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By November 22, 2017 0 Comments Read More →

Who Loses in the Breakthru/RNDC Merger? Everyone

Happy Thanksgiving to Them

Happy Thanksgiving to all my readers. Happy Thanksgiving to the thousands of independent suppliers that read my writings and the 100 or so distributors that check in with what we are doing. This time of year, there is generally a Presidential pardon given to some turkey out there that has it’s life spared. The pardon has also been given to this merger. The big loser is all the independent suppliers out there. The climb uphill to success just went towards Mt Everest. There are now two super large distributors that cover 83% of America and Canada.

To take a quote from Shaken New Daily:

“Among the advantages gained by joining forces, RNDC-Breakthru’s supplier profiles are complementary in a number of key markets. For example, both distributors already handle Gallo brands in Florida. The new company’s portfolio in Florida will also combine brands from The Wine Group (RNDC) and Jackson Family (Breakthru), as well as Brown-Forman (Breakthru) and Sazerac (RNDC) on the spirits side. Meanwhile, the deal will allow the combined group to leverage RNDC’s strength in Texas—where it has sales of $2.2 billion and distributes Brown-Forman, Pernod Ricard, Sazerac, Constellation, Trinchero, The Wine Group, Jackson Family and Ste. Michelle brands, among others—with Breakthru’s business in Illinois, which totals $1.1 billion and includes Diageo, Gallo, William Grant, Brown-Forman, Sazerac and others.”

The vast majority of suppliers are not mentioned in the above caption. The vast majority of suppliers will get killed in this merger. FACT. If I was a small supplier <50,000 9L cases I would be looking for solutions. Sales, marketing, tasting, and distribution solutions. This merger is an expensive and a safe business decision clearly stating that it is better to be friends with my enemy’s enemy than enemies with them. There will be brands that get forgotten, not sold for sure, and many redundancies all down the selling line. There will be terminations and there will be brands that get dropped, often without even knowing it.

The winner in the merger are the distributors themselves. Brands not mentioned in Shanken is a strong majority of independent brands. The brands and importers mentioned above will win because they always do, and the system is gamed that way. We are passionate because we get hundreds of calls a week from suppliers that are left holding the bag at big distribution, because they are not being actively sold. This merger only accelerates the demise of small brands or at the very least slows down their growth.

Thanksgiving is a time to stop, pause, and thank all those that love and support what we do. Breakthru and RNDC should be incredibly thankful for this business transaction. Every small brand out there should feel like the turkey that DID NOT receive the Presidential pardon. Game Over Gobble Gobble.

Brian RosenThree Tier Talk
by Brian Rosen, www.BevStrat.com

Brian Rosen is Former CEO of America’s #1 Retailer, Sam’s Wines in Chicago, Former Partner at PricewaterhouseCoopers in Retail and sought after retailer consultant.

He can be reached at @rosenretail or brian@briandrosen.com

More information and articles by Brian Rosen

 

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