Liquor Group Wins Litigation: Alcohol Brands Forced Adhere To Contract or Face Legal Liquidation

July 14, 2011 Jacksonville, FL – Public records show that Liquor Group Wholesale, Inc. (Publicly Traded: LIQR) and Liquor Group Florida, LLC., their State Level Distribution Customer have completed another Alcohol Brand litigation in their favor, this is the most recent in a series of litigation victories for the company.

Court records show that the initial claim was filed in against a brand supplier of LIQR, Liquor Group Holding, LLC. (LGH), but was revised to include many other Liquor Group companies in an attempted litigation “drag net”.

The Judge in Duval County Civil Court determined that a brand that contracted with LGH for distribution cannot simply add any/all Liquor Group companies as Defendants in the case just because they provided services on behalf of LGH, regardless of the binding Arbitration status or any outstanding claims of the contract. This process would either force a default or require each of the various Liquor Group named entities to defend the litigation, which was found to be procedurally improper and unfair by the courts. The opposing brand in this instance not only lost against LGH, but may now have to defend against Counterclaims and Sanctions levied against them by Liquor Group Florida, LLC. and Liquor Group Wholesale, Inc. for attorneys fees and costs.

So what’s the problem?

The basic principle is simple: Brands contracted for distribution must abide by the term length and conditions of their contracts, and they must pay for the marketing and expenses that they contract for; or they face treble damages or liquidation of inventory to cover the uncollected fees and costs. The records show that Liquor Group only uses this process as a last resort, giving brands six full months to bring their contract into compliance, and then implements under strict State and Federal guidelines. Other distributors are not so patient, many have a 30 or 60 day clause to quicken the process.

LIQR not the only ones…

Though the premise seems straightforward, during the 2009-2010 economic down-turn, many alcohol beverage brands within the US found themselves unable or unwilling to support the sale of their products by providing their distributor/brokerage partners with the contracted adequate marketing monetary support; and many others simply failed to repay their bill-backs for services such as brokerage fees and delivery fees due in Control States. Court records in Florida, Texas, California and New York show that most every major alcohol distributor in the US litigated heavily with brand suppliers during this timeline, mostly to enforce contracts or collect on bill-backs.

The Results are in:

This lack of follow through by brands had a massive cumulative negative effect on all major alcohol industry distributors/brokers throughout the US, leaving many distributors and brokerages out of business by 2011, (public records show that more than 35% of state level distribution/brokerage licenses terminated during this time period). Many of the remaining distribution/brokerage companies have been unable to recover or recoup these losses from their brand suppliers due to inadequate or unenforceable contracts.

Although according to their 2009-2010 public disclosures, LIQR suffered many hundreds of thousands in “uncollectable” invoices from various brand suppliers due to this unsettling situation, the contracts they utilized specifically address these very issues, which resulted in a much smaller number of brands defaulting on agreements without recourse than average distributors or brokerages; and the vast majority of brands who did default in their agreements yielded profits to the companies through public auction style liquidations of inventory held to defray or cover costs incurred by these brand suppliers.

Is it getting any better?

At the height of the economic downturn, LIQR was involved in 15 cases related to brand defaults, brand issues or brands attempting termination without cause, which considering the 3,000+ brands represented in 33 US States, that number does not seem so dramatic. Currently the number of outstanding cases has decreased dramatically, a spokesperson for LIQR states that they are now only involved in two brand related litigations, both tied to contracts with LGH, and the company contemplates that both will be resolved favorably.

Liquor Group Expanding Diageo $2BN Portfolio across US

June 6, 2011 – London, England – The World's Largest Spirits Company, London-based Diageo (DEO), is known as the maker of leading alcohol brands including: Johnnie Walker Whisky, Jose Cuervo Tequila, Crown Royal Canadian Whisky, Captain Morgan Rum and Smirnoff Vodka. However, they now have a new $2.3 Billion feather in their cap: Mey Icki Distillery, Turkey's largest spirits company, that holds an 80 percent share of the country's top-selling spirit categories, lead by Binboa Vodka.

April 2011, Liquor Group Wholesale (LIQR) began implementing their domestic distribution strategy commencing in Florida; marking the first time Binboa Vodka had ever been sold in the US. Due to overwhelming success, the Binboa Vodka product line is now expanding with Liquor Group into Illinois, Michigan, Pennsylvania and Virginia.

Binboa Vodka has award winning flavors including: Red Apple, Satsuma, Red Orange and Strawberry, suiting the palates of Young, Hip and Daring Taste Aware Consumers. Binboa Vodka uses a marketing approach based on Cerebral Mid-Twenties Survey Advertising Campaigns; slogans include: “On a Night Out, 95% of Party Goers Meet New People, 5% Remember Their Names Afterwards…” and “On a Friday Afternoon, 4% of People Work, 96% Pretend To Work.” Uniquely packaged high quality spirits coupled with catchy marketing earned Binboa Vodka the largest market share in segments of Europe and Asia, and now the target is the US.

“Liquor Group understands the multi-billion dollar potential identified by Diageo Executives that purchased this brand, notably long before ever selling a single bottle into the US, the largest market in overall sales in the world.” says C. J. Eiras, CEO of Liquor Group Wholesale “Binboa Vodka enjoyed immediate results from our Patent-Pending Bailment Distribution Model, and we feel strongly that this expansion is only the beginning of a larger move forward.”

About Diageo

Diageo is the world's leading premium drinks business with an outstanding collection of beverage alcohol brands across spirits, beer and wine. These brands include Johnnie Walker, Crown Royal, J&B, Windsor, Buchanan's and Bushmills whiskies, Smirnoff, Ciroc and Ketel One vodkas, Baileys, Captain Morgan, Jose Cuervo, Tanqueray and Guinness.

Diageo is a global company, with its products sold in more than 180 countries around the world. The company is listed on both the New York Stock Exchange (DEO) and the London Stock Exchange (DGE). For more information about Diageo, its people, brands, and performance, visit us at Diageo.com. For our global resource that promotes responsible drinking through the sharing of best practice tools, information and initiatives, visit DRINKiQ.com.

Celebrating life, every day, everywhere.

About Liquor Group Wholesale

Liquor Group Wholesale, Inc. (LIQR) is an emerging alcohol distribution/brokerage organization representing thousands of brands with operations in 33 US States. Our Manufacturer to State level conveyance utilizes a Patent-Pending business model focused on providing unique trade channels for many of the world’s leading & emerging alcohol beverage brands. Current/historical financial information at: www.LiquorGroup.com and www.SEC.gov

$2.1 BN Brand Launched in the US by Liquor Group

The news hit the NASDAQ Building all day long:

In late February 2011, Diageo (NYSE:DEO) the world's largest spirits maker, announced that it had agreed to buy Mey Icki Distillery, Turkey's biggest spirits company, that holds an 80 percent share of the country's top-selling spirit categories. London-based Diageo, is the maker of leading alcohol brands including Johnnie Walker whisky, Captain Morgan Rum, Jose Cuervo Tequila and Smirnoff vodka to name a few, acquired Mey Icki and their entire portfolio of products for $2.1 billion in cash from the private equity firms TPG Capital whom manages$48BN in assets with operations worldwide, and Actera, a Turkish Based fund operating in excess of $500 million.

Liquor Group Wholesale (Publicly Traded: LIQR) and it’s privately held state level distribution network was chosen to implement the initial 2 year US distribution strategy for the Mey Icki Portfolio, which is lead by Binboa Vodka; and the first containers of the vodka the have already landed on US shores at Liquor Group distribution hubs. Binboa comes in award winning bold flavors including: Red Apple, Satsuma, Red Orange and Strawberry, to suit the palates of the new “Daring Taste Aware Consumer”. These products are already funneling through the State Level Customer Distribution Channels of Liquor Group, are being registered for sale in various states and are moving towards end consumers.

“Liquor Group is very pleased to be selected among all of the larger distributors commonly used by major portfolios like Diageo to launch and develop these important brands throughout the US.” says C. J. Eiras, CEO of Liquor Group Wholesale “Our unique abilities and flexibility-to-market allows Liquor Group to achieve distribution success for smaller and larger brands; Binboa will see immediate results at the cash registers due to our Patent-Pending Bailment Distribution Model.”

Binboa’s successful marketing approach has been based on a 'Cerebral' Mid-Twenties Survey Style Advertising Campaign; including such slogans as: “On a Night Out, 95% of Party Goers Meet New People, 5% Remember Their Names Afterwards…” and “On a Friday Afternoon, 4% of People Work, 96% Pretend To Work.” High quality spirits coupled with this catchy marketing approach has earned Binboa Vodka the largest market share in segments of Europe and Asia, and will appeal to hip, market savvy US consumers as well. Eiras summarized: “Since Diageo has spent more on this acquisition than Bacardi spent on the purchase of Grey Goose Vodka, we at Liquor Group are confident that this Portfolio is well positioned for success.”

Berkshire to Buy Alcohol Distributor in U.S. South (Update1)

By Andrew Frye

March 22 (Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. agreed to buy alcoholic-beverage distributor Kahn Ventures Inc. to add sales in Georgia and North Carolina and help the company prepare for further acquisitions in the industry.

Closely held Kahn, owner of Empire Distributors, will be part of Omaha, Nebraska-based Berkshire’s McLane unit, Buffett’s company said today in a statement. Terms weren’t disclosed.

“We expect that the Empire acquisition will provide us with a solid platform for potentially acquiring other similar high-quality wholesale distributors,” Buffett, Berkshire’s chairman and chief executive officer, said in the statement.

McLane already accounts for more than a quarter of Berkshire’s revenue, with sales to grocery stores, retailers and chain restaurants. Berkshire was a shareholder of AnheuserBusch Cos. before the brewer of Budweiser beer was bought by InBev NV.

Buffett, 79, completed the biggest takeover of his career last month with the $27 billion acquisition of railroad Burlington Northern Santa Fe Corp.

--Editors: Dan Reichl, Erik Holm

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

USA Mutuals VICEX - Invest Your Knowledge Conference

Eric Lansky, CEO of USA Mutuals has announced the upcoming “Invest Your Knowledge” conference for shareholders and interested investors of the Vice Fund (MUTF:VICEX) on December 9, 2009. The NASDAQ traded USA Mutuals’ Vice Fund views the global alcoholic beverage sector as an important focus and on e in which our portfolio managers have special insights and knowledge. Some of the holdings in the fund as of September 30, 2009 include: Diageo (DEO), SABMiller (SAB LN), Carlsberg (CARLB DC), Anheuser-Busch InBev (ABI BB), Pernod-Ricard (RI FP) and FEMSA (FMX). This call should be attended by anyone whom is seriously involved in the Alcohol Beverage Industry, as the insight gained can prove invaluable in the coming year.

Lansky hand selected Liquor Group Wholesale (LIQR) CEO C. J. Eiras to speak at the conference about the current workings of the alcohol beverage industry. “I am honored to be chosen to speak; Mr. Lansky has many options available for other speakers, I will do my best to provide meaningful insight...” says Eiras. Also participating on the call is Dr. Marcin Kacperczyk, Professor of Finance at New York University, co-author of the award-winning “The Price of Sin: The Effects of Social Norms on Markets”. Mr. Charles Norton, advisor for USA Mutuals will also speak about the Vice Fund and will be available to answer questions as well.

VICEX uses the Invest Your Knowledge call series to feature industry experts like Eiras & Kacperczyk who provide the opportunity of speaking directly to individuals and professional investors so they might gain real-world insights from people in the know. The USA Mutuals Invest Your Knowledge philosophy encourages individuals with specific industry knowledge to apply such knowledge to their investments. For those involved in the adult beverage marketplace, the Vice Fund may be of interest as one of the few funds which specifically includes alcohol as one of its primary investments.

Liquor Group* an organization that has both a private component and a small publicly traded component, continues to gain recognition as one of the fastest growing alcohol distribution companies in the USA, recently spreading its breadth of territory to 32 states. The rise of Liquor Group from a home garage in 2002 to its current state of operations spanning almost the entire country gives testament to what can be accomplished in this industry with the right ideas. The company recently acquired privately held alcohol distribution/brokerages in Illinois and Iowa, and intends to continue acquisitions capturing/controlling distribution/brokerage licenses in as many states as are available.

To register for the call contact USA Mutuals at 1-866-264-8783 or email: Info@USAMutuals.com

For more information about Liquor Group, visit www.LiquorGroup.com, and click here for a downloadable PDF of the entire paper “The Price of Sin: The Effects of Social Norms on the Markets”

* USA Mutuals is not an investor in Liquor Group Wholesale (LIQR)

Liquor Group files $1M+ Breach of Contract Claim Against Drinks Americas

Jacksonville, FL - Documents obtained in Duval County, FL show Liquor Group Wholesale (OTCBB:LIQR) filed claims for Breach of Contract among other counts against Drinks Americas (OTCBB:DKAM).

According to the Securities & Exchange Commission (www.SEC.gov) report, in April 2008 Liquor Group contracted and commenced representation of Drinks Americas products in the State of Michigan, an agreement which was swiftly amended to include Florida and subsequently Sixteen (16) additional states (all NABCA.org listed Control States except Mississippi) for a total of 18 US States. The contracts were for exclusive representation of brands marketed by Drinks Americas including: Trump Vodka® & Trump Flavored Vodkas®, Willie Nelson’s Old Whisky River Bourbon®, Damiana Liqueur®, Bo Dietl’s Casa BoMargo Wines®, Cohete Rum® & Aguilla Tequila®, and other Drinks Products as they become available. These agreements utilize Liquor Group’s patent pending bailment method for the sale of alcohol products to the state level. Once delivered at the state level, the privately owned Liquor Group companies or affiliated companies take over the operations representing the goods to bar/restaurant/liquor store customers.

On or about December 19, 2008, the report shows that Liquor Group notified Drinks Americas of numerous contract violations, including but not limited to overdue marketing funding and insufficient inventory to fill customer orders in excess of $300,000.00. Liquor Group documented that Drinks Americas representatives only responded to Liquor Group by saying that they would be able to bring the agreement into compliance soon.

The report goes on to show that multi-state inventory depletions and marketing fund positions were reconciled at the end of the first annum of the contract on April 1, 2009 showing a severe balance due by Drinks Americas to Liquor Group. Liquor Group also documented that Drinks Americas was given time to bring their accounts current and offered to revise the marketing agreements at this time, however no action was taken on their part to rectify Drinks Americas contract deficiencies.

At the time of this document filing, more than $800,000.00 of orders generated by Liquor Group remained unfilled by Drinks Americas, a major contract violation and contributor to the claim proceedings. The Control States of WV, IA, WY & OH have now terminated the listings of Drinks products.

When asked for a comment on the report, C.J. Eiras, President of Liquor Group Wholesale would only reluctantly state that he “Wished that Drinks Americas had the wherewithal and resources to fill these back-orders and to work this all out without it coming to this.” No one at Drinks Americas was available for comment at the time of this report.

Brandy Christine Reporting for BevNews1.com

Brandy Christine is an independent reporter specializing in the alcohol beverage industry, reporting here for the Beverage News Network BevNews1.com

Substantial Distribution Companies Prepare To Merge Into Liquor Group

Jacksonville, FL - When you walk into the tall, cold grey granite and tinted glass clad corporate offices of Liquor Group you expect to be visiting an industry standard facility, much as you would find at major alcohol distribution company. I know, I have visited many of them in my years are as an alcohol beverage reporter. However, instead you are immediately surprised by the warm feeling engendered by the Liquor Group headquarters. Linda, a kind hearted New York-Jewish lady greets you with a smile and a joke then sends you back to meet the team. You then enter a large room with multiple groupings of living room sets, complete with TV’s tuned to cable news, and then you see a large old fashioned mahogany bar, not something you generally see in Corporate America. Further back as you get closer to the VP and President’s offices you must walk around a golf putting area and a billiards table, so I think to myself ‘this is my kind of office!’ So it was no surprise to me when the executives at Liquor Group Wholesale (OTCBB:LIQR) put out the word that they were looking to acquire distribution companies through stock purchase, that if this is how they are operating during this worldwide financial meltdown, I can imagine the tremendous response they received. “We are continuing to sift through the litany of proposals from state level distribution companies interested in merging into the Liquor Group network. We received some promising prospects, we have begun implementing several of them…” says Lowell Newman, VP of License States “…and we are still setting phone conferences from companies whom reached out to us as far back as last month.” Intrigued by this operation, I decided to ask some basic questions to Mr. Newman about the company and I was surprised with what I found: Q: Why would an established alcohol distributor want to become part of Liquor Group? The open areas at Liquor Group’s corporate offices are more like living rooms than meeting space, complete with a full bar, billiards, golf putting area and televisions. A: The Patent Pending Innovative Distribution Business Method utilized exclusively by Liquor Group which gained publicity when approved by the Tax & Trade Bureau in March of 2009 provides substantial operational and costs savings over traditional distribution, allowing us unlimited brand selection growth without carrying costs of traditional inventory, and quite frankly, other options for liquidity for the owners of mid sized distribution companies is thin at best. This is a radical difference from the normal operations of alcohol distribution companies, and we feel it is the difference that will allow Liquor Group to continue to excel in up or down markets. Q. What triggered the decision to merge vs. organic growth? A. Our organic growth has been astounding, in 2005 we only had 4 products, by 2006 we had 660, by 2007 we had 1250, and now we have more than 1700. Liquor Group is growing rapidly, and we are having fun while doing it, however, consolidation is all around the industry right now, as companies seek efficiencies of scale. Even 100 year old titans of the alcohol beverage industry such as Glaziers find themselves now merging with Southern Wine & Spirits, and other giants such as Republic gobbled up National Distributing, which is all just a part of the largest scale of consolidation ever seen in the business, spelling trouble for lesser distribution companies and brand portfolios trying to compete against them. However, we are interested in the acquisition of all types of distribution targets, large, mid and small. Q. Why are brands, import portfolios and distilleries flocking to Liquor Group? A. One basic principle in nature is part of the success of Liquor Group: SAFETY IN NUMBERS. Liquor Group represents so many brands in so many states that it provides safety for products that may not make the cut under their own horsepower. Our one price policy is also a strong selling point in the market, and research shows that overall the clients of Liquor Group approve of out pricing methodology and overall strategy. Our brand policy also dictates the taking of no favorites; we treat all brands fairly and provide each with the same opportunities to market. We represent small brand suppliers with only 1 SKU to large scale distilleries offering a hundred varieties of products. Last but not least, Liquor Group offers a viable and lasting alternative to the traditional distribution model that is not affected by the titans of the industry; therefore we can survive where others will eventually fail. Q. What does the publicly traded portion of Liquor Group provide to your company in this strategy? “Safety in numbers” is a key component to the ongoing success of Liquor Group. A. Liquor Group Wholesale (OTCBB:LIQR) is a vehicle created to take advantage of our plans for future growth of the overall Liquor Group operations. The company does not yet control even 10% of the overall Liquor Group privately held company asset base, however it is a key component in our unified strategy. We are the first and still the only publicly traded liquor distribution company with operations in the US, and we hope to follow the model set by Central European Distributing Company (NYSE:CEDC) in terms of shareholder value growth. Buy utilizing stock to acquire other distribution companies, we are in essence “buying them in” not “buying them out” which allows the owners of these companies to enjoy the upside potential of their stock shares in LIQR. Q. Who has answered your call to tender for acquisition? A. The Liquor industry though large in scale in dollars and economic impact, it is very small in numbers of top management personnel. When we put out the word that we were interested in purchasing distribution companies, it spread through the industry like wild fire. Several mid-market companies immediately came forward and some that are larger in their individual state than any individual Liquor Group state level operation have expressed interest and are at the discussion table. However, since we have not finalized any of the multiple initiatives that we have begun, it is too early for me to “let the cats out of the bag”. And so my day was complete, as I stepped back on the airplane heading home to New York City I thought to myself…if only I was an alcohol beverage executive instead of an alcohol beverage reporter…then I sat down in my coach seat and ordered a stiff one on the rocks to take off the edge for the flight home. Go figure. Brandy Christine is an independent reporter specializing in the alcohol beverage industry, reporting here for the Beverage News Network BevNews1.com