Initial Thoughts on RNDC, Breakthru Deal


As was reported yesterday, RNDC and Breakthru unveiled plans for a merger in 2018 [see WSD 11-20-2017]. Together BRNDC (as we've taken to calling the new entity) will represent $12 billion in sales and span 30 markets. It will be the second largest distributor in the US, nearly catching up to Southern Glazer's Wine & Spirits, which now covers 45 markets (not 41 as written yesterday) with close to $16 billion in annual sales.

Being Thanksgiving week, we were unable to get executives on the phone by press time, but here are a couple of our initial observations on the deal.

MISSING OUT IN NY, CA. Despite its formidable size, BRNDC will not have a presence in two of the largest US markets: California and New York. These are huge holes if the goal is to be a nationwide distributor and go head to head with SGWS for those long term agreements with the largest suppliers.

You may recall, New York is a complex situation. Breakthru co-chairman Charlie Merinoff does co-own Empire Merchants distributor in New York, but Breakthru Beverage doesn't. Breakthru and Empire were involved in a legal squabble from the end of 2016 to the beginning of this year [see WSD 03-17-2017]. Breakthru offered to acquire the company during the ordeal, but Empire thoroughly rebuffed the overture [see WSD 11-11-2016]. So there's no love lost there.

In California, it would make sense for BRNDC to join forces with SGWS's main competitor Young's Market, as RNDC does have a partnership with the company in Arizona. But despite speculation around such a deal this year, Young's is seemingly not interested in merging right now.

Without those two essential markets, we're willing to bet that this merger won't be the end of BRNDC's expansion plans. We can imagine California's Wine Warehouse is looking pretty good right about now.

The question now is: is the newly expanded BRNDC territory enough of a footprint to attract alignment deals with some of the prize suppliers? Recall, SGWS won more than a couple big contracts after its merger including the likes of Bacardi, Campari, and Beam Suntory. And who would be the first to jump?

LARGER CONSOLIDATION TRENDS. This move is the latest in a series of major consolidation moves in recent years. Five of the Top 10 largest distributors have made deals to consolidate since 2015. Recall, Southern Wine & Spirits and Glazer's coupled up in 2016, as did Wirtz Beverage and Charmer Sunbelt, forming Breakthru Beverage. And the latest move came earlier this year when Breakthru merged with Allied Beverage in New Jersey.

Once the BRNDC deal goes through, the No. 1 and No. 2 distributors will have as much as 60% of market share in the US, according to Jeffries International.

What do you think? Ping us your thoughts at, or simply reply to this email.


Retail chain owner Liquor Stores NA announced it will be almost completely pulling out of the US to refocus on its core markets in Canada, Alberta and British Columbia, according to a statement from the company.

"The transactions are strong indicators of the board and management's determination to implement the strategic plan which our shareholders endorsed in June by electing six new directors," says board chair Derek Burney.

Liquor Stores NA has a presence in Kentucky, New Jersey and Connecticut. The company has already finalized the sale of its 15 Liquor Barn stores in Kentucky to Blue Rose Spirits, a subsidiary of holding company Blue Equity. Gross proceeds of the sale are about $26.15 million, with the possibility of an addition $4.2 million subject to an earn-out agreement.

The company is also in the midst of finalizing a deal to sell its 51% stake in Birchfield Ventures, which operates two liquor stores in New Jersey. This sale also releases Liquor Stores NA from its obligation to purchase the remaining 49% in Birchfield, which is currently valued at about $12.4 million. As for its Connecticut operations, they're still in discussions to sell with a third party.

The only US entity they'll hang on to is in Alaska.


KO Distilling in Virginia has just completed a $900,000 expansion to its facilities, tripling its production capacity and improving its distillery store and tasting room, per a release. More specifically, they've put in a new column still, larger fermentation tanks, much higher capacity boiler and chiller system as well as larger grain silos.

$25,000 of that investment came from a grant from the Virginia Governor's Agriculture and Forestry Industries Development Fund and another $25,000 in a matching grant from the City of Manassas. "Thanks to the support of the state and local governments, we will now be able to triple our production. As a grain-to-glass producer of local spirits, this also means we'll be tripling the amount of grain we buy from neighboring Virginia farms," says co-founder Bill Carlson.

The KO portfolio includes Battle Standard 142 Gin in Navy Strength ($35), Standard Strength ($30) and Barrel Finished ($36) and four small batch American whiskeys - Virginia Moon White Whiskey ($35), Bare Knuckle American Wheat Whiskey ($36), Bare Knuckle American Rye Whiskey ($46) and Bare Knuckle Straight Bourbon Whiskey ($41).


SHARE A SPLASH WINE CO. DEBUTS HIGH DIVE LABEL. High Dive is a collaboration between Share A Splash Wine Co. founder Yoav Gilat, Peter Heitz of Turnbull Wine Cellars and Scott Palazzo of Palazzo Wines, per a release. High Dive Napa Valley 2014 is the first release under the label. It's a blend of predominantly cabernet sauvignon with merlot and cabernet franc sourced from Oakville and Carneros AVAs. High Dive Napa Valley 2014 will be available for approximately $95 a 750 ml.

HYATT AND FOLIO FINE WINE PARTNERS TO LAUNCH CANVAS BLANC DE BLANCS. Canvas Blanc de Blancs is a sparkling addition to the Canvas wine brand, which Hyatt developed in collaboration with Folio Fine Wine Partners. The new addition was made by Venetian sparkling wine producer Villa Sandi. It will be available in all restaurants, bars and in-room dining at all Grand Hyatt, Hyatt Centric, Hyatt Regency, Hyatt Place and Hyatt House hotels starting January 1, 2018.

HAPPY THANKSGIVING. We are extremely grateful for all of our Wine & Spirits Daily readers. So from our family to yours, we hope you eat way too much delicious food and enjoy some good booze this week. Barring any breaking news, we'll be back in your inbox on Monday.

Until later,
Your Editors

Emily Pennington -
Sarah Barrett -

"If a fellow isn't thankful for what he's got, he isn't likely to be thankful for what he's going to get." -- Frank A. Clark

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