Dear Client:
Supermarket spirits sales continue to hold up during the recession, with May volumes post a 2.3% gain, according to Nielsen scans reported by UBS analyst Melissa Earlam. That coincides with a 12 week trend of up 2.4% and a 52 week trend of up 2.5%. So spirits volume gains are staying fairly steady, although April trends were a big higher, up 3.4%, reflecting Easter timing.
However, pricing and the trading up mix are slowing more dramatically, with pricing and mix only up 0.7% in May compared to up 1.7% in April. But the 52 week trend in pricing and mix is up only 0.9%, so “it appears last month’s improvement in mix, may have been a one off,” writes Melissa. “A number of value brands have re-accelerated at the expense of premium brands,” she adds. Diageo, Pernod, Brown-Forman, and Remy all lost share, while Campari (Skyy) and Constellation gained.
“For 2009, we estimate 1% market volume growth and 1.6% value growth for the US market. Nielsen volumes growing ahead of the total market is expected as volumes shift from the on-trade to the off-trade,” says Melissa.
IS IT TIME FOR SPIRITS ADS ON NETWORK TV?
Cable TV and local network affiliates have been raking in the revenues in these tough times by accepting spirits ads in addition to beer and wine ads. But the national networks have historically stayed away, for fear of alienating viewers. That is changing, as network advertising revenue is off about $250 million, or 4.2 percent, in the first quarter compared to last year, reports the NY Post.
“With the economy and what’s happening to corporations, more and more people are accepting liquor advertising,” said Matt Carroll, the chief marketing officer at Patron to the Post. “Everyone who has traditionally not [accepted spirits advertising] now is,” he said, as Patron runs ads on NBC-owned stations on shows like “The Tonight Show with Conan O’Brien.”
CBS dropped its self-imposed ban on spirits and aired an ad during the Grammy’s in Feburary after 10 p.m. in 15 major markets. Still, none of the broadcast networks air totally national ads for spirits. “We’re optimistic that the barrier will fall of its own anachronism,” said Frank Coleman, of DISCUS. “If the owned-and-operated stations are taking them, clearly the networks are seeing that it’s just profit left on the table.”
CONSTELLATION’S EXECUTIVE COMPENSATION FOR 2009
Constellation chief Rob Sands made about $6.36 million in compensation in fiscal 2009, according to the AP. His pay package was up 2% from last year, but Rob along with his brother Richard and other execs didn’t receive a bonus. Richard, meanwhile, had compensation valued at $6.86 million in fiscal 2009. He made $7.3 million in fiscal 2008 when he switched from ceo to chairman.
BACARDI AND MIAMI HEAT AGREE TO COURTSIDE ADVERTISING
The NBA has lifted its ban on courtside advertising by spirits companies, and Bacardi and The Miami Heat are the first to make the switch. Bacardi signed a 7 year deal with the Miami basketball team last year that included a provision allowing courtside advertising should the NBA lift its restriction on spirits. The courtside signs will make an appearance for the 2009-2010 season and gives the team an additional 10% in revenue. The spirits ads can now appear on camera but on a few conditions. One, they must be limited to responsibility messages or feature a simple brand plug without a tagline. Three or four other courside deals are reportedly pending.
RED WINE INGREDIENT A WONDER DRUG
That’s what the Daily Telegraph has uncovered. While not exactly new news, the revelation was uncoverd by Professor Lindsay Brown of the University of Queensland, who conducted a “mini review” of a number of recent studies about the health benefits of red wine. Of course the key ingredient is resveratrol, “which in small doses acts as an antioxidant protecting organs but in larger quantities kills dangerous cancer cells.” The bad news is that old age begins at 27, which is when mental powers start to decline. The good news is that drinking red wine at 27 helps slow the process. Red wine appears to contain a number of antioxidants which are good for your health but that resveratrol was the most powerful. They concluded that it “shows therapeutic potential” for cancer and heart disease and may aid in the prevention of age-related disorders that affect the brain and the body.
“I think that red wine has both some mystique and some historical symbolism in the west and of course, some various pleasures attached to its ingestion, all of which give it a psychological advantage edge, food-wise,” said prof. Brown. He said “not many of us can or will eat a couple of cups of blueberries a day for years on end” but we were happy to have a glass of wine.
WSD BRIEFS:
UBS CUT Remy Cointreau to neutral, saying while the worst is over, a recovery is not in sight. UBS still expects organic sales to decline for Remy in 2010, forecasting a 4.9% organic sales decline in 2010. “While management is rightly sticking to its strategy of taking price to build brand equity, we believe that it remains the most vulnerable stock in the sector to trading down,” said analysts.
THE NEW ZEALAND GRAPE harvest in 2009 has been held at the same level as the year before to support the wine industry in the face of global recession, the industry said on Monday. The volume of grapes harvested was 285,000 tons, above initial forecasts but in line with 2008’s crop.
BRAZILIAN CACHACA industry is asking the U.S. government to officially recognize cachaça, as currently the TTB requires the phrase “Brazilian rum” on the label. Cachaça can only be made from fresh cane juice, where rum can be made from molasses.
FOSTER’S GROUP APPOINTED DAVID DEARIE as its new managing director of Australasian Wine. The former managing director of Brown-Forman’s Western Europe and African businesses will lead the Australian and New Zealand wine business. He will take his new position in July.
Until tomorrow, Megan
“Where we have strong emotions, we’re liable to fool ourselves.â€
-Carl Sagan
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