Interview, Part 2: Southern Glazer’s Execs On The California Market

California is the largest drinks market in the U.S., and Southern Glazer’s has a leading position in the middle tier, with its Golden State revenues at approximately $5 billion. In the second part of our interview, Southern Glazer’s president, West Region, Lewis Kenrick and executive vice president, general manager, California, John Landry discuss on-premise trends, the retail side, and how they see the future of the business in the California market.

SND: What are you seeing broadly across the on-premise?

Landry: There’s still a recovery going on from the pandemic. Consumers have been shifting from high-end restaurants to more casual dining, and that’s where we’re seeing a lot of openings. But I live in San Francisco and go out quite a bit, and it’s vibrant out there in the restaurants that I frequent. 19% of our revenue in the on-premise is flowing through our online Proof platform, and that business is growing double-digits.

Kenrick: With the inflationary pressure the consumer has definitely shifted their behavior. But in the last three months we’ve seen a more positive trend in key cities like San Francisco and San Diego.

Landry: There are also new “entertainment zones” that passed last year and allow for alcohol to be consumed outdoors in plastic cups from bars, restaurants, breweries, and wineries. There’s one in San Francisco in the financial district, there’s one in Thrive City down by the Chase Center, there’s one in Cole Valley, and there are five more planned. The numbers they’re putting up are just crazy, sometimes getting 20,000 people and giving a huge lift in business to the bars and restaurants that are participating.

SND: How about the retail side?

Kenrick: We saw a lot of destocking in our national account and independent chains, and that’s now stabilized a bit. Albertsons, Kroger, Total Wine, and Gopuff are all big players, with Total Wine taking some share in the market.

A lot of the new items going into these stores are RTDs, Tequila, and cordials. On the wine side you’re seeing the no- and low-alcohol offerings continue to grow, as well as Sauvignon Blanc and interesting aromatic whites.

SND: How does the future of the business look in California?

Landry: California is such a big and unique market. It’s the largest economy in the United States and a diverse market with no dominant demographic. It’s 40% Latino, 34% white, 16% Asian, 6% black. There’s a lot of opportunity for us to continue to market to the various segments and go where they are shopping.

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