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Sherry Whitney

From: John Bodnovich <bodnovich@ablusa.org>Sent: Wednesday, January 21, 2015 9:29 AMTo: John BodnovichSubject: FW: Industry News Update - Wednesday, January 21

 Please consider the environment before printing this e-mail. 

Nielsen Spirits Analysis Source: The Cowen Insight January 20, 2015

Distilled spirits growth decelerated in the most recent 4-week period ended 01/03/15, with dollar sales growth of +3.2% and volume growth of +0.7%. Brown spirits continue to outperform the category led by bourbon, Irish whiskey and Canadian whiskey. Vodka, gin, and rum remain challenged. Category Growth Slows, Non-Whiskey Underperformance Continues. Total distilled spirits dollar sales and volume growth decelerated in the latest 4-week period. Dollar sales were up 3.2%, representing a 70 bps deceleration relative to the 12-week growth of +3.9% and a 100 bps deceleration relative to the 52-week growth of +4.2%. Volumes grew 0.7% in the latest 4-week period, representing a 90 bps deceleration relative to the 12-week growth of +1.6% and a 150 bps deceleration relative to the 52-week period growth of +2.2%. Vodka, gin and rum were a drag on results. Vodka dollar sales decelerated 140 bps in the 4-week period to +1.4%, underperforming the total category by 180 bps. Vodka dollar share now stands at 24.5%, after losing 0.4 pts in the latest 4-week period. Gin (-0.5%) and rum (-2.1%) dollar sales growth also underperformed the total category. Tequila decelerated, but outperformed the total category, posting dollar sales growth of +3.9% and volume growth of +2.3%. Brown spirits continue to drive category growth. Bourbon outperformed total category dollar sales by 620 bps (+9.4%) and volumes by 440 bps (+5.1%). Canadian whiskey dollar sales growth accelerated 30 bps for the 4-week period to +12.5%, outperforming the category by 930 bps. Irish whiskey decelerated 230 bps for the period, but still posted impressive double-digit dollar sales growth of +13.7%. BFB Growth Decelerates, Continues to Outperform Category. BFB dollar sales decelerated 130 bps to +4.5% for the period, outperforming the category by 130 bps. Volume growth of +1.5%, also outperformed total category growth of +0.7%. Dollar share grew +0.1 pts for the period and now stands at 8.1%. Volume share also grew +0.1 pts and now stands at 6.3%. BFB posted strong dollar sales growth in Woodford Reserve (+41.0%) and Gentleman Jack (+13.4%). Although core Jack

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outperformed the category, dollar sales growth decelerated 180 bps to +4.3% for the latest4-week period. Tennessee Honey notably underperformed, posting both declines in dollar sales growth and volume growth (-1.5% and -1.3%, respectively). STZ Posts Impressive Results. STZ grew dollar sales +5.2%, representing a 40 bps acceleration relative to the 12-week growth of +4.7%, and a 200 bps acceleration relative to the 52-week growth of +3.2%. Strong volume growth of +4.0% also easily outperformed to total category. STZ seems to be on the right track, as this is the second consecutive month of dollar sales and volume acceleration. Strong performances in Svedka (+6.4% dollar sales growth and +5.8% volume growth) and Paul Mason (+7.7% dollar sales growth and +3.5% volume growth) drove the impressive performance. Diageo Remains Challenged. Dollar sales growth decelerated for the third consecutive month, with Diageo posting growth of +0.2% for the latest 4-week period, underperforming the category by 300 bps. Volume growth declined 3.0% for the period, underperforming the total category volume of +0.7% by 370 bps. Captain Morgan (-3.7% dollar sales growth) and Smirnoff (-4.8% dollar sales growth) were a drag on results. Beam Suntory Growth Decelerates. Dollar sales growth for Beam Suntory was up 0.7% for the period, representing a 30 bps deceleration relative to the 12-week growth of +1.0%. Volumes remain challenged as they declined 3.2% for the period. The underperformance was driven by core Jim Beam (+0.3%) and line extensions Jim Beam Black (-28.3%) and Devils Cut (-17.2%). ------

Barclays Consumer Equity Research - Spirits Scanner Scoop Source: Barclays January 20th

This report contains a high-level review of the latest Nielsen Spirits Scanner data released this morning (data through January 3, 2015), ordered by company (with a look at a few key categories), highlighting some metrics (sales, volume, price/mix growth) within a chronological context. Keep in mind that Nielsen captures a relatively small ~15%-20% of the US Spirits category, largely in grocery stores, Wal-Mart, Club, Dollar & Military outlets. This data set compares to NABCA's Control State data that covers only specific states and comprises 20%-25% of the national spirits industry. In the latest Nielsen spirits scanner data for the period ending January 3, 2015: Spirits sales slowed to +3.2% from +4.0% last month and from +4.7% two months ago. That said, YoY comparisons were more challenging this month, and the 2-year CAGR improved to 4.5% from 4.1% in the prior four weeks. On a 12-week basis, sales grew

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+3.9% vs +4.4% in the previous 12 weeks. This month, price/mix strengthened by +30 bps to 2.5% from +2.2% last month, while volume worsened -100 bps to +0.7% from +1.7%. Virtually all major players saw sequentially slower sales trends; BF's growth slipped sharply to +4.5% from +7.3% last month - though it continues to outpace its peers. Diageo's sales rose +0.2% vs +0.7% in the previous four weeks, while Pernod Ricard grew +2.1% vs +2.3% last month. Beam/Suntory sales slowed to +0.7% from +1.2% in the prior four weeks, albeit with increasingly strong price/mix (+4.0%). While this month's slowdown was widespread, white spirits categories fared worse than major brown spirits. Vodka decelerated to +1.4% from +2.8% last month, while Tequila sales moderated to +3.9% from +4.9%. Bourbon sales cooled to +9.4% from +10.4% last month, but Canadian Whiskey accelerated to +12.5% from +11.7%. Meanwhile, Irish Whiskey slowed to +13.7% from +20.2%. ------

SABMiller sales rise limited by falling China demand Source: FT Scheherazade Daneshkhu January 21, 2015

SABMiller, the brewing group behind Peroni, Grolsch and Miller Lite, reported higher quarterly sales growth in most parts of the world, but a continuing decline in lager demand in China hit overall revenues from one of its most important markets. The world's second-largest brewer said on Wednesday that net producer revenue - its measure of turnover - increased 4 per cent in the three months to the end of December, its third quarter. This was in line with analysts' expectations. In a trading statement, Alan Clark, chief executive, said: "Our Latin America and Africa businesses continued to grow both volumes and revenues, together with Europe, while more difficult trading conditions, particularly in China, held back the overall group performance." The London-based group again blamed the bad weather in China for falling demand, following a 10 per cent drop in volumes in the second quarter in the market. SABMiller produces Snow beer in China, which is the world's biggest-selling lager in terms of volume. But lager volumes fell by 9 per cent in the third quarter, leading to a 7 per cent fall in revenues in the country. This in turn was behind the 2 per cent drop in Asia-Pacific revenues. Africa continued to drive overall growth, with a 7 per cent increase in revenues while the performance in Europe improved, with sales up 3 per cent in the quarter.

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Once again, the growth of soft drinks, up 4 per cent in volume terms, outpaced lager, which suffered a 1 per cent drop in volumes. SABMiller has put increased emphasis on its soft drinks business to capitalise on its faster growth by strengthening its relationship with Coca-Cola. In November it sealed a deal with the US soft drinks company that has made it Coca-Cola's biggest bottler in Africa. ------

Nomura: BEVERAGES Source: Nomura January 21st

SAB Miller Neutral, TP 3400p, Magnificent Mundy Small miss to consensus, bit damp but not a disaster. Stock has been weak so not sure much reaction to this. The guidance for positive beer volumes for the year looks less likely given -1% for the 9M. Pricing generally healthy and particularly so in the US where there have been some pricing worries. Team remain sceptical on the possibility of an ABI-SAB deal, I'm not so sure. SABMiller 3Q organic revenues (NPR) +4% (Nomura +6%, cons +4.5%) with total beverages volumes flat (Nomura +3%) with lager -1% (Nomura +1%, cons +0.7%) and soft drinks +4% (Nomura +7%). This represents a slowdown vs 1H with NPR +5% and total beverages volumes +1%. Other than Europe, all regions showed a sequential slowdown vs 1H. With 1H results conf call, the company indicated that it expected to grow volumes in beer for the full year - this would appear challenging now (9M lager volumes -1%). Although we see limited risk to consensus EPS for F15 (Nomura 244.2c vs cons 244.6c) we see some pressure on F16 EPS (Nomura 248.2c vs cons 260.0c) given ongoing currency volatility and macro uncertainty from oil price weakness. Valuation: cal 2015 p/e 20.7x vs beer ave 20.6x By division: . Latam revenues (NPR) +5% (Nomura +9%, cons +7%), total volumes +2% (Nomura +5%). Soft drinks +4%, lager +1%. Key market Colombia lager volumes decreased -1%. . Africa revenues (NPR) +7% (Nomura +9%, cons +8.6%), total volumes +4% (Nomura +4%). Lager +3%, soft drinks +5%. . Asia Pac revenues (NPR) -2% (Nomura +2%, cons +1.4%), total volumes -7% (Nomura +1%). Australia volumes -1%, China -9%.

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. Europe revenues (NPR) +3% (Nomura +5%, cons +2%), total volumes +2% (Nomura +4%). Lager volumes +2% . N.America revenues (NPR) -1% (Nomura +1%, cons +1%), total volumes -3% (Nomura -2%). STRs were -1.7% but the pricing environment remained strong (NPR per hl +3%) ABI /TAP: Read across from SAB is positive given strong pricing dynamic in the US. SABMiller reported revenue per hl +3% (STWs -3.7% and SPR -1%) in line with 1H (NPR per hl +3%). There have been some concerns that the pricing environment in the US is coming under pressure. We see a continued robust outlook for revenue per hl in the US given the consolidated market structure and model for +2.5% price/mix in ABI's N.American division in 2015 vs 2014E +1.7%. HEINEKEN: Read across from SAB negative given the weaker outlook in Nigeria. Head of SAB Africa said the Nigerian beer market will slow from c.8% growth to 3-4% given oil price weakness. Although this should not come as a huge surprise and Heineken has benefits from cost savings following the merger of its two entities in Nigeria this represents a more cautious tone on Nigeria. Nigeria accounts for c.10% of Heineken profits and is an important growth engine. CARLSBERG: No real read across from SAB given lack of incremental Russia news. Remember Anadolu Efes has already reported Q4 and indicated weaker than forecast Russia performance. See absolutely no reason to believe in a Russia story for Carlsberg here, do NOT believe 'Russia is valued at zero' or whatever the tat written by a competitor the other day, and am comfortable small short or avoiding altogether. ------

Dutch spirits maker Bols sets price range for flotation Source: Reuters Wed Jan 21, 2015

* Price range set at between 13.50 euros and 18.00 euros/shr * Values company at between 187 million euros and 207 mln Lucas Bols BV, the Dutch spirits maker, said it had set the price range for an initial offering of shares in which it hopes to raise around 147 million euros ($170 million). The range was set at between 13.50 euros and 18.00 euros per share, valuing the company at between 187 million euros ($216 million) and 207 million. Including an offering by shareholders such as AAC Capital, Black Diamond Capital Management and a possible over-allotment of new shares, the 9.4 million shares on offer will represent about three-quarters of the company's equity.

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The subscription period begins on Wednesday and runs through Feb. 3, with listing on the Euronext stock exchange in Amsterdam expected on Feb. 4. Bols, whose major international rivals include the likes of Diageo Plc, makes a popular jenever, the Dutch answer to gin, as well as liqueurs including Galliano and the banana-flavored Pisang Ambon. The company had 78.7 million euros in sales in its financial year ended March 31, 2014, with an operating profit of 22 million euros. ($1 = 0.8648 euros) ------

How is your state doing? MADD rates USA on drunk driving prevention Source: USA Today Network Lori Grisham January 15, 2015

Mothers Against Drunk Driving released a report Thursday rating all 50 states and the District of Columbia on their efforts to stop drunk driving fatalities. The report is the latest release from the group's Campaign To Eliminate Drunk Driving, a project that began in 2006 and involves working with legislators and law enforcement to create stronger laws. "The report is such a great thumbnail of where we are in the country," Colleen Sheehey-Church, president of MADD, told USA TODAY Network. MADD created a five-star system for the report that looks at five different areas of countermeasures that can be taken to prevent drunk driving fatalities. While laws varied, states received a star for each criteria that they fulfill. Those categories are: Ignition interlock laws: Ignition interlocks are devices that measure drivers blood alcohol level and are installed in cars of offenders. Drivers have to blow a clear test before they are able to start up their cars. MADD supports first-time offender laws that require an interlock for six months and longer for repeat offenders. Sobriety checkpoints: MADD says random checkpoints that screen drivers for intoxication are the "primary way to protect the public." Checkpoints are legal in 38 states and the District of Columbia. MADD considers these measures and ignition interlock laws the most effective to prevent fatalities, Sheehey-Church said. License revocation: Laws that allow the arresting officer to immediately confiscate an offender's driver's license.

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Child endangerment laws: 46 states and the District of Columbia have enacted laws or statues that consider driving under the influence with a child in the vehicle as a form of child abuse. These laws vary, with New York's considered the model by MADD. No-refusal events: A program that allows law enforcement officials to obtain an expedited warrant to test an offender who has refused to take a blood alcohol test. MADD gave a star to states that have prosecutors and judges available to streamline the process. "We're actually doing pretty good," Sheehey-Church said of the progress since 2006. "In 2014, we passed four very strong laws for ignition interlock in Alabama, Mississippi, New Hampshire and Delaware." "Our priorities are passing ignition interlock laws for every offender in every state and we will continue to work to make sure that strong laws, like interlocks and the other DUI countermeasures in our report, are passed across the country," she said. There are 13 states on the list with a 5-star rating. Kansas is one of them. "Impaired driving is everybody's problem," Chris Bortz, the traffic safety manager at the Kansas Department of Transportation, said. "I like that other states are putting it high on their list too to stop death and injury on our roadways." Virginia also received MADD's highest rating. "We're very pleased with the recognition. However, any death from a drunk driver is unacceptable and avoidable so we'll continue to be vigilant in our efforts," Virginia's Secretary of Public Safety Brian Moran said. There is no state that's doing it perfectly, according to Sheehey-Church. "There is always room for improvement," she said. http://www.usatoday.com/story/news/nation-now/2015/01/15/drunk-driving-efforts-across-usa/21776227/ Full report: http://www.nabca.org/assets/docs/MADD_2015CampaignReport%20CEDD.pdf ------

New Study Suggests Alcohol TV Ads are Linked with Underage Drinking Source: WSJ January 20, 2015

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A new study suggests that exposure to an alcohol ad on TV can increase the likelihood young people will pick up a drink. The study, conducted by researchers at Norris Cotton Cancer Center and Children's Hospital at Dartmouth-Hitchcock and published Monday in the journal JAMA Pediatrics, found that a higher receptivity to alcohol commercials among teenagers and young adults who weren't of legal drinking age was linked to the onset of drinking, binge drinking and hazardous drinking in the future. "Our study found that familiarity with and response to images of television alcohol marketing was associated with the subsequent onset of drinking across a range of outcomes of varying severity among adolescents and young adults, adding to studies suggesting that alcohol advertising is one cause of youth drinking," the authors wrote. "Current self-regulatory standards for televised alcohol advertising appear to inadequately protect underage youth from exposure to televised alcohol advertising and its probable effect on behavior." The Distilled Spirits Council of the United States, a trade association representing producers and marketers of distilled spirits sold in the U.S., questioned the methodology of the Dartmouth-Hitchcock study, noting that more than a third of the participants did not complete the follow-up survey and that the ad receptivity score is a subjective measure. "The multiple flaws in the study are so extensive it undercuts the credibility of the conclusions," said Frank Coleman, senior vice president of the Distilled Spirits Council. The Distilled Spirits Council has a voluntary code of responsible practices for advertising and marketing alcoholic beverages. According to the code, beverage alcohol advertising and marketing should be placed in outlets where at least 71.6% of the audience is reasonably expected to be of legal purchase age. A study released last month from the National Institute on Drug Abuse and the University of Michigan found that underage drinking and binge drinking are at record lows in the U.S. The Dartmouth-Hitchcock researchers surveyed 2,541 people between the ages of 15 and 23. Roughly 1,600 participants also completed a follow-up study. The surveys examined participants' recall of more than 300 TV advertising images for top beer and distilled spirits brands that aired nationally from 2010 to 2011. These images were edited to remove branding from the ad. Receptivity to these ads was determined based on if the respondent had seen the ad and liked it as well as if the respondent correctly identified the brand. The study found that participants under the legal drinking age were only slightly less likely to have seen alcohol ads than people of legal drinking age. According to the researchers, respondents between the ages of 15 and 20 reported they saw 23% of the alcohol ads compared, while people ages 21 to 23 saw 26% of them.

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The researchers found that the more receptive underage participants were to the alcohol ads, the more likely they were to start drinking or to engage in binge drinking or hazardous drinking. According to the study, 29% of youths between the ages of 15 to 17 reported binge drinking- defined as having six or more drinks on one occasion- and 18% reported hazardous drinking- defined as meeting or exceeding a threshold score for frequency and quantity of alcohol use. ------

Insurer sues to avoid coverage for Templeton whiskey's alleged mislabeling Source: Lexology January 9 2015

Society Insurance has filed a lawsuit in Iowa federal court seeking a declaration that its policy does not require it to defend or indemnify Templeton Rye Spirits in a putative consumer class action alleging that the whiskey distiller falsely represented its products as made from a Prohibition-era recipe. Soc'y Ins. v. Templeton Rye Spirits LLC, No. 15-0005 (U.S. Dist. Ct., S.D. Iowa, filed January 5, 2015). The underlying lawsuit asserts that Templeton claims its whiskey is made in a "small batch" from a Prohibition-era recipe that was a favorite of Al Capone's, but that the product is actually distilled at an MGP Ingredients, Inc. factory in accordance with a stock MGP recipe. Society seeks a judicial declaration that Templeton's insurance policy, which Society argues covers only damages based on bodily injury, property damage or personal and advertising injury, will not require Society to indemnify a settlement or judgment against Templeton. The insurance company argues in the alternative that if the court finds that the policy agreement does cover the putative class action's allegations, they either fall into a specific policy exclusion or are outside the policy period because Templeton began its alleged false representation before the policy took effect. ------

A. SMITH BOWMAN DISTILLERY WELCOMES HOME A NEW 500 GALLON STILL NAMED GEORGE Two Minute Video Captures the Build from Start to Finish Source: A. Smith Bowman Distillery January 20, 2015

A. Smith Bowman Distillery just welcomed home a brand new still, naming it George, after the father of the pioneering Bowman brothers. George, also known as still number 1965,

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found his place next to Mary, the existing whiskey still, on Thursday as the installation process began. Mary is named after Mary Hite Bowman, George's wife, and the mother of the Bowman brothers. Designed to create more than just whiskey, the new still was custom made, with unique features chosen by Master Distiller Brian Prewitt that allow him the freedom to explore his passion for creating new and exciting expressions. George also enables A. Smith Bowman to craft spirits from start to finish. "We want to have the capability to try anything and everything, and with George, we should be able to do just that," Prewitt said. "We're excited to do some experimenting, try new things and continue to make great spirits here at A. Smith Bowman Distillery." George is a 500 gallon hybrid pot still with a reflux onion, optional gin basket, and attached columns with bubble cap trays. These features allow Prewitt to create many different flavor profiles and a variety of spirits including vodka, gin, and whiskey. Standing at 24 feet tall with a pot that is approximately 1,700 pounds, George will weigh nearly four tons when full. While George allows the Distillery to pursue their passion for new expressions, current A. Smith Bowman spirits will continue to be crafted in their consistent method. George arrived at the Distillery after making his journey from Vendome Copper and Brass Works in Louisville, Kentucky, where he was built. Though George is now fully assembled, final connections are still in process before his inaugural distillation run. George is expected to be in full operation starting in March. To see a 2 minute time lapse video of George being assembled click here. https://www.youtube.com/watch?v=_yXfYWQo8o0 About A. Smith Bowman A. Smith Bowman's distilling roots date back to the years before Prohibition when the Bowman family had a granary and dairy farm in Sunset Hills, Virginia. They used excess grain from the family estate to distill spirits. In 1934, after the Repeal of Prohibition, Abram Smith Bowman and his sons continued the family tradition and built a more modern distillery in Fairfax County, Virginia called Sunset Hills Farm. In response to the rapid rise of taxes in Northern Virginia, the Distillery was moved in 1988 and is now nestled in Spotsylvania County near the city of Fredericksburg, 60 miles away from the original location. As a small and privately owned company, A. Smith Bowman Distillery continues the time-honored traditions on which it was founded. Considered a micro-distillery by today's standards, A. Smith Bowman produces an assortment of hand-crafted spirits distilled from only the finest natural ingredients and using the latest technology. This micro-distillery

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focuses on the production of premium spirits honoring the legacy of Virginia's first settlers. For more information on A. Smith Bowman, please visit www.asmithbowman.com. ------

Deals Rumor Mill: Saint-Gobain, Sysco, China Telecom (Excerpt) Source: Law360 By Benjamin Horney January 16, 2015

Saint-Gobain SA is hoping to fetch upward of ?3 billion ($3.45 billion) in the sale of France-based glass bottle maker Verallia, Reuters reported on Friday. According to the report, Saint-Gobain has officially kicked off the sale process for Verallia, which in 2013 posted earnings before interest, taxes, depreciation and amortization ?441 million. Previous reports have pegged Ardagh Group SA as one entity interested in the unit. Ardagh bought Verallia North America earlier this year. Other interested parties could include private equity outfits like Bain Capital, BC Partners and Blackstone LLP, the report said, adding that the sale process is being run by JP Morgan and BNP Paribas. ------

Top trade exhibitions for 2015 Source: the drinks business 20th January, 2015 by Neal Baker

With a host of industry events to bear in mind this year, Neal Baker rounds up the various key trade shows that should firmly feature in your diary. HKTDCWe in the drinks trade know that every month, and nearly every week, there is an industry fair somewhere in the world that we wish we could get to, or are disappointed at not hearing about sooner. 2015 is no different, with innovative shows covering beer, wine and spirits that every year seem to grow more and more as the industry continues to expand. Well, with this guide to the top trade events in the coming months, you'll see what unmissable shows you'll need to keep in mind. Click through to see the top drinks trade exhibitions 2015. http://www.thedrinksbusiness.com/2015/01/top-10-drinks-trade-exhibitions-2015/

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A novel suggestion for smashing wine fraud Source: Jancis Robinson January 19th

Nick Bartman, the lawyer specialising in anti-counterfeiting who was responsible for our riveting series on Chinese fakery, has a simple and ground-breaking idea for fighting counterfeits in the wine business. Whether it be Kellogg's, Jack Daniels, Heinz or any other brand, there is no shortage of predator companies, including supermarkets with their own brands, circling overhead and hatching plans to manufacture look-alikes to take advantage of others' successes. Victims may head for the courts to do battle, or just take a view and roll over, but one comfort is that the predators and their knock-offs are, at the very least, visible. Now step away from this scenario to the other end of the spectrum. The absolute unknown. Predator counterfeiters either local, or as far away as China, are invisible. Their copies maybe distinguishable by a handful of knowledgeable experts, but the average consumer will not spot the difference. Either way the brand-owner victims may never be able to account for the damage done, as there are no figures to work from. It is very common that the damaged companies are not even aware that their brands are being counterfeited. In short, they are working blind. For the wine industry, some brand owners take the issue seriously and invest in anti-counterfeiting products such as hologram-type labels. These are a start, but they are never a practical solution for a number of reasons, including the fact that the Chinese, for example, counterfeit every reasonably priced anti-counterfeiting product there is. So, is all lost? No. I believe there is a self-help solution in the form of just one item: the common-or-garden glass wine bottle. Look at the bottom, or punt, and there before you is an array of insignia permanently cast into the bottle, with each element importantly telling a story, and offering traceability. This is the anti-counterfeiting solution, and all within the cost of the bottles bought regularly from suppliers. The methodology is as follows. Bottle producers must have traceability so that they can detect any problem with their manufacturing processes. To fully appreciate the intricacies one needs to visit a bottle manufacturing plant, but in short they comprise giant, and fantastically expensive, machinery that creates molten glass which, at over 1,000 ºC (1,832 ºF), is then fed into bottle-shaped moulds to produce the final bottle. Any manufacturer would rightly scoff at this elementary summary as there are many more highly sophisticated steps and processes involved, particularly quality control. However, if any element of the production

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develops a glitch, one could end up with bottles fracturing, chipping or breaking at a wine-bottling plant, or even in the hands of a consumer at home, or anywhere in between. In this eventuality a bottle manufacturer needs rapidly to know what has happened in order to trace the source of the problem immediately. And this is where the moulded insignia comes in. Each bottle has sufficient information to identify the manufacturer, the geographic location of the plant, even down to the mould that produced the offending bottle, helped by a series of braille-like pimples, or so called dot-codes. No other components of a finished bottle of wine possess such traceability. For example, testing wine itself for its origin is often nearly impossible and, due to ease of counterfeiting, a wine label, cork and capsule are about as untraceable as Santa Claus himself. The most reliable source of information is the glass bottle. The insignia on bottles vary considerably between manufacturers, and even between plants of the same manufacturer. For the anti-counterfeiting system proposed and discussed in this article, these variances are an absolute positive. So, looking at the adjacent pictures, while reading the following, will explain all. At the top of the insignia list is the manufacturer, which in this instance is O-I Owens & Illinois (1). E71 (2) is the factory identification, the E being for Europe and the 71 being the plant in Italy. The A 04 (3) is the identification of the mould that produced the bottle. And finally the all-important dot-codes cum braille pimples (4) that provide for the final production inspection equipment to read the bottle identification information, then computer stored. The following insignia are irrelevant to the wine bottle manufacturer's traceability, but are required by law: the ? (5) is for bottles made in Europe, the 75cl (6) is total liquid in the bottle, and the 30mm (7) is the ullage level. Insignia on bottles may vary considerably but they will, one way or another, provide all the information as detailed above. The main element, however, is the dot-code and it is this information, and the other insignia, that must be passed to a wine bottler for them to match which wine they are putting into which bottle, and with which label. A total of up to 13 dots are generally on each bottle but to provide a code, the combinations, permutations and exact positions of the dots of course vary, and they may be changed without additional costs. It is this one area of knowledge that, metaphorically, ties the wine bottle, wine and brand together such that it is almost impossible to achieve a passable counterfeit. For this to happen, though, the bottler of the original wine will have some extra administration to manage. In the first instance the bottler must ask for an email from the bottle manufacturer that includes a drawing of the dot-codes, and other insignia, of batches delivered. It would be helpful if this could be just one drawing, but as the bottle-mould equipment produces numerous different bottles, and therefore dot-codes, in one cycle, several drawings may accompany each delivery. This is unavoidable, and arguably an advantage since it makes the job of a counterfeiter more difficult.

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Once the bottler begins the bottling process they must record which brand of wine is put into which batch of bottles, and this should be stored on computer in order that the bottler has irrefutable traceability matching wine labels and wine bottles together, something that currently does not happen anywhere on this planet, at least to my knowledge. The trick here is for the records to be stored in such a way that the bottler can quickly and effectively search, at any time in the months or years to come, for any dot-code. From the above explanation comes the key to the anti-counterfeiting methodology. For wine counterfeiters to execute the perfect crime they must first find a glass-bottle manufacturer who is prepared to counterfeit a competitor's bottle, O-I in this instance. Imagine their giant competitor Saint Gobain agreeing to that one. In fact imagine any western glass-bottle manufacturer, most of whom are publicly listed companies, agreeing to blatant counterfeiting. Even in China where counterfeiting is rampant, many of the relatively few wine-bottle manufacturers are vast organisations, not pop-up businesses able to shift their manufacturing base at the first sign of trouble. They have fantastically expensive machinery, administrative structures and workforces of many hundreds, any one of whom, with some sort of grievance, could so easily blow the whistle - a not uncommon phenomenon. Any company considering such a madness would think long and hard before attempting to counterfeit a competitor's product, especially taking into account the fact that the volumes, and therefore profit, would be comparatively trivial when put against their total production. But even if, for some extraordinary reason, there were such a rogue bottle manufacturer, then that manufacturer would have to point out to the bottler that he or she must first come up with a quantity of bottles with sufficient variety of dot-codes. Or to put it another way around, if the bottle manufacturer were to counterfeit just one bottle, and so just one dot-code pattern, then the market would be flooded with a disproportionate number of identical bottles that would immediately attract the attention of any buyer aware of this proposed anti-counterfeiting system. In addition any manufacturer would have to produce a number of different moulds which the wine counterfeiter would have to pay for, which would exponentially push up the cost of each bottle. The final element is the moulds themselves. The average engineer would find it next to impossible to manufacture exact replicas such that the insignia is indistinguishable from the original one. One final bonus is that it would be extremely difficult for a renegade bottle manufacturer to combine the correct cocktail of raw material to match the exact colour of an original bottle. So, to summarise: the manufacturer of original bottles must provide digitally recordable (not paper) drawings to the bottler, who shall in turn keep records of which wine goes into which batch of bottles, and with which label attached. But finally, it is for everyone concerned with the distribution chain through to the consumer to be made aware this

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traceability exists, and for them to report back to the brand owner anything suspicious, or just perhaps simply conduct routine checks. This would mean some additional label wording such as 'anti-counterfeit bottle dot-code tracibility'. Thus everyone in the supply chain, including the end consumer, becomes an unpaid spy. Of course the more wine brand owners used this system, the more awareness there would be in the market. An additional bonus could be more market feedback of a general nature which may provide valuable intelligence. There is one trump card in this proposed anti-counterfeiting system that has not yet been discussed. Deterrent. If counterfeiters are aware that a brand of wine is subject to such detailed traceability, they would most likely move on to some other brand that is not traceable in the same way. http://www.jancisrobinson.com/articles/a-novel-suggestion-for-smashing-wine-fraud ------

Australian wine exports rise amid growing premium demand Source: FT Jamie Smyth in Sydney January 21st

The value of Australian wine exports has risen for the first time since 2007 amid growing demand for premium brands from key trading partners and a weaker Australian dollar. Vintners exported A$1.82bn (US$1.5bn) of wine last year, up 1.9 per cent on 2013, providing a welcome boost to an economy facing headwinds from a slump in iron ore prices and falls in mining investment. "One of things that is helping us now is the depreciating currency," says Bruce Tyrrell, chief executive of Tyrrell's Wines, one of the oldest winemakers in Australia. "The industry is also transforming by selling more premium wines and I believe there is huge growth potential, particularly in Asia." Australia's economic slowdown after its decade-long mining boom is prompting the government to target agriculture as a growth industry that can help rebalance its resource-dependent economy. The sector has been battered over recent years due to the strength of the Australian dollar, which made products more expensive in overseas markets. But a fall in the value of the Australian dollar against its US counterpart, from a high of US$0.95 to US$0.82 over the past 12 months, is aiding producers.

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"The weaker dollar has provided some assistance to wine exporters over the last year and if it stays where it is now it will provide a real boost next year," says Peter Bailey, manager of wine sector intelligence at Australia's Grape and Wine Authority. Figures published on Wednesday show total wine export volumes increased by 1.9 per cent to 700m litres. The value of exports increased at the same rate to A$1.82bn, according to the AGWA. The UK is Australia's biggest export market by volume with 249m litres shipped in 2014, up 4.5 per cent on 2013. Export volumes to the US fell 9 per cent to 164m litres last year following two consecutive record domestic harvests by vintners. Exports to China increased by 8 per cent to 40m litres in 2014. This followed a dip in exports in 2013 following the introduction of austerity measures by Beijing in late 2012. Mr Tyrrell, whose family has been making wine for 150 years, said there was huge growth potential for Australian agricultural producers in Asia, particularly given the problems facing the European economy. "We have the potential to feed a whole lot of people in Australia and many people are predicting the price of beef could double in the next few years," he said. "I don't know if it can make up for the fall in iron ore prices but if we didn't have agriculture we'd be in deep doo-doo." Billionaire mining magnates Gina Rinehart and Andrew Forrest have both bought cattle stations over the past year and indicated they intend to target the Chinese market with exports. Australia is already one of only eight nations legally permitted to export beef to China, where demand is rising sharply. Shipments quintupled to 155,000 tonnes in 2013. Economists say agriculture, which makes up 3-4 per cent of gross domestic product compared with mining's 10 per cent, cannot on its own compensate for the end of the resources boom. But it can be part of a wider economic diversication and expansion of sector's including services, technology, tourism and education. "The wine sector is a micro-level example of how this can happen when the value of the currency falls," says Paul Deane, ANZ agricultural economist. "If you get enough of the trade-exposed sectors to grow then this is when rebalancing can occur." ------

Burgundy 2013 Prices Stabilize or Drop Amid Tight Supply Source: Bloomberg By Guy Collins Jan 19, 2015

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Prices for 2013 vintage Burgundy wines going on sale now are holding stable or declining relative to the peaks reached in 2012 even as supplies remain tight after cold, wet weather reduced yields for the fourth straight year. Late flowering, combined with rot in some vineyards and hail showers in the Cote de Beaune, contributed to making the vintage difficult for winemakers, according to Jasper Morris, Burgundy director for London merchant Berry Bros. & Rudd. Demand for Burgundy remains strong in the U.S., the U.K. and Japan, where collectors are drawn to a region whose many small producers and wide variety of vineyards contrasts with the bigger, more commercial Bordeaux estates. While the four Burgundy vintages from 2010 to 2013 have all had yields below average, putting pressure on growers to raise prices, especially for 2012 wines, merchants say that trend is easing. "It's supply and demand, and the problem is supply has really been hit," Morris said in an interview Jan. 12 before a tasting. "Demand is quite strong worldwide, but the growers have been listening. They realized that 2012, when prices went up quite sharply, they realized that they were pushing people's patience." He described 2013 as "another very good vintage, but not consistent across the board," and singled out Clos de Vougeot and Chambolle-Musigny as regions that produced quality wines. "The top end of the Cote de Nuits did very well," he said, while noting most Cote d'Or wines at Berry Bros. are being priced below 2012 levels. Low Yields Thibault Liger-Belair, a producer in Clos de Vougeot and Nuits-Saint-Georges, said that while yields were half their normal levels, continuing the pattern of the previous three years, the vintage captured "the taste of the soil." For pricing, he said it was "necessary to find a good balance between the quantity and the quality." That has led him to keep his prices broadly stable for 2013, with the prospect of reducing them for the 2014 vintage. Other merchants presenting 2013 Burgundies in London over the past week gave a similar assessment. "I don't see 2013 as a difficult vintage to sell at all," Martin Buchanan, private client account manager for Armit Wines in London, said in an interview Jan. 14. "People have either kept prices at 2012 levels or pulled back very slightly. I don't think pricing is going to be a major issue." He described it as "not as big a vintage" as some recent years in terms of its prospects for long aging, but "really elegant" and with "a lovely fresh acidity."

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Looking ahead to the 2014 vintage, harvested three months ago and due to go on sale next year, there are further prospects of lower prices, according to Berry Bros.'s Morris. "With 2014, which is a bigger crop, and it's going to be decent but not spectacular, I think that we will be able to see a softening of prices," he said, adding that that is "what the market wants to see." Burgundy's share of wine-auction sales rose in 2014 as interest in Bordeaux vintages waned, with the Domaine de la Romanee Conti estate driving demand, according to U.S. houses Acker Merrall & Condit and Zachy's Wine Auctions Inc. ------

Britons set to spend more on wine than the French Source: FT Kadhim Shubber January 20th

British wine lovers are set to outspend their French counterparts as they develop a taste for more expensive bottles. Although people drank less after the financial crisis, between 2008 and 2014, the value of the UK wine market rose 15 per cent to $16.1bn. Research by Vinexpo, a wine exhibition and forum, and the International Wine and Spirits Record forecasts it will reach $17.1bn by 2018, overtaking France as the world's second-largest still wine market by value behind the US. Much of the growth has been driven by the rise in popularity of "premium" wines that cost from £7 to £14. "This is part of a wider trend of consumers drinking less, but when they do drink, some are looking for something a bit more special," said Chris Wisson, drinks analyst at Mintel, a market research company. Consumers in the UK have developed a particular taste for Italian wine in the past five years, pushing Italy ahead of France as the number two source of imports in 2013, behind Australia. Between 2009 and 2013, volumes of imported Italian wines grew 12.6 per cent to 20.7m 9-litre cases, helped by the success of Prosecco. Imports of the Italian sparkling wine rose more than 150 per cent to 3.57m 9-litre cases in the five years to 2013. Overall wine consumption fell 10.5 per cent in the same period.

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Consumers have also turned away from French staples such as Bordeaux, where quality did not reflect price in 2011, 2012 and 2013, according to Mark Pardoe, wine-buying director at Berry Bros & Rudd, a wine merchant. "The cornerstone of the French fine wine industry, which is Bordeaux, has been through an awkward phase." He said prices were boosted by strong vintages in 2009 and 2010 but added that subsequent vintages had "not been in the same league but prices haven't moved to reflect that so people have started to look elsewhere." Wines from Spain have also become more popular in the UK, with imports rising almost 25 per cent to 16.7m 9-litre cases between 2009 and 2013, whereas imports from countries such as Australia, France, South Africa and Chile have dropped. Sherry, the quintessential Spanish wine, has found renewed popularity in London's tapas bars over the past decade. The UK market is also worth more because higher taxes make wine more expensive, according to Mr Wisson. Taxes on wine have almost doubled over the past decade, he said, adding he was "slightly less optimistic" about a rebound in consumption than Vinexpo. "It is possible that it could bounce back this year, but it is too early to tell." The French still wine market fell in value slightly between 2009 and 2013 and is forecast to fall a further 2 per cent to $16.5bn by 2018. French consumers have been buying cheaper wines direct from the producer, cutting out middlemen, said Guillaume Deglise, chief executive of Vinexpo. China and the US had the strongest growth. Consumption in the US grew 11.6 per cent to 377.9m 9-litre cases, while volumes in China grew 70 per cent to 180.7m 9-litre cases, though per capita consumption was still low. Although China was the biggest consumer of red wine in 2013, France regained the top spot in 2014, Mr Deglise said. Italy and France remain the biggest per capita consumers of wine in the world, and Europeans the most dedicated wine drinkers. Argentina aside, all the top 10 countries for per capita consumption are in Europe. ------

McWilliam's moves to reduce debt

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Source: TheShout By James Atkinson 21/01/2015

McWilliam's Wines has announced completion of a sale and leaseback initiative that aims to significantly reduce its borrowings. The transaction involved selling two Coonawarra and three Hanwood vineyards to Belvino Investments, an Australian based investment company with significant agricultural holdings in Australia. "We have signed long-term leases on all these vineyards and will continue to manage and operate these vineyards as we do today," McWilliam's said. "A feature of the sale and leaseback will be a capital investment in the Coonawarra vineyards to improve long-term yields. "This is great news for McWilliam's and allows us to focus on growing our brands and increasing our domestic and export sales." ------

Texas Wines Win More Medals At Out-Of-State Competitions Than Ever Before Source: CraveDFW by Andrew Chalk January 19, 2015

Congratulations are in order! In 2014 Texas wines gave another telling demonstration of their continued march towards national recognition. They won more medals at major wine competitions than ever before. These competitions pitted Texas wines against the best from California, Washington, Oregon, Europe and Australia/New Zealand and they continued a trend that started as recently as 2011 of winning more contests than in the previous year. The chart below plots the total number of medals won each year by Texas wines from 1984 (6 medals), on the extreme left, to 2014 (164 medals), on the extreme right at out-of-state wine competitions. Over 80% of the medals below were gained at the San Francisco International Wine Competition, the San Francisco Chronicle Wine Competition, the Finger Lakes International Wine Competition, the Los Angeles International Wine Competition and the San Diego International Wine Competition. Two are actually from the Lyon International Wine Competition in France. All results are as reported by the wineries and cross-checked against published competition results. No distinction is made in this report between different ranks of medal (e.g. gold, silver or bronze).

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The total number of medals awarded (vertical axis) oscillated around 30 from 1984 until 2011. In that year there is an inflexion point and the annual medal count shows exponential growth. While the relatively low number of medals in earlier years can be partly attributed to sketchy reporting, the main reason for the increase is a massive improvement in the quality of the wine. As noted above, the quality of the wine has improved beyond its external reputation. Wineries that would not have considered entering out-of-state competitions just five years ago (because of the small prospect of a medal) are now much more willing to bear the substantial costs (typically, over $100 per wine to enter and $300 per wine if you win a medal and the competition rules require winners to donate wine to a charity tasting). The result is far more medal wins. The above chart actually understates the number of medals Texas wines win against out-of-state competition since it excludes in-state competitions, even though the major examples of those competitions are comprised, overwhelmingly, of out-of-state wines (the five major competitions in Texas are the Lone Star International Wine Competition, the Houston Livestock Show and Rodeo, Rodeo Uncorked International Wine Competition, the Dallas Morning News Wine Competition and San Antonio Stock Show & Rodeo Wine Competition). I estimate that Texas wines won at least as many medals at these shows as at the out-of-state shows, so omitting them actually biases the test against Texas wines and therefore strengthens the conclusions about the improvement in Texas wine quality. ------

Wine Flash Sales Activity Still Strong (Excerpt) Source: WineBusiness.com January 20th

The websites, which sell wine at a discount for a short period of time in what came to be known as "flash sales," offer a wide variety of imported and domestic wines at varying price points. Because Wines & Vines is focused on the wine industry in North America, Wines Vines Analytics tracks flash offers for domestic wines. The total offers for all 16 flash sites tracked by Wines Vines Analytics in 2015 was 6,234, or 15% higher than the 5,402 total offers from 2013. http://www.winebusiness.com/?go=getNewsLink&dataId=144772&ref=dnl_link ------

Winemaking on the Slopes of Sicily's Volcano A small group of vintners is pushing the boundaries of winemaking on the high slopes of Sicily's Mount Etna, producing wine that rivals the finest European vintages

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Source: WSJ By Tom Downey Jan. 20, 2015

VISITING FRANK Cornelissen 's winery means driving along a dangerously winding road that starts on the shores of the Mediterranean and ends high on the slopes of Mount Etna. Cornelissen, a wiry Belgian-born winemaker, has spent more than a decade in the volcano's northern valley, often sleeping in his cellar, always toiling in his vineyards and forever explaining his methodology with the voluble erudition of a philosophy professor. But now, as we uncork one of his earliest vintages, Cornelissen is silent. He pours the almost-black liquid from the bottle, with hand-painted calligraphic lettering on its side, sniffing it to make sure it's OK. He passes me a glass, uttering just two words: "Liquid stone." That's not a description I'd ever thought a wine should aspire to. After one sip, I understand what he means. This liquid stone is not just complex and delicious; it's pushing the boundaries of winemaking. Cornelissen, beloved by oenophiles from Tokyo to Paris, is one of the most successful entirely self-taught winemakers in the world. "I started with half a hectare of vines that I tended myself," he says. "I'd never grown grapes or made wine before. For three years I was a gardener. Then I learned to be a farmer." Cornelissen's premium wine, called Magma, now sells for upward of $650 a magnum in restaurants. He's become known as one of the foremost makers of "natural wine"-though he rejects that designation in favor of the term "non-interventionist." Purists may argue over exactly what natural or non-interventionist wine means, but Cornelissen explains his method in a deceptively simple way: "I make wine out of nothing but grapes," he says. "No sulfites, no acid correction, no sugar, no added yeasts." While organic and biodynamic wines focus primarily on cultivation and harvesting, natural wine focuses on the vinification phase-but few vintners do so quite as radically as Cornelissen. "Adding sulfites to wine is like riding on train tracks," he explains. "You box the wine inside the rails. So while you limit the chances of something bad happening, you also limit the chances of something extraordinary and unexpected." Around the time he arrived, two other outsiders were staking a claim on Etna's soil: Andrea Franchetti, an Italian who had long sold wine in America and then started producing his own vintages in Tuscany, and Marco de Grazia, a famed Italian-American wine importer and consultant who is credited with creating, from virtually nothing, the lucrative Barolo market in the United States. A fourth winemaker, Salvatore Foti, born in nearby Catania, had been making wine for other vintners before striking out on his own. Francis Di Savino, wine expert and co-author of The World of Sicilian Wine, put it this way: "Each of these four helped make Etna wine what it is today. Cornelissen contributed the philosophy. De Grazia provided an ideal based on the contrata system, which emphasized the special conditions of each small plot. Franchetti founded the first forum for tasting all of Etna's wines and contributed a spirit of cooperation and collaboration. Foti helped preserve the history and tied current winemaking to Etna's past."

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Though these four are now producing some of the finest red wine not just in Italy but in Europe, this outcome was not guaranteed. Because the climate and conditions are so variable, all of Etna's winemakers have had less than stellar vintages; Cornelissen's extreme methodology only amplified the risks. In 2004, his wines had high voluble acidity, making them hard to enjoy-a problem he corrected in future years. Hearing these winemakers talk about the risks and rewards of their terroir made me realize there's much more to the area than just wine. The sense of isolation here is profound. People in this part of Etna aren't just cut off from the Italian mainland; they speak a dialect of Sicilian different from coastal dwellers. Though parts of Sicily, such as the nearby town of Taormina, have become established destinations, tourism in this corner of Etna is still in its infancy-travelers are just starting to discover this rustic, deeply traditional part of the country, far from Italy's tourist meccas. Etna has a long and storied winemaking history. It appears-with its wine-in Homer's Odyssey. The northern region of Etna later became known for producing sfuso, cheap table wine for local farmers, as well as "cutting wine," barrels of strong-tasting stuff shipped to mainland Italy to give vintages produced there more backbone. But it took these four winemakers to notice a few key features of the northernmost subregion of Etna that make it ideal for producing world-class red wine-aspects that place its terroir in a league with the choicest regions in France or California, more so than almost anywhere else in southern Europe. Vineyards here range from 1,000 to 3,300 feet above sea level, an elevation uncommon among southern European wineries. Higher-altitude vines undergo extreme temperature variation from day to night, helping to produce excellent grapes. What's more, the indigenous Etna red-wine grape varietal, Nerello Mascalese, held the promise of greatness, even if it hadn't yet been made into world-class wine. The composition of the soil, formed from centuries of intense volcanic activity, is not only especially nutritive; it also varies from subregion to subregion, allowing for small holdings in the same area to yield very different wines, much as they do in Burgundy. Randazzo, the largest town in the region, comes alive at sundown, when its main street is closed to cars. The heart of the village, with its cobblestone streets and an ancient tabaccheria, feels locked in time. Driving east from Randazzo-the easternmost boundary of the winemaking region-I arrive at a grand estate, Feudo Vagliasindi, now turned into a hotel by the family that has owned it for generations. Paolo Vassallo Vagliasindi, who runs the place with his brother, greets me and escorts me to a second-floor terrace with a view stretching across vineyards to the volcano itself, now furiously puffing smoke. As Vagliasindi walks me around the hotel, he explains that the property was once his family's country estate and winery. "Our main house was in Randazzo," he says, "but for many years my relatives would come here to escape town, to relax and to oversee the production of our wine." He leads me downstairs and opens a creaking wooden door that leads into a huge, high-ceilinged chamber.

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"This is the palmento," Vagliasindi says. "It was the traditional way of making wine in Sicily. First you crush the grapes with your feet; then the wine is carried down by gravity into the vats where it ferments." Palmentos fell out of use in the 1990s, when EU regulations forbade their use for commercial wine (the fear was that their open-air construction made them prone to contamination). The family estate was virtually in ruins when Vagliasindi and his brother decided to renovate it and open their hotel five years ago. Though the grand exterior is visible from miles away, inside the accommodations are simple and comfortable. My visit reminds me that, a century ago, there were still hundreds of working palmentos dotting this landscape, churning out wine that visitors from mainland Italy considered some of the best in the country. It took a small group of outsiders to revive this heritage. MARCO DE GRAZIA'S home and winemaking facility stand in the center of what is probably the finest wine land on Etna, varied enough to produce white, red and rosé, and surrounded by acres of lush green vineyards in every direction. De Grazia was older and much more experienced than Cornelissen when they arrived-his reference points from the start were Tuscany and Burgundy. Over a glass of sparkling wine, de Grazia explains how he got here. "When I first tasted Etna wine, even though it was rough and tough, I saw something in it," he says. "Then I visited. As soon as people come here and see this land, they get what this wine is about. You see the veins of magma. You understand why a tiny plot higher up the slopes is different from the vines next to my house." De Grazia is on a mission to attract more visitors-he recently opened a tasting facility where anyone can drink his wine after touring his land and cellar-and he also still sells sfuso wine to the locals. "The vineyard I bought had always sold bulk wine," he says. "I'm determined to continue that tradition. It's a way to sell honest wine at a good price-and to allow me to keep the best grapes for bottling." Over the years de Grazia has shared his cellar with other local growers, such as pianist-turned-vintner Girolamo Russo, one of the most promising young talents on the mountain. "We have to work together," de Grazia says. "Nobody makes much money making wine this way. You do it because you love the place and you love what you're doing." Before settling down for the night at Monaci delle Terre Nere, the most luxurious accommodation in the area, I sit with its proprietor, Guido Alessandro Coffa, who grew up a few miles south of here. "For years I worked as an auto engineer in America, in Germany, in the north of Italy." He pauses and sips his wine, an older Etna red from Benanti, one of the original winemakers on this side of the mountain. "Then I had a break from work, and I came home to Sicily. I drove up this way looking to buy a small vacation home, and instead I found this huge, old, abandoned place. It was in ruins. But the structures were amazing. And the views down to the ocean and up to the volcano were extraordinary. There was such beauty, such potential that I took out every cent I had in the bank, bought the place, quit my job and hatched a plan to build this hotel." For five years, Coffa oversaw the renovation of the crumbling estate into thoroughly modern, stylish guest rooms, while preserving their original stone facades. Centuries ago,

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Etna wine was carted down to the nearby seaport of Riposto and sent all over Europe. Now Coffa's boutique hotel is benefiting from a small reverse migration: tourists from all over Europe and the world, many of whom first learned about this region through its wine. Later, I meet Frank Cornelissen at Cave Ox, a pizzeria and wine bar owned by a local named Sandro Dibella, one of Cornelissen's best friends, who, with Frank's encouragement, began collecting a formidable cellar of natural wine from Etna and other parts of Italy. Dibella escorts us to a corner table where we sample some of Cornelissen's wines. "I started off making wines that were very conceptual," Cornelissen says. "I wanted to impose myself on the land. But eventually the land wins." He offers a sample of his 2006 Magma, a turning point for him. There is still something unusual about it-not all of the liquid stone quality has been lost-but unlike the earlier wine I'd tasted, it's also classically elegant, aiming not for eccentricity but for distinction. A vertical sampling of multiple vintages of the same wine typically reveals vicissitudes of climate and harvest. This is true of Cornelissen's wines, but what also emerges is a remarkable evolution from an inexperienced, if unusual, first-time winemaker to a great, if controversial, master. "Winemaking is a very emotional thing for me," Cornelissen says. "And it's been a tremendous struggle to get to where I am now. I almost went bankrupt many times. There were harvests I could hardly do anything with. But I had to go through that process to arrive at this point. To get to the essence of this place, I took away everything but the grapes." Each of the winemakers I've met, despite whatever preconceptions he brought to this region, has come to a similar place of respect, perhaps even obedience, to the volcano, to the land and to the grapes. As we work our way through the bottles, Cornelissen arranges the half-filled ones on a windowsill so we can return to them later. Suddenly a gust of wind blows through the open window, sending all of the amazing, impossible-to-find wine we've opened crashing to the floor. "The wind almost never blows like that in this season," Cornelissen says, as we pick up shards of wine-stained glass from the floor. "Like I said before, nature always wins." ------

Republic National Distributing Company Appoints Taylor Sommer State EVP of RNDC Colorado Source: RNDC January 20, 2015

Republic National Distributing Company USA (RNDC), the nation's second largest premium wine and spirits distributor, is pleased to announce the promotion of Taylor Sommer to the role of State Executive Vice President of RNDC Colorado. In his role, Sommer will have responsibility for the overall leadership and performance of the RNDC business and teams in the state.

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Sommer began his career in the beverage industry with the E & J Gallo Winery in Kansas as a market specialist in 1997. He eventually relocated to New Orleans where he served as Field Marketing Manager for the state. In 2000, Sommer joined the sales leadership team at RNDC as a District Manager On-Premise Wine in Austin, Texas. Since that time, he has held progressive leadership roles providing him a broad and diverse level of experience in wine and spirits across the Retail and On-Premise sales channels. In his most recent leadership position, Sommer served as Executive Vice President of the RNDC South Texas market. His responsibility included leading all sales and operations initiatives by planning, directing and executing the company's key initiatives with the support of his team. Additionally, he has demonstrated a high degree of professionalism and excellence in his overall leadership, strategic planning and talent management for the South Texas region, which includes San Antonio, Austin, Corpus Christi, and the Rio Grande Valley. As a result of his performance, he has been recognized as being a developer of top talent and for delivering strong business results. "I am excited to bring Taylor's leadership, experience, and enthusiasm to the dynamic Colorado market," said Region President Jay Johnson. "I look forward to many years of continued success for Taylor and our great RNDC team in Colorado." Sommer is a graduate with Honors of Texas Tech University, and is a current member of the RNDC Senior Executive Leadership Forum. Sommer will report directly to RNDC Region President Jay Johnson and will relocate to Denver by April. RNDC wishes Sommer the best of luck and much success in his next leadership role. ------

Chipotle Mexican Grill, Inc. (CMG): Updating estimates to reflect reduced pricing outlook Source: Goldman Sachs January 20, 2015

INVESTMENT LIST MEMBERSHIP: Americas Buy List COVERAGE VIEW: NEUTRAL What's changed We are updating our CMG estimates to reflect management commentary that it does not plan on taking price in 2015, partially offset in 2015/2016 by a reduced near-term COGS inflation outlook. As a result, our F14 EPS estimate increases to $14.10 from $14.03 and F15 and F16 fall to $17.56 and $21.64, respectively, from $18.16 and $22.15. We remain above consensus' 2014-2016 EPS outlook of $14.07, $17.44 and $20.70, respectively. Implications

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(1) CMG clearly indicated that it does not plan on taking 2015 price: We had assumed continued COGS inflation and that the goal of reducing COGS to 34% of sales or below would drive an additional price increase in 2015; however, on the margin, dairy prices have moved favorably and CMG appears less focused on a 34% COGS number. As a result, we now expect 34.4% COGS in 2015. (2) Throughput opportunities remain, but wary of reading too much into the N/T from a positive tone: CMG sounded confident that there is still room to drive incremental throughput and that its food with integrity positioning makes it well placed for comp growth. However, we believe the positive tone was driven by confidence in L/T brand positioning and being on the right side of "real food" trends. Valuation Our new 12-month price target of $770 (vs. $790) represents a 50-50 blend of a long-term DCF, embedding 4,500 units, 28% store margins, and 3% terminal growth ($780/share, with non-Chipotle brands as free options), and a 37x P/E multiple on our NTM, 12 months from now, estimate of $20.49 ($760/share). This represents CMG's current 2.5x premium to the market multiple on the consensus 12-month S&P multiple of 14.5x. Key risks We would become less constructive if (1) there was evidence CMG started to reverse increases in marketing spend, (2) survey data indicated a delayed reaction to pricing in terms of traffic or value perception, and/or (3) dairy or avocado prices show signs of re-inflating. ------

Wetherspoons bitter about supermarket deals Source: FT Joel Lewin January 21, 2015

JD Wetherspoon hit out at the UK tax system claiming it favoured supermarkets over pubs as the group reported slowing sales and weaker margins in the second quarter. The chain, which runs almost 1,000 pubs in the UK, said like-for-like sales rose just 2.8 per cent for the 12 weeks to 18 January 2015, slowing to 2 per cent in December and dipping even further in the past two weeks as supermarkets continued to seduce drinkers with discount booze deals. "The main reason behind this trend is not that people prefer to drink at home?.?.?.?but relates to the huge and growing price differential between pubs and supermarkets," said Tim Martin, Wetherspoon's chairman. While trading was in-line with market expectations, the company warned that the reduction in sales growth "may have an impact on our operating margin if the trend continues".

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In early trading in London, shares in Wetherspoon fell by 3.6 per cent to 789p. Mr Martin said that while food sales had continued to rise, bar sales had been "flat" for the past two months. "Fewer and fewer customers, outside pockets of affluence, in an accelerating trend, are using pubs for 'drinking occasions' which do not involve eating," he said. In addition to the supermarket price war, the pubs group blamed above-inflation pay increases for staff and rising utility and supplier costs for an 0.9 per cent fall in its operating margin to 7.3 per cent in the second quarter. Pubs pay significantly higher business rates per pint than supermarkets, as well as paying 20 per cent VAT on food while supermarkets pay nothing, a disparity which is crippling the pub industry, said Mr Martin. He called on the pub industry to speak out and campaign for tax inequalities to be narrowed. "The tectonic plates of the industry moved?.?.?.?the companies that do not speak out about the dangers of tax inequality are likely to be those that suffer most in the future," he added. Wetherspoon has already opened 11 new pubs this year and intends to open a further 20 to 30 as the company seeks to increase its market share. Alex Paterson, analyst at Investec, said "this period of softer trading is only temporary" adding that "increasing real disposable incomes will benefit pubs offering great value and high service levels". However, he cut his full-year operating profit forecast by 4.2 per cent to £112.6m. The company highlighted "the continuing imposition of stealth taxes, such as the late-night levy and the reduced allowances for gaming machine income" as further financial threats to the pub industry, but said it was "aiming for a broadly satisfactory outcome in the current financial year." Two weeks ago Wetherspoon's announced it would resume serving Heineken's beers in its pubs gain after the companies settled a pricing dispute in Ireland. ------

Supreme Court won't hear case on inflated swipe fees Source: NRA January 20, 2015

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The U.S. Supreme Court will not hear the appeal the National Restaurant Association and other merchant groups and businesses filed last year concerning the Federal Reserve's rule allowing inflated debit swipe fees to be charged to restaurants and other retailers. The Supreme Court's decision not to hear the case effectively ends the legal effort against the Federal Reserve over inflated debit swipe fees, which the NRA maintains violate the 2010 Durbin Amendment calling for fees "reasonable and proportional" to the cost of the transaction. The Fed had initially proposed a 12-cent cap on fees, but later raised the cap to 21 cents per transaction in their final rule on debit swipe fees. "We are disappointed in the Supreme Court's decision not to hear our appeal," said Scott DeFife, senior vice president of policy and government affairs for the National Restaurant Association. "Inflated swipe fees are gouging restaurant operators and the business community at large. We will continue to fight for a solution and hope the Federal Reserve will exercise its existing authority to reconcile this and ensure the major card brands cannot continue to levy exorbitant debit card fees on restaurateurs nationwide." The swipe fee is paid by merchants who accept debit cards and is a significant cost for restaurants and retailers, particularly on small-ticket items. It also well exceeds the actual cost of processing the transaction. Research conducted by the Federal Reserve has shown that 90 percent of debit-card transactions cost less than two cents to process. NRA fought back against the inflated swipe fees and won the first round of the court battle when U.S. District Court Judge Richard Leon ruled that the Federal Reserve's swipe-fee regulations violated congressional intent by allowing inflated transaction fees, especially for merchants with lower-dollar transactions. But in January of last year, a three-judge panel in the U.S. Court of Appeals overturned Leon's ruling and upheld the Fed's final rule that allowed for a 21-cent swipe fee per transaction. Joining the National Restaurant Association in the appeal against the Federal Reserve were the Food Marketing Institute, National Association of Convenience Stores, the National Retail Federation, Boscov's Department Store and Miller Oil Company. ------

North Carolina: EEOC Settles With Beer Co. In Hiring Suit Over Rasta's Hair Source: Law360 By Kat Greene January 20, 2015

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A North Carolina-based beer distributor on Tuesday agreed to settle a suit brought by the U.S. Equal Employment Opportunity Commission in which the agency accused it of discriminating against a Rastafarian delivery driver candidate who wouldn't cut his hair. Mims Distributing Co. will pay Christopher Alston, the would-be driver, $50,000, and will make company policy changes and subject itself to inspection by the EEOC, according to a deal to end the suit filed in North Carolina federal court. Mims denied that it discriminated against Alston, but agreed to the deal, which includes notices that must be posted around its workplace and training programs for employees, to end the litigation, according to the settlement. "The parties have advised this court that they desire to resolve the allegations in the complaint without the burden, expense, and delay of further litigation," the parties wrote in a joint proposed consent decree filed Tuesday. In its September suit, the employment agency claimed that Alston, who hasn't cut his hair since 2009, was interviewed for a delivery driver position with Mims in May. The beer distributor, whose footprint covers North Carolina's Research Triangle, allegedly told Alston he couldn't have the job unless he cut his hair, prompting Alston to explain that he couldn't do so because of his religion. Mims' alleged conduct flies in the face of Title VII, which requires employers to try to make reasonable accommodations for workers' sincerely held religious beliefs, as long as it doesn't impose an undue hardship, the EEOC said when it filed suit. According to "The Rastafarians," a 1997 overview on the history of Rastafarians, the prohibition on cutting one's hair may stem from a Bible passage that reads, "They shall not make baldness upon their head." How employees wear their hair at work has been a contentious issue between the EEOC and certain courts. In March, an Alabama federal judge dismissed a race discrimination suit brought by the agency over claims that a company refused to hire a woman with dreadlocks. And last week, the EEOC filed suit against another North Carolina company, hitting Triangle Catering LLC with discrimination claims for allegedly unlawfully firing a Rastafarian delivery driver who insisted on wearing a small hat to keep a lid on his spiritual energy. Representatives for the parties didn't immediately respond to requests for comment on Tuesday. The EEOC is represented by regional attorney Lynette A. Barnes and trial attorney Katherine A. Zimmerman.

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Mims is represented by Kevin Scott Joyner and Kimberly Joyce Lehman of Ogletree Deakins Nash Smoak & Stewart PC. The case is Equal Employment Opportunity Commission v. Mims Distributing Company Inc., case number 5:14-cv-00538, in the U.S. District Court for the Eastern District of North Carolina.