Tag Archives: distributor merger

Winebits 599: Distributor consolidation, Grocery Outlet, Agincourt

distributor consolidationThis week’s wine news: Tom Wark asks how distributor consolidation fits into the legal framework that guides three-tier, plus wine discounter Grocery Outlet goes public and the role of wine in the battle of Agincourt

Distributor consolidation: Wine marketer Tom Wark’s take on the recent RNDC-Young’s Market merger is well worth reading. “It has long been a near unbreakable tenet and motivation of state alcohol regulation that no single company be allowed to control too great a portion of the market,” he writes. So Wark wants to know: What will regulators do about the merger, since it means three companies will control more than 60 percent of wine and spirits distribution in the U.S.? In this, he forces the regulators’ favorite argument in favor of three-tier on its head. Regulators have insisted for more than 80 years that we need three-tier to protect us from the abuses of one company controlling too much of the market (also known as Al Capone during Prohibition). Some of the post is inside baseball, but Wark’s point is well taken – distributors and regulators can’t have it both ways.

Bring on the cheap wine: Grocery Outlet, the supermarket discounter that’s all but worshiped on the West Coast for its cheap wine deals, went public last week. Shares traded at almost double the initial estimate, which means I’m not the only one excited about the chain’s expansion plans. The company’s president said Grocery Outlet wants to move off its California base, opening 32 stores this year, 2,000 in the near term and as many as 4,800 stores nationwide over the long term.

Lots and lots of wine: Ever wonder how much wine a medieval army needed when it went on campaign? England’s Henry V, in his invasion of France in 1415 (memorialized in Shakespeare’s “Henry V,” which includes “Once more unto the breach, dear friends“) took 4,000 casks of wine. Rupert Miller, writing in the drinks business trade magazine, says no one is quite sure how much wine was in a cask, but notes that Henry had to provision a 12,000-man army (plus servants). So it was probably a lot. The piece is very history geeky (which is why I liked it), but does offer some perspective on wine’s role in the pre-industrial world, when water wasn’t safe to drink.

Winebits 598: RNDC distributor merger, local wine, red vs. white

RNDCThis week’s wine news: The country’s second biggest distributor, RNDC, is going to merge with the fourth biggest, plus Italians stick up for local wine and red wine drinkers are much cooler than white wine drinkers

RNDC tries again: RNDC, the country’s second biggest distributor, will merge with No. 4 Young’s Market. This comes in the wake of RNDC’s failed merger with No. 3 Breakthru Beverage in the spring, which the federal government said would violate anti-trust law. The story in this link calls the merger “a distribution joint venture,” but read it all the way through and it says Young’s will become a division of RNDC. Which sounds like a merger, but I’m not the one RNDC executives have to convince. That would be the Justice Department. Regular visitors here know how I feel about this stuff; it’s a great deal for the distributors, allowing them to cut costs and increase margins, and not so good for the wine drinker and too many wineries that aren’t Big Wine. But it’s all part of the thrill and excitement of the three-tier system.

Local wine means local wine: Farm house bed and breakfasts in the Italian region of Lombardy must serve only local wine to their guests, reports the The Local, an Italian news site. “Under a new amendment to the regional law. … the more than 1,600 agriturismi– farms offering tourist accommodation in Lombardy will have to prioritize local specialties. They will be limited to getting 20 percent of their products from outside the region, and none of their fish or wine (though wines from vineyards directly adjoining Lombard soil are considered acceptable).” The story doesn’t explain why the law was passed – no doubt it was caused by a particularly Italian dispute.

Red vs. white: Red wine drinkers are much cooler than white wine drinkers, according to a recent poll. “Nearly half of red-wine drinkers considered themselves ‘wine aficionados’ compared to 31 percent of white-wine drinkers. And red-wine drinkers also showed they knew slightly more about wine in a series of follow-up questions compared to white-wine lovers.”And who took this poll? None other than Coravin, the $250 wine opener whose target audience, not surprisingly, is expensive red wine drinkers. This is yet another example of someone paying for a study to get certain results, something I have written about many times before. And, to her credit, the woman who wrote the story in this link mostly did just that.