RNDC’s decision to cease operations in California by September 2 has sent shockwaves through the wine industry. As the second-largest alcohol wholesaler in the United States, RNDC’s exit will leave a significant gap for numerous US and international wineries, given California’s strict regulations that require wineries to partner with wholesalers for retail and restaurant sales.
Legal expert Rebecca Stamey-White noted that RNDC’s choice to shut down operations instead of selling its California business is an unusual move, especially in such a crucial market. This has led to confusion and uncertainty among suppliers reliant on RNDC, both in California and beyond.
The move is perplexing considering RNDC’s substantial market presence, with projected sales of $12.2 billion by the end of 2024 and a 16.9% share of the US wholesale market. In contrast, the remaining 300 wine and spirits wholesalers are projected to account for only $13.4 billion in sales with an 18.5% market share. RNDC had previously strengthened its position in California by acquiring Young’s Market, the state’s largest wholesaler.
CEO Bob Hendrickson stated that the decision to withdraw was difficult and emphasized RNDC’s commitment to managing the transition responsibly. However, no clear explanation was provided for the exit. Earlier insights suggested that RNDC might be considering significant changes, potentially through acquisition.
In the competitive landscape of California, RNDC has faced challenges in its spirits division, losing key brands like Tito’s Vodka and Gallo’s High Noon to Reyes Beverage Group. These shifts, while impactful, do not directly affect wine, which is likely to suffer the most from RNDC’s departure. The wine sector is already experiencing a sales decline, its worst in three decades, and the wineries previously associated with RNDC will now need to navigate a challenging market to find new wholesalers. The remaining key players include Southern Glazer’s, Breakthru Beverage, Henry Wine Group, and Regal Wine Co., but the timing exacerbates the challenges for mid-sized brands that find themselves without a major distributor.
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