The First Big Domino Falls In California
My phone has been ringing off the hook this week with questions about what RNDC’s demise in California portends for the future of distribution and the greater health of the wine & spirits industry overall.
What does it mean that CA’s second largest distribution company has decided to abandon ship and pull out of the largest booze market in the United States? Why did it happen? What’s next for the employees, the brands, and all of the accounts who carry those products?
I can’t answer all of those questions for you today, but I can give you my immediate reaction.
For those of you who don’t work in the business, a behind-the-scenes failure in the industry’s middle tier may not seem all that interesting, but I’ll explain how and why its effects will ripple across the rest of the country. RNDC’s California collapse is like an earthquake in the middle of the ocean. You won’t feel it until the tsunami hits the shore and begins destroying everything in its path.
As someone who consults for brands both large and small, new and established, well-funded and boot-strapped, I am in conversation with a large number of major American distribution companies on a daily basis. I’m either trying to boost sales for the brands already in the market, or I’m trying to gain entry for newcomers hoping to enter it.
Over the last six months, there has been a sea change in the level of enthusiasm for new products. While talking to the VP of Spirits for one such distributor a few weeks back, I was told: “We’re not even considering new brands until summer of 2026.”
And that was before RNDC announced its big news.
What do these conversations tell me? Quite literally, there’s no more room at the table. Distributors are full. They don’t have the bandwidth, the resources, the sales team members, or the warehouse space to take on new brands in 2025—especially with sales dropping faster than the stock market after Liberation Day.
Demand is way down. Inventory is way up. New brands? Talk to me a year from now.
Meanwhile, DIY distribution companies like Park Street are continuing to expand. Because there’s no more room at the major distributors, emerging brands from around the world are choosing to give it the old college try by hiring their own sales teams, fulfilling their own orders, and nipping at the borders of the boutique business. While a handful of these brands have found momentum with DTC platforms and independent shops looking for something outside-the-norm, there’s an elephant in the room when it comes time to scale: major chains, supermarkets, bars, and restaurants don’t like ordering from small distributors.
I could write an entirely new article just about the emboldened line above, but for the sake of brevity I’ll sum it up like this: imagine you’re an exhausted, overworked bar manager or retail buyer and you already have to manage orders from Southern, RNDC, Breakthru, Reyes, WineBow, Skurnik, Pacific Edge, and a dozen other small distributors across California. You get a discount for buying in bulk, so—like ordering from Costco—you wait until a sizable-enough order emerges to justify the delivery.
Now, on top of this chaos, 50-100 small brands are beginning to stop by on a daily basis, hoping you’ll order a six pack of their new brand from some tiny distributor you don’t normally order from, fracturing your appointment schedule into tiny bits, and forcing you to spend additional time you don’t have on ordering and invoicing instead of selling the stuff you already have. Does that sound fun?
Which brings us back to the collapse of RNDC this week. I don’t know the exact number of wine and spirits brands that were in RNDC’s CA portfolio, but it’s in the thousands. As of right now, all of those brands are currently without distribution in a market that already doesn’t have enough distribution for the number of brands within it.
Some of those brands will get picked off by the remaining distribution companies, but—in my personal opinion—a large number of them will not, simply because doing so would require distributors to increase their operations at a time when most companies are scaling back. Losing out on California sales for the rest of 2025 will send many of these now-homeless brands deep into the red, potentially driving them out of business.
When those brands go out of business, their existing inventory will get dumped into the market at a discount, resulting in a fire sale of quality wine & spirits that will water down the rest of the industry. Prices in California for some brands will be a fraction of what they are in other states, leading online customers to order via shipping from CA retailers rather than purchase locally. This will play out until that inventory either finds a new distribution home, or sinks so low that it gets snapped up by chains and blown out at bargain basement prices.
In the meantime, existing brands already struggling in CA will find themselves shrinking down the priority list as the RNDC fallout consumes the collective attention of every distributor in the state. Some will be dropped in favor of fresh blood, others will waste away. I could go on and on. As someone who consults for all four tiers of the booze biz (production, importation, distribution, and retail + bars + restaurants), I’m certain there will be countless consequential disruptions I’m not currently foreseeing that will disrupt my ability to do business as usual.
To sum it up: the music has just stopped in a gigantic game of musical chairs for the California wine & spirits industry, and someone has just pulled out 1,000 seats for the remaining brands in the market. What we’re witnessing now is the scramble. Who will find a chair before the music starts back up again?
Personally, I believe the dropping of the RNDC domino is more than just the result of a few large brands jumping ship to greener pastures. It’s reflective of a larger instability in the greater wine & spirits business, an industry that has grown faster than is currently sustainable, and the lasting reverberations are going to be big.
-David Driscoll