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News Briefs for April 23, 2012

April 23, 2012

•After months of talks, Russian Standard has secured a deal to increase its stake in rival vodka producer Central European Distribution Corp. from 9.9% to 28% for up to $310 million. The transaction includes $100 million in a combination of newly issued shares of CEDC common stock and exchangeable notes, and up to $210 million in newly issued, unsecured CEDC senior notes due July 31, 2016, at a blended interest rate of 6%. The move represents an enhanced alliance between Russian Standard, the leading premium vodka company in Russia through its flagship brand, and CEDC, which sells over 15 million cases in the country annually, mostly at the lower end of the pricing spectrum through brands like Green Mark, Yamskaya, Juravli and Parliament.

•The U.S. Virgin Islands legislature has voted to increase government subsidies for Beam Inc.’s Cruzan rum distillery, located in St. Croix. Under the measure, the USVI will pay 25% of the distillery’s federal excise taxes for bulk rum production, compared with 18% under a previous agreement. The new deal, set to run through 2018, is the most recent development in an ongoing rum subsidy war between the USVI and Puerto Rico, triggered after Diageo relocated rum production for its Captain Morgan brand from the latter territory to the former. As a result, Puerto Rico has since enhanced its own rum production incentives, luring an increasing number of rum contracts from surrounding Caribbean neighbors, including the USVI.

•Washington state has concluded the online auction of its 167 state-run liquor stores, raking in approximately $27 million, according to an early estimate from the Associated Press. The auction, which began March 8, attracted more than 13,000 bids. Winning bidders have been granted the exclusive right to apply for a license to sell liquor at an existing location, but will still need to negotiate a lease with the store’s landlord. (If a lease cannot be renegotiated, winning bidders can seek an alternative location within a one-mile radius of the existing state store.) Washington’s 163 contract stores, meanwhile, were exempt from the sale, and will continue to be operated by their original owners. The sale is part of Washington’s transition toward privatization, which goes into full effect June 1. Complete details on winning bidders will be released later today.

•Los Angeles-based hospitality company SBE Entertainment Group LLC has announced plans to open an outpost of its Hyde Lounge concept inside the American Airlines Arena, home of the Miami Heat, in time for the next NBA season. The 5,000-square-foot club will accommodate 200 guests and will feature multiple bars and lounge areas, several flat-screen TVs and a private dining room. The space will be available for private events on evenings when the arena is closed. SBE Entertainment Group is also opening a South Beach location of its SLS Hotel chain, which will house another Hyde Lounge, this June. SBE owns and operates dozens of restaurant, hotel and nightclub brands in California, Miami, Las Vegas and Houston.

Banfi Vintners, as well as Excelsior Wine Co., its U.S. joint venture with Concha y Toro, is switching its distribution from Charmer Sunbelt to Republic National Distribution Corp. (RNDC) in the Florida and South Carolina markets, effective June 1. All or part of the Banfi portfolio will now be represented by RNDC in 17 of the 22 states in which RNDC and its National Distributing Company affiliate operate, making RNDC Banfi’s leading wholesale partner in the U.S.

SABMiller says longtime CEO Graham Mackay will leave that position in July 2013, as Alan Clark, currently SABMiller’s managing director for Europe, assumes global chief executive duties for the brewing giant. Clark will be named COO this July, working closely with Mackay before becoming CEO a year later (Clark will be replaced as Europe managing director by Sue Clark, currently director of corporate affairs). Also this July, Mackay will add executive chairman to his title, replacing Meyer Khan, before transitioning to non-executive chairman in July 2013.

•Virginia-based The Vintner Group (formerly known as The Country Vintner) has appointed Brian Koziol as sales director for its Stacole Fine Wines unit, the Florida-based Bordeaux importer and fine wine and craft spirits wholesaler. He previously was director of strategic accounts on-premise for Treasury Wine Estates.


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