Barrels sit in a cool windowless building at Spottswoode Winery, where bottles of Cabernet Sauvignon range from $90 to $225. The wine making process is a nuanced and delicate scientific process that requires wine makers to work with Mother Nature through the year-long production process. Recently, spikes in temperatures in Napa Valley and across the globe have made it increasingly difficult for wineries to work their magic. Barrels
Sacramento, California – California’s spirits industry is facing a sudden and severe disruption as one of the nation’s largest alcohol distributors prepares to exit the state, triggering more than 1,700 layoffs and placing hundreds of small brands at risk of collapse.
Republic National Distributing Company (RNDC), the second-largest alcohol distributor in the U.S., filed a series of WARN (Worker Adjustment and Retraining Notification) notices this month indicating 1,756 job cuts statewide. In West Sacramento alone, where RNDC acquired Young’s Market Company just two years ago, 136 layoffs are planned.
RNDC will cease operations in California on September 2, a move it attributes to rising operational costs, shifting industry conditions, and the loss of major suppliers. Those suppliers include titans like Tito’s Handmade Vodka and Gallo’s High Noon, both of which moved to Reyes Beverage Group. RNDC also recently lost Brown-Forman’s distribution partnership, a blow that insiders say left a large hole in its financial structure.
The company has declined to respond to questions about its decision or provide clarity on how many jobs are ultimately affected, instead referring reporters to an internal message from CEO Bob Hendrickson. That message, while acknowledging the loss of key brands and partnerships, frames the exit as part of a “broader strategic shift.”
But for those working within the industry, the consequences feel far less abstract.
The layoffs land just weeks before the critical holiday selling season. Small distilleries, many of whom were reliant on RNDC to legally access California’s massive market, now find themselves scrambling to secure new distribution channels in a state where the three-tier system restricts direct-to-retail sales.
California has the largest number of craft distillers in the country—378 as of August 2024, up 55% from the year prior. More than half of the California Distillers Association’s 60 members had relied on RNDC for market access, according to association president Alex Villicana. With no immediate alternative, many of those producers face an uncertain future.
The disruption is also compounding other pressures: California’s craft spirits sector is contending with a downturn in tourism, the looming expiration of a direct-to-consumer shipping law, and broader economic headwinds. “We’re seeing quite a few that are on the verge of closing,” Villicana said, referencing the surprise shutdown of JJ Pfister Distilling Co. in Sacramento.
Industry experts estimate that the combination of RNDC’s exit and the likely expiration of the temporary DTC shipping law could lead to the closure of 30 to 40 distilleries in the state.
With fewer options and limited time, the crisis has sparked renewed calls to reform the three-tier distribution system, which critics say limits flexibility and favors industry giants. Whether California lawmakers act in time to prevent further closures remains to be seen, but for hundreds of workers and small brands, the fallout is already here.
