Sharepoint 2007 Custom Alert Template Group By Clause

We have created a custom sharepoint alert which shows data in a digest format. The data is categorized in a manner that traditional reporting SQL would leverage as a group by.

Is anyone aware of a way to change a custom List Email Alert Tempate to show and form the email with the caregory (group) as subheaders ? (CAML query groupby?)

Sharepoint List Content
Date      |              Group   |              Description
1/1/2012              Red                        Item 1 about Red
1/1/2012              Red                        Item 2 about Red
1/1/2012              Blue                       Item 1 about Blue

Alert Email Format Currently:
1/1/2012              Red                        Item 1 about Red
1/1/2012              Red                        Item 2 about Red
1/1/2012              Blue                       Item 1 about Blue

Red
1/1/2012              Item 1 about Red
1/1/2012              Item 2 about Red

1/1/2012              Item 1 about Blue