Alcademics.com

Shelling Out for the Top Shelf

Oooh busted! I'd heard that it was common practice in nightclubs to pay for placement on the top shelves but I don't think I knew that it was illegal. 

Nearly all the top liquor companies got busted and fined for violating the "slotting fee" prohibition at Harrah's (through a third party). According to the TTB:

The allegations of tied house violations stem from the companies' participation in the 2008-2009 Harrah's Nationwide Beverage Program. The TTB investigation, which focused on activities in the Las Vegas area, alleges that the companies collectively furnished nearly $2 million in inducements through a third party to Harrah's Entertainment's hotel and casino subsidiary corporations during the two year period of the program. TTB alleges that the purpose of these inducements was to obtain preferential product display and shelf space (also known as slotting fees) at Harrah's Hotels and Casinos.

Payment of slotting fees by an alcohol beverage supplier to an alcohol beverage retailer is an unlawful marketing inducement which creates an artificial barrier to open and fair competition especially for small to medium-sized companies that cannot pay such fees.

As a part of the settlement agreements, each company denied violating any laws or regulations.

The companies and their offers in compromise are:

Diageo North America, Inc. - $650,000,
Pernod Ricard USA, LLC - $300,000,
Moet Hennessey USA, Inc. - $275,000,
Bacardi USA- $262,500,
Future Brands, LLC- $250,000, and
E. & J. Gallo Winery - $225,000.

This makes me wonder who the third party is...

More information from the Wall Street Journal:

Federal law dating to the post-Prohibition era prohibits makers of beer, wine or liquor from paying slotting fees to retailers and other outlets. The rules were designed to prevent anticompetitive practices that were seen by regulators as commonplace prior to Prohibition.

Food manufacturers are permitted to pay such fees to gain shelf space at supermarkets.

On one hand, the practice is sketchy. On the other hand, food brand owners get to do it so why should booze be any different?

 

New Products from Beam: Devil's Cut, Rose Cognac, and a Twelve Dollar 100% Agave Tequila

I wish all the major spirit companies would do this: Instead of being contacted by a million different PR agencies, I sat down with a Beam Global employee and she took me through some of the new product launches for Beam's brands over the next half a year. 

Beam has partnered with Thatcher's Organic Liqueurs so we may be seeing those around more. They're pretty low in alcohol level so I think they'll be more for home consumers than for bartenders. Of the ones I tried I think the apple-ginger one has the most potential.

Jim Beam is releasing the "Devil's Cut" in July/August. A play on the angel's share (the alcohol that evaporates through the barrel), the devil's cut is the bourbon that is trapped absorbed in the wood when the barrel is emptied. Apparently they've developed a way to get some of this whisky out. (Chuck Cowdery gets the info here.) They add a touch of this devil's cut to six-year-old Beam (with the same mash bill as their four-year-old) and release this product at 45% ABV.

I sampled the Devil's Cut and found it to be light bodied like regular Beam, but definitely a lot more woody. Not so much caramelized vanilla, but raw wood.

Knob Creek Single Barrel is just regular old Knob Creek but unblended and sold at 60% ABV instead of the usual 50%. The one I tried tasted like Knob Creek, at higher proof.

Courvoisier Cognac is coming out with a Rose' - a blend of cognac and wine. Sounds to me like it's a Pineau des Charentes but I don't know enough about it yet. Courvoisier continues to release new products - last year saw the launch of a 12-year and a 21-year bottlings. Finally cognacs are getting creative.

Sauza is launching a 100% agave tequila called Sauza Blue for  $11.99 and $13.99  $18.99 (the product was just released at this price- must have changed since speaking with me), in time for Cinco de Mayo. Sauza is usually a mixto, whereas their other lines - Tres Generaciones and Hornitos are 100% agave.

I think this is a pretty significant event, because:

• While 100% agave tequilas are growing even in the bad economy, the cheaper mixto tequilas are actually selling less. It seems Sauza is acting on this.
• We're currently in an agave glut, but the price of agave must be super low to offer this for twelve bucks. Will it be sustainable?
• 100% agave tequila must be bottled in Mexico, whereas mixto tequilas are usually trucked to the US and bottled there. Because Sauza is the #2 selling tequila their production is so big that they added an additional bottling line in Mexico to handle the bottling volume of this product.

So between Cuervo launching the 100% agave Tradicional Silver in the US ($24) and this 100% agave Sauza, things are moving in the right direction.

Ilegal Infusions: The Word Gets Out

For the past month or so, San Francisco bars have been in a panic as the ABC (Alcoholic Beverage Control) decided to crack down on a few bars for having infusions. These, it turns out, are technically illegal in California, as are homemade bitters, tinctures, and liqueurs like limoncello.

I decided it was best not to share this information with too many people, as maybe it's best the ABC doesn't know that half the bars in the city- including all the best ones- have some form of rectified spirits on the menu. But today the Chronicle put forth the news in a story that is now online.

Reza Esmaili, president of the Northern California chapter of the United States Bartenders Guild, estimated that half the bars in San Francisco serve them.

So there we have it.

Why are they illegal? Here's why, from the same Chronicle story:

Infusion confusion

Bars and restaurants can mix and muddle drinks and serve them right away to customers, according to the state Department of Alcoholic Beverage Control. But they cannot engage in "rectification," which the agency defines as "any process or procedure whereby distilled spirits are cut, blended, mixed or infused with any ingredient which reacts with the constituents of the distilled spirits and changes the character and nature or standards of identity of the distilled spirits."

Bay Area bartenders say infused spirits typically take a few hours to a few days to take on the flavor of the fruit, vegetable or herb that is placed in the alcohol. They said the law could affect not only infusions but house-made tinctures, bitters, syrups and liqueurs.

Obviously, this is problematic. As one bartender said to me, "So the ABC thinks it's better to have artificially-flavored Sour Apple Pucker on the menu than apple-infused vodka?" Yep!

The law was written not to promote bad drinking but to protect consumers. It's the same law that prevents you from cutting Grey Goose with 50% water and putting it into a Smirnoff bottle to sell. You're supposed to know what you're getting.

There are also health concerns- will all that stuff floating in the jar spoil and make you sick?

Though the law is on the books with good intentions, it is very much out of date and out of touch with where cocktails are today. (Cocktails are a cuisine.) Possible solutions to this problem might include:

• Having any bar that serves infused or otherwise rectified products take a food safety course or certification program. Whether this would be for all bartenders, just the bar manager, or just the one person assigned to the rectified spirits could be determined later. This would take care of the food safety issue.
• Insist on clear menu labeling for rectified spirits, such as starring menu items and listing a footnote at the bottom of the menu that states, "This cocktail includes rectified spirits such as infused fruits or spices, which alters the flavor and may lower the proof of the base spirit." This would take care of the consumer warning issue. 

Regardless, the current laws on the books will likely take years to change, if they change at all. In the meantime the illegal state of rectified spirits such as infusions and sorta-not-really prosecution status for them allows for inconsistent and/or discriminatory enforcement of the law.

Energy Drinks and Alcopops

I enjoyed reading this long article on alcoholic energy drinks, written by Kit Stolz for the Ventura County Reporter.

After reading the long report about the sales, marketing, and consumer base of "alcopops" - caffeinated energy drinks- it seems to me that these are more like modern-day wine coolers, in a modern day world where young people probably consume five times as much caffeine as they did in the 1980's when wine coolers were all the rage. I'm not so sure that people who were sneaking Bartles & James peach coolers in high school should be rallying to ban Rockstar 21.

Here are some really great quotes from the story.

A counselor in San Diego gave a presentation to some teachers at a middle school, and went out at lunchtime and counted 12 students with alcoholic energy drinks. They didn’t need to conceal it because the adults didn’t even know these drinks existed.”

I think this is a very valid argument for better labeling of energy drinks- a big fat government warning sticker "Contains Alcohol" on these drinks wouldn't be such a bad thing, and would help adults and store owners better identify which items contain alcohol and which do not.

Now, about making them illegal entirely:

Under federal law, manufacturers must show that any substance deliberately added to a food or beverage sold in the United States must be “generally recognized as safe” (a standard known as GRAS). Mosher doubts that alcoholic energy drink manufacturers will be able to meet that test.

 “Under FDA rules, manufacturers have to establish before they put additives in any food or beverage that the products are safe,” he said, “But all the scientific studies we have seen say that it’s not safe.”

Mosher points to a study published last year by a doctor at Wake Forest, Mary O’Brien, which showed that college students who consumed alcoholic energy drinks had “a significantly higher prevalence of being taken advantage of sexually, taking advantage of someone else sexually, riding with a drunken driver, or being physically injured,” even in comparison to those who drank alcohol, but without caffeine.

I think this argument is weak and wrong. Separately alcohol and caffeine are regulated and approved, so is adding one to the other an unsafe additive? I think not. Nobody (yet) is advocating banning the combination of Red Bull and Vodka (or the Irish Coffee for that matter) when mixed together from separate containers. Putting them together in one drink seems efficient, if often a bad idea.

This I didn't know:

In a 2007 report for the Marin Institute, he and a co-author revealed that alcoholic energy drinks such as Tilt, Rockstar 21, and Sparks cost about 25 percent less than comparable nonalcoholic energy drinks such as Rockstar Juiced, Lost Energy and SoBe Adrenaline Rush.

But seems to support my existing belief that energy drinks are horrendously overpriced.

I think I am coming to the conclusion that more dramatic warning labels may be needed for alcopops, but I don't support a ban on them. The idea that these products are marketed to "children" I think is off-base. Can you say that extreme sports are marketed to children, or are they an adult activity that's exciting to younger people? Energy drinks in general take their marketing cues from extreme sports (heck, even Gatorade does) and so I think it's not exactly fair to claim that they're going for underage drinkers specifically. Maybe if there was an alcoholic energy drink that was labeled "Extreme Algebra" my opinion would change.

Overall you don't need to tempt underage people to try alcohol; they'll go out of their way to find it for themselves. The reasons for that have nothing to do with the existence of alcopops.

What do other people think? Are alcopops really a problem at all? Should we change the labeling, tax them as spirits (as a lot of legislation proposes), ban them outright?

Alcohol Abstinence Education

Recently in the news, a 16 year old kid apparently died of excessive alcohol consumption at a party. (The autopsy is not complete, could have been other things in his system.) First the police locked up the party host who threw the event while his parents were away. Now they're trying to find who purchased the alcohol to prosecute that person as well.

While I agree the alcohol-purchasing person should probably be fined, chances are he or she will be charged with involuntary manslaughter or something else awful. Personal responsibility be damned, let's blame someone else.

I think that the current state of alcohol education encourages binge drinking, and is the equivalent of abstinence-only education for sex. It doesn't work because it creates an all-or-nothing model of a pleasant act. After you turn 21, or after you get married, booze and sex is awesome! Before, you are not allowed to even learn about it. It's great, but we can't tell you anything about it.

I am particularly perturbed by alcohol brand websites. All of them require you to enter your birth date or click to prove you're 21 years of age. That means in order to learn about, say, the history of a brand or person behind a brand, you need to be old enough to drink alcohol. Why? These sites already promote responsible drinking within the site- it's not like you click through and they instruct you how to drive a car with a six-pack in your lap. And how would reading drink recipes on these sites encourage underage drinking? I can read about how to drive a backhoe, but since nobody will give me a backhoe there's no danger of me scooping irresponsibly.

I understand that these age restricted sites and alcohol abstinence education in general are what everyone has to do to avoid being sued. (Websites are basically ads for the brand, and ads showing people having fun with the addition of alcohol are against the current industry advertising policy.) But I also think that these policies prevent people from learning about alcohol and its role in history and culture- things that would make it seem a lot less glamorous and exotic.