The wine industry is witnessing significant shifts as Southern Glazer’s Wine & Spirits (SGWS), the largest wine distributor in the U.S., has reportedly laid off hundreds of employees across the country. Unverified reports suggest that the layoffs have heavily impacted SGWS’s fine wine division, with some employees sharing their experiences on social media, claiming the downsizing affected entire divisions and included dismissals via Zoom.
Gregory Stokes, an Ohio wine retailer, disclosed during a recent Zoom conference with the U.S. Wine Trade Alliance that up to 3,000 people may have been let go, signaling a substantial restructuring in response to declining wine sales. On platforms like Reddit, anonymous users shared personal accounts of the layoffs, describing the unexpected notifications and rapid removal of work devices.
This year has been challenging for SGWS, as the broader wine market has slowed considerably. Recent industry data from SipSource indicates that distributor wine sales to retailers, restaurants, and bars dropped by 8% in the past year, ending in August 2024. Additionally, SGWS faces increasing legal scrutiny. In May, a federal judge ruled against SGWS’s attempt to dismiss a lawsuit filed by Provi, an online alcohol vendor, accusing SGWS and another major distributor, RNDC, of stifling competition. Moreover, the Federal Trade Commission (FTC) may be considering an anti-competitive pricing lawsuit against SGWS, further complicating its legal and financial landscape.
Some industry professionals see the downsizing as a potential opening for smaller distributors. Harry Root, president of Grassroots Wine in South Carolina, believes SGWS’s restructuring reflects a broader trend of industry vulnerability. Root notes that while the changes could create opportunities for smaller wine brands to seek alternative distribution partners, many producers rely on SGWS’s scale to reach major retailers and national chains.
Rob McMillan, executive vice president of Silicon Valley Bank’s Wine Division, connects these changes to the long-standing consolidation trend in the wine distribution sector. He notes that larger distributors have typically focused on high-volume, lower-priced wines, leaving fine wine producers with fewer options. However, McMillan anticipates that former SGWS employees may now form smaller, regional distributors or strengthen existing ones, fostering some positive shifts in distribution options for premium brands.
In Ohio, Eric Faber, president of boutique distributor Cutting Edge Selections, describes the wine industry as split between large corporations and smaller, niche distributors. As larger companies like SGWS shift focus to major accounts and national brands, smaller distributors see more interest from wineries looking for specialized attention to their products. However, Faber highlights the challenges for smaller distributors who often lack the capacity to represent every brand seeking new distribution.
Gina Schober, owner of California-based distributor Vinifera Wine Marketing, expressed empathy for those affected by the layoffs, especially ahead of the holiday season. She sees the restructuring as a chance to bring in talented sales professionals passionate about wine, hoping to recruit from SGWS’s pool of experienced, knowledgeable staff.
Southern Glazer’s has yet to respond to requests for comment, but these layoffs are a clear signal of a shifting landscape in the U.S. wine industry, with effects that could open the door to increased competition among distributors and potential gains for smaller players.
