Interview, Part 2: RNDC President And CEO Nick Mehall
September 25, 2024In the second part of our interview, RNDC president and CEO Nick Mehall discusses current market conditions, the distribution giant’s e-commerce initiatives, and emerging categories like non-alc and hemp-derived THC, as well as progress in RNDC’s most recent expansion markets.
SND: What are you seeing in the market heading into the fourth quarter?
Mehall: Disposable incomes are pressured, and that’s leading the consumer to be more choiceful about where they spend money, which in turn is clearly having an impact on the overall business. The consumer uncertainty has a ripple effect of retailers pulling back on investment. Part of it is also a reaction to interest rates and working capital challenges, but there’s an overall feeling of uncertainty around the health of the consumer and where that’s going next.
Destocking has probably been going on for the last 12 months now, so there’s a lot of hope that we’re starting to cycle out of that. I think you’re going to start to see some stabilization across the retail environment, but I also see retailers keeping inventory levels low, not a bounce-back where we’re going to be reloading.
SND: How is progress in the states you’ve entered most recently?
Mehall: We’ve over doubled the size from when we started in New York and Illinois, and we’re close to doing that again in year-three in those markets as well. We’ve made some big investments and we’re statewide in both markets. We’ll be introducing automation in the warehouse in Illinois in mid-2025.
We’re still investing heavily in California and the entire West Coast as well. Mid next year, we’ll be bringing on our most advanced warehouse in Northern California. It’s a very attractive market, and a key anchor market for our suppliers to be successful. The investments we’re making will continue to position us for growth well into the future.
SND: What’s the latest on eRNDC and other e-commerce initiatives?
Mehall: Customer engagement continues to accelerate. We’re scheduled to do over a billion dollars worth of sales through eRNDC this year, which shows you the strength of the platform as well as the size and the number of customers engaging with it. We just launched in Illinois, which puts us pretty much across the country, and it’s quickly evolving into a platform that’s not just a place where customers can place orders, but also a space of collaboration between our sales force and customers.
Suppliers are engaging with it. They’re spending their dollars investing and advertising because of the traffic that we’re now getting. We know it’s at the forefront of how the customer is going to engage with our portfolio in the future.
The second component is our ability to leverage data from across our overall digital ecosystem. You’re seeing that through different platforms, with REDI (a new “digital accelerator” aimed at helping brands boost brand messaging on platforms like Instacart, Uber Eats, and DoorDash), which is a big investment that we made, as well as our partnership with Flaviar. That data then starts to help inform decisions we’re taking as a company, and the insights we’re providing our suppliers around how their brands can show up differently in the marketplace.
SND: What’s your take on emerging categories like non-alcoholics and hemp THC?
Mehall: There are alternatives that are impacting the industry. On the THC side, we continue to evaluate that marketplace and we’re cautious. We want to really understand what the consumer wants, the route to market, as well as the compliance components of it. But we do see opportunities for these products going through the consistent route to market within the beverage alcohol space.
We’ve been able to successfully participate and really lead the overall beverage alcohol space on non-alc. The wellness trend is impacting the industry, and we need to continue monitoring that to understand where the consumer is and provide insight to our suppliers so they can meet those consumer demands and behaviors.
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