The big boys in wine and spirits distribution had a good year in 2012 and their outlook for 2013 is equally rosy.
According to Wine Spectator’s Impact Databank, the top 10 distributors should see an aggregate growth rate of 8% for 2013. That’s an increase of about $2.5 billion. [level-members]
Is that good news for you – it means consumption must be up, no? But of course, there are a bunch of factors that could influence how far this trickles down.
Some of the distributors growth can be attributed to an increase in on-site consumption – restaurants for the most part – where we know sales are up. So that has no impact on us. (Though I’ll argue that every time someone finds something new and interesting on a well-crafted restaurant wine list, you have an opportunity to sell another case of wine.)
Of course, it may also be the case that their growth is on our backs. If the market won’t let you raise your prices but your distributors are raising theirs …
And there’s also the possibility that all of this is pretty neutral as far as our business is concerned. The top 10 distributors grow at the expense of 11 through 1,000 and we see no change in our costs or demand. At least in the short-term. Decreased competition could lead to higher prices going forward, though this does seem to go against the disruption that we’re seeing in so many industries, where technology has been absolutely killing the middle man.
Worth watching but I wouldn’t count the distributors and their powerful lobby out any time soon. They’ve been back challenges for longer than anyone has predicted. [/level-members]