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    Understanding The Craft Beverage Modernization and Reform Act

    Alcohol producers shared a collective sigh of relief in December when Congress made the Craft Beverage Modernization and Tax Reform Act (CBMA) permanent in its year-end funding legislation package after extensive lobbying and support from the industry. Background  CBMA was originally passed in 2017 and enacted for the 2018 and 2019 calendar years in order to provide tax relief for brewers, winemakers, distillers, and importers of beverage alcohol. It was extended for one year in December of 2019 and was set to expire on December 31, 2020. Without passage, the tax rate on spirits producers would have reverted to the previous rates – an increase of 400%.  The act specifically allows for the following cuts to Federal Excise Taxes: Spirits – Distilled spirits will permanently be taxed at a reduced rate of $2.70 per proof gallon for the first 100,000 proof gallons produced domestically or imported annually, and a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons. Wine – CBMA enacts a tiered tax credit system for wine produced or imported into the US. The system provides a $1 per gallon credit for the first 30,000 wine gallons, $0.90 credit for the next 100,000 wine gallons, and $0.535 credit for the next 620,000 wine gallons. Beer – Brewers producing 2 million barrels or less annually saw rates reduced to $3.50 per barrel on the first 60,000 barrels and $16 per barrel for the remainder. Brewers producing over 2 million barrels annually and beer importers also received a reduced excise tax rate of $16 per barrel, reduced from $18 per barrel, on the first 6 million barrels. ...

    SGWS to Acquire Epic Wine & Spirits, Align with Foley Family Wines

    Southern Glazer’s Wine & Spirits has acquired certain assets of Epic Wine & Spirits, the distribution division of Foley Family Wines. Simultaneously, Foley Family Wines signed a national distribution agreement with SGWS. Financial terms were not disclosed. Foley Family Wines was founded by Bill Foley in 1996 and has a sizeable portfolio of well-known brands including: Chalone Vineyard, Merus, Chalk Hill, Sebastiani and most recently Ferrari-Carano. “The national partnership with Southern Glazer’s Wine & Spirits is the right next step for Foley Family Wines,” said Shawn Schiffer, President of Foley Family Wines. “We are confident that the industry-leading scale and strategies of Southern Glazer’s will position Foley Family Wines for exponential growth.” Southern Glazer’s Wine & Spirits is the largest wholesaler in the U.S. with operations in 44 states and D.C. The deal coincides with the launch of SGWS’ new Fine Wine and Artisanal spirits strategy. Further reading: Wine Industry...

    How Milam & Greene Thrived in 2020 by Expanding its Footprint

    2020 was an unprecedented challenge for beverage alcohol brand owners and many had to adapt their business model on the fly to compensate for the widespread closures on-premise, supply chain disruptions, and consumers who were largely homebound.  One brand that found success by drastically adapting its plans for 2020 was Milam & Greene.  Texas-based Milam & Greene was set to focus solely on the Texas market, but the pandemic forced them to look beyond their home state.  Expanding from 1 to 10 States Milam & Greene leadership felt expanding beyond Texas was a necessity as it was no longer able to focus its sales efforts on-premise as it had originally planned. So Milam & Greene expanded its off-premise sales capabilities to a total of 10  states and built an online store-locator for its website.  “As you know, if you are a craft distiller and expanding your market, it’s not enough to be on the shelves. You have to constantly be thinking: “How do I get those bottles moving off the shelf,” says Heather Greene, CEO of Milam & Greene parent company Provision Spirits. “By doing these store-locators and geo-targeting campaign, we were basically showing our retail partners and distribution partners that we were going to back up that distribution channel with marketing efforts.”  Milam & Green additionally waded into the e-commerce space and was able to expand its DTC capabilities to 41 total states.  Optimizing Digital Communications Not only did its new digital platform provide Milam & Greene the ability to reach more customers directly, but also gave it data about retention, conversion, and more information about the target...
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    The Celebrities that Entered the Alcohol Business in 2020

    The alcohol category has long been a target of opportunity for celebrities looking for a spokesperson role, but some major successes and payouts of late have driven a number of famous personalities to seek investment and greater involvement in the category. Sean “Diddy” Combs sparked the movement with Ciroc vodka and DeLeon Tequila, followed by George Clooney and Casamigos Tequila, and more recently Ryan Reynolds in Aviation gin. Casamigos made headlines in 2017 when it was bought by Diageo in a deal worth up to $1 billion and Aviation was also acquired by Diageo last year for up to $610 million.  These substantial paydays only spurred more celebrities to pursue the category. Some of the big names to launch products in 2020 included Dwayne Johnson, Cameron Diaz, Luke Bryan, Post Malone and even athletes like Derek Jeter. The most popular categories were wine, Tequila, whiskey and seltzer.   Dwayne Johnson’s Teremana Tequila was particularly popular in its first year, selling an estimated 300,000 cases in 2020, according to the company. Cameron Diaz’s wine Avaline sold 120,000 bottles in its first three months and Post Malone’s rose Maison No. 9 sold 50,000 bottles in its first two days and crashed the Vivino app the morning it went on sale.  “Looking across the spectrum of drinks, it’s clear that categories with a strong lifestyle connection are ripe for celebrity involvement,” said Brandy Rand, COO for the Americas at IWSR. “Consumers can tell if someone is being paid to promote a product versus really excited about sharing something they’ve had a hand in producing or genuinely love drinking.” Below is a list of...

    IWSR Predicts Key Wine Trends That Will Drive Growth in 2021

    While global wine consumption was significantly impacted by COVID-19 in 2020, it’s expected to see a big bounce back in 2021 and four key trends are likely to drive the market, according to analysis from IWSR. The shift to E-commerce will continue to benefit wine, which has a 40% value share of the online drinks market. Another trend expected to carry on from the pandemic is alternative packaging, including both larger formats and smaller packaging, such as cans.  Wine has also been rediscovered as a staple for off-premise drinking occasions during the pandemic, opening itself to a broader range of occasions. Of course, with consumers becoming more health-conscious than ever, IWSR predicts organic and sustainable wines will be key drivers of the market for years to come.  Source: IWSR, January 2021  ...

    Q4 Product Approvals Hint at Trends to Come in 2021

    The final quarter of 2020 saw a few noteworthy trends in label approvals from the TTB, according to research firm bw166. Below are a few key category trends as indicated by product approvals. Lemonade-flavoring is ticking up in popularity and two notable additions to the category were Smirnoff and Labatt Blue. Big players like Constellation, Gallo, and Francis Ford Coppola continue to bet on alternative packaging sizes including boxes and cans. Botanicals and infusions were also a noticeable trend as Belvedere and Beefeater had several offerings approved. Low-calorie options are also on the rise with TTB approving several 90-calorie offerings for Chateau Ste. Michelle and two 70-calorie options for Constellation’s Kim Crawford brand.  Looking at 2020 as a whole, TTB approvals were down by 15,600 for the year, representing an 8.7% decrease from the previous year. Wine led the way with a 13.6% drop in approvals, while beer dropped 3.3%. However, approvals for spirits actually grew 15.1% for the year. Source: bw166, January 2021...

    Silicon Valley Bank Predicts Rebound in Wine Demand in 2021

    Silicon Valley Bank (SVB), one of the largest providers of financial services to wine producers, has released its 2021 State of the Wine Industry Report. The annual report predicted a strong consumer demand that gains momentum throughout 2021 as the hospitality, travel, and entertainment industries rebound. The bank expects retailers with an E-commerce strategy will have a strong 2021 and online sales could represent 20% of winery sales within five years. But wine sales through restaurant channels are not expected to recover to pre-COVID levels for a few years. Additionally, SVB submits that the wine industry will need a marketing organization to deliver a unified national consumer message as wine sales across all price segments have been in decline over the past few years.  Source: Wine Industry Advisor, January 2021...

    How 2020 Transformed the US Alcohol Industry

    The pandemic certainly altered how consumers buy alcohol in the US in the short term, but will there be any lasting changes to the beverage alcohol category? Drizly’s Bev Alc Insights team spoke to industry experts who provided insight on the longevity of channel shifts, regulation changes, and premiumization. Q1 and Q2 of 2021 may look sluggish when compared to pantry loading period last year, but Q3 and Q4 have great potential. “Q4 could be a fantastic quarter, because if the vaccine is here people are going to feel liberated,” says Danny Brager, industry consultant and the former senior vice president for Nielsen’s beverage alcohol practice.  “It could be the roaring ’20s all over again, because people are going to be so happy and relieved to get back to life as normal.” Source: Drizly Bev Alc Insights, January 2021...
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    Best Practices for Independent Alcohol Brands

    E-commerce has been a lifeline for some independent brand owners during the COVID-19 pandemic. Troop Beverage, a ready-to-drink (RTD) canned cocktail brand launched in October 2020, is one of the companies that has found early success with the channel.  “I think today’s brands have to meet consumers where they are. The fact is, now more than ever–but really for the last decade plus–consumers are shopping online,” says Troop Beverage co-founder Reed DesRosiers. “So having an omni-channel strategy is not a nice-to-have thing, it’s a must have.” Small businesses are often up against the most powerful brands in the world that have bottomless budgets for marketing, but DesRosiers believes the advantage his company has with e-commerce is a depth of knowledge for a very specific subset of consumers. This allows them to build a community of loyal followers.  DesRosiers has a few key suggestions to any brand that is interested in giving their customers an online experience:  Make the customer experience as seamless as possible. Ensure the different pages on the website flow so that the customers are not drawn away by the formatting. Take on multi-level marketing projects that bring more consumers onto the website. The more eyes on the product, the more purchases. Develop loyal online customers by offering incentives. For example, Troop Beverage builds shipping into their costs so that they can offer free shipping and maintain the customer through payment rather than abandoning the purchase due to high shipping costs. Hear more from Reed DesRosiers at www.parkstreetuniversity.com...

    Accessing the Impact of the $810M Gallo & Constellation Deal

    Earlier this month, E&J Gallo and Constellation Brands finalized an $810 million mega-deal. The acquisition included 30 wine brands and five wineries, and was negotiated with the Federal Trade Commission for more than a year over the agency’s concern that the proposed acquisition could decrease competition in the US wine category. In a new article, Wine Enthusiast takes a look at how a deal this big could shape American wine culture from a resource, production, and distribution perspective. Source: Wine Enthusiast, January...