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Exclusive: RNDC And Young’s Join Forces, Creating An $11 Billion Powerhouse With A 32-Market Footprint

June 13, 2019

Republic National Distributing Co. (RNDC), the U.S. market’s second-largest spirits and wine distributor, is joining forces with fourth-ranked Young’s Market Co. Pending regulatory approval, the two sides will form a joint venture to operate in all markets where Young’s is now present. The RNDC-Young’s combination will create an $11 billion wholesale giant with a 32-market footprint.

RNDC will lead operations in all 32 markets and become managing partner of the joint venture for the Young’s states, which will continue to be called Young’s Market Company. Key executives for the joint venture will be: president and CEO Tom Cole, COO Bob Hendrickson, and CFO Nick Mehall, all three holding the same titles at RNDC. A board of directors comprised equally of executives from both sides—including current Young’s Market Co. CEO Chris Underwood—will oversee the joint venture. The other Young’s Holdings companies, including Wilson Daniels and Infinium Spirits, aren’t included in the deal.

The agreement represents a major advance from RNDC and Young’s existing joint venture partnership in Arizona. “We’ve been engaged in our Arizona partnership for seven years, where we’ve had an opportunity to build a business together, build a warehouse, and make buying decisions,” RNDC’s Tom Cole told SND. “This is a natural evolution of that partnership.”

Young’s operates in 10 markets including Arizona, while RNDC is in 23 markets with Arizona included. Based on 2019 projections by Impact Newsletter, the agreement will unite RNDC’s $8 billion in annual sales with $3 billion from Young’s, creating an $11 billion powerhouse.

RNDC’s 13.7% market share will now combine with Young’s 5.1% share to reach nearly 19% of the U.S. spirits and wine distribution market. By comparison, top-ranked Southern Glazer’s Wine and Spirits (SGWS), has annual revenues of $19 billion and a 32% U.S. market share.

Both Young’s and RNDC are optimistic that government approval will proceed expeditiously. “We don’t see any hurdles,” said Chris Underwood of Young’s. “Since we’re already partners in Arizona, and we don’t have any other states that overlap, we would view this as pro-competitive.”

Indeed, the RNDC-Young’s deal is a strong strategic fit precisely because there’s no overlap. Arizona aside, RNDC is present in Alabama, Colorado, Florida, Georgia, Indiana, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Virginia, West Virginia, and Washington, D.C. Young’s, meanwhile, operates in the Western states of California, Washington, Oregon, Alaska, Idaho, Montana, Utah and Wyoming, as well as Hawaii. The only two major markets where the combined RNDC-Young’s won’t be present are New York and Illinois.

The move represents something of a bounce-back for RNDC, following the recent termination of its proposed merger with Breakthru Beverage Group. The two companies announced a merger deal in November 2017, but after a long period of foot-dragging by the Federal Trade Commission (FTC) in the approval process, they decided to abandon the plan this past April.

At the time of that announcement, Breakthru and RNDC said it was possible the merger talks could be reopened at some point in the future. If that were to occur and the effort succeeded, the RNDC-Young’s revenue of $11.1 billion would combine with Breakthru’s $5.4 billion to hit $16.5 billion—not so far off from SGWS’s $19 billion.—David Fleming

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