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December 2017 WINES&VINES 41 THE BIGGEST AND BEST OF 2O17 www.scottlab.com • info@scottlab.com Introducing the UNICO Filter • Filters product to turbidity below 1 NTU, keeping color and structure intact • Stainless steel membrane technology for lees filtration • Available in automatic and semi-automatic models • For use on wine, cider, mead and lees Delivering a single pass solution for wine and lees Best-Read Feature TOP 10 U.S. WINE DISTRIBUTORS By Jim Gordon For the September 2017 issue of Wines & Vines, staff members from various disciplines collabo- rated to create an ambitious 24-page package detailing the rapidly changing wholesale tier for wine sales. The lead story, "Top 10 U.S. Wine Distributors," was the year's most popular fea- ture with readers of wine- sandvines.com. The "top 10" list, informed by data from Wines Vines Analytics and the interests of wineries searching for distribu- tion, cov- ered a swath rang- ing from corporate giant South- ern Glazer's Wine & Spir- its, which represented 1,178 win- eries at the time, to Wine Warehouse, which represents just 81 wineries but operates in many of the country's top markets for wine sales. The Distributor Market 2017 package also included informa- tion about distributor consolida- tion, marketing companies, digital platforms and an exclusive inter- view with the head of the Wine & Spirits Wholesalers of America. Biggest Challenge FDA BEGINS WINERY INSPECTIONS By Kate Lavin Within months of the 2017 Unified Symposium, when repre- sentatives from the U.S. Food & Drug Administration warned of surprise inspections, wineries began reporting drop-in inspec- tions related to the Food Safety Modernization Act. And while most believed inspectors would target the nation's largest winer- ies first, legal service providers to the wine industry said visits did not follow a pattern in terms of winery case production or even location. This unexpected turn of events sent thousands of readers to winesandvines.com, making this story one of the best-read items of 2017. Attorney Barbara Snider of Hinman & Carmichael told Wines & Vines she advises clients to appoint two staffers to handle drop-in inspections, so there is always someone present who knows where the necessary docu- mentation is stored. Sanitation is key, and inspectors will want to see that cleaning products are clearly labeled and kept separate from food amendments. Records of the winery receiving grapes, yeast and fining agents should be available, along with details of where wine was sent after leaving the winery. 32 WINES&VINES September 2017 September 2017 WINES&VINES 33 DISTRIBUTOR MARKET 2017 DISTRIBUTOR MARKET 2017 Southern Glazer's Wine & Spirits Headquarters: Miami, Fla. States served: 36 Offices: 128 U.S. wineries represented: 1,178 Chairman: Harvey Chaplin Executive vice chairman: Bennett Glazer CEO: Wayne Chaplin President: Sheldon Stein Southern Glazer's Wine & Spirits is by far the largest wine distribu- tor in the United States. It serves 36 states and 1,178 wineries, ac- cording to Wines Vines Analytics. The firm generated revenue esti- mated by Forbes magazine at $16.5 billion in 2016. It sold 150 million cases of wine and spirits the same year to more than 350,000 retail and restaurant ac- counts—that's more than twice the sales revenue giant producer Constellation Brands posted in 2016, including wine, beer and spirits. Southern Glazer's was formed by a January 2016 agreement to merge Southern (already the biggest distributor) and Glazer's, which had revenues about a third as large as Southern. The two had acquired several other distributors since 2010 including Premier, Stoller, Odom, Olinger, Alliance, Sterling and Union. Southern Glazer's leadership stems from the two founding families: the Chaplins, one of the original families of Southern Wine & Spirits, and the Glazers, who founded Glazer's Inc. Wayne Chaplin from South- ern is CEO of the merged companies. He has been with the company since 1984 and holds a juris doctor degree from the University of Miami. His father, Harvey Chaplin, is now chairman. From the other side, Bennett Glazer is executive vice chairman of Southern Glazer's and president of Glazer's Inc., which is the parent company of all Glazer's subsidiaries. He joined Glazer's in 1968. Sheldon "Shelly" Stein is president of Southern Glazer's and came to the Glazer's firm in 2010 with a background in investment banking and law. While celebrating its No. 1 position, Southern Glazer's also currently faces lawsuits filed by New York and California bar owners who allege overcharging and other illegal business practices. Republic National Distributing Co. Headquarters: Grand Prairie, Texas States served: 21 Offices: 42 U.S. wineries represented: 751 President and CEO: Tom Cole EVP and COO: Robert Hendrickson Republic National Distributing Co., known as RNDC to the wine trade, is the nation's second-larg- est wine distributor, representing 751 wineries, according to Wines Vines Analytics, and bringing in an estimated 2016 revenue of $6.5 billion, according to Forbes, in 22 states largely in the East, South and Midwest. The company's roots go back to the N. Goldring Corp., a beer distributor in Florida before Pro- hibition. The present company evolved and grew via mergers and ac- quisitions to include the Block Distributing Co. and National Distributing Co. as well as many others. RNDC formed in 2006 when the Republic and National firms merged. Forbes ranks RNDC as the 49th largest private company in the United States, moving it up from No. 85 in 2009. It counts 42 offices across the country and is the market leader in Texas, where it holds a 63% market share with $354 million in annual sales through the first quarter of this year, according to Wines Vines Analytics. After serving at the helm of several predecessor firms including Magnolia Marketing Co., Tom Cole is now the president of RNDC. He is on the board of directors of the Wine & Spirits Wholesalers of America and its government affairs committee, and he is active in New Orleans business and civic organizations. Robert Hendrickson is the executive vice president and chief operat- ing officer, a position he assumed in 2009 after serving as president- western states. Hendrickson has been part of RNDC since the beginning when, in 1997, the former Tarrant Co. and the former Julius Schepps Co. were merged to create Republic Beverage Co. Breakthru Beverage Group Headquarters: New York, N.Y., and Cicero, Ill. States served: 15 Offices: 37 U.S. wineries represented: 691 Co-chairmen: Charles Merinoff and W. Rockwell Wirtz President and CEO: Greg Baird Breakthru Beverage ranks third among the top wine distributors in the United States, selling prod- ucts from 691 wineries into 15 states from its sales force in 37 offices, according to Wines Vines Analytics. Breakthru is a relatively new company in its present form, being the result of M&A activity that brought the Charmer Sunbelt and Wirtz distribution companies together as of early 2016, along with 15 other companies they had gathered in recent years. Operating in mostly central, eastern and southern states, Breakthru has headquarters in both New York City and Illinois. Its 2016 revenues were estimated at $5.4 billion by Forbes. "By working as an efficient and collaborative wholesaler across multiple markets, we can improve speed to market for our partners and better coordinate and activate brand marketing strategies," now-presi- dent and CEO Greg Baird noted at the time of the merger. "We can make investments in both our markets and our people." Baird previously was president and COO of Charmer Sunbelt Group, where he oversaw all aspects of the company's operations. His résumé also includes being president of Reliable Churchill, a prominent distribu- tor in Maryland. Representatives from two long-time distributor families are co- chairmen of Breakthru: Charles Merinoff has worked for his family's beverage-distribution business since 1980. In 1991, he became president of Charmer Industries, the family's metropolitan New York beverage business. In 1994 he led the acquisition of Sunbelt Beverage Corp., and in 1997 the wholesale companies in which the family had an interest became known as the Charmer Sunbelt Group. W. Rockwell "Rocky" Wirtz is the other co-chair, representing the third generation of his family in the beverage business. Wirtz also serves as chairman of Wirtz Corp., one of the largest privately held and family- owned companies in the United States. Young's Market Co. Headquarters: Tustin, Calif. States served: 11 Offices: 54 U.S. wineries represented: 663 Chairman: Vern Underwood CEO: Chris Underwood President: Rick Gillis Of the companies on the "Top 10" list of wine distributors, Young's Market Co. is the only one based on the West Coast. It serves 663 wineries in 11 western states from its headquarters in Orange County, Calif. Young's has com- pleted its share of mergers and acquisitions, absorbing six other companies since 2010, including regional leader Columbia in Or- egon and Washington. The family-owned company reports annual revenue of more than $3 billion and has a staff of 3,000 employees. Young's was a retail market business when it began in downtown Los Angeles in 1888 and grew to include 60 retail locations by the 1930s. After Prohibition, Young's got into wine and spirits and oper- ated a Dr. Pepper bottling plant before focusing exclusively on bever- age alcohol. Chairman Vern Underwood began his career in the Young's ware- house in 1955. He ultimately became the fourth generation to lead Young's Market Co. and now serves as chairman of the board of parent company Young's Holdings. Wilson Daniels, the Napa Valley- based marketing company with a portfolio of luxury wine brands, also is owned by Young's Holdings. Chris Underwood started with the company in 1996 and is now chief executive officer. He oversees all Young's business operations. Underwood also serves as a member of the board of directors of Young's Holdings. As president of Young's Market, Rick Gillis provides strategic di- rection and operations management for a multi-state distribution network. Gillis is a 20-year veteran of the sales and distribution divi- sions of some of the most well-known consumer packaged goods organizations in the United States. He worked 15 years with Coca- Cola Enterprises and was group vice president of Dean Foods Co. Top 10 U.S. Wine Distributors An introduction to the 10 wine distributors and their executives, ranked by their importance to U.S. wineries By Jim Gordon T his first-time ranking of the top 10 U.S. wine distributors is intended to help domestic wineries as they confront the ongoing challenges of distributor consolidation. Wines Vines Analytics, the data research arm of Wines & Vines, created this top 10 list using unique criteria chosen to emphasize the interests of wineries, including how many and which U.S. wineries a distributor represents, the percentage of population in the states they cover and other factors. Note that there is a significant break in size between the top four distributors and numbers five through 10. Distribution of imports, beer and spirits were not considered in this methodology. 1 2 Wayne Chaplin Tom Cole 3 Chris Underwood Greg Baird 4 TOP 10 U.S. WINE DISTRIBUTORS 1 Southern Glazer's Wine & Spirits 6 Heidelberg Distributing Co. 2 Republic National Distributing Co. (RNDC) 7 Wine Warehouse 3 Breakthru Beverage Group 8 Martignetti Cos. 4 Young's Market Co. 9 Empire Merchants 5 Johnson Brothers Liquor Co. 10 Winebow Group Source: Wines Vines Analytics.