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Lynn M. Walding, Administrator

	e - NEWS
October 17, 2003

1. Cedar Falls to Step up Enforcement of Alcohol Laws

2. THE SMIRNOFF® ICON IS REBORN

3. US: Low-Carb Imported Beer Launched

4. Dinner and Drinks Come In the Same Martini Glass

5. Allied Domecq Lose Out in Wines Takeover

6. Diageo Plans £1.34bn US Sell-Off

1. Cedar Falls to Step up Enforcement of Alcohol Laws

By Jon Ericson, Staff Writer - Waterloo / Cedar Falls Courier Online

October 14, 2003

CEDAR FALLS --- Instead of banning drink specials, the City Council is vowing to more vigorously enforce existing alcohol laws.

The city has been looking to cut down on underage and excessive drinking in Cedar Falls.

It had looked into passing an ordinance similar to Iowa City's, which outlawed a number of drink specials. Among those were all-you-can-drink offers and two-for-ones.

But after hearing from bar owners and summarizing that such a ban would not likely cut down on excessive drinking, the council's Administrative Committee decided to go in another direction.

Instead, the city will look to step up sting operations on bars and house parties, as well as those selling liquor for consumption off-premises.

Also, the committee passed a resolution that states the city will revoke liquor licenses if bars have four convictions for selling alcohol to minors in a three-year period.

A memo from Administration Committee Chairman Stan Smith states the city will look to beef up enforcement of liquor laws in bars and in the city at large.

"The stings will be on the lookout for serving to underage drinkers and for serving obviously intoxicated patrons. In other words --- if the bars dress like a lightning rod and behave like a lightning rod, they shouldn't be surprised if they attract lightning," said Smith's memo.

The city also may keep an eye on what drink specials are advertised.

"We're going to monitor the situation, and if you advertise we'll be looking," Smith said.

Bar owners warned against banning specials in Cedar Falls if the same wasn't done in Waterloo. They still want cooperation between the two cities.

"There should probably be a concerted effort to communicate with Waterloo, or we end up with the same situation," said Darin Beck, owner of the Barmuda nightclubs and restaurants. "We certainly don't want Cedar Falls to be the last place you'd want to go to buy a drink."

Smith said he has kept Waterloo city officials appraised of what Cedar Falls is doing, but hasn't received any commitment from them.

"I furnish them with the minutes of every meeting we have and every proposed resolution. Basically what I get is a pat on the butt and a 'thatta boy,'" said Smith.

The city has been monitoring neighborhoods and more proactively enforcing bootlegging laws this fall. Bootlegging is when one serves alcohol at a party and charges a cover charge or for individual drinks.

Smith also promised the city will keep a closer eye on suppliers of kegs and supermarkets promoting beer specials.

2. THE SMIRNOFF® ICON IS REBORN

Press Release: Diageo plc - Happy Hours

October 13, 2003

--Iconic Brand Relaunches With $157 Million Integrated Marketing Program –

STAMFORD, CT – Diageo, the world’s leading premium drinks company announces the relaunch of one of it’s most recognizable icons - SMIRNOFF®. This fall the world’s #1 premium vodka brand SMIRNOFF ®, the #1 flavored vodka SMIRNOFF TWIST® and the #1 line of premium flavored malt beverages SMIRNOFF ICE® and SMIRNOFF ICE TRIPLE BLACK® will surface with a bold new look. Supporting this relaunch SMIRNOFF® will spend more than $157 million on national advertising, public relations and additional marketing programs that are focused on communicating the premium quality of the SMIRNOFF® products to consumers.

“SMIRNOFF® is the world’s number-one premium vodka brand, and its important for us to communicate that in everything we do,” explains Sharon Lichten, Smirnoff Brand Director at Diageo. “In our continuous effort to assess our appeal, we recognized the need to update the SMIRNOFF® image to make a contemporary statement about our portfolio of quality products. Consumers are more interested in premium brand attributes and our research reveals that our new look communicates to them this all important ‘style’ and ‘quality’ distinction.”

The new SMIRNOFF® packaging debuts at a time when consumer buying patterns are trending towards premium and super premium beverage alcohol products. SMIRNOFF® has revamped the image of this iconic brand to reflect both the brand’s Russian heritage and modern success. The stylish new SMIRNOFF® bottle features a broad shoulder and tapered body with a new sharp red and silver logo, which draws inspiration from awards bestowed upon Pierre Smirnoff as an Official Purveyor of the Imperial Russian Court in the late 1880’s. Still winning awards today; SMIRNOFF® recently was awarded the 2003 gold medal at the San Francisco World Spirits Competition.

To emphasize this award winning quality of the original SMIRNOFF® vodka a new national advertising campaign “Neat” will be launched in October. The centerpiece of the campaign is the new sleek SMIRNOFF® bottle accompanied by an olive, a twist or a shot glass, conveying the message to consumers that this premium spirit can be enjoyed by itself -- neat. The television and print campaign will be seen national in all markets across the United States.

“SMIRNOFF® is the vodka of choice for adults who enjoy their social life with friends, whether they are going out or staying at home. They demand genuine, high quality brands they know will complement a great evening,” says Sharon Lichten, Smirnoff Brand Director. “It’s important to us to deliver activities relevant to their lifestyle, such as our SMIRNOFF “Get Discovered” promotion, which allows customers, where legal, the chance to win a role in a national SMIRNOFF TV advertisement.”

SMIRNOFF will spend more than $150 million on a range of integrated marketing efforts including on- and off- premise promotions, extensive public relations activities, and various non-traditional marketing tactics—all of which will effectively communicate the premium quality of the SMIRNOFF trademark.

3. US: Low-Carb Imported Beer Launched

Source: just-drinks.com editorial team

October 15, 2003

The low carbohydrate beer category continues to grow in the US, with the launch of an imported brand that claims to contain the fewest carbohydrates yet of any brand on the market.

Martens Low Carbohydrate, brewed by Brouwerij Martens of Bocholt, Belgium and imported by Elite Brand Imports was unveiled yesterday at the National Beer Wholesaler Association’s (NBWA) 66^th Annual Convention and Trade Show in Las Vegas.

Martens Low Carbohydrate contains only 2.1 grams of carbohydrates per serving, the lowest carbohydrate count of any beer on the market, it says. However Martens hopes to distinguish itself from other low-carb beers by the fact it is an imported beer.

“The response to this beer has been incredible,” said Rick Davis, Elite Brand Imports vice president, sales and marketing. “Martens Low Carbohydrate has three huge selling points that quite frankly the other low-carb contenders just don’t have. It’s got fewer carbs than any other beer, it’s imported from Belgium, and it tastes like a regular, higher-carb beer.”

It’s now estimated that at least 24 million people in the US have tried the low-carb lifestyle. And food and beverage marketers are quickly developing low carbohydrate alternatives to capture a portion of this growing market.

4. Dinner and Drinks Come In the Same Martini Glass

By Katy McLaughlin, Staff Reporter - The Wall Street Journal

October 15, 2003

'Bar Chefs' Add Ham, Basil and Gelatin to New Cocktails

Bartenders are throwing so much food into mixed drinks that the wet bar is starting to resemble the salad bar.

Blue cheese, cucumbers and pieces of ham are showing up in cocktail glasses. Chili peppers, avocados, figs, truffles, cream cheese, graham crackers, fish, gelatins, foams and flowers all are swimming in gin or cognac or champagne.

"When it goes in your mouth it, like, explodes," said Maggie Poetz, an interior designer from Jupiter, Fla., tasting a $10 concoction called "92 in the Shade" at the Blue Water Grill in Manhattan. The drink is made of mango puree, tequila and a red habanero pepper syrup.

Dailey's Restaurant and Bar in Atlanta serves the "Dirty Maytag Martini," garnished with an olive stuffed with blue cheese. Saucebox in Portland, Ore., makes drinks with crushed Thai basil. Denver's Blue 67 offers a ground-coffee-bean martini for $8. Other bars garnish with everything from olives stuffed with prosciutto or caviar, to pickled okra, apple slices and ramps (wild leeks).

The Amaretto Cheesecake Caketail (left), which includes cream cheese and graham crackers, and the 24 Carrot Cake, with carrot juice and various liqueurs

Behind the food surge is a flood of new specialty beverages on the market. Fifty-three new cordials and liqueurs were introduced in 2002, up from 18 in 2001 and 17 in 2000, according to the Distilled Spirits Council in Washington. Four times the number of flavored vodkas and rums were introduced in 2002 as in 1999. In order to draw attention to each of these new beverages, liquor companies hire "mixologists" to concoct new recipes. The best way to hit promotional pay dirt is to come up with something truly bizarre and exotic.

For bars, restaurants and hotels, a cocktail with two ounces of booze, juice and garnishes is a particularly big money maker. For every $10 cocktail, bar owners say, they spend about $1.50 or $2 on ingredients. A $10 plate of food, on the other hand, is likely to cost about $3.50 in ingredients and a lot more in labor.

Rob Wilson, a chef at the Ritz-Carlton Laguna Niguel in Orange County, Calif., teamed up with the California Avocado Commission to create the Avocolada and the Avorita, thick green takes on piña coladas and margaritas.

Then there's the dessert cocktail. A few months ago, the owners of the New York City restaurant Dylan Prime, who also run a cocktail consulting company called Drink Tank, developed Caketails and Pietinis, or cocktails that imitate the taste of cake and pie. The Amaretto Cheesecake, priced at $10, contains cream cheese, amaretto liqueur, roasted almonds and graham-cracker crumbs. The drinks, which are sold both at the bar and on the dessert menu, have increased Dylan Prime's dessert sales by 25%, the restaurant says.

Barhoppers aren't all gobbling this up. "Sounds like California froufrou to me," said Randy Berger, a manufacturing executive from Hammond, Ind., while having a beer at Noe Restaurant and Bar in Los Angeles. Among the drinks is an orange-and-cardamom flavored vodka cocktail with an accompanying chocolate bonbon filled with blue cheese. Chef Robert Gadsby says the combination "creates a symphony of flavors on your tongue." Mr. Berger stuck with Amstel Light.

Others find the drinks tantalizing. Anita Lucas, a Charleston women's-clothing retailer, was recently eating alone at the bar at Citarella the Restaurant while in New York on business. She was just leaving when she saw the bartender mix up a concoction of mashed grapes, a syrup made of elderflowers, and vodka, with chunks of champagne sorbet floating on top. It's name: the Titanic. Ms. Lucas sat back down and ordered the $12 drink. "Delicious," she said.

One engine driving the food-in-cocktail trend is the advent of the "bar chef" position in some ambitious restaurants. The term is used to describe barkeeps who make their own syrups, purees and infusions, and mix them together in unique ways. Bar chefs have been influential in the New York City cocktail scene for the past several years, but now corporate restaurant chains, hotels and liquor companies are hiring them for low-six-figure salaries to take their creations national.

BR Guest Restaurants, which owns Blue Water Grill, where the mango-chili drink Ms. Poetz tasted is served, and other restaurants in New York, Arizona and Las Vegas, recently hired former bar chef Eben Klemm to be the "Director of Cocktail Development" for all the company's bars. Cocktail sales have gone up by 10% to 15% since Mr. Klemm joined the company five months ago, the company says.

Albert Trummer, a bar chef on Long Island, recently helped New York chef David Bouley create "cocktails on a plate." These include a Bloody Mary made of lemon cake with horseradish sauce, celery sorbet and jellied vodka.

Some innovations miss the mark. In a recent taste test at New York's Mix, the flavor of the $16 Truffle Martini was so subtle that a truffle-hunting pig might have had trouble sniffing out the pricey fungus. A spokesperson for the restaurant says they tried another formulation that gave the drink an earthier flavor. Lesson learned: The only thing worse than a $16 drink that doesn't taste like truffles is a $16 drink that does. The restaurant took it off the menu for tinkering.

--Ethan Smith in Los Angeles contributed to this article.

5. Allied Domecq Loses Out in Wines Takeover
Ireland On-Line

October 13, 2003

Drinks giant Allied Domecq today conceded defeat in its two-way takeover struggle for control of Australian company Peter Lehmann Wines.

Allied pulled out after Peter Lehmann directors backed an identical four Australian dollars a share offer from privately owned Swiss group Hess.

With Allied owning 14% of Peter Lehmann Wines (PLW), it said it acted in the best interests of its own shareholders by accepting the Hess price for its holding and by not raising the stakes further in the month-long bid battle.

The Hess offer values PLW, which is based in the Barossa Valley in South Australia, at around €87m.

Allied chief executive Philip Bowman said: “While we remain firm believers in the potential of Peter Lehmann Wines under the control of Allied Domecq, we have an obligation to generate value for our own shareholders.

“Despite the significant cost and revenue synergies that we believe would accrue to PLW as part of the Allied Domecq group, we do not believe that it would be in the interests of our shareholders to increase our offer further.”

The move by Allied comes after Peter Lehmann directors threw their weight behind the Hess bid, citing their “positive relationship” with the Swiss company and the intention of Allied to change distribution arrangements.

Hess made the first approach for PLW in August but Allied – best known for making Beefeater Gin and Tia Maria – tabled a higher offer last month.

Both companies subsequently sweetened their bids, although Allied failed to win the support of founder and major shareholder Peter Lehmann.

A successful bid from the UK company would have added a first Australian presence to its wines division, which already features the brands Montana, Atlas Peak and Mumm and Perrier Jouet champagne.

PLW’s wines are widely sold in supermarkets and include the Ambassador, Barossa and Clancy’s labels.

6. Diageo Plans £1.34bn US Sell-Off

This is London

October 12, 2003

LONDON - DRINKS giant Diageo is to cash in on a £1.34 billion windfall from selling part of its 21% stake in US food giant General Mills.

Diageo, the company behind the Guinness and Smirnoff brands, took 79 million shares in General Mills when it sold its Pillsbury dough business to the Cheerios cereal maker in 2001.

On November 1, Diageo, headed by Paul Walsh, can sell 50m of those shares, equal to about 13% of the company.

Based on current trading, the stake is worth $2.25bn (£1.34bn). Diageo is prevented from selling its remaining 29m shares until October 2005.

Fears that Diageo was planning to dump the majority of its shareholding as soon as the lock-in expired hit the food company's share price last week. General Mills shares fell nearly four% to less than $45.

A spokeswoman for Diageo confirmed that the company was looking to get out of General Mills as it was not part of its premium drinks core business. But she would not say when the company was planning to sell all or part of its initial stake other than to comment: 'It will go eventually.'

The good news for Diageo's shareholders - whose annual general meeting is on October 22 - is that despite last week's slight slump, General Mills is still trading close to its 52-week high of $49, while the shares were trading between $36-$38 when the Pillsbury deal went through.

The money raised is likely to be returned to shareholders, though some could be put aside to reinvest in the business or pay off some debt.

Diageo spent £852m on share buybacks last year.