Christine Wente's mention of merger activity among distributors piqued my interest on the topic. As it relates to the transaction that she referenced in class - namely, the recent merger between Glazer's and Southern Wine & Spirits of America - I came across a terrific opinion piece authored by Matt Kramer of Wine Spectator that he aptly sub-titles: "The delightful contradiction of American wine marketing."
In the elucidating column, Kramer acknowledges that the trend of consolidation diminishes the likelihood that wines from (smaller) producers incapable of generating sufficiently meaningful supply (by the consolidated distributors' standards) ever come to market. However, Kramer subsequently credits the 2005 Granholm v. Heald ruling (discussed in today's class related to NVL case) for facilitating D2C channels that critically give consumers visibility and access to such wines. He characterizes these as two opposing forces consistent with his chosen sub-title for the piece.
Related to the announcement of the Glazer's / Southern Wine & Spirits merger, Bacardi concurrently announced the selection of the combined entity as its distributor, abandoning Breakthru Beverage Group (a consolidated entity itself resulting from a late-2015 merger between Wirtz Beverage Group and Charmer Sunbelt Group).
Sources:
M. Kramer: http://www.winespectator.com/webfeature/show/id/52636
G. Trotter: http://www.chicagotribune.com/business/ct-bacardi-wirtz-beverage-0112-biz-20160111-story.html
S. Charles: http://chicago.suntimes.com/news/7/71/1029524/wirtz-beverage-merging-new-york-based-distributor-form-breakthru-beverage
We'll reprise this point in class on Monday!
ReplyDeleteThis summer I looked at distributor consolidation a bit and I was interested to learn that some of the big wineries are actually trying to take advantage of the consolidation to their own benefit. Companies like Constellation are actually choosing to work with fewer distributors than they have to so that they can exert more pressure on those distributors. This strategy certainly wouldn't work for a small winery with limited distribution but is an interesting way for big wineries and conglomerates to take back some control!
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