Stateways March-April 2013

StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions

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E D I T O R ��� S N O T E StateWays �� Executive Vice President and Group Publisher Charles Forman Tel: 845-426-6072 Fax: 845-426-6423 Business Is Up; Guess Who Might Ruin It? A email: Editor- in-Chief s I write this we have entered unknown economic territory: the feared ���sequester��� has just kicked in, and it���s looking more and more as if the deep thinkers in Washington have reached a new low in dysfunction. There are some observers who are playing down the potential negative effects, but one thing is for certain: by taking a meat-cleaver approach to cutting $85 billion dollars from the federal budget, most analysts say the country is risking throwing at least 750,000 people out of work within the next six months. Since the economy has been rebounding, albeit at a modest pace, this seriously dumb act is certain to slow that progress. It���s not only the thousands of defense-sector workers who will lose their jobs or be furloughed for prolonged periods, it���s also the hundreds of thousands of workers who keep our civil society functioning, from air traffic controllers, teachers and first responders, to health and safety inspectors, to name a few. And it���s not like these people will just disappear: many will file for unemployment benefits, stretching already troubled state budgets; they will not be paying taxes on the money they are no longer earning, and they will not be purchasing discretionary goods and services with the money they no longer have. Unfortunately, some of those goods will probably be beverage alcohol products. Though our industry was mostly spared during the recent Great Recession, there were disappointing trends, such as the decrease in sales of above-premium and superpremium products and the increase in sales of large-size, value-priced packages. This could easily happen again, if Congress doesn���t come to its senses. Right now, it���s looking bleak. On the other hand, as we point out in our Growth Brands cover story (turn to page 8), the wine and spirits industry has been doing quite well, and our 2012 statistical results underline healthy growth in both sales volume and revenues. Total U.S. distilled spirits sales volume in 2012 rose to almost 206 million 9-liter cases, representing a 3.6% gain versus 2011. And overall spirits retail revenue growth (the combined dollar total of off- and onpremise sales) also increased, by a hefty 5.4% to $72.12 billion, an almost $3.7 billion jump over 2011. This result underlines the fact that a significant part of the increase is produced by more sales activity at the premium and above-premium price segments. The same holds true in the wine segment. Total U.S. wine sales volume increased by 2.7% in 2012, to approximately 320.8 million 9-liter cases, the nineteenth consecutive year of wine sales volume increases, according to Beverage Information Group research. Similar to spirits, the move toward high-end purchases continued in the wine segment, evidenced by the segment���s 3.9% revenue increase in 2012 to $28.9 billion. These positive trends can certainly continue, but we need our elected officials to see the light. Let���s all hope they do. Richard Brandes Tel: 212-353-3832 Managing Editor Jeremy Nedelka email: Art Director Adam Lane Contributing Editor Cheryl Ursin Vice President of Sales, Associate Publisher Anthony Bongiovanni Senior Regional Sales Manager Mark Marcon Senior Regional Sales Manager Debbie Rittenberg Senior Research Analyst Adam Rogers List Rental Manager Cheryl Naughton StateWays is published by The Beverage Information Group, a division of Specialty Information Media Editorial and executive offices are at 17 High St., 2nd Fl., Norwalk, CT 06851 Telephone: (203) 855-8499 Richard Brandes, Editor-in-Chief Fax: (203) 855-9446 e-mail: 4 StateWays I I March/April 2013

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