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Annual Conference Day 1 Wrap Up

Monday, May 18, 2009
George Will Kicks off Conference Presenting Today's Political Argument

Political Columnist and Commentator George Will gave a terrific overview of today's political climate, throwing in several baseball references and quite a few zingers. Mr. Will indicated that with the events in Washington the last eight months, the era of Reagan-Thatcher distant relationship between state and private industry has completely eroded with the Government bailouts of the bank and auto industries. Among the many other topics Will touched on included Social Security and the challenges facing the current system when the baby boomers retire (Americans are living disgracefully long."), the declining participation in income tax, and the future of the Republican Party ("Revival of Republicans can turn on one word: Democrats.")


Beer, Wine and Spirits Executives Discuss Future of Industry

Pennsylvania Liquor Control Board Chairman P.J. Stapleton moderated a panel of some of the leading executives in the industry; Joseph E. Gallo of E & J Gallo Winery, Jim Koch of the Boston Beer Company, and William Newlands of Beam Global. The panel started with a talk on the consolidation of each sector of the industry. Mr. Newlands indicated that whiskey is making a comeback if you look at the recent sales numbers throughout the world, and despite the incredibly large increase in the popularity of vodka. The panelists also talked about how consumers have changed their spending habits, and are looking for 'value' over 'cheap' with most products, and how wine has taken a large hit in on-premise sales. When asked if regulation of alcohol will increase going forward, Jim Koch said regulation is necessary and at its best when done by fair minded intelligent people. When asked about the problem of overconsumption, and how the U.S. needs to avoid having problems similar to those in several European countries, Mr. Gallo said that the industry should continue to educate and encourage right behavior while consuming their products. When asked their thoughts on lowering the drinking age to 18, Mr. Newlands said he didn't think there was much to gain from it, and neither Koch now Gallo condoned it, while calling for more enforcement and education.


Alcohol and Taxes: It's Complicated

Alcohol was one of the first commodities to be taxed in our history, and as the years have gone by it has been a complicated policy to say the least. That was the essence of the first seminar of the conference, Moderated by NABCA Chair Shauna Helfert. Gerry Isenberg of the TTB gave a run down of how the 5010 tax credit has worked in determining tax on alcohol. Jay Maltby of Incubrands Spirits then proceeded to make the case for why the 5010 tax credit puts Control States at a competitive disadvantage, and that guarding this policy helps prevent spirits, wine and beer tax differentials from increasing.


Panel: Alcohol NOT Recession Proof (But it is Recession Resistant)

Renowned industry analysts Kaumil Gajrawala and Danny Brager both said despite the many rumblings in the media today, alcohol is in fact not recession proof, and it is evidenced by the impact of the strains in the overall market and in other sectors of the industry. Mr. Gajrawala of UBS said we have been in an extremely volatile market and industry sales numbers have been down, but we are likely in the 'middle of the U' in the turnaround of the economy and returning to trendlines. Mr. Brager of Nielsen reiterated the notion mentioned in the morning Business Session that consumers are currently seeking 'value' rather than 'cheap.' He also lamented the steep decline of dining (45% of consumers are downscaling their dining experiences) which has caused a drop of on-premise sales for beverage alcohol. He said regarding off premise sales that the dollars are ahead of the volume.


Mark Brown Elected New ISC Chair for NABCA

Sazerac CEO and world renowned 'Industry News Update' editor Mark Brown has been elected as the new chair for NABCA's Industry Steering Committee. John Byrne of Remy U.S.A. was elected the new Vice Chair. The Chair and Vice Chair of the ISC serve three year terms.