Wine, he wrote in his 2013 book, “Extreme Wine” was not only becoming more expensive to produce, but much more expensive to buy, both of which were reducing its potential market. This was what had happened to opera in the first half of the 20^th century, he said, when it changed from entertainment for the masses – it even had its own weekly national radio broadcast, listened to by millions in the US — into something appreciated mostly by wealthy, older people.

“It isn’t a surprise, therefore,” he wrote, “that opera evolved into an art for rich elites, and the opera houses became gilt palaces of conspicuous consumption.”

Two things happened at once. Costs rose, and prices followed. And as prices rose, opera became more expensive — and less relevant, as its audience narrowed to those who were able to pay.

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It arrived just two days after an article on how…

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And yet one of its largest players just imploded.

The news, when it came in June 2025, seemed too incredible to be true. RNDC, the second biggest US wine and spirits wholesaler with $12 billion in revenue and one-sixth of the market, was closing – not selling, but closing – its California business, laying off thousands and likely writing off tens of millions of dollars in losses. It would be leaving perhaps the most lucrative market in the country, an unprecedented move. It’s like Ford saying it would stop doing business in California — and then vanishing from the state, with nary an explanation.

But it was true.

Photo by Rafael Camacho Greilberger on Unsplash

Since the announcement, the news has gotten even worse for the Texas-based company, more formally known as Republic National Distributing Company. More layoffs, more key suppliers leaving, and the sale of its businesses in six states and the District of Columbia. A once mighty company shed almost half its revenue in six months — something that had never happened in the US alcohol wholesale business.

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The gatekeeping written into law

The three-tier system which regulates alcohol sales in the US is beyond complicated. The laws differ in each state, often significantly. The one constant is that the 21st Amendment gives states broad authority to regulate alcohol, and in practice that authority has produced a mandatory three-tier system in almost every state. With limited exceptions, retailers must buy from in-state wholesalers, and out-of-state producers are generally barred from selling directly to retailers. Direct sales, common for almost every other consumer packaged goods, are illegal.

In other words, since alcohol wholesalers are legally mandated, it’s almost impossible for them to fail.

Until now. The roots of RNDC’s troubles, say the analysts, former RNDC executives, suppliers, retailers, marketers, and other wholesalers interviewed for this story, are as complex as the three-tier system. Most asked not to be named, given the nature of the article, but they all agree that RNDC expanded nationally to compete with Southern Glazer’s, the biggest US wine and spirits wholesaler. As part of this expansion, it bought No. 4 Young’s Market in California in 2022.

“It was either acquire or be acquired, and California was going to be the crown jewel,” says a former RNDC executive.

To make this happen, RNDC set out to cut costs so as to boost profits, but without necessarily increasing revenue. This was the classic, 1990s-style “leaner and meaner”. In practice it included paring its sales force and asking its retail and restaurant customers to take on more of the wholesaler’s duties (and expenses), like ordering via e-commerce, which would reduce the need for sales people.

RNDC was not unique in this; Southern launched its e-commerce platform about the same time RNDC did in 2019. But RNDC was more aggressive, and its digital drive included buying LibDib, a pioneer in wholesale e-commerce, in 2018.

Bigger was not better

The Young’s merger, which started as a “joint venture” in 2019, seemed to be the culmination of all of this. In doing the Young’s deal, RNDC had seemingly thumbed its nose at US anti-trust officials, who had prevented a merger with number three wholesaler Breakthru Beverage three years earlier, citing fears it would reduce competition and raise prices. Now, RNDC had California, control of Young’s, and a presence in 90% of the U.S. market.

Instead, it was the beginning of the crisis. Some of it was bad luck, first with the pandemic and then with the worst alcohol sales slump in the US in 25 years. But other wholesalers found a way to manage those hurdles.

“Retailing in wine and spirits is about shelf space and end caps,” says attorney Jason R. Canvasser of Clark Hill in Detroit, who represents a variety of clients in the alcohol business. “And if you don’t have sales people in the store fighting for shelf space and end caps, the two of them go to someone who has sales people in the store. So if your best customers aren’t getting shelf space and end caps, they’re not going to be happy.”

In 2022, Sazerac, a long-time RNDC spirits supplier whose brands included high-demand bourbons Pappy Van Winkle and Buffalo Trace, dumped the company in 28 states, including Texas and California. This was news, but not necessarily a sign something was amiss at RNDC. Supplier-wholesaler breakups of this size, while not common, aren’t unusual, either, and it often speaks more about supplier changes.

But then other key suppliers started leaving. Over the next couple of years, brand leaders Tito’s Vodka and Gallo’s High Noon RTD, moved to Reyes in California, while Brown-Forman, home to whiskey powerhouse Jack Daniels, pulled its business from RNDC in 11 states, including California.

People noticed. Pat DeLong, the founder and principal of Napa’s Azur Associates, a beverage alcohol consultancy, said in the spring of 2025 that he thought something was afoot at RNDC, though he expected the company to make an acquisition to replace the losses.

Then, in March 2025, RNDC president and CEO Nick Mehall was replaced. The news release announcing his departure credited Mehall with improving “e-commerce and operational efficiency.” This struck an odd note with employees, said the former RNDC official, since Mehall “never sold a case and never carried a bag.”

Which, say those interviewed, brings the story back to California — and how different it is to RNDC’s home state of Texas.

RNDC replaced Young’s management with its own. “RNDC committed the cardinal sin of distributor management by believing they could manage California in the same manner they managed Texas,” says one consultant. “But that didn’t work, because the markets are unique.”

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First, there were important differences in state laws. Part of Texas is still dry or semi-dry and there are a variety of legal opening hours and rules about retail sales; supermarkets can’t sell spirits, for example. In California, everyone can sell everything more or less 24 hours a day. Also, wineries can self-distribute to large accounts, which is not legal in Texas, which can cut wholesaler profit and often increase expenses.

Second, California is more regional, so that Los Angeles is different from San Francisco, which is different from Orange County and so on. In Texas, the wine and spirits markets are not only similar in the major cities, but a handful of liquor stores and grocery chains control those markets. Independents play a much smaller role than they do in California, where there are few state-wide chains but a variety of powerful regional companies. This meant RNDC had to deal with many different retailers in many different markets instead of being able to cut a handful of deals with a handful of chains for the entire state.

Third, these differences presented a series of novel logistical and supply chain challenges, complicated by the company’s poor relationship with the Teamsters, who represented its truck drivers. Tension between the two sides became so bad, said several people, that there were late deliveries, missed deliveries, and even no deliveries.

All of this apparently chased away suppliers. The exodus continued earlier this year when tequila leader Jose Cuervo’s parent company, Proximo Sprits, cut ties with RNDC in all but two states. Proximo had been the biggest spirits supplier left in the company’s portfolio.

Dave Infante's Fingers newsletter also just reported that Delicato Family Wines, the number five US wine producer, pulled its products from nearly half of the markets where it had used RNDC. This apparently includes Texas, RNDC's strongest market.

Stability that concentrates risk

In the end, RNDC may have to sell off assets, though it will probably hold on to Texas and a handful of surrounding states. In any case, a far cry from its 2024 peak.

But the big loss isn’t RNDCs, because it wasn’t just a distributor. It was one of only a few ways to get to market. Producers cannot legally bypass the middle tier, which means RNDC’s wineries and distilleries have almost nowhere to go. And all this is happening in one of the worst downturns for alcohol in more than 30 years.

The three-tier system was designed to prevent chaos. Instead, it has created a market where a single corporate failure can strand thousands of producers overnight. That’s not distributing risk throughout a system — it’s concentrating it.

This post has been updated to clarify the three-tier system and add new information about Delicato.

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“For the first time in Gallup’s trend, a majority of Americans, 53%, say drinking in moderation, or ‘one or two drinks a day’, is bad for one’s health,” said the report.

Mitch Louch wasn’t convinced.

Mitch Louch took to LinkedIn to express his scepticism.

Polls measure mood, not behaviour

Mitch was most recently Principal Strategist at Numerator, advising clients from Moët Hennessy to MillerCoors, after earlier stints at Anheuser-Busch and Beam Suntory.

Polls, he argues, capture noise, not behaviour — they track whatever society happens to be talking about the most at the time.

“Generally speaking, the industry is going through a transformation, and it’s not new. I’ve been watching it happen for a decade,” he tells Drinks Insider.

In his opinion, there are three things going on. The first was the pandemic.

Stimulus cash drove drinkers upmarket. “You had a $100 bottle of Don Julio 1942 flying off the shelf. I think that was a time we’re still benchmarking against, but the reality is that’s not the situation.”

While spending patterns have now normalised, inflation and premiumisation are changing how people spend, leading to lower volumes.

A third, smaller factor is substitution at the margins (THC and some non-alcoholic options), which he sees as incremental rather than category-killing.

But the biggest issue facing the market is the immovable one: demographics.

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Fewer drinkers, not less drinking

The issue isn’t how people drink, it’s how many drinkers there are.

”I think there’s been too much concern on a per person basis,” says Mitch, noting that per-person consumption hasn’t materially declined.

What has fallen is the number of drinkers. The Baby Boomers are tapering off their drinking — but there are not enough Gen Xers to replace them.

“You reduce consumption as you age — it’s just something that happens,” he says. “Those are the types of things that I think are really foundational to the problem.”

As for the question of whether Gen Z is drinking less than other cohorts, Mitch thinks the anecdotal evidence is that they have more options than in the past, from cannabis to gaming. But he thinks it’s difficult to know for sure what’s happening, because on-premise data are thin — a problem with every new generation.

“What we think we know about the next 21+ generation is often hindered by a lack of consistent data in that space.”

However, the “number of restaurants continues to go up, and the number of stadiums and colleges and universities that are allowing alcohol to be sold at events has expanded exponentially.”

Which suggests there is demand. What may be changing are the venues where alcohol is being consumed.

“Anheuser-Busch and others are investing in other areas of the market because they have the most insight into what’s happening. Pickleball. Gaming,” he says. “These are all things that they recognise as the next iterations of where consumers are going to be. They’re not at a bar chugging pitchers.”

This dovetails with what Asahi Group CEO Atsushi Katsuki told the Financial Times recently, that gaming and social media are reshaping drinking occasions more than health warnings.

And demographic shifts are affecting how people are drinking all along the chain. Millennials, for example, are “at the ripe age of at-home consumption”.

So a parent with kids who can’t go out at weekends might stay at home and order in food and alcohol. “That’s where RTDs — especially spirit-based — and seltzers have really gotten a boost.”

Spirits ride the tailwind beer created

Mitch says that it was beer that taught people to pay more for less product — a change that spirits now profit from.

“Beer created its own problem by basically saying, ‘you spend $10 and I’m going to give you six beers rather than 12’,” he says. “That was really the catapult for spirits, in my opinion, especially as people aged more into spirits.”

As for wine, Mitch says there’s been a lack of innovation.

“Arguably, the last hot trend in wine was either Josh, cans or pink or bubbles. So where’s the category at? We’re not seeing innovation.”

At the same time, wine’s main problem is a ‘demographically-induced lull’. In other words, it’s a pause that demands better targeting, not panic.

Mitch thinks the opportunity for wine will come when consumers are ready to move on from spirits, which he sees as wine’s primary competitor.

“The wine industry is going to be just fine when the spirits consumer starts to say, ‘I don’t want this drink any more. I want to be able to show my refined palate. I want to do all the things that I feel about with spirits, but now I want to do it in the wine category’.”

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Moderation is nothing new

When it comes to the moderation trends, Mitch says, “Ozempic is definitely a problem. You’ve got to get used to it. Wearables,” he adds. But then, he says, “my parents were on Atkins in the 90s. These things have happened every decade.”

There are always dramatic ebbs and flows within categories as well. “The 80s were all about rum, and then the 90s became this flavour variation of vodka,” he says. “And then in the early 2000s to 2010 it became whiskey and then it turned into tequila.”

He says that consumers' preferences are always shifting and what categories need to do is decide how they’re going to allow it to define themselves.

Where to find new consumers

Mitch also believes that the sector is missing out by not investing in data. He argues it’s relatively easy to pair public data with targeted consumer studies — but too few bother.

He says that it’s important to invest in those places where there are big populations of 30-40-year-olds — and that there’s enough public data out there that wine companies, for example, could easily find out which top 20 counties are over-indexing on 21-to-30- year-olds and then the 55-and-ups.

Wine companies should then “target spirits occasions. Do research on spirits consumers. I don’t need 21-to-25-year-olds. I need the ones that are actually going to drive 60% of my volume at later stages of their life.”

This applies to retailers and wholesalers as well.

“The people who win are the ones that say, ‘I’m going to take my product off this shelf because I don’t have a consumer there and I’m going to make sure that it’s never out of stock on this shelf.”

His bluntest advice: stop chasing volume everywhere — pull products from shelves where you don’t have consumers, and never be out of stock where you do.

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It’s the presentation given by Professor Jenni Romaniuk of the Ehrenberg-Bass Institute.

The Ehrenberg-Bass Institute, based at Adelaide University, is the world’s largest centre for marketing research, particularly renowned for its wine marketing insights.

Prof Romaniuk is also the author of two books. And, for someone with such a formidable CV, she's very down to earth.

Her goal, she said, was to talk about the things marketers do that backfire.

“I chose six,” she said. “I don’t know why — seven seemed too many.”

1. Loyalty is not the way to grow

“Loyalty is not going to save you,” she said. “We know this, because it’s what the data tells us.”

Prof Romaniuk said even brands with a “really great direct-to-consumer loyalty programme” can get into trouble. This is thanks to the Law of Double Jeopardy, which says that “small brands suffer twice. They have many fewer users and those users are slightly less loyal.”

(I looked it up: The Law of Double Jeopardy, first described by William McPhee at NBC in 1963, states that smaller brands suffer from both a lack of customers [lower penetration] and lower customer loyalty compared to larger brands.)

If a brand wants to become bigger, whatever its current size, there’s only one pathway. Expand the customer base and more sales — and more loyalty — will inevitably follow.

“You’re probably thinking, ‘Why will my existing customers buy more?’” she said.

It’s because any marketing done to reach new buyers will be noticed by the old ones as well. It reassures them they’ve made the right purchasing decision and thereby reinforces their loyalty.

“You have to go out and reach the ones that are not currently buying from you,” she added.

2. Target wide, not narrow

If “I don’t have that much money to spend on marketing,” she said, “I better make sure that every dollar goes to exactly the right person.”

The problem is that “you don’t know who that person is.”

Even if marketers could identify the person who was perfectly matched with their product, it’s impossible to use the “vast media landscape” out there to target them. “Most of the claims of media targeting are overstated and really don’t deliver on the promise.”

Prof Romaniuk said the best course is simply to target the market.

“Obviously, there are people who aren’t going to buy from you. There are people who don’t live in places where you distribute, and people who don’t drink wine. They’re obvious,” she said. “But once you’ve got over those hurdles, then treat everybody like they could be your customer.”

By this she didn’t mean spray advertising at random.

She pulled up a table of luxury brands selling in the UK, with a list of their target audiences next to them.

“Look at how similar the social class is,” of all the brands, she said. “They’re basically selling to the same profile of people,” rather than trying to carve out their own distinct segments for themselves.

“Give as many people as possible the opportunity to choose your brand.”

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3. Go for reach, not engagement

Don’t spend your advertising money trying to reach a small group of people.

“A small reach activity, even if it’s 100% successful, will only have a small effect on your bottom line — and rarely are they 100% successful.”

Not only that, but it takes a lot of resources to deliver even a small reach, so it’s better to get in front of as many people as your budget will allow.

“Think of it as a game of chance,” she said. “Once you’ve ruled out the people with zero chance, there’s a lot of people out there with some chance, but you won’t be able to predict which ones they are.”

The more people who see you, the more chances you have.

“I’m using ‘advertising’ in the broadest sense here,” Prof Romaniuk went on. “Everything you do that reaches out to consumers is advertising. But it’s important not to waste money going back to the sale, over and over again.” It’s better to target new customers, instead.

That doesn’t mean ignoring existing customers. “I might come back to you in six months’ time. This is the idea of cumulative reach.”

Another challenge for wine brands is how to communicate to the average person. “Talking to lighter buyers is often more complicated than talking to heavy buyers — with heavy buyers, you can talk to them like they’re part of the industry, because they probably know a lot.”

But brands can’t ignore the people who don’t know a lot, or who might be intimidated by the category.

“Speaking to them is an important part of growing your brand. Remember, light buyers are less engaged. They come into the category less frequently. They’re the people you want to get out to.”

4. The cellar door is a product in its own right

Prof Romaniuk recently visited Champagne — and was surprised at how poor the cellar door experience was.

“There was a big mismatch between the people coming in the door, and what the cellar door people were trying to sell,” she said. “Everyone was treating it like a distribution channel rather than a product in its own right.”

Meaning, the producers were treating the cellar door like a cash-generating gift shop, whereas the people who were coming wanted to experience Champagne itself.

At the very least, she said, cellar door management should have been thinking about different product segments and category entry points.

These were the missed opportunities to take someone from being just a visitor to “being a category buyer, and therefore a potential brand buyer,” she explained.

A category entry point can be something like the drink options on the lunch menu. What those options are doing is signalling that they are suitable pairings with lunch.

Champagne has done this particularly well, as it’s promoted itself as the right product to go with celebrations of all kinds, from weddings to promotions. But there can be a downside to being over-associated with one type of occasion.

“What happened to Champagne sales during COVID? They went down. Why? Because there was so much link to celebration — and we were not celebrating very much.”

“Understanding category entry points is important because they’re about people’s lives and how the category fits with them,” she said.

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5. Distinctiveness over information

People have got to be able to find your product, regardless of how crowded the retail environment is. It’s therefore better to make the package memorable at a distance rather than crowd it with information or branding that can only be seen up close.

“I always encourage people to create shopping assets— these are the things people use to find you in a crowded room,” she said.

Prof Romaniuk used the example of a liqueur called RumChata, bottled with a gold cap. They even run advertising campaigns called “Comes With a Gold Cap”, so “people can navigate and look for the gold cap”.

6. Brand cohesion over product individuality

Products from the same family must look like they belong together.

“All products sold under the same banner should look the same,” said Prof Romaniuk.

She pulled up a picture of Yellow Tail, a distinctive-looking brand, and then showed its Pink Bubbles range, which gets completely lost when listed alongside lots of other rosés, because its Yellow Tail branding isn’t signalled strongly enough.

“Remember, the big battle is against other brands, not the other options within your portfolio,” she said. “Every brand you produce, every variant, should look like you and not like your competitors.”

So how do brands grow?

“Getting more customers. Mental and physical availability.”

Meet the man who’s optimistic about wine

There’s a wine downturn going on, and yet The Wine Group, America’s second-largest wine company, is snapping up brands like the market is expanding. This week, the Drinks Insider podcast features CEO John Sutton, who explains why he’s bullish on wine.

He talks about:

• Why The Wine Group bought so many Constellation brands and vineyards earlier this year;

• How the company rehabilitates neglected brands;

• How to handle portfolio segmentation;

• Why premiumisation still matters; and

• The surprising growth of high-alcohol styles

And many other interesting topics! You can find the episode on Spotify, Amazon or Apple.

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