Lilly Hovis, 3, gets some help from her mother Michelle, as they cut lunch meat into shapes for a picnic at their home in Iron Station, N.C., Tuesday. As inflation squeezes budgets, middle-class Americans are taking fresh stock of their everyday habits in search of ways to curb spending.

NEW YORK – The “latte effect” of the go-go years had consumers spending $4 a day on coffee. Now the downturn is forcing them to rethink the wisdom of such habits.

As inflation squeezes budgets, middle-class Americans are taking fresh stock of their spending in search of ways to save a nickel or a dime. The result: People are giving up a variety of small financial vices.

For Michelle Hovis, that means refilling her husband’s used soda container from a 2-liter bottle she buys on sale for 98 cents. She tweaked his daily habit of buying a 20-ounce bottle when the price crept up to $1.39.

“The price of gas, milk, eggs — everything you can’t control — is going up. So you need to watch the things you can control,” said Hovis, a 31-year-old stay-at-home mom from Iron Station, N.C.

While the idea that little costs add up is nothing new, it comes with added sticker shock as food and gas prices sprint along at a record pace. The result is that people are finally putting the brakes on vices once considered necessary — like frappuccinos.

Milk, coffee, fresh fruit and bread were among the items that got more expensive by an average of 0.9 percent in April, the largest one-month increase since January 1990. Gasoline prices were up nearly 21 percent compared to a year ago.

Workers’ wages, meanwhile, dropped for the seventh consecutive month.

The result is fewer latte runs. Literally.

Last month, Starbucks Corp. blamed rising food and gas prices when it reported a 28 percent drop in second-quarter earnings, and said sales at U.S. stores open at least a year had dropped — indicating some may finally be summoning their inner Scrooges. Coca-Cola Enterprises Inc. also said last month that weak U.S. sales — especially on some 20-ounce beverages — will likely cause its earnings to drop.

Consider the jaw-dropping math behind “the latte effect” in today’s economy.

A $1.50 bottle of soda for each weekday of the year, for example, would add up to about $390. Now at $2 in some parts of the country, the habit comes with an annual price tag of $520. Over five years, that’s $2,600.

This is the point where a financial planning guru might multiply the cost out for decades, demonstrating how a carbonated beverage is quietly robbing you of your retirement. Except now it’s consumers crunching the numbers and agonizing over their wasteful ways.

“Unfortunately, pain is required for change. The pain of the uncertain economy, of gas prices and food prices, is becoming an important reality check,” said Sheryl Garrett, a financial planner based in Shawnee Mission, Kan. That means people aren’t eating out as often or spending as much on clothing and vacations.

For New York City resident Natasha Patel, the penny pinching means no more cab rides home on weekends. Instead, she relies on her monthly subway pass, saving about $20 in taxi fares a week ($1,040 over a year, $10,400 over a decade).

She also canceled her cable and Internet package, pocketing another $120 a month ($1,440 over a year, for anyone keeping track).

“It makes you really hone in on the things you really want to do, rather than doing stuff just because you can,” said Patel, a 34-year-old academic counselor at Columbia University.

Taxis, mocha lattes and sports cable packages aren’t even options for those who are suddenly out of a job. Others who rein in pricey habits are seeing the savings gobbled up by gas prices or mounting debt. But even among the relatively comfortable, rising prices are upending habits they’ve long known were costing too much anyway.

Cutting back doesn’t have to mean a joyless existence, however. Simple measures like using cash instead of credit cards can make people more conscious of how much they spend, financial planners say. Taking a few hours to scan cell phone and cable bills for unnecessary charges can save, too. Shopping around for better deals when contracts run out is another good idea.

“Most people are not even conscious of how much they spend,” said Laurie Hensley, who teaches a course on personal finance at Cornell University.

In some cases, the cost of all a person’s habits can add up to more than basics like rent and transportation, she said.

That’s not to say the little habits will determine your financial fate. Other factors — mortgages, bad interest rates, credit card debt — are likely the bigger drains on your budget. But when times are tight, it’s a chance to review all spending, big and small.

Giving up pricey routines isn’t stopping the Hovis family from enjoying life. Instead of buying pre-packaged Lunchables at around $4 apiece, Michelle Hovis makes her own using deli meats and cookie cutouts; her daughters don’t know the difference.

To save money on gym memberships, they now take their two young daughters on family bike rides. There are no more trips to Chuck E. Cheese, but they have even more fun taking picnics at a nearby peach orchard.

“We get to spend time together as a family,” Hovis said.

FORT BLISS, Texas – This military base in the far West Texas desert stood as the last Army post in America where if you were old enough to fight and die for your country, you were old enough to drink a beer.

But the party is over at Fort Bliss.

Citing too many drunken-driving crashes and arrests and too many fights, the new commanding general has raised the drinking age on base from 18 to 21, bringing 17,000-soldier Fort Bliss into line with what has been the law in the rest of Texas since 1986.

And not only that, but all Fort Bliss soldiers are barred from slipping across the Mexican border to Ciudad Juarez, the city of famously loose morals where young Americans have been getting drunk — and getting into trouble — for generations. From now on, no passes to Juarez will be issued.

The new policy took effect May 22.

Pfc. Walter Iverson, a babyfaced 19-year-old, said he will miss grabbing a beer after work: “It’s like my parents say, I’m old enough to join the Army, but I’m not old enough to drink.”

“I don’t know why they changed it. I never had a problem with drinking,” he said. A few guys “ruined it for everyone.”

Other Army bases around the country raised their drinking age to 21 over the past 20 years or so. Many states went to 21 under federal pressure beginning in the mid-1980s, and 21 is now the law in all 50 states.

For the past 28 years, however, Fort Bliss let young soldiers drink. For most of that period, it was peacetime, and things were calm on base. Also, commanders figured that letting soldier drinks at the base club would discourage them from going to Juarez.

But now units are routinely shipping back and forth to Iraq and Afghanistan, and base officials say young men and women have been using alcohol to blow off steam — too much steam.

Maj. Gen. Howard B. Bromberg, who took over in January, cracked down after a review of base crime statistics showed that in late 2007 and early 2008, sexual assaults, domestic violence and traffic accidents by soldiers 18, 19 or 20 involved alcohol more often than not.

Before the war, “we didn’t have a large number of incidents involving younger soldiers,” said Fort Bliss spokeswoman Jean Offutt. “We weren’t in a wartime situation, which made for a difference in behavior upon returning.”

One combat veteran said that is all the more reason the soldiers deserve a drink.

“They are under a lot of pressure when they come back from wars,” said 71-year-old Navy veteran Ramon Segura, commander of a Veterans of Foreign Wars post just outside the 17,000-soldier Fort Bliss. “I just don’t think that at the post that it should be 21.”

The way Segura sees it, post bars could easily serve underage soldiers low-alcohol beer and make sure that they stay at Fort Bliss after drinking.

Pvt. Katie Perkovich, who turned 21 in January, said that when she was underage, she liked the safety of being able to have a few beers, bowl at the base bowling alley and walk home.

Pvt. Aaron Clark, also 21, the new policy is good news. “I think it’s for the best,” he said. “Most of the accidents were with drinkers under 21.”

Mike Johnson pours a sample beer during a meeting of the Auburn Brew Club in Montgomery, Ala. That state is not among the 46 in which home brewing of beer is legal.

For years, Alabama beer aficionados have been trying to get home-brewing and the sale of high-alcohol brews legalized, but have failed.

Now the proposal’s startling transition from dead bill to potential law mirrors the transition of Free the Hops, the nonprofit, beer-loving statewide organization that brought up the legislation. During the past three years, Free the Hops has gone from a grass-roots group that believed it had ideas for good laws, to a more sophisticated organization with a plan on how to transform these ideas into laws.

Free the Hops emerged in 2004 because some of the state’s most dedicated beer connoisseurs believed Alabama’s beer laws were so outmoded that the state had become out of sync with the rest of the country.

Among other changes, the group wanted to reform Alabama’s restrictive laws on brew pubs, which required that they be in historic buildings in counties where beer was brewed before prohibition. That law limited the number of brew pubs in the state to three.

The group believed the changes would not only help beer drinkers enjoy exotic brews, but have a huge economic impact on Alabama, where the laws made it possible to sell only a handful of what were usually selected as the top 100 beers in the world.

The group knew its beer. When it initially tried to get the alcohol-content law passed in 2006, it didn’t know the Alabama Legislature.

Any bill in Alabama that deals with alcohol is controversial, and there were groups working hard to defeat “alcohol legislation” that they believed would only hurt the state.

Some opponents argued that the higher-alcohol beer would corrupt teenagers and lead to more drunken-driving arrests.

Rep. Thomas Jackson, D-Thomasville, a bill sponsor, said it was unlikely that teenagers would try a get drunk on beer that can cost about $40 a six-pack.

But a representative of Alabama Citizens Action Program, which opposes any expansion of alcoholic sales in Alabama, said if teenagers wanted the beer, they could find a way to get it – including by stealing it from their parents.

“The bottom line, is that the more alcohol there is, the more alcohol problems you’re going to have,” said Joe Godfrey, executive director-elect of Alabama Citizens Action.

Free the Hops faced another problem: Legislators had no real reason to listen to their arguments. At that time the group only had about 50 members.

Beer distributors, who have a lobby, would gain nothing from passage of a bill allowing independent beers and expensive imports into the state.

Faced with all these problems, the bill literally became a joke. Two years ago, the House presented it the Shroud Award for the “deadest bill” of the session.

“In the long run, I think (the award) helped us both because it got us publicity, and because it showed us some of the things we needed to do,” said Dan Roberts, Free the Hops’ legislative liaison, which like all the organization’s positions is unpaid.

In 2007, the organization used some of its limited funds to hire a lobbyist.

John Little is not only a Montgomery, Ala., attorney but also one of the South’s most talented home brewers who believes that Alabama should legalize home brewing like most of the rest of America. He knows many professionals who brew beer and have declined to come into Alabama from the 46 states where brewing is legal.

In 2007, the Free the Hops bill failed by only three votes.

The group then found something more important than a lobbyist – voters.

By having events throughout the state, the group increased its membership to more than 900 members this year. It also began mobilizing them.

The organization found members who lived in the districts of legislators who were unsure of how to vote – and had them make a call or write a letter, Roberts said.

And unlike last year, this time the organization has the facts to back up its argument and is making sure legislators hear them.

“I think Georgia changed its beer laws in 2004, North Carolina in 2005 and South Carolina just did it recently, in 2007,” Roberts said.

“So we can look at those states that have recently done it and then look at the drunk driving statistics and see that there has been no change. You can look at the underage drinking statistics, no change. The only major change you see is economic impact.”

By Kym Klass, Rick Harmon

DUBLIN – Guinness beer owner Diageo PLC rattled an Irish icon Friday, announcing plans to lay off more than half of its brewery workers, close two breweries and shift most production to a new, high-tech plant in the Dublin suburbs by 2013.

The British beverage maker decided not to close the landmark Guinness brewery, one of Dublin’s oldest businesses and a top tourist attraction, after concluding this would do too much damage to its brand image and customer sentiment.

Diageo expects to lay off about 250 people, or 58 percent of its current brewery work force in Ireland, over the next five years. Brewing staff at the Guinness brewery at St. James’ Gate in west Dublin will be slashed to 65 from 230.

Half of the riverside St. James’ Gate site will be sold for private development, and the volume of Guinness brewed there will be cut by about a third — to about 500 million pints annually. This will exclusively supply the Irish and British markets, where demand has slipped over the past decade in line with pubgoers’ diversifying tastes.

David Gosnell, Diageo’s managing director of global supply, said the move to a new suburban mega-brewery was necessary to compete with the rise of lower-cost breweries in Eastern Europe, Russia and China.

“The business is hugely competitive. … Smaller breweries are consolidating and closing in Western Europe,” Gosnell told a news conference inside Guinness’ panoramic Gravity Bar, which offered a 360-degree view of a mist-shrouded Dublin.

The new plant is expected to employ about 100 people, many of whom could come from the current Guinness brewery.

Two other breweries employing more than 170 in the towns of Dundalk, north of Dublin, and Kilkenny to the south would close by 2013. Few of those workers are expected to relocate. Those breweries produce many other beer brands, but not Guinness.

Gerry O’Hagan, supply director for Diageo in Ireland, said the current production capacity of the Dublin, Dundalk and Kilkenny breweries was less than 1.25 billion pint glasses of beer annually, while the new plant would be able to produce more than two-thirds of that on its own.

Diageo executives said they planned to spend 800 million euros ($1.25 billion) on the plan. Nearly three-quarters would go on building the new plant at an as-yet-undisclosed location, most of the rest on closing the two breweries and paying off staff.

Government and business leaders welcomed Diageo’s plans as a major new investment in Ireland. But union chiefs and opposition lawmakers said the company was greedy and taking Ireland’s drinking public for granted.

Deputy Prime Minister Mary Coughlan said Diageo was planning “a major investment that secures the future of brewing in Ireland.” She said the five-year scale would give workers facing layoffs plenty of time to retrain and look elsewhere.

“People were expecting change, but the actual announcement has shocked people,” said Sean Mackell, general secretary of the Guinness Workers Union. Diageo was “already making huge profits in Ireland,” he said, and vowed to extract maximum payoffs.

About 100 million euros ($150 million) has been earmarked to build a new brewhouse and refurbish other facilities at the St. James’ Gate brewery, where Anglo-Irish entrepreneur Arthur Guinness began brewing Ireland’s dark brown, creamy stout in 1759.

Brian Duffy, who travels the world promoting Guinness as its global “brand director,” said Arthur Guinness was a visionary but unsentimental businessman who negotiated a bargain 9,000-year lease on the St. James’ Gate site. He noted that Arthur Guinness had moved there from another location in search of better profits.

“I firmly believe if Arthur was here today, he would tell us to hurry up and get on with it, and would endorse it as the right thing to do,” Duffy said of Diageo’s plan.

Diageo said the project’s cost could be minimized by selling land at the Dundalk, Kilkenny and Dublin sites valued at an estimated 500 million euros ($775 million). Property prices in Ireland have soared over the past decade of Celtic Tiger boom, but have dropped this year in line with the global credit crisis.

Officials in the two towns losing breweries expressed shock at the news.

The Great Northern Brewery in Dundalk mainly produces Guinness’ sister beers — Harp lager and Smithwick ale — as well as continental European lagers under license, including Denmark’s Carlsberg and Germany’s Warsteiner.

The St. Francis Abbey Brewery in Kilkenny produces Irish-brand ales and U.S. brand Budweiser for the Irish market, where lighter beers, ciders, wines and vodka-based drinks have made steady inroads versus Guinness over the past decade.

The new suburban Dublin brewery would take over the workload of both closing plants. It also would produce Guinness for continental European and global export, as well as the secret-recipe “essence” extract that Guinness ships to its nearly 50 breweries worldwide.

Diageo’s smallest beer-related facility in Ireland, in the city of Waterford, will continue to produce the “essence” extract. But supply director O’Hagan said staff there would be cut to 18 from 27.

Production of the company’s two world-recognized local spirits — Bailey’s Irish Cream and Bushmills Whiskey — will not be impacted by the brewery shakeup.

Diageo shares rose 1.3 percent to 1,041 pence ($20.27) on Friday in London.

WASHINGTON – Consumer advocates are pressing the Treasury Department to develop detailed labels for alcoholic drink packaging to let people know how much alcohol is in each serving of liquor.

The groups want the department’s Alcohol and Tobacco Tax and Trade bureau to expand the information included in a proposed requirement for alcoholic drink labels. Specifically, they want labels that reveal the amount of alcohol per serving, the definition of a standard drink and the U.S. dietary guidelines on drinking.

“I think people have no idea how much alcohol is in a standard drink,” Sally Greenberg, the executive director of the National Consumers League, said in an interview last week. “They need to know that to make the right choices.”

Last July, the Treasury Department published a proposed rule to label all alcoholic drink packages with percentage of alcohol by volume along with the number of calories, carbohydrates, fat and protein for a standard serving size. The comment period on the proposed rule ended in late January and the department is analyzing the results to determine if and how to move forward. There is no time frame for this process, said spokesman Arthur Resnick.

But consumer groups were upset that the label proposed in July did not list the amount of alcohol in each serving, the amount defined as a standard drink and the U.S. dietary guidelines for how many drinks an individual should have in a day.

A newspaper ad campaign launched last month and signed by 18 public health, nutrition and consumer organizations and officials urged Treasury Secretary Henry Paulson to change the labels on alcoholic drinks to include such information along with the products’ nutritional details.

“When the TTB finally put out a proposed label, it didn’t include alcohol,” said Barbara Moore, nutritionist and president of Shape Up America! She said adding the total amount of alcohol would help people realize that alcohol itself is a significant source of calories.

The industry’s reception of such desired changes is mixed.

Peter Cressy, president of the Distilled Spirits Council, a trade group, favored two of the potential additions. “Knowing how much alcohol is in a serving of beer, wine or spirits and how that alcohol content relates to a standard drink helps consumers make responsible drinking decisions,” he said in a statement.

But other trade groups have different views.

The Beer Institute and the Wine Institute, which represents California wineries and wine businesses, both think that including the amount of alcohol per serving could confuse consumers.

“Use of fractional measurements of beverage volume and absolute alcohol content to prepare drinks or to make product comparisons requires complex calculations,” the Beer Institute said in its January comments to Treasury, adding that this is “likely to mislead consumers.”

Both trade groups also feel the standard drink size information does not have meaning for consumers, especially when they order a mixed drink in a bar.

Wendell Lee, general counsel for the Wine Institute said “Consumers may think they’re getting a standard drink” at the bar but “it’s not what happens in the real world.”

The world will be awash in bourbon Saturday, as thousands sip frosty mint juleps to celebrate the Kentucky Derby in Louisville. But while corn-centric bourbon may be the libation of the day, there is growing buzz over a whiskey based on another grain – rye.

Rooted well north of the Mason-Dixon Line, rye whiskey is spicy and edgy compared with its mellow Southern cousin. If bourbon is soft and genteel, rye – the original mixer for the Manhattan, Old Fashioned and other classic cocktails – is assertive and brash. And it’s turning heads.

But Kentuckians need not choke on their straws. While rye whiskey was made first in Pennsylvania and Maryland and was popular in the bars and taverns of the Northeast, most rye is distilled in Kentucky.

“I’d say the volume of interest in rye whiskey has gone up exponentially in the last two years,” says Larry Kass, communications director of Heaven Hill Distillery near Bardstown, Ky., which has made rye whiskey since the end of Prohibition.

Heaven Hill, which also makes Evan Williams and Elijah Craig bourbons, introduced a 21-year-old Rittenhouse Rye for $140 a bottle in fall 2006, even before the New York Times validated the rye resurgence. Its Rittenhouse Very Rare 23-Year-Old Single Barrel Rye, introduced in late 2007, was named Best Rye Whiskey in April at the San Francisco World Spirits Competition.

The Buffalo Trace Distillery near Frankfort , Ky., brought home a Northern American Whiskey of the Year award in 2007 from San Francisco for its Sazerac Straight Rye Whiskey. This year, the same whiskey took gold, while Buffalo Trace’s Thomas H. Handy Sazerac Straight Rye Whiskey earned a double gold.

“Our feeling, even 10 years ago, was that there was opportunity in rye,” says Mark Brown, president and CEO of Buffalo Trace.

That was when a manager told him about a cache of fine rye whiskey aging in his sprawling brick warehouses. The next year – 1998 – Brown directed his distiller to start making more rye.

Why rye? To explain its growing popularity, Brown and others compare the trend to the explosion of single-malt Scotch whiskeys in the 1990s. As American consumers became more sophisticated, they wanted to sample different, often rare and pricey whiskeys – small batch and single-barrel bourbons, and now, rye.

“(Until then) there was a perception that all American whiskey was the same,” says Brown.

For some, rye is the “new frontier for American whiskey,” says Kass. Others perceive it as “retro” and “classic.”

Considering rye’s history, it may be more surprising that the whiskey actually had to make a comeback. Rye was an American favorite long before bourbon was born. In fact, rye whiskey distillers, who left Pennsylvania after the Whiskey Rebellion of 1794, are credited with creating bourbon before the turn of the 19th century. Upon arriving in Kentucky, these early craftsmen substituted corn for rye in their recipes simply because the yellow grain was more plentiful.

While bourbon soon became king in the South and much of the West, rye whiskey ruled the Northeast and upper Midwest until Prohibition. After 1933, Canadian rye whiskeys flooded the U.S. market. Perhaps because corn was still cheaper after World War II, American rye whiskey largely disappeared from bar shelves and liquor cabinets.

Even then, it was easy for Kentucky distilleries to make small amounts of rye whiskey because they had the grain on hand. By law, bourbon must be made using at least 51 percent corn, but rye is usually an ingredient along with malted barley. Conversely, rye whiskey must be at least 51 percent rye, but contains some corn.

Distilling rye whiskey is much the same as bourbon, and like the corn-based whiskey, rye is aged in new, charred, oak barrels. This is why, at first look, sniff and taste, some might think bourbon and rye are identical. Their color is a golden amber, growing darker with age. The aroma and taste are similar, with nuances of vanilla and caramel notes from oak wood aging.

So why not rye whiskey in a mint julep? The spicy, some might say slightly bitter, flavors of the rye whiskey stand out in the sweet julep. When made with traditional bourbon, the drink is rounder and more mellow. As they say in Kentucky, the rye mint julep isn’t better, “just different.”

———

RECIPES

The 134th running of the Kentucky Derby is at 3:04 p.m. Saturday Tucson time. To get into the Louisville, Ky., mood, try these recipes, courtesy of The Cincinnati Enquirer.

Taste Plus

Mint Julep

Try rye for a spicier twist to the traditional Derby drink.

crushed or shaved ice

fresh mint sprig

2 tablespoons mint syrup (or to taste; see note)

3 ounces rye whiskey or bourbon

Fill julep cup or glass 1/2 full with ice. Insert straw to bottom of glass and insert mint sprig near straw. Stir syrup and whiskey in another glass and pour over ice. Add more ice to top of glass and serve.

Note: To make mint syrup, boil 1 cup of sugar with 1 cup of water about 5 minutes, or until dissolved. Remove from heat and add large bunch of washed, fresh mint. Cover and allow to sit at least 1 hour or until cooled to room temperature. Strain out mint, cover and refrigerate until needed.

Manhattan

2 1/2 ounces rye whiskey

1 ounce Italian sweet vermouth

several dashes of bitters

lemon twist or cherry, for garnish

Stir well with ice cubes and strain into cocktail glass. Garnish with lemon twist or cherry.

Note: A “dry Manhattan” uses only French vermouth and lemon twist; a “perfect” employs the same amount of vermouth, but 1/2 French dry and 1/2 Italian sweet.

Source: “Michael Jackson’s Bar & Cocktail Companion” (Running Press, $19.95)

Old Fashioned

2 teaspoons sugar syrup

3 dashes bitters

1 1/2 ounces rye whiskey

twist of lemon, for garnish

slice of orange, for garnish

Pour syrup and bitters into old fashioned glass and stir. Add ice, top with whiskey, stir and garnish.

Source: “Michael Jackson’s Bar & Cocktail Companion” (Running Press, $19.95)

———

MORE RECIPES

• More traditional recipes for the Kentucky Derby Derby Day Recipe

Dry Fly going with the grain in state saturated with wineries & brewpubs

SPOKANE, Wash. – In the land where hops and grapes grow, Northwest brewpubs have poured a variety of pale ales and dark beers. Wineries have uncorked pungent cabernets, spicy syrahs and fruity rieslings.

It stands to reason that distillers could enjoy the same success with local ingredients for grain gin or potato vodka, but entrepreneurs in Washington state have been slow to catch on.

Until now.

Dry Fly Distilling, believed to be the state’s first production grain distillery since Prohibition, opened its doors last fall. Others are lining up to follow suit, putting Washington in a position to compete with its southern neighbors on another alcohol front.

California and Oregon, already known for fine wines and microbrews, also lay claim to the largest number of craft distillers nationally in a beverage market that is exploding.

“Whiskey is the future. The brands that are out there are old and tired. They’ve been around for 150 years,” said Bill Owens of the American Distilling Institute, based in Hayward, Calif. “These new distilleries are creating new and interesting products. That’s the plan – you’ve got to come out the door and do something different.”

More than 31,000 acres of wine grapes are grown in Washington state. Its inland fruit bowl, the agricultural Yakima Valley, also produces 70 percent of the world’s hops, which provide much of the flavor and aroma for beer.

In the early 1980s, beer pioneer Bert Grant laid claim to what was believed to be the first American brewpub since Prohibition in central Washington. Dozens of microbreweries and hundreds of wineries have set up shop in the state since, and their products are becoming known around the world.

Like the breweries and wineries before it, Dry Fly Distilling is capitalizing on local ingredients and local talent.

“I first looked at doing a brewery, but that’s just too tough of a market right now. There’s too many,” said Don Poffenroth, Dry Fly’s co-owner. “Then my friends in the brewer business told me to look at distilling. They said, ‘That’s the next great thing,’ and I think they’re right.”

The 142 craft distilleries in the U.S. are a pittance compared with the booming number of wineries and breweries – some 7,000 wineries and 1,500 breweries nationwide. But 38 of those distilleries are in California and Oregon.

In Oregon alone, the number of distilleries doubled to more than 12 in the past two years, said Jim Dodge, purchasing manager for the Oregon Liquor Control Board. Craft liquor sales by state liquor stores topped 14,000 cases in the 12-month period ending November 2007, compared with 9,331 cases in the previous 12 months.

Last year, Oregon lawmakers approved a law allowing distillers to open tasting rooms and sell directly to the public.

“Some of these distilleries have been connected directly to the wine industry, but only a few,” Dodge said. “I think it’s an outgrowth of the earlier success of the microbrews, and the other element is more of a societal change.

“There’s been a recent shift from beer, and to some degree wine, to distilled spirits as the alcohol of choice,” he said.

Craft spirits remain a small niche in the U.S. spirits industry, which rings up $58 million in annual sales. Entrepreneurs in Washington aren’t dissuaded.

Poffenroth also supports legislation proposed in Washington state to create a new class of alcohol license for craft distillers – those who produce only about 10,000 cases annually and derive more than 50 percent of their raw product in state.

The license fee would be just $100, compared with $2,000 for large grain distilleries and $200 for fruit spirits. Distillers also could allow visitors to sample on site and conduct limited retail sales.

Other states have taken similar steps. In 2002, New York introduced a new class of distilling license for small producers that carries a fee of $1,450, compared with $50,800 for the old license.

In the meantime, local farmers already are excited about the opportunities for new markets, Poffenroth said.

“For wheat farmers, for instance, it puts a retail face to a crop that doesn’t usually get one,” he said.

Dry Fly buys most of its bulk ingredients from Washington growers – a 20-family cooperative provides the raw, soft winter wheat for vodka and gin, and the malted barley for whiskey and flaked corn for bourbon are local.

So, too, are the ingredients that make up Dry Fly’s 80-proof vodka recipe: juniper, coriander, organic dried apple, hops, lavender, mint.

Dry Fly produces one batch of whiskey a month – about 900 cases – where each barrel ages for at least two years. But they’re distilling as much vodka and gin as they can make in a still with a capacity of 3,000 cases per year.

Eighteen months of planning went into the business, and 45 days in, Poffenroth and partner Kent Fleischmann were already making plans to expand. That despite liquor laws that in many states date back decades.

“Craft distillers are going to bring new flavors, and they’re going to find ways around old ways of spelling out how things are done,” Poffenroth said. “In our case, you build a small business and you hope it’s going to work out. We knew eventually we would, we just thought it would be three years instead of three months.”

———

ON THE WEB

www.dryflydistilling.com

www.distilling.com

Heaven Hill Distilleries' Rittenhouse Single Barrel Straight Rye Whiskey, Very Rare 23 Year Old was named the Top Rye Whisk(e)y in the 2008 San Francisco World Spirits Competition. The file photo above shows Heaven Hill master distiller Parker Beam.

What better way to introduce yourself to a new spirit than to sample the “best” in a given category.

One way to find the best is to consider the results of last month’s eighth annual San Francisco World Spirits Competition.

In all, 25 judges tasted 847 spirits from 63 countries in 439 brand classifications, according to the competition’s official Web site.

Here is a rundown of the winners, based on a press release from event organizers, including where appropriate the price given by the entrant per 750-milliliter bottle. Note that its Whisk(e)y categories combine Scotch whisky and other whiskeys.:

• Distiller of the Year Buffalo Trace Distillery (Kentucky)

• Importer of the Year Moët Hennessy USA (New York, N.Y.)

• Best in Show – White Weber Haus, Silver Cachaça (Brazil) (no price available)

• Best in Show – Whisk(e)y Highland Park 12-year-old Single Malt Scotch (Scotland) ($40)

• Best in Show – Brandy Loujan 1979 Armagnac (France) ($105)

• Best in Show – Liqueur Domaine de Canton Ginger Liqueur (France) ($30)

• Top Absinthe (new category) Vieux Pontarlier Absinthe (France) (NPA)

• Top Vodka Snow Queen Vodka (Kazakhstan) ($29)

• Top Gin Plymouth Gin (England) ($30)

• Top Rum Matusalem Gran Reserva Rum (Dominican Republic) ($32)

• Top Tequila AsomBroso Silver Tequila (Mexico) ($45)

• Top Reposado Tequila El Tesoro Platinum Tequila (Mexico) ($40)

• Top Añejo Tequila Siete Leguas Añejo Tequila (Mexico) ($50)

• Top Extra-Aged Añejo Tequila Don Julio Extra-Aged Añejo Tequila (Mexico) ($350)

• Top Irish Whiskey Jameson Rare Vintage Irish Whiskey (Ireland) ($250)

• Top Rye Whisk(e)y Rittenhouse Single Barrel Straight Rye Whiskey, Very Rare 23 Year Old (Kentucky) ($170)

• Top Blended Scotch Chivas Regal 25 Year Old Scotch (Scotland) ($299)

• Top Bourbon Pappy Van Winkle Kentucky Straight Bourbon Whiskey, Reserve 20 Year Old (Kentucky) ($100)

• Top Cognac Hennessy Cognac Paradis Extra (France) ($320)

• Top Fruit Liqueur Cointreau Orange Liqueur (France) ($34)

———

IN TUCSON

These Tucson liquor stores likely are your best bets for finding some of the competition’s winners. Prices may vary considerably. You may want to call ahead, or order online.

AJ’S FINE FOODS 2805 E. Skyline Drive, 232-6340

BEVMO! 6228 E. Broadway, Suite 100, 514-0695

MAGEE ROAD LIQUORS 7980 N. Oracle Road, 297-9113

PLAZA LIQUORS AND FINE WINES 2642 N. Campbell Ave., 327-0452

RUMRUNNER WINE & CHEESE CO. 3131 E. First St., 326-0121

THE BEVERAGE HOUSE • 6250 N. Oracle Road, 219-6424, • 4231 E. 22nd Street, Suite 141, 323-6566, and • 8660 E. Broadway, 296-9933

A vineyard waits after the harvest near Jefferson, Ore., in the fall of 2006. Oregon had a third consecutive record harvest of grapes during 2007.

PORTLAND, Ore. – Oregon produced and crushed a record amount of grapes in 2007, the third year in a row it has hit such highs.

Experts say it’s the result of the right mix of good weather and demand for Oregon wine.

“I think it’s just another impressive figure to show the continued growth in Oregon,” said Chris Mertz, director of the Oregon Field Office of the National Agricultural Statistics Service, which compiled the report.

Oregon wineries sold 1.7 million cases of wine for $207.8 million in 2007. But there is still unmet demand, the report found, particularly for mature grapes such as pinot noir.

“Oregon wines have never been more popular around the world,” said Ted Farthing, executive director of the Oregon Wine Board, which represents the state’s wineries.

Pinot noir and pinot gris production both increased by 15 percent. Cabernet sauvignon production increased by 33 percent.

The growth in production doesn’t mean quality will drop, Farthing said. The yield, which is often considered a measure of quality, has grown in pace with the acreage planted.

“If you talk to winery owners one-on-one they talk about quality, quality, quality,” Farthing said. “To me, it is continuing a very thoughtful trend of responsible, steady growth.”

Prices for Oregon wine go up each year, Farthing said, but it’s a difficult thing to measure because of the variety across wineries.

The continued good harvests are a relief after weaker harvests in 2004 and 2005 that hindered growers and winemakers.

Growing conditions in 2007 enabled yields of 2.8 tons per acre of grapes.

Oregon’s 370 wineries reported producing wine under 442 labels. The number of wineries has grown, but most remain small.

NEW YORK – It may seem heresy to purists, but flavored beers are going mainstream as brewers reach for sales growth.

Sales of flavored distilled spirits and niche and upscale “craft” brews have shown that a splash of citrus, vanilla, berry or other flavorings go a long way with younger drinkers.

“The name of the story is growth, and the only way to get share is to come out with something different,” says Frank Walters, research director at Impact, which tracks spirits sales.

Now, mainstream Bud Light will try for a taste of the action. Anheuser-Busch will introduce Bud Light Lime (with real lime juice) in May with a $35 million marketing push. Its decision to flavor a flagship brand and not create a new label signals a change in attitude by beermakers.

“By putting the Bud Light name to it, Anheuser-Busch is signaling that they envision some kind of mainstream opportunity,” says Benj Steinman, editor of industry newsletter Beer Marketer’s Insights. “It’s not just a small niche. Otherwise, they would not put the Bud Light name to it.”

Miller Brewing, meanwhile, is expanding package options for its second season for Miller Chill, a light beer flavored with lime and salt. Julian Green, a Miller spokesman, says the company decided to give the brew its own Miller Chill label and not make it a variety of Miller Lite because marketers believe it sounds “more premium.” It first was test marketed in Arizona and a few other states.

The brew will be sold in fancy, slim, 12-ounce cans and 16- and 22-ounce aluminum bottles, as well as the original glass bottles.

A-B, the world’s largest brewer, took its first swig only last spring, with Michelob Ultra in Pomegranate Raspberry, Lime Cactus and Tuscan Orange Grapefruit flavors.

Last month, came Budweiser & Clamato Chelada and Bud Light & Clamato Chelada, beers mixed with Clamato Tomato Cocktail, a clam-juice-flavored, bloody mary-type mixer.

“The palate for consumers has broadened, and they are looking for more variety,” says Dave Peacock, vice president of marketing.

He says he expects the $1 price premium per six-pack for lime over regular Bud Light to offset an expected 20 percent decline in regular Bud Light sales as some buyers switch.

“Loyalists don’t want lime beer,” Peacock says. “But about 29 percent of beer consumers have some form of sweeter palate.”

Coors Brewing, meanwhile, will continue to offer seasonal flavors for its fast-growing, Belgian-style Blue Moon brand. Blue Moon seasonal brews include pumpkin for fall, lime for spring, honey for summer and dark Belgian sugar for winter.

———

SPECIALTY SHOPS

Any beer, wine or spirit available in Arizona, but not on the shelves at your liquor or grocery store, can be special ordered. See store for details.

Here are details on the Tucson liquor stores that stock specialty wines, beers and liquors, including selections from France.

AJ’S FINE FOODS 2805 E. Skyline Drive, 232-6340

THE BEVERAGE HOUSE • 6250 N. Oracle Road, 219-6424, • 4231 E. 22nd Street, Suite 141, 323-6566, and • 8660 E. Broadway, 296-9933

BEVMO! 6228 E. Broadway, Suite 100, 514-0695

CATA VINOS WINE SHOP 3063 N. Alvernon Way

58 DEGREES & HOLDING CO. • 5340 E. Broadway, 747-5858 and • 4280 N. Campbell Ave., 529-2020

MAGEE ROAD LIQUORS 7980 N. Oracle Road, 297-9113

PASTICHE WINE SHOP 3025 N. Campbell Ave., 325-3333 pasticheme.com

PLAZA LIQUORS AND FINE WINES 2642 N. Campbell Ave., 327-0452

RUMRUNNER WINE & CHEESE CO. 3131 E. First St., 326-0121

VINO 100 10110 N Oracle Road, 575-8466 vino100.com

This photo is provided by the Eastpointe (Mich.) Police. Authorities say a Detroit beer distribution company loaned the green, pint glass-shaped costume to someone for Halloween.

EASTPOINTE, Mich. – Police in suburban Detroit are looking for a 6-foot-tall glass of Guinness. Don’t worry, it’s work-related.

A green, pint-glass-shaped Guinness costume has been reported stolen from an Eastpointe resident’s garage. It’s valued at $3,000 and had been flown to Michigan from Ireland to be used as advertising. Eastpointe Police Lt. Leo Borowsky says it is believed to be one of only two such costumes in the U.S.

Authorities say a Detroit beer distribution company loaned out the costume for Halloween. The owner of the home where the costume had been stored found out it had been stolen after the company asked for it back.

Borowsky says to be on the lookout. There’s no better time to dress up as a green pint of Guinness than on St. Patrick’s Day.

New technology is making it easier for bar and restaurant owners to automatically track liquor use instead of manually matching inventory with sales.

“If you don’t keep things in check, it can cost restaurants a significant amount of money,” said Steve Chucri, president and chief executive officer of the Phoenix-based Arizona Restaurant and Hospitality Association.

Restaurants and bars can lose up to 30 percent or more on drink sales if bartenders, for example, pour too much liquor or give away free drinks, said Michael Thomas, a franchise owner of Bevinco. Some of his clients were losing as much as 50 percent per drink.

Toronto-based Bevinco is one of a growing number of services helping restaurants and bars slow losses from overpouring alcohol. Bevinco, in part, requires bottles to be manually weighed on a regular basis.

More high-tech offerings include BarVision, developed by Tempe-based Nuvo Technologies Inc. It relies on digital pour spouts that record and wirelessly transmit how much liquor a bartender pours per drink.

The information is sent to a receiver, then to a computer program that tracks the data and creates reports that show how much money bar managers spend per drink – or their “pour cost.”

“The response has been excellent, although it’s a little bit of a tough sell simply because it’s so new and modern and a little bit outside of the box,” said Mark Cutsforth, senior vice president of technology for TekNV Inc. He declined to give sales figures or customers’ names.

Rare is the Hollywood western that doesn’t include the stock character of bartender. A dour presence, he quietly polishes glasses, pushes straight whiskey and ducks behind the mahogany when the fighting starts.

But this vision of the frontier saloon-keeper sells them short: Some of the most colorful characters of the Old West were the anything-but-dour men behind the bars.

Drinks historian David Wondrich sets the record straight in his new book, “Imbibe!,” a tribute to the legendary 19th-century bartender Jerry Thomas.

Wondrich quotes one amazed observer of rough and rowdy California that the saloons had “purer liquors, better segars, finer tobacco . . . and prettier courtezans” than anyplace in the country: “California can and does furnish the best bad things that are obtainable in America.”

Presiding over the best bad things were the “professors” of the bar – flamboyant fellows with brocaded waistcoats and flashing diamonds who mixed fantastically elaborate concoctions.

They were admired as men of property and professional accomplishment.

The most illustrious of the lot was Thomas. As a young man he traveled to California after gold was discovered there in 1849 and soon realized the handiest veins of gold were to be found in the pockets of the miners, who would pay princely sums for those best bad things.

Thomas returned East after a few years with a small fortune earned mixing drinks for the Forty-Niners, and soon opened what would become one of the most popular bars in New York.

He covered the walls with original artwork, including a large collection of Thomas Nast cartoons, and mixed fabulous drinks while keeping up an entertaining banter.

During his life, Thomas was profiled in various newspapers, and upon his death in 1885, he was fondly eulogized by the New York Times.

But for all his celebrity, Thomas would likely have been forgotten if not for his groundbreaking “Bar-Tender’s Guide.”

“Thomas did something no American bartender had ever done before,” Wondrich writes.

He “put the unruly mass of formulae that every skilled mixologist carried around in his head down on paper.”

The book, also known as “How to Mix Drinks, or the Bon-Vivant’s Companion,” became the core canon of every bartender’s education, with its exhaustive categories of punches, flips, fixes, cobblers, juleps and, yes, cocktails.

Because Thomas was the first to write most American drink recipes down, he was mistakenly credited with having invented many of them (it was a mistake that Thomas did his best to encourage).

But Wondrich is able to identify with confidence only one cocktail as having originated with the Professor himself – the Japanese Cocktail, a mix of brandy, orgeat (almond syrup) and bitters in 1860 to commemorate the ballyhooed and bibulous visit of the first Japanese embassy to America.

Thomas created the Japanese Cocktail – brandy, orgeat (almond syrup) and bitters – in 1860 to commemorate the ballyhooed and bibulous visit of the first Japanese embassy to America.

Japan sent some 170 diplomats, bureaucrats, samurai and servants to the States, ostensibly to get the president’s signature on an English-language copy of a treaty. Of the many amenities the ambassadors experienced, none was embraced with quite as much enthusiasm as drink. The Chicago Tribune reported that the Japanese didn’t miss their sake, as they were quick to “exchange it for Champagne and other wines, and rum, whisky and brandy.” One of the envoys, Fukuzawa Yukichi, recounted in his memoirs how startled they had been upon first being served sparkling wine: “When a bottle was opened, it exploded with a frightening noise.” Even stranger to them was the ice that was served in the glasses to chill the champagne. “Some were frightened by the floating objects and spat them out; some were loudly crunching on the cubes.” They didn’t realize it was just ice, wrote Yukichi, because “we didn’t know they could have ice in such warm spring weather.”

While staying at the Willard Hotel in Washington, the younger ambassadors would “slip into a room to enjoy a julep.” A reporter for the Boston Journal complained that it was hard to gather news because “as they imbibe and become loquacious they forget their English and grow communicative in unintelligible Japanese.” Even so, Champagne quickly became the legation’s drink of choice, and rather expensive Champagne at that. When New York threw a grand ball in the ambassadors’ honor, the wine bill alone was more than $20,000 – or about half a million in today’s dollars. The New York Times griped that the crowd had been “ankle-deep in Champagne,” and grumbled that giving the Japanese a taste for Champagne had only benefited “French commerce.”

At least Jerry Thomas was doing his part to instruct the Japanese legation in the signature American art of mixing drinks. When in New York, the legation stayed at the Metropolitan hotel, just a few blocks from Thomas’s saloon. Chances are an ambassador or two tried the drink created in their honor.

The Japanese Cocktail – with its use of the rather exotic-tasting orgeat (pronounced or-ZHAH) – pushed open the possibilities of cocktails, helping what was then a narrow category of quaffs begin its evolution from a simple thing of liquor, sugar and bitters into the very definition of the American mixed drink. Though the Japanese Cocktail didn’t survive Prohibition, it’s worth reviving. And it’s easy to make – though if you want to mix it up in a fashion befitting the Professor himself, you might want to get a set of diamond cuff links.

———

Japanese Cocktail
2 ounces cognac

1/4 ounce orgeat (almond syrup)

2 dashes Angostura bitters

1 slice lemon peel

Muddle lemon peel in orgeat and bitters in the bottom of a short tumbler. Add cognac and ice, stir, and serve. Or, shake all with ice and strain into a stemmed cocktail glass.

When I see a good recipe for chicken nuggets, I don’t like to let the fact that they’re made of chicken stop me.

So when I came across the recipe in Real Simple’s February issue for “Kickin’ Chicken Nuggets,” featuring a breading made of pita chips, I knew there had to be a way to lose the chicken and keep the pita breading.

I ended up using well-drained extra firm tofu in place of the chicken, and I was pretty happy with the results. But if you’re not already on board with tofu, this dish probably won’t win you over.

These nuggets are incredibly versatile – any spice can be added to the pita mixture to create new flavors.

This recipe calls for cumin in the pita breading and recommends tamarind date sauce and coriander chutney for dipping. It was inspired by a paneer appetizer I’ve enjoyed at parties – look for the sauces at a grocery store that specializes in Indian food.

They could also be made by using basil and oregano and dipping the tofu nuggets in tomato sauce (think mozzarella sticks), or seasoning the breading with smoked paprika and ground mustard and dipping them in ketchup and honey dijon mustard (more like classic nuggets).

Contact Liz Kohman at versatile.vegetarian@gmail.com.

———

BODY PLUS REFER
MORE FOR YOUR HEALTH

For more information on healthful eating, go to the Tucson Citizen’s Body Plus.

MORE RECIPES

For seasonal, celebrity and local chefs’ recipes, go to the Recipes link at the bottom of the Taste Plus home page.

———

Tofu Nuggets,

3 ounces pita chips (I used one-half of a 6-ounce bag of Stacy’s Simply Naked Pita Chips)

1/2 cup grated Parmesan

1 1/2 teaspoons cumin

1 egg

12 ounces firm tofu, drained

tamarind sauce, for dipping

cilantro chutney, for dipping

Wrap tofu in a towel, and press between two plates, placing something heavy (like a 28-ounce can of tomatoes) on the top plate. Press tofu for at least 10 minutes.

Preheat oven to 400 degrees. Place the pita chips and Parmesan in the bowl of a food processor. Pulse until coarsely ground. Transfer to a bowl and mix in the cumin. In another bowl, beat the egg with 1 teaspoon of water.

Unwrap the tofu and cut into bite-sized chunks. Dip the tofu in the egg and let the excess egg drip off before rolling the tofu in the pita mixture.

Place the tofu pieces onto a parchment-lined baking sheet, and bake for 10 to 12 minutes, until the tofu nuggets are crisp and slightly browned.

Serve with tamarind sauce and cilantro chutney for dipping.

Serves 4.

More distributors are giving up exclusive deals to sell Anheuser Busch beers, to take advantage of the growing craft beer market.

A decade ago, Anheuser-Busch Cos. began dangling financial incentives to get beer distributors to jettison rival brands. The campaign, known as “100 percent Share of Mind,” was a big hit, helping the King of Beers tighten its grip on the U.S. market.

But now, some distributors are finding that selling only Anheuser products might not be smart in the fast-changing alcohol-beverage industry.

In the past year, distributors in Texas, Tennessee and elsewhere have decided to eschew Anheuser’s incentives and begin selling rival beers such as Yuengling Lager, as well as wine and spirits. Recently, R.H. Barringer Co. became the first Anheuser distributor in North Carolina to start selling other brands, acquiring a rival that sells wine and imported beer. Today, about 60 percent of Anheuser’s sales flow through distributors carrying only its brands, down from about 70 percent at its peak.

The shift might help competing alcohol brands gain market share, as distributors divert some of their attention from Anheuser, which accounts for about 48 percent of U.S. beer sales. For consumers, it means greater choice at their local bars and liquor stores. Wall Street analysts say the movement signals a weakening of the St. Louis brewer’s clout in the marketplace, as small-batch “craft” beers and imports, as well as wine and spirits, wrest market share from mass-market brews like Budweiser.

Anheuser’s exclusive distribution system “was a great business model,” but “the consumer environment has changed dramatically,” says Bump Williams, general manager of the beer, wine and spirits practice of market-research firm Information Resources Inc.

In recent years, some of Anheuser’s 560 independent distributors became frustrated as craft brands such as New Belgium Brewing Co.’s Fat Tire Amber Ale surged in popularity and competing distributors snatched them up. Often, the distributors adding such high-margin brews were the same ones that peddled the beers of Anheuser’s top rivals, SABMiller PLC’s Miller Brewing and Molson Coors Brewing Co.

Anheuser wholesalers “are realizing that we have made the competition stronger by basically forfeiting these brands to them,” says Chris Monroe, vice president of D. Canale Beverages Inc., a Memphis, Tenn., distributor that carried only Anheuser products until last fall.

As profit growth eroded, Anheuser distributors began clamoring for the company to acquire brands with higher profit margins and growth rates. The beer titan has responded over the past two years. It reached a deal to import European beers such as Stella Artois and Beck’s from Belgium’s InBev SA. And it has expanded agreements to distribute other companies’ craft brews, spirits, water and other beverages.

Some distributors began hawking rival products several years ago. Others haven’t been able to distribute the InBev products and other new brands from Anheuser because of franchise laws governing beer sales. The laws, which exist in many states, block a distributor from taking over a brand unless the existing distributor agrees to sell it. Ironically, Anheuser distributors often backed the adoption of such laws.

When distributors forgo the incentives Anheuser offers exclusive partners, they are making a bet that they will make up the difference with revenue from the new brands. The incentives include cash payments of two cents a case, access to credit and truck-painting allowances.

Last fall, 11 distributors in Tennessee stopped being exclusive, in part because the state’s franchise law kept them from obtaining the InBev lineup. They all began selling brews made by Pennsylvania’ s D.G. Yuengling & Son Inc., one of the nation’s oldest beer makers, which was entering the Tennessee market.

“We saw a brand with some very strong potential, and we didn’t want that brand to fall into competitive hands in the state,” says Mr. Monroe of D. Canale in Memphis.

The move may be hurting Anheuser. Yuengling established 3.2 percent market share in terms of volume in food stores in Tennessee in the 13 weeks ended Dec. 30, says Information Resources. In the same period, three of Anheuser’s four-top selling brands in the state – Budweiser, Busch and Natural Light – experienced sales declines. Budweiser volume fell 5.4 percent.

“There appears to be some correlation between Yuengling’s entry into Tennessee and the softness in some Anheuser brands,” says Mr. Williams of Information Resources. He says it is common for Yuengling to grab share from Anheuser when it enters new markets.

Dave Peacock, Anheuser’s vice president of marketing, says Yuengling is having a minimal, if any, effect on its Tennessee sales, noting that other brewers experienced similar declines late last year.

Still, Anheuser wasn’t happy with the way it learned of the Tennessee distributors’ decision. “We found out later (in their decision-making process) than we would have liked,” says Mr. Peacock. “When we don’t get early communication, it rubs us wrong.”

Anheuser continues to champion the exclusivity program, believing it gives distributors the best chance to succeed. “We want their efforts and focus aligned with ours,” says August Busch IV, Anheuser’s chief executive. The company is open to talking to its distributors about beer brands it could acquire that would help strengthen their businesses, he says.

Mr. Busch’s father, August Busch III, ran the company when it began the exclusivity program in 1997. The campaign angered Anheuser’s foes, especially craft-beer makers that lost access to some markets. The Justice Department investigated the brewer for possible violations of antitrust law, but eventually dropped the probe. At the time, Anheuser controlled about 45 percent of the beer market, and about 41 percent of its distributors carried only its brands. As more distributors went exclusive, Anheuser’s market share rose to 50 percent, a significant feat.

So far, the biggest Anheuser distributor to end exclusivity is Ben E. Keith Co., of Fort Worth, Texas. The distributor, one of the nation’s largest, sold only Anheuser beers for about 75 years until last spring. It began selling brews like Trumer Pils, as well as wine and energy drinks that also aren’t affiliated with Anheuser. The decision came “after much debate and with the utmost respect” for Anheuser, says Kevin Bartholomew, who runs the company’s beer division.

Bartholomew is among those who believe such a shift ultimately will benefit Anheuser, because individual distributors will have enhanced their long-term business prospects.

Some industry observers are surprised a greater number of distributors haven’t flown the coop. “It really hasn’t been a widespread national jailbreak,” says Harry Schuhmacher, editor of Beer Business Daily, an industry publication. “It will be interesting to see if August continues to hold the party line.”

Some analysts say “jailbreak” may not be far off.

Jim LaRose, a Cleveland-area distributor, says he is among those taking a hard look about whether to remain exclusive. He says his sales growth has flattened. “I have to have an outlook toward what it’s going to take for me to compete in all tiers of the industry,” he says.