ALCOHOL INDUSTRY CONSOLIDATION
Is consolidation hurting the liquor industry? With companies all over the alcohol industry merging together – such as Pernod/Allied and Constellation/Vincor as of late – it seems wholesalers are being led to follow. Spirits distributors along with beer and wine wholesalers have shrunken in recent years alongside suppliers, which has led me to wonder what this phenomenon means for the business.
In May WSD conducted a survey in which we asked our readers what they expect of wholesaler consolidation. The following quotes sums up the general consensus:
“3-4 big national players and lots of small innovative wholesalers handling emerging brands and the on premise arena,” said one reader.
“I believe that the wholesaler network will continue to mirror supplier structure.”
It’s certainly a different world out there with new threats charging the industry everyday. Consolidating distributorships into large corporations provides a defense against those threats, showing wholesalers won’t go quietly into the night. Also, it makes more sense for large suppliers to deal with just a small number of distributors versus a larger quantity. Consolidation is a healthy and inevitable response to a changing market. Right? Well, not everyone necessarily agrees.
Some argue that wholesalers are losing that close-knit, family feel. Consolidation among supplier and wholesalers, some feel, is keeping the wine and spirits industry in a constant state of flux, bringing uncertainty to the market, limiting competition, and making prices higher. Instead of dealing with 10 different local distributors, retailers only do business with two or three, and some complain the big guys have lost focus of their product. Where distributors fear big-box chains like Costco and Wal-Mart, small-to-medium sized retailers fret over large wholesalers.
But consolidation also opens up room for smaller, specialized wholesalers – especially since restaurants and consumers are seeking unique products more than ever. Large distributors are mainly concerned with two or three flagship brands and usually leave the lower-volume brands to the little guys, which is one reason small wineries are looking to beer distributors to get that extra push. It’s the smaller distributors that will help keep boutique brands alive.
In May WSD conducted a survey in which we asked our readers what they expect of wholesaler consolidation. The following quotes sums up the general consensus:
“3-4 big national players and lots of small innovative wholesalers handling emerging brands and the on premise arena,” said one reader.
“I believe that the wholesaler network will continue to mirror supplier structure.”
It’s certainly a different world out there with new threats charging the industry everyday. Consolidating distributorships into large corporations provides a defense against those threats, showing wholesalers won’t go quietly into the night. Also, it makes more sense for large suppliers to deal with just a small number of distributors versus a larger quantity. Consolidation is a healthy and inevitable response to a changing market. Right? Well, not everyone necessarily agrees.
Some argue that wholesalers are losing that close-knit, family feel. Consolidation among supplier and wholesalers, some feel, is keeping the wine and spirits industry in a constant state of flux, bringing uncertainty to the market, limiting competition, and making prices higher. Instead of dealing with 10 different local distributors, retailers only do business with two or three, and some complain the big guys have lost focus of their product. Where distributors fear big-box chains like Costco and Wal-Mart, small-to-medium sized retailers fret over large wholesalers.
But consolidation also opens up room for smaller, specialized wholesalers – especially since restaurants and consumers are seeking unique products more than ever. Large distributors are mainly concerned with two or three flagship brands and usually leave the lower-volume brands to the little guys, which is one reason small wineries are looking to beer distributors to get that extra push. It’s the smaller distributors that will help keep boutique brands alive.
posted at 7:47 AM
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