Second biggest alcohol distributor in the US quits California
The departure of a wholesale giant from the largest wine market in the US is also a warning sign for an industry which is already struggling as Americans increasingly cut back on alcohol . Republic National, which is based in Grand Prairie, has not suggested that politics played a role in its decision to quit California. But the news may be resonating widely in part because of the narrative it presents that a Texas company wants nothing to do with California, the San Francisco Chronicle reported.
President and CEO Bob Hendrickson said: 'This decision is driven by rising operational costs, industry headwinds, and supplier changes that made the market unsustainable.' He added that the company is 'using this moment to sharpen our focus and reinvest in the markets where we're best positioned to grow', naming Texas and Kentucky. It comes weeks after the distributor announced a 'strategic reinvestment' in its Texas operations.
Several dozen of Republic National's crucial brands have defected in recent months to other distributors. This means the company no longer has the rights to sell popular spirits such as Jack Daniel's, Tito's and High Noon in California. While it is unclear why all the brands cut ties with the company, it is likely to have been a financial blow as many shifted distribution to a major rival, Reyes Beverage Group.
Some workers have blamed executive mismanagement for the company's departure from California, according to specialist outlet VinePair. 'They started focusing on numbers instead of customer satisfaction and that's what drove them to their fall,' an anonymous California-based worker told the outlet. A former worker claimed the the company was 'terribly run' and its execs were 'in over their heads' in the Golden State.
They alleged executives from Texas did not get out to meet customers or 'learn the market.' John Buehler, owner of Napa Valley's Buehler Vineyards, said Republic National's departure from California 'left everybody in the lurch.' Wholesale purchases drive 80 percent of the business. 'It was really such short notice,' he told the San Francisco Chronicle.
Although Republic National continues to sell his wines in a handful other states, he will now need to find a new distributor in the Golden State. The company had only recently increased its presence in California when it purchased distributor Young's Market Co. in 2022. Industry analyst Impact Databank estimated Republic National made $2.8 billion in sales in California alone in 2022.
But despite this success, Buehler told the outlet that the distributor consistently underperformed for him in terms of sales. 'I think I should have seen the writing on the wall,' he said. 'You lose these suppliers, and you're not attracting any new suppliers. Still, I had no idea that they were going to close up shop.' It comes after Republic National announced a 'strategic reinvestment' in its Texas operations in May, according to Global Drinks Intel.
The company said the move would create around 100 jobs. 'We've taken a close look at where we are – and more importantly, where we need to be,' chief sales and execution officer Taylor Sommer said at the time. 'After listening to our associates, customers and supplier partners, one thing is clear: we need to strengthen our presence and performance in the market. 'Texas is a critical part of our foundation, and we're proud to reinvest here.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
23 minutes ago
- Reuters
India sees Asia's biggest earnings downgrades as US tariffs loom
Aug 21 (Reuters) - Indian companies have seen the steepest earnings downgrades in Asia, with analysts slashing forecasts as steep U.S. tariffs heighten risks to growth even if proposed domestic tax cuts help cushion the impact. According to LSEG IBES data, forward 12-month earnings estimates for India's large and mid-cap firms have been cut by 1.2% in the past two weeks, the sharpest in Asia. The cuts follow a lacklustre season of quarterly earnings reports extending a bout of weakness among listed firms which kicked off last year and has hurt benchmark equity indexes. India's economy is largely domestic and firms which are part of the Nifty 50 index (.NSEI), opens new tab earn only 9% of revenue from the U.S. but the tariff hike to as high as 50% on exports to the world's largest economy presents a risk to economic growth. Analysis by MUFG indicates that a sustained 50% tariff could cut India's GDP growth by 1 percentage point over time, with the biggest hit to employment-sensitive sectors such as textiles. Looking to buoy domestic consumption, Indian Prime Minister Narendra Modi recently announced sweeping tax reforms to boost the economy in the face of a trade conflict with Washington. "It's a little bit of an interesting time given what's happened with the tariffs that have been imposed on India," said Raisah Rasid, global market strategist at J.P. Morgan Asset Management. Valuations are still elevated and "we could potentially see the tariff triggering a broad valuation re-rating downwards and make some of the domestic oriented stocks attractive," she said. Earnings growth for Indian companies has been in single-digit percentages for five consecutive quarters, below the 15%–25% growth seen between 2020–21 and 2023–24. Following the April-June earnings announcements, forward 12-month net income forecasts for automobiles and components, capital goods, food and beverages, and consumer durables sectors saw the deepest cuts in earnings estimates, each down about 1% or more, the data showed. The government's plans to lower consumption taxes are also expected to boost the country's GDP growth. Economists at Standard Chartered pencil in a boost of 0.35-0.45 percentage points in the fiscal year ending in March 2027. India's real GDP growth averaged 8.8% between fiscal 2022 and 2024, the highest in Asia-Pacific. It is projected to grow at 6.8% annually over the next three years. Bank of America's latest fund manager survey shows that India has tumbled from the most-favoured to the least-preferred Asian equity market in just two months. "After disappointing earnings growth of only 6% in 2024, the pace of recovery remains sluggish in 2025, as indicated by both the economic growth parameters and corporate earnings," said Rajat Agarwal, Asia equity strategist at Societe Generale.
The Independent
an hour ago
- The Independent
Asian shares are mostly higher after a mixed finish on Wall Street
Asian shares were mostly higher on Thursday after a mixed finish on Wall Street, where shares in Nvidia, Palantir and other superstar stocks pared their earlier steep losses. Traders are looking ahead for cues about U.S. monetary policy from a meeting of central bankers that begins later in the day in Jackson Hole, Wyoming. Federal Reserve chair Jerome Powell is due to speak to the conference on Friday. The Fed has kept its main interest rate steady this year, primarily because of the fear of the possibility that President Donald Trump's tariffs could push inflation higher. But a surprisingly weak report on job growth across the U.S. may be superseding that. In Tokyo, the Nikkei 225 fell 0.6% to 42,636.74 after a survey showed Japan's factory activity remained in contraction for the second month in August. The S&P Global flash Japan Manufacturing Purchasing Managers' Index (PMI) increased to 49.9 in August from 48.9 in July, just below the 50 level that delineates between growth and decline. Regional manufacturers have been feeling pressure from Trump's higher tariffs on exports to the United States. In Chinese markets, Hong Kong's Hang Seng index edged 0.1% lower to 25,135.09, while the Shanghai composite index rose 0.4% to 3,779.52. South Korea's Kospi jumped 1% to 3,161.74, while Australia's S&P ASX 200 index added 1% to 9,005.00. Taiwan's TAIEX climbed 1.2%, while India's Sensex added 0.1%. 'Asian markets walked into Thursday like a card room still heavy with last night's smoke — muted, watchful, waiting for the next cue out of Jackson Hole,' Stephen Innes of SPI Asset Management said in a commentary. On Wednesday, the S&P 500 dipped 0.2% to 6,395.78 after trimming a 1.1% loss earlier in the day. It is still near its all-time high set last week. The Dow Jones Industrial Average added less than 0.1% to 44,938.31. The Nasdaq composite fell 0.7% to 21,172.86. The day's action centered again around stocks caught up in the mania around artificial-intelligence technology. Nvidia, whose chips are powering much of the world's move into AI, sank as much as 3.9% during the morning and was on track to be the heaviest weight on Wall Street following its 3.5% fall on Tuesday. But it clawed back nearly all of Wednesday's drop and finished with a dip of just 0.1%. As it pared its loss, so did broad market indexes because Nvidia is Wall Street's most influential stock by being its most valuable. Palantir Technologies, another AI darling, fell 1.1% to add to its 9.4% loss from the day before, but it had been down as much as 9.8% Wednesday morning. One possible contributor to the swoon was a study from MIT's Nanda Initiative that warned that most corporations are not yet seeing any measurable return from their generative AI investments, according to Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management. But the larger factor may be the simple criticism that prices for such stock have simply shot too high, too fast amid the furor around AI and became too expensive. In other dealings early Thursday, US. benchmark crude gained 30 cents to $63.01 per barrel. Brent crude, the international standard added 26 cents to $67.10 per barrel. The U.S. dollar rose to 147.37 Japanese yen, from 147.29 yen. The euro slid to $1.1648 from $1.1659. ___ AP Business Writer Stan Choe contributed.
Reuters
an hour ago
- Reuters
Currencies steady as investors ponder Fed independence, await Powell speech
SINGAPORE, Aug 21 (Reuters) - The U.S. dollar drifted on Thursday as investors fretted about the Federal Reserve's independence after yet another attack from President Donald Trump ahead of remarks from Chair Jerome Powell later this week that could influence the outlook for rates. Trump called on Fed Governor Lisa Cook to resign on the basis of allegations made by one of his political allies about mortgages she holds in Michigan and Georgia, intensifying his effort to gain influence over the U.S. central bank. Cook said she had "no intention of being bullied to step down" from her position at the central bank. Trump has also told aides he is considering trying to fire Cook, the Wall Street Journal reported on Wednesday. "It has the potential to raise questions around the Fed's oversight and regulatory functions but it has little to no near-term monetary policy implications," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities. That explained the relatively subdued reaction in the currency markets to the news as the dollar initially dipped but was mostly calm in listless trading in Asian hours. The Japanese yen held onto gains made in previous sessions and was little changed at 147.36 per dollar, while the euro was steady at $1.1646. The dollar index , which measures the U.S. currency against six other peers, was steady at 98.301, on course for a 0.4% rise this week. Sterling last fetched $1.3454, hovering near a one-week low. Data on Wednesday showed inflation hit its highest in 18 months in July, with markets not fully pricing the next rate cut until well into next year. Trump has repeatedly criticised Powell for being too slow to cut rates, stoking investor worries about the central bank's independence and its credibility. Investors expect Trump will replace Powell with a more dovish appointment when his term ends in May. Trump earlier this month said he would nominate Council of Economic Advisers Chairman Stephen Miran to serve out the final few months of a vacant Fed seat after Adriana Kugler unexpectedly resigned. Kristina Clifton, a senior economist at the Commonwealth Bank of Australia in Sydney, said if Cook resigns it would create another opening for Trump to appoint a Fed Governor who will vote to lower interest rates. "Perceived political interference in the Federal Reserve can undermine its independence, steepening the yield curve and denting the dollar's safe haven status." The main focus this week has been on whether Powell will push back against market expectations for a rate cut at the Fed's September 16-17 meeting when he speaks on Friday at the Jackson Hole meeting, following a weak jobs report for July. "Markets are adamant that recent labour market data necessitates some policy calibration and are expecting Chair Powell to tip his hat in that direction," TD's Newnaha said. The benchmark U.S. 10-year yield was steady 4.291% , while the two-year yield, which is more sensitive to the monetary policy, was at 3.749% . The gap between 2- and 10-year yields was at 54 bps . However, the curve's steepening trend remained intact as the market expects the Fed to resume its rate-cutting cycle as soon as the September meeting. Traders are pricing in an 82% chance of a 25-basis-point rate cut next month, CME FedWatch tool showed. While the odds have lowered from last week after hotter than expected producer price inflation tempered expectations, investors are still pricing in over 50 bps of easing this year. Some analysts cautioned that markets could end up being disappointed by Powell's speech, noting that the impact of Trump's tariffs on inflation remains unclear. In other currencies, the New Zealand dollar was nursing steep overnight losses at $0.58205 after diving 1.2% to its lowest level since April. New Zealand's central bank cut interest rates on Wednesday as expected but left the door wide open to yet more easing if needed. The Australian dollar eased 0.13% to $0.64245, hovering near a two-week low.
