Exclusive news and research on the wine, spirits and beer business

Special Report: After Southern-Glazers And Breakthru Megadeals, More Consolidation Expected

April 14, 2016

Consolidation has been an ongoing trend in spirits and wine distribution for decades, but it reached new heights in recent months, when two megadeals reshaped the middle tier. In October, Charmer Sunbelt Group joined forces with Wirtz Beverage Group to create Breakthru Beverage, an industry force with operations in 16 markets and combined revenue in excess of $5 billion. Then, early this year, Southern Wine & Spirits and Glazer’s announced their plan to merge, forming a distribution giant with more than $16.5 billion in annual revenue and a near-national footprint.

Impact’s exclusive new report on the top 10 spirits and wine distributors finds that many of the middle tier’s top executives think more big moves will be made in the near future. “We believe those two deals will require more to happen,” says one leading distributor. “As it stands now, you’ve got one company at more than $16.5 billion, $10 billion ahead of the second-ranked player, RNDC. You just don’t see that kind of disparity in many other industries—at least not for long.”

One leading East Coast wholesaler, though, struck a different tone. “I don’t think it will happen,” he said. “My hat’s off to Southern and Glazer’s for getting their shareholders on the same page, because the more people you have making a decision, the harder it becomes to reach one. It seems like the only thing that would really drive another deal forward is fear. But there doesn’t seem to be much to fear, because plenty of suppliers like the status quo.”

Even after the blockbuster deal that formed Breakthru, it appears the new company is considering further expansion. “Right now, we’re very focused on our integration, but we still have a strong appetite for growth,” says Breakthru vice chairman Danny Wirtz. “So on the one hand, we’re focused on integration. We have to look at the opportunities that are out there, and frankly, the formation of Breakthru and Southern Glazer’s has created a lot of energy in our tier.”

Whatever happens on the consolidation front, it seems that the recent blockbuster deals have created a ripple effect that will likely lead to an array of portfolio and brand shifts in the coming months. “If a supplier was number-one or two with Southern or Glazer’s and now they’re moving to three or four, they don’t like that,” says Tom Cole, president of Republic National Distributing Company (RNDC). “So we’ll look to exploit the disruption in the marketplace.”

For a full report and analysis on the U.S. market’s top 10 wine and spirits distributors, don’t miss the April 1&15 edition of Impact.

 

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