RNDC turned the California wine market upside down on Monday when it announced it would cease operations in the state by September 2.
RNDC is the second-biggest alcohol wholesaler in the United States, which means hundreds, if not thousands, of US and foreign wineries will be left without a route to market in one of the most important wine markets in the world; California law requires wineries to go through a wholesaler to sell their products to retailers and restaurants, while wineries in the state are allowed limited self-distribution.
“RNDC's approach to exiting California — apparently opting to shutter operations rather than sell the business — is an unconventional strategy for an important state like California,” says attorney Rebecca Stamey-White. “It's creating notable confusion and a sense of disruption among suppliers that work with RNDC, both in California and elsewhere.”
That sentiment was echoed by other producers and marketers, who wondered how a company with an estimated $12.2 billion in sales at the end of 2024, as well as a 16.9% share of the US wholesale market, could leave a state as vital to the wine business as California. By comparison, according to Impact Databank, the other 300 or so wine and spirits wholesalers in the US only accounted for $13.4 billion in sales and have just an 18.5% market share in 2024. In addition, in 2022 RNDC bought Young’s Market, then the biggest wholesaler in California, in what was supposed to make it a key player in the state.
Nevertheless, said RNDC CEO Bob Hendrickson in a statement to Shanken News Daily, “We’ve made the difficult business decision to withdraw from California, which affects many of the roles in the state. We are complying with all regulatory obligations and are committed to handling every transition thoughtfully and smoothly and ensuring everyone is treated fairly and respectfully.”
Which didn’t answer why it’s doing so; however, earlier this year, analyst Pat DeLong of Azure Associates told Meininger’s he thought RNDC might be the next big wine company to make headlines, possibly through an acquisition.
That’s because RNDC had been facing increased competition in California for its spirits business, losing Tito’s Vodka, Gallo’s High Noon, and the Brown-Forman portfolio to Reyes Beverage Group. The latter includes whiskey powerhouse Jack Daniels, while Tito’s is the best-selling vodka in the US and High Noon dominates the RTD business. Brown- Forman had also pulled its business from RNDC in 10 other states.
None of which, ironically, has anything to do with wine, which will almost certainly be the biggest loser in the RNDC decision. The industry is facing its worst sales slump in some 30 years, and the wineries that had been with RNDC must now find new wholesalers in an historically depressed market — when wholesalers are pruning portfolios because of the slump. There are four key players left – industry No. 1 Southern Glazer’s. No. 3 Breakthru Beverage, and regionals Henry Wine Group and Regal Wine Co.
“Those mid-sized brands, say 10,000 to 150,000 cases, have lost one of the biggest markets through no fault of their own,” says Sonoma wine marketer Paul Tincknell, “and at the worst possible time.”
