How to Think About the Southern/Glazers Wine Wholesaler Merger

MonopolyBlake Gray looks at the Federal Trade Commissions recently approved merger of Southern Wine & Spirits and Glazers and is exactly correct in his conclusions:

The merger this week of Southern Wine & Spirits and Glazer has created a 41-state behemoth with exclusive rights to many essential brands and  the market power to muscle out smaller competitors. This is normally the type of company that the U.S. tries to break up to protect consumers, but alcohol is a special case, because of Prohibition….his merger is bad for liquor retailers, many (not all) of which are small businesses. It’s bad for restaurants, most of which are small businesses. And it’s bad for consumers, as it will reduce choices and allow the distributor to set artificial monopoly prices.

In the end, Blake makes the point that in the wake of this merger, it’s absolutely critical that states allow direct to consumer shipping by both wineries AND wine retailers.

Today, 40 states allow out-of-state wineries to ship wine into their state direct to the consumer. The only state of any real population size that still disallows it is Pennsylvania.

However, 36 states claim to prohibit out-of-state RETAILERS from shipping wine into their state direct to the consumer. This is problematic on a number of levels:

-Retailers across the country are being prohibited from taking part in the fastest growing distribution channel for wine

-Consumers in state where retailers are told they can’t ship have ZERO ACCESS to imported wines not carried by local retailers (there are tens of thousands of them)

-Consumers have terrible access to hard-to-find, rare and collectible wines which, even if made domestically, are often not available to them via direct shipment from the winery or their local retailer—but they are available from out-of-state retailers.

Oddly, wineries don’t support retailer to consumer shipping either individually or via their trade groups despite the fact that retailers are their best customers and best advocates. State politicians usually don’t support changes in the laws that allow out-of-state retailer shipping because they don’t see it supported by local wineries and local wholesalers oppose it outright.

With the merger of Southern and Glazer’s wholesale operations consumers can look forward to fully stocked shelves of low-priced wines. Wineries can look forward to more substantial demands being put on them from wholesalers. Retailers can look forward to being presented with a catalog of wines only a drug store and convenience store would love.

Read Blake Gray’s article carefully and take his words to heart.

4 Responses

  1. Doug - January 13, 2016

    If the retailer trade organizations and restaurant trade organizations don’t pull together to fight this, then look for more brands to move into the SWS/Glazers portfolio. National distribution and a national footprint have been the wet dreams of suppliers/distributors for years. Some people think SWS/Glazers will loose brands. But I see it just the opposite. I’ve had retailers tell me in the last few days that the move by Bacardi to SWS/Glazers is the last thing the behemouth needs since they can’t handle what they have now. But mister retailer and mister restaurateur you need to get that trade organization you are apying fees to to get off their asses and up on Capitol Hill yelling, scraming and pulling their hair out about the defacto monopoly the FTC just allowed. Otherwise…deal with it.

  2. David Anthony Hance - January 14, 2016

    I appreciate the direct-to-consumer shipping issue. This merger, and the consolidation of Bacardi distribution with the newly merged distribution company, will also be very hard on wineries that are committed to selling through the thee-tier system, but that don’t sell through Southern or Glazer’s. Some major wholesalers are losing a big piece of business when they lose Bacardi to the newly-merged Souther/Glazer’s. That will undoubtedly result in fewer sales-people on the streets, and the remaining sales-people calling on more accounts. That sounds to me like less time to spend hand-selling wine.

  3. Tom - January 21, 2016

    This is not a monopoly! Take vodka as an example; there are hundreds of vodkas available, just because someone has an exclusive right to sell Belvedere (for example) and other popular vodkas does not constitute a monolopy. Now if there were only three vodkas produced and Southern/Glazer’s had all three you may have a case. This move will lead to small boutique start-up companies to represent brands that may not have a voice in a bigger distributors.

  4. Ricki Montaut - March 9, 2016

    Thanks for this helpful information I agree with all points you have given to us. I will follow all of them.- Double Glazing Twickenham

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