Lynn M. Walding, Administrator
e - NEWS
August 8, 2003
By Michael A. Lindenberger and Lisa Hornung - The Courier-Journal
August 5, 2003
BARDSTOWN, Ky. - About 800,000 gallons of Jim Beam bourbon burned yesterday after lightning struck a warehouse, sending flames soaring into the sky and dumping streams of burning liquor into a nearby creek.
No one was injured in the blaze. It was the third major bourbon industry fire in Central Kentucky since the Bardstown-based Heaven Hill distillery burned in 1996.
Officials at Jim Beam, Kentucky's largest bourbon producer, and emergency personnel said a lightning strike apparently sparked the fire. It was reported at 3:01 p.m., Bardstown police said . The area was experiencing a heavy thunder storm at the time.
bourbon was in 19,000 barrels (500,000 cases), an amount the Deerfield,
Ill.-based company said is less than 2 percent of its inventory of aging
Anthony Mattingly of the Bardstown Fire Department said firefighters
initially were hampered by soggy ground surrounding the building and were
forced to run water hoses to the warehouse by hand.
The bourbon was in 19,000 barrels (500,000 cases), an amount the Deerfield, Ill.-based company said is less than 2 percent of its inventory of aging bourbon.
Chief Anthony Mattingly of the Bardstown Fire Department said firefighters initially were hampered by soggy ground surrounding the building and were forced to run water hoses to the warehouse by hand.
By the time they arrived, at least a quarter of the warehouse was engulfed, officials said, leaving firefighters to turn their attention to trying to stop the flames from spreading to two other warehouses.
By about 5 p.m., the risk to the nearby warehouses appeared to have passed , but Mattingly said he expected firefighters to stay at the site until after midnight
The state fire m arshal's office and the Louisville office of the Bureau of Alcohol, Tobacco , Firearms and Explosives were expected to investigate the fire .
Agents from the state Department of Environmental Protection also responded to see if the flaming stream of bourbon running out of the warehouse into Withrow Creek would cause environmental problems .
Emergency officials temporarily closed Ky. 245 in Bardstown as the flaming bourbon flowed down the creek toward a hastily erected dam designed to prevent it from getting into Beech Fork River.
"We are grateful that no one was harmed, and we appreciate the efforts of the first responders and the local firefighting personnel," said Rich Reese, CEO and president of Jim Beam.
In 2000, a fire at the Wild Turkey distillery near the Kentucky River in Lawrenceburg interrupted water service for more than 20,000 Anderson County residents. Schools and businesses were shut down for a long weekend as a result of the fire, which destroyed about 20,000 barrels of whisky and a seven-story storage facility.
In the 1996 Heaven Hill Distilleries blaze, 95,000 barrels of high-proof whisky and 50-mph winds combined to create one of the worst bourbon industry fires on record.
But David Leo, a coordinator with the emergency - response division of the Department of Environmental Protection, said the impact from yesterday's fire does not appear to be as serious as the previous fires.
Flaming bourbon flowed into a containment pond on the property and then overflowed into Withrow Creek, he said. From there the bourbon passed the Ky. 245 bridge, some of it escaping before the temporary dam could be erected.
But Leo said neither of the two water companies in Nelson County take s its water from that creek, and drinking water would not be affected.
"That's the one thing we looked at, to see where any water intakes were," Leo said. "The next concern is to see how much of the material got into the creek."
If too much alcohol entered the creek, he said, it could deplete the oxygen in the water and kill fish.
Mayor Dixie Hibbs, who said she also is Bardstown's unofficial historian, said the blaze struck at one of the key elements of the city's civic pride.
"Historically, we have an appreciation for the art and history of making bourbon," Hibbs said. "We like to consider ourselves the bourbon capital of the world."
Nearly all the bourbon in the world is made in Kentucky, and Nelson County claims four major distilleries - Jim Beam, Maker's Mark, Heaven Hill and Barton - as its own, although Maker's Mark and Jim Beam actually are just across the county lines in Marion and Bullitt counties, respectively . The Jim Beam warehouse that burned yesterday is in Nelson County, however .
In 2001, bourbon distillers sold nearly 13.1 million cases nationwide, worth more than $3 billion.
Hibbs said a bourbon warehouse at the same property as yesterday's fire burned in 1968, long before Jim Beam bought the site.
Business in Person / Martin Flanagan City Editor / Scotsman
August 1, 2003
Paul Walsh, the chief executive of Diageo, is phlegmatic about the fact that he took control of the world's biggest drinks company in January 2001 just as the global economy began pouring a long cocktail of downturn and stagnation. "It is the first time I've looked at it through that lens. You play the economic cards you are dealt," he says.
It helped, says Walsh, that his plans for quitting Diageo's food businesses to focus on drinks had won the board's backing, including the then-chief executive John McGrath, before he was appointed chief operating officer in January 2000. "I would not like to be orchestrating that level of change in today's financial environment," he says. By contrast, the first 18 months or so in the top job for Walsh were a whirlwind.
The Pillsbury food business, where he had been chief executive since 1992, was sold in October 2001, with a remaining 22 per cent stake to be sold off when market conditions improve. That was followed by the sale of Burger King restaurants to a US consortium last July. Sandwiched in between, Diageo - formed from a merger of Guinness and GrandMet in the late 1990s - paid £5.5 billion with Pernod Ricard to buy the Seagram drinks business from Vivendi Universal. Diageo and Pernod were thought to have paid top-dollar for Seagram's array of assets, including Captain Morgan Rum and Chivas Regal whisky, as British rival Allied Domecq walked away from an auction.
But Walsh makes clear that Diageo would have gone even higher to win the brands to put alongside its existing top products such as Johnnie Walker and J&B whiskies, Smirnoff vodka, Bailey's liqueur and Guinness. "With Seagram, we played to win," he says. "We would have won it if it had gone to auction. We would have [paid more] if we had to. History will show that it is one of the best multi-million dollar transactions."
It is easy to see Walsh, 48, being influenced by his experience at Pillsbury, whose products include Jolly Green Giant. It was a middling-sized American food company but unable to really take on the likes of Unilever or Kraft. Walsh's philosophy is that, in business, you have to be very big, or niche. Being caught in the middle is the worst of all worlds: all the customer demands of a big company but without the scale to meet them.
Crucially, Seagram increased Diageo's market share in the US from 16 to 26 per cent - useful when more than a third of group's sales are in that country. With the American economy only tentatively recovering, Walsh has directed his attention to streamlining distribution arrangements there to distil efficiencies.
Speaking at Diageo's HQ behind London's Oxford Street, he says three-month contracts and short-term relationships with drinks distributors in the US are not uncommon. "We can find ourselves with our brands sprinkled among four different distributors in one area, and that is highly inefficient," he shrugs.
Instead, Diageo is pursuing deals across the country, bringing all its brands under one distributor in each local market, from California to New York. Everybody wins, says Walsh. The distributors get security with contracts of up to five years and are let in on the drinks giant's plans for its brands. In return, distributors must invest in information technology IT and personnel training, as well as create a ring-fenced workforce to work on just Diageo's products.
Walsh adds: "It is better than having a situation where a distributor may be selling 500 brands. Only a small percentage are ours, but a major percentage of the profits are coming from our brands. Most time is spent on looking after the smaller brands. The Smirnoffs of this world can look after themselves, so we have been losing out."
By contrast, Diageo says 70 per cent of its distribution arrangements stateside have been "realigned". It will have a dedicated 2,000-strong sales workforce there by next December.
Everything has not been hunky-dory. Trading conditions are have been tough in Diageo's financial year to end-June, which Walsh is precluded by Stock Exchange rules from talking in detail about. Last November, he acknowledged that the company's targets of 8 to 10 per cent sales and double-digit profit growth this year would be "challenging". That is how it has panned out.
Latin American sales have been hit by political, economic and industrial volatility, more than anywhere in Venezuela, where Diageo has a dominant 40 per cent market share. But the company is not folding its tent across the Rio Grande. "Sales have been decimated, but we will still be there. It is a rollercoaster, but we will be in a fantastic position when it comes back."
The future? Walsh accepts that the lion's share of growth has to be internally generated as opposed to further acquisitions as the regulator casts a gimlet eye at the company's dominant market position. He also believes that only 6-8 per cent of Diageo's growth targets are achievable from market conditions - the rest being achieved by product innovation.
The company's health is important to the Scottish economy. It employs 3,800 staff at 50 locations in Scotland, including the largest of Diageo's gin and vodka distilleries at Cameronbridge in Fife; the largest warehouse of any sort in Europe at Blackgrange, near Stirling; and a major packaging plant at Shieldhall in Glasgow.
Despite speculation that slowing Guinness volumes - they were down 3 per cent last year - might lead to the stout being jettisoned from an otherwise upmarket brand portfolio, Walsh says this would be "unwise".
He says: "I don't believe in sacred cows. But you should not just jump on the merger and acquisition bandwagon for tidiness." Guinness, he adds, also provides a useful, cheaper beachhead into foreign markets for its higher-priced spirits. "I certainly do not see, in any short-term sense, Guinness not being part of the business. Then, we will see."
Walsh spends about 50 per cent of his time out of the country on company visits. In three recent weeks he has spent three days in Athens, three in the US and one in Ireland.
Although he says he gets a tremendous buzz from that involvement, he admits there is a difficult trade-off with personal life. He is married, with a grown-up son, and says: "It's a downside, no question. But it's a choice you make."
July 31, 2003
NEW YORK - Winemaker Robert Mondavi Corp. (NasdaqNM:MOND - News) on Thursday said quarterly earnings fell due to an oversupply of grapes that hurt its prices and charges for inventory writedowns, job cuts and grape contract buyouts.
But the company, which makes Woodbridge and La Famiglia wines, backed its earnings targets for its current fiscal year and its stock jumped nearly 10 percent.
The company said its fiscal fourth-quarter profit fell to $1 million, or 6 cents a share, from $10.2 million, or 62 cents a share, a year earlier. Revenue fell 3 percent to $120.8 million from $125.1 million.
Robert Mondavi said it expected to earn between $1.80 to $1.95 per share in fiscal 2004, its current fiscal year, in line with Wall Street's expectations.
Analysts currently expect Mondavi to earn $1.75 to $1.92 per share for the full year, with a mean target of $1.84 per share, according to Reuters Research, a unit of Reuters Group Plc.
The company also forecast a first-quarter profit of 46 cents to 50 cents per share.
A reduced grape harvest, which should help with wine pricing, is expected to boost profit in 2004, the company said.
Shares of Robert Mondavi rose $2.16, or 9.4 percent, to $25.25 in midday trading Thursday on the New York Stock Exchange (News - Websites). It hit $25.67 in earlier trading.
By David R. Francis - Christian Science Monitor
August 4, 2003
It's not a happy hour for the alcoholic beverage industry.
Later this month, the Federal Trade Commission will issue a study on whether the $450,000 the industry spends every hour to advertise alcohol reaches too high a proportion of underage youths.
And next month, the National Academy of Sciences (NAS) plans to release a report to Congress on scientifically validated, effective programs to reduce and prevent underage drinking.
"The industry is very concerned that the worm is turning," says George Hacker, director of the Alcohol Policies Project at the Center for Science in the Public Interest in Washington.
Already the National Beer Wholesalers Association has written members of Congress, charging the NAS panel with having views on taxation and advertising that would "vilify a legal industry," while suggesting "radical agendas" and "antiquated solutions."
Aware of the alcohol industry's enormous lobbying clout and campaign largess, more than 130 members of Congress signed a letter in June to the NAS president warning that the $500,000 appropriation for the study was not aimed at producing "a primer of suggested public-policy changes intended to adversely affect the beverage industry."
How many of these members really thought carefully about what they were signing is an open question.
Among youths, alcohol-related deaths outnumber those connected to illicit drugs by a ratio of 6 to 1, according to government data. Alcohol is often a factor in the four leading causes of death among persons ages 10 to 24 - motor-vehicle crashes, unintentional injuries, homicide, and suicide.
In 1999, 21 percent of 15- to 20- year-old drivers killed in automobile accidents were intoxicated. Alcohol is connected to two-thirds of sexual assaults and cases of acquaintance or "date" rape among teens and college students, according to the US Department of Health and Human Services.
It is well known that pregnant women shouldn't drink for the sake of their babies. It is less known that medical research indicates that alcohol - a "poison" to new cells - can damage the physical and intellectual development of fast-growing teenagers. Because alcohol is "mind-altering," it arrests the emotional and social development of youths," says Robert Reynolds, director of the Center for Policy Analysis and Training in Calverton, Md, a group striving to get underage-drinking laws enforced.
The $116 billion industry is right to suspect that the reports could damage its business.
Underage drinking accounts for 20 percent of all alcohol consumed, reckons a study published in The Journal of the American Medical Association last February. Mr. Hacker calculates that teens consume at the least 8.4 billion cans and bottles of beer each year. Many cans now contain 20 ounces of high-octane malt liquor, compared with traditional 12-ounce cans of beer in a six-pack.
Moreover, a child starting to drink before age 15 is much more likely to become a steady customer, indeed an alcoholic, notes the National Institute on Alcohol Abuse and Alcoholism.
When quizzed, about half of Americans say they have not had a drink in the last 30 days. They are essentially nondrinkers. Thirty-six percent abstain completely, finds a Gallup Poll.
Of those who do drink regularly, 15 percent become addicted. That's the same addiction rate as for cocaine users. The difference is that cocaine addicts much more rapidly than alcohol.
When all the damage resulting from underage drinking is added up - medical expenses, lost earnings from illness, premature death, crime, auto crashes, fires, etc. - it comes to $53 billion annually, calculates the Pacific Institute for Research and Evaluation, parent of Mr. Reynolds's center. (Government estimates put the national cost of alcohol to society as a whole at more than three times that amount.)
The NAS study, experts say, will include some form of these recommendations:
* A substantial tax increase on alcoholic beverages. In real terms, alcohol taxes are about a third of what they were 30 years ago. Resulting higher prices would affect consumers of all ages. But a 10 percent price increase would result in a 4 percent drop in consumption by youths, estimates Henry Saffer, an economist with the National Bureau of Economic Research in New York. Further, binge drinking by youths - an increasing problem - would decrease by 5 percent.
* Restraints on alcohol advertising. In 2001, industry spending on radio, TV, print media, outdoor signs, and point-of-purchase advertising rose to $1.5 billion from about $1.1 billion in 2000. Mr. Saffer figures other promotions - sports and music events, etc. - match that sum.
Saffer says a complete ban on advertising would reduce alcohol consumption by 25 percent and binge drinking by 40 percent. That action is unlikely. More feasible may be controls designed to limit exposure of alcohol advertising to young people David Jernigan, research director of the Center on Alcohol Marketing and Youth, says 12- to 20-year olds are more likely to see beer ads than those for juice, gum, jeans, chips, or sneakers.
In magazines such as Vibe, Spin, Rolling Stones, Sports Illustrated, Allure, In Style, that age group will be exposed to 45 percent more beer ads than those older. "This stuff is placed where parents aren't likely to see it," says Mr. Jernigan.
* Limiting access to alcoholic beverages and stiffer law enforcement.
The nation has tackled smoking. But "there is no comprehensive or clear federal policy agenda to reduce underage drinking," notes Mr. Hacker.
Given the political power of the liquor industry, experts wonder if Congress will use the reports to devise such an agenda.
August 4, 2003
The world's largest liqueur brand Baileys Original Irish Cream has added a second brand extension to its range called Baileys Glide, which will be launched in September in the UK.
The move follows the already successful roll out of Baileys Minis last year, by owner Diageo.
Baileys Glide is a longer and lighter version of the original brand and is aimed at further de-seasonalizing a drink that traditionally relies heavily on the Christmas period.
Baileys Glide will be supported by a £6m launch marketing campaign in addition to the £30m Baileys marketing plan for 2003/2004. As part of the launch campaign, a heavyweight outdoor and press campaign for Glide will be introduced in September.
Chris Stagg, senior innovation manager for Baileys Glide said: "Over the last few years, sales of Baileys Original Irish Cream have increased strongly as consumption of the brand is moving away from Christmas and special occasions. The successful launch of Baileys Minis has demonstrated how innovation can further drive that move into more everyday occasions.
"Consumer research has identified that there is an opportunity to extend Baileys Original Irish Cream further into social occasions by developing a longer, lighter alternative. To maximize this opportunity, we have developed Baileys Glide - the delicious taste of Baileys Original Irish Cream and vanilla, blended for a longer, lighter experience. The product is in a 200ml bottle and has an ABV of 4%."
Baileys Glide will be on the shelves of supermarkets, off licenses and convenience stores from September 1st. RRSPs are £1.59 for singles and £5.99 for a 4-pack.
6. Back to School for Bar Workers
August 5, 2003
Just say no.
IOWA CITY - That phrase, which has been drilled into the heads of children and adolescents for years, permeated the curriculum of a state-sponsored alcohol-training course for local bar employees that began Monday.
"We are trying to prevent intoxication," said Iowa City Police Officer Allan Mebus, community relations director for the department.
State officials, meanwhile, are looking for results.
The free training "could ultimately be expanded into a statewide program," said Lynn Walding, administrator for the state's Alcoholic Beverages Division. "For that reason, what happens here, if successful, could impact all licenses and all communities throughout Iowa someday."
Mebus teamed up with Ron Turner of the Iowa Alcoholic Beverages Division to instruct a class of about 35 people Monday on ways to identify intoxicated or underage patrons and keep alcohol out of their hands.
"Servers can get into trouble by over-serving or serving people that are underage," Mebus said, adding that while refusing to sell someone alcohol might mean less immediate income, it will financially benefit the business in the long run.
"What it all boils down to is the almighty dollar," Mebus said. "You depend on the tips, or gratuity, from others. If you have the ability to make your customers feel safer, they will invest in you. Studies show nationwide that if customers are not slosh drunk, they feel safe and will come back. The idea is to get return business by protecting patrons."
The two four-hour classes Monday were just the first of a two-week Training for Intervention Program, referred to as TIPS. The program, which is paid for with a $15,000 grant from the National Highway Traffic Safety Administration, is offered for free to bar employees.
As of Monday, 527 employees of 40 establishments had enrolled in the 20 sessions offered through Aug. 15 in the Sheraton Hotel, 210 S. Dubuque St.
Walding said the classes' popularity is an encouraging start to another University of Iowa school year.
"In just a few days, a new set of incoming students, fresh out of high school, will arrive on campus filled with high hopes, unlimited opportunity and boundless energy," he said. "Unfortunately, in recent years the return of students has also meant the return of alcohol problems."
Last year, 2,291 people were arrested for possession of alcohol under the legal age. Those numbers led Iowa City councilors to push for more regulations of downtown bars.
Earlier this year, some councilors proposed banning everyone under age 21 from entering the establishments after 10 p.m. However, UI students and bar owners vowing to work even harder to reduce binge and underage drinking persuaded a council majority to lower the age limit to those under age 19.
Walding said the Iowa City/Johnson County area was selected for the free TIPS program because the community was serious about addressing alcohol-related problems, the local law enforcement efforts set the state standard and local bar owners needed help in their struggle to curb underage drinking.
Dr. Brad Krevor of the Heller School of Public Policy and Management at Bradeis University in Boston, will determine the program's success based on research and interviews with participants.
Steve Silverman, 21, a UI senior and employee at One-Eyed Jake's, 18-20 S. Clinton St., attended an afternoon session Monday.
"A lot of this I already know, but it is good reiteration and it's nice to get everyone on the same page," he said. "I don't think this class will impact underage drinking, but I think it will help people deal with it better than they used to."
The class participants were given six guidelines to follow when dealing with intoxicated patrons, including making clear statements, using non-threatening language and explaining their actions.
Chris Peterson, 35, a long-time employee of One-Eyed Jake's, said that while Iowa City has offered the TIPS program for many years, he never has seen such an overwhelming response.
"Now it's much bigger and there is much more cooperation," he said. "It makes everyone more aware, and will make things better in the long run."
Don Stalkfleet, owner of the Sports Column, 12 S. Dubuque St., and Joe's Place, 115 Iowa Ave., said he agrees that the local bar scene is on an upswing.
"This seems to be a new era of cooperation," Stalkfleet said. "The number of people involved is a tell-tale sign that we can make a change and we can work together."
By Carol Emert – San Francisco Chronicle
August 7, 2003
SAN FRANCISCO – Napa Valley has reached a new milestone as a brand – it’s getting ripped off overseas.
A winery in Bejiing, Hongye Grape Wine Co., has applied to register “Napa Valley” as a trademark for use on wines that apparently will be made from Chinese grapes and sold in China.
Written in Chinese (see illustration), the first two characters phonetically spell out “Napa” and the second two are the Chinese words for “river valley.” The phrase is transliterated as Napa Hegu and sounds a bit like “nah-pah huuh-goo.”
The Napa Valley Vintners Association has spent hundreds of thousands of dollars in recent years fighting trademark battles in the United States, most notably its long-running fight with Bronco Wine Co., which thanks to a loophole in federal law sells non-Napa wine under names like Napa Ridge.
NVVA, which has good friends in Sacramento, went so far as to get a state law passed to invalidate Bronco’s border-crossing privileges; that case is now before the California Supreme Court.
The pending Napa Hegu registration, which the NVVA learned of in March, is the first alleged infringement of the Napa name outside of the United States. NVVA is concerned that broad use of the Napa moniker – whether in Beijing or Modesto – will confuse consumers and undermine the region’s reputation for quality.
The irony is that California vintners are now in a similar position as European winemakers who have complained for decades about the use of terms like Champagne and Chablis on U.S. jug wines.
“It’s really an old world/new world thing,” says Scott Gerien, who represents the NVVA as an attorney with Owen, Wickersham & Erickson in San Francisco.
Many decades ago, European immigrants came to the United States and borrowed names from the old country for their new-world products. “Now China has a fledgling wine industry and we’re the old ones compared to them,” says Gerien. “So we have to go over there and say, ‘You can’t use this name.’”
The difference between Burgundy jug wine and Napa Hegu, says Gerien, is that over time Burgundy has become a generic term that no U.S. consumer would confuse with a fine wine from France’s Burgundy region.
Napa Valley, on the other hand, is well-known as a California appellation and has not become a generic descriptor, so it needs to be protected, Gerien says.
U.S. exporters like Mondavi and Beringer use the Napa Hegu characters on their California wines sold in China, “which is evidence that this is the same word and therefore it should be denied because it’s deceptive,” says Gerien.
It’s not clear whether Napa Hegu wine is actually on store shelves or whether Hongye has only gotten as far as registering the trademark. It is also possible that other Chinese wines use Napa Hegu on their labels and have gone undetected because they didn’t try to trademark the term.
Hongye’s registration application popped up in March on a worldwide trademark registry scan, and an NVVA representative in China filed an opposition in June.
Now everybody will bide their time for two years, which is how long China typically takes to rule on a trademark.
TACKLING SAKE: In another trademark case with an Eastern theme, the NVVA is trying to invalidate the brand name NapaSaki, a brand of Oregon-made rice wine.
Gerien’s firm has petitioned the U.S. Patent and Trademark Office to invalidate the NapaSaki name on grounds that it is deceptive. The brand is owned by AIG Wine & Spirits Import Co. of New York.
AIG’s lawyer, John Rannells, wrote in an opposition statement that the brand is a single word, NAPASAKI, which is not a geographic term. He contends that consumers are more likely to confuse NapaSaki with the city Nagasaki, “or even (see it) as being a play on the word ‘knapsack,’” rather than confusing it with Napa Valley.
“I think there’s a different commercial impression when you see NapaSaki as one word,” says Rannells, reached by phone in his office in New Jersey. “My client has no intention of making people think his product is from Napa Valley.”
Asked what his odds are of winning the case, Rannells says: “50-50.”
Separately, the NVVA has gone after an actual Napa sakery – Hakusan Sake Gardens – for calling its premium rice wine Napa Sake and for labeling several of its sakes “Napa Valley.”
Although Hakusan’s sake is brewed in Napa with Napa water, the rice from which it is made is grown in the Sacramento Valley.
That’s another no-no.
Hakusan’s owner, Kohnan Inc., was unaware of the labeling rules and agreed to stop using Napa and Napa Valley on all of its wines after being approached by the NVVA two months ago, says Hakusan attorney Erick Marcks of Squire, Sanders & Dempsey in San Francisco.
Non-Napa sake labels are at the printer now.