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The RNDC-Young’s Deal Creates A New Landscape Within The Middle Tier

June 14, 2019

With yesterday’s blockbuster announcement that Republic National Distributing Co. (RNDC) and Young’s Market will join forces to create a 32-market, $11 billion distribution giant, the middle tier’s long-term consolidation trend continues.

The RNDC-Young’s combination will boast a market share of nearly 19%, behind top-ranked Southern Glazer’s Wine & Spirits at 32%. The top two distributors nationwide thus will have an aggregate share of above 50%. Overall, the top 10 distributors will combine for a share of nearly 75% this year, up from 59% in 2010, according to Shanken’s Impact Newsletter.

As the market’s biggest wholesalers increasingly look to provide national distribution coverage, it remains to be seen how many major suppliers will follow suit. Since the formation of Southern Glazer’s in 2016, the merged company succeeded in attracting a number of national—or nearly national—partners including Bacardi, Campari, Beam Suntory, and Jägermeister. Others have opted for a more fragmented footprint, including Stoli Group, Treasury Wine Estates, and Santa Margherita USA.

Stoli and Sazerac are two key suppliers shared by Young’s and RNDC. Young’s recently gained the Stoli portfolio across 10 states, where the supplier was previously partnered with Southern Glazer’s. Meanwhile, RNDC handles Stoli’s brands in 12 states. No doubt more suppliers will weigh the upside of aligning with that 32-market footprint moving forward.

As RNDC and Young’s mount a new challenge with a significantly enlarged distribution area, Southern Glazer’s plans to continue to leverage its own 45-market coverage. “Regardless of what happens elsewhere in the market, we’re focused on doing the best we can for our suppliers,” Southern Glazer’s CEO Wayne Chaplin recently told SND. “From our standpoint, we’re now more than two and a half years into our merger with Glazer’s, and we couldn’t be happier with the situation we’re in with our consolidated footprint, our regionally structured organization, and our national account team. All of those things are gelling extremely well.”

As Southern Glazer’s and the RNDC-Young’s partnership prepare to compete at a national level, others also see openings for continued expansion. Among them, Johnson Brothers, which is a $2.5 billion powerhouse in its own right, has quietly expanded into 27 states, most recently entering New Jersey.—Daniel Marsteller

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