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Top Wholesale Players Adapt To A New Marketplace Shaped By Covid-19

April 13, 2020

With the Covid-19 crisis impacting the drinks business at all levels, the U.S. market’s top wholesalers have been adapting to the conditions by bolstering their off-premise operations and expanding e-commerce initiatives to compensate for the broad shutdown of the on-premise in states across the country.

“We established an executive-level task force to coordinate our coronavirus-related business continuity plans, monitor the situation as it unfolds, and safeguard the health and well being of our employees and customers,” says Wayne Chaplin, CEO of $19 billion wholesale giant Southern Glazer’s. In recent days, the company also introduced a new online hub for trade customers intended to help them navigate the coronavirus crisis in their own markets.

“While our off-premise accounts have been extremely busy, on-premise activity has been adversely impacted by broad social distancing and government restrictions,” Breakthru Beverage president and CEO Greg Baird notes. “We’re working diligently to help our customer partners be as efficient and effective as possible in light of the circumstances.” Breakthru is the third-ranked wholesaler nationally, with 2019 revenues of $5.5 billion.

“We’re reallocating our resources away from the on-premise channel to the retail trade, where we’re experiencing significant business increases,” adds Tom Cole, CEO of Republic National Distributing Co. (RNDC), which last year expanded to a total of 32 markets via a new 10-state joint venture with Young’s Holdings. Including both its legacy business and the new Young’s joint venture, of which RNDC is operating partner, RNDC had pro forma revenues of $11.8 billion last year. “The Young’s integration is going fantastically,” Cole says, adding, “We’re bringing the resources of our national accounts organization as well as logistics, operations, and technology to the effort, and we’re investing for the long term.”

The acceleration of middle-tier e-commerce efforts like eRNDC and Southern Glazer’s Proof has been timely, with those programs expanding just as online operations become even more vital due to the restrictions ushered in by Covid-19. SGProof has launched in 28 markets so far, with more on the way. In the year through March 1, the e-commerce site generated revenue of $140 million, according to Southern Glazer’s chief commercial officer John Wittig. “We’re getting a ton of feedback on the site and the efficiency and the ease to order,” he says, adding that the platform also serves as “a 24/7 sales assistant to our commercial sales teams. It’s augmenting their work so that they have more time to spend on consulted selling, with basic orders handled by the site. Our quality sales visits, the way we’re measuring it, are up exponentially.”

In terms of market trends, the leading wholesalers say that while the spirits segment continues to be robust, the wine category has been challenging, with industry players competing for share. Hard seltzer is another area they’re watching closely. “I think the big question is the effect of hard seltzer on wine and spirits,” Chaplin says, adding that prior to the Covid-19 outbreak seltzers were beginning “to take up a lot of on-premise drinking occasions, and some of those are coming out of wine and spirits.”

While conditions remain challenging to say the least, the top distributors are devoting ample resources to the Covid-19 fight, and focusing on the off-premise arena, where they hope rising sales will blunt the impact of the on-premise shutdowns. “We’re all operating in an unprecedented environment, and we’re committed to being a responsible and attentive partner across our U.S. and Canadian markets,” Baird sums up.

Impact’s exclusive ranking of the U.S. market’s Top 10 Spirits and Wine Wholesalers appears in the April 1&15 issue. Click here to subscribe.—Daniel Marsteller

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