On Sept. 2, the Republic National Distributing Co. (RNDC) will complete its departure from the largest liquor market in the United States: California. The withdrawal of one of California’s largest alcohol distributors is bound to affect consumers negatively. The initial impact is already being felt by liquor retailers, liquor producers, bars and restaurants.
“At least half of our book came from RNDC,” said Alex Tarantino, the general manager and liquor buyer for the Buckeye Roadhouse in Mill Valley. “And now it’s gone, and there’s no information as to where it’s gone. There’s no list; it’s just gone.”
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The Louisiana-based company completed its acquisition of the century-plus-year-old California company Young’s Market Co. in November 2022, making it one of the largest liquor distributors in California, with brands like Hendrick’s Gin, Tito’s Handmade Vodka, Milagro Tequila and Glenfiddich Scotch Whisky. The other big distributor players in the California market are Breakthru Beverage California and Southern Glazer’s. Then, in a puzzling turnaround, less than 22 months later, RNDC decided to abandon the California market altogether, citing “rising operational costs, industry headwinds and supplier changes,” according to The Spirits Business magazine.
“Now I have to try and locate the rep for the brand and then figure out who now distributes the brand, because the rep for the brand isn’t the same as the distributor,” Tarantino said. “And I have to do that for over 300 products.”
After Prohibition, California instituted the three-tier system for liquor sales. The reasoning then was that public health might be a concern with a product like alcohol, and the best way to monitor that was to put an intermediary into the equation between the producers and the consumers. In California, a producer cannot sell directly to the public, except in certain small amounts and under special conditions. Instead, they sell to distributors, which then sell to the retailers, which then sell to the consumer.
The family-owned Young’s Market Co. — founded in 1888 by John G. Young — switched from grocery sales to wholesale liquor and wine sales after Prohibition. The flagship Young’s Market Co. Building, built in 1924, still stands in the Westlake area of Los Angeles. That Spanish Revival building is on the National Register of Historic Places. Come September, the few remaining vestiges of the venerable Young’s Market Co., as RNDC California, will all be gone, along with their 1,756 employees, many of them Teamsters (Local 853), who will all be laid off.
According to VinePair, California ranks No. 1 in overall liquor consumption in the United States, to the tune of 94 million gallons annually, almost equaling both of the next two states on that list combined: Texas and Florida. California also comes in at a distant No. 20 in per capita consumption — all of which makes RNDC’s decision all that more puzzling.
“We launched in California 10 years ago,” said Alanna Hanson, one of the owners of Hanson of Sonoma, which has a tasting room in Sausalito.
“We looked at whether we would go with Southern Glazer’s or Young’s Market. Young’s was really well known for building brands and taking a lot of really young brands and helping get them into the marketplace. We ended up going with them because they just had such an amazing track record with smaller brands like us, and we had a really amazing time with them. And then when they merged with RNDC, we just found there were a lot of problems that were making it more challenging. So, we ended up switching to Southern Glazer’s about two years ago, and we are really, really grateful that we did because a brand like ours right now, to be kind of thrown into the wind and trying to figure out our distribution with what’s left of the market, would be really challenging.”
One of those newer brands facing exactly that challenge is Marin’s Free Spirits Co., a nonalcoholic spirits producer that’s just getting started. They began to experience problems with RNDC right away.
“When we introduced two new products last year, it took them (RNDC) nearly eight months to confirm them, and then a month later they capitulate, and the whole thing was done,” said Free Spirits Brand Ambassador Steve Turner. “We then switched to Western States Beverage because it was particularly important for us to get a distributor that already worked through BevMo!, Safeway, Kroger and Albertsons, all of the big supermarket chains, because that’s where most of our business goes.”
Distribution is the key for alcohol. Young’s Market Co. originally pioneered the idea of territorial exclusivity, meaning that only one distributor is allowed per product in every market — a situation that still permeates the market today. There’s no shopping around. And ironically, it’s exactly that system that’s causing most of the problems with RNDC’s departure.
“Some of these really big companies, which are swooping up these big brands, aren’t used to the on-premise restaurant dynamic,” Tarantino said. “They’re used to selling to Costco and Safeway and Whole Foods, these massive grocery conglomerates, and they don’t really know how to deal with restaurants.”
Brands want to feel taken care of by their distributor, because that’s their only real outlet for sales, especially smaller brands that don’t have any market share yet. In a sales book with thousands of other higher-profile brands, a small company can get lost.
“This is going to push more suppliers to Breakthru and into Southern Glazer’s, which many people felt their books were too big anyway,” said Marin’s Dan Leese, former chief executive officer of Hotaling & Co. (He retired in July.) “And I think it creates a problem for RNDC potentially nationally, because they had some big suppliers, and they just left them high and dry in the biggest market in the country. That might create some issues with those suppliers potentially looking to make changes elsewhere.”
In the meanwhile, it’s the Wild West here in California right now, at least in terms of alcohol products. So, if you can’t find your favorite wine or liquor in the next couple of weeks, rest assured it’s not just you. And it might just take a couple of months for everything to get sorted out. And many think that you can thank RNDC for that.
“They abandoned us,” Tarantino said. “They just left us here to pick up all the pieces.”
And in the largest liquor market in the country, that’s sure to be a lot of pieces.
Jeff Burkhart is the author of “Twenty Years Behind Bars: The Spirited Adventures of a Real Bartender, Vol. I and II,” the host of the Barfly Podcast on iTunes (as seen in the NY Times) and an award-winning bartender at a local restaurant. Follow him at jeffburkhart.net and contact him at [email protected]
