BurgundyStreet

There has been a seemingly inexorable consolidation of adult beverage distributors in recent years, in part reflecting the seemingly inexorable consolidation of adult beverage producers such as Diageo plc (NYSE:DEO) and Constellation Brands Inc. (NYSE:STZ).

Companies such as Southern Wine & Spirits of America Inc., Glazer’s Distributors and Republic National Distributing Co. have come to dominate the market for adult beverage distribution in the U.S. The companies have used mergers, acquisitions and other deals to gain clout with global producers.

One of the latest attempts to supersize the beer, liquor and wine wholesaling business has collapsed, however, as megadistributors Southern and Glazer’s said Tuesday that they have ended joint venture plans after more than a year of talks.

Southern and Glazer’s hoped to establish the first national distribution company when they unveiled joint venture plans in August 2008. The companies envisioned a collaboration that would handle more than 80% of the total wine and spirits volume in the U.S.

Southern president and COO Wayne Chaplin proclaimed, “Given the highly competitive landscape at the distributor level and the ever more consolidated marketplace at the supplier tier, we believe the time is right for a more national-type distribution footprint.”

Glazer’s operates in 11 states, while Southern, the largest of the distribution houses, is in 29 states. In April, the companies said they had hired Chicago consultant A.T. Kearney Inc. to help bring the complex operations together. They expected to close the deal in 2009.

On Tuesday, the Chaplin and Glazer families, who have known each other for 50 years, conceded that the JV would not happen.

Southern’s Chaplin called the news “a disappointment to us all.”

Glazer’s chairman and CEO Bennett Glazer said in a statement that the chief impediment was “the sheer complexity of the transaction.”

For the time being, wine, liquor and beer wholesaling will keep its regional flavor. – Chris Nolter

SOURCE