How brands can gain a US listing with SGWS and RNDC

The two biggest alcohol distributors in the US told us what it takes to join their portfolio in a competitive spirits market.

It has been noted that this year will be a ‘challenging’ one for spirits in the US.

Wine & Spirits Wholesalers of America (WSWA) – which draws on data from wholesalers to more than 450,000 retailers nationwide – expects the US spirits sector to decrease by 5.65% for the 2024 full year.

Although the trading environment may not currently be the easiest, there are certain things new brands looking to make headway in the US from the beginning can do to catch the eye of the biggest distributors.

For starters, Jeff Potter, senior vice-president (SVP) and managing director of supplier excellence and growth for Republic National Distributing Company (RNDC), says that the company is looking for brands that demonstrate both a “strong market demand” and a “unique value proposition” for consumers.

To secure a listing with RNDC – the second-largest spirits distributor in the US – a brand’s proposition would have to be “clear and compelling”, Potter says, but behind the story and product’s quality needs to be “a robust marketing strategy and sustainable growth in the long-term”.

“We like to think of ourselves as brand builders, not just ‘order takers’,” he adds.

Some of the brands RNDC has picked up lately include Lalo Tequila, which focuses exclusively on its blanco expression, and Five Farms Irish Cream, which markets itself as the ‘world’s first’ farm-to-table Irish cream liqueur.

Zach Poelma, SVP, supplier strategy and insights at Southern Glazer’s Wine & Spirits (SGWS), meanwhile stresses that a product must “have sufficient financial backing to support investment behind the brand”.

Explaining that newer brands cannot win on distribution alone, he says that “a distributor must be focused on the execution, and the distribution strategy needs to align and tie closely with how the brand is investing to drive consumer awareness and trial.

“Too often we see brands think that by just growing distribution that alone is enough to drive success.”

Poelma also highlighted the importance of “sell-through” (or velocity) of a product, which indicates availability and popularity, and is something customers – large and small – pay close attention to.

He continues that “the larger retailers have a very formal process and cycle where they evaluate brand performance multiple times a year. In smaller accounts, while the process may not be as formal or the cadence may differ, they also are looking for items that won’t just sit on their shelf and tie up working capital. So even if the brand is not in many accounts, customers are going to be looking to see how that sell-through is in the accounts it is in.”

Looking beyond Tequila

In terms of categories that are currently of greatest interest, for RNDC, Potter points to premium spirits, which are experiencing “significant growth and consumer interest”. He adds that the company is also watching emerging trends in low/no, as they “cater to the growing demand for healthier lifestyle”.

For Southern Glazer’s, Poelma feels that despite a slowdown in Tequila, there are still “some sweet spots and price tiers within not just Tequila, but the broader agave-based space that continues to interest us as the consumer remains very interested in the category”.

Although higher-priced categories have been under pressure the last few years, he contends that “we don’t think trading up is permanent, and we still believe consumers have a desire to drink products they enjoy.

“A lot of the pressure these categories have felt was driven by consumers who came into the category when they had excess disposable income, and now they are leaving. As we return to a more normalised consumer base, we do think these price tier returns turn growth, regardless of the category.”

Lastly, recognising that some whisky trends are “soft” at the moment, Poelma says Southern Glazer’s still believes “the category will still see growth over the coming years as consumers become more engaged with some great aged offerings in the space”.

At the start of the year, SGWS acquired Horizon Beverage Group’s assets, including its operations in Massachusetts and Rhode Island. The two states are SGWS’s 46th and 47th markets in the US, marking significant expansion for the company.

It also just appointed a new exec for its Campari Division in Jennifer Chaplin Tolkin.

At RNDC, meanwhile, the company recently saw its CEO Nick Mehall depart after three years, with Bob Hendrickson taking over the role in the interim.

The change came after reports revealed Tito’s Handmade Vodka would be ending its distribution agreement with RNDC in California, in favour of Reyes Beverage Group from 1 April, while Brown-Forman would follow suit from 1 May.

RNDC’s e-commerce platform hit over US$1 billion in sales last year and Potter said investment in the channel had helped the company “stay ahead of the curve” and navigate industry challenges by “enhancing our digital capabilities and improving customer engagement”.