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New data from Information Resources (IRI) reveals that wines are picking up momentum in convenience stores versus the more traditional grocery and drugstore channel.

DOMESTICS TAKE THE LEAD. Domestic wines in particular showed impressive growth, up 6.5% in dollar sales and 6.4% in volume, in the four weeks to June 14. In fact, domestic wines gained almost a share point in dollar sales and gained 1.4 market share points in volume. Varietals in the 1.5 liter bottles were the most popular package size for domestic wine in c-stores.

Meanwhile, imports grew 1.7% in dollar sales in the four week period but lost almost a full share point. In terms of volume, imports declined -2.3% and lost 1.4 market share points. Unlike domestic wines, imports saw the most growth among non-varietal bottles sized .75 liters.

WHITE WINE MOST POPULAR. Note that much more domestic wines are sold in c-stores than imports. In the period, domestics incurred about $23.4 million in dollar sales and about 310,000 cases. Imports sold about $7.6 million worth of wine and 78,000 cases.

Overall, white wine grew at the fastest rate, particularly fume/sauvignon blanc and pinot grigio/gris, with chardonnay trailing behind. Pinot noir took the lead among reds followed by cabernet sauvignon and trusty merlot. Surprisingly, white zinfandel lost share in both dollar sales (0.7) and even more so in volume (1.2).

California by far has the largest presence in c-stores, particularly in terms of cases sold. California wines grew 7% in dollar sales and gained 1.1 market share points in the period, and grew 6.8% in volume gaining 1.6 market share points. Oregon wines, which have a much smaller presence, showed impressive growth in sales (38.3%) and volume (50%) and gained about half a share point in both categories.

Although far behind California, Australian wines have the second largest presence in c-stores (not surprisingly). Australian wines lost some market share in both dollar sales and volume, but grew 0.4% and 2.1%, respectively. Imported wines growing at the fastest rates included France, New Zealand, Argentina and Spain.

WINES $8 AND BELOW WIN. In c-stores cheaper was better in June – a motto that seems to apply to all channels in this environment. With imports and domestic combined, wines priced $8 and below showed the most growth. The $11-$15 category posted some growth in dollar sales but declined in volume, while all other table wine price categories were in declines. The $2 and above boxed wine segment came in particularly strong, gaining 0.7 market share points in dollar value and 1 share point in volume.

The two wine brands that far outshone all the others in terms of market share growth in both dollar sales and volume were Barefoot and Sutter Home. The five wines with the biggest presence in c-stores are Sutter Home, Yellow Tail, Barefoot, Gallo Family Vineyard and Woodbridge.

DIAGEO REFUTES CLAIMS IT IS RECEIVING TARP FUNDS FROM THE BAILOUT

Remember the Bloomberg story on Diageo’s new Captain Morgan distillery in St. Croix? Well, Diageo has issued a press release refuting certain details of the article, namely that “Diageo has never sought, and will not receive TARP funds,” which are funds from the Troubled Assets Recovery Program from the U.S. government.

Diageo took especial offense with this line in the Bloomberg story: "Bailout of U.S. Banks Gives British Rum a $2.7 Billion Benefit... The $2.7 billion Diageo tax break in the October bailout bill gives the most financial aid to a non-U.S. company."

This suggestion “is false,” says the company. “The public-private initiative that is bringing Captain Morgan to St. Croix is based on cover over, not TARP.” Congress has reenacted the rum cover over extender (which increases cover over from $10.50/gallon to $13.50/gallon) for over 50 years “as part of an independent package of tax extenders” because Congress believes the US Virgin Islands “has a continuing need for cover over revenues to promote its economic stability and fiscal autonomy.”

Diageo said it is “purely a matter of circumstance” that Congress attached the extenders package to the TARP bill last fall, and that the cover over is completely unrelated in any way to either the bailout or TARP money.

Says Diageo: “The suggestion in the Bloomberg article that Diageo somehow benefits from TARP funds is misleading and gives the reader an inaccurate and false impression. Diageo's agreement with the USVI was announced in June 2008 -- well before any TARP legislation was ever discussed on Capitol Hill. Even if this extender had never been introduced or passed, Diageo's agreement with the USVI would still be in tact.”

And there you have it.

WSD BRIEFS:

WE’VE RECEIVED WORD THAT Southern Wine and Spirits is working on a deal to distribute all of Constellation’s brands in California, including those currently distributed by Young’s Market. We have no further details about the rumored change. Expect a lot of news concerning Constellation and its consolidation of wholesalers in the coming months.

CORRECTION. We attributed Geyser Peak Winery to Constellation in yesterday’s report, but the company of course sold the brand to Ascentia Wine Estates last year. Sorry for the mistake.


Until tomorrow, Megan

“You don’t have to specialize - do everything that you love and then, at some time, the future will come together for you in some form.”
Francis Ford Coppola
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WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com

© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.

Follow me on Twitter http://twitter.com/WineSpiritDaily

]]> http://www.winespiritsdaily.com/2009/07/wine-building-larger-presence-in-c.html 02 Jul 2009 10:20:00 tag:blogger.com,1999:blog-20546773.post-6542345576973583774 Wine & Spirits Daily Wine & Spirits Daily ]]> http://feedproxy.google.com/~r/wwwdecantercomfeedsrssnewsxml/~3/_GHZd4XwNAI/285446.html 02 Jul 2009 09:06:00 http://www.decanter.com/news/285446.html?aff=rss Decanter News Decanter News ]]> http://feedproxy.google.com/~r/wwwdecantercomfeedsrssnewsxml/~3/44TCDQ8bCC4/285440.html 02 Jul 2009 08:43:00 http://www.decanter.com/news/285440.html?aff=rss Decanter News Decanter News ]]> http://feedproxy.google.com/~r/wwwdecantercomfeedsrssnewsxml/~3/iOGC806q7tY/285434.html 02 Jul 2009 08:17:00 http://www.decanter.com/news/285434.html?aff=rss Decanter News Decanter News ]]> http://feedproxy.google.com/~r/wwwdecantercomfeedsrssnewsxml/~3/Nk2dwoAYq5g/285430.html 02 Jul 2009 07:41:00 http://www.decanter.com/news/285430.html?aff=rss Decanter News Decanter News ]]> http://feedproxy.google.com/~r/wwwdecantercomfeedsrssnewsxml/~3/ycMq2zYkeN0/285392.html 02 Jul 2009 02:11:00 http://www.decanter.com/news/285392.html?aff=rss Decanter News Decanter News http://www.winespectator.com/Wine/Weekly/Tasting_Game_Archive/0,1212,236,00.html?CMP=OTC-RSS 01 Jul 2009 17:00:00 http://www.winespectator.com/Wine/Weekly/Tasting_Game_Archive/0,1212,236,00.html?CMP=OTC-RSS WineSpectator.com News & Features RSS WineSpectator.com News & Features RSS http://www.winespectator.com/Wine/Features/0,1197,5178,00.html?CMP=OTC-RSS 01 Jul 2009 17:00:00 http://www.winespectator.com/Wine/Features/0,1197,5178,00.html?CMP=OTC-RSS WineSpectator.com News & Features RSS WineSpectator.com News & Features RSS http://www.winespectator.com/Wine/Features/0,1197,5179,00.html?CMP=OTC-RSS 01 Jul 2009 17:00:00 http://www.winespectator.com/Wine/Features/0,1197,5179,00.html?CMP=OTC-RSS WineSpectator.com News & Features RSS WineSpectator.com News & Features RSS http://www.winespectator.com/Wine/Features/0,1197,5177,00.html?CMP=OTC-RSS 01 Jul 2009 17:00:00 http://www.winespectator.com/Wine/Features/0,1197,5177,00.html?CMP=OTC-RSS WineSpectator.com Q&As RSS WineSpectator.com Q&As RSS

]]> http://feeds.sfgate.com/click.phdo?i=43ddb400c75a9abbd9029dcc549a4aaa 01 Jul 2009 17:00:00 /c/a/2009/07/02/NSPU18E2EM.DTL SFGate: Wine SFGate: Wine ]]> http://www.wein-plus.com/magazine/+01.07.2009+European+roadshow_fn5232.html 01 Jul 2009 13:54:00 http://www.wein-plus.com/magazine/+01.07.2009+European+roadshow_fn5232.html Wein-Plus.com News Wein-Plus.com News ]]> http://www.wein-plus.com/magazine/+01.07.2009+Entry+into+the+Swiss+market_fn5231.html 01 Jul 2009 13:49:00 http://www.wein-plus.com/magazine/+01.07.2009+Entry+into+the+Swiss+market_fn5231.html Wein-Plus.com News Wein-Plus.com News
Constellation continued to focus on streamlining its business in Q1 of fiscal 2010, or the three months ended May 31, while the company also experienced adverse effects from the economy and reduced inventory.

In the spirit of simplification, Constellation undertook three main initiatives in recent months. One, the company “took steps over the past 18 months to shift the focus of our strategy to building must-have brands that return the greatest profits and that represent good value for consumers,” said ceo Rob Sands. This led to Constellation selling many of the Pacific Northwest brands it acquired from Beam Global Spirits and Wine, and selling most of its value spirits brands to Sazerac.

“We are already seeing the benefits from this strategy as brands such as Woodbridge by Robert Mondavi, Nobilo, Clos du Bois, Kim Crawford and Svedka continue to perform well,” Rob continued.

During the first quarter Constellation also “integrated the remaining spirits business into our North American wine organization and began refining the structure of our U.S. wine business into a single integrated group.” This mainly effected sales and marketing and unfortunately resulted in major lay-offs in the U.S.

Lastly, Constellation is in the midst of consolidating its distributor network. In all, said Rob, the changes with distributors will encompass 17 states and transitions will begin by the end of the summer.

THE WINE AND SPIRITS BIZ. Growth of the US wine market “remained healthy” with dollar sales rising 5% in the first quarter, according to IRI scan data. Again, consumers are turning to trusted brands in the economic downturn, which benefited premium wine brands such as Rex Goliath, Woodbridge, Kim Crawford, Wild Horse, Geyser Peak and Clos du Bois.

Svedka’s momentum continued in the quarter, while Black Velvet also posted solid sales results.

Sales of branded wine worldwide grew 1% on an organic constant currency basis, while North American wines decreased -1%. Numbers were impacted by ongoing SKU reductions and the economic downturn, said Rob. Constellation estimates that the SKU reduction negatively impacted North American sales by 2%.

ROB ON CONSUMERS TRADING DOWN. Overall, Constellation’s wine segment is growing but various price points are performing better than others.

“In terms of our mid tier brands we are seeing some positive results. We see brands like Woodbridge continuing to grow in the high single digit range. We see brands like Clos du Bois growing about 8% in volume. There are ups and downs...we do see a trend towards better known and trusted brands that represent good value for money. Some of our brands are benefiting from that in general. We did see on a volume basis some trading up continuing in the industry with total wine in a low-single digit range, and in the premium and super-premium range growing in the mid- and higher-single digit range,” said Rob.

Bob Ryder, cfo, noted that Svedka is one of those brands that have benefited from trading down. “The economy is certainly helping Svedka...getting sales from Ketel One and Grey Goose,” because Svedka offers prime positioning, good marketing and tastes great for less money.

Rob noted that “major players” in the value wine segment are taking the opportunity to increase prices and gain in dollar sales. Meanwhile, premium and super-premium wine brands are outpacing value brands on a volume basis. “In a dollar basis, we see in the value business a lot of pricing being taken in the marketplace. While we see value lines growing at lower percentage in volume than premium and super-premium, on a dollar basis they’re actually growing faster because major players in that segment, which we aren’t one, are taking the opportunity to take pricing in the value segment.”

In all, a negative mix shift had a big impact on Constellation in the first quarter. Rob explained that although general mix trends indicate that consumers are trading up, activity in respective price categories shows “there is in fact some degree of trading down.”

The highest end of the super premium category ($8-$12) is being more negatively affected versus the lower end, said Rob. “People are looking for bargains even within the respective categories.”

“When we talk about trading up in general it continue to be a phenomenon measured by the difference of total business in dollar and volume sales, versus looking at super-premium category versus value.”

Furthermore, “on-premise oriented brands are definitely being hurt in the economy...the highest margin brands in our portfolio which are more on-premise oriented are being more negatively impacted by the economy, especially in the restaurant business,” said Rob.

CONSTELLATION LOSES SOME SHARE IN Q1. Constellation lost some share in Q1 mainly due to recent price increases and SKU rationalization. Bob also pointed out that Constellation chosen “not to take part heavily in the value category” which is growing.

THE MOVE TOWARD CONSOLIDATING DISTRIBUTORS. When asked if Constellation anticipated a disruption with the distributor transition, Rob responded: “We don’t expect any disruption at this time...we’ve put a lot of things in place to ensure that things remain intact in the transition period so right now we feel pretty good about that.”

Why, you ask, does Rob not anticipate disruptions? He said the company has “obviously put some mitigation plans” in place and there are also “some natural things that occur when you make these movements that offset each other, such as when you’re moving the brands you’ve got inventory moving around, shipments to new distributors, etc.”

“When you balance everything out we really don’t think it will have a huge impact on retail sales. We think depletions should be somewhat stable. There might be some loss from distributors who are losing brands and some pick up from distributors who are gaining brands and the same things from the shipment side.”

He noted that “timing issues which would be the worst case scenario,” but the company isn’t currently expecting any timing issues between the second and third quarters. “By Q3 it should be largely complete and stabilized...the idea is to get this done before October, November and December which is one of the key selling seasons.”

Constellation executives decided they should be announcing the changes to the trade “fairly shortly in the next 30 to 60 days, something in that effect and it might not be all at once.”

“The trade is well aware of our intentions...we are in the process of filing negotiations as we sit here right now. Everybody knows what’s going on, basically,” Rob continued.

NON-COMPETING BRANDS MAKE THE MOVE POSSIBLE. The company is opting to change its distributor model because it has sold a significant amount of its value wine and spirits brands, which generally competed against one another. The old model “that worked for selling was putting brands that competed against each other with different distributors,” said Rob. Now, Constellation has a much more streamlined portfolio and can put all its brands with one distributor. “With the elimination of the value business and the narrowing down of the portfolio to a relatively small number brands that are fairly well differentiated, only 10-12 brands that are the key brands...one dist can prioritize those brands and we don’t have the issue of selling largely generic inter-competitive products.”

Rob also pointed out that Constellation will have more influence over a distributor if all their brands are under one roof.

2ND CIRCUIT COURT OF APPEALS UPHOLDS OUT-OF-STATE RETAILER BAN

The 2nd Circuit Court of Appeals today upheld the decision of the Southern District of New York by rejecting an attempt by out-of-state retailers to secure direct-to-consumer shipping licenses in the state of New York.

Circuit Judges Wesley concluded that “because New York’s three-tier system treats in-state and out-of-state liquor the same, and does not discriminate against out-of-state products or producers, we need not analyze the regulation further under Commerce Clause principles.” In all, NY ABC laws “instituting a three-tier system for the regulation of alcoholic beverages, do not discriminate against out-of-state producers in violation of the Commerce Clause.” You can’t get much plainer than that.

In Judge Calabresi’s concurrence, he stated that “to be sure, the Constitution as a whole does and must evolve. Moreover, as the Court may have done in its recent readings of the Twenty-First Amendment, history can be made into a tool for bringing the Charter into line with current needs. But judges are not historians with fancy robes and life tenure. And historical reinterpretation always poses the risk that courts will too readily “‘imagine the past [to] remember the future.’”

He went on to say that “any sort of updating can be dangerous. It may permit courts, especially well-meaning ones, to substitute their own notions of modern needs for those of the majority. Moreover, when a rereading results in the erection of a constitutional barrier, it may remove serious issues from the democratic process and from legislative deliberation.”

This opinion could have ramifications on the appeal pending before the Fifth Circuit. Stay tuned...

DIAGEO CUTS 900 JOBS IN SCOTLAND

Diageo announced early this morning a new cost restructuring plan that will result in the loss of 900 jobs over the next two years. It is closing Kilmarnock Packaging Plant resulting in the loss of 700 jobs due to “infrastructure limitations.” Instead, Diageo will invest £86 million to expand the Leven Packaging Plant in Fife, which will create approximately 400 jobs. “The company hopes that a number of these jobs would be taken by employees transferring from Kilmarnock.” In addition, Diageo will invest another £3 in the Shieldhall Packaging Plant in Glasgow, which will result in the loss of 30 jobs at the site.

Diageo is also closing the 200 year-old Scottish distillery Port Dundas and adjacent Dundashill Cooperage that will result in 150 lay-offs. Diageo said it hopes “that some employees would relocate to a new cooperage in Central Scotland,” which is the Cameronbridge Distillery in Fife. The company plans to build a new £9 million cooperage at Cambus near Alloa by summer 2011.

In all, the company says the restructuring will cut costs about £40 million ($65.8 million) in 2012. Recall that Diageo announced in February a £200 million restructuring plan. The company expects to cut costs by £100 million in the financial year ending June 2010 and reduce the global work force by 1,000 from 23,000.

“We believe the plans announced today will help secure the sustainability of our business in Scotland...Our plans and the associated £100 million investment reflect the strength of Diageo’s continued commitment to Scotland. With these changes, Diageo would still employ nearly 4,000 people across the country,” said the company in a statement.

TTB FIRES BACK AT NCL

In response to the National Consumers’ League criticizing “misleading” labels by U.S. wine producers, the TTB issued the following statement:

“The United States and the European Union (EU) signed an agreement on trade in wine on March 10, 2006. In the agreement the U.S. committed to seeking to change the legal status of the semi-generic names to restrict their use solely to wines originating in the applicable EU member state with certain exceptions, in particular, a ‘grandfather’ provision. Under the ‘grandfather’ provision, any person or their successor of interest may continue to use a semi-generic name on a label of wine not originating in the EU provided the semi-generic name appeared on a Certificate of Label Approval (COLA) that was issued prior to March 10, 2006.”

In all, certain wines are “grandfathered” into the provision that does not allow U.S. wine producers to incorrectly label their wines as Champagne or other place names if it does not hail from the specific region.

WSD BRIEFS:

VINEXPO CHIEF SAYS INTERNET “NOT THE RIGHT MEDIUM” FOR WINE SALES. In a new report from Decanter, Vinexpo ceo Robert Beynat said the internet will “never be anything other than a marginal circuit for sales.” He went on to say that “the internet is not the right medium for the sale of wines and spirits, it is not a real alternative to traditional sales circuits and will never reach more than around 8% of the market.”

AMAZON.COM THE NEW WAL-MART? An interesting research note from Cowen and Company claimed that Amazon is the “next generation Wal-Mart” because “we believe the company's focus on lower prices and a superior shopping experience versus online and offline competitors will result in substantial share gains over time,” said analyst Jim Friedland. This is notable given Amazon’s anticipated entrance into the wine industry in which the online retailer will surely jumpstart a new era of competition.


Until tomorrow, Megan

“You do ill if you praise, but worse if you censure, what you do not understand.”
Leonardo da Vinci

--------- Sell Day Calendar ----------
Today's Sell Day: 1
Sell days this month: 23
Sell days this month last year: 23
This month ends on a: Fri
This month last year ended on a: Thurs
YTD sell days Over/Under: 0

WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com

© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.

Follow me on Twitter http://twitter.com/WineSpiritDaily

]]> http://www.winespiritsdaily.com/2009/07/distributor-consolidation-underway-for.html 01 Jul 2009 13:09:00 tag:blogger.com,1999:blog-20546773.post-1983724781802571189 Wine & Spirits Daily Wine & Spirits Daily ]]> http://feedproxy.google.com/~r/wwwdecantercomfeedsrssnewsxml/~3/J2a-VtVnRwo/285290.html 01 Jul 2009 02:21:00 http://www.decanter.com/news/285290.html?aff=rss Decanter News Decanter News

]]> http://feeds.sfgate.com/click.phdo?i=db5008394f8ce0e594901d65ea5f9283 30 Jun 2009 17:00:00 /c/a/2009/07/01/NSPU18E2EM.DTL SFGate: Wine SFGate: Wine http://www.winespectator.com/Wine/Features/0,1197,5174,00.html?CMP=OTC-RSS 30 Jun 2009 17:00:00 http://www.winespectator.com/Wine/Features/0,1197,5174,00.html?CMP=OTC-RSS WineSpectator.com News & Features RSS WineSpectator.com News & Features RSS http://www.winespectator.com/Wine/WS/Features/Answerman/0,3835,636,00.html 30 Jun 2009 17:00:00 http://www.winespectator.com/Wine/WS/Features/Answerman/0,3835,636,00.html WineSpectator.com Q&As RSS WineSpectator.com Q&As RSS http://www.winespectator.com/Wine/Features/0,1197,5172,00.html?CMP=OTC-RSS 30 Jun 2009 17:00:00 http://www.winespectator.com/Wine/Features/0,1197,5172,00.html?CMP=OTC-RSS WineSpectator.com News & Features RSS WineSpectator.com News & Features RSS

]]> http://feeds.sfgate.com/click.phdo?i=89d285a9481658782c2f51046d697cb0 30 Jun 2009 17:00:00 /c/a/2009/07/01/SBRE184CSO.DTL SFGate: Wine SFGate: Wine