SABMiller exit ignites takeover talk
Source: Times Live
22 February, 2015
The dramatic exit of SABMiller's finance director, Jamie Wilson, which shocked company insiders and the investment community this week, could spur Anheuser-Busch InBev into making its long-expected move on its rival.
SABMiller spokesman Richard Farnsworth would not elaborate on the official explanation for Wilson's sudden departure, other than to say that "he has tendered his resignation for personal reasons".
But analysts said this week that AB InBev could use the perception of management instability at SABMiller to launch its takeover plan. Market speculation is that AB InBev could pay up to $122-billion (R1.4-trillion) for SABMiller - making it the largest deal involving a South African firm.
Fuelling speculation, SABMiller's share price climbed after Wilson's resignation was announced.
Analysts said they believed this was due to the increased likelihood of an AB InBev bid, rather than any indictment of Wilson's contribution .
Additional information disclosed with SABMiller's statement on Wilson's departure suggests his exit was not on amicable terms.
Calculations show that the resignation may have cost Wilson more than R150-million in lost options and shares. If AB InBev does do a deal with SABMiller at a premium to its share price, Wilson's loss could be closer to R200-million.
These "personal reasons" do not appear to be health-related, judging from additional information provided by SABMiller this week. This showed that Wilson will depart with the absolute minimum that SABMiller is contractually obliged to give him. He will lose the claim to all of his unvested share options and share awards, which now lapse.
Before his resignation, Wilson had 376 098 shares under option at exercise prices of £22.40 (R402) to £33.30. He would also have received a maximum of 163299 SABMiller "performance" shares had the company achieved "stretching" long-term performance targets.
These performance shares, which have a current value of more than R100-million, have been forfeited.
Wilson will also lose claim to the 35 726 SABMiller shares held in the SABMiller Employees Benefit Trust, which were due to be released in equal tranches in June 2015 and 2016.
These shares that Wilson has forfeited are worth about R23-million.
Wilson's loss may be even greater if a deal with AB InBev takes place, as such a deal would probably trigger early payout of all options.
Farnsworth said it was standard SABMiller policy that anyone who resigned forfeited unvested options.
But the group's remuneration policy suggests the board does have some discretion to award above the contractual limit. SABMiller's annual report says that in the case of a resignation for health reasons the "normal practice is that unvested share options and share awards are pro-rated for time served".
One recent "resignee" from SABMiller said that even a "good leaver" in robust health was usually allowed to keep his or her unvested options on a pro rata basis.
This suggests there was a falling out between Wilson and group CEO Alan Clark. Analysts said the bust-up may have been related to AB InBev.
Chris Gilmour of Absa Wealth and Investment Management said: "Did he oppose the bid, or was he an overly enthusiastic supporter of it?"
Trevor Stirling of Bernstein Research said the resignation was a "genuine surprise", even to insiders.
"But I don't think it's related to the potential AB InBev bid," he said.
In the past financial year, Wilson's annual bonus was 61% of the maximum, marginally below Clark's 63%
Wilson's departure highlights the extent to which the brewer's once stable top management team has changed. For decades, SABMiller's top management layer was dominated by Meyer Kahn, Graham Mackay and Malcolm Wyman.
Wilson joined the group in 2005, and took over as chief financial officer from Wyman in 2011. In 2013, Clark became CEO.
Weekend Munching: Survey shows a stronger consumer eating more and trading up
Source: Goldman Sachs
Restaurants continue to be a primary beneficiary of a stronger consumer
Our proprietary survey showed an optimistic consumer, with restaurants continuing to outscore other categories in spending intent. Most incomes also saw relative intent to spend at restaurants grow; however, it shrank in favor of appliances for <$30K, which could indicate spending on pent up demand for durables.
Signs consumers are trading up
The sub-$50K consumer indicated a growing portion of restaurant visits at fast casual concepts (from 18% in 2Q14 to 27% in Jan-15) and a shrinking portion of restaurant visits at QSR (56% to 49%). For the >$50K consumer, casual dining grew from 26% to 32% with both fast casual (down 2%) and QSR (down 6%) donating share.
Updating PBPB for 4Q, 12m target rises to $15.50 from $13.50
Reflecting a stronger top line and lower tax rate, almost entirely offset by higher costs, our F15-F17 EPS adjust to $0.21, $0.31, and $0.42 from $0.24, $0.31, and $0.41. We are more optimistic on PBPBs ability to grow traffic, although have concerns about the margin investment required.
Domestic and import beef prices diverged last week, as import90 prices increased 2.8% while domestic prices were down 1.3%. Our chicken wing index declined 2.1% over the past two weeks, coming off its Superbowl peak. Meanwhile, avocado prices continue to rise with typical seasonality.
Over the past two weeks, insiders at both YUM and SBUX have sold almost 30K shares, while MCD insiders have sold more than 18K shares.
No Additives in Bourbon, No Way, No How
Source: The Chuck Cowdery Blog
Saturday, February 21, 2015
WARNING: This entire post is about geeky labeling rules stuff.
The picture above came to me from Germany. It is the back label of a bottle of Bulleit Bourbon. In English, the phrase indicated means "Contains Caramel." I posted it elsewhere and a lively discussion ensued. Another correspondent in Germany theorized that, because Diageo sells so many scotches, and they contain caramel (which must be disclosed in Germany), the person in charge of their German label compliance must have assumed bourbon contains caramel too. The statement no longer appears on Bulleit Bourbon labels in Germany, so his theory seems sound.
What does Diageo say about it? I asked but they never answered.
The discussion caused some people to refer back to a post here in September, where we discovered that flavoring is permitted in American whiskey in some very limited circumstances. We also noted a seeming conflict between the rules themselves and the TTB's Beverage Alcohol Manual (BAM).
The BAM is a tool created by TTB for the convenience of producers. It is easier to use than the rules but is subordinate to them. If they conflict, the rules rule.
In the comments to that September post, we received some very good input from some very knowledgable people and also, offline, a clarification from TTB itself, which we published as a comment in the same thread.
It's there, in the comments, and has been since September, but in light of yesterday's discussion I now realize it didn't get enough play at the time, so here it is again. This is TTB's statement:
"Bourbon whisky can't have coloring, flavoring, or blending materials because 27 CFR 5.23(a)(2) allows the use of such materials up to 2 ½ percent only if 'customarily employed therein in accordance with established trade usage.' TTB's interpretation of this is that Bourbon whisky does not customarily include such usage (straight or otherwise).
"The formulation office would not see a formula for Bourbon whiskey as it is not required. The BAM states that harmless coloring, flavoring and blending material (HCFBM) is not allowed to be added to Bourbon whiskey. Caramel color would fit within HCFBM. (I did check the table in the BAM, and it clearly indicates that no HCFBM may be added to Bourbon whisky or Straight Bourbon whisky.)
"So, technically, the BAM is not contradictory to the regulation at 27 CFR 5.23(a)(2) . nor to the standard of identity for the class of whisky and several types in the regulations at 27 CFR 5.22(b). The answer to the question is that you may not add caramel or caramel coloring or flavoring to Bourbon."
This statement from TTB confirms that bourbon may not contain any additives under any circumstances. Through this exercise we learned that rye whiskey (but not straight rye whiskey) may. Rye whiskey may contain 'harmless coloring, flavoring, or blending materials up to 2 ½ percent,' because for that product said additives are 'customarily employed.' This is why Templeton Rye is not labeled as straight rye, according to its makers. It contains some of the permitted additives.
It is unknown at this time whether or not this dispensation exists for any other named types, such as wheat whiskey. Now at least you know that if your rye whiskey isn't labeled 'straight,' it might contain some flavoring or coloring.
Some might ask how this affects so-called flavored whiskeys such as Red Stag by Jim Beam. Short answer is, it doesn't. That's a different issue, discussed at length here.
TTB, just in case you don't know, is the federal regulator of all beverage alcohol products; beer, wine, and distilled spirits. It is part of the Treasury Department. The initials stand for 'Tax and Trade Bureau.' Technically, TTB's rules only apply to products sold in the U.S., but they do apply in Germany and many other countries through treaty agreements.
The Good and Not-So-Good of the Old Grand-Dad Reboot
Source: The Chuck Cowdery Blog
Beam Suntory has given Old Grand-Dad Bonded a bright new look and a fancy new price, $24.99 MSRP. (It has been selling at closer to $20.) But the upgrade is a nice job and Old Grand-Dad bourbon deserves more attention. It's also good that Beam is emphasizing the bond, rather than the other Old Grand-Dad expressions. Historically, Old Grand-Dad Bonded was the #1 bonded bourbon when bottled-in-bond meant something to bourbon drinkers.
The new label emphasizes the brand's high rye mashbill. The label is printed on the glass and the bottle is tall and sleek, for a modern look. It now has a cork topper instead of a screw-cap.
These are all improvements, but they made one screw-up. There is no evidence to support the new claim that Basil Hayden "was known for distilling bourbon with a high rye content." In fact, no one really knows when the current Old Grand-Dad recipe was adopted, as the brand had many different owners before Beam acquired it in 1987. What is known is that Beam continued to use the same recipe the previous owner was using, the same recipe Beam still uses, but that's about as far as it goes.
Of the many bourbon brands Beam acquired when it merged with National Distillers in 1987, the Old Grand-Dad recipe was the only one Beam continued to make the same way. All of the other National brands, such as Old Crow, were simply switched to Jim Beam distillate when the liquid made by National ran out.
Although Beam doesn't officially disclose mashbills, Booker Noe told me many years ago that the Old Grand-Dad recipe is about 30 percent rye, as compared to Jim Beam at about 15 percent. Four Roses also uses more rye than average in both of its mashbills. At the other extreme, some major bourbons contains as little as 8 percent rye.
It is important to challenge this new exaggeration about the origins of the Old Grand-Dad recipe because there is real history here, important history that deserves to be told without brand-hyping distortion.
Here's a little bit of it.
Basil Hayden was one of the leaders of a migration of Catholics from Maryland to Kentucky in the late 18th and early 19th centuries. Although they came west in small groups over about a 30-year period, they all came with the intention of settling in what are now Marion, Nelson, and Washington Counties. They wanted to settle close together for mutual support and, specifically, so they could attract a priest.
Maryland, which had been established as a colony for English Catholics, eventually turned on them. After 1692, Maryland established the Church of England by law and forced Catholics to pay heavy taxes to support it. Catholics were cut off from all participation in politics. The Mass, the Sacraments, and Catholic schools were all outlawed.
When the successful conclusion of the Revolution opened up more of the interior for American settlement, many Catholics headed west. The Kentucky Catholics were the first large Catholic enclave west of the mountains.
Most of the migrants were farmers and many of them were distillers. So far as we know, Basil Hayden was a typical farmer-distiller of his era. Nothing has come down to us about his recipe and it is probable that he, like his contemporaries, distilled whatever he had on hand without consideration of niceties like mashbills. Again so far as we know, Basil's son Lewis was a farmer-distiller much like his father.
The Maryland Catholic families stuck together and intermarried. Many of those families are still prominent in those same three Kentucky counties. In 1818 Lewis Hayden married Mary Dant, daughter of another famous distilling family in the Kentucky Holy Lands. They had 14 children, including a son named Raymond.
After the Civil War (1861-1865), whiskey-making left the farm and became industrialized. In about 1882, Raymond Hayden teamed up with a former treasury agent to establish a commercial-scale distillery at Hobbs, Kentucky, a stop on the then-new branch of the Louisville and Nashville Railroad. They named the distillery Old Grand-Dad and put a portrait of Raymond's grandfather, Basil, on the label. With the industry growing rapidly, many producers cultivated the image of 'old time' distillers like Raymond's grandfather.
Although Hayden's distillery made both rye whiskey and bourbon, this was common at the time and doesn't prove the bourbon recipe was uniquely high-rye. It was Old Grand-Dad bourbon that became successful nationally and the rye was discontinued.
After Hayden's death, Old Grand-Dad was acquired by members of the Wathen family, who also had been part of that Catholic migration. They continued to sell Old Grand-Dad bourbon as medicinal whiskey during Prohibition and their company, American Medicinal Spirits, became a major component of National Distillers after Repeal.
As for the recipe, it's likely that when National revived the brand after Prohibition, they simply developed a recipe they thought would be appropriate. As rye whiskey and bourbon had been about equally popular before 1920, it is likely that bourbon recipes containing a healthy dose of rye were also common. But after Prohibition, consumers want a softer taste, and rye can taste hot and harsh, especially in a young whiskey. Rye whiskey itself struggled after Repeal and many bourbon makers reduced the percentage of rye in their mashes to produce a milder taste. In addition to softening the taste, rye was (and is) much more expensive than corn, so reducing the rye content also saved money.
Old Grand-Dad was positioned as a premium brand and also as an old, traditional one, so it retained its old, traditional recipe. That's important, even if the recipe isn't 200+ years old. Beam Suntory does a disservice to the brand's authentic heritage by exaggerating it.
Wells Fargo's Weekly Economic & Financial Commentary
Source: Wells Fargo
February 20, 2015
Seasonally-adjusted housing starts reached 1.07 million units in January, falling short of economist expectations, while reported starts for December 2014 were revised lower.
Single-family housing starts weighed heavily on new home construction, falling 6.7% month-over-month, while multifamily starts grew 7.5%.
January's headline Producer Price Index (PPI) remained flat year-over-year, the lowest reading on record, as oil prices continued to put downward pressure on inflation.
Although headline PPI remained steady, core inflation, which excludes food and energy prices, rose a healthy 1.6% over the same period.
The U.S. Energy Information Administration announced that crude oil inventories rose 7.7 million barrels last week to an all-time record of 425.6 million barrels in total supply.
Domestic producers continue to cut production and capital expenditure forecasts for 2015, but it appears that many drillers are continuing to produce in order to cover the significant fixed costs of wells that have already been tapped, contributing to the growing crude inventories.
Despite the Bank of Japan's ¥74 billion quantitative easing program in 2014, the Japanese economy grew at only a 2.2% annualized rate for the year, significantly below the 3.7% that was expected.
As a result of the weak growth, the country's central bank signaled that it would increase its quantitative easing program going into 2015, causing the yen to fall more than 10.0% against the U.S. dollar.
With near-term expectations of 2.0% inflation, the Bank of England recently signaled that it will push back planned interest rate hikes for the foreseeable future.
It is anticipated that the country's main policy rate will rise from its current level of 0.5% to 1.5% by the end of 2016.
Point of View
Credit Market Insights
Household debt outstanding increased by $1.2 trillion in 4Q2014, with mortgage lending and student loans as the largest contributors.
The total level of student loan debt outstanding has risen to an all-time high of $1.16 trillion, with student loans accounting for nearly 10.0% of total household debt as of 4Q2014.
Brand Battles: Return of the Monster
We've missed you, old friend.
Monster Energy Co. went an astonishing two straight weeks without filing a case at the TTAB, but roared back with a vengeance this week with three filings against two brands that it says got too close to its apparently oft-infringed trademarks.
The first went against Sonoma Estate Vintners LLC, a Santa Rosa, California-based private label winemaker that had applied to register "Monster Mash" for a line of wine. The other two targeted a firm called MOJO 6-D Athletics LLC, which wanted a word-heavy logo that included the phrase "Unleash the Beast," one of Monster's many registered marks.
Monster is represented by Knobbe Martens Olson & Bear LLP. Sonoma Estate is represented by Carle Mackie Power & Ross LLP.
Are YouTube Videos With Alcohol Dangerous?
Feb. 20, 2015
A new study shows popular YouTube videos make light of alcohol
Prior research has suggested that teen media exposure to alcohol, whether through TV shows or movies, could influence their drinking behaviors. Now, a new study suggests that online videos may also be a site for negative exposure.
In the new study published in the journal Alcoholism: Clinical & Experimental Research, a team of researchers watched 70 of the most popular videos on YouTube related to intoxication in order to see what kinds of messages they were sending.
To do that, the researchers searched for the terms "drunk," "buzzed," "hammered," "tipsy," and "trashed" and chose the most popular and relevant videos in those categories. In order to characterize the videos, they coded each one for a variety of factors, like how much alcohol was depicted, who the characters were and whether the video showed consequences of binge drinking. Overall, the videos contained more men than women, and usually depicted a specific brand. Rarely did the videos show poor side effects like withdrawal.
The videos with the most "likes" tended to be funny, and the overall vibe of the video was upbeat and positive when a specific brand was mentioned. Hard alcohol was the most common beverage featured, even though beer is the most common alcoholic beverage consumed in the United States, the authors note.
In the study, the researchers didn't make any connections between watching the videos and drinking more or drinking more dangerously. But their findings shed light on what alcohol-related content is available online. The findings are still preliminary, but online videos may be another way to target young people who might be susceptible to messaging.
Conversely, the researchers also view YouTube as a potential venue to reach young people with positive messages about drinking as well. Videos could educate teenagers about the potential consequences of behaviors like binge drinking. Either way, YouTube may be worth further consideration by public health experts, they note.
Strap-on booze baby seeks funding
Source: the drinks business
by Lauren Eads
20th February, 2015
In what could be the most bizarre Kickstarter campaign in memory, a US entrepreneur is attempting to raise $70,000 to launch a strap-on booze-filled newborn that you can drink from.
Described as an "expressive, customizable, hands-free beverage insulator that looks like a baby", the "Cool Baby" makes drinking in public "adorable", according to its inventor, Brooklyn-based Simon Philion.
While there is a market for objects that conceal alcohol, this has to be one of the strangest of disguises.
Announcing the project on his Kickstarter page, Philion said: "Dress it up to look like you, like someone else, like a part of a costume, like a fan of your team. Use it to get a seat on the subway, strike up a conversation, or mock a biological baby. Whatever you do with it, The Cool Baby is a fun, expressive, hands-free beverage insulator for a wide variety of occasions."
The semi-realistic baby can be pulled apart and has a hatch on its bottom that houses a 36oz. drinks container which attaches to a straw that extends through its body, allowing you to drink through its skull.
Philion says that he has already sourced an agent and has factories in place to manufacture more the cool babies once the project is funded.
"The reason my funding goal is a little high is because I might have to use up to three factories to get everything I need into this one product", he said. "I'm finding that manufacturing is fascinatingly not-straight-forward."
Amazingly, 203 people have backed the project raising $11,156 so far of its $70,000 goal, with eight days left to go.
United Kingdom: Number of women drinkers treated in hospital for liver failure soars with teenage girls being treated for life-threatening condition
Treatment for women aged under 30 increased by 58 per cent since 2004
Youngest girl was 19-year-old who was treated in Cambridgeshire
Source: Daily Mail
By Lydia Willgress for MailOnline
22 February 2015
The number of female drinkers suffering from liver disease has soared in the last ten years.
Older women and teenage girls are particularly vulnerable, according to new data from the Health and Social Care Information Centre (HSCIC).
Treatment for women aged under 30 has increased by an incredible 58 per cent since 2004.
The youngest girl hospitalised with the disease was a 19-year-old from Cambridgeshire.
Last year 5,214 females aged over 30 were also diagnosed with alcoholic liver disease - up from 4,210 in 2004.
Women are thought to be more susceptible due to body size.
Experts are blaming binge-drinking for the rise in the condition.
Recent figures show that teenagers are consuming twice as much alcohol - 10.4 units a week compared to 5.3 units a decade ago.
Andrew Langford, chief executive of the British Liver Trust, said that liver disease in the UK was 'spiralling out of control'.
He said: 'Unfortunately the increasing amounts and regularity in which women are drinking are causing these shocking increases in alcohol related liver disease.
'Many women are now drinking most days, whether that is a few drinks after work or opening a bottle of wine when the kids have gone to bed, and this is leading to drinking too much on a regular basis.
'Liver disease is now the third main cause of premature death. The government and the alcohol industry must make it a lot clearer what is a safe amount to drink.
'They must also very importantly encourage anyone who drinks to take at least two or three consecutive days off every week.
'We encourage everyone to complete the liver health screener to assess what risk they maybe at, get clear advice on what to do and if necessary what to discuss with their GP.'
Kingsley Manning, chair of HSCIC, said: 'This paints a powerful picture of the many impacts that alcohol has on patients and the NHS in this country.'
Read more: http://www.dailymail.co.uk/health/article-2963808/Number-women-drinkers-treated-hospital-liver-failure-soars.html#ixzz3SUhavVLU
United Kingdom: Will drinking on trains hit the buffers? Call to end 180-year tradition and make EVERY service in Britain alcohol-free - to put a stop to 'mind the gap' deaths
Drinking on intercity trains and across the rail network could be banned
New plan to prevent deaths of drunken passengers who fall on to the rails
Measure proposed after 18 people were killed over the past five years
Source: Daily Mail
By Martin Delgado for The Mail on Sunday
21 February 2015
For more than a century, the buffet car tipple has been one of the few pleasures afforded railway travellers.
But drinking on intercity trains and across the rail network could be banned as part of a new plan to prevent the deaths of drunken passengers who fall through the gap between doors and platforms, or between carriages, on to the rails.
The extraordinary measure has been proposed by the rail safety watchdog after 18 people were killed and almost 250 were seriously injured over the past five years after falling from trains or platforms. Many incidents involved intoxicated travellers.
Opponents say a ban - one of a number of ideas put forward in a report by the Rail Safety and Standards Board (RSSB) - would unfairly penalise the thousands of rail users who drink moderately on journeys.
In its 72-page report on 'platform- train interface' - jargon for getting off and on the train - the RSSB says consideration should be given to following the example in London, where there is already a ban on the consumption of alcohol on buses and the Underground. It was outlawed by Boris Johnson in 2008 in one of his first acts as London Mayor.
The report also reveals that 48 per cent of the passenger-fatality risk on the rail network occurs during boarding and alighting and that drunkenness was identified as a factor in 21 of the 32 deaths at the 'platform-train interface' in the past ten years. Males, it says, are involved in more alcohol-related incidents than females.
It also reveals that other causes of accidents include passengers being distracted by mobile phones and tablets, travellers falling over suitcases lying in their path, and rail users - in particular women - tripping up due to unsuitable footwear.
Last night pop impresario and railway enthusiast Pete Waterman hit out at the proposed alcohol ban saying it was not passengers drinking on the train who were to blame.
He said: 'Most alcohol is not drunk on trains. It's people coming out of office parties and abusing staff.
'Ninety-nine per cent of passengers drink responsibly. It would be lunacy to ban alcohol on the entire network just because of a few problems on platforms. The answer is to stop drunks from entering the station in the first place.'
The RSSB report calls for a 'formalised agreement' between Network Rail, train companies and the British Transport Police on how best to deal with inebriated passengers.
'This agreement will be supported by investigation into additional legislation and policy... for example banning the sale and consumption of alcohol on trains, similar to TfL (Transport for London),' it says.
The report proposes a number of other measures for improving passenger behaviour, including:
Offering passengers an app that would log the time they arrive at the station. Those turning up in good time for their train would receive airline-style loyalty points.
Installing a sensor in the yellow strip marking the danger zone at the platform edge which would communicate electronically with train tickets via the barcode and award points or credit to passengers who wait safely behind the line.
Displaying holograms at stations to deliver safety advice and warnings to passengers.
At present, football 'specials' and other services laid on to get fans to big sporting events are sometimes designated 'dry trains' to combat drunken behaviour. And alcohol has been prohibited on most evening and early morning train services in Scotland since 2012.
Making the entire UK rail network alcohol-free would end a tradition dating back nearly 180 years.
When Britain's first intercity line into London, between Euston and Birmingham, opened in 1838, a buffet was laid on at Wolverton station - the halfway point on the five-and-a-half-hour journey - so that passengers could obtain refreshment.
Railway historian Phil Marsh said: 'Most of the passengers were in open carriages - unless they were travelling first class - so they needed a stiff drink to get them through the rest of the journey.'
These days many stations have bars and other alcohol outlets and on-board food and drink sales provide train companies with an important source of revenue.
A British Transport Police spokesman said last night: 'Drunkenness and anti-social behaviour on the railway are unacceptable.
'An alcohol ban is a matter for the train companies, but if one were to be imposed, we would enforce it as required.'
Read more: http://www.dailymail.co.uk/news/article-2963431/Will-drinking-trains-hit-buffers-Call-end-180-year-tradition-make-service-Britain-alcohol-free-stop-mind-gap-deaths.html#ixzz3SUqTM45f
Ivy League alcohol policy roundup
Source: Daily Pennsylvanian
By Caroline Simon
February 22, 2015
College alcohol policies nationwide have come under scrutiny recently following increased attention to sexual assault and other alcohol-related dangers. The Daily Pennsylvanian rounded up the details of each school's policies.
Penn officially prohibits underage drinking but allows students over the age of 21 to possess alcohol in residential areas, and residential deans have the authority to govern alcohol monitoring in their respective houses. Usually, students found possessing alcohol do not face legal consequences.
Parties serving alcohol must register with the University and are required to hire University-approved security and bartenders. Hard liquor is not permitted at on-campus events, but may be served at events held by third-party vendors, such as parties at downtown clubs. Additionally, events with alcohol are required to supply non-alcoholic beverages as well as food and must not discuss alcohol in their advertisements.
Many of these rules are effective in regulating alcohol consumption at on-campus events, but students tend to avoid these policies by holding off-campus parties, and underage drinking remains an important aspect of social life at Penn.
However, Penn's policies are ultimately designed with student safety in mind. Penn's medical amnesty policy ensures that students seeking medical attention for themselves or a friend after substance use will not be held legally responsible for underage drinking.
Although Ivy League universities are unified in their prohibition of underage drinking, a closer look at minor policies reveals there is not total agreement about how to regulate student alcohol use.
Brown prohibits alcohol in all residential areas, including Greek houses, and events with alcohol may only be held in supervised public areas for students of legal age. Parties serving alcohol are also banned during certain periods of the year, such as reading days and finals. Brown's medical amnesty policy also requires students who receive medical attention to follow up with an educator.
Columbia bans alcohol in certain residence halls but allows residence staff to give several warnings to students caught with alcohol before referring them to higher administration. Events at Columbia with alcohol must be registered and must follow specific guidelines - according to Columbia's website, alcohol "not specifically manufactured for human consumption" is prohibited, and students of legal age must provide double proof of identification.
Alcohol use in residences on- or off-campus is governed by individual residential contracts, and students of legal age are permitted to possess and consume alcohol in Cornell dorms. Like Penn, Cornell students must register events that will involve alcohol with the university. However, Cornell's Office of Fraternity and Sorority Affairs maintains its own process of approval and registration for events with alcohol.
Recently, Dartmouth took the drastic step of imposing a campus-wide ban on hard alcohol. At Dartmouth, students of legal age can drink in many university spaces, including residences, but the regulations specifically ban public intoxication. Students who violate the rules are required to take part in intervention programs. These programs are also mandatory for students who are hospitalized for alcohol-related reasons.
Harvard permits students of legal drinking age to drink alcohol in their rooms and host alcohol-related events, but there is a limit to how many students are allowed in one room at a time. Larger social events are permitted to have alcohol only if they will be attended by Harvard students - Harvard's website says alcohol is always banned at events with attendees from "beyond the Harvard community."
Princeton's alcohol policies emphasize the seriousness of pressured drinking and expressly forbid forcing students to drink in hazing situations. Students who are of legal age are allowed to drink in many areas but cannot provide alcohol to others without permission, regardless of the age of the recipients. Like other universities, students who violate the rules are subject to warnings before facing any disciplinary action.
Yale students who are of legal drinking age are allowed to drink in residential areas, but students who wish to host events with alcohol are subject to extensive regulations. The rules emphasize bars at parties must be well-lit and there must be a physical separation between alcoholic beverages and non-alcoholic beverages or food. Additionally, all Yale parties are banned from serving grain alcohol.
West Coast Port Employers, Union Reach Tentative Five-Year Agreement
Union employees and maritime association members still need to ratify the contract
By Laura Stevens And Erica E. Phillips
Feb. 21, 2015
West Coast port employers and their union said they reached a tentative five-year agreement on a new contract late Friday. The pact brings an end to a nine-month standoff that resulted in significant slowdowns at the ports.
The International Longshore and Warehouse Union and the Pacific Maritime Association were locked in negotiations all day Friday after the White House sent Secretary of Labor Thomas Perez to urge the two groups to come to an agreement. He threatened to send the parties to Washington, D.C., if the situation wasn't resolved by the end of the day.
Union employees, as well as members of the maritime association, will need to ratify the contract.
"After more than nine months of negotiations, we are pleased to have reached an agreement that is good for workers and for the industry," said maritime association President James McKenna and union President Bob McEllrath, in a joint statement.
The two sides didn't release details of the agreement. Mr. Perez said the ports would resume full operations Saturday evening.
The main sticking point in the negotiations was the issue of arbitration, Mr. Perez said late Friday in a conference call with reporters. Currently, four regional arbitrators serve as judges in disputes between union workers and employers. That system will change under the new agreement, he said, though he declined to elaborate other than to say it will ensure fair treatment.
"The parties have agreed to ensure there are fully operational ports up and down the West Coast beginning tomorrow evening," Mr. Perez said. "I am confident that they understand the urgency of the task of eliminating the backlog."
The White House expressed gratitude to Mr. Perez in a statement late Friday, saying the agreement was "a huge relief for our economy-particularly the countless American workers, farmers, and businesses that have been affected by the dispute and those facing even greater disruption and costs with further delays."
A pact would be welcome news to shippers whose goods have been delayed for weeks by alleged work slowdowns, some suspended nighttime and weekend operations and continuing congestion at ports along the West Coast-particularly at Los Angeles and Long Beach. It is expected to be months, however, before cargo snarls untangle and shipping returns to normal.
Port of Los Angeles Executive Director Gene Seroka estimated last month that it could take eight weeks to get the port back to normal, while other logistics professionals have said it could take up to six months.
In San Pedro, Calif., home to thousands of longshoremen and their families, the usual racket of cranes moving containers and trucks lining up to load cargo at the Port of Los Angeles had fallen silent at night for weeks.
"It's so weird to not have them working out there at night," said Janice Hahn, the U.S. Congresswoman who represents San Pedro and the surrounding area, the nation's primary entry point for cargo of all kinds from Asia.
At Godmother's Saloon in San Pedro, 59-year-old longshoreman Jack Bagliazo said Friday night that the dockworkers were ready to get back to a normal schedule.
"Nobody wanted this," Mr. Bagliazo said. "It took nine months-you wonder, what were both sides asking for?"
Oakland Mayor Libby Schaaf has questioned whether the ports will ever return to normal, as some shipping companies may choose to continue to use other ports.
"As we certainly learned from the 2002 lockout, when that business goes away, most of it never comes back," Ms. Schaaf said.
The Port of Oakland is typically a second stop for a number of shipping lines after the ports of Los Angeles and Long Beach, and importers use it to ship items such as produce and wine back to Asia.
However, some carriers have been skipping that port, instead dropping off all cargo in Southern California or choosing a completely new route to ports in Canada, Mexico or on the East Coast.
Even with the tentative agreement, the ports face a number of structural challenges that contributed to worsening congestion over the past year. Global shipping companies in recent years have tried to increase their economies of scale through using larger cargo ships and sharing ships, which means cargo is often out of order for unloading.
In addition, the shipping companies shed their chassis, which are used by trucks to haul containers, selling them to leasing companies that at times have struggled to deploy them where needed.
The slowdown at the West Coast ports has caused widespread pain for retailers, meat and poultry companies, and manufacturers across the country. Major ports that have reported January import and export volumes showed a precipitous drop in cargo.
Demonstrating the magnitude of the problem, on Friday morning 27 ships were at anchor outside the ports of Los Angeles and Long Beach. On a typical February day last year, no ships were in line.
Wine industry keeping eye on Empire Wine dispute
Source: The Record
By Lauren Halligan
A local wine retailer, displeased with a state agency's actions against them, is fighting back legally in what could be a long battle.
Last August, successful local business Empire Wine of Albany received a cease and desist letter from the New York State Liquor Authority (SLA), because it was supposedly violating a law - not a New York state law, but a law on the books of other states - by selling its product to other parts of the country.
The wine retailer was charged with 16 counts of improper conduct, for different states to which it had shipped wine.
Empire Wine contends the State Liquor Authority is making up its own rules as it goes along, and not conveying them to licensees.
"Not only is the SLA attempting to enforce a non-existent law against a local retailer, but it's also doing everything it can to ensure we don't have a right to due process and an ability to defend ourselves," said Brad Junco, owner and operator of Empire Wine in a press release. "The SLA has fought at every step to hide the details of this case, and now the agency is refusing to let us question the staff members who were involved in this case and the policies under question. We hope a judge will see these actions for the blatant overreach that they are, and order them to appear at the hearing."
The local retailer was seemingly under the spotlight after found to be dealing with a wholesaler called Winebow, which was under investigation at the time for failure to post prices.
Empire Wine's lawyer Will Nolan claims the SLA does not have the authority to do that, because its regulations do not say anything about violating laws of other states. "There's nothing about shipping to other states," he said, which is the issue at hand.
The rules state that the authority can revoke, cancel or suspend a liquor license for anything the licensee does that the SLA deems improper. "Really, really, really vague, broad language," he said.
The lawyer said: "It was the SLA going out and trying to find evidence that Empire was violating laws of other states, and then concluding that it was, and then coming back to Empire and saying 'Well, pay us money or we'll take your license.'"
The SLA sees it differently.
The SLA director of public affairs, William Crowley, said that charging Empire Wine for improper Conduct is holding the company to the same standards as every other state-licensed retailer.
Empire Wine asked, in writing, that the SLA charges be withdrawn. The office responded verbally that the charges weren't going to go away.
The retailer pleaded not guilty to the charges administratively, and then decided, last September, to challenge the SLA with a lawsuit in state Supreme Court.
The court dismissed the suit without prejudice. In rejecting Empire's case, Judge George Ceresia wrote, "the Court is of the view that (SLA) possesses abundant statutory authority to commence and maintain a license revocation proceeding."
Then, the system sent Empire Wine through an administrative hearing process, which started last month, held before the SLA with an assigned judge.
"In addition to sending this case back to the SLA for an administrative hearing, Justice Ceresia's decision also upholds the SLA's clear statutory authority to bring charges when a liquor store illegally sells and ships wine," Crowley said.
At a Jan. 23 hearing the SLA produced one witness, an investigator from the agency named Ethan Manning, who had no knowledge of the laws of other states and didn't attempt to claim that any other states' laws were being violated, according to Nolan.
When Empire Wine called upon two additional SLA employees as witnesses, director of enforcement Noel Colon and deputy commissioner of licensing Kerri O'Brien, the SLA refused, despite having prior notification and subpoenas from Empire Wine. Nolan said he wanted to ask them when the agency changed the policy and if it is now following a new policy, "because it seems to be unclear if it is."
The administrative law judge, who doesn't have the power to enforce or quash a subpoena, then adjourned the case indefinitely, so that Empire Wine could request a judge to enforce the subpoenas. On Feb. 4, Empire Wine commenced a special proceeding in state Supreme Court to try to enforce the subpoenas that would require the SLA employees to attend and testify.
The case isn't likely to hit a courtroom again unless and until a final determination is made at the SLA level, and one of the parties wants to appeal from that decision.
"It could literally take years to get to a just result here," Nolan said. "I think that ultimates we will prevail, the question is at what stage and how long with that take."
Meanwhile, Empire Wine is still shipping wine out of state, as it's done for many years, just like hundreds of other retailers out there, Nolan noted.
"I think that a lot of the industry is waiting and watching to see what happens with this," Nolan said.
"Even if the state were to win this case, it loses," Nolan said. "The consumer loses, the state loses, everybody loses, because the state it ultimately interfering with commerce, preventing job growth, preventing revenue from coming into the state."
This month, the state of Ohio issued a cease and desist letter to the retailer, and Empire Wine has stopped shipping there.
One of the retailer's defenses is that the SLA has had a policy in the past of allowing out-of-state wine shipping freely, never interfering with its own licensees from doing that. However, the SLA produced evidence that it has brought charges against other retailers for illegally shipping alcohol. For instance, on Nov. 6, 2013, the SLA accepted an offer by Liquors Galore for a cancellation of their license and a $25,000 civil penalty, after the liquor store violated a court order to stop illegally shipping to residents in states where the practice is illegal.
Additionally, after receiving complaints from retailers, on Aug. 12, 2013, the SLA issued cease and desist order to New Jersey based online wine retailer "Wine Library" for directly shipping wine to New York state residents. Additional cease and desist orders have been issued to retailers in California and Pennsylvania.
Other charges issued for illegal sales to other states by New York-based retailers include beer distributors Half Time in Poughkeepsie, St. James Beverage on Long Island, and Market View, a liquor store in Rochester.
Bordeaux Fine Wines Ltd director banned for 15 years
by Chris Mercer
Friday 20 February 2015
Kenneth Gundlach, director of collapsed Bordeaux Fine Wines Ltd in the UK, has been banned from company boardrooms until 2030, after failing to deliver millions of pounds-worth of wine and spending buyers' money on fast cars, race horses and private jets.
The UK Insolvency Service said that its ban on Kenneth Jean Pierre Gundlach was for the maximum time possible and encompassed managing, directing or promoting any limited company.
It said its reason was that Gundlach failed to purchase at least £9.3m of fine wine that was sold to consumers. At least 1,750 cases of wine were never delivered to buyers.
Instead, Gundlach used their money to pay himself dividends, which he used to fund a lavish lifestyle, buying 'performance cars', race horses, jewellery and designer clothing, the Insolvency Service said. He also spent £141,000 on hiring private jets, it added.
Bordeaux Fine Wines Ltd was shut down by the High Court in London a year ago. At the time, the court head that Gundlach admitted in a written statement that he failed to buy sufficient wine and that he got his team of cold-callers to inflate wine prices when on the phone to potential buyers.
'Anyone showing such blatant disregard for commercial morality should expect to be banned from running any limited company for a lengthy period of time,' said Paul Titherington, of the Insolvency Service's public interest unit.
Bordeaux Fine Wines Ltd was incorporated in 2008 in Croydon, south of London.
What did Gundlach spend the money on?
Here is a selection of transactions from the company's bank account, published by the Insolvency Service:
£626,148 to bloodstock companies probably for the purchase of race horses
£553,803 for the purchase and running of motor vehicles
£170,000 to a well known bespoke jeweller
£141,589 for private jet hire and associated costs
£38,500 for an office Christmas party
APW update: deleted website and liquidation
Source: the drinks business
by Neal Baker
20th February, 2015
The wine investment firm with strong links to APW Asset Management, the company accused of draining millions of pounds from its clients, has shut down its website and its employees have disappeared from social media.
An investigation by this magazine into the shady practices of the now defunct APW Asset Management found that several of its employees moved to a new firm, UK Agora. These employees then began calling their old clients asking them to part with more cash.
And now, after db published its findings two weeks ago, UK Agora's website has been shut down and these employees have removed their profiles from social media.
Nicolas Gibbs and Jamie Ellis, two sales and "portfolio" managers who moved from APW to UK Agora, cannot be traced.
Meanwhile, City of London police are investigating whether or not APW Asset Management has a case to answer, after the company unexpectedly folded in December 2014.
Clients and other creditors of APW will be hosting a meeting in High Wycombe next month to appoint a liquidator, after APW's initial administrators Quantuma pulled out.
APW's clients have been left stranded as their wines - thought to be several thousands of cases bought for millions of pounds - were locked in bond because fees had not been passed on from APW to the storage company. These fees are thought to amount to "six-figures", as Gibbs himself admitted to this magazine.
Read the full investigation here. http://www.thedrinksbusiness.com/2015/02/revealed-the-fine-wine-investment-company-apw-that-has-drained-millions-from-its-clients/
The Greatest Wine In The World (Excerpt)
February 22, 2015
But why is Burgundy such a conundrum?
OK, it's true a few other regions make great wine too, but the greatest Burgundy, properly aged is sublime. It thrills the senses and makes all seem right with the world.
But it is fiendishly complex to navigate, as mind-boggling as Harry Potter's three dimensional chess.
There are plenty of people to blame for this confusion. The French revolution divided up the big estates of the aristos and sold them off. Then there are the French inheritance laws which require landholdings to be divided and divided again amongst heirs.
So there are a lot of owners in Burgundy. A single vineyard of a few hectares can have a dozen different owners. Some make and bottle their own wine. Some sell their grapes to a négociant, and some simply rent their four rows of vines to a winemaker and live the high-life as a rentier in the Eighth. Well, they need a little more than three rows for that, but you get the idea.
Then there's History. Wine has been made in Burgundy since at least Roman times, and traditions and practices evolve over 2,000 years, so as illogical as they might seem today, they become set in stone.
Premiere Napa Valley auction raises a record $6 million
Source: Napa Valley Register
For the second year in a row, the Napa Valley Vintners' Premiere Napa Valley futures wine auction broke a record, raising $6 million on Saturday afternoon.
The bidding was spirited as more than 700 trade and media guests crowded into an upstairs room at the Culinary Institute of America at Greystone in St. Helena. Near the end of the afternoon auction, one bidder yelled out a preemptive bid of $100,000 for a five-case lot of Chateau Boswell Winery's 2013 cabernet sauvignon from Oakville.
It was the only bid received and as auctioneer Fritz Hatton slammed down the hammer, the crowd cheered and the NVV employees, who were keeping track of the bidders numbers and the dollar amount raised, started clapping. Auctioneers Hatton and David Elswood sold 225 lots of unique Napa Valley wine, although 92 percent of those lots were from the 2013 vintage and 175 were cabernet sauvignon. In fact, the top 10 lots were all 2013 cabernets and bidders paid $865,000 for them.
Last year, the auction raised nearly $5.9 million, shattering the prior year's receipts of $3 million. The auction, open only for the retail trade and wholesalers, was first held in 1997, when it raised $412,000.
On Saturday afternoon, Elswood sold the top lot of the auction, a five-case lot of 2013 Brand Napa Valley cabernet sauvignon for $115,000. The bidding for the wine quickly went to $24,000 and then to $60,000 and $80,000. As it neared and passed the $100,000 mark, those in the audience cheered and clapped. Elswood slammed down his hammer at $115,000, to more cheering. He quickly went on to the next lot, a sparkling wine from Domaine Chandon that sold for $12,000.
The keys to having a top lot in the auction were either having a well-known winemaker, like Philippe Melka or Thomas Rivers Brown; sourcing fruit from historic vineyards, including To Kalon in Oakville, Dr. Crane or Stice Vineyards in St. Helena; or being a winery that is well established and grows estate fruit, such as Shafer Vineyards, Rombauer Vineyards or Silver Oak Cellars. For the past 31 years, the winemaker for Shafer has been Elias Fernandez, while Daniel Baron has been winemaker at Silver Oak for the past 21 years.
Melka also made other top lots at the auction, including the 2013 cabernet sauvignon made from St. Helena grapes for Fairchild Napa Valley. Its five cases sold for $100,000 and will be released in April 2016. According to the Napa Valley Vintners' auction book that lists all 225 lots, Melka had a hand in making eight of the lots, while Rivers Brown is listed as making or consulting on five lots for different wineries.
The bidders were from all over the United States. Contingents were from 30 states, including California, Oklahoma, Arkansas and New Jersey; and from eight countries, including Japan, and Puerto Rico. Many of those attending have been coming to the trade auction for many years and some since it began 19 years ago. From Oklahoma were V.J. Jazirvar and J.P. Richard, who showed the different styles of bidding. Jazirvar often yelled out a fairly high bid to start and most of the time he dropped off as the bidding got heated. Richard, on the other hand, lifted his paddle and kept it up throughout the bidding, as did Durrell Smith from Los Angeles' Beverage Warehouse. Both won a couple of lots that way.
Most of the lots started at $5,000 or $10,000, although the Continuum lot -- five cases of proprietary red blend -- made from the 2013 vintage, started at $50,000 and ended at $70,000, after almost selling at $65,000. Continuum is owned by Tim Mondavi and his family.
As both Hatton and Elswood auctioned off the lots, the spotters, including Sauna Jones, would yell out, "Yes, yes, yes" over and over again in rapid fire, until the lot sold.
Hatton especially cajoled the bidders, telling a group from Arkansas, "C'mon, give me a big-boy bid," and as the Boeschen lot stalled at $12,000, he asked the bidders, "Who wants to put more motion into Boeschen?" No one took him up on it and the lot sold for $12,000.
At the beginning of the auction, at 1 p.m., every seat was taken and the room was packed. Later on, the crowd thinned out and gathered at the back, or left altogether, having bid on their favorites and either won or lost.
Elswood's last lot was five cases of 2013 cabernet sauvignon produced by Pride Mountain Vineyards. It started at $5,000, then the bidders doubled it at $10,000 and doubled it again, landing at $25,000. As the bidding ended at $35,000 the crowd cheered, thanking Elswood for his efforts and the bidders for spending their money.
The last lot of the trade auction was a 2013 cabernet sauvignon produced by Jeff Morgan for Peter Paul Wines, LLC. Hatton asked for $10,000, got it, then asked for $12,000, although the bid he received was for $11,000. As the lot sold for $15,000, there was clapping heard all around and he said, "Thank you very much ladies and gentlemen. See you next year."
According to the Napa Valley Vintners, top trade accounts bidding at the event included: Total Wine & More, Cliffewood Wine Syndicate, Gary's Wine & Marketplace, Wine Library, Beverage Warehouse, Nakagawa Wine Co., The Wine House, N16 Cellars, Meritage Wine Market, and Veraison.
Stoli Group appoints Cullins as new CEO
Source: The Spirits Business
by Amy Hopkins
20th February, 2015
Stoli Group has appointed Robert Cullins as its new CEO, while at the same time confirming it is considering acquisitions of new spirits brands.
Cullins, previously the global commercial director of Stoli Group, has taken over from previous incumbent Val Mendeleev, who will remain chief executive of the firm's parent company SPI Group.
In his new role, which will take effect immediately, Cullins will be responsible for the Stolichnaya Vodka's global sales, marketing and logistics operations.
Meanwhile Mendeleev will continue to oversee Stoli Group as the chairman of its board of directors, and also have responsibility for the strategic and mergers and acquisitions side of the business.
"From the time I joined our company in August 2008 as SPI Group CEO and Stoli Group CEO, we have made a huge progress in developing and expanding Stoli as a premium, international vodka business," said Mendeleev.
"Since we left Pernod Ricard as a global Stoli distributor, we have established a new sales and brand management structure, new distributor relationships in nearly 180 markets, and more recently set up our own distribution business in the US.
"In this journey, I was supported by Rob Cullins, who since joining Stoli Group as international commercial director in August 2011, has further spear-headed Stoli's global reach."
Rene Lek, who has previously held roles at Pepsico and Shell, has also been appointed chief financial officer (CFO) of SPI Group, replacing Sebastiaan Boelen who, after six years with the firm, is moving to the UK to "pursue private interests".
Meanwhile John Esposito, who joined Stoli Group USA in January 2013 as its first president, has been promoted the board of Stoli Group, and chairman of Stoli Group USA. A new president of Stoli Group USA will "soon be recruited".
The group also confirmed that is it considering new spirits and wine brand acquisitions, as well as entry into new categories.
"In order to facilitate further organic and corporate development of our group, we aim to improve the division of strategic and operational activities of our top management," added Mendeleev.
Stolichnaya Vodka launched its "multi-million" advertising campaign THE Vodka in September last year to emphasis the brand's heritage.
Sysco defends merger with US Foods
Feb 20, 2015
A high-powered team of some of the top antitrust litigators in the country has launched a vigorous defense on behalf of Sysco Corp. of the proposed $8.2 billion merger between the foodservice distribution giant and US Foods.
The defense will hinge in part on the apparent disagreement within the Federal Trade Commission's five commissioners, which issued a rare, split vote in favor of blocking the merger. The vote was 3-2, and the FTC sued to block the deal on Thursday.
"Two of those commissioners could find no - zero - reason to believe this transaction is anticompetitive," said Richard Parker, an attorney with O'Melveny & Myers, who has worked on numerous antitrust cases and is an antitrust attorney for Sysco. He is also a former director of the Bureau of Competition at the FTC.
The commission sued to block the merger in an administrative court, but it is also seeking a preliminary injunction to keep the deal on hold, pending that action, in a U.S. District court in the District of Columbia.
The injunction will be decided on in the next 60 to 90 days, and will likely include a trial. The FTC will likely drop its case if Sysco wins the trial, Parker said. That makes the injunction the primary fight in the antitrust case.
Parker said Sysco aims to take the case to trial, but added, "our doors are always open if the FTC intends to talk."
The decision on the merger will ultimately come down to the complexity of the U.S. market for food distribution and the potential impact of the merger itself. On one hand, the two companies are the only national distributors of a broad range of food products. On the other, there are numerous places where restaurants and others can buy food.
"I think the market is saturated" with distributors, said Debra Bachar, president of the Blueberry Business Group, a foodservice consulting firm. "And with saturation comes inefficiency."
Bachar added that many regional distributors have been gaining share in the 14 months since the merger was announced. She believes those distributors are taking advantage, with Sysco and US Foods distracted by the potential merger.
In its lawsuit, the FTC argued that the merger would create a single company with 75 percent of the national broadline distribution market. Combined, the agency said the two would have 133 distribution centers, compared with 24 for the next largest, Performance Food Group.
It also argued that a combined Sysco-US Foods would dominate numerous markets, and would have more than half the market share in 32 local markets.
That includes 100 percent of the market in San Diego and 93 percent in Las Vegas. Those are among 11 markets where Sysco and US Foods are proposing to sell facilities to Performance Food Group, should the merger receive the ultimate go-ahead.
However, attorneys for the two companies argue that there are numerous competitors, and that the deal would ultimately improve competition by helping the combined company reduce prices. The combination would enable the companies to save $600 million a year that will be passed to consumers.
They argue that there is no national market for broadline distribution. "Food in this country is distributed in local markets," Parker said. "If you are in Chicago and you need food delivered, you can look at broadline suppliers, local suppliers. There is no national market. It is pure mythology."
Parker also said all local markets are "fiercely competitive." And Performance Food Group would be "fortified" - and a much tougher competitor - with a greater footprint and ability to compete because it would get those 11 facilities and their nearly $5 billion in sales.
"That is a recipe for competition," he said. "That's why we say we proceed to court with confidence this transaction is pro competitive."
There is also disagreement about the impact of "cash-and-carry" retailers like Restaurant Depot and others on the foodservice market. Damian Didden, an antitrust attorney for Sysco with Wachtell, Lipton, Rosen & Katz, noted that the retailer is a big resource for independent restaurant companies to get their food and supplies.
"Restaurant Depot sells about $6 billion a year to restaurants," Didden said. "It sells food, equipment, everything. Who does Restaurant Depot compete with if not for Sysco and US Foods?"
In its lawsuit, the FTC suggested that those retailers are not interchangeable with companies like Sysco and are not a substitute for broadline distribution services. That's because most cash-and-carry stores don't deliver, the commission said. "Customers have to shop for and transport the food themselves, which is resource intensive and impracticable for most customers," the lawsuit said.
There's also a question on the fierceness of the competition between the two companies. The FTC says Sysco and US Foods are often the first and second choice for national customers. And for many customers, they are the only two bidders.
The two companies "frequently respond to competing bids or offers from the other by lowering prices to customers," the commission said. The lawsuit referred to numerous instances in which the two competed heavily to win business from foodservice customers.
But Sysco attorneys argued that's not a reason for the lawsuit. "The fact that Sysco and US Foods are competitors is not a reason for an antitrust action," Didden said, suggesting that there would be no merger of any company if two competitors couldn't merge.
Restaurants lead state employment picture
February 20, 2015
According to the National Restaurant Association's just-released 2015 state economic brochures, states whose restaurant workforces represent the largest proportions of their overall employment include Nevada, with 16 percent; Hawaii, with 14 percent and Florida, with 12 percent. Not surprisingly, all three states are leaders among tourism/travel destinations in the United States.
Nationally, restaurant industry employment makes up about 10 percent of the nation's total workforce.
The NRA's 2015 Restaurant Industry Forecast reports that international tourism to the United States hit a record high in 2014, and continued growth is expected for 2015 and in the years ahead, the Office of Travel and Tourism Industries says. The OTTI, a division of the U.S. Department of Commerce, expects 76.6 million international visitors to come to America in 2015, which would represent another record high.
"Regional variances in key economic indicators drive restaurant industry growth at different rates across the nation, including the influx of travel and tourism," said Hudson Riehle, the NRA's senior vice president of research. "Restaurants derive up to one-third of sales from tourism, especially in the fine-dining segment."
The forecast also reported that top states for restaurant sales growth in 2015 are Arizona, Florida, North Dakota, Texas and Colorado. And looking at restaurant job growth over the next decade, Arizona is in the lead, followed by Florida, Texas, Georgia and Utah.
Washington: Two-and-a-half years into privatization, Washington state still working through some issues
Source: Penn Live
February 20, 2015
While a proposal for privatization likely will return to Pennsylvania's House floor to be debated as early as next week, Washington state is still managing the effects of its changes in June 2012 to its wine and spirits laws.
Wine writer Sean Sullivan produces the much-acclaimed Washington Wine Report that he updates daily with information and reviews on that state's wines and more than 800 wineries. He's also a contributor to a number of other wine publications and sites and serves as a contributing editor for Wine enthusiast. He concluded in a story for the current issue of Vineyard & Winery Management that the new laws have led to, among other things:
A sharp increase in the number of spirits retailers,
A growing dent in the sales of small, independent retailers,
Changes in the way that the state's distributors and retailers do business,
and increasing difficulty for the state's wineries to get retailers to sell their product.
Sullivan wrote that "Initiative 1183, which was largely sponsored by Costco Wholesale Corp., removed the state from the business of distributing and selling spirits, privatizing both systems (wine and beer have long been sold in Washington through private outlets and state stores). To recoup lost revenue, the initiative imposed fees on spirits distributors and retailers. It also restricted spirits sales to stores with at least 10,000 square feet of space, a provision said to keep spirits out of convenience stores - a concern from an earlier failed privatization bid.
"While spirits privatization was the main focus, 1183 also made significant changes to the state's wine laws. Previously, Washington had uniform wholesale pricing, where every retailer was offered the same wholesale price regardless of the amount purchased. Initiative 1183 allowed for volume-based discounting. The initiative also permitted retailers and restaurants to deliver to a centralized warehouse."
He pointed out that 328 state stores were closed in the move to privately owned shops; by the end of 2014 the number of retail outlets had increased fivefold. But more stores hasn't translated into more competition and lower prices. Indeed, in some cases, it has been the opposite.
David LeClaire, who at the time the amendment was approved ran Wine World, a 20,000-square-foot retail store in Seattle, told Sullivan that consumers thought they were going to get more selection at a cheaper price. "I think what they are finding is they have less selection in more places and they now have to go even farther out of their way to find selection." He added, "For spirits, we're the highest state in the nation as far as our taxes go, and that puts most of our prices as the highest in the nation."
Meanwhile, being able to buy wine and spirits at more locations, particularly big-box retailers, has cut significantly into the profits of large and small independent wine stores. Chuck LeFevre, who's connected with one of Seattle's largest independent retailers, Esquin Wine & Spirits, told Sullivan the effects have cut his sales down by around 30 percent. That has forced him to reduce staff. "Think about it. Would you pass a few grocery stores, a Costco and two really good liquor stores to come here to buy wine?" he asked. "The answer is 'No.' We might still be their favorite store, but customers are just not coming here as often as they used to because they have more options."
Sullivan wrote in an email that the ripples of these changes to the buying habits of customers have started to affect small to midsize distributors, too.
"The rules that were put in place in Washington are ones that benefit companies - both wineries, distributors, and retailers - that operate at scale and can take advantage of the benefits volume discounting can offer," he said. "For smaller businesses, it's squeezing their already small margins and making them smaller.
"Once more small retailers start to falter - and I have a real concern that this will happen - it will begin to have a domino effect as will additional consolidation of the smaller to mid-sized distributors. That's when I think wineries will start to truly feel the effects. There will be less outlets for their wines with small independent retailers and the price squeezing by the big-box stores will have a significant effect on their profit margins. It may not all play out this way but I would be surprised if it doesn't. Why would the wine industry be any different than any other industry in the country? We've seen countless examples in other industries."
Pennsylvania has only one-fifth the number of wineries that operate in Washington. Around 15 percent of those currently sell their products through the Fine Wine & Good Spirits stores in addition to the winery itself. Producers are permitted through their limited winery licenses a maximum of six retail locations.
Sullivan went on to say in his email that business hasn't changed dramatically for the wineries in his state. While one Seattle-based distributor told him that the big retailers are making decisions to limit or remove their inventory of wines produced in the state, a Seattle winery owner said he has found other options for sales.
"Are we losing small wine shops? Sure," said Tim Narby, of Nota Bene Cellars. "There are wine shops in trouble and I feel for them. They are really upset with me for selling to Total, Costco and QFC. I'm like, 'How much wine are you going to move for me? What am I going to do? I have to stay in business, too.' "
Narby told Sullivan that while he's working with lower margins by selling to Costco and others, he has no regrets. "It's keeping me in business," he said. "It's paying my grape bills. I can't see how it's bad for business or the industry or for me to do things like that."
Here is a link to the full story.
Sullivan noted in his story that, two and a half years in, this is an evolving process that's far from complete, especially for the state's wineries.
"I think you've got to give it five years to get a good understanding of what's going on," Christian Grieb, of Treveri Cellars. It's located in Wapato, in Yakima County, 150 miles southeast of Seattle. "The first year was chaos. The second year has been about recovery and stabilization. The next few years will be really telling. I'm hopeful it could be a good thing, but I'm unsure about certain changes and whether we can meet the challenges as a winery."
Arkansas: Grocery Store Wine Selection Could Expand
Source: Arkansas Matters
Drew Petrimoulx, Reporter
The selection of wine at your local grocery store may soon get a lot better.
There's a push brewing to end decades old rules keeping many popular brands off the shelves.
Some worry about the impact on locally owned liquor stores and Arkansas wineries, but some shoppers we spoke with are bubbly and ready to toast to convenience.
At Spirits Fine Wine they pride themselves on having the selection and customer service that competition across the parking lot doesn't offer.
"We're not gonna lose customers to Walmart that are coming in to find a nice bottle of wine," said store owner Tom Smith.
Right now, grocery stores in Arkansas can only sell brands from wineries that produce less than 250,000 gallons per year.
Grocery store shopper Len Sinkus called the selection "a bit on the side of mundane, nothing exotic or fascinating."
"When we buy wine we don't buy it at a grocery store," said another shopper Bke Millwee.
But that may soon change.
The biggest chains in the state are pushing legislation ending the limitations.
"I think it would be a good idea," Sinkus said.
We found grocery store shoppers excited about the prospect.
"In visiting other states and other cities and things like that, it's kind of nice to be able to do it all in one place," Millwee said.
But Smith worries he won't be able to compete with the buying power of his new competitors.
Some of the top wine producers in the state are also worried -- fearing their spot on grocery store shelves will soon become crowded.
Advocates for changing the grocery store limitations are expected to file legislation soon.
They say state tax revenue alone could see a $2-4 million boost.
The Arkansas Wine Producers Association says the industry's economic impact has been measured at nearly $200 million a year, and the legislation could force them out of business.