Minnesota Municipal Beverage Association Newsletter
(May 10-16, 2009, 2009)
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As I see it...
 
 
As I (Paul Kaspszak, MMBA Executive Director) see it, there is a large debate at the Capitol about the state budget and alcohol taxes.
 
Here is a recent editorial written by Mark Stutrud, President and Founder of Summit Brewing in St. Paul.
 
Like many businesses today, Summit Brewing Co. in St. Paul is facing a difficult time. With increasing costs and decreasing profit margins, the potential for a 144 percent increase in the Minnesota beer excise tax rate is alarming. Such an exorbitant tax increase would be a tremendous blow to brewing operations and the entire beer, wine and spirits industry in Minnesota.

Minnesotans already pay very high alcohol taxes. Our taxes on beer, wine and spirits are higher than in any surrounding state and in most other parts of the country. It costs more to have a beer, wine or cocktail in more than a dozen Minnesota cities than it does in New York City, Los Angeles or Miami.
 
Now imagine increasing the state excise tax by 144 percent.
 
This would turn a traditional beverage into a luxury and place an additional burden on consumers and every part of the liquor industry in Minnesota. Making our beer a luxury item is not what Summit Brewing stands for or believes is right for Minnesota. Beer is for people who appreciate a glass while watching a baseball game, sitting by the campfire or, as Gov. Tim Pawlenty pointed out, fishing.

Brewing on a small scale as we do at Summit is very expensive, which sadly is why so few Minnesota-based brewers remain. Summit's packaging costs are 22 percent. Labor and energy costs are 11 percent and 5 percent. Raw materials, including hops and malt, have increased from 11 percent in 2007 to 17 percent in 2009. This dramatic cost increase has hurt our business.

Although we have increased our wholesale price in the past two years, we simply cannot pass on all of our increased costs to consumers and remain competitive in the marketplace.
Small breweries like Summit already have to price our products higher than large domestic brewers. If we were to increase our prices even more, there is a point at which our product becomes too expensive, and consumers will simply stop buying it.

The proposed legislation containing a 144 percent excise tax increase would mean a tax jump from $4.60 to $11.21 on every barrel of Summit beer, bringing the company's annual state excise taxes from $244,000 to $594,000. Our federal excise taxes are $924,000, which would bring our combined state and federal excise taxes for 2009 to $1.52 million on a sales base of $16 million.

This would represent almost 10 percent of the brewery's expenses, which we expect would eliminate our entire profit for 2009, 2010 and 2011. As a privately held firm moving toward employee ownership, that hurts. And after doubling our workforce to 50 employees over the past 10 years, our projected new growth and employment would decline.

Summit is just one story among hundreds that could be told about Minnesota-owned companies in the beer, wine and spirits industry. Along with the members of Minnesota's hospitality industry, we would face substantial business losses if the tax increase passes.

For instance, in communities that border Wisconsin, Iowa, and North and South Dakota, our retail alcohol taxes are already higher. Excessive alcohol taxes also will make it more difficult to attract national and regional convention business to Minnesota.

While some people have described the tax increase as a dime a drink, which sounds reasonable and affordable, there's markup on that dime at several points along the journey from the source of the beer to where it is consumed. So the extra dime at the brewer's dock is likely to grow with every transaction along the way.

Imposing new, outrageously high taxes on drinks is simply wrong. Wrong for small breweries like Summit trying to compete in a highly competitive market, wrong for all kinds of small businesses across Minnesota, and wrong for working Minnesotans who already pay high taxes.

I encourage other Minnesotans to join me in urging the Legislature to reject the very un-Minnesotan tax.

Women More Affected by Price of Wine than Men
 

Source: Reuters
Thu May 7, 2009
 
How much does the price of a bottle of wine matter? Quite a lot - to women.

Researchers from the Stockholm School of Economics and Harvard University set out to determine whether knowing how much a bottle of wine cost would affect what people thought of the taste.

They found that disclosing the expensive price of a wine before people tasted it produced considerably higher ratings, although only from women.

"I was surprised. The men didn't seem to be affected by the price. It might be the way men relate to wine. But the women reacted very strongly to a high price," said Johan Almenberg, who with co-researcher Anna Dreber of the Stockholm School of Economics and Harvard, conducted the study among 266 volunteers in Boston.

The volunteers tasted one of two Portuguese red wines, one cost $5 a bottle and one $40. One-third of the people tasted the wine without knowing the price, one-third was told the price before the tasting, and one-third learned the price afterwards.

All of the tasters were told to rate the wine on a scale that ranged from undrinkable to perfection.

The researchers, whose findings were published by the American Association of Wine Economists, said only women assigned considerably higher ratings when they were told they were about to drink the expensive wine.

Almenberg does not know why the cost of a bottle of wine should matter so much to women but not men.

"It may be something evolutionary," he said. "If you look for what women find attractive in a man, the paycheck is probably not that important for either sex, but a lot of women attach more importance to that than men do."

In a survey by Vinexpo, the international wine and spirits exhibition that takes place in Bordeaux, France next month, researchers found that nearly three-quarters of women said price determines their choice of wine.

Vinexpo, and wine magazines, questioned 4,300 women in France, Germany, Japan, Britain and the United States about what they drank, how often and where they bought it for the survey.
 
Do You??
 
We do it better
By Mike McKinley
Alive! Alive! Associates
 
Many businesses today are struggling to maintain profitability. 
 
The ones that are hanging in there have a rich history of quality, customer driven business practices. 
 
 
Never has there been a greater opportunity to re-structure your work environment for the future: 
 
* Keep the best people and educate, educate, educate.
 
* Embrace and constantly communicate a higher level of operational procedures.
 
* Explicitly define leadership roles and hold leaders accountable.
 
* Analyze and transform toward your mutually selected business template.
 
* Have a visual "report card" of your progress and praise the players who help your company make the grade.
 
During this time of restructuring our lives and work, we need a daily assessment.  We need to question our priorities.  We need to evaluate our knowledge base. We need to embrace chances to learn.     
 
Everyone -- especially your customers -- will celebrate  your commitment to doing it better.

Future Dates to Remember!!
 
2009 MMBA Annual Conference
May 17th - 19th
Wine Dinner May 16th
 
MMBA Regional Meetings
 Fall of 2009
 
 
Ask A Director
 
Gary Buysse
Rogers
763-428-0163
 
Bob Leslie
 Pelican Rapids
218-863-6670
 
Dan Bahr
Bemidji
218-751-8868
 
Brian Hachey
Stacy
651-462-2727
 
Nancy Drumsta
Delano
763-972-0578
 
Lara Smetana
Pine City
320-629-2020
 
Joyce Zachmann
Spring Lake Park
763-780-8247
 
Virgene Shellenbarger
Hutchinson
 320-587-2762
 
Michael Friesen
Hawley
218-483-4747
 
Tom Agnes
Brooklyn Center
763-381-2349
 
Molly Meyer
Fairmont
 507-238-2269
 
Paul Kaspszak
MMBA
763-572-0222
1-866-938-3925

 
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Tom Shay
Tom Shay
By popular demand, retail expert Tom Shay will be making a return engagement at the MMBA Conference this weekend. 
 
He will be presenting three topics:
 
Developing a Pricing Strategy
 
Keys to Visual Merchandising
 
What to do when your Management Style isn't Working
 
Those who cannot make it to the conference, or those looking for information on other topics should go to Tom's website by clicking the link below.
 
 
 Philosophy Drives Attitude.
 
Attitude Drives Actions.
 
Actions Drive Results.
 
Results Drive Lifestyles.
 
If you Don't Like Your Lifestyle, Look at Your Results.
 
If you Don't Like Your Results, Look at Your Actions.
 
If You Don't Like Your Actions, Look at your Attitude.
 
If you don't Like Your Attitude, Look at Your Philosophy.