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added: Thu, 13th October 2005 | 1370 views | 0x in favourites
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Beverage Industry Blog
It must be every PR's worst nightmare – you take a load of journalists away on a trip – often at great expense - and, all the time you're on site, you fear a member of your company's workstaff saying, or doing, something that reflects badly on your firm. Yes, that's right, members of the PR world, we're looking out for it too. So, I couldn't resist, on a trip round AmBev's largest brewery in Brazil today (12 May), to ask – during the 'any questions' part of the presentation – why one of the InBev unit's employees was wearing a 'Miller Genuine Draught' shirt. It seems this kind of situation transcends language boundaries. Quick as you like, one of the Brazilian's colleagues says: “He's new!” Turns out AmBev used to brew MGD at its facility in Sao Paulo. But the irony wasn't wasted on us. How we all laughed. A lot.
New research has revealed that music has a direct impact on the taste of wine. According to Chilean wine producer Montes and research carried out at the Department of Applied Psychology at Heriot Watt, it seems the style of music we listen to whilst drinking wine affects how the wine actually tastes. Montes winemaker Aurelio Montes already plays monastic chants to his maturing wines, convinced that the gentle vibrations improve the quality and energy of the wine. His Feng Shui designed barrel room is even built in the form of an amphitheatre, allowing each barrel of wine the optimum musical experience. Which is all very well indeed if you can determine the good, the bad and the ugly of the music world. Nobody wants wine that has matured listening to Rick Astley now do they? Commenting on the research, Montes said: "I've always believed that playing Gregorian chants aids in the maturation of our wines - it was therefore a natural extension to link with Heriot Watt and to scientifically determine the impact that music has on how wine tastes." The research, conducted by Professor Adrian North, head of the Dept of Applied Psychology at Heriot Watt University, Edinburgh, is based on the “cognitive priming” theory - when a particular style of music is heard, it stimulates or “primes” specific areas in the brain. Subsequently, when wine is tasted, these areas of the brain are already active and prime us to taste the wine in a corresponding way. It seems the research could have wide reaching implications on how wine is marketed and sold in supermarkets and bars, so my advice is, get your request in early. A little Jimi Hendrix at table ten please!
From our group editor, and former just-drinks editor, Chris Brook-Carter. Olly is away in Brazil this week, and, with our news editor’s desk temporarily empty, you guys are stuck back with me for the next five days. It’s been a while I know, but I reckon I can get the hang of this drinks industry thing once again without too many slips. Olly is checking out InBev’s facilities in the country – which as he pointed out in his weekly couldn’t have come at a more interesting time. InBev, when it reported its results last week, was described by one analyst as having had "a nightmare quarter". For all the talk of the potential offered by the BRIC markets, the brewer saw volumes in the quarter slip in three of them, the only exception being India. EBITDA margin, meanwhile, fell for what the same analyst suggests is the first time in Inbev's history. With Brazil being one of those three struggling, Olly certainly has the ammunition to put the local management through its paces. Meanwhile, a handful of other analyst reports I saw over the weekend gave some hope to the newly formed Dr Pepper Snapple Group, which I gave a bit of a hard time in my column on Friday. Dr Pepper Snapple made its stock market debut last week, to a very lukewarm reception. I argued investors were waiting to see how the group would perform in its first few quarters because they were wary of the company’s competitive position vis-à-vis Coke and Pepsi. However, analysts in Barron's financial magazine seem to suggest that the company is already trading at a discount to its real value. The report cited several analysts who valued the company’s shares at between US$28 a share and $35 a share. Shares are currently trading around the $25 mark. The article said part of the reason for last week's stock drop was likely selling by UK institutions holding Cadbury Schweppes, but which do not want to hold a US-listed drinks group. If this is the case we may see some correction over coming weeks. For the group’s sake let's hope so; it would be great to see it get off to a good start.
It seems Big Brother could well and truly be looking over your shoulder if you live in Australia when a new law comes into force banning you from drinking a glass of wine in your own home. The extreme new liquor law will create “no-go” alcohol zones in New South Wales, and is expected to be implemented in around ten weeks time. Drinking hotspots across the state could soon be classed as “restricted alcohol areas” for up to three years, which will apply to the sale of alcohol as well as possession and consumption, whether on licensed premises or not. Gone will be the days of a large glass of red wine to help you unwind at the end of a hard day and no more will “tinnies” be present at barbies if the ban is slapped on your town. Speaking to The Daily Telegraph, teetotaller Gaming Minister Graham West said the bans will only be implemented if requested by a broad section of the community and will not be government enforced. He said they would be decided on a case-by-case basis and developed specifically for the area. So if you live in an area well known for “chronic alcohol abuse’’ then it could be slapped with a range of restrictions. West said it was “new territory’’ and it was still undecided as to what penalties might be imposed if someone was caught with alcohol in a banned zone. Although the new law could be seen as penalising those who are sensible with their drinking habits, on the flip side, it could see the beginning of an end to the serious problem of drink driving and have a dramatic impact on the reduction of crime, surely making the area more appealing to live in. Drug and Alcohol Research and Training Australia’s Paul Dillon told the Telegraph it was a “radical solution for a serious problem,” and although initially only a trial, it certainly has the potential to be rolled out globally.
A quick heads-up to our loyal readership. Like the rest of the UK, this coming Monday (5 May) we'll be sitting inside, splitting our time between watching the rain and catching some low-quality TV. That's right, it's a Bank Holiday here next week. Normal service will be resumed on Tuesday.
With LIWF & Distil less than three weeks away, today (1 May) we begin our traditional preview of who's doing what at this year's event. Click here to see how we're going to be running our daily diary. To keep this running, however, I need your help. If you or your client will be at the fair this year, please email me at editor@just-drinks.com with details of what visitors can expect. And, seeing as Liverpool now won't be in Moscow on the middle Wednesday of the fair, I've been assured that this year's event will have my "undivided attention". That assurance came from a Chelsea fan.
As promised, here's some unexpurgated footage of how to cut peat, courtesy of Laphroaig, who took me to Islay earlier this month. Feel the biting wind!
Bulmers’ slogan, 'Nothing Added But Time', seems mildly appropriate at the moment. Staff at the C&C; Group's cider unit certainly seem to have plenty of it on their hands right now, don’t they? Some highly dedicated workers at Bulmer's plant in Clonmel, Co Tipperary have posted a range of clips on YouTube entitled: "Working hard in Bulmers" - clips that, sadly, have been taken off the site now. Staff were seen racing in forklifts ('Time to Gather', perhaps?), while others were captured spraying fire extinguishers between their legs. 'Time to Cool Down', presumably. I’m sure the bosses have put everything on ice to mull these antics.
The end of Scottish & Newcastle looks more like it’s the beginning of something yet more colourful. In London one evening last week, the top brass at the now-defunct brewer gathered the city's analysts and media together to say thankyou and goodbye. Considering S&N;’s traditionally rather staid summer drinks soirees, this one was a tad more lively, I can tell you. However, what happens at press events stays at press events, I’m afraid – my lips are sealed. Of course, the collective hair letting-down was well-deserved, for all present: The battle between S&N; and the Carlsberg/Heineken consortium was protracted, tense and complex. And it could still have been even more so, with rumours - after a deal had been struck - linking the likes of SABMiller and Anheuser-Busch to counter-bids for S&N.; If what just-drinks has heard is true, by the way, SABMiller came a lot closer to entering the fray than we all believed. But, spilt milk… The future, then, reads like a soap opera for both Carlsberg and Heineken. The best storyline, I feel, is the Indian one, with Heineken reportedly locking horns with Vijay Mallya over its inheritance of S&N;’s stake in Mallya’s UB Group. We’re getting conflicting messages on this one, though. The UB Group has suggested, via the Indian press, that Heineken cannot simply step into S&N;’s shoes, and carry on regardless, especially with a potential conflict of interest through Heineken’s Asia Pacific Breweries operations in the country. I’ve been told however, that UB Group’s braying could amount to nothing, and that Heineken could quite easily do what it jolly well pleases with the former S&N; stake. Either way, the delicate juggling act on Heineken’s hands in India is just the start of a new chapter of fun in the global brewing sector. Where’s the popcorn?
A couple of interesting studies were out this week that shed some light on what is or what isn’t going on in the US economy at the moment. The extent and depth of the current economic crisis is being debated ad infinitum. Is this the beginning of the darkest economic cloud to descend on the Western economies since the Great Depression, or is it merely the correction of a market that had gotten over hyped and over heated? Well, the opinions of those desperately trying to juggle the numbers in the face of the storm have taken a turn for the worst, a survey suggests. A US survey of CFOs and senior comptrollers conducted by Grant Thornton found that 59% believe that the US economy will worsen over the next six months, while 39% believe it will improve or remain the same. This represents a significant change in outlook since the same survey was last taken only six months ago, when 36% felt the economy would worsen and 64% believed it would improve or remain the same. That said another set of figures this week gave some credence to the argument that we are talking ourselves into a worse situation than we actually need to. All the doom and gloom prophesised by the media can become self-fulfilling, when the bare facts of the matter suggest the outlook isn’t nearly as bad as doom mongers would have us believe. The figures are highlighted on our sister site just-style in an article examining the extent the credit crunch has hit retail sales in the US and Europe. The EU's official statistics agency Eurostat shows retail sales in euro-zone clothing stores were 3.2% higher in January this year than last. The US Department of Commerce shows US clothing store sales were 2.3% higher this February than last - and the UK's Office for National Statistics shows its clothing sales an extraordinary 4.9% higher in February than last year too. As our correspondent says: “Do these public servants count differently from the retailers? Well, slightly, but whatever's going on in major clothing retailers, it's certainly not melt-down.”
The recent furore over the Olympic torch relay has been noticeable for many, many reasons. Not least of all, is the reticence of the big sponsors to either ally themselves too closely to the Chinese authorities or, for that matter, to the protestors. The silence of companies like Coca-Cola, it seems, has been deafening. Take a read, then, of the following comments, which appeared in an opinion piece in The Atlanta Journal, the newspaper in Coca-Cola Co.’s home town, earlier this week. “By aligning itself with China for an estimated US$75m to $90m, it (Coca-Cola) also aligned itself with China's poor record at home and abroad. ”Coke's been making the argument that it's one thing to sponsor the Olympics - a "force for good" it says - and another to condone the actions of the host country. "It would be an inappropriate role for sponsors to comment on the political situation of individual nations," it says in a recent statement. Coke's attitude is comparable to how some social workers say to deal with a child who's acting out: love the child and ignore the bad behavior. ”That means loving China, even though it is sending weapons to war-torn Darfur, where tens (if not hundreds) of thousands have died in what's generally considered genocide. That means loving China despite its censorship of the media and the Internet. That means ignoring the religious and ethnic oppression perpetrated by Chinese leaders. ”There's only one problem with Coke's reasoning here: China is not a child. Treating it as a naive country that doesn't know better is patronizing at best, and downright insulting at worst. “Coca-Cola has too much leverage to stay neutral or feign ignorance about what happens. Yet that's exactly what's going on: Coke's desire to avoid controversy is trumping its sense of corporate responsibility.”
I know it was cheeky, and I’m really sorry, but I just couldn’t help it. As the ‘any questions’ segment of Paul Walsh’s presentation to the World Whiskies Conference today (15 April) drew to a close, I simply had to ask him: “How does it feel to no longer be the biggest premium spirits company in the world?” Quick as you like, he replied: “There are statistics, and there are statistics. “For those of you who like to study annual reports, look at market capitalisation, look at total sales, look at margins, and then make your decision.” Told!
Today sees the start of the third annual World Whiskies Conference. just-drinks will be there in force and is even closing the first day by presenting the findings of its Global Malt Whisky Report. just-drinks has been the media sponsor for this event since its organisers first mooted the idea almost four years ago. Despite some initial apathy from the industry we have long held that this should be an important date in the spirits industry’s calendar – particularly in a climate that poses so many threats, from the global economy to rising costs, not to mention the anti-alcohol lobby. I am pleased to say that as an event, this year’s WWC seems to have come of age. Paul Walsh, CEO of Diageo and chairman of the Scotch Whisky Association, will be speaking right before Vijay Mallya, head of UB Spirits – surely that potential clash of world views is worth the admission price alone. They will be followed, among others, by Tom Flocco, CEO of Beam Brands, and Rear Admiral Dr Peter H Cressy, president and CEO of DISCUS – and that’s just the first day. This promises to be a fascinating couple of days. The drinks industry always prides itself on being fairly recession proof but the current economic crisis is the biggest test it has faced since the Tiger Economies of Asia crashed at the end of the 1990s. The WWC is the first of the year’s big drinks events here in the UK and gauging the mood of the sector will be an indication of how it is fairing so far. Keep peeled to these pages for more.
It appears that Vin & Sprit is not keen to let dust of any kind settle, following the announcement of its sale to Pernod Ricard last week. The Sweden-based company hit the headlines at the beginning of this week, when an advert for its Absolut vodka brand, which ran in Mexico, provoked complaints in the neighbouring US. The ad, which centred on a redrawn map of the two countries, led to calls for a boycott of Absolut in the US. Keen to jump on the Absolut-bashing bandwagon, Campari has followed the row by today (11 April) pushing its Skyy vodka brand as being “exceptionally proud” of being from the US. “Like Skyy Vodka, the residents of states like California, Texas and Arizona are exceptionally proud of the fact that they are from the USA,” a spokesperson for the vodka brand said. “To imply that they might be interested in changing their mailing addresses, as our competitor seems to be suggesting in their advertising, is a bit presumptuous.” In the ad, an ‘Absolut World’ is depicted where the map of North America is re-drawn with Mexico claiming much of the western US, negating the Treaty of Guadalupe Hidalgo in 1848, as well as the Gadsden Purchase (1853), and the independence of Texas (1836), Skyy said. “Don’t get me started on the Gadsden Purchase,” the spokesperson continued. “I think the folks in Tucson and Yuma would be rubbed the wrong way if they hear this landmark deal was somehow nullified as suggested by Absolut, a Swedish-owned brand.”
It seems a person’s sexual inclination can be determined by their choice of wine, according to an Italian winemaker. Franco D’Eusanio, who operates an organic vineyard in the Abruzzo region has introduced the 'masculine' red wine 'Is', the ‘feminine’ white wine 'Ea' and the ‘rose’ 'Id', for those of undetermined or ambiguous inclinations. Aside from making wine, Franco D'Eusanio also dabbles in philosophy and is convinced that everyone is not just male or female and that these aspects of their personality can be identified through their sense of taste. Personally, I enjoy nothing more than a glass of South African full-bodied merlot, so upon reading this, I am expecting myself to start spurting cheesy chat up lines and burping after every other sip. On the other hand, I could switch to a glass of rose, drink myself into oblivion and become another statistic of that crowd called ‘binge drinkers’ who seem to have taken quite a shine to the popular tipple. Unless a connoisseur, many of us tend to stick to our usual choice from the local supermarket, so to complicate matters by adding sexual inclination into our choice, only serves to complicate yet further. Is it not enough to have to choose from a wall of 500 bottles when all we want is a cheap bottle to enjoy while watching our favourite film, without pondering whether we fancy being male, female or indeed ambiguous for the evening? So for all those rose lovers out there, in the words of Dean Martin - "You haven't drunk too much wine if you can still lie on the floor without holding on."
And so, we bid adieu to Scottish & Newcastle. The UK-based brewer's shareholders have today (31 March) backed Carlsberg and Heineken's takeover bid. marking the end, not only of the protracted acquisition battle, but also of the UK's largest brewer and one of Scotland's oldest independent companies. While it's likely that only the names will change and the faces stay the same, I'd like to take this opportunity to thank all the folk at S&N; that I've had contact with in the last four years. Indeed, one of my first interview assignments since joining just-drinks in 2003 was with Tony Froggatt, then CEO at the brewer, so I've always followed the goings-on at the company with great interest. All of us here at just-drinks wish all of you there at S&N; all the best for the future.
As those who have met me will know, I’m a big music fan. If tickets to a concert are ever on offer, drinks PRs have been known to withdraw nothing but a bloodied stump after having contacted me. Whilst not the world’s biggest Guns N’ Roses fan, though, I’ve still been watching the total inaction on the band’s new album front. Chinese Democracy, as the not-yet-finished album is called, has been a staggering 17 years in the making. And how’s this for a stroke of marketing genius? It certainly caught my eye. Cadbury Schweppes Americas Beverages is offering everyone in the US a free can of Dr Pepper if the album ships at any point in 2008. "It took a little patience to perfect Dr Pepper's special mix of 23 ingredients, which our fans have come to know and love," said Jaxie Alt, director of marketing for Dr Pepper. "So we completely understand and empathize with Axl Rose's quest for perfection - for something more than the average album. We know once it's released, people will refer to it as ‘Dr Pepper for the ears’ because it will be such a refreshing blend of rich, bold sounds - an instant classic."
The US, and with it perhaps the global, economic slowdown is seemingly hard to get away from at present. Hardly a day goes by, it feels, without a constant bombardment of figures that are supposed to point towards impending doom. These are then backed up by armies of economic editors, using terminology I haven't heard of since my days in an economics classroom (my favourite yesterday was deleveraging) to explain how my house price is linked to the certain collapse of another US financial institution. And whilst I watch the plight of Northern Rock here in the UK and Bear Stearns in the US with great interest, the situation still feels strangely disassociated from reality. It is still hard to connect all this number crunching with the day-to-day runnings of the drinks industry. That may all be about to change with figures (yes more figures) released this week. Whilst the plight of Bear Stearns may seem a distant issue to many in the drinks industry so far, figures from Nielsen suggesting US consumers are making fewer shopping trips as the economic downturn bites, is of a far more personal concern. The figures reflect the fact that consumers are now looking for ways to combine errands and save money, Nielsen said. In a bid to battle rising fuel prices and other economic pressures, Nielsen reported that consumers only made an average of 59 trips to grocery outlets in 2007, compared to 61 in 2006. Mass merchandise shopping also saw a dip, with only 15 shopping trips last year, compared to 16 the year before. The convenience sector remained flat, with an average of 14 trips per household, while supercentres saw 27 trips, compared to 26 the year before. The research, however, showed that while shopping frequency across most retail channels is flat or on a decline, supercenters, which enable consumers to combine shopping trips with more items in one store, continue to show growth. "Value and convenience are more important than ever as rising gas prices impact where and how often consumers shop," said Todd Hale, senior vice president of consumer & shopper insights, for Nielsen Consumer Panel Services. "Long-term trends show us that all value retailers - supercenters, warehouse clubs and dollar stores - are gaining in their quest to grab shoppers." The economic slowdown is already a grim reality for many in the financial community with more US and European financial institutions predicted to fall in the coming months. But expect the impact of this complicated economic picture to increasingly become a reality for us too.
The balance of power in the relationship between drinks producers and retailers has long been an issue of huge contention. On record, few suppliers are willing to criticise the supermarkets - one expects, for fear of the repercussions – but, off record, there are plenty of tales of woe and even the odd horror story about the bullying tactics of Europe’s bigger retail players. The recent scandal at Systembolaget, the Swedish retail monopoly, where buyers and store managers were found to be taking kickbacks from producers in return for the best listings, is an example of what can occur when this relationship swings too far in favour of the retailer. However, in defence of the rest of Europe’s supermarket chains, I have never heard, even off record, of any other illegal practices. And, whilst I would expect that the supermarkets themselves would admit they are tough negotiators, they are able to be so because of the market forces that act upon the drinks industry. Whether this makes the system fair or not is another question. The reality is that this is the free market we operate in. Or is it? News that broke over the weekend will have dealt the reputation of the current system and, in particular, the buyers a sizeable blow. A buyer at Sainsbury’s, the UK’s third-largest retailer, has been arrested on suspicion of accepting some GBP3m (US$6.1m) in backhanders from a potato supplier. The news raises inevitable questions about whether such illegal payments are made elsewhere in the system and whether suppliers have to resort to those kinds of measures to gain shelf space. It also puts the spotlight – once again – on the relationship between supplier and retailer. Whilst covering the story, the UK newspaper The Times described the country’s GBP1bn potato market as “cutthroat”, adding that there is overcapacity in the processing and packing plants that supply the supermarkets. Does that sound familiar to those of you in the drinks industry, particularly, perhaps, some of our winemaking readers? One industry source said potato suppliers were “chasing too little business. They can’t afford to lose supermarket business.” These comments will resonate with the suppliers of many agricultural products. The fear must be, then, that that if this sort of corruption has occurred in the potato category, then the similar pressures and circumstances faced by many drinks producers must potentially be fertile breeding ground for similar scandal. Last month, the UK’s Competition Commission outlined a series of measures it hopes will help protect suppliers from any abuse of power from the country’s larger retailers. The Commission wants to replace the existing code of practice between retailers and suppliers with a new code. It has also mooted the establishment of an independent ombudsman to enforce the new arrangements. Some have questioned whether these measures would go far enough to regulate the buying power of supermarkets. These allegations of bungs will only add to concerns over whether an ombudsman would be strong enough. Much, I suspect will come down to whether this is an isolated incident or merely the tip of a much bigger problem.
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