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Exclusive: RNDC And Breakthru Join Forces, Creating A $14 Billion Wholesale Colossus

November 20, 2017

Competition is about to get even stiffer in the U.S. wine and spirits market’s wholesale tier. Just a year after the creation of $17.5 billion giant Southern Glazer’s Wine & Spirits, the current number-two and -three wholesalers in the market—Republic National Distributing Co. (RNDC) and Breakthru Beverage Group (BBG), respectively—have announced plans to merge. The deal, which is subject to regulatory approval and other customary closing conditions, is scheduled to be completed late in the second quarter of next year.

RNDC, the nation’s second-largest wholesaler with projected 2017 sales of $7.5 billion and a market share of 13.6%, has operations in 23 markets across the U.S. Breakthru, which was formed last year through the merger of the former Wirtz Beverage Group and Charmer Sunbelt Group, currently ranks third in the wholesale spirits and wine tier with projected 2017 sales of $6.35 billion and a market share of 11.5% (including Breakthru’s recent merger of its New Jersey business with that of Allied Beverage Group, a unit which will continue to operate independently). Breakthru operates across 16 markets.

Together, the combined RNDC-Breakthru will have sales approaching $14 billion, with operations in 30 markets and a market share of about 25%. With that kind of clout, the new company will present Southern Glazer’s with a formidable new competitor with a scale and scope to rival its own.

RNDC president and CEO Tom Cole and COO Bob Hendrickson will hold those same roles at the newly combined company. Danny Wirtz, currently vice chairman of Breakthru, will become chief growth and strategy officer, and Breakthru president and CEO Greg Baird has been named chief integration officer. Breakthru COO Lloyd Sobel will also hold a senior role that has yet to be determined. Cole will report to a 10-person board comprised of representatives of the RNDC and Breakthru ownership families.

“Our headquarters will be virtual,” Cole explains. “I will remain in New Orleans, Bob Hendrickson lives in Dallas, Danny lives in Chicago, and Greg and Lloyd will continue to be based out of New York. With today’s technology and travel requirements, it’s no longer necessary to be side by side in an office complex in one market. We all talk, text and communicate frequently and will have regular status calls as we progress through the integration.”

The RNDC-Breakthru distribution footprint will include the following states: Alabama, Arizona, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, Virginia, Washington D.C., West Virginia and Wisconsin. As such, the new company’s geographic breadth spans much of the nation, with the exception the Pacific Coast, New York, New England and a handful of markets in the interior of the country. It will also have a presence in Canada.

The new company will represent a who’s who of top suppliers across the wine, spirits and beer categories. Major spirits partners include Beam Suntory, Brown-Forman, Diageo, Edrington, Moët Hennessy, Pernod Ricard, Proximo, Rémy Cointreau, Sazerac, Tito’s and William Grant & Sons. In wine, leading suppliers include Banfi, Constellation, Gallo, Jackson Family Wines, Kobrand, Ste. Michelle, Trinchero and The Wine Group. The beer portfolio will include Heineken, MillerCoors and a number of craft brews.

One issue yet to be decided is a new corporate identity. “We haven’t spent much time brainstorming a new name,” Cole says. “RNDC and Breakthru are still independent competitors and will remain so until we receive regulatory approval sometime in the first quarter of 2018. But the name will capture the spirit of a new dynamic North American total beverage alcohol company.”

We’ll have more to come on the blockbuster RNDC-Breakthru deal in tomorrow’s issue. —Daniel Marsteller

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