Q: Is wholesaler consolidation driving retailers to align more closely with the larger wholesalers?
In the past two years, the largest wholesalers in the wine & spirits sector have grown even larger through acquisition. Following suit, major suppliers have signed increasingly broad agreements with the larger wholesalers to cover the US representation more comprehensively.
So now we have 2 of 3 tiers aligning; are retailers getting on board? In short, it is yet to be seen. Prior to the formation of Southern Glazers Wine & Spirits (SGWS), the largest grocer in the country, Kroger, attempted to align their category management function with SGWS. There was backlash by suppliers and government compliance agencies and the partnership was shelved. Does this push retailer and wholesaler further away from each other? Do suppliers fill the void? The latter should not be the case as the same compliance pressures are bearing even more weight on the suppliers.
Now what?… while there continues to be significant opportunities for all sizes of wholesaler, broker, and supplier to gain business with retailers, choice is what consumers are seeking, now more than ever. The top 10 wine brands today makeup less total category share than ten years ago. So retailers will continue to try new brands, from the major suppliers and from the innovators and from the niche players. In a category growing year-over-year for two generations, there continues to be room for everyone. While retailers have to back the big guns, and promote the big brands, those inevitably become price sensitive and margin detractors. While new control and private labels are margin accretive as nimble suppliers seek to grow and gain a foothold with the retail channel.
Wine Growth Partners 