Last year the National Beer Wholesalers Association (NBWA) surveyed its members on what percentage of their total portfolio comprised traditional beer. The response was 80%. Then, when asked what they expected that share to be in five years, the answer was 71%. Times are certainly changing for America’s beer wholesalers. 

“Most of our members are diversified in some shape or form,” says NBWA president and CEO Craig Purser, noting that virtually all members carry some type of non-alcohol product. “But most recently, beer wholesalers are increasingly diversifying into wine and spirits.” The moves, he adds, are “not unlike those of their suppliers.” Indeed, three years ago, NBWA itself changed its tagline to “America’s Beer & Beverage Distributors.”

As with all aspects of the drinks business, beer distributor involvement in the wine and spirits categories is dictated by state law. In control states, for example, beer wholesalers are prohibited from distributing spirits, but in many of those markets—including Ohio, Michigan, and North Carolina—they’re very active in the wine business. “In some cases, beer distributors have been distributing wine for 80 or 90 years,” Purser notes. 

But the handling of spirits in open states has been—until recently—somewhat more elusive. In some markets, for example, beer and spirits can’t be distributed from the same truck. In Indiana, beverage alcohol wholesalers can only hold either a beer and wine or spirits and wine license. At press time, beer wholesalers in the Hoosier State were pushing for approval of a measure that would allow them to sell spirits-based ready-to-drink (RTD) cocktails, including those marketed by their key beer suppliers. 

Wine And Spirits Pursuit

The growing popularity of RTDs and other beverage crossovers, as well as market dynamics—volume declines for beer and increased sales and higher margins for spirits, for example—are driving beer wholesalers in their pursuit to add wine and spirits to their routes. Reyes Holdings, with roots as a small beer distributor in South Carolina, has emerged as one of the largest private companies in the country, propelled by its expansion into soft drinks and supply-chain partnerships with leading restaurant chains. In recent years, the company—which is the parent of top beer wholesaler Reyes Beverage Group—has entered the RTD and spirits space, including in 2023 when it added Sazerac Co.’s portfolio to its California and some of its Texas branches as part of the spirits giant’s blockbuster wholesaler reshuffling. “Reyes Beer Division and Sazerac have similar growth patterns and strategies, and are two long-standing family-owned businesses, a model we believe will set us both up for success,” the wholesaler said in a statement at the time. “This is a natural next step for us as we have made significant investments to transform our business into a total beverage alcohol distributor.” It’s widely believed that the spirits addition won’t be Reyes’s last.

Similarly, Texas’s Andrews Distributing entered the spirits market when it added Sazerac’s more than 230 brands in early 2023 to its portfolio of domestic, imported, and craft beers. “Our partnership with Sazerac will usher in a historic new era,” president and CEO Mike McGuire said at the time of the announcement. “With the No.-1 volume player in the industry, we can extend our shopper marketing expertise and deliver the high level of customer service we are known for into the world of spirits.” Dallas-based Andrews said that just as it does for its beer products, it would employ specialized teams on the Sazerac brands to ensure “detailed planning around the customer, a best-in-class supply chain, next-level marketing execution, and dependable service.” Other Texas beer wholesalers that have added Sazerac brands include Houston Distributing, Faust Distributing, Keg 1, and L&F Distributors.

Columbia Distributing, meanwhile, with operations in Washington and Oregon, has been on a journey to expand within wine and spirits for the last seven to eight years, according to president and CEO Chris Steffanci. Despite its vast beer business, “we knew early on that we wanted to be a beverage distributor,” he says, and the company set in motion a plan and investments to accomplish that. Today, Columbia distributes a total of 80 million cases of beer, wine, spirits, and non-alcoholic products. “We’re one of the few with scale across categories,” Steffanci says.

In 2018, Constellation Brands—already a beer supplier to Columbia Distributing—expanded its partnership with the wholesaler by awarding it statewide rights to its wine and spirits business in Washington and Oregon. “We learned a lot from that partnership,” says Steffanci, noting that Columbia created a separate wine and spirits division to better serve retailers. “We learned that wine and spirits are complex and there are a lot of SKUs. But we also found that spirits offer high gross profits while cases move slowly. Beer is the opposite, with lower gross profits and volume that moves quickly.” Three years later, however, Constellation Brands moved those wine and spirits rights to Southern Glazer’s Wine & Spirits as part of its expanded and nearly national partnership with the country’s top wine and spirits house. But like Reyes and Andrews, Columbia was a beneficiary of the Sazerac network shakeup, and now distributes the spirits portfolio in Washington and Oregon.

Columbia has also been expanding its presence in wine in recent years. In 2019, it was named the statewide distributor of the Treasury Wine Estates portfolio in Oregon, followed by Washington in 2020. “The business exploded, and we started getting noticed,” says Columbia senior vice president of wine and spirits Brian Renney, who notes that craft wineries and distilleries were also added to its portfolio. And last year, Trinchero Family Estates awarded Columbia the rights to its brands in the two states. “As the category and the industry continue to evolve, developing partnerships with the right wholesalers in the right markets are critical,” Trinchero senior vice president and COO Dave Derby says. “Columbia’s strong regional account relationships and their portfolio make them the right partner for us in the Pacific Northwest.”

Great Convergence

Steffanci and Purser say that product diversification by beer wholesalers is being driven by the expansion moves of other players in the industry. “Distributors, suppliers, and retailers are changing,” says Steffanci. Pointing to moves like Anheuser-Busch InBev’s (A-B InBev) acquisition several years ago of Cutwater Spirits and the involvement of companies like Coca-Cola and PepsiCo in the RTD space, Purser says, “Everyone’s getting into everyone’s kitchen and product line.”

Sean McLaren, managing partner at OMAC Beverage Advisors, which consults with wholesalers on transactions, says consumers and beer wholesalers’ own route to market are contributing to their expansion. “Consumers are demanding new products, and it can be difficult for a small wine or spirits company to get into a wine and spirits house,” he says. “Some suppliers are realizing that because wine and spirits houses don’t always service every account, there’s more opportunity with beer wholesalers.” According to Renney, that was the case in 2022 when Columbia had the opportunity to present to Sazerac. “They were interested in our model. They saw that we had the logistics in place, and the ability to go to more accounts more frequently than other wholesalers,” he says.

Sazerac’s shift from Republic National Distributing Co. to a new network of distributors, including quite a few beer houses, caught the attention of members of all tiers of the industry. Renney says that the ability for beer wholesalers to service all types of retail accounts is becoming increasingly attractive to wine and spirits suppliers. “We can take a bottle of wine or a bottle of spirits to an account profitably because we’re going there with beer. That’s not always true of a wine and spirits distributor.” Purser adds that due to the experience Sazerac has had with beer houses handling the company’s beer- and wine-based Fireball offerings, “they’ve been able to see how beer distributors perform and realize that they like the way they go to market.”

In another recent move, wine and spirits house Martignetti Cos. acquired Massachusetts’ Quality Beverage, a distributor of A-B InBev and Constellation beer brands, in what some experts say is a play to gain more insights into the beer distribution model. Similar moves could be in the offing. “Beer distributor consolidation will ramp up and wine and spirits suppliers will look to those beer distributors that have diversified and offer their retail customers a total beverage solution,” says Steffanci.

At its core, beer wholesalers’ expansion into wine and spirits benefits retailers, the Columbia Distributing executive says, adding that it drives efficiency for retailers, as they interact with fewer vendors, make fewer payments, and see a reduction in the number of trucks entering their lots. “Retailers love the total beverage model,” he says.

Total beverage distributors are here and likely the wave of the future. While Purser believes that there will still be a place for the traditional beer wholesaler in the years ahead, he concedes, “it’s evolving, it’s changing. There will be consolidation, but there are also new entrants into the business.” McLaren sees the most opportunity for diversified houses. “Beer wholesalers have realized that the business isn’t as easy as it used to be,” he says. “But they know they have an incredible route to market, and increasingly they’re looking to apply that to wine and spirits.”