Control States

Have you been following the press about privatization of some Control States?

In case you haven’t, Wine and Spirits Daily (June 7th edition) has a great score card on what’s been happening.

NABCA has issued a resolution in support of Control States. No surprise but people I’ve talked with have wondered why they didn’t do this some time ago. WSD reports that 4 states (NC, PA, WA and VA) are looking closely at privatization. So the debate must be getting serious.

I’m not sure I know how I feel about privatization.

Those who want to keep government involvement argue about jobs and the need for industry regulation or control in their jurisdiction. But the NABCA resolution states, “there is irrefutable proof that alcohol control systems have a positive public health and safety impact on their communities.” Does this mean that the 32 open states are not doing a good job in protecting health and safety? Or, that the industry, unless governed by state officials, will behave badly?

Follow the money. As WSD points out, in tough economic times, states will look to a range of resources to increase revenue including taxes, fees and privatization.

Hey, look at California – on the ballot this November is a voter initiative to legalize marijuana. The tax revenue from sales is seen as a way to help the state’s budget difficulties.

Interesting that the economic climate has created change in government’s involvement in the social climate. But I guess it’s always been that way.

Here’s a thought if you’re working in a state store that gets privatized – think about moving to California.

Continue Reading

Beer Market Woes

Today’s issue of Ad Age Daily has a lead story on declining beer sales. Ad Age Daily

Industry shipments are down 4% (Beer Institute); for the four weeks ending May 16, only 4 of the top 30 brands posted gains  (SymphonyIRI); the big boys saw large declines – Bud Light down 5.3% and Miller Lite down 7.5%, both vs. 2009 sales.

How come?

I don’t think it’s the economy, beer held its own vs. spirits and wine at the height of the recession…why should it decline now?

Could it be the growth at the top and bottom of the beer market? Craft beers and imports are doing okay as are the price brands. Bud Light and Miller Lite are hurting and that’s enough to upset the entire category.

Maybe after a few years of substituting beer for wine and spirits, consumers have returned to pre-recession consumption patterns.

My view is that the marketplace is cluttered with light beers including new entries such as MGD 64 and Budweiser Select 55. Adding to the clutter is a barrage of new products, line extensions, brand extensions at all price tiers, especially the top end. And, let’s not forget about the growth in craft beers.

So, maybe it’s just that consumers are drinking less but drinking better. Those of us in the spirits world know that phenomenon well.

Continue Reading

Say it isn’t so…

Two news items that caught my eye recently and just in case you haven’t seen them here they are. Both were reported in Mark Brown’s newsletter.

Southern Wine alcohol distributor seeks loans of $2 billion

Source: The Associated Press

Not even the alcohol distributors are immune from the national financial crisis.

Southern Wine & Spirits of America Inc. is seeking $2 billion in loans to refinance existing debt. The Miami-based distributor is the largest in the United States.

Bank of America Corp. is arranging a $1 billion revolving credit line and a $1 billion term loan, a source said. Both loans will mature in five years.

Budweiser’s Clydesdales now come clopping at a cost

Source: USA Today

The Budweiser Clydesdales are still available for appearances … at a cost.

The St. Louis Post-Dispatch reported Monday that Anheuser-Busch has quietly begun charging $2,000-per-day for Clydesdale appearances, ending the brewery’s long practice of absorbing nearly all of the cost of showcasing the iconic horses.

The brewery says the fee helps to offset the $8,000-per-day cost of putting a hitch team on the road. Until now, event organizers or beer wholesalers were asked to pay nominal costs for stabling and feed.

It’s tough out there…

Continue Reading