One less distributor in MA

Martignetti to buy United, leaving just 2 liquor giants
By Chris Reidy, Globe Staff | August 4, 2006

The Martignetti family, whose wine and spirits empire includes distributorships and retail stores, has agreed to buy United Liquors Ltd. , the distributor business built up by prominent philanthropist A. Raymond Tye , for an undisclosed amount

``A preliminary agreement has been reached," the two companies said in a joint statement relayed by Pamela McDermott, president of McDermott Ventures, a Boston public relations firm that represents both companies.

Executives at the two companies declined to be interviewed. McDermott would not discuss the possibility of layoffs.

Officials in the restaurant and package store industries say there are three big wholesalers in the state: United, Horizon Beverage Co. of Avon, and Martignetti, with ``Martignetti rapidly gaining," said Roger Berkowitz, chief executive of the Legal Sea Foods restaurant chain. ``With Martignetti buying United, they would become the 800-pound gorilla."

In theory, fewer distributors could result in higher prices for package stores, bars, and consumers

full story here

Same thing happened in NY recently--Peerless and Charmer (two biggies) have joined forces in the Metro area.

[Robin Garr]

In theory, fewer distributors could result in higher prices for package stores, bars, and consumers

As Thomas points out, this "vertical integration" of the distribution business is happening all over the country, and I'm in little doubt that our friends at WSWA could 'splain the whole thing to us. The number of distributors in Kentucky is about one-third what it was a decade ago, another sizable local firm (Commonwealth) fell into the hands of one of the majors this year, and I'm sure it's no coincidence that retail prices here, once at or a little below the national median, have been rising to the point where I can almost always count paying a dollar or three more than the prevailing rates on Wine-Searcher for almost any wine I buy. :-Þ

Robin,

I had a conversation last week with a NY retailer who told me that ever since the biggest distributor came to the state, where there once were discounts offered on a five and ten case order, they have upped it to 25 cases to get that discount, thereby forcing retailers into pricing problems if they don't buy in quantity.

If true, that is an exact example of the effect of consolidation: squeeze the little guy out of business and then the consumer is left with no choices.

Yet, I see an opportunity for retailers who deal with small, wine-oriented distributors who bring the unusual and the small production wines to them. That market still receives little or bad attention from large distributor reps, who must move boxes and boxes in order to make a living--and keep their jobs.

Good point, Thomas. Matt Kramer made much the same point in the Sun this week:

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.

****

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.

And, of course, you made the same point in the last chapter of "Wine."

I'm awfully glad I live near New York City. :-)

Regards, Bob

Bob,

I was making the same point when I established my wine shop, is-wine, but that venture turned out a little differently than I had wanted...hell, while big wine retailers were screaming scared that wine would make it into grocery stores in NY, I was praying for it to happen so that I could add cheese and other items in my wine shop. It is the only way small shops can survive againts wholesaler consolidation.

Thanks for mentioning is-wine, Thomas. Somehow I missed your shop, although I try to stay current on smaller wine shops in the city.

The website is very informative -- and stuffed arm chairs in a wine shop -- that I've got to see. :-)

http://www.is-wine.com/ -- worth a visit.

When I was associated with the shop, I served espresso to customers who wanted to sit in one of those chairs and talk about the unusual selection of wines they had never seen before. Ah, for the good old days!

I understand the shop will soon move to 8th Street between Fifth and Sixth Aves.