Senate Reintroduces Tax Bill to Extend FET Reduction

Federal excise tax reduction is back on the agenda in Congress. The Craft Beverage Modernization and Tax Reform Act (CBMTRA) was reintroduced in the US Senate today by Senators Ron Wyden and Roy Blunt. Now they’re looking to make the tax relief permanent or at least extend it.

You’ll recall, the CBMTRA passed as part of a larger tax bill at the end of 2017. But it’s set to expire by the end of 2019. As a refresher, the details include:

— For distillers the tax rate will drop from $13.50 to $2.70 for the first 100,000 proof gallons.
— For wineries the tax rate will be 90 cents per gallon on the first 100,000 gallons.
— For brewers the tax rate will drop from $7 to $3.50 on the first 60,000 barrels.

TRADE GROUPS SHOW SUPPORT. “The Craft Beverage Modernization and Tax Reform Act enhanced our industry’s ability to contribute even more by channeling tax savings into purchases of new equipment, additional employees, increased wages, expanded distribution, and facility enlargements,” says WineAmerica president Jim Trezise, adding “We are deeply grateful for the original legislation, and respectfully urge that it be made permanent.”

“Without a doubt, CBMTRA is having the intended positive effect on wineries all over the country,” says Wine Institute chief Bobby Koch.

“Making this legislation permanent would provide stability for distillers in moving forward to generate new jobs and support local agriculture and tourism,” says Distilled Spirits Council ceo Chris Swonger.

“Federal excise tax reform has dramatically helped to stimulate craft spirits growth, and a permanent relief is critically important to securing the future of our industry,” says American Craft Spirits Association ceo Margie Lehrman.

We’ll have more as this legislation progresses.

US, UK INK POST-BREXIT TRADE AGREEMENT PROTECTING WINE AND SPIRITS

The US and UK signed two agreements earlier this week covering wine and spirits to “ensure there is no disruption of trade” whenever the UK leaves the European Union (aka Brexit), per a release from the office of the US Trade Representative.

The agreement on wine includes commitments regarding wine-making practices and labeling requirements. The agreement on distilled spirits continues recognition and protection of bourbon, Tennessee whiskey, Scotch whisky and Irish whisky designations.

“Ensuring that our flagship spirits exports – bourbon and Tennessee whiskey – will continue to be protected provides our companies much-needed assurances as the UK negotiates its departure from the EU,” says Distilled Spirits Council chief Chris Swonger in a release.

The UK and EU are still in negotiations about transition periods and trade between them moving forward. Currently the UK is slated to officially leave the EU on March 29, 2019 whether or not the two reach an agreement.

NIELSEN CGA: TIME AND LOCATION DICTATE MOST POPULAR COCKTAILS

The margarita continues to reign supreme as the most popular cocktail on-premise, with more than half of consumers (56%) saying that’s their cocktail of choice, according to the recent Nielsen CGA On Premise User Survey.

The top five cocktails on-premise across the US are: (1) margarita, (2) martini, (3) old fashioned, (4) mimosa, and (5) Moscow mule.

However, the time of day and region affects what’s most popular and even what consumers are willing to pay.

For instance, in the morning (6am-12pm) mimosas and Bloody Marys are the top ordered cocktails. It’s also a key time for non-alcoholic cocktails such as Virgin Marys and skinny margaritas, which are showing growth in the on-premise. Regardless of the time of day, 21-34 year olds are driving the non alcoholic trend, with 16% saying they would drink a non-al cocktail if available, according to Nielsen CGA.

Looking at price, the average price of a cocktail across the US sits at $9, which Nielsen CGA notes is just below what consumers say they are willing to spend on a standard cocktail, which is $9.48. But in New York and Chicago the average prices are higher at $11 and $11.95 per cocktail, respectively.

Moreover, consumers are willing to spend more the later it gets. In the evening (6pm-12am) and late night (12am-6am) time frames, the average price paid per cocktail is $9.75 and $10, respectively. Comparatively, in the morning and afternoon consumers spend $8-$8.50 per cocktail.

“Outside of margaritas and martinis, there is significant variation in consumer preference across all markets, demonstrating the importance of customizing what is offered across regions to meet consumer demand….a blanket menu will not maximize sales in the way a more individual menu would,” per the report.

MAINE WHOLESALER TAKES WX BRANDS TO COURT

Last month, Maine wholesaler South Portland Wine Co. (SoPo) filed suit against WX Brands for allegedly attempting to “wrest” the Bread & Butter brand from them, and violating the state’s franchise laws.

In its complaint, SoPo claims that WX Brands approached the wholesaler asking if it would be willing to negotiate the release of Bread & Butter, but they refused. As SoPo tells it, once they refused WX imposed price increases, slowed shipments, and made “unfounded accusations” of poor service.

Moreover, SoPo claims WX has “engaged in other subterfuge” by making a “new” brand with an “imperceptible” change to the Bread & Butter label as a way to sidestep the state’s franchise laws, according to the complaint.

You may recall, WX Brands purchased the Bread & Butter brand from Alcohol by Volume in 2017 [see WSD 04-05-2017]. We reached out to WX Brands for comment but the company said it does not comment on pending litigation.

We’ll have more as the case progresses.

WSD BRIEFS:

WINEBOW EXPANDS DISTRIBUTION OF ROMBAUER VINEYARDS INTO FL. Winebow has expanded its distribution agreement with Napa Valley’s Rombauer Vineyards to Florida. Winebow now distributes Rombauer in seven states (FL, CT, GA, NJ, RI, VA and DC). The Rombauer wines now available in Florida include Carneros Chardonnay, Napa Valley Sauvignon Blanc, Napa Valley Cabernet Sauvignon, Napa Valley Cabernet Sauvignon – Diamond Selection, Napa Valley Merlot and California Zinfandel.

COPPER & KINGS LAUNCHES TWO NEW GINS, The History of Lovers and The Ninth. The History of Lovers is a pink rose gin and The Ninth is a blood orange gin finished in Destillare Orange Curacao barrels. Both are bottled at 90 proof and available for approximately $35 a 750 ml.

M.S. WALKER BRINGS GARNISH ISLAND GIN TO US. Garnish Island Gin is a small batch gin from West Cork Distillers in Ireland and made by master gin distiller Deirdra Bohane. It is now available in the US with a suggested retail price of $27 a 750 ml.

ZAYA GRAN RESERVA RUM REVAMPS PACKAGING. Zaya Gran Reserve Rum, imported by Infinium Spirits, is now sporting a new look. The bottle pays homage to Trinidad and Tobago, where it’s produced, with imagery of the country’s national flower and bird, as well as new teal accents and in a slimmer, sleeker bottle, per a release. The new packaging is available now at select retailers nationwide for approximately $30 a 750 ml.

EASTSIDE DISTILLING LAUNCHES REDNECK RIVIERA GRANNY RICH RESERVE. Granny Rich Reserve is a blend of traditional corn whiskey, aged at least three years, blended with American single malt, aged at least four years, and it’s bottled at 86 proof. The brand pays homage to John Rich’s grandmother. John worked with Eastside to create and promote Redneck Riviera. Granny Rich Reserve is shipping now through Republic National Distributing Co.

LOT 18 PARTNERS WITH PLAYBOY TO CREATE RED WINE BLEND. The Playboy California Red Wine is a limited edition wine in celebration of Playboy’s 65th anniversary, per a release. The label includes the iconic Playboy Bunny costume. The wine is available online only at Lot18.com.

Until tomorrow,
Sarah

“To be or not to be. That’s not really a question.” – Jean-Luc Godard

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