2011 NABI Budget Status

Report
NABI Membership and Board Meeting
Presentation Materials
The following
slides are provided
as background for
both meeting
Attendees and
members who
were not able to be
in New York on
March 23rd.
These notes are
not intended on
substituting for
meeting minutes
but can give you
An overview of the
gathering and the
topics discussed.
Presentation by Jim Squeo, Chief Executive Officer of the
National Alcohol Bverage Control Administrators
Jim made a presentation on
The current status of
Privatization
Within the control states. His
PowerPoint
Presentation slide follow.
Details of
Jim’s
presentation
in these
balloons
Control States - Spirits
Montgomery Co.
Worcester Co.
Control States - Wine
Wholesale Distribution
Spirits Only
Spirits & Wine
Spirits, Wine & Beer
Retail Distribution
WV
Government
Government & Agency
Agency
Private
Privatization
•Washington
•Virginia
•North Carolina
•Pennsylvania
•Ohio
Washington
Following the defeat of both
referendums on system revision state
ABC officials have promised to change
the system to make retail more
accessible and convenient. They have
suggested providing shipping to
Washington state consumers of retail
items. COSTCO is suggesting more
pressure to change the system
including legislation or a new
referendum
Back
Virginia
Privatization as a legislative
process is finished for this
session in VA. Governor
McDonalds fellow republicans in
the legislature did not support
his bill. The lack of a reliable
revenue stream to replace the
annual $120M from current
Back
alcohol sales doomed
McDonald’s plan. He has vowed
to bring a modified plan back
next year.
North Carolina The NC system is
decentralized down to
the county level
where 167 ABC
boards run 422 retail
sales operations and
retain the profits for
use within the county.
This creates a
disincentive to
privatize without
replacing the revenue
stream
Back
Pennsylvania
Back
Pennsylvania Gov.
Corbett has
established a
commission to study
privatizing. He is from
a policy point of view
opposed to state
government operating
a business of this
type. State Senator
John Pippa has a
hearing scheduled for
May 4 in Harrisburg,
PA to vet the issue.
Ohio
Ohio Governor Kasich
has proposed setting
up a quasigovernmental unit
called JobOhio that
would use alcohol
taxes to pay off bonds.
Energy Drinks
There is a
continuing
interest by state
administrators in
this category.
They may be
looking at the
consequences if
the size and
alcohol content
of flavored malt
beverages from
a tax standpoint.
Editor note:
Monster
Energy is
not one of
the
products
targeted by
FDA and
TTB and
ought not
be included
in this
category.
H.R. 5034
Though NABCA
supported this bill in
the past the board has
not yet taken a
position of the new bill
HR 1161. NABCA ‘s
annual meeting will be
held in Phoenix, AZ on
May 17. NABCA
officers have a
conference call on May
4 to discuss their
position on the current
bill.
Alcohol is Alcohol
Jim made the point that
as beverage alcohol
products morph into
new variations not
associated with their
basic style and type
administrators may be
looking to assign higher
tax rates and placement
restrictions.
Author Daniel Orkent speaks at the annual NABImemberhsip and
Board meeting
Author Daniel
Orkent spoke to the
group about his
book “Last Call: the
rise and fall of
Prohibition. Mr.
Orkent answered
questions and signed
copies of his book
for meeting
attendees. In
response to one
question he revealed
that Joe Kennedy
was not in fact
involved in the illegal
prohibition liquor
running activity but
was well positioned
to take advantage of
the end of the “dry”
era.
2011 NABI Budget Status
Actual Dues Income
$456,720
Reflects new members and
non renewal of a few small associate
members
2011 Budget
YTD Expenses
Avg. Monthly Spend Rate
450,000
165,769
33,153
Spending at the same rate as
prior year in spite of additional
meeting expense in Jan. 2011
Projected Total year revenue and spend within budget.
Budget / Expenditure detail in the Conf. Materials
Cash on hand
Capital One Cash on hand
Eagle Bank CD
PNC Bank
Total
$ 383,343
105,039
95,438
$ 583,820
Outside Audit Report and Letter
• NABI outside auditors state that all accounts
and practices are in conformance with
generally accepted accounting principles. The
Association receives a clean opinion.
• Auditors recommend establishing a policy on
staff leave accumulation.
– Action Step: Conduct a review of leave hours over
the past year, apply any adjustments and
determine final current leave balances. Report to
Audit report continued
report to offices on the next monthly
conference call
 Leave Policy for Association Staff
Follow the Federal Government policy to accumulate
not more than 240 hours of vacation time to be
carried over from year to year. Leave earned at the
rate of 4 hours per pay period or 15 days per year.
Sick leave earned at 4 hours per pay period or 15 days
per year. No cap on sick leave ceiling but no cash
value.
Audit report continued
 Personal days available not to exceed 15 days per
year.
 Vacation leave balance for the President would
not be paid out at end of employment or be an
obligation of the association.
 Special Projects expenses – auditors commented
that dues can be taken as a valid member business
expense. Other payments to the association
would have to meet the criteria to be taken as
business expense. Expense for “lobbying” may
not meet this criteria.
Ratification of Auditors
• Auditors – Linton, Shafer, Warfield & Garrett,
P.A. have agreed to be retained for the
coming year at the same rate as last year
$7,500.
– Action: Approve Auditors for the current fiscal
year.
The board approved retaining
Linton, Shafer… as association
auditors for 2011-2012
Election of Board of Directors
Katja Zastrow
Marc Pl Goodrich
James P. Ryan
William J. Deutsch
Barbara J. Anderson
John R. Frank
David Francke
T. Daniel Tearno
Robert DeRoose
Christopher J. O’Rourke
John F. Beaudette
Timothy Scully
Michael P. O’Brien
David P. Babkow
John A. Scribner
Fred Cooper
Anheuser-Busch Inbev
Banfi Vintners
Crown Imports
W.J. Deutsch & Sons, Ltd.
DIAGEO-Guinness USA
Sidney Frank
Folio Fine Wine Partners
Heineken USA Inc
Kobrand Corporation
Moet Hennessy USA Inc
MHW, Ltd.
Miller Coors LLC
Palm Bay International
Remy Cointreau USA, Inc.
Terlato Wines International
Wirtz Beverage
This slate of
officers were
approved by
the
membership
Election of Executive Committee
James P. Ryan
William J. Deutsch
Barbara J. Anderson
John R. Frank
David Francke
T. Daniel Tearno
Robert DeRoose
Christopher J. O’Rourke
John F. Beaudette
Timothy Scully
Michael P. O’Brien
David P. Babkow
John A. Scribner
Fred Cooper
Crown Imports
W.J. Deutsch & Sons, Ltd.
This slate of
DIAGEO-Guinness USA
members were
Sidney Frank
approved by
Folio Fine Wine Partners
the board as
Heineken USA Inc
an executive
Kobrand Corporation
committee. In
Moet Hennessy USA Inc
addition
MHW, Ltd.
member
Miller Coors LLC
AnheuserBusch Inbev
Palm Bay International
was elected to
Remy Cointreau USA, Inc.
Terlato Wines International the executive
committee
Wirtz Beverage
Election of Officers
Chairman Board of Directors
Chairman of the Executive Com.
Vice Chair Board and Exec. Com.
Treasurer
President
VP, Asst Treasurer & Corp Sec.
Michael P. O’Brien
John F. Beaudette
Michael J. Rudy
T. Daniel Tearno
William Earle
Bernadeen P. Emamali
These individuals were elected by the board to be
the officers of the association for the 2011-2013
period. Board member T. Daniel Tearno was
elected to fill the position as Treasurer. Past
Chairman Jim Ryan was congratulated on his
productive leadership of the association.
NABI Executive Committee
duties, goals and alignment
Issue: The association often needs to act promptly in response
To issues, actions or positions confronting the import community
 By-laws designate the Executive
committee to act on behalf of the board
between Board meetings.
 The Executive committee currently has
14 members representing all product
segments
 Response from the Board and
Executive committee as a whole have
often been slow on time critical issues.
Proposal to the Board
•Designate the immediate past Chairman of the Board a member of the Executive
committee leadership team
•Continue to endorse the Executive Committee Chairman, Officers and members to act
on behalf of the Board of Directors between regular meetings of the board consistent
with the by-laws
•Recognize the following positions as forming a quorum for actions by the Executive
Committee. This group will meet on the first Thursday of each month by conference call
Chairman of the Board
Immediate past Chairman of the Board
Chair Executive Committee
Vice Chairman of the Board
Treasurer
•NABI staff will promptly advise the Board of all actions taken on its behalf
•Remind Executive Committee members of the need to remain engaged and responsive
to requests for their input and approval
Significant turmoil in the budget and funding
authorization area
 Agency is being asked to justify its allocation of
resources
 Prior approval of Labels under review
Last year processed 103,000 labels average of
7,000 per week
Label review staff has been held at about 10
positions
Alternatives such as requiring label filing
without approval, shifting review to market
sampling
The value of the system for use by other federal,
state, and local agencies is recognized
User fees may be proposed once again

 EU wine negotiations 2nd phase
labeling talks underway in Brussels
March 23.
Traditional terms, semi generics, champagne,
 Vintage dated varietals. Currently barred by US
regulations for wines with an national
appellation.
EU petitioned the US in 2010 to provide relief
TTB is writing a proposed rule to respond to the petition and
seems agreeable to support a change. This would also mean
that domestics could label nationally with a vintage date.
 World Wine Trade Group –
Negotiating and MOU among the members to
forgo certification requirements among member
states. Currently Argentina requires certificate of
analysis from the US.
South Africa has not signed the mutual
acceptance agreement with the group. Therefore
South African imports are still required to certify
for entry. SA Parliament has been slow to act.
 Certification for 2006 Brunello has been
received from government of Italy
TTB is requiring two more years of certification.
The 2008 vintage will be the last to need a
certification.
The Italian government could certify all stocks
currently in inventory as meeting the standard and
no further certifications would be required.
 French Pinot Noir – French are not providing
certifications. Import of this category
(Languedoc-Roussillon Region) continues to
require that the importer holds a certification
from the French government.
 TTB acknowledges mixed and misleading
messages between FDA under 7% wine
products, FMB, wine and distilled spirits
specialty labeling.
 FTC Federal Register notice – comment on
information collection on compliance with selfregulatory advertising code. Up to 14 of the
largest beverage alcohol advertisers will be
selected. Smaller companies previously audited
likely excluded. Comments due April 26, 2011
 Commission not backing off it’s position that
the voluntary standards should move from 70 %
to 75% above LDA. Census data may counter this
position.
 Still working on caffeinated alcohol beverages
would not comment on follow on actions.
Near term Events
FDA’s First Public Meeting on the FDA Food
Safety Modernization Act: Focus on Imports
March 29, 2011, Silver Spring, MD
Industry has
recommended
use of the King
Country, WA
standard
FTC Notice Seeking Comments on
Proposed Information Requests to Beverage
Alcohol Manufacturer: Comment due April
26, 2011.
FDA issues guidance on calorie labeling
for food items on menus for businesses with
20 or more units: Imminent
Petitions
submitted by
Center for digital
decency and
Berkley Media
Estimated burden
cost $253K
The FDA has announced
that information about
menu labeling will be
posted to:
http://www.fda.gov/Foo
d/LabelingNutrition/ucm
217762.htm
FDA deferred to TTB and
exempted beverage
alcohol from the menu
requirement pending
comments in their
notice.
( future events continued)
FDA to Convene Public Hearing on Ensuring the Safety of
Imported Foods and Animal Feed: Comparability of Food
Safety Systems and Import Practices of Foreign Countries:
College Park, MD, March 30-31,2011
The Agricultural Marketing Service (AMS), US
Department of Agriculture (USDA), National Organic
Program –
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Continued need for the regulations;
Complaints or comments received;
Complexity of regulations;
Extent of overlap in the regulation, duplicate, or conflict
Length of time last evaluated or the degree to which technology, economic conditions or
other factors have changed in the area affected by the regulations.
Comment by April 26, 2011
Both
Bernie
and Bill
attended
this event
(Near Term events continues)
Follow up on TTB advance notice of proposed
rulemaking to define estate bottled to encompass
terms including estate, estates, estate grown,
proprietor grown, vintner grown, orchard, farm,
single farm, single ranch, proprietors blend, Old
vine, Barrel fermented, Old clone, reserve, select
harvest, bottle aged…………….
NABI commented on this advanced notice
These terms are in broad use and harm could result
in new definitions
No evidence they are misleading by consumer
complaints
The New CARE Act
HR 1161
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Introduced by Congressman Chaffetz (R-UT) on March 17.
Wholesalers have legal protections, franchise laws in place
One Third fewer wholesalers over 20 years
Craft brewers, small wineries proliferating, wholesalers no
long the only source of product
Texas case rejected by the Supreme Court
Doesn’t seem that sponsors asked state administrators for
input
No crisis of deregulation
Wholesalers will seek additional co-sponsors
50 + co-sponsors as of April 29, 2011
Gray Market Project
Focus on the FDA Compliance Policy guide
Require that Importers provide the manufacturer
registration number and other information required by
the Bioterrorism Act
Require FDA coordination with the authorized US
based manufacturer’s agent when Key information is
missing from prior notices
Engage Hill and Administration officials with the goal
of developing critical changes to the CPG
Retain Capital Counsel to complete the final phase of
this project
Member benefit
Congress in you Pocket
For Blackberry
Available soon on the NABI website
Member resources page
http://www.congressinyourpocket.co
m/blackberry.cfm
Other Business
Renewal of office lease for 3 years
Activities of the Wine and Beer
Committees
Benefit for Jeff Becker –May 2, 2011
American Beverage Licensees
Opening night reception, June 18,
Milwaukee, WI
Performance Plans

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