The second-largest alcohol wholesale distributor in the country has left California, leaving local craft distillers and wineries unsure of what happens next.
With Republic National Distributing Company (RNDC) no longer in the market, hundreds of wineries and distilleries around the state are now in limbo, scrambling to find a new distributor.
“I wish I could say there was a silver lining, but unfortunately, there's not," said Alex Villicana, President of the California Distillers Association.
Villicana is also the owner of Villicana Winery and RE:FIND Distillery. On the distillery side, he says a move like this is catastrophic.
“If you’ve lost your wholesaler with RNDC or if you're actually even looking, you haven't had a wholesaler, trying to get one now is even harder than it was before," he explained.
RNDC carried thousands of spirits and wine brands, including popular ones like Tito's Handmade Vodka, Jack Daniels and High Noon, which was announced to have left the distributor earlier this year.
The loss of the giant wholesale distributor means a displacement of brands, which means smaller, local brands might not be hitting shelves as much as they were before, so Villicana urges people to buy local.
“I would actually say I would prefer to be in the spirits business right now," Villicana said, adding that at least distilled spirits can sit on a shelf and age while wine has a shelf life.
As for local wineries, “It's a major disruption for most of the producers in the Central Coast. The majority of their business is in California, even if they're nationally distributed," said Amanda Wittstrom Higgins, Full Cup Solutions Principal and Owner.
But while it is a tough time already for wineries across the globe, the loss of RNDC could allow for wineries to take more ownership of their business and strategize how to make their product stand out with alternative distributors and customers.
“Tough times make great businesses," Higgins said. "We're entering a challenging time and we're going to see who comes out on the other end stronger than ever. But there will be opportunities for everyone."
Peter Baedeker is the owner and principal of the boutique wine consulting firm Baedeker and former president of a wine distribution company. He says, displaced or not, change is coming and people need to be ready for it.
“But the shift was so dramatic that it would affect the marketplace in general," Baedeker said. "How that really plays out nationally always ends up affecting things locally, so you need to be mindful of that.”
The wine industry is already facing global shortages in demand and oversupply, meaning the strain is already being felt, but Higgins and Badeker believe it is a storm that can be weathered.
“This is a product that humans have been enjoying for 10,000 years as far as we know," Baedeker said. "I think it's had some pretty good proof of demand going forward. It'll be about making sure that you're always looking at what does the consumer want and delivering on that.”
Texas-based RNDC officially pulled out of California on September 2. In June, the company’s CEO was cited in a press release saying that “rising operational costs, industry headwinds and supplier changes” were the reasons for leaving.
KSBY reached out for additional comment but has not heard back.
For now, Baedeker says consumers will drive what ends up on store shelves
“It's always what ends up driving distribution and ultimately production.”
