Johnson Bros. to Expand Footprint in IN

Last week, news broke that Indiana distributor Monarch Beverage is exiting the wine business as of September 1 [see WSD 05-16-2018]. Picking up the slack is Johnson Brothers, who has confirmed that it has agreed to purchase certain assets of Monarch’s wine business in Indiana, WSD has learned.

This expands Johnson Bros.’s footprint in the state with suppliers like E&J Gallo, Terlato Wine Group, Treasury Wine Estates, Bogle Vineyards, among others. Monarch chief Phil Terry told WSD that Monarch is closing its wine operation because its largest supplier is moving to a wholesaler that can service its whole portfolio.

“This acquisition strengthens our state-wide model, and will enable us to provide even better service to our customers, as well as to our current and future supplier partners,” says Johnson Bros. ceo Michael Johnson.

Johnson Bros. has operations in 24 states. You’ll recall, it recently picked up Mutual Distributing in North Carolina, expanded into New York through a partnership with Nestor Imports, and into West Virginia through a partnership with Mountain State Beverage.

WINEBOW GROUP FIRES BACK IN PALM BAY TRADEMARK SUIT

Earlier this year, Palm Bay International took The Winebow Group (TWG) and its longtime producer partner Consorzio Cooperative Riunite D’Abruzzo (Citra) to court over the rights to the trademarks for “Sheep Thrills” and “Niro” wine brands [see WSD 02-28-2018]. The defendants are seeking to dismiss the suit for lack of subject matter jurisdiction and improper venue, while Palm Bay is offering TWG a way out.

BACKGROUND. The suit was filed after Citra sent Palm Bay a notice of termination of contract effective April 2018 and formed an exclusive US import agreement with TWG. The problem now is who owns the trademarks for the two aforementioned terms. Citra believes they own the rights, and Palm Bay believes it owns the rights. Palm Bay claims it is responsible for the conception of the two brand names, and financed the efforts to grow them. The importer claims it has been filing COLA applications for the brands in its own name, and registered for the federal trademark for Sheep Thrills.

Palm Bay also claims that Citra began working with TWG to file a COLA application for Niro, for which Palm Bay says it owns the US trademark.

MOTIONS TO DISMISS. Since the complaint was filed there’s been a lot of back and forth between the parties. Both TWG and Citra are seeking leave to dismiss the complaint, though for different reasons.

In a letter to the court, TWG’s attorneys say that TWG hasn’t claimed they own the trademarks and that “any dispute with respect to ownership of the trademarks is between [Palm Bay] and [Citra].” Though they do admit that the company filed two COLAs for “Niro,” but has since withdrawn both (one before the complaint was filed and one after Palm Bay pointed out they forgot one).

They go on to say that the trademark ownership claim against TWG is just “a way to improperly seek relief in this court.”

In response, Palm Bay says that if TWG really is willing to not import and distribute any Niro and Sheep Thrills wine brands in the US, then they should file a consent judgement, which would remove them from the case, per court documents. And if they don’t agree to a consent judgment then Palm Bay will amend its complaint to add claims for trademark infringement and unfair competition against both TWG and Citra.

Meanwhile, Citra wants the case to be argued in Italy. The contract between Citra and Palm Bay says that the Law Court of Milan, Italy has exclusive jurisdiction over any contract disputes, according to Citra.

However, Palm Bay claims the issue goes beyond a simple contract dispute and is actually seeking to enforce contractually based trademark ownership rights.

We’ll see how this one shakes out.

MT SUPREME COURT SIDES WITH STATE ON LIQUOR DISCOUNT FORMULA ISSUE

The Montana Supreme Court has reversed the decision of a lower court order that required the state to pay liquor store owners millions in damages, reports the Great Falls Tribune.

The original ruling in 2016 stated that the Montana Department of Revenue had undercompensated state agency stores as much as $3.5 million between 1997 – 2005 due to an outdated discount formula. The judge ordered the agency to pay store owners $14.8 million in damages, $11.3 million in interest and $8.7 million in attorney fees, per the Tribune.

However, the state Supreme Court found that any money lost on the discount was based on the storeowners’ business decisions not the formula. For instance, the agency liquor stores must give a discount to consumers who buy by the case, per state law. Case sales had increased for the store owners, which meant the state received more of their total profits. “Further, whether a store’s unbroken case sales grew, stayed the same, or diminished, is sufficiently attributable to that Agency Liquor Store’s independent business decisions,” writes Supreme Court Justice Laurie McKinnon.

Liquor store owner Mark Kohoutek said he’s disappointed with the decision, but will carry on business as usual.

NH LIQUOR COMMISSION REINSTATES RETAILER SHIPPING

The New Hampshire Liquor Commission (NHLC) has had a sudden change of heart about allowing out-of-state retailers to directly ship wine to residents, according to compliance experts at Compli. The NHLC decided after all that it will reinstate retailer shipping permits, and begin accepting new ones. Compli says the NHLC will be sending out letters next week to retailers whose permits were denied inviting them to reapply.

Recall, The NHLC began denying out-of-state retailers shipping permits earlier this year, despite the fact that the state legislature killed a bill proposing to ban out-of-state retailers from shipping to NH consumers [see WSD 03-08-2018].

WSD BRIEFS:

HALL & WALT WINES LAUNCHES NEW BACA BRAND. Hall & Walt Wines announced the launch of Baca Wines, a new California Zinfandel brand. Baca Wines, which is Latin for berry, will release four zinfandels to start including 2016 Baca “Cat’s Cradle” Zinfandel, 2016 Baca “Tug O’ War” Zinfandel, 2016 Baca “I Spy” Zinfandel, and Baca “Double Dutch” Zinfandel.

CAORUNN GIN UNVEILS NEW BOTTLE IN US MARKET. The new Caorunn gin bottle’s pentagonal shape is representative of the five natural Scottish botanicals that surround the distillery. Crafted from extra white Flint glass, the sleek new bottle is aimed to appeal to a new generation of gin drinkers, per a release.

Until tomorrow,
Your Editors

Emily Pennington – emily@winespiritsdaily.com
Sarah Barrett – sarah@winespiritsdaily.com

“There is no influence like the influence of habit.” — Gilbert Parker

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