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Wine and spirits wholesalers in America have been around since very soon after the end of Prohibition in 1933. Many of the companies founded in those early years are now in their third, fourth, or even fifth generation of ownership. In the Wholesaler Power Hour session, “Stories Through the Generations,” moderator Marc Sachs of Republic National Distributing Company spoke with four pioneering leaders who helped to create today’s wine and spirits marketplace. These included:
- Bobby Harmelin: Executive Vice President at Allied Beverage Group, LLC, which his grandfather and great uncle started in 1934.
- Stan Hastings: CEO of Moon Distributing, a wholesale wine and spirits distribution company founded in Little Rock in 1935 and servicing the state of Arkansas.
- Charlie Merinoff: a principal founder of Breakthru Beverage Group (BBG), currently serving as Co-Chairman of BBG’s Board of Managers.
- Bennett Glazer: Executive Vice Chairman of Southern Glazer’s who began his career as a salesman in the Glazer’s Houston office in 1968.
Following are highlights from the conversation:
Q: What are the biggest lessons you’ve learned and who were the mentors who taught them to you?
Stan: “Most of the lessons I learned years ago. When it comes to our competition, I’ve seen in my lifetime the number of wholesalers shrink by about a third. But there’s always room for the small wholesalers. Our job as wholesalers is to have relationships above and below us in the two tiers Build brands.”
Charlie: “My father was amazing, and I think the advantage of three generations — they don’t teach you the business, but they do calibrate your moral compass. The grave you dig for others is the one you fall in yourself, so don’t worry about the jerks of the world, the people who wrong you. Ignore them, and they’ll take care of themselves. If five people tell you you’re drunk, you may not be, but you should sit down and shut up. If someone fails around you, that’s your failure, because it’s your job to make sure they don’t fail.”
Bobby: “When I was in university, I got a job in a retail wine shop in Washington, D.C. It was a great place to learn wine. We had this sales manager and his first advice to me was When you go into a restaurant or a bar, don’t go in the front door — go in the back. What you see going on in the back will tell you what’s going on in the front. Also, my father told my brother and me, ‘Go out and make mistakes with other people’s money.’”
Q: Wholesalers are known as brand builders; given lessons learned through the decades, what role can wholesalers play in brand building?
Stan: “Every brand starts as a craft brand, ultimately. Maker’s Mark started as a small brand. It was craft — you don’t think of it being that way. Tom Bulleit pulled up at our office and was literally selling little square bottles of bourbon out of the trunk of his car. And look at what Bulleit is today. It all starts small. You’ve got to build it from there. Some things work and some things don’t. But the wholesaler and supplier have to be on the same page about what’s realistic and who is the market for it.”
Charlie: “In many ways, the world has evolved, but maybe not as much as we think. This is the golden age of selling, because what suppliers and wholesalers are doing is we used to serve information in a teacup, to our customers, but now it’s a firehose. The role of the salesperson, knowing the account, knowing the marketplace, is to go through all of the options there are and help them select those brands and then bring them to live in their store. It’s helping write the newsletter, getting content, getting it on the website, doing the in-store tastings. I sell grape juice from $2.99 a bottle to $5,000 a bottle. There’s a qualitative difference but it ain’t $4,997 per bottle. It is the stories we tell and when we tell the stories correctly, we can create tremendous value for those brands.”
Bobby: “Brands are built on-premise. Start on-premise, stay on-premise, continue to hammer on-premise. Over time, I think that’s changed. In my opinion, the shelf life of brands, which has consolidated and condensed over time, certainly the internet and everything that comes with it has changed it. Also, the proliferation of chain accounts has a lot to do with the establishment and well-being of brands as they come into the marketplace. Bottom line is, you build brands with your people, with a concerted effort, with strength, with knowledge. STP: See the people. You have to go out and see your customers. You can’t phone or email it in. You have to make sure you see the accounts.”
Bennett: “When you bring up brand building, the first that comes to mind would be a brand called Titos. It’s an interesting story because he started with absolutely nothing. He had no investors, and no one that believed in him. He built a distillery in Texas and couldn’t get a distributor. He found a guy down in Houston, who was a broker, who would clear it for him. Eventually, we ended up taking him back on after everyone else had turned him down twice in 1997. There are hundreds of exhibitors, all in this room, who would like to have a Titos. But what is the reason he’s been so successful? No one has the answer because otherwise, there would be thousands of Titos running around. As far as our companies, all of us feel like our organizations are brand builders. We do all of the things necessary to team up with a supplier to make it successful. Some of them work, some of it don’t.”
Stan: “I closed Pappy Van Winkle out twice before it became a brand. It happens — you never know.”
Q: According to SipSource data, in 2023, wine and spirits have finished in negative territory and the market is in a place many are saying is unprecedented. Can you recall a time when the industry was faced with challenges like this?
Charlie: “You have to remember ... the two years before, we saw unprecedented growth during COVID. And now we’re seeing a bit of a recalibration, of people who saw their lifestyle staying home, drinking earlier, drinking better, not spending money, and there’s a little whiplash we’re experiencing. I don’t know if this is the trend or an anomaly. Spirits declined 25% from 1980 to 1990, and my first three years I was in the warehouse, I swear I had nothing to do with it, but my father blamed me for the demise of the industry. What it mean, though, was it became a share war. The brands really battled and it was tough. The question is, did you tell the right stories, did you build value as the industry declined? Or did you discount, destroy value, lose brand identity?”
Bobby: “We really don’t know if this is a trend or an anomaly. I go back to the 1970s. At that time, American whiskey was dying out. Blended scotch was the big thing of the day. And the industry moved on from there to what I believe has become the nation’s trend, which is brands go from West Coast to East Coast. Vodka came out, and they were low cost to produce, pretty profitable for suppliers, not so profitable for distributors, but nevertheless the volumes helped resuscitate the business. There wasn’t much of a wine business, then. That’s changed, too. It’s all dynamic. We’ve seen the trends going from American whiskey dying to American whiskey roaring, on fire. We’ve seen vodka being low end for the most part, moving in quality and price point supported. Now we’re seeing tequila. We know trends are happening, we know they’re changing, we’re seeing the proliferation of RTDs and what’s going on. Consumption may be down, that may be the new ethos for the younger generation. I think it’s something we all have to adapt to. Something that I take from this gentleman over here [Charlie]: My warehouse is filled with other people’s dreams, and some of those dreams come true.”
Q: How much do you think of last year was economically based, fears of recession or interest rates or inflation in general?
Bobby: “I think a lot of it was action and reaction. During the two COVID years, we couldn’t keep high-end product in stock. While some of those things take time to manufacture, produce, others can be done pretty quickly. And so, there was a rush to fill the void. At the same time, we saw price increase over price increase because people didn’t want to leave money on the table. Now the reaction, to a great degree, is money is getting tighter, we saw inflation rear its ugly head, the workforce has now changed. Doesn’t seem to be just a change in taste but also a change in attitude.”
Charlie: “For two years, people were saving a lot of money because they weren’t going out, they weren’t spending, they weren’t travelling. Then all of a sudden, things got back to normal and money got tighter because they were going out again. People were splurging, people were drinking more — better — and this is a recalibration.”
Stan: “We’re in the lifestyle business. I think there’s a shift in lifestyle spending going on in the country, also. Cannabis is viewed as a competition to us. Brand loyalty is not what it used to be. When it comes to the lifestyle dollar and us competing for that, it’s going to be $5 billion online gambling this year. Where did that money come from? Online porn, even. The truth is, Amazon is in competition with us, not necessarily in alcohol, but it’s so easy for people to go online and buy something they want or need, and it’s delivered to their house the next day. All of that is taking money out of other things, and I think we’re one of those things. Someplace between 11% and 15% are consuming 90% of the alcohol. That number now is shifting up to over 20%. For the long haul, I think we’re fine. We’re going to get more are more consumers consuming on a regular basis, but consuming less.”
Bennett: “The experience on this panel goes back ... 56 years from me. All these family businesses that I recognize, they all started with icons who understood how this industry works. It was footprint. They understood that the bigger the footprint you have, the more important you are in the industry. And the better chance you have of surviving this industry. I watched what their goals were, and it just rubs off on you. That’s how you learn what’s important to staying alive. When I started in 1968, there were 17 distributors in Texas and for all practical purposes there’s only two left. The big major players that are still around.”
Marc: “The decisions you make when times aren’t as good, when numbers are down or not as strong as we want them to be, you have to take a long-term look at survivability as a company.”
Q: When things started changing back for spirits, was there anything wholesalers did that helped bring consumption back?
Bobby: “We sell a lot of perception. John D. Rockefeller would drink XYZ brand, and he would drink it once a day. Now I don’t have John D’s money, but I can drink it once a month. And therefore, I can feel like John D. Rockefeller for a day. And I think that, coupled with the advertising that took place, elevated spirits to the point where people were aspirational.”
Stan: “Miller Lite was introduced in 1976 or 77. Bud Lite came a few years later. That started a generational shift, and at the same time, the wine industry took off. They become more friendly to the female drinker. Spirits was the king, and it got knocked off during that whole time frame. Anheuser-Busch, at the time, in the 70s, only had two breweries in the country, and they went from two to eight in about five years because of Bud Lite. Generationally, the young people wanted Miller Lite, Bud Light and wine. And they just ran over us.”
Q: What has changed the most in the wholesale tier and the industry in general during your career?
Charlie: “When I first came into the business, it was a relationship business. The business was growing every year. When we saw that 10 years of decline, it’s still a relationship business, but it has to be grounded in performance. It is, now, truly performance-driven, and you need to be winning for each other. Before, you could get away with great fellowship. And now we deal mostly with public companies, the bulk of our business, and they’re performance quarterly driven, and we need to be there to solve their issues and win for them.”
Bobby: “For me, one of the biggest changes is the blurring of the lines. We see that almost everywhere you look, whether it’s Cannabis Alley, or Mountain Dew selling alcohol in a ‘hard’ product. For the longest time, the beer guys were in their lane, and the wine and spirit guys were in their lane. Now we see more and more of our malt brethren picking up wine, picking up spirits. And it’s not just in our industry, but blurring of lines is taking place everywhere you look. This is a trend we’re going have to accept because I don’t think it’s changing.”
Bennett: “I can remember back in the old Glazer days, we couldn’t hold onto a good person. Our competition would offer them a small pay raise and they were gone. But for whatever reason, our company attracts really, really qualified and really quality people. It’s so fun to be around people that understand all the nuances we bring with technology and all the things I could’ve never understood when I started. It’s so impressive that the type of people that you attract and how qualified they are, and it just makes life so much easier.”
Stan: “Ten years ago, if you told me some of the iconic brands in our industry would be producing flavored products and putting it in a bottle, I’d have said you’re nuts. Then if you told me they’d be taking an iconic brand, producing a flavored product and putting it in a can, I’d say you’d lost your mind. I was wrong, no doubt. The biggest single change, though, is the data. The good retailers that are surviving know their business. With the data interchange with our suppliers, they know our business. They know where they’re selling. Identifying who our core consumer is, that’s where can do better because we have the data.”