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Exclusive: Breakthru Enters California, Acquiring Wine Warehouse

January 17, 2023

Breakthru Beverage Group is set to enter its 16th market with a move to acquire Wine Warehouse—the third-largest wholesaler in California and a top-10 player nationally—for an undisclosed sum. The deal is expected to close this spring. Wine Warehouse has annual revenues of approximately $800 million, 650 employees, and facilities in both Northern and Southern California. Handling wine, beer, and spirits, the multi-generational family-owned company was founded in 1973 by wine collectors Bob and Jim Myerson. Its existing leadership team is slated to stay in place, with Breakthru pledging to invest aggressively to continue growing the business. For Breakthru, which had estimated revenues of $6.6 billion last year, the acquisition is a landmark deal to expand into the largest drinks market in the U.S. SND executive editor Daniel Marsteller spoke with Breakthru president and CEO Tom Bené to hear more about the California entry and the road ahead for the nation’s third-largest spirits and wine distributor.

SND: What does entry into the Golden State mean for Breakthru?

Bené: This West Coast expansion is a major milestone. It not only allows us to expand our footprint in the largest U.S. beverage alcohol market, but as we continue to look to be the preferred distributor in the markets we operate in, we think that partnering with these guys puts us in a great place over time to continue to achieve that goal as well. It’s a critically important market. This is a great business, and it dovetails nicely with other partners we have. We believe there are future growth opportunities there because we’ve had suppliers ask us about going to California, and so we think it’s a great step in the right direction given our strategy.

SND: What can you tell me about Wine Warehouse’s portfolio of suppliers and its overlap with Breakthru’s existing partners?

Bené: The good news for us is they have a strong book of business to start with, and we obviously want to maintain what they have, but also grow that portfolio. Their business is heavily wine, with some statewide beer and also some spirits. They have Gallo, J. Lohr, other premium folks like Silver Oak and Far Niente. And many of those are partners that we do business with in other markets as well. One thing that came out last week I thought was probably worth addressing up front—the announcement with Gallo and RNDC. What’s important to note is that Wine Warehouse is a very strong Gallo wholesaler and that is not changing in this process. The announcement last week had to do with Gallo’s direct distribution business. But what Wine Warehouse has had with Gallo will continue to be part of this portfolio, both in the on-premise and off-premise.

SND: Wine Warehouse handles the independent side?

Bené: Wine Warehouse has a fair amount of the chain business as well, the big part being on-premise. We’re Gallo’s largest trading partner nationally, and we’re very excited about maintaining growth for that portion of their business in California.

SND: How do you plan to expand the Wine Warehouse business moving forward?

Bené: They have a strong team and we look forward to working closely with them and certainly augmenting what they have from a capabilities and infrastructure standpoint. We’re going to be making big investments in resources, obviously the infrastructure, operations, logistics, everything important to be a good service provider. But we’ll also be bringing our digital platform, our business intelligence, and all the things that we’ve become known for across the industry. We feel like it will create a lot more depth and reach for those current partners, and also presents an opportunity to bring in others who know us well from other markets and like how we do business.

SND: Safe to say more expansion is on the docket for Breakthru looking ahead?

Bené: Very much so. We have a strong desire to be the distributor of choice in every market we operate in. Last year we announced the Major Brands acquisition in Missouri. We also did J.J. Taylor in Minnesota. That’s an example of where we didn’t have quite the right infrastructure in place, and so we felt it important to try to solidify that business. That beer business coming in was a great way to do that. They had a great facility, a great team, and so we built not only onto the beer business we had in Minnesota, but helped build some infrastructure for future growth. We’re very focused on making sure we have the right resources and infrastructure in every market, in addition to continuing to grow our market footprint.

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