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 e - NEWS

May 16,2003


1. Secret Merger Talks For Allied

2. (BW)(FL-DIAGEO/SANDOVAL)(DEO)(DGE.L) An Industry First - Diageo and Arturo Sandoval Join Forces to Trumpet Responsibility

3. Study Finds Liquor Ads Popular With Teens

4. 7-Eleven Will Sell its Own Inexpensive, Imported Beer

5. Forget Proposal to Increase State Alcohol Tax, Critics Advise

6. FTC Study Examines Effects of Online Wine Sales

7. Windsor Heights Council Weighs Liquor-Buffet Ban

8.  Liquor Effects Last Longer Than Earlier Presumed


1. Secret Merger Talks For Allied


This is Bristol

 May 12, 2003

Drinks giant Allied Domecq, which has its headquarters at Bedminster Down, has held secret merger talks with privately-owned rum distiller Bacardi, according to reports. The Observer said Allied's chief executive Philip Bowman had met Ruben Rodriguez, the Bacardi chairman, at the group's Bermuda headquarters in the last month in an effort to strike a deal.

Industry sources were also reported to have said Allied chairman Gerry Robinson had also met Mr. Rodriguez and that the two men had established a good rapport.

At an investors' meeting last Wednesday, Bacardi shareholders are understood to have agreed to prepare for a possible flotation of the company, founded in Cuba in 1842.

The agreement means outsiders could be allowed to hold shares in the family controlled business for the first time.

The move would also fit in with Allied's avowed strategy of creating a portfolio of top drinks brands and would help fight off increasing competition from Diageo, the world's biggest drinks group. It owns brands including Smirnoff vodka and Guinness.

Speaking to the newspaper, drinks analyst David Hallam of Williams de Broe, said: "Bacardi and Allied would be an excellent combination: they would complement each other's brands and fit well geographically."

Bacardi rum is the best selling spirits brand in the world.




2. (BW)(FL-DIAGEO/SANDOVAL)(DEO)(DGE.L) An Industry First - Diageo and Arturo Sandoval Join Forces to Trumpet Responsibility


Business & Entertainment Editors – Business Wire

Miami, FL

May 13, 2003

 Diageo, the world's leading premium drinks business, today took a leadership stance in the industry by launching an unprecedented program to recognize, detect and prevent intoxication among Hispanic consumers. The company, through a substantial grant from the Diageo Foundation, has joined forces with the nationally-recognized Health Communications, Inc. (HCI), creators of the proven and well-established Training for Intervention ProcedureS (TIPS) program, to introduce TIPS en Espanol (Hispanic TIPS), the first server training program in Spanish. Expanding on its affiliation with HCI, Diageo announced that it will fund the supplemental TIPS en Espanol Train-the-Trainer program and committed to sponsoring training workshops in the United States and key countries in Latin America and the Caribbean.

TIPS, marketed primarily to the hospitality industry, is a program that trains bartenders and sellers of alcohol beverages in methods geared at preventing intoxication among consumers. "Over the years, Diageo has worked closely with organizations like TIPS, and with elected officials, government agencies, educators, and the public health community authorities on initiatives aimed at preventing alcohol misuse," said Carolyn Panzer, Diageo Senior Vice President of Public Policy. "With the explosive population growth among Hispanics in the United States, we wanted to have an immediate impact with this consumer segment in the area of social responsibility. Our vision was shared with HCI and became the genesis for TIPS en Espanol," Panzer continued.


The launch of Hispanic TIPS took place at Bongo's Cuban Cafe, a bar and restaurant owned by Gloria and Emilio Estefan. World renowned Emmy and Grammy award winning trumpeter Arturo Sandoval delivered his message of "Trumpeting Responsibility" and underscored his commitment to TIPS en Espanol.

Sandoval said, "TIPS en Espanol provides us with a unique opportunity to train those who serve alcohol as our first line of defense. I am asking my friends and colleagues in the entertainment industry to join me in using our reach and influence to heighten awareness on responsible consumption among Hispanics." Sandoval added, "I am honored to join Diageo and be part of this important undertaking."

Miami-Dade County Mayor Alex Penelas, international music producer Emilio Estefan, and State of Florida and local law enforcement officials joined Diageo executives and other distinguished supporters in the launch of TIPS en Espanol.


"Educating those who serve alcohol is an important component in the county's overall program in promoting public safety," said Mayor Alex Penelas. "As a county with one of the largest Hispanic populations in the country, I commend all involved in delivering this program and for providing the hospitality and tourism industries with the necessary tools to deal with the issues associated with alcohol misuse," Penelas added.

The launch of TIPS en Espanol was followed by a one-day comprehensive training of candidates consisting of professionals from leading hotels, restaurants and bars in the Miami-Dade county area, state and local law enforcement officials, and employees from Diageo's Florida distributor, Southern Wine and Spirits. It is anticipated that the newly trained graduates of the TIPS en Espanol program will share their knowledge with others in the industry to expand the reach of the program, not only nationally, but throughout Latin America and the Caribbean.

A study of the Hispanic community in the United States entitled "Snapshots of the U.S. Hispanic Market," released last April, revealed that the Hispanic population reached 38.5 million in 2002, or 13.4 percent of the total, and that it is expected to make up 18.9 percent of the population by 2020.

Since its creation in 1982, TIPS has certified over 25,000 trainers and almost 1,000,000 servers in the United States and around the world. TIPS certification has its privileges and benefits. Bars, restaurants and other establishments can receive discounts of up to 25 percent off liability premiums from their insurers. Also, studies show that when a TIPS program is in place, there is a 50 percent reduction of intoxicated patrons, as well as 13 percent increase in gratuities. Courts recognize TIPS as the standard for server training programs and use TIPS records in legal proceedings.

TIPS en Espanol is in line with Diageo's vision of Celebrating Life Responsibly, Every day, Everywhere. "Diageo strives to set the pace in social responsibility. We have developed a mandatory Marketing Code that we believe represents best practice in the industry," said Panzer. "Recognizing that with leadership comes responsibility, Diageo will continue to develop initiatives and fund organizations around the world whose mission is to fight underage drinking and alcohol misuse."

About Diageo


Diageo is the world's leading premium drinks business with an outstanding collection of beverage alcohol brands across spirits, wine and beer categories. Diageo is a global company, trading in more than 180 countries around the world. The company is listed on both the New York Stock Exchange (DEO) and the London Stock Exchange (DGE). Entirely committed to the well being of the individuals in every community where it operates, Diageo builds strong and enduring relationships with its business partners and communities around the world. Diageo has supported a number of alcohol education initiatives in its principal markets. The company has been a founding member and leading participant worldwide in a number of social aspects organizations, which undertake responsible drinking initiatives on behalf of the industry. For more information about Diageo, its people, brands and performance, visit us at http://www.diageo.com.

About Training for Intervention ProcedureS (TIPS) Program


The TIPS (Training for Intervention ProcedureS) program is designed to teach servers, sellers and consumers of alcohol to prevent intoxication, drunk driving and underage drinking. There are several versions of the program addressing concerns specific to different groups. The programs currently available include: On Premise, Off Premise, Social Functions, Concessions, Casinos, University, Seniors, Parents and Workplace. All sessions are taught by certified TIPS trainers, using video and printed materials to facilitate discussion of the course content. All training materials of Hispanic TIPS are in Spanish, including a comprehensive videotape in Spanish, as well as culturally sensitive vignettes. For more information about TIPS and its programs visit http://www.gettips.com.




3. Study Finds Liquor Ads Popular With Teens


Gadsden Times

May 13, 2003

Magazines popular with teenagers, such as Rolling Stone, Sports Illustrated and People, tend to have more liquor and beer ads than other titles, suggesting the alcohol industry may be indirectly targeting underage drinkers, according to a study.

"Kids also read these magazines, and if this is truly a public health concern, then we need to find ways to talk about decreasing adolescent exposure to advertising," said one of the researchers, Dr. Craig Garfield of the Evanston Northwestern Healthcare Research Institute in the Chicago suburb of Evanston, Ill.

The researchers compared 35 magazines and found that for every 1 million more readers ages 12 to 19, a magazine had about 60 percent more beer and distilled liquor ads.

"We're not in any way trying to suggest that they are doing this intentionally. It simply may be worth it for them to look a little more closely at their advertising strategies," said another one of the researchers, Dr. Paul Chung of the medical school at the University of California at Los Angeles.

The study was published in Wednesday's Journal of the American Medical Association and was funded by the Robert Wood Johnson Clinical Scholars Program.

The Distilled Spirits Council of the United States, a major trade association, ridiculed the study as "typical of the Robert Wood Johnson Foundation-funded advocacy efforts: rife with flagrant technical errors bordering on junk science." It said the study's tables show that only 16 percent of the magazines' total readers are ages 12 to 19, so the overwhelming majority of those seeing the ads are adults.

The council said its member companies "are strongly committed to responsible marketing and advertising policies directed to adults."

The researchers said major alcoholic beverage trade associations have codes of conduct pledging to avoid marketing to teens. The researchers said that if self-regulation by the industry is not enough, then maybe the government or an independent auditor needs to monitor the situation.

"We always consider that stuff to be the last resort," Chung said.

The Beer Institute, a trade association for the malt beverage industry, said more regulation will not reduce underage drinking.

"The strongest influences on young people are their parents and their peers," the group said in a statement. "Providing materials to parents - that the beer industry does in abundance - that allows them to talk about drinking with their kids, is the sort of effective solution that this industry's critics should embrace."






4. 7-Eleven Will Sell its Own Inexpensive, Imported Beer


By Christopher Lawton and Ann Zimmerman – The Wall Street Journal

May 12, 2003

During hard economic times, shoppers tend to trade down to store brands.

But try to find a cheap imported beer. There aren't many options.

7-Eleven Inc. sees an opening. This summer, the country's largest chain of convenience stores plans to introduce Santiago, a private-label beer from El Salvador designed to compete head-to-head with the nation's top-selling imported brew, Mexico's Corona.

One of the nation's biggest beer retailers, 7-Eleven wants to take advantage of twin trends in the $60 billion-a-year beer business: rising prices and consumers' growing fondness for imports. 7-Eleven is aiming Santiago at the market's sweet spot - slightly more costly than the average domestic but less than imports. A six-pack of Santiago will sell for $5.99 nationwide - less than a six-pack of Corona, which 7-Eleven stores price at $6.99 to $7.99. (Of course, some states limit liquor sales, so those 7-Elevens won't stock the beer.)

The 7 million people who shop at 7-Eleven every day probably will think Santiago is the latest trendy brew from across the border. They won't have a hint that it is private label, historically the cheap category of goods packed in drab plain packages on a store's lower shelves.

Santiago comes in a clear glass bottle with a picture of the sun on it - pretty close to Corona, which has a similarly shaped bottle with a crown as its symbol. 7-Eleven, based in Dallas, is hoping Santiago will appeal to Hispanic customers, who make up almost 19 percent of its shoppers, an increase of five percentage points in recent years.

The company spent two years developing the product, creating a flavor similar to Corona's yet distinct. "One of the things we were going after was to develop a taste that you could drink without that lime," says Robin Michel, 7-Eleven's vice president of merchandising, referring to a customary way to consume Corona.

But despite Santiago's obvious similarities to Corona, Suzanne McDonald, 7-Eleven's category manager for beer and wine, says she thinks the product's packaging and flavor will appeal to a wider range of customers. "We think it has a European flair," McDonald says.

Launching a private-label beer is no easy feat. People often try new beers at bars - a platform store-label beers don't have. And beer is mostly about image: That's why brewers spend more than $1 billion a year advertising their brands. Stores usually don't want to spend that kind of money, but how else can a beer convey an image while sitting on a shelf? "The challenge of a beer positioned at the premium side that is produced for a retailer would be, 'What does it stand for? What's the imagery and the appeal, and how do you build preference?' " says Andrew Conway, a Credit Suisse First Boston analyst.

7-Eleven doesn't plan national ads but will promote Santiago heavily in stores with signs. The strategy relies on customer traffic at the chain's 5,300 U.S. stores. "Our advantage is clearly one of scale," says Jim Keyes, 7-Eleven chief executive. Santiago will share shelf space with more than three dozen imports and flavored malt offerings, 7-Eleven's fastest-growing beer segments.

7-Eleven has experience building powerhouse private brands: the Slurpee, with $160 million in annual sales, and the Big Gulp fountain drinks, with $130 million in sales. If Santiago flies, other big retailers may be tempted to give beer a try. Wal-Mart Stores Inc. says it has no immediate plans to develop a private-label beer. Among big supermarkets, just Albertson's Inc. and Kroger Co. have introduced private-label beers: Albertson's San Lucas has been out for only about a year; sales this year of Kroger's three-year-old Caguama have been flat.

Nina Gorham, a drinker of imported beer and a regular 7-Eleven customer, says she is looking forward to tasting Santiago. "If it's as good as their coffee drinks, I'm sold," she says, referring to the flavored and iced coffee drinks 7-Eleven sells, competing with Starbucks.

Corona's importers say they aren't worried about losing sales to Santiago. Carlos Alvarez, president of Gambrinus Co., San Antonio, one of two U.S. importers of Corona, allows the new brew may elicit some initial curiosity. But it will have a tough time competing against Corona's carefully cultivated image.

"The consumer is being presented with an imitation of the real product," he says.

SABMiller PLC's Salvadoran brewery, Cerveceria La Constancia S.A., will make the beer; its Miller Brewing unit will distribute it exclusively to 7-Eleven.

Other industry players are watching Santiago's introduction closely. Beer sales are sluggish this year. Anheuser-Busch, the world's largest brewer, raised prices for the fourth year in a row, and rivals Miller Brewing and Adolph Coors Co. followed suit.


5. Forget Proposal to Increase State Alcohol Tax, Critics Advise

It would hurt stores in border cities and fail to meet revenue objectives, they say.

By Lynn Okomoto, Register Staff Writer – Des Moines Register

May 14, 2003


A last-minute legislative proposal to increase Iowa's already-high excise tax on alcohol met resistance Tuesday from those who said the idea hadn't been studied enough and would make Iowa less competitive with its neighbors.

"When you're a border city, your competition comes from the surrounding states," said Kirk Ivener, a co-owner of Ivy's Liquor Store in Sioux City. "That would definitely have an effect. It could maybe produce more people going across the state line."

Senate Republicans on Monday proposed increasing the tax on alcohol and cigarettes to pay for a $700 million fund that would promote biotechnology and other economic-development initiatives.

Iowa already ranks third-highest for its $1.75-per-gallon tax on wine and 25th for its 19-cent-a-gallon tax on beer, said Lynn Walding, administrator of the Iowa Alcoholic Beverages Division.

Lawmakers did not specify the size of the proposed increase, but said a 10 percent increase in excise taxes on alcohol would raise an additional $9 million for state government.

Gov. Tom Vilsack said Tuesday that he'd prefer to stick with an increase in the cigarette tax - an idea that has received support from Attorney General Tom Miller, a coalition of 28 anti-tobacco groups, and a student group called Just Eliminate Lies. Iowa's cigarette tax ranks below those of many other Midwestern states.

"My focus would be primarily on the tobacco tax," Vilsack said. "It's simpler, quicker, and I think there's a political momentum for looking at that tax. I don't know that there's momentum for the alcohol (tax)."

Walding said an increase in the tax on alcohol might hurt sales at Iowa restaurants, some of which already are suffering because of the sluggish economy.

Calls to the Iowa Hospitality Association were not returned Tuesday. However, a legislative analysis shows lawmakers expect a tax increase to cause a 10 percent reduction in alcohol sales.

Walding also said increasing the tax on alcohol wouldn't generate enough money.

"It would take a whole lot of hooch to produce the revenue being discussed," he said. "The money they're talking about for the Iowa Values Fund, you're not going to get there by drinking."

At least 21 other states have considered increasing excise taxes on alcoholic beverages this year, mostly because of budget deficits, according to the National Conference of State Legislatures. Arkansas and Utah have passed such a tax increase into law.

The Center for Science in the Public Interest in Washington, D.C., has pushed for increasing alcohol taxes nationwide, saying that alcohol costs the nation $185 billion a year.

"This is an appropriate way to derive some revenues," said George Hacker, director of the center's Alcohol Policies Project. "Alcohol use costs this country and states tremendous amounts of resources in terms of lost work, property damage, law enforcement costs and drunken-driving crashes, as well as having to treat and prevent alcohol problems."

Hacker said raising alcohol taxes also would help reduce drinking, especially among young people.

But Stephany Schwartz, an employee at the Family Mart in Dubuque, said she didn't think an increase in the state tax on alcohol would have much of an impact on sales. "If people want to drink, they'll drink, don't matter how much it costs," she said.

Iowa last increased its tax on beer in July 1986, when it went from 14 cents to 19 cents per gallon, Walding said. The tax on wine was increased in 1985 from $1.50 to $1.75 a gallon.

Liquor taxes were reduced from a 60 percent markup in March 1987 to the current 50 percent markup. It's the fifth-highest liquor tax in the nation at $14.41 per gallon. The disparity isn't as big as it looks, however, because in other states liquor is sold by private wholesalers, while in Iowa the state is the wholesaler.



6. FTC Study Examines Effects of Online Wine Sales


By Margaret Webb Pressler - The Washington Post


The Federal Trade Commission just finished a study of wine buying that looked at how laws preventing consumers from ordering the nectar of the vine online affect prices at conventional stores. The study draws some potentially broad conclusions, even though the agency focused on just one state, Virginia.

All manner of people like to buy wine online, but many can't because state regulations won't allow it. That's provoking some battles in a number of states.

The problem with online buying isn't the purchase itself but the shipping. Many states prohibit "direct shipments" of any alcoholic beverages to consumers, and in some places it's even a felony. Other states simply make it burdensome, requiring middlemen and licenses. (In Delaware, it's illegal to buy or send alcohol from a supplier who doesn't have a Delaware license.)

The arguments against allowing direct shipments of wine to consumers are, on their face, understandable. States have the right, under the 21st Amendment, to regulate the sale of alcohol within their borders. That helps to control alcohol sales, prevent underage purchases and provide efficient tax collection.

Many states believe direct shipping would circumvent these controls, potentially putting more alcohol into the hands of minors and keeping money out of state coffers. The Wine and Spirits Wholesalers Association, the trade group representing distributors that sell to wine stores and supermarkets, supports this position.

This system of controlled distribution has "served consumers and states well for 70 years," the association says on its Web page. "WSWA is committed to preserving the integrity of the state-based alcohol control system." Of course, that system benefits wholesalers by making them a critical link in the sale of wine.

Even if wholesalers were more open to direct shipments of alcohol, prickly issues remain, such as underage drinking and tax collection. Wine lovers dargue that these issues can be handled without restricting consumer choice.

Most people interested in buying online or directly from a winery want access to wines they cannot get at local outlets.

Devotees say they're willing to pay taxes and support efforts to curb underage drinking. Wineries can be responsible for collecting taxes. Delivery companies can be required to get the signature of someone 21 or older. Besides, they argue, most online purchases in states where direct shipping is legal are for higher-end wines that kids wouldn't be buying.

The FTC realized there had been no studies of the matter, leaving the arguments largely theoretical and ideological. The agency studied all the wine shops in the Washington suburb of McLean, Va., comparing their offerings with those online.

The study found that "if interstate direct shipping were legal, Virginians would have access to greater wine varieties and some lower prices," said Jerry Ellig, acting director of the office of policy planning.


7. Windsor Heights Council Weighs Liquor-Buffet Ban

By Wendy Weiskircher, Register Staff Writer – Des Moines Register



Windsor Heights could be the next metro-area city to ban all-you-can-drink bar specials if the City Council passes an ordinance Monday.

Not that Windsor Heights is a hotbed of so-called liquor-buffet activity, City Administrator Marketa Oliver said. But Waukee, West Des Moines and Clive all have banned the drink specials, and "we thought it was a good idea," she said.

"I don't know that we have a lot of bars here that offer those specials," Oliver said. "The issue is more do we want to be the only place that allows it?"

The Windsor Heights City Council will meet at 5 p.m. Monday in the City Hall council chambers, 1133 66th St.

Approval of the ordinance would ban drink specials in which patrons pay one cover price - up to $15 - and receive unlimited drinks the rest of the night.

"It prohibits a free-for-all," Oliver said of the proposed ordinance.

There would be an exception for private gatherings, such as bachelorette parties, she said.

The college towns of Ames and Iowa City both have banned drink buffets, and Des Moines considered a similar ban last fall. If the Windsor Heights ordinance is approved, Oliver said she does not expect the ban to have a major effect on the Windsor Heights bar scene.

"It's a public-safety issue," she said.

Clay Cook, owner of the Front Row bar in Windsor Heights, said he supports the ban.

"I think it's a good idea - I'm all for it," he said. "I don't mind two-for-one drinks every once in a while or lowering drink prices 50 cents to bring people in. But those $5 all-you-can-puke specials don't help anybody."

Another issue being watched by the council is the upkeep at the Paradise Mobile Home Park, 6400 Hickman Road. Officials last month ordered residents to resolve nuisance issues after neighbors complained about "trash and those kinds of things," Oliver said.

Residents received cleanup orders April 18. If problems aren't resolved, Oliver said, those living in the mobile-home park face municipal fines. Oliver said progress has been made.

"I was out there recently and saw people planting flowers," she said. "The people out there have been terrific. They've done a really good job getting it cleaned up."

The park will be discussed at Monday's council meeting.


8.  Liquor Effects Last Longer Than Earlier Presumed

Yahoo! News: World

May 15, 2003

Washington, May 15 (ANI): Researchers have found that executive cognitive function (ECF) is more impaired during the descending limb of the blood alcohol concentration curve, when people no longer feel stimulated by alcohol.

These findings indicate that intoxication effects last much longer than previously believed. ECF encompasses a number of "higher order" cognitive abilities, such as attention, abstract reasoning, organization, mental flexibility, planning, self-monitoring and the ability to use external feedback to moderate personal behaviour.

A study, published in the latest issue of Alcoholism: Clinical and Experimental Research, has confirmed that not only does alcohol impair ECF but, surprisingly, this effect is more pronounced on the descending rather than the ascending trajectory (or limb) of the blood alcohol concentration (BAC) curve.

"Executive functioning is basically a metaphor for frontal lobe functioning. This area of the brain, the prefrontal cortex, arguably defines us as a species; it is roughly 120 percent larger in humans than in our closest primate relatives. In fact, some Russian neurophysiologists refer to it as the area of the brain that pulls the past, the present and the future together. In other words, it puts things in context", explained Robert O Pihl, professor of psychology and psychiatry at McGill University and first author of the study.

This finding has important ramifications for behaviours such as driving. "People who think they have waited two hours before driving home may need to actually wait six hours. Or else, maybe at the time when you least expect it, you are the most vulnerable", he added. (ANI)