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What a wild time in beer distribution, and more broadly, alc bev distribution! Five striking distrib deals announced in just one week. Each in their own way advances key consolidation themes, including convergence, an emerging battle of the giants and accelerated consolidation in AB system. Largest wine and spirits distrib, Southern Glazer's Wine and Spirits, will buy 2 more AB distribs. That makes 3 since last Aug. Biggest beer distrib, Reyes Beverage Group, is gobbling up wine and spirits distribution assets at a record rate. The top 2 alc bev distribs increasingly face each other on (what used to be) each other's turf. Meanwhile, after selling 7 branches in last 5 yrs, AB One reversed course and added contiguous distrib in CA. And KEG 1 did its 5th deal in just 3.5 yrs. All these pieces of the puzzle are interconnected. Something fundamental has seemingly changed. SGWS Will Sell 35+ Mil Cases/Yr in Beer Southern Glazer's Wine and Spirits, the largest wine and spirits distrib, is betting big on beer distribution. It already has $25 bil in annual revs. SGWS will spend over half a bil on the additional 2 distribs it is buying. First, SGWS will buy Clare Rose on Long Island, contiguous to AB's NYC branch, Southern's initial foray into AB system. Together, they amount to between 9-10 mil cases. Manhattan Beer will buy 1+ mil cases of HUSA from Clare Rose. But second SGWS deal announced 2 days later a BIG BANG. It will buy approx 13-mil case Eagle Rock in CO. Suddenly, Southern will become much bigger in beer, totaling around 35 mil cases. It's clearly become a preferred consolidator in AB system. But SGWS beer biz will only represent about 3% of co's total revs.RBG Will Add Billions in Wine and Spirits Revs Meanwhile, Reyes Beverage Group moving up fast in ranks of wine and spirits distribs. In a timing for the ages, Reyes Beverage Group officially announced it would be buying RNDC's biz in 10 states + DC, signing agreement on same day as Eagle Rock deal announced to employees. Reyes deal to buy RNDC portfolio in TX, FL, CO, AZ, LA, VA, DC, MD, OK, SC, HI and DC expected to close by early Jun. It will be adding billions of $$ more to its spirits revs. (Shanken News Daily estimated states that RBG buying at $6 bil in revs for RNDC; that may be high.) Given what's happened so far with RNDC and RBG, one can readily imagine Reyes as a top 3 spirits distrib in not-too-distant future.In all, Reyes Holdings even bigger than SGWS (tho not in alc bevs). Reyes revs at $44 bil last yr, according to Forbes list of top 400 US private cos. It was #6 private co in US, including its Coca-Cola and Martin Brower bizzes as well as alc bevs. SGWS at #9 private co. Last yr, RNDC at a "mere" $10.5 bil in revs, #49. But it will be much smaller after selling 10 states + DC and losing more key brands. Breakthru Bevs at $8.5 bil in revs (including beer).Battle of the Giants RBG and SGWS will increasingly go head-to-head to get spirits assets, especially in states without franchise protection, i.e. most states. Indeed, RBG got spirits assets that SGWS wanted in CA as RNDC imploded there last yr. But more recently Pernod announced its move from RNDC in 8 states, going with a mix of Southern, RBG and Johnson Brothers. Pernod went with SGWS in LA and TX, 2 states where RBG will acquire RNDC biz. In LA, SGWS already has vast majority of spirits profits. Meanwhile, Pernod agreement very demanding, INSIGHTS understands. SGWS already sells Pernod in most states.Consider CO: Southern Will Sell Bud, RBG Spirits; More Changes to Come? Then too, consider Colorado. There, the world has gone topsy turvy. Southern will be selling Bud, RBG will be selling spirits. This is convergence kicking into a higher gear. Over time, each of SGWS and RBG will try to add brands there. So who knows what will happen? There's also a sizable Breakthru operation and a large Molson Coors branch in CO. Southern's Eagle Rock deal (Economos family) much buzzed about for other reasons too. Recall, after sending in a market evaluation team last Jun, consensus view is AB pretty much pushed Eagle Rock out in a protracted, painful process. That's despite inviting Eagle Rock in to buy its troubled branch a mere 5 yrs earlier. Economos family remains respected by other distribs and Eagle Rock will remain an AB distrib in GA. Then too, Reyes Bev Group also at least took a gander at Eagle Rock's CO operation, sources say. So RBG and SGWS went head-to-head in beer biz too. That's the first time, but one would guess not the last.KEG 1 Adds Pine State; Five Deals Since Late 2022 While Southern buying into AB system and RBG buying more spirits assets recently, another notable consolidator becoming more prominent in MC system: KEG 1. On Mar 24, it announced it acquired "controlling stake" in 7.9-mil-case Pine State in ME and NH just a couple mos after it announced "merger of equals" in NC between United Bevs and Carolina Premium, adding 6.4 mil cases to 12 mil combined Carolina Premium/Caffey Dist. New 18-mil-case entity will be called United Carolina Bevs. Previously, KEG 1 added River City in Louisville, Summit in St Lou and Iowa Bev in Des Moines since late 2022. KEG 1 describes itself as a "national beverage distribution partnership owned by experienced multi-generational distributor families." Recall, KEG 1 originally conceived as a Reyes alternative by 10 indie MC distribs about 20 yrs ago. But partnership really came into its own in last 5-6 yrs with multiple deals in mid-sized mkts; each structured differently, often with owners of acquired distribs staying on with a stake. Its flexibility seemingly key in getting so many deals done.AB Makes First Sizable Branch Acquisition in 5+ Yrs; Lotsa Deals in Last 18 Mos AB One will be adding to its extensive branch system in CA, with acquisition of approx 4-mil-case Advance Bev (Lazzerini family) in Bakersfield, CA. AB One sold 7 branches in last 5 yrs, but since 2021 it only added much smaller Sound in northwestern WA early last yr. Reyes Bev Group will buy HUSA portfolio from Advance; unknown which of craft/NA brands will stay with AB One. But insertion of branch could create a gap for statewide network of mostly indie AB distribs, CA Beverage Solution, as those distribs try to get additional non-AB aligned brands.In any case, there continues to be a lot of consolidation in AB system: INSIGHTS already reported on 6 AB distrib deals in Q1 (including the 3 in this article), following 20 last yr. With accelerated pace, many indie AB distribs again point to AB's seeming preference for giant family offices (Redwood and Bass family) or giant liquor distribs (SGWS). Also on their minds, FTC lawsuit vs and IRS/TTB investigation of SGWS. With AB aggressively remaking its distribution system in last yr or two, including pushing some smaller distribs out over selling out-of-code Busch Light Peach, there is unease in AB system about what comes next, even as AB results have recently improved.

Deals Extravaganza: Southern Gets Big in BUD; Reyes a Major Player in Spirits; KEG 1 Keeps Climbin'; AB One Adds On

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