Brutal, but not a surprise given the hemorrhaging of major suppliers. I’d think the business is viable, but I imagine there are other suppliers jumping from the sinking ship.
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They have been laying off employees in other states for weeks now.
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More shocking to me is the Teamsters represent 500 sales people working at the company.
Had no idea…
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We saw it here in GA, let go of some folks who had lengthy tenures and were well respected just to offset those losses as they can’t really lose any brands here.
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when i first heard the news, i thought: they are going to use this to get out of the union contracts and then just send everyone to a digital order desk
i believe they own libdib as well
Empire in NY is crumbling too.
They lost Brown Forman and Sazerac, after they had already lost Macallan and Diageo.
They are essentially Gallo and LVMH, and rumors have run wild for a while that LVMH wanted to leave too.
RNDC bought our Illinois distributor a couple of years ago. We’re definitely shopping around to get ahead of what I expect to happen there.
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So if one of the three tiers goes out of business, does that mean that there will be nobody to bribe, um, I mean influence legislators to continue to protect their rent seeking? Or will Southern Glazer just become a monopoly and have sufficient excess profits to continue to fill up the trough?
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other large wholesalers are already filling the vacuum, Johnson Brothers and Breakthru are picking up a lot of the pieces, suppliers are seeing wholesaler movement as leverage more now than ever and I think that will increase competition…hopefully
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Is there any background on what’s going on at RNDC? The article doesn’t seem to dive into it deeply.
Someone may be able to color in here, but in the last few years they’ve lost Sazerac, Tito’s, Brown Forman, and Gallo moved the High Noon business. Those all represent massive case and revenue quantities. On top of that they’ve gotten stuck in some lawsuits that are a drain on resources. Coupled with poor trends in the spirits categories it’s a bit of a perfect storm. They were a bit of a bloated company and then tried to make wholesale go to market strategy changes that involved a lot of telesales that was never going to work.
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This is very true and I wonder if they over expanded too quickly and were effectively a few years too late on their acquisitions.
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Very generally speaking, how wise is it for a wholesaler (perhaps regardless of size) to allow a large percentage of their total book be “able to walk”? That is, shouldn’t upper management have an eye on “risk management” concerns? From what people are saying in this thread it looks like a handful of suppliers leaving can bring down a large wholesaler/distributor. The Brown Formans of the world, et. al. Should not any well managed company be able to weather the storm of losing 2-3 big suppliers? Or have a “pivot plan” in place to replace suppliers that might leave? (Conclusion perhaps being that RNDC is not a well managed company.)
Doesn’t a wholesaler have to “keep recruiting” their suppliers? (Analogy these days would be college football or basketball players in the NIL era.) Ensure their offer/value proposition is sweet enough others couldn’t make a good enough case to lure them away? For the purpose of this conversation the relative sizes of the companies could arguably make jumping ship harder. That is, was Brown Forman going to jump to Skurnik or Rosenthal? Of course not. So options for a Brown Forman should be relatively limited (particularly when factoring in preexisting supplier competitors in the book of the company being jumped to).
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In the business world where the 80-20 rule is very applicable, 80% of revenue comes from 20% of customers.
Nobody can survive losing 2-3 of the biggest if there are only 10 in the portfolio.
Losing the big accounts is a double whammy because it cripples the ability to cross and upsell.
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That is exactly what I was typing, it would be impossible to diversify out the risk based on brand consolidation trends the last 20 years. You could bring on every single brand and hope one of them becomes something, but the long tail of inventory and investment in brands that die within five years would slowly kill you.
Much of this was caused by a paradigm shift, historically wine/spirit wholesalers had a monopoly on those products while beer stayed in their lane. That has changed drastically as beer wholesalers have gotten better at selling wine/spirits and they do a better job from an account servicing and merchandising perspective (beer merchandisers rotate product and fill the cold box on the weekends and during the week, wine/spirits wholesalers traditionally do not).
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Claiming it won’t effect yearly financial performance…
In the first half of the company’s financial year, its sales through RNDC in California accounted for around 25% of the net sales revenue from its Americas division and approximately 10% of group net sales revenue
Good points from you and Brig. I would still like to know the dynamics about the party on the receiving end of a, for example, Brown Forman jump. My hunch was that anyone big enough to take on suppliers of this size already have competitor suppliers. Wouldn’t they get pissed off that their distributor just took on a big competitor? Would this not in some way have them sniffing around to jump ship?
The thesis being that – even allowing for industry consolidation – two or three distributors cannot service all the big suppliers. They would cannibalize each other inside a given portfolio and sales reps couldn’t possibly try and sell all the products in their book. Something would get ignored. And that supplier would get pissed.
Not saying it isn’t true and I have worked in the wine industry long enough to know things often don’t make sense. But it might devolve down to X trading A to Y and Y trading B to X. And then swapping again five years down the road. Maybe With Z jumping in just for fun.
As other threads point out, the wine/spirits/beer industry isn’t getting substantially bigger, if not the opposite. Is the grass always greener elsewhere?
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Yes this is news in Australia. Treasury just issued profit downgrade to Stock Exchange as RNDC were their Cali distributor accounting for a quarter of US sales for them.
Southern basically allocates an entire division by supplier, or puts 2-3 non-conflicting suppliers together.
They are a bunch of mini companies under one umbrella. The jokes are endless about how many Southern reps you will have. So basically everyone just picked up 2 new reps (this is at least how they do it in the big markets.)
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This would be more of an issue if it was going to Southern where they are somewhat at critical mass in terms of suppliers, but for Reyes who is just getting into the spirits category they have plenty of room. In the end it is a zero sum game, every new supplier is going to draw attention away from someone else and that tends to be mid level suppliers.
There is no difference between cannibalization and competition, you can control both to a degree with various tactics.
Moving wholesalers is also very costly, it is far more efficient to try and rectify any issues than it is moving.