Olly Wehring's beverage industry blog - from just-drinks.com

InBev UK, you cheeky little monkeys

Wed, 27 Aug 2008 15:24:00 GMT

If you saw this news piece from last week, you may have noticed that InBev is looking to bring the abv of its Stella Artois brand in the UK in line in both the on- and the off-trade.

The initial statement from InBev said that the company will "harmonise" Stella's abv across the board in the country, at 5.0%. A little digging led to the discovery that, in the on-trade, Stella is available at 5.1%, while in the off-trade, it's a slightly stronger 5.2%.

"By harmonising the abv, we are providing the consumer with clarity and this will allow consumers to enjoy a consistent strength lager at home or in the pub," said InBev UK's president, Stuart MacFarlane, at the time.

A little more digging revealed that, by lowering the abv, InBev can look forward to lower excise on Stella - for beer, it's GBP14.96 for every 1% of strength per 100 litres.

Those of you with half-decent memories, meanwhile, will remember this story from earlier this month, in which InBev said it was "reluctantly" having to raise the prices of its beers in the UK.

A call into InBev about the matter resulted in silence: "We do not discuss details of our production costs or commercial arrangements," MacFarlane told us.

Spoilsports.

Monday - just-drinks is closed

Fri, 22 Aug 2008 15:23:00 GMT

A quick heads-up for you all.

just-drinks will be closed this coming Monday (25 August), as we have a Bank Holiday here in the UK.

The forecast is rain. Lots and lots of rain.

I wish I was a girl...

Fri, 22 Aug 2008 11:33:00 GMT

... for, oh, so many reasons.

Here's one of them.

Critics turn sour on Bottle Shock film

Tue, 19 Aug 2008 18:35:00 GMT

Reviews of the long-awaited Bottle Shock film, charting the rise of California's wine industry, have been decidedly mixed since it was uncorked for limited release in the US just over a week ago.

Several critics have found the film difficult to palate (sorry, last one), accusing it of playing "loose with the facts" and producing an "unripe storyline" (their pun, not mine).

Bottle Shock charts the build-up to the 1976 Judgement of Paris, now etched into the psyche of every Californian winemaker as the year local wines beat France's finest in a blind taste test. Randall Miller directs, with Alan Rickman playing UK wine buff Stephen Spurrier MW.

In one review, Carla Meyer, for California publication Sacramento Bee, slates Bottle Shock for "taking a fascinating historical event" and making it "a sidelight to an overindulged father-son conflict".

Given that those with power clearly felt the need to embellish large chunks of the story, one has to question: do they think the public is really interested in films about the wine industry? It suggests they don't. In which case, why bother?

Presumably the relative success of the Sideways film, also set in California wine country, got some cogs turning in the film world. A second film, simply entitled Judgement of Paris, was also in production earlier this year.

Unfortunately, Bottle Shock still has no release date outside the US, except - curiously - for the Netherlands, where it is due out on 2 October.

Have you seen Bottle Shock? If so, don't be shy, tell us what you thought.

Democrat or Republican? Your reputation at the bar precedes you

Mon, 18 Aug 2008 16:29:00 GMT

The presidential election in the US is bound to drive both sides of the political divide to head for the nearest bar come election night - half to toast their win, the other half to drown their sorrows.

In one of the more tenuous drinks-related surveys, announced today (18 August), it appears US Democrats are the more generous when it comes to tipping, while Republicans are keener on their drinks straight up as opposed to those namby-pamby cocktails.

The survey, of around 100 bartenders in the Washington DC area, also concluded that Democrats have better pick-up lines and give better toasts, while the two parties are in agreement on drinking hours, with Republicans edging out for the first to arrive at happy hour and Democrats being the last to go home.

"According to the survey results, bartenders in Denver should know that they'll hear better toasts while the bartenders in Minneapolis won't need as much ice with their patrons ordering drinks straight up," said Bobby Gleason, "master mixologist" for Beam Global.

The full survey questions and results include:
�         Who is a better tipper? Democrats 60%, Republicans 38%
�         Who is more likely to order a drink straight up? Democrats 14%, Republicans 82%
�         Who is more likely to order a fruity (pink) drink? Democrats 58%, Republicans 34%
�         Who has the better pick-up lines? Democrats 74%, Republicans 14%
�         Who is better at giving a toast? Democrats 63%, Republicans 36%
�         Who is more likely to arrive first to happy hour? Democrats 48%, Republicans 50%
�         Who is more likely to be the last to go home? Democrats 53%, Republicans 46%

Yes, it's quiet again today...

Press releases in August - consider this lilly guilded

Thu, 14 Aug 2008 15:58:00 GMT

That's it, folks. I can't take it anymore. It's the middle of August and, as the scarcity of news at the moment suggests, we're all in the height of the silly season.

But some of you just aren't helping, you know. Indeed, some of your press releases are veering towards, well, silly.

To whit, the following exhibits:

"With the new gift pack, Absolut is updating the concept of masquerade for the modern era, where the possibilities of being yourself and expressing your personality are more important than ever."

"This creative initiative reflects the pride and imaginative go-for-it attitude of Rotterdam." (This is a direct quote from a release, no less)

"The Red Bull Air Race - dubbed the F1 of the skies - was a stunning spectacle of high speed skill and agility that has further cemented Red Bull's status as the go-to brand for fun, energy and innovation."

"'Cosiness' is the theme as diva-like the naked shoulders of a Grand Marnier bottle emerge from an opulent red fur collar and nubuck coat adorned with a vibrant metal label. The warm tactile materials cry out to be touched, while the aromas of orange and Cognac demand it be tasted."

If you wrote these, then I'm sorry.

I'm really, really sorry.

Southern Wine & Spirits interview

Wed, 13 Aug 2008 16:51:00 GMT

No doubt those of you with any involvement in the US drinks market will have read today's news that leading distributors Southern Wine & Spirits of America and Glazer's Distributors, are to merge.

So what will this new, mega-distributor mean? I hear you ask. Well, never fear readers, because just-drinks spoke to Southern Wine president Wayne Chaplin this afternoon.

We'll be publishing his thoughts tomorrow (14 August), as part of our 'just the answer' interview series, just as soon as our team of highly trained chimpanzees have transcribed what Mr Chaplin had to say.

Constellation - are the times a-changin'?

Mon, 11 Aug 2008 16:54:00 GMT

In June, some of you may remember, we ran an interview with Bruce Jack from Constellation. Jack has been brought on board at Constellation to oversee its South African offering, in particular its flagship Kumala wine brand.

A couple of weeks later, I received a letter from Constellation Europe's president, Troy Christensen. In the letter, Christensen - who we interviewed last year - took me to task on my assertion, when speaking to Jack, that Constellation "doesn't have a reputation for focusing on improving value".

"I welcome the question and congratulate you for holding the trade accountable for its behaviour," Christensen said. "I would agree that Constellation does not have a great history in this regard," he conceded, "but we have changed our strategy."

Any suspicion I had that this could be a hollow statement was cast asunder last week, when Constellation announced the results of a review of its Australian operations. The company will now look to sell certain assets at Constellation Wines Australia and will implement changes to its wine portfolio and production footprint in the country.

Here is a company who, previously, had a reputation for being quicker than most when it came to getting out the chequebook when it came to acquisitions. The announcement last week signifies a clear change in strategy at Constellation. Is this a sign of troubled times and the wine giant? Or a reflection on the times we are all suffering in?

It's certainly not the former, as our interview with Constellation's CEO, Rob Sands, earlier this year can attest to.

Whatever the move suggests, one thing would appear certain. If Foster's is looking for a buyer for its beleaguered Australian wine operations - which many believe to be the case - then the company that many would have pegged as the first to go sniffing round will be staying at home.

A trip to Cowes with Mumm

Fri, 08 Aug 2008 18:32:00 GMT

The following is a postcard from our recently-appointed news editor, Chris Mercer. I was VERY busy that day.

There is a fine line between bravery and lunacy, so the saying goes, and I have yet to decide on which side of it Sebastien Josse is standing.

Seb, as he is known by those who know him better than me, is preparing to sail solo around the world in a race this November with nothing but his own thoughts and a satellite navigation system for company.

Yesterday, just-drinks was invited onto his eight-tonne, 60-metre long yacht as part of Mumm Champagne's sponsorship of Cowes Week on the Isle of Wight. Thankfully, we didn't break anything.

Interesting things we learned include: that the launch of a just-sailing.com publication is beyond our expertise; that whales are one of the biggest hazards for racing yachts on the open waves; and that the last time Seb competed in the forthcoming competition he smashed into another of the biggest hazards - an iceberg. He was lucky to survive.

After a stay on the boat, and after chasing sailing genius Dame Ellen Macarthur on a rib powerboat, just-drinks had to endure (ahem) a hard-earned Champagne and BBQ party back at Mumm's Cowes HQ.

No wonder there is talk of a Champagne shortage across the Channel, judging by the number of bottles emerging from the depths of Mumm house last night. Mumm is looking to raise its profile in the on-trade and wants to be associated with explorers and outdoors types, such as Bear Grylls and Tom Avery, who were both present as guests. And they're explorers, NOT adventurers, by the way.

A few flutes and some dodgy singing on a ferry later, and just-drinks was snugly holed up in a fancy hotel in Southampton for the night.

High spirits in the low countries defy global downturn

Fri, 08 Aug 2008 11:25:00 GMT

They're a cheery bunch, those Dutch.

Whether it's the vibrant support of the country's football fans, or the relaxed atmosphere of the country's capital Amsterdam, there is definitely something of a joie de vivre about the Dutch.

They're also apparently pretty relaxed about the global economic downturn. According to research giants Nielsen, the Netherlands is one of the few countries where consumer confidence is on the rise. Over the last six months, consumer confidence has risen by 5%: only the Taiwanese are more optimistic.

Alas, that confidence is in short supply around the world. Nielsen research claims that global consumer confidence has fallen to a record low, with 56% of online consumers believing their country is in a recession.

Alongside New Zealanders and Latvians, it seems the biggest pessimists are in the US. Consumer confidence across the pond is at its lowest level since 1992 and the days of Clinton's refrain: "It's the economy, stupid."

Non-discount retailers, in particular, are "feeling the pinch", according to Nielsen. Private-label sales are growing but only as commodity cost rises fuel inflation; volume sales have dipped slightly.

All is not doom and gloom however, says Nielsen. "There are opportunities in a slowing economy to lead the recovery," the researchers say. "Category-specific opportunities exist to maximise in-store efforts. For products that are performing strong and showing immunity during a recession, manufacturers and retailers in these industries have the opportunity to increase product exposure even further.

"For products at the other end of the spectrum, companies would be well-advised to target their marketing efforts to shore up performance and maintain traction during tough times.

"Now is the time to plan for recovery."

Is localisation the new globalisation?

Mon, 04 Aug 2008 15:26:00 GMT

Few terms can have become so synonymous with the rampant changes to the world community that we have seen in the last 25 years as 'globalisation'. A product of the revolution in communications and the economic boom, at times it seemed that we would all eventually be speaking one language, whilst trading in one currency, shopping at the same supermarket, whilst wearing the same branded clothes.

The economic slowdown has already taken some high profile casualties. Is the trend of globalisation likely to be next? That's what a piece in today's New York Times asks.

"The world economy has become so integrated that shoppers find relatively few T-shirts and sneakers in Wal-Mart and Target carrying a "Made in the USA" label," the piece says. "But globalisation may be losing some of the inexorable economic power it had for much of the past quarter-century, even as it faces fresh challenges as a political ideology."

The argument is that cheap oil, which has quite literally greased the wheels of inexpensive transportation links across the world, may not return anytime soon, making the search for cheaper labour in far off locations pointless.

In addition "rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex," the New York Times article said.

Whilst we are unlikely to see globalisation go into complete reverse there are already numerous examples of companies looking to move production of materials and goods closer to market to save on costs. Will drinks companies, for example, that have built a reputation for exporting products to consumers from their original production base (I can think of a number of beers and spirits that trade on the cache this brings) now look to produce their beers/spirits locally?

With the cost of shipping a 40-foot container from Shanghai to the US having risen to $8,000, compared with $3,000 early in the decade perhaps we are about to enter into a new phase of localisation.

The full New York Times article

Bid for Stolichnaya, if you dare

Fri, 01 Aug 2008 14:37:00 GMT

So just what, exactly, is going on with Stolichnaya?

Word on the just-drinks grapevine this week is that Stolichnaya owner SPI Group is desperately seeking a US importer to take over from Pernod Ricard, which has to end its involvement with Stoli within six months to satisfy competition authorities.

Right now, however, the question is perhaps not so much whether anyone is interested, but whether anyone is willing to risk getting involved.

Over in Russia, yet more confusing reports emerged on Wednesday (30 July) in state-controlled media about the ownership of the brand.

Depending on which government department you listen to, it seems the Kremlin has not given up hope of seizing control of Stolichnaya along with various other vodka brands.

There is also talk of a joint venture between the state and SPI, with group owner Yury Shefler quoted in the Kommersant publication as saying he was "ready to seek compromise with the Russian government". Apparently the court battles with the Kremlin are draining SPI's finances.

As one analyst told just-drinks this week: "It is difficult to deal with SPI when there is a government who may just take the rights back on a whim". It is like negotiating a price, only to realise you are not talking to the true owner. Or worse, you pay a price, only to find that the true owner has turned up on your doorstep to demand back what they claim is rightfully theirs.

Added to this, no one seems sure what, if anything, is for sale or how much it is worth. Again just-drinks hears that some analysts have been unable to get accurate market information for Stolichnaya in the US because SPI has not provided the figures.

Some have suggested Beam Global, owned by Fortune Brands, would be favourites in a Stoli sale. President and CEO Tom Flocco told just-drinks recently that the group would be interested, but he added: "[Stolichnaya's] a brand that, based on what I've read over the last two or three years, some smart people worked very hard to get out of the dual-ownership structure. I don't know why they weren't able to get something done, so I can't really comment on whether it's ever going to become available."

PS readers: Next time you bump into a Pernod Ricard executive, ask them how easy it has been to negotiate with the Russians.

Will the real scientists please stand up?

Wed, 30 Jul 2008 17:29:00 GMT

Another day, another pile of public money thrown onto the proverbial bonfire in the name of scientific research.

A researcher in the US has come to the inspired conclusion that young people who consume energy drinks regularly (that's on six or more days per month) are more likely to have unsafe sex, get involved in fights and take illegal drugs. They're also more likely to ride in cars without fastening their seatbelts.

This is because energy drinks encourage people to take risks, says the study from the University at Buffalo's Research Institute on Addictions (RIA). Or is it that risk-takers are attracted to energy drinks? The press release finds it hard to decide.

Nearly 800 male and female undergraduate students were surveyed.

By a similar token, I could argue that people who drink expensive cocktails are more likely to buy frivolous luxuries such as shoes and handbags, rather than, say, give their money to environmental charities.

Perhaps a US government organisation would like to pay me US$471,000 to investigate. After all, that's how much the National Institute of Drug Abuse dished out for this energy drinks survey.

I'm not getting into the arguments here about regulation on energy drinks and their various ingredients - and there are some serious ones to be made on both sides. This blog is about bad science. I'm sure the RIA findings have been honestly reported, but is there really a causal link here?

It seems that every day the world wide web is packed with new studies, either claiming one thing or disproving the other but always masquerading as proper science. Flooding the world with this fluff is really not going to help regulatory authorities, and often only degenerates into mud-slinging between opposing groups.

Of course, it can also be used as a cheap space filler for some of us lot in the media.

At least RIA study author Kathleen Miller PhD was sensible enough to include a qualifier in her report: "Although energy drink consumption can be used to predict other problem behaviours, it does not necessarily follow that drinking these substances is a gateway to more serious health-compromising activities."

She added: "It is entirely possible that a common factor, such as a sensation-seeking personality or involvement in risk-oriented peer sub-cultures, contributes to both. More investigation is needed to study these relationships further, over longer periods of time."

Judge for yourself readers: Energy drinks linked to risk-taking behaviours among college students

Lawnmower tops the sound of summer

Tue, 29 Jul 2008 17:03:00 GMT

The gentle hum of a distant lawnmower has been voted the UK's favourite summer sound, according to new research released today (29 July).

The seasonal noise, which reverberates around the nation's gardens every summer, is likely to strike fear into the heart of many a hayfever sufferer, but nevertheless it pushed the sound of pub garden chatter into second place.

Personally I prefer the sound of crashing waves as I close my eyes whilst lying on a sunny beach.

This made number three in the survey of 2,500 Britons commissioned by Diageo's summer drinks brand, Pimm's.

Okay, many of you at this point are probably wondering where the sound of a cold beer glugging into a glass came. Well fear not. The sound of drinks being poured over ice arrived in at number six. Not too short of the sound of pigeons cawing (No, me neither).

According to the survey, 76% of Brits feel uplifted by their favourite sound of summer - an antidote to the current unpredictable weather.

How fitting then that the sound of rain should rear it's ugly head at number ten.

I think the real question should be: What sounds of the summer do we fondly remember from times past?

just-drinks - Back to full strength

Wed, 23 Jul 2008 17:35:00 GMT

Finally. Yes, finally, we here at just-drinks towers are able to unveil (that's right, unveil) our new deputy editor.

With Jessica Harvey having shifted three months ago to a publication within the William Reed empire, we've poached one of theirs.

Ladies and gentlemen, it gives me great pleasure to introduce... Chris Mercer.

Chris has been involved in the drinks industry in a journalistic capacity for over three years. He joins us from Drinks International, Wine & Spirit AND Off-Licence News (busy boy) where he was online editor.

Coinciding with me moving out of the Big Smoke, I'm sure many of you who work in - or are visiting - our fair capital, will meet Chris in the fullness of time. Meanwhile, if you'd like to say hello virtually, drop Chris a line at news@just-drinks.com.

I'll just put my feet up for a bit.

Coke and its fizz (a headline writer's dream)

Tue, 22 Jul 2008 16:57:00 GMT

This past seven days has been a tough one for the Coke brand. Late last week, The Coca-Cola Co. reported a fall in second quarter earnings, as the company took a hit on a non-cash impairment charge at bottler Coca-Cola Enterprises.

Things looked altogether bleaker, however, for two of its bottlers. CCE reported a second-quarter net loss of US$3.2bn. Meanwhile, over in Charlotte, Coca-Cola Bottling Consolidated announced plans to shed 5% of its workforce.

Beverage analysts at Goldman Sachs removed Coca-Cola Co from its Americas conviction buy list last week on the back of the "mixed" second-quarter earnings report. The deteriorating US economy is taking few prisoners and Coke is proving no exception.

"We now expect the drag from a weak US along with a tempered international backdrop to hold performance back," said analyst Judy Hong.

The problem Coke and its bottlers face is that the issue of declining volumes in its traditional CSDs is being made all the more serious by soaring raw material costs. The Coke family looks set to announce price rises to try and counter the problem, but one can only foresee this affecting volumes even further.

For more check out this week's In the spotlight

Fighting the tide of legislation in the UK?

Tue, 22 Jul 2008 16:44:00 GMT

Answer me this, would you? How inevitable, really, is it that the level of legislation affecting alcoholic drinks producers operating in the UK is set to rise?

Feel free to let me know your thoughts - anonymously, if you prefer. I've spoken to countless execs within the UK drinks industry and, on the record, naturally, not one of them has conceded that it is just a matter of time before the authorities come down harder on them over here.

Today's announcement, however, that the Department of Health in the UK has launched a fresh consultation on drinking culture, suggests that it's more when than if.

I had quite an interesting chat last week with the head of alcohol policy at SABMiller, Kristin Kaplan Wolfe (heads-up: an interview coming up later this month on just-drinks), and she, like everyone else, still maintained that the drinks industry had a case to fight, and was well-placed to resist the heavy rod of legislation.

Do you agree? I'm struggling to. We, as an industry in the UK, have let go of the reins, despite our best intentions. The press may verge on hysteria with their coverage of our binge-drinking culture, but surely there's no smoke without fire?

I hope you'll convince me I - and the UK government, I'll wager - are both wrong.

The 'Aldi effect' - what will it mean for you?

Wed, 16 Jul 2008 16:04:00 GMT

A 0.4% rise in sales at a UK pub chain wouldn't normally give much rise to discussion on the pages of just-drinks. However, news today that JD Wetherspoon has reported a small rise in sales in the 11 weeks to July 13 - taking the performance for the second half as a whole to flat - is significant on two fronts.

Firstly, the result is well ahead of the 3.1% decline experienced in the second quarter. And, as a result its gives the struggling UK pub industry a welcome fillip.

More interestingly, though, is the way the story is being portrayed in the UK and the perceived reasons behind this change in fortunes. "'Aldi effect' boosts JD Wetherspoon", runs the headline in The Times today.

Aldi, for those unfamiliar with the European retail landscape, is one of a clutch of discount retailers currently clawing market share off the traditional retail food giants as consumers look to stay on top of soaring food bills amid the credit crunch.

"JD Wetherspoon, the pub operator that has made a speciality of serving cheap food and drink, is benefiting from the 'Aldi effect' as hard-pressed consumers trade down to cheaper alternatives," The Times' correspondent Dominic Walsh wrote today.

There is little evidence yet as to how all this is going to affect the drinks producers. But there is enough in the way of figures to suggest there is going to be pressure on margins from the on- and the off-trade here in the UK.

Whilst we are on the subject of Aldi, this month's free members' briefing on just-drinks is an in-depth study of the discount retail trade in the UK. Anyone interested in the winds that are sweeping through this sector should really check it out.

The briefing takes a look at the major players and reviews the latest sales data and expansion plans from Aldi, Lidl and Netto. It also highlights best-practice strategies that these players are taking in order to increase market share. By adopting strategies such as private-label NPD, building on economic concerns and becoming more fashionable, the discounters are ensuring they are here to stay.

Download the 'Aldi Briefing' here.

InBev gets its man, I don't get my ride

Mon, 14 Jul 2008 14:00:00 GMT

So you want to know the biggest repercussion of Inbev's acquisition of Anheuser-Busch? Could it be Grupo Modelo? Cuba?

Oh no, I'll tell you what the most seismic of effects is.

I've had to cancel my trip on the Stella Artois-sponsored airship around London this afternoon, so I can listen in on a conference call from the two brewers.

Never mind, it's just a load of hot air, eh?

I'll get my coat.

InBev & Anheuser-Busch - this one's going to run and... Eh? Oh.

Mon, 14 Jul 2008 13:35:00 GMT

Well, that was quick, wasn't it? Just as we were settling down to enjoy what we all were convinced would be a long summer of takeover to-ing and fro-ing, Anheuser-Busch this morning decided that the price was right, and climbed into bed with InBev. While I'm not one to gloat - honestly, mum - I did say that, despite all the nationalistic noises coming out of the US, InBev's move for A-B would come down to numbers, pure and simple.

What makes InBev's victory - at US$70 per share - so anti-climactic is that some of A-B's comments in the past few weeks had suggested we could look forward to a battle royale that could have gone on for quite some time. Only last month, A-B's CEO, August Busch IV, was quoted as saying a takeover would not occur "on my watch". The US brewer also suggested last week that the presence of an InBev subsidiary in Cuba sits ill for a potential tie-up.

We've also had US senators wade in, and even the possible president-in-waiting, Barrack Obama, saying last week that he felt the takeover of A-B by a non-US company would be "a shame".

Evenso, the deal is done and dusted. What appears to be the major issue outstanding, however, is what will become of Grupo Modelo. The Mexican brewer, which is 50%-owned by A-B, appeared to object most strongly last month to being used as a pawn by A-B, and Modelo has now said it is "reserving its contractual rights". While A-B's holding in Modelo is not a deal-maker or -breaker, this side-story could at least provide us with some entertainment this summer, now that the blockbuster has finished.