The number 2 and 3 U.S. wine distributors announced a planned merger today in another big step toward consolidation in the beverage alcohol business nationwide. Texas-based Republic National Distributing Co. and Breakthru Beverage Group based in both New York and Illinois revealed they have signed a letter of intent to combine assets and operations.
Expected to close in late second quarter of 2018, the deal will create a bigger, more comprehensive network for the merged companies with which to challenge the current dominance of No. 1 Southern Glazer’s Wine & Spirits. Republic National (or RNDC) is acknowledged to be bigger than Breakthru in revenue, but Breakthru has distribution in key consumption markets that Republic lacks, including Illinois, Michigan, Nevada and Washington DC.
Forbes estimated 2016 revenues of RNDC at $6.5 billion and Breakthru at $5.4 billion, totaling nearly $12 billion, so the merged companies will come much closer to Southern Glazer’s size of $16.5 billion in 2016, also estimated by Forbes.
“Much more than a growth opportunity, we are entering this venture to create something that is different, sustainable and transformative,” said RNDC President and CEO Tom Cole. “Together, our deep bench of focused, diverse associates will bring great and unique advantages to our suppliers, our customers and the consumers who enjoy the products we represent.”
His counterpart at Breakthru is President and CEO Greg Baird, who said, “We see this as the launch pad to bring innovation to life and to usher in a new era for our business and industry.”
From the RNDC side, Cole will become CEO of the new company, which has yet to be named, Robert Hendrickson, will be chief operating officer and Danny Wirtz becomes chief growth and strategy officer. From the Breakthru side, Baird will be chief integration officer. Other appointments are pending.
Both of the companies in the merger reached their present forms by earlier mergers. RNDC was created in 2007 through the joining of the Republic and National firms. Breakthru in its current form has only existed since 2016, when distribution companies Charmer Sunbelt and Wirtz Beverage merged.