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Florida’s ABC Fine Wine & Spirits derives about 60% of its sales from spirits, with wine at 27%, beer at 10% and cigars at about 3%. In the second part of this interview, ABC executive vice president Jess Bailes discusses the trends influencing buying activity across the retail chain’s 140-plus stores.
SND: What trends are you seeing in the vodka aisle lately?
Bailes: Some of the biggest brands are under attack, for sure. Smirnoff is having difficulty. A brand like Skyy used to be at about $24.99 a 1.75-liter, and now it can be as low as $18.99, which shows you the pressure on price from items like Svedka and New Amsterdam. There are so many vodka brands that weren’t even around several years ago, and they’re all within a $4–$5 price point. I remember when we first started selling Absolut. Its growth was unbelievable—like Tito’s is now. Now Absolut is very difficult. Stoli is underneath Absolut by a couple of bucks. But Tito’s is really sucking the life out of everything around it. Off a huge base it’s still up 50%, and it will overtake Smirnoff in dollars at our chain this year. Even at the high end, there is pricing pressure. Grey Goose, Cîroc and Belvedere used to sell at about $15 more for a 1.75-liter than they do now. They used to be in the mid-$60s. Now to really sell they need to be at $50-$55, because the market has grown so competitive.
SND: How about other spirits categories?
Bailes: Cognac, which had been struggling, is coming back in a fierce way, especially Hennessy and Rémy Martin. Scotch, Bourbon and Tequila are also hot. In gin, Hendrick’s and Bombay Sapphire have performed well, while Patrón is leading the way in Tequila. In Bourbon, there are a number of high-end brands that are performing well: Knob Creek, Maker’s Mark, Angel’s Envy, Gentleman Jack and Woodford Reserve, to name a few. Irish whiskey is also doing great, and with all the new distilleries going up in Ireland I think you’ll see a surge in that selection over the next few years.
SND: How is the craft spirits segment developing?
Bailes: It’s really just getting started. There’s a tremendous amount of financing going into craft distillers across the country. Within the next five to 10 years craft spirits will look a lot more like craft beer than it does today (craft beer continues to grow by double-digits at ABC). The selection will get better and better. Right now, a lot of the products are too expensive, but I think they’ll start to get more competitive.
SND: What’s the update on the wine side?
Bailes: Meiomi is leading the charge for Pinot Noir, doing exceptionally well. In Cabernet, Josh Cellars is up by double-digits. Chardonnay is still king, with Cabernet right on its heels. Kendall-Jackson has softened its price a little bit in this market, so we’re seeing a resurgence there. In the red blend category, which was dominating the business for a while, the main SKUs like Ménage à Trois have softened slightly. That said, Apothic continues to do very well. In the Florida market, it’s all about domestic wines, mainly Cabernet, Chardonnay and Pinot, as well as New Zealand Sauvignon Blanc.
Anheuser-Busch InBev (ABI) passed a crucial hurdle in its quest to close its pending $100-billion-plus acquisition of SABMiller, as the U.S. Department of Justice (DOJ) approved the transaction, with certain requirements. Under the terms of its “consent decree” with the DOJ, ABI will divest SABMiller’s 58% interest in MillerCoors to joint venture partner Molson Coors for about $12 billion, as previously announced. Additionally, ABI has pledged not to terminate any U.S. wholesalers as a result of the SABMiller acquisition, and agreed not to acquire any distributors that would result in more than 10% of its annual volume being distributed through wholly-owned U.S. distributorships. Also, ABI will abandon its recently introduced program to incentivize distributors to make up 98% of sales with ABI brands.
In a statement, ABI CEO Carlos Brito said, “We will continue to invest heavily in the U.S., including our efforts to build our entire portfolio of brands, support and incentivize our wholesalers, and compete effectively in a dynamic and fast-changing market. While we will make some adjustments to certain aspects of our U.S. sales programs and policies, our fundamental approach and commitment to this market will not change.”
Both the Justice Department and the Brewers Association, which represents craft brewers, issued statements lauding the concessions won from ABI in the deal. Deputy Assistant Attorney General Sonia Pfaffenroth said the settlement “preserves the ability of smaller brewers...to compete against ABI by protecting their access to important distribution networks.” With U.S. approval in hand, ABI expects the SABMiller deal to close before the end of the year.
•Tuscan winery Badia a Coltibuono has expanded its U.S. lineup with the launch of a 2011 Montebello IGT Toscana ($60 a 750-ml.). Made with organic grapes sourced from Chianti, Badia a Coltibuono’s Montebello IGT is a blend of nine Tuscan varietals: Mammolo, Ciliegiolo, Pugnitello, Colorino, Sanforte, Malvasia Nera, Canaiolo, Fogliatonda and Sangiovese. Badia a Coltibuono, which is owned and operated by the Stucchi Prinetti family, is handled in the U.S. by Napa-based direct importer Dalla Terra Winery Direct.
•Control state spirits volume rose 3.8% year-to-date through June, outpacing a gain of 2.8% during the same period last year. On a rolling 12-month basis, control state volume increased 2.8% on a selling-day-adjusted basis, while dollar value grew 5.2%. Meanwhile, control state wine volumes have risen 1.9% over the past 12 months.
•Ben Pearson, wine buyer at Santa Rosa, California retailer Bottle Barn for two decades, passed away over the weekend at the age of 56. A well-known fixture in the Sonoma County wine world, Pearson died of unknown causes while vacationing in Mendocino County.
•MillerCoors has acquired a majority stake in Athens, Georgia-based Terrapin Beer Co. and added the Terrapin range to its craft and import division, Tenth and Blake. The deal, for which financial details weren’t disclosed, is expected to be completed next month. MillerCoors had previously purchased a minority interest in the craft brewer in early 2012. Terrapin was founded by John Cochran and Spike Buckowski in 2002. The company produces year-round and seasonal beers such as Hopsecutioner, HI-5, RecreationAle and Rye Pale Ale at its 84,000-square-foot brewery and 100-barrel brewhouse in Athens. Terrapin’s current management team will remain in place. The Tenth and Blake portfolio also includes Blue Moon, Jacob Leinenkugel, 10th Street Brewery, AC Golden, Birra Peroni, Pilsner Urquell and Saint Archer.
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