AROUND THE WORLD

01 March 2007 By db staff writer

“standfirst”>The Big Chill, Cold weather warms the heart of Canada’s largest Icewine producer…Out of East Africa, Starbucks has announced plans to establish a support centre for coffee farmers in East Africa…Sherry shake-up, the consejo regulador de Jerez, which regulates the Sherry industry, is introducing new measures…

The Big Chill

Cold weather warms the heart of Canada’s largest Icewine producer

Following reports that this year’s Icewine harvest was at risk due to unseasonably warm temperatures, Canada’s biggest Icewine producer, Inniskillin, was thankful for a major cold front in January which allowed picking to commence at ideal temperatures of -10ºC. Cabernet Franc was the first to be harvested on 16 January, while the Riesling and Vidal harvests continued into February at Inniskillin’s vineyards throughout the Niagara Peninsula. In previous years, the Icewine harvest has been as early as 2 December and as late as 5 March.Inniskillin export director Randy Dufour is extremely pleased to have more Cabernet Franc Icewine available for export markets, although this will still not meet growing demands.Canada’s Icewine is made from grapes that are netted and left to freeze naturally on the vine. Once harvested the frozen grapes are basket-pressed to release only the most concentrated juice from the grapes, just 5–10% of the usual yield. While rich in natural sugars this juice benefits from high acidity levels which ensure the wine is well-balanced with intense aromas and flavours.

New senior winemaker Bruce Nicholson commented that he is “extremely pleased with the quality of the Cabernet Franc from the initial picking.”

Out of East Africa

Starbucks has announced plans to establish a support centre for coffee farmers in East Africa, as well as expressing intentions to purchase twice as much coffee from the area by 2009.The Seattle-based coffee company currently buys 6% of its coffee from East Africa. At a press conference last month in Nairobi, Starbucks senior vice-president Dub Hay said that the company had, “seen an improvement in the quality of coffee and we are committed to opening up markets for coffee from the region.”The announcement arrived after an ongoing attempt by Ethiopia to trademark the names of East African coffees. In November last year, Oxfam America called on Starbucks to allow this, after which the Ethiopian government threated to take action against the company. The country’s assistant agriculture minister, Ato Yacob Yalla said at the time that “Starbucks has to recognise that this is Ethiopian coffee, this is an Ethiopian brand.”

The proposed support centre follows the success of a similar centre in Costa Rica. Starbucks will also apparently be offering small loans to coffee producers in the area.

Sherry shake-up

The consejo regulador de Jerez, which regulates the Sherry industry, is introducing new measures designed to reduce excess stock and the amount of cheap BOB Sherry in some export markets.Until now, the same shippping quota (around 36–37% of stocks in recent years) has applied to all producers irrespective of their size and positioning in the market.César Saldaña, general manager of the Consejo Regulador, said, “We are establishing a quota based on the stock rotation of each bodega over the last five years and the structure and the needs of the bodega’s portfolio.”The new quota system will have a range of 22–37% and is designed to give maximum flexibility to the almacenistas (smaller stockholders often offering fine wines), who are likely to be granted quotas at the top end of the scale.

Saldaña stressed that the new quota system would ensure that there would be enough Sherry to supply the market in the future. He concluded: “The effect on prices (due to the surplus stock) is very bad for all concerned in the industry – for Sherry’s image and for margins. The new system may not solve all our problems, but it will allow more reasonable prices.”

Coke cases dropped

Two lawsuits against Coca-Cola Enterprises (CCE) brought about from a number of its bottlers are being dismissed after an agreement was reached last month.The lawsuits regarded a proposed distribution system for Powerade. The legal action was intended to prevent the drinks company from distributing the sports drink to customer warehouses instead of directly to stores. A small test was conducted last year with Wal-Mart stores.Bottlers, seeing this as a threat, brought legal action against CCE last year. Last month, however, an agreement was struck between the bottlers and CCE, under which the company would develop a customer service and distribution system together with bottlers. This system will function in addition to CCE’s current store deliveries. As part of this agreement, bottlers dismissed the two lawsuits that had been filed against CCE.Sandy Douglas, president of Coca-Cola in the US, commented that “the partnership with our bottlers is what makes the Coca-Cola system powerful and unique, and we will work diligently to ensure that we move forward and succeed together.”Hager Rand, the president of the Coca-Cola Bottlers’ Association, speaking to press after the agreement, said that “the entire system should be pleased that we reached a solution which preserves our fundamental strengths, but creates a path to adjust to meet the current needs of an evolving marketplace.”

The system, which is to be developed by CCE and bottling companies, will bring products to customers that require special services.

In the hands of the stars

Swedish Vodka brand Svedka has been acquired by Constellation Brands for US$384 million. The brand, as well as its owner Spirits Marque One, was expected to change hands at the beginning of this month. The brand was launched in 1998, and has now reached sales of over 1m cases per year, with the bulk of sales in the US. The vodka has achieved its success partly as a result of a futuristic and risqué marketing campaign.Constellation already owns a number of other vodka brands, including Effen in the UK.

Guillaume Cuvelier, creator of the brand and founder of Spirits Marque One, will continue to manage the brand, and the sales and marketing team will retain their autonomy. Cuvelier believes that “Constellation recognises Svedka’s unique culture.”

Tawny turnaround

a greater focus is being placed on the tawny Port category by the Instituto dos Vinhos do Douro e Porto (IVDP) in 2007. The institute’s marketing director, Paulo Pinto, explained that this category acts as a driver of value growth, particularly in the UK. He expressed an intention to “generate excitement around tawny that will attract new consumers to the Port market.”

The IVDP’s Port programme for 2007 in the UK will focus on trade and consumer tastings in York, Edinburgh and London. In addition, sommeliers will be educated about various Port styles.

Brewery behemoth?

Reports in the Brazilian press last month about a possible merger between InBev and Anheuser-Busch had a dramatic effect on both companies’ share prices. US brewer Anheuser-Busch’s share price rose 3% to US$52.25, the highest in two years. A merger would result in the formation of the largest brewer in the world.A Brazilian paper, Valor Economico, reported that talks were underway between the two brewers, albeit at a preliminary stage, but did not name any sources for this information. Reuters quoted Andrew Holland, an analyst for investment bank Dresdner Kleinwort, as saying that “Global domination of the beer industry is a prime target for InBev.”

The majority of overlap between the two brewers is in China and the UK, fuelling discussion about the likelihood of a merger. As the drinks business went to press, however, neither brewer had confirmed nor denied the rumours.

On the fence

SABMiller has been paired with the British Olympic fencing team as part of an initiative between 33 FTSE 100 companies and the 33 governing bodies for Olympic sports. The intention behind the initiative is to transfer skills and knowledge to each sport’s governing body.

The partnership between the brewer and British fencing is set to continue at least until the 2012 London Olympics.

© db March 2007