It's time again to channel our inner Miss Cleo and make our predictions for 2018. You can find a trend prediction story online to validate just about any decision you want to make this year, so we're mostly focusing on our specialty: strategic moves.
WHOLESALER CONSOLIDATION. We think the formation of Southern Glazer's and Breakthru in 2016 kicked off an era where we will see consistent wholesaler consolidation as the larger distributors look to spread from sea to shining sea.
MORE MARIJUANA, IN EVERY SENSE. Recreational marijuana is officially legal in California (which is a huge deal). There's a lot of red tape to be sorted out, but the industry's development looks very similar to alcohol at this point. This Washington Post article is a great primer.
We also believe it's wishful thinking to say marijuana won't affect alcohol consumption. (We believe it will. If you don't believe us, ask the young people you know.) As a result, we expect another one or two marijuana investments from our industry -- though they may not be widely publicized.
AMAZON WILL NOT BUY TARGET. The internet has been abuzz the last couple of days after analyst Gene Munster suggested Amazon might buy Target Corp. While we do agree that Target would be a good score for Amazon in the future, we don't see it happening in 2018.
Gene suggests Target would be worth about $41 billion, or 8% of amazon's current $564 billion market cap. Target would be its largest acquisition ever, surpassing the $13.7 billion acquisition of Whole Foods. Check out this infographic of Amazon's big acquisitions in the last 10 years, most of which are under $1 billion. Target doesn't seem like it would follow the pattern for 2018.
Could it happen in the future, MAYBE, but we're not betting on for 2018.
MOVEMENT IN INTERSTATE SHIPPING CASES. The interstate shipping issue has been a hot topic since at least 2015, but it wasn't until 2017 that we saw multiple legal disputes over the topic. All of the current cases are still in the lower court system, but we expect there will be some decisions made next year, and likely some appeals to follow regardless of who comes out on top.
GROWTH IN EXOTIC IMPORT WHISKEYS. Whiskey is so popular right now everyone wants in on it, and as a result, we're seeing a flurry of new import whiskies from places like Ireland, France, India and Japan. We expect there will be even more of entrants from exotic countries over the course of the next couple of years.
FLAVORED VODKA/WHISKEY SLOW DOWN. While import whiskeys grow, we expect both flavored whiskey (and flavored vodka) sales to slow. It seems like their time is winding down. See Ohio story below for sign of the times.
TERROIR CAPITAL WILL BE SOLD. You'll recall, last year Terroir Capital's founder Charles Banks was sentenced to four years in prison for wire fraud. The fate of Terroir Capital, parent company of Agharta, Leviathan, Fable Mountain Vineyards, MulderBosch and Qupe, among others, is not clear at the moment. Charles already sold off his share in his Mayacamas business, and we'd be willing to bet his stake in Terroir Capital will be sold as well.
WHISTLEPIG WILL BE SOLD. This one seems like it's been a long-time coming, and we imagine there are a lot of takers if they decide to go that route.
What do you think will happen in 2018? Send your predictions to firstname.lastname@example.org
MASSACHUSETTS' TASK FORCE UNVEILS "RADICAL" OVERHAUL TO STATE'S ALCOHOL LAWS
A few days before 2017 came to a close, a government appointed Massachusetts task force unveiled a proposal to overhaul the state's alcohol laws and regulations, as reported by sister publication Beer Business Daily.
The recommended measures "represent the most extensive official rethinking of alcohol rules in Massachusetts since many were put in place at the end of Prohibition in 1933," reports The Boston Globe.
Indeed, the measures were outlined in a 288-page report. We won't bore you with all the recommendations, but there were a few that are noteworthy including:
A 50% hike on state excise taxes. "For beer, the task force recommends increasing the tax to 16 cents a gallon, from 11 cents; to 82 cents a gallon on wine, from 55 cents; and to $6.07 a gallon on liquor, from $4.05," writes the Globe.
The task force also touched on cross-tier ownership, recommending that the state "ease the prohibition on alcohol producers, distributors, and retailers owning other licensed businesses outside of their segment of the industry." So one tier, for example, could own up to 10% of another.
Other interesting proposals: "abolish the limit on the number of alcohol licenses grocery store chains can hold, allow bars to accept out-of-state photo IDs, and permit brew pubs to sell beer through other retailers."
Now its up to the state legislature to determine if any of the proposals become law.
"For all the work that the task force and working groups put in, they don't have the power to simply change anything," said Bob Luz, president of the Massachusetts Restaurant Association. Indeed, all of the measures put forth by the task force will have to get the thumbs up from the legislature to move forward. Those approvals won't come easy, Bob acknowledged: "we've got a long row to hoe."
OHIO NIXES 700 SPIRITS OFFERINGS IN 2018
The state of Ohio is starting off the year by cutting off about 700 spirits brands "to free up shelf space for more popular products as well as new-to-market products," per the Dayton Business Journal.
You may recall, Ohio--one of the largest control states in the US--is working on overhauling its alcohol system after the implementation of a new alcohol tracking software went off the rails last year resulting in millions of dollars in late payments to suppliers [see WSD 05-03-2017].
The full list of "Last Call Items" can be found here, but what caught our eye is the high number of flavored products on the list. And not just vodka, but flavored products of all varieties will no longer be available in the Buckeye State.
ROYAL DUTCH DISTILLERS TO IMPORT CHERRY HEERING. RDD, the US subsidiary of De Kuyper Royal Distillers will be the exclusive importer and sales and marketing arm for the cherry liqueur. 2018 marks the brand's 200th anniversary, and RDD will be launching a new marketing campaign to mark the occasion, as well as releasing a special product or two. Cherry Heering will join Rutte Gins and Genever, Mandarine Napoleon, Italicus Rosolio di Bergamotto, Half Hitch Gin and ChocoVine in the RDD portfolio.
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"The hardest things for human being to do is to know themselves and to change themselves." -- Alfred Adler
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Today's Sell Day: 3
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