Interview, Part 1: Breakthru Co-Chairmen Charlie Merinoff And Danny Wirtz

Formed as a partnership between Charmer Sunbelt and Wirtz Beverage in 2016, Breakthru Beverage Group ranks as the third-largest wholesaler of wine and spirits in the U.S., with revenues of $8.2 billion in 2023 and a presence across 16 states.Its key suppliers include Gallo, Treasury Wine Estates, Diageo, Brown-Forman, Tito’s, Moët Hennessy, William Grant & Sons, Molson Coors, Rémy Cointreau, and Sazerac among others.

Last year, Breakthru lost one of its founding partners—and an icon of the U.S. drinks industry—in Rocky Wirtz, who served as co-chairman alongside Charlie Merinoff from the company’s inception. Rocky’s son Danny Wirtz ascended from his previous post as vice chairman to join Merinoff as co-chairman of Breakthru in late August. As the distribution giant navigates the transition and looks to the future with an eye toward further expansion, Merinoff and Wirtz spoke with SND executive editor Daniel Marsteller to offer their views on the state of the business.

SND: Breakthru has seen a lot of growth recently, particularly with entry into California last year. Do you expect to continue steadily adding more markets to the footprint?

Merinoff: Without a doubt, we will continue to grow. We want to make sure we’re in all the major markets. But we won’t take our eye off the target, which is to ensure that we’re winning in the marketplace. Sometimes I think there’s this mad rush to be that national footprint—and I believe we’re going to get there—but what our suppliers are looking for is performance in the markets where they have us. That will continue to be our focus, our priority. But we will continue to expand because our suppliers are encouraging it. I think the independent wholesalers are feeling the pressure, knowing they need to be part of something larger.

Wirtz: We absolutely have that ambition, and we’ve been backing it up with deals that allow us to integrate and get up and running fairly quickly (including in markets like California, Missouri, and Minnesota). But as Charlie said, we want to be the distributor of choice in our existing markets. There’s not a market out there that doesn’t have opportunity for us to grow, whether organically through market share or inorganically. And we continue to invest in the existing markets. We have new buildings in Delaware and Minnesota, and we’re doubling the size of our capacity in Tampa. That reinvestment is critically important while we look to grow across the footprint.

SND: The U.S. spirits market has had a long run of growth. How do you see the category progressing moving forward??

Merinoff: Everyone is saying we’re facing this incredible headwind right now. And one of the reasons I think we feel that is we had two years of Covid where consumption just went crazy. Now it’s a period of normalization and even the pendulum swinging backwards a little bit. It’s a bit more challenging, and drinking habits are changing.

Wirtz: It is the consumer that’s driving it—the assortment of new products and innovation coming to market, the rise of RTDs. As a wholesaler, as an industry, we need to be much more nimble to those changing dynamics. I think in totality, we should still feel really bullish about the category. Both we and our suppliers know there’s room for more growth. We continue to take share from other categories. But we can’t be too complacent, thinking that what’s happening this year is going to be replicated next year.

SND: What are your priorities in the wine category?

Wirtz: All three tiers have to figure out different ways to engage younger consumers, bring them into the category. The premium on education is higher than ever. You have a changing consumer and generational change, which is affecting the trade. That puts a tremendous responsibility on our shoulders, and we’re putting resources behind teams through our Aspect Fine Wine division to bring education into the trade and introduce and reintroduce the wine category to a new set of buyers and ultimately consumers in the market. The wine category is too big to fail, but we have to stay relevant and we have to find new ways to engage. So I think it’s a huge opportunity for everyone that we’re all aligned on.

Merinoff: We can’t fix the consumer or how he or she is thinking. But if you do it right, if you educate your people, educate the trade, tell the stories that resonate, though the overall market might be shrinking, there’s so much share that we can gain. It’s not like in spirits where the rising tide has raised all boats. But we can win in this market by activating the brands and telling the compelling stories behind them.

SND: New product proliferation, particularly in hot categories like RTDs and Tequila, has accelerated the past few years. How does Breakthru balance finding the new growth brands of the industry against keeping supplier and SKU expansion to a manageable level?

Merinoff: Our first focus is taking care of the innovation from the suppliers that we already do business with, and then finding those unique brands that fill gaps and are truly innovative in the marketplace. We’re probably one of the most difficult distribution houses to get into because we’re thoughtful about making new additions. We know we can’t be all things to all people.

Wirtz: The process used to run looser than we’d like. Now through our Trident division, truly we have objective criteria, really good due diligence, and market experts to understand the viability of certain brands by market, by region, and they put a lot of effort on the front end so we don’t overpromise and underdeliver. We have the hardest conversations before we even say yes, as opposed to saying yes and then dealing with all the consternation that comes with misaligned priorities and objectives. That team has done a nice job bringing in the right brands and then having the right support to make sure those brands continue to grow.

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