Exclusive: The U.S. Market’s Top Wholesalers Aim For New Heights In 2022

Amid a rapidly changing market characterized by new consumer trends and a host of challenges ranging from the supply chain slowdown to inflation to the pandemic, the U.S. market’s wholesale tier continues to see sales churn forward. According to Impact Databank, the total wholesale market for wine and spirits in the U.S. is projected to grow 5% this year in value terms to just under $70 billion, up from approximately $66 billion in 2021.

The distributor tier’s top players have been taking an outsized share of the market’s growth, with the 10 largest wholesalers nationwide projected to account for a combined market share of 78.5% this year, compared with their 75.2% share in 2021. That trend looks set to continue, as the leading companies expand both organically and through acquisition, while also mounting extensive efforts to update and transform their businesses for the digital age. While growth has been strong lately—especially in light of the tempestuous conditions of the past few years—top wholesale executives tell SND that plenty of uncertainty remains about how the rest of the year will play out.

“Overall the business has been very healthy,” says Wayne Chaplin, CEO of 45-market giant Southern Glazer’s Wine & Spirits, the top distributor nationally with projected 2022 revenues of $24 billion. But he adds that the market remains “very hard to predict. The on-premise is coming back, but we’re still thousands of on-premise customers less than we had in 2019, so that’s been a real change to our route to market. The off-premise is continuing to hold ground, and it’s premiumizing as well.”

The premium end of both wine and spirits continues to drive growth in the U.S. drinks market, and the leading wholesalers report ongoing gains especially in Tequila, North American whiskey, Cognac, and sparkling wine. “We’re still seeing a lot of really good activity around Scotch, and in vodka Tito’s is just an incredible powerhouse,” Chaplin says.

“Higher-end, premium spirits as well as premium wine are continuing to see strong growth,” adds Nick Mehall, CEO of second-ranked player Republic National Distributing Co. (RNDC), which is projecting $13 billion in revenue this year, up from $12.1 billion in 2021. “What’s under pressure is the sub-$15 wine category. As we look nationally and move through the back end of the year, we’re bullish about the impact of the on-premise reopening. There’s been a significant amount of turnover in the on-premise, so we’re focusing on educating about the brands in our portfolio and getting back to the level of strength we had pre-pandemic.” RNDC’s footprint now spans 37 states plus Washington D.C., with New York slated to be added this year through a pending joint venture with Opici Family Distributing.

The outlook is similar for Breakthru Beverage, the third-largest wholesaler nationwide with projected 2022 revenues of $6.6 billion and operations across 15 markets. “We’re continuing to see the channel shift returning back to pre-pandemic levels, although we’re not quite there yet with the on-premise,” explains chief executive Tom Bené. “The off-premise has been strong all along, and we’re hoping that continues this year. In wine, there are some good tailwinds at the higher end and challenges at the lower end.”

As the top wholesalers look to continue their momentum in 2022, the middle tier is also closely watching the recently filed antitrust complaint lodged by e-commerce player Provi against Southern Glazer’s and RNDC. Provi claims the distribution behemoths have used their size and influence to edge its own e-commerce platform out of the market. Both Southern Glazer’s and RNDC told SND the suit has no merit and will be vigorously defended.

For a full report on the U.S. market’s leading wine and spirits wholesalers, see the April 1&15 issue of Shanken’s Impact Newsletter. Click here to subscribe.—Daniel Marsteller

Tagged : Breakthru, Provi, RNDC, Southern Glazer's

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