Monday, January 21, 2013

Australia: Health curbs on alcohol mooted


Source: The Australian
by: Christian Kerr
January 21, 2013

HEALTH activists are seeking public funds to lay the groundwork for bans on alcohol advertising, minimum pricing of alcoholic drinks, restrictions on certain foods and to push the case that alcohol causes cancer.

A freedom of information document reveals the Australian National Preventive Health Agency was approached for grants last year to fund projects that examined "What is the public support for regulating the food supply", "Understanding and engaging community and policymaker support for alcohol supply control policies and practices", and "Preparing the public interest case for minimum pricing of alcohol", among others.

The document does not specify if the applications were approved.

Tim Wilson, a policy director at the Institute of Public Affairs think tank, who lodged the request, said the list betrayed a bias towards taxing and regulating away personal choice rather than promoting responsible behaviour.

"Public health activists seem intent on reinventing every policy used against smoking to now target food and alcohol choices because they can casually be linked to cancer," he said.

"When activists want to test the public's preparedness for wartime rationing policies, you've got to wonder whether they understand that we live in a free society that respects individual choice."

Opposition preventive health spokesman Andrew Southcott echoed his remarks.

"We know that quitting smoking, drinking within recommended guidelines and maintaining a healthy weight and lifestyle are important," he said, "but the opposition's first response is always to encourage personal responsibility."

Dr Southcott praised the efforts of private health insurance funds to encourage healthy lifestyles.

"We prefer voluntary codes of conduct over more nanny state regulation," he added.

Michael Keane, an adjunct lecturer in public health at Monash University and an adjunct associate professor at Swinburne University, warned against what he called the established ideology in public health.

"I would be concerned by the potential focus on bureaucratic edict and prohibition," Dr Keane said. "An attempt should be made to engage the widespread community concern at the lack of personal responsibility that appears to dominate contemporary public health thought.

"As a matter of urgency, further research grants should be targeted to investigate what effect the public-health-promoted mass abrogation of personal responsibility is having on the equilibrium of forces which affect behaviour and the effect that this potentially has on the fabric of our society."

The Australian was unable to contact ANPHA for a comment.

The economic impact of alcohol


Voters weigh in on local option elections; Danville prospered from sales

Source: The Independent
Carrie Stambaugh
Jan 20th

In the last decade, local option elections have taken place in nearly every corner of the state with communities voting, more often than not, to allow or expand alcohol sales rather than to limit or prohibit them entirely.

The driving force behind the trend is economic. Most proponents of allowing alcohol sales view the move as a way to make their community more attractive to new and old businesses while helping to create what economists call a positive "balance of payments," meaning more dollars are spent in the community than outside it.

According to the Kentucky Department of Alcohol Beverage Control, there were 188 local option elections from 2002 through 2012 - 113 of which were approved by voters. Only 87 local option elections took place statewide in the previous two decades.

This surging tide of alcohol expansion does not appear to be receding anytime soon. A number of local option elections are already on tap in 2013, including two in northeastern Kentucky.

On Tuesday Greenup County voters will decide whether to go wet, while Ashland residents in two downtown precincts will vote on Sunday sales in restaurants on Feb. 26.

A third local option election in a single Grayson precinct was slated for last week but was called off after the petition that led to the election was invalidated. However, another petition is already in the works to put city-wide alcohol sales on the ballot. In addition, there are unconfirmed reports that a petition is being considered in Boyd County seeking Sunday sales there, too. Organizers are reportedly waiting on the results of Ashland's vote.

In all three counties, proponents for allowing alcohol sales cite economic development as their motivation. Opponents call it a hoax.

Locally, many opponents point to the city of Russell as proof there is no guaranteed alcohol sales will spur development. Russell approved liquor by the drink sales in restaurants back in 2008 but, to date, not a single business has applied for a license to sell it despite proponents claims it would make the city attractive to new restaurant development.

Other cities, though, have seen positive results quickly.

DANVILLE

In Boyle County and the city of Danville, which expanded alcohol sales to seven days in mid-2009 and then went completely wet a year later, the results have been indisputably positive for the local economy.

Regulatory fees, amounting to more than $1.2 million from June 2010 through August 2012, flowed into city coffers. Local payroll and business taxes also increased, tripling expectations.

 Last year, the city of Danville finished the year with $1.8 million in surplus funds, due in large part to expanded alcohol sales, officials there said. Three new police officers and two new code enforcement officers have also been hired because of alcohol proceeds, according to the Advocate Messenger in Danville.

Alcohol-related crimes including DUIs, alcohol-related collisions and alcohol intoxication arrests  have remained in line with historical averages.

Jody Lassiter of the Danville-Boyle County Economic Development Partnership said overall the decision to allow broad sales of alcohol in Danville has been good for the town of more than 16,200 residents.

"In Danville's case, the results are evident, not only with what we've documented in revenues but the business development that has taken place."

The move had broad public and city support, following a comprehensive study conducted by an Alcohol Sales Task Force, which examined the issue strictly from a commercial expansion and tourism development standpoint, and made recommendations based on its findings.

The study found limitations to alcohol sales was not only taking dollars out of town but preventing new businesses from locating in Danville and hampering the growth of existing ones.

At the time the alcohol sales study was commissioned, the city of Danville allowed alcohol sales by the drink in establishments seating a minimum of 100 individuals with 70 percent of gross receipts from food sales Monday through Saturday. Much like Ashland, however, sales were only happening at big box chain restaurants located outside of the downtown area on the bypass road, said Lassiter.

"Our objective from an economic development standpoint was to open up some options for downtown businesses," Lassiter said.

Through the study, officials learned that not only were Danville's historic downtown structures not able to immediately accommodate 100-seat restaurants to meet the requirements for a licenses but the cost to reconfigure the buildings was "prohibitively expensive." Furthermore, it found that the 100-seat restaurant was not necessarily "an economically viable business model." Most restaurants wanted to start small and grow larger. Alcohol sales, the study found, are also more profitable than food and often generate the revenue needed for small restaurants to offset losses in their first years.

Based on those findings and many others, the task force recommended the city go wet in order to encourage smaller bistro and cafe-style businesses to locate in the downtown central business district.  It also recommended the city commission take action to allow Sunday sales. 

Sunday sales allowed existing businesses to immediately capture dollars originally spent out-of-town on that day and instantly allowed officials to attracted new entertainment events like a large golf tournament and new festivals, said Lassiter.

"We were just missing out, with what is today is a seven-day, 24-hour economy,"?explained Lassiter.  "The only way for us to crack that nut was to get the six bar licenses that became available by going wet."

Two years out, he said, all six of those licenses are being used by small, locally owned businesses. Not one is being used for a traditional bar, said Lassiter.

"It has also brought other businesses in who want to take advantage of what is a growing buzz in downtown, no pun intended," added Lassiter, listing them. There is a women's accessories boutique, a tea shop and a confectionary among them.

In Danville, as in other "wet" or "moist" communities, the bulk of alcohol sales are package sales of liquor and beer. From June to August 2012, package sales accounted for $3.9 million in sales compared to by the drink sales of just more than $481,300.

Two other Kentucky communities that have made the switch from wet to moist in recent years are also reporting instant growth. Most of it from package stores as well.

In western Kentucky, the city of Calloway went wet in November 2012. It previously had been "moist."  Signs of growth are already showing there, too, said Mark Manning, president of Murray-Calloway Economic Development.

"It has had an economic impact. A lot of dollars that had been going out of the community are now being spent in the community and it is bringing in some dollars from outside," said Manning.?He added the changes haven't been fully implemented yet, but there are plenty of applications pending for package stores and establishments hoping to sell alcohol by the drink without the burden of quotas for food sales.

The city of Corbin went wet last February. Already two new package stores have opened and a third is under construction, according to economic development folks there.

Caricom rum producers in talks with US officials


Source: Guardian
Monday, January 21, 2013

Caribbean Community (Caricom) rum producing countries are holding high-level talks with the United States on resolving issues surrounding the rum industry in the region, Prime Minister Freundel Stuart announced. A government statement said that Prime Minister Stuart made the announcement as he addressed a ceremony unveiling a commemorative plaque for Mount Gay Distilleries' New Aging Bond earlier this week.

Stuart said the discussions, which are also being attended by officials from the Dominican Republic, were necessary since, within recent time, subsidies had been given to rum producers in the United States Virgin Islands and Puerto Rico, much to the disadvantage of Caribbean rum producers. He said the situation is so serious that Barbados is prepared to take its case to the World Trade Organization (WTO) if a solution is not forthcoming.

"The Government of Barbados has had to take a stand on this issue, and under my instructions, the Ministry of Foreign Affairs and Foreign Trade communicated with the US Government on this issue.

And, of course, very recent discussions have taken place between Caricom countries, the Dominican Republic and the United States Trade Representative with a view to addressing the more pressing concerns of rum producers, not only here in Barbados, but in other parts of the Caribbean, and, of course, in the Dominican Republic," he said.

Stuart said Caricom was not going to "relapse its vigilance" on the issue. "We are not about to relax our persistence on this issue. We do not intend to allow rum producers in the Caribbean to be so severely disadvantaged by this market distortion which has resulted from these overwhelming, if I may use that word, subsidies being extended to producers in the US Virgin Islands and Puerto Rico."

Last month, the Caricom Council for Trade and Economic Development (Coted) said the region continues to have "serious concerns" regarding the competitiveness of Caribbean rum in the United States. "In addition to being the largest agriculture-based export industry in Caricom, the rum industry is a substantial employer and a major contributor to foreign exchange earnings and government revenues," Coted said.

Caricom Secretary General Irwin LaRocque said the rum issue, involving Diageo, the global rum producer, continues to "threaten Caribbean rum into the US market, and the leaders agreed that strong and urgent political intervention was needed to address that issue.
"There is a concern with regards to some subsidy that is being provided for Diageo, the multilateral and one of the largest rum producers which is currently located in St Croix in the US Virgin Islands," said LaRocque.

 "Last August, the UK-based Diageo reportedly warned that should Caricom mount a complaint to the WTO over the alleged subsidies it would "re-evaluate" its Caribbean interests.

Pennsylvania: Private group to advocate for privatizing Pennsylvania liquor stores


Source: PITTSBURGH TRIBUNE-REVIEW
By Brad Bumsted
Friday, January 18, 2013

A fledgling coalition of citizens, businesses and groups supporting liquor privatization will announce next week a push for the state store divestiture plan GOP Gov. Tom Corbett soon will unveil, a leading advocate said today.

What's been missing in the debate is the public's voice - reflected in poll after poll - showing support for getting rid of the state stores, said Charlie Gerow, a Harrisburg-based Republican consultant. All lawmakers hear from now are special interests opposed to selling the state stores - primarily unions supporting state store clerks, he said.

A Philadelphia Inquirer poll in October showed 61 percent of Pennsylvanians favor sale of the state stores.

"This is to give the issue the citizens' push it's been lacking," Gerow said. He declined to name people who will be part of the coalition. Gerow is not under government contract on the issue.

Legislation to allow the state to sell the liquor stores could not get through the House last year despite support from House Majority Leader Mike Turzai, R-Bradford Woods. Turzai repeatedly tried to line up the votes. At that point, Corbett was not pushing it.

"I believe we're going to see liquor privatization in 2013," Gerow said. "I equally believe Gov. Corbett's leadership is essential to that happening."

Corbett said during his 2010 campaign that he supported liquor store sales. Pennsylvania is one of only two states, the other being Utah, that controls wholesale and retail liquor sales. But other issues consumed Corbett's agenda, starting with a $4 billion state deficit in 2011. He said in November he would push and lobby for a liquor bill this year. "I don't back away," he said.

"You will see something on liquor stores and on transportation (funding) before the budget address," Corbett told reporters Thursday after an event promoting his contract to privatize state lottery management. "Stay tuned," he said, when asked for details.

Gerow was involved in privatization efforts under two previous Republican governors, Tom Ridge and Dick Thornburgh. He said he believes, "The third time will be the charm." He is doing initial work setting up the coalition voluntarily but does not rule out working for proponents as a communication consultant and strategist.

Pennsylvania: Pennsylvania Liquor Board CEO To Step Down In February


Source: CBS Philly
January 19, 2013

The chief executive officer of the Pennsylvania Liquor Control Board has announced plans to step down after six years in the position.

A statement Saturday says Joe Conti will retire Feb. 2 "to pursue future opportunities in higher education and the private sector."

Conti was appointed to the position in December 2006. During his tenure, the statement said, the agency reorganized, launched a major rebranding initiative, upgraded business technology systems and instituted professional development opportunities for staff to assist wine and spirit consumers.

Conti is to stay on temporarily to help with the transition.

Gov. Corbett has recently been talking up a favorite idea, privatization of state liquor stores - an effort that The Philadelphia Inquirer says could allow beer and wine sales in convenience stores, groceries and other outlets.

Ohio: Ohio's Booze-backed Bond Deal Could Be Trend Setter


Source: Forbes
Jan 18th

In what could be one of the largest mixes of taxable and tax-exempt bond deals of its kind, Ohio officials are moving forward with a roughly $1.5 billion offering that will be secured with profits from the sale of liquor.

The deal has been mired in controversy since it was concocted years ago.  However, one thing that potential bond buyers may not have to worry about is the bonds going into default. This week, the state's liquor control division announced that state liquor sales set a record last year. Given the rate of consumption of liquor in the Buckeye State, I believe there is little reason to think that the strong sale of beverages containing it (or on the rock pours) in the state won't continue in future years, providing a more than adequate revenue stream to back the bonds.

Deal's Structure

Scheduled to price through a negotiated sale on Jan. 23, the bonds will be sold in two series. Roughly $423 million will be sold as Series 2013A tax-exempt, senior lien revenue bonds. The remaining $1.1 billion will also be senior lien revenue bonds, but they will be taxable. JP Morgan and Citigroup are joint senior bookrunners for the deal.

The 2013A bonds have serials maturing in principal amounts of $5,000 between 2015 and 2023. Most of the deal entails one term bond in the amount of about $378 million that matures in 2038. The 2013B bonds also have serials maturing between 2015 and 2023. There are two term bonds that mature in 2029 and 2035, in the amounts of about $356 million and $382 million, respectively.

Only Moody's Investors Service and Standard & Poor's rated the deal. Moody's rating is A2 and Standard & Poor's rating is AA.

Controversy

The major difference between the ratings of the two agencies is the outlook assigned. Standard & Poor's outlook is stable, but Moody's outlook is developing, which brings me to the controversy that nearly derailed the deal.

In rating the deal, Moody's noted that it was watching to see the final outcome of litigation challenging the legality of the JobsOhio Beverage System, which is the private nonprofit created to issue the bonds. Observers say that a pending ruling by the state Supreme Court will likely be in favor of JobsOhio, which would have a positive effect on the rating.

Pundits criticized Gov. John Kasich, who championed the measure creating JobsOhio, as stepping out of bounds. They say it was illegal to fund the private JobsOhio with public funds.

Regardless, proponents of the deal tout it as a boon for the state because proceeds will be used to help boost economic development in the state.

Something important that I want to point out about the deal is that there is no secondary market for it. According to the preliminary offering circular, "there is no assurance that any market will develop, and if it does develop, that it will continue or that it will provide investors with a sufficient level of liquidity of investment."

Strong Liquor Sales

Still, maybe that won't worry some investors considering the state's very strong liquor sales, as I mentioned above. The state's liquor division, which is a part of the state's Department of Commerce, said that in 2012, sales of spirituous liquor - that's typically beverages that contain more than 20% alcohol - totaled a record $849 million, which was a 7% increase over 2011's total.

State officials chalked the increase up to Ohioans developing more sophisticated taste buds when it comes to their libations. Specifically, the state's commerce director, David Goodman, said that the higher sales were due to better product selection and improved inventory management. This led to consumer needs being met without "encouraging increased consumption."

Interesting, as this is a point I'm sure many would beg to differ.

Restaurants, bars and clubs also showed they were constantly replenishing their stocks of booze for patrons. In fact, last year was the second year in a row that sales purchased by permitted wholesalers showed strong growth. Total wholesales in 2012 reached $257.8 million, which was a 5.7% increase over 2011.

Among the top selling brands of spirituous liquor is Jack Daniels Tennessee Whiskey, which is made by Brown-Forman (NYSE: BF-B). Several Diageo (NYSE plc: DEO) brands, including Smirnoff Vodka, Crown Royal Canadian Whiskey and Captain Morgan Spiced Rum, are also among the top 10 brands sold in the state.

In speaking of the potential of the deal, Gov. Kasich has said that the JobsOhio model will be studied across the country. Many may respond, "I'll drink to that!"

Tuesday, September 11, 2012

Wells Fargo's Weekly Economic and Financial Commentary


Source: Wells Fargo
Sep 10th

U.S.
  •  Disappointing data this week reaffirms the notion that economic growth will remain sluggish in 2H12.
  •  While the unemployment rate fell from 8.3% to 8.1%, the drop was largely attributed to a decline in the labor force participation rate as nonfarm payrolls increased by just 96,000, far below the consensus expectation.
  •  The ISM Manufacturing Index remained below the demarcation line for the third consecutive month, declining to its lowest level since July 2009.
  • Construction spending unexpectedly fell 0.9% in July with broad-based declines.
  • Nonresidential spending contracted by 0.6% and residential outlays shrunk by 1.6%; contrarily, single family expenditures improved 1.5%
  • Next week's key data points:
  • Consumer Price Index (Friday) - Consensus forecast: 0.5% higher; the downward trend in consumer price inflation may finally be over.
  • Retail Sales (Friday) - Consensus forecast: 0.6% increase; slightly slower than the 0.8% improvement in July.
  •  Industrial Production (Friday) - Consensus forecast: 0.1%; a disappointing ISM Manufacturing Index report likely precedes a weaker Industrial Production report than last month (0.6%).


International
  •  Mario Draghi, ECB President, seems to have developed a new plan for bond buying that will likely help solve the economic issues in the Eurozone.
  •  China continues to watch Europe, its largest export market, closely; the results of the bond buying efforts proposed by the ECB will likely determine any economic action of the Chinese government.
  • The effects of the Eurozone crisis on commodity prices and commodity exports is negatively effecting the growth prospects in emerging markets.
  •  Strong growth is not expected to resume in the near-term, but improved expectations are on the horizon.