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U.S. Spirits And Wine Distributors On Track For Significant Gains In 2012, Impact Survey Shows

March 19, 2012

After generating impressive revenue growth in 2011 despite the U.S. market’s challenging economic environment, the country’s leading spirits and wine wholesalers are now on pace to achieve significant gains in 2012. Impact’s exclusive survey of the industry’s top 10 distributors—accounting for 63% of the market—projects their combined revenue growth at nearly 7% this year, essentially matching last year’s performance.

Even in markets hardest-hit by the recession, including Florida, Arizona and Nevada, business is on the rise—particularly in the on-premise, which bore the brunt of the downturn as consumers went out less frequently and turned to at-home consumption. “Our on-premise business in Florida and Arizona actually outgrew our off-premise business there last year, and we were basically getting double-digit growth from both segments in the first few months of 2012,” says Tom Cole, president of Republic National Distributing Co., the U.S. market’s second-leading distributor.

“Year to date, our business in Nevada is up almost 20%,” adds Wayne Chaplin, president and COO of Southern Wine & Spirits. “This is in large part due to strong results we’re seeing on-premise across the casino segment, where consumers have returned and are starting to buy upscale products again.” After strong growth in January and February across the U.S. market, Southern is projecting 9.4% revenue growth in 2012.

The top 10 distributors are all projecting growth in 2012, and they all appear likely to advance by at least $30 million. The biggest players are getting bigger, outpacing overall market growth. And with consolidation trend expected to resume in the near future, they’ll soon be expanding even further.

“Consolidation is coming back. We’ve been in a holding pattern the past three or four years, largely because of the economy, but that’s now coming to an end. I think we’ll see quite a few deals over the next year or two,” says one leading East Coast distributor. “Southern has made it a national game over the past few years, and their presence around the country gives them a capability that others will have to match in order to stay competitive. That will mean more merger and acquisition activity.”

For the comprehensive report on the U.S. market’s top 10 wine and spirits distributors, see the upcoming April 1&15 issue of Shanken’s Impact Newsletter.

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