Southern Glazer’s has a leading position within the middle tier of the largest wine and spirits market in the U.S., with the wholesale giant’s California revenues at approximately $5 billion, according to Shanken’s Impact Newsletter. SND executive editor Daniel Marsteller spoke with Southern Glazer’s president, West Region, Lewis Kenrick, and executive vice president, general manager for California, John Landry, to get an update on business in the Golden State. 

SND: What areas of the California drinks market are trending well, and where are the steepest challenges?

Kenrick: It’s definitely a challenging landscape. I think the declines will start to stabilize a bit, but wine continues to be challenged, down around 9%, and spirits are down around 4%. But there are bright spots. We’re seeing Tequila, certainly Reposado, outperforming. On the wine side, imported sparklers continue to do well, especially Prosecco, and I think there’s continued opportunity there. Sauvignon Blanc and aromatic whites are also outperforming the overall wine category.

The RTD business continues to grow substantially, up over 50% in Nielsen. We’re super-excited to now represent the Anheuser-Busch InBev spirits RTDs, including Cutwater and Nutrl, which will only grow our share in the category. We’re also seeing growth across categories in smaller size formats like 375-ml. Those small sizes are allowing consumers who traded up during the pandemic to continue to drink more premium products.

And from a small base, low- and non-alcohol wines and spirits are really growing. We’re seeing it both on- and off-premise, and I think that can provide a big upside as the consumer is looking at moderation and more health-conscious decisions.

SND: Suppliers have been reevaluating their routes to market in California lately. How do you see that situation evolving?

Landry: There’s a lot going on. Typically wine and spirits distributors are in a different lane from beer distributors, but we’re seeing that increasingly converge, with beer distributors taking on spirits, and wine and spirits distributors being active in beer and RTDs.

What we’ve done is invest heavily in our fine wine company, Signature Fine Wines & Spirits. We have a robust model there that calls on our top 6,000 accounts in California, and that comprises probably 90% of the fine wine business in the state. Additionally, we’ve been making investments in the c-store channel to take advantage of the opportunities there.

Kenrick: I’d only add that we’re also investing in the hotel and resorts channel. We’ve got a couple of Super Bowls coming up in the state, we’ve got the soccer World Cup, and we’ve got the Olympics in the next few years. It’s an area where Southern has always been focused in the on-premise, and with all the tourism that’s coming we need to continue investing to service that channel. 

We’ll have more on Southern Glazer’s outlook on the California business in the second part of this interview.