The Federal Trade Commission (FTC) has launched a legal battle against Southern Glazer’s Wine and Spirits, a major U.S. distributor, citing alleged violations of the Robinson-Patman Act. The agency accuses the company of engaging in discriminatory pricing practices that purportedly favor large chain retailers over smaller, independent outlets by offering the former more attractive discounts and rebates.
As a powerhouse in the distribution of alcoholic beverages, Southern Glazer’s handles products for prominent brands such as Pernod Ricard, Bacardi, Diageo, and Suntory Global Spirits. In 2023 alone, the company reported a staggering $26 billion in revenue, ranking as the 10th largest privately held company in the nation.
The lawsuit has prompted responses from industry groups, including the Wine & Spirits Wholesalers of America (WSWA), which termed the FTC’s action as particularly troubling given the heavily regulated nature of the alcohol sector. The WSWA, in its January 6 statement, has sought further clarification from the FTC on its lawsuit, stressing that the industry practices volume-based discounts widely accepted across various sectors and regulated at the state level.
The trade association defended the existing alcohol distribution model, which it argues has served the public health and safety while fostering economic growth, innovation, and consumer choice. According to them, current laws create an essential buffer between alcohol producers and retailers to prevent harmful trade practices.
The WSWA highlighted that it supports a decentralized framework for alcohol regulation under the 21st Amendment which gives states primary authority. This framework, they argued, supports a competitive marketplace that benefits consumers, aids the economy, and enriches the industry.
However, the WSWA warned of the challenges arising from sudden regulatory changes without clear guidance. They suggested that the FTC should focus on enforcing issues critical to public health and safety, and on strategies that promote innovation and strengthen the alcohol marketplace globally.
Alongside the lawsuit, the WSWA released data from its SipSource tool, analyzing trends in the U.S. beverage alcohol market. From December 2023 to November 2024, the report showed a 4.9% decrease in spirits sales in dining establishments, a significant sector constituting 42.7% of on-premise spirits revenue. Wine sales faced an even more substantial drop of 7.9% in the same venues.
Despite the overall downturn, cocktails saw a growth of 9.7% in sales, marking them as a bright spot in an otherwise declining market segment. Other beverage categories like cognac/brandy and Irish whiskey experienced declines of 17% and 10.1%, respectively.
The data further revealed shifts within price tiers in the dining channel, with the $25-$49.99 range experiencing a 3.8% decrease in sales, even as it held a 38.7% share of the dining revenue for spirits.
The WSWA cautioned that the significant trends noted in the dining sector might indicate a shift by consumers towards off-trade purchases, highlighting the ongoing challenges faced by the industry in maintaining a robust in-restaurant sales figure.
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