Wednesday, November 22, 2017

Another Major Merger of American Alcoholic Beverage Distributors, Are We Headed toward a Monopoly?

      The mega distributor Southern Glazer looks like it is going to have some huge company with the proposed joining of Republic National Distributing and Breakthru Beverage Group.  The completion of this deal will mean that 56% of the American alcoholic beverage distribution will be controlled by two distributors.  Many of the larger producers and looking toward having only one distributor in the United States, a trend that is being spearheaded by Bacardi and Campari, but we will see where this leads.  We question whether there will be pressures on other suppliers to consolidate their distribution networks to one wholesaler or continue with a portfolio approach. A sole supplier could lead to better coordination on retail activation and branding, lower inventory (better readings for stock levels), cost savings (simpler organizational structure). On the other hand, a sole supplier could lead to improved bargaining power of wholesaler over supplier.

    "The merger of RNDC and Breakthru will create strategic opportunities that will benefit our associates and our business partners in a rapidly changing and highly competitive marketplace. Much more than a growth opportunity, we are entering this venture to create something that is different, sustainable and transformative," said RNDC President & CEO Tom Cole. "Together, our deep bench of focused, diverse associates will bring great and unique advantages to our suppliers, our customers and the consumers who enjoy the products we represent."  Proposed Merger to Allow Greater Focus on Innovation and Differentiation in Rapidly Changing and Competitive Marketplace

     Breakthru Beverage Group President & CEO Greg Baird commented, "Breakthru looks forward to joining forces with RNDC to establish an even stronger foundation of industry knowledge, talent, history and heritage. We see this as the launch pad to bring innovation to life and to usher in a new era for our business and industry."   
"Across North America, the combined company of RNDC and Breakthru will benefit from a broadly expanded footprint, a passionate and progressive team, and an uncompromising commitment to providing innovation, value and service to all our stakeholders," added Cole.   The transaction is expected to close late in the second calendar quarter of 2018 subject to regulatory approvals and other customary closing conditions.