An Inside Look at Southern/Glazer’s
Southern and Glazer’s announcement yesterday afternoon definitely qualifies as one of the biggest news stories this year. In case you’ve been living under a rock (or vacationing on some remote island), Southern and Glazer’s are forming a strategic joint venture under the name Southern/Glazer’s Distributors of America.
A company press release obtained by WSD stated: “Please note that this is not a merger, it is a strategic joint venture. The difference is that we are not putting or merging the companies together. Instead, we will be marketing ourselves as one Company with a national footprint (e.g., 38 states) second to none.”
SOME FIGURES. Based on the April issue of Impact, Southern’s projected 2008 market share in terms of volume is 19% and Glazer’s is 7%. Combined, Southern/Glazer’s would account for 26% of market share. Just to give some perspective, The Charmer Sunbelt Group came in as the second largest wine and spirits distributor behind Southern with a projected market share of 10.9% in 2008, followed by Republic National Distributing Company (10.3%), Glazer’s (7%) and Young’s Market (4.8%).
According to Impact, Southern’s projected sales revenue in 2008 is $8.31 billion. Charmer Sunbelt comes in at $4.775 billion, followed by RNDC ($4.52 billion), Glazer’s ($3.08 billion) and Young’s Market ($2.12 billion). Combined, Southern/Glazer’s projected sales revenue would be $11.39 billion in 2008.
On its company website, Southern says it “has grown from its early, humble beginnings to more than 10,000 employees, over 200,000 customers, and more than 70 million cases shipped across the 30 U.S. state markets in which it operates today.”
A TALK WITH LOUIS ZWEIG. Tuesday’s deal arose from talks that began a month ago. Louis Zweig, senior vp, corporate strategy for Glazer’s told WSD via email: “Southern and Glazer's have been industry colleagues and friends for many years. The discussions that resulted in yesterday's announcement have occurred only in the last 30 days.”
The Dallas Morning News reported today that Southern held acquisition talks with Glazer's in 2006, but a deal wasn't reached. The newspaper also reported that the Glazer family isn’t “looking to get out” and is more committed than ever.
Some of our readers have speculated that Glazer’s agreed to the deal to prevent Southern from moving into Texas and possibly poaching Diageo. Recall that Republic carried Diageo several years ago until it switched to Glazer’s. Unlike beer wholesalers, state franchise laws do not protect a majority of wine and spirits wholesalers in most states like Texas.
However, from what we understand Diageo has been very happy with Glazer’s and likely did not know about the deal with Southern. There’s no question that Southern wanted to move into Texas but we don’t think Diageo forced anything.
When we asked if the j-v was driven by the possibility of Southern coming into the Texas market and whether Diageo had any influence over the decision, Louis simply told us:
“Our national strategic joint venture was formed to create a national footprint, and to create national synergies.”
Another issue on everyone’s minds: what changes are in store? What effect will the new joint venture take on Southern and Glazer’s current portfolios and relationships with their respective suppliers?
“By forming Southern/Glazer's Distributors of America, we truly become a national company with unprecedented geographic reach that will enable us to more effectively service our suppliers and build their brands through enhanced and more efficient utilization of resources,” Louis told WSD.
Southern is traditionally a more corporate company, while Glazer’s is a bit more laidback. With that said, Glazer’s will likely have as big of an influence on Southern as Southern will surely have on Glazer’s. It will be interesting to watch.
But what’s the point? In other words, how does the j-v help Southern/Glazer’s with suppliers and retailers? Although some have speculated that retailers may be a little nervous upon hearing the news, the j-v claims it will result in greater efficiency.
“By bringing together our systems, sharing best practices, and tapping into our most valuable asset - our people, we will set a new standard for our suppliers in building their brands and for our customers in delivering superior customer service,” Louis commented.
We’re not quite sure how other wholesalers will respond to the news. They’ll certainly be watching what happens, but we don’t think anyone is panicking. The level of competitiveness certainly isn’t going to change.
Some in the industry speculate that wine and spirits wholesalers are moving towards a dual system, so we asked Louis what he thinks the wine and spirits wholesaler landscape will look like in the next 5-10 years.
“We believe that consolidation in all tiers will continue at a fast pace,” he replied.
We’re not even sure dividing the nation between two wholesalers would clear the FTC, but let’s explore the issue for the sake of argument. One day we may see only 2-4 wine and spirits wholesalers, but we expect regional distributors will stay in the game for a long time. We don’t expect RNDC to merge with another company, particularly Southern, anytime soon, but perhaps Judge and Dolph and Young’s Market would eventually come together. Of course, we’re only speculating.
Lastly, what does the joint venture mean for the little guys? Will the new mega deal give small wineries and distilleries a tougher time accessing the market?
“We will continue to differentiate our strategic joint venture from our competition is our continual drive to be the distributor of choice for suppliers,” said Louis.
SOME MORE BACKGROUND. Currently, Southern operates in 30 states and is a licensed permitee in the state of Nebraska. The states include: Alabama, Alaska, Arizona, California, Colorado, Delaware, Florida, Kentucky, Hawaii, Illinois, Maine, Mississippi, New Hampshire, New Jersey, Nevada, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Vermont, Virginia, and West Virginia. Southern also has a pending strategic partnership with The Odom Corporation of Bellevue, Washington, a joint venture that has wine and spirits brokerage operations across the Northwest Control States of Idaho, Montana, Oregon, Utah, Washington, and Wyoming, as well as a fully-operational sales and distribution business in Alaska.
Glazer’s, meanwhile, operates in 12 states which include: Arizona, Arkansas, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, Oklahoma, and Texas.
We received a load of emails yesterday regarding Southern/Glazer’s. Please send us your thoughts and comments at megan@beernet.com. As usual, all identifying factors will remain anonymous.
FRENCH HARVEST BEGINS TODAY
The 2008 harvest began today in the southern French Roussillon region, reports Decanter. The Conseil Interprofessionel des Vins du Roussillon (CIVR) said Domaine Cazes was the first producer to begin picking in the area. This year’s harvest has begun one week earlier than last year, although the majority of French growers will begin harvesting sometime after August 20. Much like California, the French wine harvest is expected to be smaller than last year.
WSD BRIEFS:
WAKEFIELD WINES has named Justin Taylor, a third-generation member of the Taylor winemaking family of Clare Valley Australia, as Brand Ambassador and market manager. As a Brand Ambassador, Justin will lead training and development programs for
Brown-Forman Beverages, which imports Wakefield to the U.S. He is relocating to the company’s regional offices in Atlanta.
CHALONE VINEYARD is aiding wildlife preservation efforts through the release of a limited edition 2006 Chalone Vineyard Estate Syrah Blend. The wine is a joint partnership with the Ventana Wildlife Society (VWS) benefiting the California Condor.
Until tomorrow, Megan
“What's money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.”
Bob Dylan
--------- Sell Day Calendar ----------
Today’s Sell Day: 8
Sell days this month: 21
Sell days this month last year: 23
This month ends on a: Fri
This month last year ended on a: Fri.
YTD sell days Over/Under: +1
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
A company press release obtained by WSD stated: “Please note that this is not a merger, it is a strategic joint venture. The difference is that we are not putting or merging the companies together. Instead, we will be marketing ourselves as one Company with a national footprint (e.g., 38 states) second to none.”
SOME FIGURES. Based on the April issue of Impact, Southern’s projected 2008 market share in terms of volume is 19% and Glazer’s is 7%. Combined, Southern/Glazer’s would account for 26% of market share. Just to give some perspective, The Charmer Sunbelt Group came in as the second largest wine and spirits distributor behind Southern with a projected market share of 10.9% in 2008, followed by Republic National Distributing Company (10.3%), Glazer’s (7%) and Young’s Market (4.8%).
According to Impact, Southern’s projected sales revenue in 2008 is $8.31 billion. Charmer Sunbelt comes in at $4.775 billion, followed by RNDC ($4.52 billion), Glazer’s ($3.08 billion) and Young’s Market ($2.12 billion). Combined, Southern/Glazer’s projected sales revenue would be $11.39 billion in 2008.
On its company website, Southern says it “has grown from its early, humble beginnings to more than 10,000 employees, over 200,000 customers, and more than 70 million cases shipped across the 30 U.S. state markets in which it operates today.”
A TALK WITH LOUIS ZWEIG. Tuesday’s deal arose from talks that began a month ago. Louis Zweig, senior vp, corporate strategy for Glazer’s told WSD via email: “Southern and Glazer's have been industry colleagues and friends for many years. The discussions that resulted in yesterday's announcement have occurred only in the last 30 days.”
The Dallas Morning News reported today that Southern held acquisition talks with Glazer's in 2006, but a deal wasn't reached. The newspaper also reported that the Glazer family isn’t “looking to get out” and is more committed than ever.
Some of our readers have speculated that Glazer’s agreed to the deal to prevent Southern from moving into Texas and possibly poaching Diageo. Recall that Republic carried Diageo several years ago until it switched to Glazer’s. Unlike beer wholesalers, state franchise laws do not protect a majority of wine and spirits wholesalers in most states like Texas.
However, from what we understand Diageo has been very happy with Glazer’s and likely did not know about the deal with Southern. There’s no question that Southern wanted to move into Texas but we don’t think Diageo forced anything.
When we asked if the j-v was driven by the possibility of Southern coming into the Texas market and whether Diageo had any influence over the decision, Louis simply told us:
“Our national strategic joint venture was formed to create a national footprint, and to create national synergies.”
Another issue on everyone’s minds: what changes are in store? What effect will the new joint venture take on Southern and Glazer’s current portfolios and relationships with their respective suppliers?
“By forming Southern/Glazer's Distributors of America, we truly become a national company with unprecedented geographic reach that will enable us to more effectively service our suppliers and build their brands through enhanced and more efficient utilization of resources,” Louis told WSD.
Southern is traditionally a more corporate company, while Glazer’s is a bit more laidback. With that said, Glazer’s will likely have as big of an influence on Southern as Southern will surely have on Glazer’s. It will be interesting to watch.
But what’s the point? In other words, how does the j-v help Southern/Glazer’s with suppliers and retailers? Although some have speculated that retailers may be a little nervous upon hearing the news, the j-v claims it will result in greater efficiency.
“By bringing together our systems, sharing best practices, and tapping into our most valuable asset - our people, we will set a new standard for our suppliers in building their brands and for our customers in delivering superior customer service,” Louis commented.
We’re not quite sure how other wholesalers will respond to the news. They’ll certainly be watching what happens, but we don’t think anyone is panicking. The level of competitiveness certainly isn’t going to change.
Some in the industry speculate that wine and spirits wholesalers are moving towards a dual system, so we asked Louis what he thinks the wine and spirits wholesaler landscape will look like in the next 5-10 years.
“We believe that consolidation in all tiers will continue at a fast pace,” he replied.
We’re not even sure dividing the nation between two wholesalers would clear the FTC, but let’s explore the issue for the sake of argument. One day we may see only 2-4 wine and spirits wholesalers, but we expect regional distributors will stay in the game for a long time. We don’t expect RNDC to merge with another company, particularly Southern, anytime soon, but perhaps Judge and Dolph and Young’s Market would eventually come together. Of course, we’re only speculating.
Lastly, what does the joint venture mean for the little guys? Will the new mega deal give small wineries and distilleries a tougher time accessing the market?
“We will continue to differentiate our strategic joint venture from our competition is our continual drive to be the distributor of choice for suppliers,” said Louis.
SOME MORE BACKGROUND. Currently, Southern operates in 30 states and is a licensed permitee in the state of Nebraska. The states include: Alabama, Alaska, Arizona, California, Colorado, Delaware, Florida, Kentucky, Hawaii, Illinois, Maine, Mississippi, New Hampshire, New Jersey, Nevada, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Vermont, Virginia, and West Virginia. Southern also has a pending strategic partnership with The Odom Corporation of Bellevue, Washington, a joint venture that has wine and spirits brokerage operations across the Northwest Control States of Idaho, Montana, Oregon, Utah, Washington, and Wyoming, as well as a fully-operational sales and distribution business in Alaska.
Glazer’s, meanwhile, operates in 12 states which include: Arizona, Arkansas, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, Oklahoma, and Texas.
We received a load of emails yesterday regarding Southern/Glazer’s. Please send us your thoughts and comments at megan@beernet.com. As usual, all identifying factors will remain anonymous.
FRENCH HARVEST BEGINS TODAY
The 2008 harvest began today in the southern French Roussillon region, reports Decanter. The Conseil Interprofessionel des Vins du Roussillon (CIVR) said Domaine Cazes was the first producer to begin picking in the area. This year’s harvest has begun one week earlier than last year, although the majority of French growers will begin harvesting sometime after August 20. Much like California, the French wine harvest is expected to be smaller than last year.
WSD BRIEFS:
WAKEFIELD WINES has named Justin Taylor, a third-generation member of the Taylor winemaking family of Clare Valley Australia, as Brand Ambassador and market manager. As a Brand Ambassador, Justin will lead training and development programs for
Brown-Forman Beverages, which imports Wakefield to the U.S. He is relocating to the company’s regional offices in Atlanta.
CHALONE VINEYARD is aiding wildlife preservation efforts through the release of a limited edition 2006 Chalone Vineyard Estate Syrah Blend. The wine is a joint partnership with the Ventana Wildlife Society (VWS) benefiting the California Condor.
Until tomorrow, Megan
“What's money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.”
Bob Dylan
--------- Sell Day Calendar ----------
Today’s Sell Day: 8
Sell days this month: 21
Sell days this month last year: 23
This month ends on a: Fri
This month last year ended on a: Fri.
YTD sell days Over/Under: +1
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 2:56 PM
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