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Lynn M. Walding, Administrator


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 e - NEWS

October 3, 2003


1. Under the Influence?

2. Corona Price Increase

3. US: Pernod Launches Martell Print Ads

4. SABMiller Sales Are Flat In U.S., Foamy in Europe

5. Alcohol Industry Efforts Improving

6. Pernod Serves up Merger Talk


7. Red Bull Takes Air at Passing Off Offenders



1.  Under the Influence?

By Karen Dandurant and Elizabeth Kenny

September 29, 2003


Do candy cigarettes or tequila-flavored lollipops influence children’s decisions later on in life?


Police and health officials say they do, but some local stores say there is no reason to pull the products off the shelves.


Candy and bubblegum cigarettes like those shown here are available for kids in many local stores.   Staff photo by Rich Beauchesne










Kittery resident Priscilla Guy said she was outraged when she walked into the local 7-Eleven and saw tequila-flavored lollipops that include a real worm. What she found more outrageous was that the candy was accessible to children. The lollipops do not contain alcohol.

Guy is chairwoman of the Kittery Youth Connection and the Kittery Chemical Awareness and Prevention program.

"Parents see this stuff and they call me," Guy said. "First of all, I am worried about children eating insect larvae, but even more disturbing is the message a liquor-flavored lollipop sends to children. It tells them alcohol is OK. It makes it realistic because there’s a real worm in a tequila bottle and in the candy."

Guy approached the manager of the 7-Eleven who told her he saw nothing wrong with the tequila pops.

"There’s nothing in there that’s against the law; there’s no liquor in them," said Don Chabot, manager of the 7-Eleven, waving his hand at the box on the counter.

PHOTOPictured above is the the tequila pop.
Staff photo by Rich Beauchesne


Chabot said the pops are aimed at adults, and so far adults are the only ones who have purchased them.

"Adults buy it as a joke thing," he said.

The lollipops are the creation of California-based company Hotlix.


"Our Hotlix worm suckers and other insect confections have surpassed our expectations for acceptance, perhaps due to the increased demand for insects as food," the Hotlix Web site states.









According to information on its site, the bugs are FDA approved and completely safe. Hotlix claims to sell more than 100 million a year.



2.  Corona Price Increase

Source: Beernet Online

September 30, 2003

The letters from Gambrinus starting arriving on Friday, from Barton on Monday. The shocking news: both companies are going up a buck a case, more in some markets, on Corona and Corona Light, effective November 1. Both importers getting the directive from Grupo Modelo. However, we hear Modelo is discounting it back to the importers until the end of the year to help ease retailers into it.

Corona distributors are worried. "There will definitely be pushback," says one, echoing several others. Many distributors are privately wondering what Modelo is thinking when the beer industry is so soft this year.

But not everybody so upset. A large West Coast distributor emailed me on Friday: "I haven't heard anything [letter hadn't arrived yet] but it sounds like a good idea. Their brands are on fire and can handle an increase."

WHY SO AGGRESSIVE? The mere size of the increase, on top of last year's increase, and when Heineken is sitting out an increase, is getting tongues wagging. While Corona has experienced a rebound in August-September in much of the country, September industry volumes are seen as sluggish despite the extra sell day (against buy-in last year).

Surprisingly, some believe Anheuser-Busch had an influence on the decision. "They [A-B] get the extra equity income [from Modelo], while creating a comfortable price umbrella under which they can raise Bud and Michelob prices," says one wholesaler. Good point.

Indeed, the move can only help A-B as it pushes through price increases this week in a soft volume environment. The timing of the announcement also softens retailer complaints of A-B's increase. And don't forget: While it's no secret that Modelo execs don't get BBQ rib baskets from St. Louis at Christmastime and A-B execs don't get piñatas from Mexico City, A-B does own half of the company and presumably has a say in pricing decisions.

Others wondering if Modelo is taking up the price to help pay for a future acquisition, say, of one of their importers. The dual effect of the increase would be to dampen volume, thereby decreasing the value of said importer, while at the same time generating more cash to pay for it. A-B could, again, be a winner in this scenario.

But for those of you who prefer less conspiratorial explanations, the reason might simply be that Modelo looked at its brewing capacity, profit margins, and maybe Pat Stokes was kind enough to share A-B's price elasticity models, and looked at Corona and Corona Light moving average trends, particularly 12 pack bottles, and said, "Hey, we can push this through, let distributors take retailer heat for a couple of months, and make a lot more money."

Don't forget that Corona 12 pack NRs are the highest grossing beer SKU in supermarkets, and they are hot, up 13% in recent IRI scans. That gives you some sort of leverage in the marketplace.

While October price increases move through the supply chain, distributors who are not going up expect A-B to take up their pricing in February about 2%, or sixty cents a case across the board on premium brands.


3.  US: Pernod Launches Martell Print Ads

Source: just-drinks.com editorial team

October 2, 2003


French drinks group Pernod Ricard is launching a new print ad campaign for its Cognac brand Martell.

The ads, called "Rise above", will run from September to December 2003 in order to help the continuing repositioning of the brand.

The campaign features three successful African Americans who call for individuals to 'rise above' life's challenges, said Pernod in a release.

The company hopes the new ads will appeal to its key target audience of 21-35 year old male Cognac drinkers.

The ads will run in consumer magazines and regional newspapers and be supported by promotional activity and events.

"The new campaign, exclusive to the US, embraces Pernod Ricard's philosophy to manage global brands at a local level (to ensure marketing activity is relevant to its audience). The campaign is aimed at recruiting new Cognac drinkers through effective and relevant media, increasing awareness of Martell in a competitive environment and establishing brand territory," said Pernod.

International marketing director for Martell, Eric Benoist, said: "We are very proud of this impactful campaign and believe it will appeal to existing Martell consumers as well as inspire new ones. Martell has always adopted its own original approach and 'Rise Above' demonstrates Martell's individual character and will appeal to our US target audience. It provides us with an excellent platform to educate people about the quality of Martell cognac and what sets Martell apart."



4.  SABMiller Sales Are Flat In U.S., Foamy in Europe

By Dan Bilefsky - Staff Reporter of The Wall Street Journal

September 30, 2003

SABMiller PLC said on that despite strong demand for beer in Europe, it is still suffering slumping sales volume of its flagship Miller brand in the U.S.

The London-listed company, which last year paid $3.6 billion in stock to Philip Morris Cos. to buy Miller Brewing Co. and create the world's No. 2 brewer in volume, said the volume of the Miller brands sold in April to mid-September fell 4.5% in North America. SABMiller said it continues to struggle against Anheuser-Busch Cos., the world's largest brewer and maker of Budweiser, which has the biggest distribution network in the U.S. and accounts for nearly half of U.S. beer sales.

"The volume of Miller brand sold continues to remain weak, and we don't expect any big improvement anytime soon," SABMiller spokesman Nigel Fairbrass said after the company released a trading update, a snapshot that lists volume increases and decreases world-wide without disclosing sales figures or liters of beer sold.

Still, SABMiller's shares rose 2% to 474.15 pence ($7.86) in London, buoyed partly by an 8% increase in beer volume in Europe in April to August. Europe's hot summer and robust demand in the Czech Republic and Russia helped boost sales, the company said. The Czech Republic has the highest per capita beer consumption in the world -- two glasses a day. In Russia, a growing number of people are turning to beer instead of vodka.

SABMiller, which generates about 14% of its annual sales of $9 billion in South Africa and reports in dollars, also has benefited from the recent strength of the rand compared with the dollar. That contrasts with rivals Heineken NV of the Netherlands and Interbrew SA of Belgium, both of which report in euros and have seen the performances of their U.S. imports dragged down by the strength of the euro against the dollar.

The company, which is based in London and Johannesburg, said its volume was up 2.5% in South Africa and up about 3% in the rest of Africa and in Asia, despite economic turmoil in Zimbabwe and the severe acute respiratory syndrome epidemic in China.

SABMiller alarmed investors in May when it said it would take three years to turn around the Miller brand. Despite a recent U.S. television campaign featuring former "Baywatch" star Pamela Anderson, the company continues to lag behind rivals Anheuser-Busch and Adolph Coors Co. Ian Shackleton, analyst at Credit Suisse First Boston in London, estimates that Miller's U.S. market share has fallen to 18.5%. The brewer had a 19.6% share in 2002, according to the newsletter Beer Marketer's Insights. "Miller continues to be the big black mark on this company," said Mr. Shackleton.

Mr. Fairbrass, the company spokesman, said SAB hoped to improve Miller's performance by pruning the more than 57 brands in the Miller portfolio. Miller Brewing's brands include its premium brew Miller Genuine Draft, as well as less expensive brands such as Milwaukee's Best and flavored beverages such as Jack Daniel's Hard Cola. The company wants to focus more on the higher end of the market. "We have too many brands in our portfolio, and we want to simplify things," Mr. Fairbrass said, though he wouldn't say which brands would be eliminated.

Miller is spending $500 million this year on marketing the Miller brands. Earlier this year, it began a brand shake-up aimed at attracting younger beer drinkers. It replaced Miller's silver label, which was easily confused with its rivals, with royal blue packaging. Mr. Fairbrass said the company plans to launch a new U.S. advertising campaign in November. He wouldn't disclose details, other than to say it will focus on the overall Miller name, instead of separate commercials for each of the Miller brands.

SAB also has introduced the Miller brand across Europe as part of its effort to boost sales. Miller Genuine Draft has been introduced in Russia, Romania, the Czech Republic, Poland and Italy. The company says it wants to benefit from Europeans' affection for iconic American brands, such as Levi's jeans.





5.  Alcohol Industry Efforts Improving

By Frank Balsamello -The Hoya (Georgetown U.)

September 29, 2003

(U-WIRE) WASHINGTON — Concern over alcohol advertisements once again reached the floor of Congress with the release of two reports on Sept. 9.

Although differing in opinion, both reports confirmed a central issue — the alcohol industry is beginning to reform youth exposure to its advertising.

Of the two reports, the Federal Trade Commission's was most in favor of the alcohol industry's changing practices. Jim O'Hara, executive director at the Center on Alcohol Marketing and Youth at Georgetown University, said that the report was a "review of what the industry had done since 1999," and that "the industry has made several improvements."

In order to limit youth exposure, the alcohol industry has agreed on a 70 percent threshold of adult access in order to run such an advertisement, meaning that they will only choose to run such ads in periodicals or during air time in which less than 30 percent of its readers, viewers or listeners are under 21. Prior to the change, the threshold was set at 50 percent, statistically leaving one in two viewers of the ad underage.

While saying he is glad about the changes, O'Hara also added that he wished it had come sooner.

The other report presented to Congress comes from the National Academy of Sciences. According to its findings, the 70 percent threshold is too low; it calls for 85 percent of the audience to be adults.

Further, they claim that the percentage does not account for the size of the audience in general. George A. Hacker, director of the Alcohol Policies Project at the Center for Science in the Public Interest in Washington, said, in reference to the Super Bowl, that "even though the underage audience is a small proportion, it's still the largest audience of kids for any show ever," in a Sept. 15 New York Times article.

According to O'Hara, 15 percent of the U.S. population is age 12-20, and so the Academy concluded that 85 percent access was a better proportion than 70.

The National Academy of Sciences calls for other regulations beyond an 85 percent rule. According to O'Hara, it has "a very comprehensive strategy that addresses the issue from all angles." One such proposal includes increased taxes on alcohol or cigarettes.

The Center on Alcohol Marketing and Youth will soon release the 2002 findings in order to assess if industry changes have started to have any impact yet, he said.

At this point, O'Hara said he finds the good news to be that "everyone recognizes the need for change, and the industry is taking steps."



6.  Pernod Serves up Merger Talk

By James Dow – The Scotsman

September 26, 2003


THE world’s third largest spirits group, the French giant Pernod Ricard, yesterday threw its hat in the ring for the next round of mega-mergers in the drinks industry.

Pernod managing director Richard Burrows, unveiling half-year results in London, said he was in a position to do a deal with his rivals "right now", adding he would take a "very careful look" at any opportunities that arose.

Separately, he disclosed that Pernod has received inquiries to buy its five mothballed whisky distilleries in Scotland. None of the approaches has led to talks.

Speculation began last week when the chief executives of Diageo and Allied Domecq - the world’s largest drinks groups - revealed they are considering mergers or alliances with other major players.

Burrows signalled that he is prepared to enter similar discussions. Asked if he was ready to do a deal he said: "We’re in a position to, right now."

He pointed out that Pernod has pared down its debt - accumulated in 2001 when it bought the Seagram portfolio with Diageo - to below the 2 billion (£1.4 billion) mark.


He added: "We’re more or less back to the debt ratios we had before that acquisition. We’ve digested Seagram, in other words."

He did not feel that Pernod needed to reduce its debt further before it could consider new mergers or acquisitions.


Burrows said he was aware of the opportunities for further consolidation in the industry, adding: "We’ll take a very careful look at them."

He appeared to suggest he was more interested in acquiring specific brands rather than a merger. "We’re interested in looking at opportunities that arise within our very specific spirits and wines parameters", he said.

Turning to the Scottish operations, Burrows said Pernod had received approaches for the Allt A’Bhainne, Braeval, Benriach, Glenkeith and Caperdonich distilleries on Speyside. He said the inquiries came mostly from individuals rather than trade buyers. They had not progressed to discussions.

"We’re not in a situation where we’re forced to sell, and they could be needed by us in the future. A silent distillery is not an expensive item to maintain," he said.

Pernod is focusing on its six remaining distilleries in Scotland, with plans to launch a £28 million global advertising campaign this winter.

Burrows was bullish about the outlook for the second half, pushing his net profit forecast to 15 per cent growth for 2003, from 10 per cent.

Pernod was hit hard by exchange rates in the half to end-June, logging a 3.7 per cent rise in net profit excluding exceptionals. The lift would have been 34 per cent at constant exchange rates.





7.  Red Bull Takes Air at Passing Off Offenders

Red Bull Communication Center – Media Information

September 24, 2003


Settlements Reached with New York, Las Vegas and Philadelphia Restaurants, Lawsuits Pursued Nationally


SANTA MONICA, Calif. – Red Bull, the manufacturer and distributor of the well-known energy drink, has reached negotiated settlements with New York City restaurant/nightclub Centrofly, Las Vegas restaurant/nightclub Drai’s on the Strip and Philadelphia restaurant/nightclub M Restaurant and Lounge that resolve “passing off” and other claims alleged in lawsuits filed by Red Bull against those establishments.  The three lawsuits, which were filed in federal courts in New York, Nevada and Pennsylvania, respectively, alleged, among other things, that customers visiting Centrofly, Drai’s and M Restaurant who requested Red Bull routinely received a substitute beverage instead of Red Bull without being notified of the substitution.  Red Bull alleged in the lawsuits that the substitution of an alternative beverage for Red Bull, without providing the customer with notice of the substitution and an opportunity to reject the alternative beverage, violated Red Bull’s rights and deceived consumers.


The terms of the settlements of each of the lawsuits involve the entry of a permanent injunction against the establishment and its employees that precludes them from “passing off” other beverages as Red Bull.  In addition, pursuant to the settlements, each of the restaurants/nightclubs have agreed to pay to Red Bull an undisclosed amount, some portion of which is to compensate Red Bull for the claims alleged in the lawsuits and some portion of which will compensate Red Bull for attorney’s fees incurred in pursuing its claims.


Dan Ginsberg, Red Bull’s Executive Vice President, expressed satisfaction with the outcomes stating:  “The settlements achieve all of our litigation objectives.  They ensure that customers will not unwittingly receive a substitute beverage when they order Red Bull, they protect the integrity of the Red Bull brand and they send the message to others that Red Bull will aggressively pursue those who attempt to “pass off” other beverages as Red Bull.


These lawsuits are three among a number of legal actions Red Bull has recently initiated to preserve the integrity of its brand and to ensure that Red Bull drinkers are not misled when they order Red Bull and instead receive another beverage in its place.  Red Bull also has filed a lawsuit against a restaurant/nightclub in San Diego where its investigations revealed routine substitution of alternative beverages for Red Bull were occurring without notice to customers.  In addition, Red Bull currently is actively investigating numerous reports of “passing off” at other restaurants/nightclubs across the country, some of which may result in the initiation of additional lawsuits.


“The defendants in the lawsuits filed by Red Bull each were repeatedly warned that the passing off of substitute beverages as Red Bull damaged the Red Bull brand, deceived consumers and violated federal and state laws,” said Jim Goniea, an attorney at Sonnenschein, Nath & Rosenthal representing Red Bull.  “When Red Bull’s investigations revealed that the defendants continued to serve substitute beverages to customers who had requested Red Bull without notifying them of the substitution, lawsuits were initiated to protect Red Bull’s rights and those of its customers.  Although Red Bull would prefer to resolve passing off issues whenever possible by educating restaurants, bars and nightclubs concerning their legal obligations and by obtaining voluntary compliance with the law, Red Bull has made a decision to aggressively pursue those who persist in deceiving Red Bull consumers by serving them a substitute product without warning.”


“I was at a bar recently in San Francisco and I ordered a Red Bull.  The bartender reached for the soda gun and I told her to hold off.  I know Red Bull doesn’t come out of a gun, but other customers probably don’t,” said Carlton Solle, owner of San Francisco-based restaurant, the White Trash Bistro.  “People who want to make sure they really get Red Bull and not another product should order the can so they know what they’re getting!”