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US distributor consolidation ‘an issue’ for spirits

Continued consolidation in the US distribution sector presents ‘an issue’ for the spirits sector in the country, John Glaser, founder of whisky blending business Compass Box, has said.

Merger and acquisition activity in the US distribution business is one of the biggest challenges to the industry, Glaser has said

Speaking exclusively to The Spirits Business, Glaser identified the ongoing merger and acquisition activity in the US distribution business as one of the biggest challenges to the industry, with smaller brands now facing increased difficulties building their businesses in the US.

The consolidation spate has been led by Southern Wine & Spirits of America and Glazer’s Inc, which finalised their merger in July 2016, forming the largest wine and spirits distribution company in North America.

“In the US the distributor consolidation makes it more difficult for small brands to gain traction, to gain distribution, to gain traction in the market,” Glaser said.

He sees the shift in the market as an “opportunity” for businesses “to do things in a different way”.

“Either big distributors will figure out ways to create say, divisions that are more suitable to selling small brands, or small, medium sized distributors will figure out new ways to successfully come to market and meet the needs of these small brands,” he continues. “Or maybe, who knows maybe the laws will change and in some ways it will make distribution easier for small brands.”

Glaser said he sees Amazon as a big winner if change comes to the distribution sector.

“Certainly Amazon is watching really closely in terms of how they can gain access to the US alcoholic beverage market and they’re already here in the UK. They are a force to the reckon with in wine and spirits distribution and wine and spirits route to market straight through to the consumer.

“It’s so easy to buy high-end whiskies right now in the UK through Amazon that I think you know, all the whisky retailers and especially the online whisky retailers really need to be paying attention and figuring out how they are going to differentiate themselves.”

Compass Box has spent much of 2016 campaigning against EU legislation which forbids spirits producers from disclosing details of age statement information about the component liquids in blends.

For the full John Glaser interview, see the December 2016 print edition of The Spirits Business.



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