Republic National Distributing Company, which filed for Chapter 11 in July, has won court approval to sell its Michigan wine business, according to WOOD TV. At a hearing in Houston on October 22, a bankruptcy judge granted the motion RNDC filed on October 16. The wine business will go to Great Lakes Wine & Spirits, Imperial Beverage Company and Vintage Wine, and Great Lakes will also take the equity of the authorized distribution agent business. RNDC estimates about $20 million in net proceeds at or around closing and said the deal could close by the end of October. The Michigan operation is a joint venture with National Wine & Spirits that sat outside the original filing.
For anyone who imports wine into the United States, this is the story to watch this fall. Under the three-tier system, a brand cannot reach a store shelf or a wine list without a wholesaler. When a large distributor is sold off state by state, the brands it carried move with it or get dropped. Suppliers do not choose their new partner in a bankruptcy sale. A court and a group of buyers do.
At Grus Drinks, where we import and distribute premium wine in New York and Toronto, I treat distributor concentration as a business risk, not a background fact. Large houses absorbing smaller books works well for the biggest brands. For a boutique producer it can mean becoming one SKU among thousands in a new catalog, handled by a sales rep who never chose to sell it.
My advice to producers and importers is practical. Know who holds your rights in each state, read the termination and assignment terms before you need them, and keep direct relationships with the retailers and sommeliers who actually move your wine. Splitting Michigan among three buyers may even give smaller brands a more attentive home. The brands that lose are the ones that assumed their distributor would always be there.