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In TWE’s U.S. Distributor Realignment, Southern Faces Rare Situation Of Losing A Major Supplier In Some Key States

January 31, 2018

Following Treasury Wine Estates’ announcement late yesterday that the company is making a number of changes across its U.S. distribution network, company CEO Mike Clarke tells SND that the moves are in line with TWE’s strategy to get closer to its retail partners and shift its portfolio toward the higher end of the market.

Among the changes are a shift to a partial self-distribution model in California and Washington and a hybrid model in Florida, where TWE will directly manage relationships with its large retail partners in collaboration with Breakthru Beverage. Prior to the changes, Southern Glazer’s has been TWE’s distributor partner across the affected markets. While Southern Glazer’s is losing TWE’s brands in key states like California, Florida and Illinois, it remains linked with TWE in Texas, among other markets.

With the move to self-distribution in California, TWE joins a number of other key players that handle their own distribution in the Golden State, among them E.&J. Gallo, Jackson Family (through Regal Wine Co.) and Foley Family Wines (through Epic Wines & Spirits).

“We’ve invested in the systems, and in top class sales and marketing capability to deliver this transformation in our route to market across the U.S.,” Clarke said, adding that the new distribution arrangement is expected to be implemented by the end of June. “Just as we’ve done in other regions, we’re also walking away from unprofitable, low margin commercial wine. The decisions we’re taking now are all steps in our strategy to set us up to deliver sustainable growth in the U.S. in the coming years.”

In addition to the distribution revamp, TWE also announced its results for the half-year through December yesterday, with its Americas business showing a mid single digit depletions decline owing to the company’s exit from the commercial wine tier over the past year. Excluding the commercial business, TWE’s depletions were in positive territory for the period, driven by strong growth for 19 Crimes and Matua in particular. According to Impact Databank, 19 Crimes more than doubled to over 1 million cases in the U.S. last year, while Matua crossed 400,000 cases on strong double-digit growth.—Dan Marsteller

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