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Breakthru Beverage Group and Republic National Distribution Co announced their planned merger yesterday

Breakthru Beverage Group and Republic National Distribution Co announced their planned merger yesterday

Republic National Distributing Co has not ruled out job cuts in relation to its planned merger with fellow US alcohol distributor Breakthru Beverage Group.

Late yesterday, the two companies, the second- and third-largest alcohol distributors in the country respectively, announced their intention to consolidate operations. The pair currently employ a total of 16,500 staff in both the US and Canada, split 58-42 in favour of RNDC.

When contacted by just-drinks yesterday, an RNDC spokesperson flagged that no decision has yet been taken on consolidating headcount. "We will be exploring synergies over the coming months," the spokesperson said, "but the process is not yet underway.

"Right now, we are hyper-focused on delivering for our suppliers over the holidays."

Asked about the name for the merged entity, the spokesperson said: "The company will be given a name that captures the spirit of a new, dynamic North American total beverage alcohol company. It will be announced at a later date."

The spokesperson also detailed that RNDC's corporate headquarters is split between New Orleans, Dallas and Atlanta, while Breakthru is based in New York City with a presence in Cicero, Illinois. "With executive and senior leadership residing across multiple states," the spokesperson added, "the new company will not have a physical corporate headquarters but rather a virtual one."

The merger is expected to complete before the end of the second quarter next year.

US trade publication Wine & Spirits Daily says:

Once this deal goes through, the number one - Southern Wine & Spirits, - and number two distributors will account for as much as 60% market share in the US, according to Jeffries International.

Despite its size, the merged group will not have a presence in two of the largest US markets: California and New York. These are huge holes if the goal is to be a nation-wide distributor and go head-to-head with Southern for those long-term agreements with the largest suppliers.

Without those two essential markets, we're willing to bet that this merger won't be the end of Breakthru/RNDC's expansion plans. We can imagine California's Wine Warehouse is looking pretty attractive right about now.

This move is the latest in a series of major consolidation moves in recent years. Five of the top ten largest distributors have made deals to consolidate since 2015. Southern and Glazer's coupled up in 2016, as did Wirtz Beverage and Charmer Sunbelt, forming Breakthru Beverage. The latest move came earlier this year when Breakthru merged with Allied Beverage in New Jersey.

For further details on Wine & Spirits Daily, click here.