The beverage business blog from Chris Mercer
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UK Government kills ad spend on alcohol
07 Dec 2011 15:28
The UK Government's Department of Health ceased all funding for advertising on responsible drinking in its last fiscal year, new figures show.
Figures revealed by Simon Burns MP in Parliament yesterday (6 December) show that there was no public health advertising around alcohol in the fiscal year to 5 April 2011. Spending fell to zero from GBP3.25m in the previous year.
Instead, ministers have encouraged industry itself to make up the shortfall, via drinks firms' funding of the Drinkaware Trust and also via the Responsibility Deal initiative, introduced earlier this year.
Wine duty forecast: Is this a joke?
30 Nov 2011 18:09
The UK Government thinks that, by 2017, its duty tax receipts on wine will have risen by 58% in value.
That's according to forecasts published the the Government's Office of Budget Responsibility (OBR) yesterday (29 November). Even allowing for a continuation of the duty tax escalator on drinks, at 2% above inflation, until at least 2015, this is a bold forecast.
The OBR only makes predictions based on current policy, so it is not basing its prediction on tax rises on wine above the escalator level.
Clearly, then, it is at least partly based on rises in wine consumption by volume over the period. Has the Government seen a UK wine market report this side of the Lehman Brothers meltdown? Growth has been hard to come by.
Coopering: An enviable skill
28 Nov 2011 15:46
Maybe it's because I stopped being able to 'make things' once I'd grown out of Lego, but I've always had a lot of respect for coopers.
During my years as a drink journalist, I've had a few opportunities to see coopers at work, for example at the Speyside Cooperage. I find it fascinating, partly because I would be so bad at it. The only time I came close to attempting it, I ended up as one part of a duo that failed to even get a few staves to stand upright in a barrel shape.
It's also fascinating because it's one of those skills that can hardly have changed a great deal down the years.
Diageo's new Cambus cooperage, which opened today (28 November), marks a new era in coopering, making greater use of technology to reduce some of the worst heavy lifting.
A few purists are probably raising their eyebrows at such a development, but it makes sense. Impressive as it is, there are quite a few stories of long-term injuries related to the intensity of the manual labour involved in coopering.
The core skill involved, meanwhile, will continue. If you get the chance, go and take a look for yourself.
Surprising(?) figures on UK wine consumers
23 Nov 2011 15:25
Figures released by Accolade Wines show that half of "regular" wine drinkers in the UK don't know that Cabernet Sauvignon is a red wine. And, that's not all.
Among the other insights offer by Accolade's Wine Nation report, published today (23 November), is that only around one in four of wine drinkers questioned knew that Rioja is a wine producing region.
I could carry on, but you get the idea. Of course, it's easy for everyone within the wine industry to sit around chortling about the ignorance of the uncivilised, plonk-swigging masses.
But, before anyone does, is it important that people don't know whether Rioja is a region or simply a type of wine? If they like the style and they seek out the name, one could argue that's all that matters.
I'm all for a bit of education, but you can't force it down people's throats. Many UK consumers buy wine on promotion and will continue to do so until the juice runs dry. Some will take greater interest in the styles on offer. Before that, though, they need to learn to enjoy wine.
Will Aldi give Scotch whisky a headache?
22 Nov 2011 15:13
Aldi has set a few hearts racing in the world of whisk(e)y by daring to sell a bottle of 40-year-old Scotch for just GBP49.99 (US$78), a sixth of its market value.
What an audacious marketing gimmick and what a walloping corker of a move for the Scotch industry to swallow. Obviously, not everyone thinks Glenbridge 40-Year-Old is a bad idea, because somebody has given Aldi the liquid - although we're not quite sure who, yet.
There are, though, going to be people out there who think this is beyond the pale. German discounters Aldi and Lidl have introduced a new dimension - a no-frills, cheap dimension - to food retailing in several countries, including the UK. This is much to the chagrin of some in the industry. Aldi's expansion into discount Scotch, then, will be greeted with a certain amount of suspicion, if not outright annoyance.
For a start, it asks all sorts of difficult questions. How much is 40-year-old Scotch really worth on average? Does the age matter, or does the marketing matter? Some of the early reviews of Glenbridge have been really rather positive. That said, it's hard to know whether this is the result of sound whisky-making or the reviewer's light relief at not imbibing something akin to 40-year-old battery acid. Expectations are everything in this game.
This is clearly a gimmick from Aldi and we're not about to see an influx of 40-year-old Scotch hitting its 450 stores on a regular basis. Only 3,000 bottles will be released this time.
In that context, I don't see the launch as negative. It might even do distillers a favour by giving consumers a glimpse of something better. Maybe, after trying this, they'll be more willing to spend a few more quid in the future.
Vinexpo coyly invites consumers to wine Rendez-Vous
08 Nov 2011 12:11
Vinexpo has said that it will next year hold its first consumer wine show, in New York, but the approach sounds too cautious for my liking.
Ah, wine fairs for consumers. It should be a good idea, but why do they all have to get so blind drunk? I can imagine how demoralising it must be to see some halfwit, who probably thinks that grapes grow on trees, necking your lovingly-nurtured wine before lurching, cross-eyed, into the aisle to leech on another random victim.
I've seen this happen. Then again, I've seen similar sights at trade-only wine shows. There are some huge drunks in the wine industry and they know who they are.
Vinexpo's basic premise, then, is a good one. I understand that there are concerns about allowing consumers free rein in a glorified warehouse where they are outnumbered five-to-one by bottles of wine. But, isn't the overriding argument that both the wine trade and consumers can derive mutual benefits from talking directly to each other while in the same room?
Trade shows have their place and so should consumer-facing expos. The food industry is streets ahead on this concept.
With Rendez-Vous by Vinexpo, what I'm really unsure about is the price. It'll cost US$180 for three days. Maybe I've got short arms and long pockets, but I think that's expensive for the average consumer. I can see what the thinking is: 'put the entry price high and the drunks won't go, right?' Well, perhaps. However, neither will a lot of people who have a genuine interest in wine.
I think show organisers should be careful about equating serious wine drinkers with wealthy wine drinkers. For a start, some of the wealthiest people I know are also some of the worst drunks.
It depends what you want, of course. Perhaps Vinexpo really only wants people who are already able to afford super-premium wines. If so, one could argue that would be somewhat short-sighted, given that it is also important to include to those who might be able to afford such wines in the future.
I think that there are other means to attract the 'right' consumer, besides price. One can control the pre-show marketing, the flow of wine at the event, the opening hours, the registration process, the calibre of experts attending, the security and the supply of adequate water, food and seating.
You can't stop all the chancers, but you can reduce your risk. And anyway, isn't this a risk worth taking?
Expect more beer duty deals in Africa
02 Nov 2011 15:29
SABMiller's cut-price duty deal to produce its new Impala beer brand from cassava in Mozambique could be a sign of things to come in Africa.
To be proper about it, SABMiller is not the first to reach such a deal with authorities. For several years, Diageo has sold Senator Keg at reduced duty in Kenya, on the proviso that the beer helps to lift more Africans out of illegal alcohol consumption.
Bootleg liquor is potentially dangerous, of course, but it also deprives the authorities of tax revenue (and companies of sales).
I would not be surprised at all to see more duty tax deals along the Senator Keg and Impala lines across Africa, particularly involving the use of local raw materials.
Governments want revenue and brewers want to make beer more affordable to lure more consumers. At the same time, using local raw materials lowers production costs and brewers can argue that the policy has the potential to generate more wealth within a given country.
Drinks tax moves up the agenda
28 Oct 2011 15:24
The idea of a sin tax on unhealthy food and drink is gaining credence as Governments seek to plug revenue holes any way that they can.
Within the last month, France's Parliament has voted to introduce a special levy on added sugar soft drinks, as well as a lesser levy on soft drinks containing sweeteners. In Denmark, meanwhile, the Government there has said it will introduce a tax on fatty foods, thought to be the first targeted 'fat tax' anywhere in the world.
It is a scenario that alcohol producers are already well aware of. The European Commission and the World Health Organisation have both endorsed duty tax rises on alcohol as one of several means of persuading people to stop drinking to excess.
The health debate around alcohol, fatty foods and added-sugar soft drinks has been raging for some time. But, are we witnessing a change in governmental thinking?
It's hard to judge, because individual governments have their own agendas and ideological positions. In the UK, for example, ministers of the Coalition Government, elected last year, have been clear that they are not seeking to change consumer behaviour via regulation. This, however, has not stopped the UK Treasury from increasing duty tax on beer, wine and spirits.
There are signs that the effects of so-called lifestyle diseases are being taken more seriously, as witnessed last month by the United Nations holding its first General Assembly meeting on non-communicable diseases.
Over the next 20 years, non-communicable diseases will cost the global economy more than $30tn, or 48% global gross domestic product (GDP) in 2010, UN delegates were informed by the director-general of the World Health Organisation, Dr Margaret Chan.
At the same time, many national and state economies are under intense pressure to increase revenue and cut debt. The logical conclusion is that sections of government health departments that are in favour of taxes are perhaps finding more friends in government finance departments. More sin taxes, then, could well be on their way.
SABMiller Takes Holy Approach with St Stefanus
27 Oct 2011 14:57
SABMiller's abbey beer, St Stefanus, was officially launched in the UK last night and, while I don't want to trivialise any of the effort involved, it is probably best described as a bit of an experiment.
Van Steenberge's master brewer, Jef Versele, first became aware of SABMiller's interest in his brewery via a Swizterland-based intermediary, who visited him in Ghent, eastern Belgium. The mystery Swiss visitor showed a keen interest in all things Abbey beer. Negotiations followed and SABMiller bagged itself international distribution rights on what is essentially Van Steenberge's Augustijn beer - only it has been renamed St Stefanus outside of Belgium.
It's a curious deal in some ways, but it makes logical sense in others. The swoop for Van Steenberge (although the brewery remains independent) certainly confused a few beer bloggers, along the lines of: 'Multinational Beer Baddie in Genuine Quality Beer Deal Shocker'.
However, SABMiller does not have a Belgian 'abbey' beer, unlike its two greatest rivals on the world beer circuit. Anheuser-Busch InBev has Leffe and Heineken has Grimbergen. And, everyone knows that craft beers are selling reasonably well in several shrinking, western beer markets.
SABMiller is a little late to this whole abbey beer gig. Still, the group is developing a knack of arriving on a scene in the UK with a slightly holier-than-though approach. It has carefully distributed Peroni Nastro Azzurrro in the UK so as not too garner a lager lout image. St Stefanus, meanwhile, is on very select distribution and, initially, will only be in the on-trade and in bottles. There is a plan for a limited draught launch, I understand.
A natural advantage for SABMiller is that the UK is not as important to the brewer's overall business as it is to, say, A-B InBev. It can, therefore, pick its battles.
This is all sounds good, but surely such limited scale won't generate much profit? Afterall, SABMiller is not in business for kicks, but rather to make returns for shareholders. Well, the brewer's new UK MD, Gary Haigh, told me that the firm is "planting acorns" by launching St Stefanus so selectively. The brand is not moving the profits dial yet, but it is expected to gain what marketers call 'critical mass' over time.
Versele presented his beer to SABMiller's exec prior to yesterday's launch. It would have been fascinating to see. SABMiller's veteran CEO, Graham Mackay, has been heard to describe many craft brewers as a lifestyle choice, rather than serious business outfits.
Mackay, though, has a shrewd head for business. The board clearly sees leverage in marketing a niche beer at a time when consumer tastes in developed markets are becoming more and more fragmented. The risk is relatively small, precisely because the volume numbers are low and SABMiller has laid down zero capital by leaving Van Steenberge as an independent business.
How many more tie-ups will we see structured like this, I wonder? It will be interesting to see how St Stefanus develops.
As for whose abbey beer is the oldest...
Well, firstly, it's all about when the abbey was built rather than when the brewing started. But, on this basis, Grimbergen dates its abbey at 1128, more than 100 years earlier than Leffe and St Stefanus, which date theirs back to a mere 1240 and 1295 respectively.
Drinks makers toast thirst for luxury
19 Oct 2011 15:29
Like retired colonels sipping Champagne on the deck of the sinking Titanic, there are plenty of consumers around the world who still very much have a taste for luxury.
If you're going down then you may as well go down in style. Sales results from Moet Hennessy and, to a lesser extent, Diageo have shown this week that plenty of consumers around the world still have a taste for premium spirits and Champagne.
A large proportion of those consumers may be in the so-called emerging markets, be it expensive Cognac lovers in China or Russians with a refreshed economy and a wallet bulging for bling. However, the US spirits market also appears to have continued its upward momentum in 2011.
Diageo said today (19 October) that spirits drove its net sales in North America up by 5% for the first quarter of its fiscal year, to the end of September, even though its volume sales slipped by 2%.
Will it last? Diageo's CEO, Paul Walsh, was careful to highlight that the company is "alert to any impact which the fragile global economy may have on trading patterns". Moet Hennessy, meanwhile, saw its momentum slow slightly from the first half of 2011 to the third quarter.
Some markets are clearly in trouble, particularly those in southern Europe. There does, though, seem to be a hardcore of consumers who are intent on carrying on regardless of the gathering global economic storm clouds.