November Trade News
Bubbly is Back!
Champagne sales are set to reach a four-year high this year, driven by strong exports to the United States and Australia, champagne wine growers lobby SGV said in early October. The forecast is good news for wine producers that were facing their worst output in 40 years in 2021 after vineyards in France were ravaged by frosts and mildew fungus attacks. The progressive reopening of markets and an economic upturn in 2021 will likely allow sales to rebound to 305 million bottles of 75 centiliters, compared to 297 million in 2019, before COVID-19.
Glass and Paper in High Demand and Short Supply
COVID-19 has caused slowdowns and shortages of many raw materials with both paper and glass joining a lengthy list of items in short supply because of pandemic-stretched supply lines. Some winemakers are finding themselves in a bind when it comes to getting their products to market. According to research by The Sheridan Group, the price of wood pulp has risen from $700–$750 per metric ton to almost $1,200 per metric ton in the last year alone. In addition, ink prices have also risen as additives, resins and the like have become increasingly difficult to acquire. Without paper, there are no labels and with no labels on the bottles, there is no wine.
Bottles are also in high demand and short supply. Argentina’s famed vineyards are struggling to find wine bottles amid a global shortage of glass, in the latest example of supply backlogs hitting local production. The shortages are being exacerbated by a fire at a facility belonging to one of the few glass producers in the South American nation. Some wineries are up to 25% short of the glass bottles needed for their current supply of wine.
Bourbon Taxes & Tariffs
For the first time ever there are more than 10 million barrels of bourbon aging across Kentucky, and distillers set records by filling nearly 2.5 million barrels in a single year.
However, all of the news for distillers is not great. Distillers in Kentucky are slated to pay more than $33 million in aging barrel taxes in 2021 alone. That figure is 140% higher than it was 10 years ago.
“Because bourbon-aging barrels are considered property, they are subject to property tax in Kentucky,” Eric Gregory, president of the Kentucky Distillers’ Association said. “Every year that barrel ages, it is taxed again and again and again and again,” he said. “If you’re drinking a bottle of 18-year-old bourbon, that whiskey from that barrel had been taxed 18 times before it was bottled.”
In 2018, China, Mexico, Canada the European Union, and the United Kingdom imposed retaliatory tariffs on American whiskey in response to U.S. Section 232 tariffs on steel and aluminum. Since the imposition of 25% tariffs on American whiskey, exports to the EU, the largest export market for the spirit, plunged 37% from $702 million in 2018 to $440 million in 2020, according to figures provided by the Distilled Spirits Council.
NBWA Launches BREW Initiative
After a delay in the initial launch date due to the COVID pandemic, the National Beer Wholesalers Association (NBWA) launched its “Building Relationships and Empowering Women” (BREW) initiative at its 84th annual convention and trade show in Las Vegas in early October.
Through the initiative, NBWA is committed to offer a forum for women to grow professionally within the beer industry. For more information on the BREW initiative and to sign up for updates and other opportunities to get involved you can visit the BREW home page.
Low Fruit Yield Hurting Some Craft Breweries
Many breweries use fruit in the creation of beers that have a variety of flavors. Brewers turn to local fruit to create such varieties as raspberry wheat, cherry stout, or sour and Belgian style fruit lambics. Fruit harvests in 2021 are suffering due to drought, wildfires and other weather-related issues and the shortages are being felt across the country.
The Oregon Raspberry & Blackberry Commission estimates this years harvest will result in a 50 percent crop loss for the region. Michigan, the nation’s leading producer of tart cherries, and the world’s leading producer of the Montmorency cherry varietal is suffering as well. The state’s cherry harvest is expected to result in just 10-15 % of a normal season’s harvest due to increased volatility in springtime weather.
AB Rolls Out New Vodka Seltzer
Anheuser-Busch has rolled out NUTRL, a line of canned vodka seltzers made with only three ingredients: vodka, seltzer, and fruit juice. The beverage comes in raspberry, pineapple, and watermelon flavors and is available at retail in 11 states including Ohio.
FTC Warns Suppliers and Retailers About Deceptive Advertising
The Federal Trade Commission sent out letters in mid-October to over 700 companies including: Anheuser-Busch, Molson Coors, Constellation, Boston Beer, Heineken USA, Pabst, FIFCO, Gallo, Robert Mondavi, Bacardi, Diageo, LVMH and just about every consumer packaged goods company. Retailers including Kroger, Speedway, Target, Walgreens, Walmart, etc. were targeted as well. The correspondance was alerting them they are at risk for penalties and offenses due to “deceptive or unfair conduct around endorsements and testimonials.”
The FTC is sending a clear message that if companies use endorsements to “deceive consumers” they can incur civil penalties up to $43,792 per violation. “The rise of social media has blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace. Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
Low and Non-Alc Buyers More Valuable to Total Bev Alc Category
Off-premise sales of the “no/low alc” category hit $3.1 billion for the 52 weeks ended September 18, 2021, in NielsenIQ-measured channels. That is a 10% increase ($291 million) versus a year ago. While low alc accounts for the majority of “no/low” alc dollars, non-alc is growing the fastest. Low alc is up 8.1% and non-alc is up 33.2% in sales (about $331 million in off-premise) for the 52-week period.