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Exclusive: Top Spirits And Wine Wholesalers On Pace For Hard-Earned Growth In 2014, Reports Impact

April 9, 2014

Impact’s exclusive report on the U.S. market’s top 10 spirits and wine distributors reveals that nearly all of the middle tier’s key players are on pace for revenue growth in 2014, but achieving it won’t be easy. Five years after the country suffered one of its worst economic downturns in decades, the on-premise channel continues to struggle across much of the U.S. And in markets where that business has recovered, momentum has been lost over the past year, as the upscale casual chains that are so crucial to the success of the spirits and wine trade have endured declines both in traffic and the average ticket.

With overall market conditions tough and both spirits and wine growth slowing in the U.S. market in 2013, 2014 is shaping up to be a challenging year for the leading spirits and wine distributors. “Things really seem to be tightening,” says Richard Leventhal, president of New Jersey’s Fedway Associates, the U.S. market’s 10th largest distributor. “Given the way things are going, it looks like suppliers may hold the line on prices instead of increasing them.”

Still, nine of the top 10 U.S. spirits and wine distributors are on pace for revenue growth in 2014—even as one of the harshest winters in recent history has hampered the drinks business across much of the Midwest and East Coast in the first quarter of the year—and they’re projecting aggregate growth of around 5% (compared to 2013’s 8% rise). They’re achieving this solid progress via a potent mix of organic growth and new business—both in existing markets and new territory.

No strangers to merger and acquisition activity, the leading U.S. distributors have ramped up their efforts on this front with a raft of recent deals. Three of the market’s six largest distributors—Republic National Distributing Co. (RNDC), Glazer’s and Wirtz Beverage Group—have entered new markets through M&A plays over the past 12 months. These moves have occurred in the interior of the country, a region where growth has largely fallen shy of that achieved in the country’s key coastal markets in the years following the economic downturn of 2008-2009.

More middle tier moves can be expected in the not-too-distant future, because, amid all of the U.S. spirits and wine market’s uncertainty, one thing is for sure—the biggest distributors remain intent on getting bigger. “We believe having a broad footprint will help us better service national accounts, so attaining a national presence is something we’re always exploring,” says Wayne Chaplin, president and COO of Southern Wine & Spirits, the top spirits and wine distributor with well over $10 billion in annual revenue.

“We’re constantly having discussions with other wholesalers in certain markets,” adds Tom Cole, president of Republic National Distributing Co., the number-two U.S. distributor. “Sometimes it’s that second- or third-generation of the family that’s considering its options. So, whether it’s partnerships or acquisitions, we’re always looking.”

For the full report, see Impact’s April 1&15 edition.

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