International News: September 2006

Legal action over Havana Club; India bans colas; Cobra founder joins Lords

Havana lawsuit: Bacardi attempts to register rival’s Havana Club brand name in the US, but Pernod Ricard is set to appeal

The fight over the Havana Club name sparked new lawsuits and legal action last month.
  Bacardi’s Havana Club is made in Puerto Rico. The Havana Club made in Cuba is a joint venture between Pernod Ricard and the Cuban government, and it is sold in over 60 countries worldwide.
  Bacardi owns the brand in Kyrgyzstan, Croatia and Tajikistan. In addition, it is awaiting rights in India, Nicaragua, the Bahamas and the US, while challenging rights to the brand in Canada and Spain.
  A recent ruling by the US trademark office in Bacardi’s favour has sparked the renewed legal action. It ruled that the joint venture between Pernod Ricard and Cuba no longer had a claim to the trademark in the US, as the registration had expired.
Regardless of this decision, this rum could not be sold in the US owing to trade embargoes on Cuba.
  Bacardi’s brand, however, can be sold in the US, and it is now attempting to register the brand name, as well as pursuing rights to market the brand in other countries.
  Pernod Ricard, however, has planned legal action against Bacardi, claiming that selling a rum named “Havana Club” that is made in Puerto Rico is misleading to consumers. In addition, it has plans to appeal against the US trademark office’s decision.
  Rum is not protected by a geographic designation, a fact that Bacardi is using in defence of its brand name.

India bans colas

Bans of Coca-Cola and Pepsi were put in place in India last month over concerns that the soft drinks contain dangerous levels of pesticides.

  Various states imposed different restrictions: Kerala, for example, banned all sales of soft drinks produced by the two companies. In the Karnataka state, the ban on sales only extended to government schools and colleges.
  The bans were put in place after The Centre for Science and Environment claimed that 11 of the two companies’ drinks contained average pesticide levels that were 24 times higher than limits agreed by India’s government.
  Indian trade groups were concerned about the states’ decisions, warning of possible ramifications for foreign investment. The US government and business leaders also warned of the negative effect the bans could have on foreign investment.
  Both Coca-Cola and Pepsi have issued press releases claiming that their drinks are safe. In addition, Coca-Cola consulted the UK-based Central Science Laboratory, which confirmed that the soft drinks conform to EU standards.
  In response to the CSE’s allegations, The Supreme Court of India has requested that both companies reveal the ingredients of their drinks.

EC slams Indian taxes

The European Commission has threatened to refer India to The World Trade Organization (WTO) if the Asian country does not adjust duties on imported spirits and wines. India will have to undergo WTO dispute settlement proceedings if the taxes are not reduced by the end of the European Union summit this month. This follows the results of a European Commission investigation that was launched a year ago following a complaint by, among others, the Scotch Whisky Association (SWA).

  According to The European Commission report, spirits imported into India are subject to as much as 550% in cumulative import duties. The report concluded that this “prevented and continues to prevent EU producers of wines and spirits from realising this market potential. There is therefore evidence of adverse trade effects.”
  Thus far, these charges have protected India’s domestic spirits producers, who claim that a reduction in import duties would “annihilate” their industry.
 However, Gavin Hewitt, SWA chief executive, believes that, “A non-discriminatory duty regime would offer Indian consumers more choice at a reasonable price, boost Indian government revenue and introduce a fair, level playing field for international producers.”
  According to the European Commission report, India is the largest market for whisky in the world. Scotch whisky, however, accounts for only 1% of India’s spirits market, according to the SWA.

Miller’s new brands

SABMiller acquired two drinks brands last month for $215 million, after approval was granted by the US Federal Trade Commission.
  The brands were acquired from  the McKenzie River Corp, a San Francisco-based brewer. One of them, Sparks, is a malt drink with caffeine, ginseng, guarana and taurine. Launched in 2002, it has achieved rapid growth in subsequent years. As an alcoholic alternative to other energy drinks, the brand has benefited from interest in functional drinks.
  The other brand, Steel Reserve, is a slow-brewed lager that has also been steadily rising in sales. The brand apparently sold 1.6m hectolitres last year. Steel Reserve is also known as a high-gravity lager and is brewed for a minimum of 24 days.

  Despite plans for the acquisition being announced in early July, the Federal Trade Commission was required to conduct an anti-trust review before the deal could be completed.
  Miller already produces the two products under a contract-brewing agreement. A long-term contract is now in place.
  Future collaboration between the two companies is planned in addition to the acquisition of the two brands. Tom Long, Miller’s president, says: “The new product development relationship with McKenzie River president Minott Wessinger will further expand our innovation capability and expertise.”

German Wine boost

A combination of marketing activity, rising consumer interest in Riesling, and Germany’s memorable hosting of The World Cup has resulted in positive growth in German wine exports.
  Growth in the value of exports has also outstripped volume, indicating an increase in sales of quality wines. In the UK, sales of German wines costing less than £3 have decreased but have been compensated for by the sale of wines at higher price points.
  Domestic sales of German wines also received a boost from The World Cup. Two million bottles were branded with the FIFA World Cup logo and sold before and during the course of the tournament. All wine sold at the stadiums during the matches was German, with 100,000 bottles provided for the 64 games.

Wine cheaper than water

The oversupply of grapes in Australia has resulted in some wines being sold for less than the price of bottled water, according to Australian newspapers.

Some producers are now selling wine in unlabelled bottles, or “clean skins”, for as little as A$1.95 (£0.80) a bottle, while bottled water sells for around
A$3 a litre.
In addition to the reported wine surplus, 5% of Australian grapes were apparently left unpicked in the last harvest.
Australian wine writer James Halliday has recently been quoted being positive about the wine surplus, saying that these “boom and bust” cycles are normal in agriculture, and predicting that the surplus will be over in “somewhere between two and five years”.

Cobra’s Bilimoria joins Lords

Karan Bilimoria, the founder and chief executive of Cobra Beer, recently took his seat in the House
of Lords.
  The Lord Bilimoria of Chelsea’s rapidly growing Cobra Beer brand currently has a turnover of
£80m, and is exported to more than 40 countries.
  In addition to the success of Cobra, however, Lord Bilimoria holds a number of public appointments on government panels; he is the chancellor of Thames Valley University, and visiting entrepreneur at Cambridge University.
  The appointment makes Lord Bilimoria one of the 10 youngest members of the House of Lords. The Appointments Commission makes recommendations for non-party political peerages, and have appointed seven new peers this year.
  Lord Bilimoria is also the first Zoroastrian Parsi peer. There are only 6,000 Parsis in the UK, with a total of 100,000 worldwide.

A Ferrari football celebration

On the evening of The World Cup final, the owner of the hotel hosting the Italian team ensured that 300 chilled bottles of Italian sparkling wine Ferrari were on hand.
  There had been other occasions to celebrate with Ferrari during the tournament, including a visit from the Italian premier Romano Prodi.
  In 1982, the Italian team celebrated their victory with a jeroboam of Ferrari on the pitch.

© db September 2006