Yesterday's announcement that Southern Wine & Spirits of America is to merge with Glazer's Distributors in the US signifies the spread of consolidation throughout the drinks industry. In this month's 'just the answer', Olly Wehring talks to Southern's president & COO - and soon to be CEO of the new venture - Wayne Chaplin.

just-drinks: What's prompted this merger with Glazer's?

Wayne Chaplin: I think it's driven by a number of factors that are happening in the US. First and foremost, we have the continued growth of both the national on- and off-premise chains. The more that we've dealt with them in our current status, the more we realised that having a larger footprint to be able to deal with these national customers throughout the system would be very important in the future.

Secondly, as we see the continued consolidation on the supplier side, that does have an effect on the distribution network as well. So, we feel that offering suppliers that are continuing to consolidate a consolidated, more national footprint to deal with - and being the first one to do that - was also very important.

j-d: You call for a more nationwide distribution footprint. Is that more a call for cross-state wine shipments to be given an easier time in the US?

Chaplin: I don't think that's the case. It's not about shipments, the question is that, as you have a bigger footprint, you get to deal with the national customers a lot easier. The national scope does create a lot of synergies on our side as far as national accounts, category management are concerned. Then we believe there are a lot of synergies in the area that does not interface with the customer such as the back of the house and the corporate side.

j-d: Can you expand on what synergies you're going to be looking at?

Chaplin: I would say that both the Glazer and Southern organisations were very heavily into category management and how we dealt with the national accounts in the on- and off-premise, so there are synergies at that level. There are also synergies on the corporate level, such as HR, IT or accounting.

Wayne Chaplin, Southern's president & COO - and soon to be CEO of the new venture.

j-d: So, will there be job losses going forward?

Chaplin: I don't know what it's going to look like. We're just getting going - we've put together a strategic team to look at what the integration will look like. But we really aren't that far along with that.

j-d: Your joint statement suggests you will now account for an 80% market share in the US, leading some to express concern that you will have a potential monopoly. Can you clarify what your market share will be?

Chaplin: I've seen a couple of people suggest that... and that is not the case. The states that we're in represent 80% of the spirits and wine volume in the US. We have market shares that range from 25% to 50% in each of these markets, so I would say that, on a national basis, we probably have an estimated 35% market share.

j-d: How influential was the current economic climate in the US behind this merger?

Chaplin: I think this is a much longer-term, strategic move that really isn't affected by the current local economy in the US. It's us deciding to work together with the Glazer organisation on a very long-term basis to really benefit our  customers and our suppliers. This is what we see as the vision for the best way to go to market in the US.

j-d: So, why hasn't such a move happened sooner?

Chaplin: I think there's been a lot of conversation, but at the end of the day what's worked here is that you have two people that have very similar strategies and were able to work something out that, I think, is going to really benefit all stakeholders involved.

j-d: What are your hopes going forward?

Chaplin: I hope the brand owners understand that the strategy we've laid out makes a lot of sense. We know the customers understand it. I believe this will lead to a very interesting next few years in the distribution business in the US.