Republic National Distributing Co., the nation’s second-largest alcohol distributor, is in talks to sell 11 of its markets, including Texas, to Chicago-based Reyes Beverage Group.
Doug McSchooler/Associated Press
In 1939, Ed Block Sr. founded Block Distributing Co. in San Antonio. The company later became a cornerstone of the modern Grand Prairie-based Republic National Distributing Co., the nation’s second-largest wine and spirits distributor.
Now, Republic National is considering cutting ties with its state of origin altogether.
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Amid a recent string of troubles for the distributor, Republic National is in talks to sell 11 of its markets, including Texas, where it’s headquartered, to Chicago-based Reyes Beverage Group, the nation’s largest beer distributor.
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In addition to Texas, Reyes has sent a proposal to purchase Republic National’s Arizona, Colorado, Florida, Hawaii, Louisiana, Maryland, Oklahoma, South Carolina, Virginia and Washington, D.C., markets, according to a spokesperson for the Texas-based distributor. Talks for six of those markets have been going on since at least January.
“We are working closely with Reyes, with a shared priority of ensuring a smooth and successful transition throughout this process,” said Marc Sachs, president and CEO of Republic National. “For now, all of our markets are still part of RNDC, and we continue to operate as we have been, with a strong focus on serving our customers and suppliers.”
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The company spokesperson said Republic National is “targeting a closing by the end of May, and for each of those markets that are not part of the Reyes transaction, it is business as usual.”
After the potential sale, Republic National would have 28 remaining markets, including Georgia, Illinois, New York and Oregon.
Reyes added spirits to its portfolio in 2023 and has been quickly expanding since. Last year, the distributor acquired Brown-Forman’s spirits portfolio, which includes major brands like Jack Daniel’s, in California and Hawaii, replacing Republic National. It also added wine to its offerings last year, picking up distribution for Gallo, which owns brands like La Marca, Black Box and Barefoot, in California.
“We are incredibly excited to expand our footprint in new and existing markets,” Reyes CEO Tom Day said in a statement. “This is an important milestone in Reyes’ history, and we thank the RNDC team for their collaboration. Together, we are committed to supporting employees and suppliers through this transition.”
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Recent struggles
Republic National’s troubles began in January 2023, when New Orleans-based Sazerac Co., which owns popular brands including Fireball, Southern Comfort, Svedka and BuzzBallz, ended its partnership with Republic National, replacing it with regional distributors. Reyes is now in charge of distributing BuzzBallz in select markets.
The same month, Sazerac filed a lawsuit against Republic National, claiming it owed $38 million in delinquent invoices. Republic National countersued before the two settled outside of court at the end of 2024.
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Then, last June, Republic National shocked the industry when it announced it no longer would be operating in California, the nation’s largest wine market. Its exit left more than 2,500 producers without a distributor and 1,700 employees without a job.
Republic National also confirmed in February that it was laying off employees across its markets. Industry sources suggested that the distributor laid off about 100 employees in Florida and 40 in Texas, as well as others in Indiana, Louisiana, Maryland, Oklahoma and Washington.
Previous merger attempt
Republic National previously attempted to merge with one of its competitors, Breakthru Beverage Group, another of the largest alcohol wholesalers in the nation. In 2019, however, the U.S. Federal Trade Commission blocked the deal, citing “significant concerns.”
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“(FTC) staff gathered extensive testimonial, documentary, and economic evidence to support our concerns that this transaction likely would have resulted in higher prices and diminished service in the distribution of wine and spirits in several states,” Ian Conner, former deputy director of the FTC’s Bureau of Competition, said in a statement.
While not a full merger, this potential deal with Reyes would continue to shrink options for producers across the country, especially smaller brands, and concentrate distribution among the top national players.
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“I think we all called that this would happen four years ago,” Chris Ware of San Antonio’s Ranch Brand Wine & Spirits said of Reyes’ potential acquisition. “It was only a matter of time when Sazerac jumped ship.”
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Dealing with a national distributor can be challenging for budding craft distilleries. With the majority of big distributors focusing on high-volume national products, smaller brands can be overlooked or dropped.
Distillers and brewers nationwide already have been struggling with slumping sales amid decreasing consumption, oversupply and the continuing downturn in the U.S. economy. The global alcohol industry is in a significant downturn as drinking habits have changed, with the stocks of major producers facing more than $830 billion in lost market value since 2021, according to Bloomberg.
Impact on smaller producers
While Reyes could choose to keep on smaller brands, a potential consolidation like this could leave them on the back burner and looking for a new distributor.
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Ware relies on Republic National to distribute only one of his products, a grain alcohol in Louisiana. Because Reyes already distributes a similar product, he expects that his will be put to bed.
“I’ll lose business, so it will affect my pocketbook,” he said.
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Ware said the distribution company is still delinquent on payments to Ranch Brand Wine & Spirits after several months, despite his several attempts to collect them. He expects to receive a payment at least by the time the sale with Reyes is official.
“It appears they’re taking care of major suppliers, who they want to stick around after this deal,” he added. “I’d like to continue doing business with (Reyes), but if they don’t need me, that’s just the way it goes. I’m not going to cry over spilled milk.”