Consolidation & The Wine Shop Around the Corner

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Summer, they say, is the slow season. But the big wine and spirits distribution business never sleeps.

Proof is found in the merger announced last week by two of New York’s largest wholesale wine and spirits distributors, Charmer Industries Inc., and Peerless Importers Inc. The new company, Empire Merchants LLC, will be owned equally by both partners.

Just how we get our wines matters more than it seems at first glance.After all, consumers see only the retail tip of the wine business iceberg.And retail is, in fact, the smallest part of the structure. Out of sight are the wholesaler or distributor and, if a wine is foreign, the importer. All three levels comprise what’s called the three-tier system.


In the past decade, the most powerful part of the wine chain, the wholesalers, have been consolidating at an increasingly fast rate across the nation. Metro New York has always had big wholesalers, as befits a big market. But the latest news shows that they’re not big enough.

The driving force behind all of this consolidation is brands. Both wine and spirits brands — especially spirits — have become gargantuan.The money is in booze, as it’s always been. But today even wine is supersized.

For example, the world’s largest wine producer is not, as was for decades, E. & J. Gallo, but Constellation Brands Inc.A publicly owned company formerly known as Canandaigua Wines, Constellation grew large through a ravenous appetite for acquisition, swallowing the likes of Robert Mondavi, Franciscan, and Ravenswood wineries in California as well as Australia’s giant HardyWine group, among many others. Constellation needs distributors equally as big.


What does this all mean for consumers? On the surface — and certainly in other, smaller, markets — it means less of many and more of fewer. One of the effects of distributor consolidation is that big distributors understandably prefer big suppliers. All those sales people on the street need “product.” Small producers are an irritant, a peanut to their elephantine appetites.

From the winery perspective, this means less access to large markets. Even if mega-distributors are willing to represent a small-production winery — and they are, in fairness — there’s only so much room in their “book”.They say, “We’ve already got two (or three or five) wineries from your part of the world. We don’t need any more.”

What happens next is a kind of shaking out. Very small, niche distributors step in to fill the gap. But their representation is necessarily spotty. Technically, the wine is present in the market, but it’s a ghostly presence. Small producers become increasingly marginalized.


In New York it all began in late 2004, when Southern Wine & Spirits of America, the nation’s largest wine and spirits distributor, bought Premier Wine & Spirits. Like Shaquille O’Neal wading into a schoolyard game, previously powerful local players suddenly were dwarfed. Former rivalries were suddenly reconsidered. At the time, Premier was the fourth largest distributor in New York.

But Southern’s appetite for expansion was not slaked. It subsequently bought Lauber Imports, which has a sizable “book,” as they say in the trade, of high-end imported wines, which gives Southern valuable entrée into soughtafter restaurant accounts.

What this latest merger of Charmer and Peerless proves is that the game plays on. Clearly, the hot breath that two of New York’s biggest and most aggressive distributors feel isn’t from global warming. (Southern Wine & Spirits is what psychiatrists call a paranoid object — the unifying nub around which the balance of a group coalesces and finds common cause.)

What this means for wine lovers is that wine shops are more critical than ever. Precisely because securing smaller-production wines is more hunt-andpeck than ever before, thanks to consolidation, you need a merchant dedicated to just such an effort. Here, New Yorkers are lucky indeed.

At the same time that wholesalers have cannibalistically gorged on each other, NewYork has seen a renaissance of small, wine-obsessed merchants willing to cast a wide net to secure those same wines that are mere appetizers to the behemoth distributors. Retailers such as Chambers Street Wines; Crush Wine & Spirits; De-Vino; Moore Brothers; Vino; Appellation Wine and Spirits; Italian Wine Merchant, and at least a dozen others bring to the city an array of small, artisanal producers often never previously seen locally.

This new retail competition, in turn, has spurred the traditional big boys, such as Sherry-Lehmann and Zachy’s, to meet the challenge.

Wine stores are the saving grace, in every sense. Much more than wholesalers, they have a powerful affection for small-scale producers. Although the big brands control retailers’ purse strings, the small growers pull on their heartstrings.

Consumers are better served today than ever before. For New York’s wine lovers, this is the sterling lining to today’s gathering cloud of consolidation.

The New York Sun

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