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From: lewis.perdue@wineindustryinsight.com

Subject: Great News on Wine Sales, Diageo Reorg, Feds Sued on Water, Calif Makes Water Rights Grab

Date: 2009-03-06 11:51:15

To: Emailing List Subscriber
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WINE INDUSTRY INSIGHT

EMAIL EDITION - VOLUME I, NUMBER 72 - MARCH 6, 2009


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IN THIS ISSUE:

  • Wine Sales Continue Upward Trajectory For Second Straight Month, Outpace Past 52-Week Growth by 30%

  • Central Valley Water Users Sue Feds

  • California Bureaucrats Make Water Rights Grab

  • Diageo Reorganization Combines Wine & Beer, Layoffs Light In Calif., Move To Save $141 Million Per Year

  • Judge Warns Conti/Charles B Mitchell Winery To File Complete Documents Or Lose Chapt 11 Protection

  • Wine’s Mammoth Water Footprint: 120 Liters To Make One Glass?



Central Valley Water Users Sue Feds

Delta smelt protection rules issued in December 2008 by the U.S. Fish and Wildlife service are endangering Californians who depend on the Central Valley Project (CVP), according to a lawsuit filed with the U.S. District Court in Fresno.

The lawsuit, which names a number of federal agencies including the U.S. Bureau of Reclamation, was brought by the Westlands Water District as well as the San Luis and Delta-Mendota Water Authorities.

Those water users contend that both urban and agricultural users are being harmed and asks the court to prevent rule enforcement.

The Bureau of Reclamation has cut off agricultural water users who will get no water from the federally run CVP for the foreseeable future.

See Fed Water Cutoff Could Blunt Obama Stimulus for more on the previous federal actions.


California Bureaucrats Make Water Rights Grab

The California Water Resources Control Board  (WRCB) has notified more than 7,000 water rights owners that it may seize their water this year. This is the first time since 1988 that such notices were sent.

The WRCB mailed notices last week to every city and farm with state water rights in central and northern California including the watersheds of the Russian, Sacramento and San Joaquin Rivers. Also included were state water rights holders on the Central Coast and Lassen County’s Tule Lake region.

WATER “RIGHT” IS A REVOCABLE “PERMISSION”

Indeed, the term water “rights” is misleading. In reality, it is not a right, but a permission to pump or divert water from a creek or stream.  The state last revoked water diversion rights/permissions in 1977.

State law has devised a complicated system of water permissions ranked according to seniority — when the right was granted to a parcel of land. Riparian rights are the most senior of all permissions and are based on historical claims to water running through or adjacant to the land. The most senior riparian rights date back to the times of Spanish colonial rule.

STATE WILL SEIZE LEAST SENIOR RIGHTS FIRST

State law provides that the state can seize water beginning with the least senior rights/permissions then move up the chain.


Wine Sales Continue Upward Trajectory For Second Straight Month, Outpace Past 52-Week Growth by 30%

Wine sales have scored their second straight month of  significant sales increases, outpacing the overall revenue growth of the past 52 weeks by approximately 30 percent. Sparkling wine and Champagne more than tripled its growth rate.

Wine Sales Outpace 2008 Growth by 30% - Click to enlarge.

Wine Sales Outpace 2008 Growth by 30% - Click to enlarge.

For the four-week period ending Feb. 22,, table wines sold through U.S. food and drug stores have increased 6.6 percent according to a Wine Business Insight analysis of data from Information Resources, Inc. (IRI).

This continues the dramatic reversal in wine sales as first reported by WII on Feb 6 when overall sales jumped 6.4 percent.

By contrast, table wine sales for the 52-week period ending Feb. 22 showed a 4.6% increase.

Champagne and sparkling wine sales performed even better with an 8.9% increase for the four week period versus a 2.4 percent increase over the previous 52 weeks.

[NOTE: A downloadable Excel spreadsheet (13 columns by 287 rows) containing  the source data used for this article as well as other information  is available here to VIP Subscribers]

ALL PRICE POINTS GAIN DOLLAR VOLUME, BUT BOXES STILL  RULE

As expected, lower-price-point box wines scored the biggest gains with box wines costing less than $2 for a 750ml equivalent posting a 41.5 percent gain. However, wines costing $8 to $10.99 a bottle came in third with a 9.2 percent gain. The “Two Buck Chuck” category, costing less than $3 a bottle gained 9 pecent, for fourth place.

March 2009 Price Point Winners - Click to enlarge

March 2009 Price Point Winners - Click to enlarge

Perhaps more surprisingly, the most expensive wines in IRI’s data — those priced at more than $20 a bottle — came in after Two Buck Chuck, growing at the rate of 7.1 percent.

Key to IRI Price Points

Key to IRI Price Points

IMPORTS VERSUS DOMESTIC

Despite a strengthening of the dollar versus the Euro and most other currencies, imports hung on to their market share, barely slipping from 29.71 percent for the past 52 week  to 29.45 percent for the four-week period.

DOMESTIC SPARKLERS RULE SHELVES

Domestic Champagne Shows Tremendous Growth - Click to enlarge

Domestic Champagne Shows Tremendous Growth - Click to enlarge

Domestic sparkling wines increased13.3 percent over the four-week period,far outpacing  imports which showed a 1.6 percent increase. This disparity is accounted for by a 19.4 percent increase in sparking wines below $4.99 a bottle, followed by 14.1 percent growth for those in the $8 to $12.99 category.

Imports, which tend to outprice domestic sparklers, fared badly. Bottles over $36 were down 10 percent and those prived at $18 to $34.99, lost 1.5 percent.

NEXT INSTALLMENT

  • Which brands fared the best?
  • Surprising data on which varietals are selling best … and worst.
  • Top 10 biggest percent sales leaders, all imports

Those and a lot more surprising numbers are in that VIP Excel File. If you want a crack at the answers first, then you may want to subscribe. For $5.99 you can slice and dice, sort and resort the numbers in every way possible.

The charts in this article are a small portion of what is in the Excel file which, itself, is a small part of the data available from IRI.


Diageo Reorganization Combines Wine & Beer, Layoffs Light In Calif., Move To Save $141 Million Per Year

While Fosters saw separating wine from beer as the best economic move, Diageo North America (NYSE: DEO) has headed the other way, combining Diageo-Guinness USA and Diageo Chateau & Estate Wines.

As part of a global look at restructuring, Diageo will also lay off 150 people in the United States and Canada, about 4 percent of its workforce.

Employees learned about the restructuring on Tuesday from Diageo North America CEO Ivan Meneze.

CALIFORNIA GETS OFF LIGHT

Zsoka McDonald, Senior Director, External Relations for Diageo North America, told Wine Industry Insight that 19 job cuts will be in California. “We don’t have a geographic breakout for California,” McDonald said, “but you can assume they will be focused on the St. Helena area.

The job cuts are effective in mid-April.

Ray Chadwick, president of Diageo Chateau & Estate Wines is expected to leave the company.

Subheads for the rest of the story:

  • EMPLOYEE ASSISTANCE AVAILABLE

  • SEC 6K FILING SAYS REORGANIZATION EXPECTED TO SAVE $141.24 MILLION ANNUALLY
  • SHARE PRICE DOWN, GLOBAL FINANCIAL PERFORMANCE UP
  • WINE, BEER DOWN, SPIRITS UP IN NORTH AMERICA
  • REORGANIZATION BETTING ON GLOOMIER OUTLOOK
  • EXTENSIVE WINE PORTFOLIO

The full article is available to subscribers of Wine Industry Insight’s VIP Content Center.

Non-subscribers, please click here to learn more.


Judge Warns Conti/Charles B Mitchell To File Complete Documents Or Lose Chapt 11 Protection

Citing incomplete filings, Bankruptcy Judge Michael S. McManus has ordered MC2 Wines, dba Charles B. Mitchell Vineyards/Conti Estate Winery to show cause why it should not have its Chapter 11 Bankruptcy protection revoked.

McManus has set a hearing on the matter for March 23 at the bankruptcy court in Sacramento.

As previously reported by WII, Conti faces a March 9 hearing to determine if three growers will be allowed to enforce their liens for unpaid winegrapes.


Wine’s Mammoth Water Footprint: 120 Liters To Make One Glass?

I ran across a surprising article in the Economist this week (Thirsty Work) which tells me that it takes 960 liters of water to make a single liter of wine. Or 720 liters of water for a 750 ml bottle.

economist-water-beverages

That Economist article was based on data obtained from the Water Footprint Network which  told me that wine has a mammoth water footprint — considerably larger than most NBA players:

“Water footprint: 120 litres of water for one glass of wine. One glass contains about 125 ml of wine. Most of the water behind the wine is for producing the grapes.”

SITE SHORT ON SUBSTANTIATION

After considerable clicking around, I found no solid data. Do any readers have an idea if this is accurate?

 




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