 2014.

The company said the rating system and the annual awards based on the top ten most popular wines in each category, offered a snapshot of current and upcoming wine trends. It pointed to the increasing interest in natural wines with many of the best reds coming out of Burgundy’s Beaujolais region being natural wines, and more serious, age-worthy styles of Provencal rose.

Spain’s Toro region, which created a ‘bolder’ style of Tempranillo, was starting to compete with more established wine regions such as Rioja and Ribera del Duero styles, it said, while Pinot Noirs were increasingly coming from lesser known regions, such as Patagonia and Tasmania.

Portuguese white wine had seen a 20 % increase in Vivino reviews and a 40 % year-over-year uptick in scans, it noted, but Chardonnay had fallen out of the top five overall white wines.

Vivino was launched in 2010 enabling consumers to scan a wine label into their smartphone, which was synched to user-generated ratings, reviews and price comparisons. E-commerce capability was added in 2016, followed by a Netflix-style personalised wine recommendation based on their previous ratings, searches and purchases in a browse-able centralised ‘marketplace’.

BORDEAUX 2018: NO SMOOTH RIDE

Bordeaux winemaker and commentator Gavin Quinney’s analysis of the 2018 harvest reveals it was an average year overall in terms of yields but one where mildew pressure meant some communes came off worse than others.

In his report (published in full both on his own website and Liv-ex’s) he explains that while the overall volumes produced where more or less average, from grower to grower the story is very different and while it was, “a glorious year for some growers.for others the size of their crop was.the stuff of nightmares”.

It is, he argues, a vintage where – despite an apparently positive outlook – “the devil’s in the detail”.

To begin with, it’s true that the region as a whole has bounced back from the absolute pasting much of it took as a result of frost and hail in 2017.

The 2018 vintage produced close to 500 million litres overall – the equivalent of a suitably devilish 666 million bottles.

The 10 year average from 2008 to 2017, including as it does two very small harvests (2013 and 2017 and 2008 wasn’t huge either) is 507m litres so 2018 is pretty much on the average sizewise but it’s worth pointing out that it is a smaller crop than 2014, 2015 and 2016 (the latter being especially bumper).

As Quinney points out, production varies massively from appellation to appellation and producer to producer.

May and July caused damage to an unlucky few and the relatively cool and damp end of spring/early summer in Bordeaux led to widespread downy mildew which caused catastrophic losses in some areas.

The Right Bank did bounce back after terrible losses in 2017 but it was the Left Bank and in particular the communes of Pauillac, Saint-Estèphe and Saint Julien that experienced lower yields.

As is so often the case (despite the occasional derision it causes), the sunshine of July through to October served to save the crops of those struck by mildew and concentrated the crop for others leading them to hail the 2018 as an excellent year.

Looking at the yields from the main appellations in tables that Quinney has compiled, one can see that in 2018 all of the major AOC, to a greater or lesser extent managed to produce more than in 2017; though Quinney adds that, “judging by the huge crop in many vineyards in 2018, it’s clear that yields would have been significantly higher had it not been for the presence of mildew in the spring and early summer.”

Digging down into the key AOC of the Left and Right Banks so far yields some surprising results.

It’s worth remembering that in 2017, while vineyards across the region succumbed to frost, the AOCs along the Gironde such as Pauillac and St-Estephe were not as badly hit and those two communes actually managed higher yields in 2017 than in 2016.

Despite 2018 being a bigger crop overall than 2017, Pauillac, St-Estèphe and St Julien all had higher yields in 2017 than in 2018 (see accompanying table).

Later on in his report, Quinney looks at the hail damage in May and July. These were, however, localised, striking Pessac, a bit of the Haut-Médoc and parts of Bourg and Blaye in May and then Bourg and Haut-Médoc again and Sauternes in July. The damage was severe in places but not catastrophic.

The real problem was mildew, brought about by heavy downpours in April but most especially May and June during flowering and grape development.

As Quinney noted: “The pattern of rainfall in the spring coincided with the spread of mildew unless it was brought under control. Many organic and biodynamic vineyards were hit badly and those conventionally farmed vineyards that missed vital sprayings also suffered considerable losses. A day or two late, in some cases, was to prove expensive – mildew can affect bunches as well as the canopy. As much as a third of Bordeaux vineyards were impacted by mildew to a greater or lesser extent.”

It is a common knowledge now that estates in “Pauillac and Margaux” that have switched to biodynamic viticulture have suffered very heavily.

One of these is Pontet-Canet, which responded to inquiries from the drinks business on this topic late last year.

Although the château declined to discuss actual losses, saying that, “mishaps of an estate only concern that estate itself,” it did reveal that the “small volume of the harvest” meant that vinification, “could take place only in the new concrete vats of 40hl,” which suggests yields were under 40hl/ha, and if, as Quinney’s charts show, Pauillac’s average yields were 38.5hl/ha then Pontet-Canet’s overall yields may have been smaller still.

So 2018 was far from a smooth ride for everyone in Bordeaux, no matter the spin that may be put on it when visits begin in earnest next month.

On the other hand, as Quinney also concludes, there is no doubt that in terms of quality the Bordelais are right to be upbeat.

The harvest really did take place after three perfectly dry and sunny months and there should be some extremely high quality wines on offer.

AT WHAT PRICE WILL ’08 LATOUR ‘WORK’?

Next week will usher in the now annual spring release of ex-cellar stock from Château Latour, the 2008 is expected to be offered but at what price will it ‘work’ – at least in theory?

This year is the the seventh since the Pauillac-based first growth announced it was quitting the en primeur system in favour of releasing stock at its own time and choosing back in 2012.

This year Liv-ex has reported that the 2008 grand vin and 2013 second label, Les Forts de Latour, are lined up for a re-release in the case of the ’08 and brand new release in the case of the Forts.

It was a similar situation last year when the château re-released the 2006 grand vin and then released the 2012 vintage of Forts for the very first time.

The appearance of the first ‘new’ Latour wine in six years led to a relatively enthusiastic response from buyers and collectors and it sold well.

The 2006 grand vin however suffered from the fate of many of the past releases, being offered at a substantial premium (16% in this case) to other 2006 Latour already in the secondary market.

Therefore, Liv-ex has asked, at what level should Latour price the 2008 in order for it to make buyers interested?

Using its ‘fair value’ methodology which correlates market prices with scores from The Wine Advocate, it’s clear from the graph (pictured below) that the 2008 vintage of Latour is currently plum on the line of what would be considered ‘fair’.

That is using the score last given to it back in 2011 by Robert Parker (95+) before he ceded Bordeaux tasting to Neal Martin.

Martin himself actually rated the wine 96 points when tasting the vintage 10 years on last year and by that score the wine is rather more comfortably inside the ‘fair value’ side of the line.

The 2008’s current market price is £4,559 per dozen. Gong on the strength of Parker’s last score a release at (for argument’s sake) £5,000 a case would represent a premium of almost 10%.

Going on Martin’s more recent score, £5,000 would (arguably) represent absolutely ‘fair value’ while still having a premium over the current market price.

Should the price begin to creep up and over £6,000 per 12 though and into the pricing realm of the 2005 vintage, then things might start to get a bit wobbly.

There almost certainly will be a premium and indeed an increase on the market price is not in-of-itself something that puts buyers off as collectors always have myriad reasons for buying.

The important thing is that the price looks compelling for the wine in question. The 2006 release largely failed because it’s not the most exciting of vintages and with a 16% premium to the market it looked too expensive.

The 2008 vintage is arguably one that the market as a whole smiles on more fondly, it is a more approachable vintage, has long been seen to represent ‘good value’ and due to its low release price has been one of the biggest earners for those who were able to buy en primeur.

As such a ‘reasonable’ premium up to and not much exceeding 10% would (possibly) be enough to generate some interest.

The situation in the UK at least is however complicated by the Damoclean spectre of Brexit.

Non-UK readers will probably be aware of the current turmoil in the UK political landscape over this thorny issue but are likely as in the dark as even UK nationals are about what it could all possibly lead to.

That said, as professor Colin Hay lays out in a report on this topic on the drinks business today, both the Latour release and primeurs in general are falling at a less than propitious time for the UK market – which, lest we forget, remains an incredibly important buying block for Bordeaux futures.

The success of both Latour’s release and primeurs may depend on the British government securing a deal or failing to.

In the event of ‘no deal’ and an inevitable drop in sterling, it makes sense to buy something like a Latour release now and not later when it will be more expensive by about 15%.

If a deal is secured then the value of sterling may very well jump and it would therefore make more sense to buy later with the pound having more buying power.

Arguably, Latour’s releases are largely aimed at the buy-to-drink Asian market but here too a Brexit deal or no deal will have implications.

A no deal and weaker pound could make Asian buyers more open to buying Latour than the alternative scenario.

So there is a price at which Latour’s next release can work, without question, but what that price is and at what point to buy is, at least for UK buyers, much more difficult to say.

Everything you need to know about corked wine in 2 minutes

You attend a wine tasting. You nod your head while the winemaker says things like “notes of cherry bark” and “long, silky finish.” You fall in love with a certain bottle and purchase it for a special occasion, only to open it and discover the wine smells. off. Musty, maybe. Some describe it as wet cardboard, wet newspaper, even wet dog. It could mean your wine is “corked.”

Corked wine, also referred to as flawed or tainted wine, is caused by the presence of 2, 4, 6-trichloroanisole, or TCA, a contaminant sometimes found in food and beverages. TCA is produced when chlorine bleach meets wood. Since cork must be cleaned when it’s processed, TCA can get into cork and infect a wine. Though you can’t get sick from drinking corked wine, experts say at least five percent of all wine bottles are contaminated by varying amounts of TCA.

While most people associate it with cork contamination, TCA is a pervasive, insidious compound that can creep into a bottle of Cab during any step in the wine production process, especially before bottling.

“It’s not just the cork,” said Rachel Speckan, director of marketing for Maverick Wine Co. and former national beverage director for City Winery. “Before bottling is where the high occurrence of contamination occurs. It could be broken down into the woods it comes into contact with, the barrel, the wood in the tank, structures in the building, the winemaking materials. Even a screw cap can be corked. A very small amount can infect an entire winery or an entire batch of wine.”

There are multiple strains of TCA, each imparting slightly different characteristics, none of them pleasant. One, said Speckan, is the wet cardboard characteristic. The other strains will mask or mute a wine’s fruit character, thereby undoing a winemaker’s hard labor. “It does unpredictable things in the bottle, so you never quite know what you’re gonna get.”

A seasoned pro like Speckan can detect TCA immediately. I can detect a corked bottle with the wet cardboard characteristic fairly well. But in other situations, I’ve wondered whether a wine is flawed or I’m simply turned off by its natural taste and smell.

Mike Baker, senior buyer for wine retailer Vin Chicago, says corked wine is extremely common, but it takes a while to identify. If customers find themselves with a less-than-satisfactory bottle or glass of wine, they should take it back to the store or ask to speak to the restaurant manager. A lot of Vin Chicago’s customers ask store personnel to taste a suspect bottle when they bring it back, asking if it is in fact corked. “It’s a learning opportunity,” said Baker. “It’s an opportunity to connect with our customers and have a conversation with them about what they’re tasting.”

Baker finds cork taint easier to identify in New World wines that are usually meant to be livelier and more fruit-forward, as opposed to a wine from Bordeaux or Rioja that exudes earthier, funkier flavors. He’s also encountered customers who voice concerns about a wine that simply has unfamiliar characteristics.

“With cork taint, it takes a lot of times running into a corked wine before you can really start to hone in on what those flavors are,” he said. Baker highly encourages people to start a dialogue with retailers or the restaurant’s sommelier or manager when they suspect a corked bottle. “I think wine geeks like to show off their knowledge and experience. It takes a while before you’re able to immediately process it.”

Wine can possess other flaws, as well, not just from TCA. Wine can oxidize if the bottle is exposed to oxygen through a faulty cork or less-than-ideal storage. It can also be “cooked” when exposed to high temperatures for long periods of time. Flaws can also occur during production, as certain processes impart a funky flavor to wine.

If you’re having an unpleasant experience with a wine, said Speckan, you should tell somebody. “Once you can identify cork taint and are able to say ‘this wine is flawed,’ versus ‘this wine is not my preference,’ I think that will help.” One way to do that, she said, is to simply “drink more.”

Tainted cork has been a problem for ages. The industry has responded with alternate closures, such as the screw cap, glass stoppers, artificial cork, composite cork, and aging in stainless steel as opposed to wood barrels. Corked wine gets returned and refunded along the supply chain, so if you do taste something “off,” you’re doing the business a favor by saying something.

And if the wine isn’t flawed after all? “In general, it’s the job of an industry professional to provide the client with a pleasurable experience and give them clean wine,” said Speckan. Baker wholeheartedly agrees, saying Vin has a “no questions asked” policy if a customer is dissatisfied with a wine. “Ultimately we’re in the service business. Just like any good seller of any product, if their customer has a concern about a quality issue, they’re going to want to immediately take care of that customer, regardless of whether it’s real or perceived.”

So, the next time you smell or taste something “off” in your wine, relax and know you can return it or ask for something else, and learn something about the flavors you’re tasting in the process. Because no one likes a wet dog, especially on the table.

The Right Red Wine Temperature Is Cooler Than You Think

If you think the proper red wine temperature is “whatever your thermostat says”…well, it just isn’t.

Visualize your refrigerator. (No, this isn’t a breathwork exercise, we promise.) Now visualize your bar cart. Where in all of this does your red wine sit? We won’t judge: We’re here to help. If the red wine in your mind is sitting on your bar cart, channel your inner Matilda-you know, when she moves the pencil with her mind-but instead of moving a pencil, you’re moving those bottles to your refrigerator. Why? Because you’re probably serving your red wine way too warm. And, to be honest, you’re probably way better off just keeping it in the fridge.

For whatever reason, a lot of people seem to think that the ideal red wine temperature is room temperature-white wine belongs in the fridge, sure, but red wine belongs in…the room. But room temperature is typically around 70 degrees, and the ideal serving temperature for red wine is anywhere between 60 and 68 degrees. So, yeah: room temp is no bueno. But don’t let those numbers throw you off. We’re not asking you to get an instant-read thermometer out and stick it into your wine bottle-that would be weird. This should be pretty intuitive stuff. You know what room temperature feels like because, chances are, you’re currently in…a room. And your red wine should taste and feel at least a little bit cooler than that. That’s not so hard, is it?

Why worry about temperature so much? Well, when red wine is right below room temperature, you’ll be exposed to the best possible version of the fruits and aromatics that wine presents. Too-warm wine will often present sweeter and spicier, which can be overpowering, especially when served with food. But, also, red wine with a slight chill on it is just…more fun to drink. It’s more refreshing and drinkable. And we’re all for that.

At this point you’re probably saying, “Okay, so how do I get my red wine to this magical just-below-room-temperature spot?? Sounds complicated!” To which I will respond: Just put it in the fridge, bud!

You shouldn’t be afraid to throw your wine in the fridge. If you sling a room temp bottle in there for about an hour, it’ll probably be close to where you want it to be on the other side. But honestly, we’re big fans of just storing our red wine in the fridge all of the time-that way we can just take a bottle out about a half hour before we want to drink it to let it come up to the ideal temperature. It’s just easier! I mean, if you’re the kind of fancy person who keeps dozens of bottles around that you’re planning on aging patiently for many years, the fridge is not the place to do it. But chances are you’re buying wine that you’re going to drink in the next week or so, and if you keep it in the fridge it’ll be ready whenever you are.

It’s really that simple! So move over that bottle of Dijon mustard and make way for a bottle or two of beaujolais. You’ll thank us later.

Applebee’s $1 Cocktails and the Exquisite Joy of Good-Bad Taste

Applebee’s knows us better than we know ourselves. In 2018, the fast-casual company successfully reinvigorated its brand by ditching menu items customers “can’t pronounce,” and doubling down on “comfort.”

It worked. As Chipotle shuttered 65 chain locations, and vegan darling byChloe splintered, Applebee’s emerged victorious. Weekly same-stores sales were up 7.7 percent toward the end of 2018, according to a brand executive’s estimate.

The ever-elusive “millennial” market was especially supportive of Applebee’s rebrand and its series of $1 and $2 cocktail specials. Despite our supposed fixation on high-end artisanal products, millennials couldn’t resist the siren song of kitschy drinks like $1 Strawberry Margaritas or Dollar Jollys, a holiday special made with vodka and either cherry or green apple Jolly Ranchers.

While it would be easy to write off the depressed economy as the primary driver of these cheap drinks’ popularity, is there something else going on here? What if people actually like this booze because it’s, well, bad?

The subtleties of ironic consumption, decried by “new sincerity” writers like David Foster Wallace, are nuanced. Self-serious beer, wine, and cocktail enthusiasts might scoff at certain trends, but their taste is just as subjective as anyone else’s. Besides, who gets to decide who is a “tastemaker” and who’s just tacky?

The revaluation of “bad” aesthetics is deeply tied to the concept of “camp,” which existed long before cultural critic Susan Sontag defined it in a seminal 1964 essay. Sontag describes a certain sensibility, primarily but not exclusively belonging to homo—uals, in which a work of art could be appreciated outside the realm of perceptions of goodness or badness. Camp celebrates the artificial, the overdone, the spectacular failures of culture.

“[Camp] doesn’t argue that the good is bad, or the bad is good. What it does is to offer for art (and life) a different – a supplementary – set of standards,” writes Sontag.

Or, put more succinctly: “It’s camp: the tragically ludicrous or the ludicrously tragic!” explains a character played by legendary filmmaker John Waters in an episode of “The Simpsons.”

You can spot the impact of camp everywhere from horror movies to the Met Gala. Is it possible our national esteem for trashy drinks is part of this same, tragically ludicrous sensibility?

The decor of the Applebee’s in Astoria, New York suggests otherwise. Almost utilitarian in its plainness, the Queens restaurant did not list the headline-driving cocktail special (a $2 Rum and Coke), on its menu the night I visited. When I asked a perfectly affable waitress about it, she excitedly confirmed the drink’s existence. What arrived was a decidedly watered down Rum and Coke that contained about 80 percent ice and, confusingly, Pepsi. It tasted more like nothing than anything at all.

My second drink there, an $11 Long Island Iced Tea (easily the location’s most popular cocktail, said the same waitress) arrived in an oversized glass goblet. And although it tasted like cleaning solution, I can confirm that I was sufficiently sloshed by the time I’d finished.

The feeling I got from this visit to Applebee’s was far from the exquisite pleasures in Sontag’s camp canon, such as “stag movies seen without lust” or the ballet “Swan Lake.” The restaurant was filled with a diverse array of families and couples having a totally pleasant evening meal, but there was something deeply banal, almost dystopian about the scene. There were touchscreens on every table, through which you could order Disney movies and video games to watch and play while you ate.

On the other hand, there was also something freeing about the experience. Its unapologetic banality gave us, the participants, license to abandon our expectations of “quality.” We didn’t need to worry about the caliber of our cocktails or implications of family meals beset with screens. We could simply embrace the absurdity (and, perhaps, tragedy?) of the endeavor.

Jay McInnes, an independent critic who runs The Scrappy Progressive, a beer blog that self-deprecatingly identifies as “really pompous,” had trouble conceptualizing Applebee’s as “camp.” Applebee’s does appeal to people, McInnes says, but on two other tracts.

On the one hand, McInnes says, “It’s a place where people go to drink . It has mass appeal. There are a lot of 40-, 50-, 60-year-old parents who want a simple drink and have low expectations. That’s a good night out! People want cheap, sweet, liquor. It’s there.”

For a smaller subset of economically advantaged or intellectually-minded millennials, a trip to Applebee’s offers potable irony, and a snobby disdain for mainstream culture. For these patrons, drinking at Applebee’s is devoid of the “tender feeling” described by Sontag and essential to camp.

“There’s a kind of rejection of normcore as a culture but a simultaneous celebration of how transgressive it is. I don’t understand it, but it’s there – and it makes money,” McInnes says. “If you cloak it in irony, you can get away with going to one of these places because you just know what a chain delivers to you: a consistent product presented with a clean and friendly face.”

“It’s something rich college kids would do,” McInnes says. “‘Hey, look at these poor people, let’s go to Applebees like they do.’ It’s saying, ‘How can I min/max my consumption while at the same time getting a story about it.’ Later, with your friends, at the $15 cocktail place, you can say, ‘We were at Applebees having this really normie drink, but this re-conceptualization of a Margarita is really much better.'”

Daniel Ng, a sommelier at O Ya in New York City, has a different, and less cynical read on Applebee’s success.

“I think what people enjoy about fine wine or craft beers is that they’re usually really complex and have a lot of different nuances. And that’s great,” Ng says. “But I think there’s a time and place for everything. Sometimes you don’t want a really hoppy beer to pair with your food, sometimes you want something that’s really crushable, that you don’t have to think about.

“What is enjoyable about Applebee’s drinks is that people don’t really have to ruminate about them. It’s simple. They have a lot of sugar, and people love sugar. And there’s nothing wrong with liking sweet things.”

Ng believes nostalgia is the primary motivator for those ironically drinking good in the neighborhood.

“For some of my friends who grew up in the suburbs, Applebee’s was a big part of their childhood,” Ng says. “It was a place you would go to with your friends in high school. It was maybe the first restaurant you went to without your parents.”

If Applebee’s owes its success to nostalgics, value-seekers, and ironical snobs, where does that leave camp? Is there no place for camp in the bar world?

Behold, the colorful exuberance of tiki.

Rob Nitschke, a DJ at tropical New York City institution Otto’s Shrunken Head, says bright decor and sweet, boozy drinks are essential to tiki’s allure. “The culture is great too: When it’s actually being done right, it’s some level of over-the-top,” Nitschke says. “If you’re calling yourself a tiki bar, you’re not going to look like some average pub. There should be a water feature, blowfish lights, pictures of hula girls, color. It should be fun to sit in the room.”

“Everything was pose and performance,” Vogue’s Hamish Bowles wrote of camp culture in Louis XIV-era Versailles. He could just as well have been describing tiki bars.

Tiki has been the subject of well-deserved cultural criticism, but a thoughtfully conceived tiki bar provides much-needed escapism. “Historically, tiki was an outlet for people that didn’t let loose otherwise,” Nitschke says. In the buttoned-up 1950s, being served a drink by “a girl in a coconut bikini” felt racy and subversive.

Today, some critics regard the resurgence of tiki culture as a reaction to socioeconomic anxiety and neo-conservatism in the Trump era. Of course, that hardly qualifies as camp, either.

In his book “Shock Value,” Waters reminds readers that “there is such a thing as good bad taste and bad bad taste.” Watered-down Applebee’s cocktails would likely qualify as the latter; but, then again, like all things, good Pepsi is in the eye of the beholder.

Dollar General Warns of Slower Sales Growth

Discount retailer plans to introduce a new line of fresh-food items and is working to create a digital and e-commerce strategy that appeals to its core shoppers

Dollar General has been expanding its store footprint and working to become a bigger seller of food and home goods to grab more shoppers.

  • WSJ
  • Kimberly Chin and Sarah Nassauer
  • March 14, 2019

Dollar General Corp. DG -7.49% on Thursday said same-store sales grew in the most recent quarter, but profit was less than expected as the retailer invests in lower prices and increases the portion of sales that come from less profitable products like food.

The Goodlettsville, Tenn., retailer anticipates same-store sales growth of 2.5% in 2019, below the 2.6% analysts polled by FactSet had anticipated. In fiscal 2018, same-store sales increased 3.2%.

Shares of Dollar General fell 7.5% on Thursday. Still, the retailer’s stock has gained 24% over the last 12 months.

Dollar General has been expanding its store footprint and working to become a bigger seller of food and home goods to grab more shoppers, and anticipates spending about $50 million this year on improvement projects.

The company said it would introduce a new line of fresh-food items to its shelves and add self-checkout options to its stores. It also is working to create a digital and e-commerce strategy that appeals to its core low-income shoppers, who aren’t likely to pay extra for speedy home delivery or may be more reliant on cash and government-assistance debt cards for payment. Last year the retailer started testing an app that allows shoppers to scan products as they shop to keep a running total of the cost.

“We believe they are using the cart calculator to stay within their budgets,” Dollar General Chief Executive Todd Vasos said on a conference call. The company will expand the availability of the app and plans to test this year a service that allows shoppers to buy online and pick up items in stores, he said.

Like other retailers that lean on low-income shoppers for a significant portion of sales, Dollar General’s sales in the latest quarter got a boost when the U.S. government sent February checks to Supplemental Nutrition Assistance Program recipients in January to ensure payment amid the partial government shutdown. The company said the shift added 0.7% to its comparable sales.

Same-store sales for the quarter ended Feb. 1 climbed 4%, beating analysts’ estimates of 2.6%. Overall net sales rose 8.5% to $6.65 billion, above the consensus forecast of $6.61 billion.

Fourth-quarter sales grew fastest in the home category, while food and other consumable sales were also strong, Mr. Vasos said.

Meanwhile, sales at rival Dollar Tree Inc.’s DLTR -1.86% Family Dollar chain have lagged behind, prompting Dollar Tree to close hundreds of Family Dollar stores and mark down the value of the chain.

Profit for Dollar General fell about 30% to $483.2 million, or $1.84 a share, down from $712.2 million, or $2.63 a share, a year earlier. Analysts polled by Refinitiv had estimated $1.88 a share. Profit was weighed by an income-tax expense of $130.2 million for the quarter, compared with a tax benefit of $112.9 million in the same quarter last year.

The retailer expects adjusted earnings of $6:30 to $6.50 a share for the year, pulling just below analysts polled by FactSet’s estimates of $6.63.

Meanwhile, it expects operating income growth between 4% and 6%. Net sales growth is projected to climb about 7%.

Dollar General will open 975 stores this year

  • CNN
  • By Nathaniel Meyersohn
  • March 14, 2019

Dollar General keeps expanding even as discount rivals like Family Dollar shrink.

The company said Thursday it will open 975 new stores in the United States this year. Dollar General will remodel 1,000 older stores with new queue lines to drive last-minute impulse buys. It will also spruce up its health and beauty sections to lift sales.

Dollar General has been growing for years in rural America. Dollar General (DG) opened 900 stores in 2018 and 1,315 the year prior. It has more than 15,300 stores across the country and sales have increased for 29 straight years.

Despite a strong economy today, the uneven recovery in the United States has buoyed Dollar General.

“While the economy is doing very well, our core customer continues to struggle,” Dollar General chief executive Todd Vasos told analysts last year. Vasos said on Thursday that Dollar General is preparing for the consumer environment to weaken in the second half of the year.

The chain caters mainly to low-and-middle-income customers in rural and suburban areas. That helps it stand out against suburban chains like Dollar Tree (DLTR) and Family Dollar, which focuses on urban customers. Family Dollar has struggled in recent years and will close nearly 400 stores this year.

Dollar General looks to build stores in rural areas where big box retailers or grocery stores are not within 15 or 20 miles. That gives the company close proximity to shoppers and compels more frequent store visits. The company says 75% of its locations are in towns with 20,000 or fewer people.

Dollar General even surged during the holidays. Dollar General’s sales at stores open at least a year increased 4% during its most recent quarter compared with a year earlier, beating analysts’ expectations.

The US government shutdown boosted Dollar General sales by 0.7% last quarter because the Agriculture Department doled out February SNAP benefits early, the company said. It also got a lift from more shoppers buying food and home products, such as kitchenware and small appliances.

Despite strong sales, Dollar General’s stock dropped around 9% in early trading Thursday. Dollar General said it lowered prices on some merchandise during the holidays to win market share, but that dented its profit margins. Its profit forecast for 2019 also fell short of Wall Street’s expectations.

The company wants to get current customers to spend more at stores and reach new shoppers, so it plans to introduce its own cosmetics and baby product brands this year.

Dollar General will also focus on selling more groceries and fresh food to grow its business. It is adding produce sections and refrigerators to hundreds of stores. Dollar General has said that offering fruit and vegetables at stores in rural and urban food deserts can “drive a tremendous amount of traffic.”

The strategy could help Dollar General compete with bigger rivals such as Walmart (WMT) and beat back the threat of German discount grocery chains Aldi and Lidl. Aldi has poured billions of dollars into new stores with fresh food sections. Lidl acquired a couple dozen Best Market grocery stores in New York and New Jersey last month.

In addition, the company will roll out buy online, pickup in store at select stores for the first time later this year, a sign that Dollar General believes the popular digital option will take off in rural areas.

Texas: Irish Eyes are Smiling in Texas

  • yDrink
  • March 15, 2019

yDrink, a beverage data company, examined 2018 Irish Whiskey sales in Texas’ On & Off Premise channels prior to this year’s upcoming St. Patrick’s Day.

Irish Whiskey has increasingly become a year-round favorite for Texas’ Spirit drinkers, and the category still enjoys a St. Patrick’s Day bump in On Premise accounts. Sales for March 2018 were 43% higher on average for Irish Whiskey than other months that year. 2019 is poised to continue this trend with Irish Whiskey placements up 5% at the end of 2018 over the previous year. Close to 80% of On-Premise accounts in Texas now have at least one brand of Irish Whiskey on hand, whereas 99% have at least one brand of Tequila!

While Irish Whiskey is gaining in popularity across the state, not all cities are feeling the same love of the Irish around St. Patrick’s Day. The Greater Houston area gets the green ribbon for the biggest boost in March where Irish Whiskey was up 31% in volume over the previous March. Dallas is at the top o’ the list as the largest volume Irish Whiskey market and accounts for nearly a third of all Irish Whiskey sold in Texas. Austin’s Irish Whiskey sales in March 2018 were ahead of the previous year and on par with total spirits category growth when South by Southwest (SXSW) events take over the city and lift spirits sales. 

While March is a pot o’ gold in the On Premise, Off Premise Irish Whiskey is seeing consistent growth throughout the year. Examining just the dedicated retail-only subset of liquor stores in the Off-Premise channel there does not appear to be a significant increase in March performance for Irish Whiskey.

Texans will undoubtedly raise their glasses to toast this St. Patrick’s Day – and if we use 2018 as a predictor – many consumers will likely be choosing Irish Whiskey to mark the occasion!

— yDrink offers account level data for every outlet in Texas selling spirits conjoined with comprehensive market data for products and their competitive sets. yDrink will be expanding their reporting to include accounts selling Wine On & Off Premise in 2019. www.ydrink.net

AB InBev, AI, Anheuser-Busch, Beer, BI, Brown, Heineken, Intelligence, Market Update, MillerCoors, Overproof, Predeictive, Spirits, trump, Wine

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