‘A Huge Red Flag’: America’s Biggest Wine Distributor Reportedly Lays Off Hundreds of Employees

Southern Glazer’s is reported to have laid off hundreds of positions, quite a few within its craft division. (Photo: Maximilian Schönherr/picture-alliance/dpa/AP Images)

Wine-Searcher reported on Friday that Southern Glazer’s Wine & Spirits, the largest wine distributor in the U.S., slashed hundreds of positions in a series of mass layoffs.

Though Southern Glazer’s has yet to respond to requests for comment, many anonymous employees confirmed the layoffs on a Reddit thread.

“I’m in CA and I can confirm the entire craft division was let go, along with a large number of fullbook Division Managers and RVPs. The salespeople are union so they are generally safe at the moment,” a Redditor named jneil commented.

Another anonymous individual posted that in Southern California, Southern Glazer’s laid off 40% of its On-Premise Management, and it was “not performance related.” The user shared one of the District Managers won “Team of the Year” before they were let go.

Redditors additionally shared that Southern California wasn’t the only market affected.

“Layoffs in Louisiana,” a Redditor said. “My husband was there for 30 years and got let go via zoom.”

Grassroots Wine President Harry Root said to Wine-Searcher that the distribution giant’s latest move might be an indicator of trouble in the wine industry.

“I think the biggest effect will be added anxiety,” Root said. “Southern Glazer spends a lot more than we do on research and market predictions so their concerns are a huge red flag for the broader industry.”

Anxiety appears to be the feeling of the moment within the beverage industry.

Multiple factors, such as the World Health Organization’s claims that no amount of alcohol is safe for consumption, have been driving consumption down, creating general feelings of uncertainty amongst wholesalers.

Lack of demand has hit regions like California’s Napa Valley particularly hard, and Eater San Francisco reported in May that wine consumption was down by 8.7%, according to an analysis from a wine analyst firm called Gomberg Fredrikson.

The San Francisco Chronicle called the slump in sales an “unprecedented downturn” for the industry in May. It’s possible the distribution giant’s purported behavior is a response to these headwinds.

Silicon Valley Bank Wine Division President Rob McMillan explained the layoffs make sense due to consolidation efforts that started 20 years ago, according to Wine-Searcher.

“Despite hopeful predictions, we know that the wholesale supply chain for alcoholic beverages is stuffed and has yet to retreat to traditional levels,” McMillan said. “We know that distributors consolidated starting in the early 2000s to gain operating efficiencies, and it was at that point, when the industry was in a strong growth phase, that they began turning down the masses of small startup wineries that emerged during that era. Given the cost to operate, distributors can’t be successful selling bottles of fine wine from small producers, but they can be quite successful when selling pallets of lower-priced wine. Distributors are built for volume sales.”

Southern Glazer’s currently faces a lawsuit from the online retailer Provi. The wholesaler attempted to dismiss the motion, yet the U.S. District Court Judge ruled in favor of Provi, claiming that Southern Glazer’s and another distributor, RNDC, enacted practices aimed to potentially push out smaller businesses. The lawsuit was scheduled to move to discovery in May.

The wholesaler additionally faces an antitrust probe from the Federal Trade Commission after it was accused of engaging in discriminatory pricing favoring big box retailers like Total Wine.

In October 2023, Total Wine received a petition from the FTC, seeking its compliance in the antitrust probe in violation of the Robinson-Patman Act.

Total Wine was requested to appear before the U.S. District Court for the Eastern District of Virginia, and the retailer expressed it would comply.

Whether the purported layoffs are simply another addition to a litany of struggles the wholesaler faces or a greater indicator of issues within the beverage industry at large remains unclear.

President Eric Faber of Cutting Edge Selections in Ohio appears to believe the layoffs are simply an indicator of shifting preferences. Faber considers large and small distributors “two separate industries.”

“You either try to build your business like a large corporation by looking at wine and employees as a commodity or your focus on the boutique aspects of wine: education, passion and relationships across all three tiers,” Faber said. “While I don’t like people in our industry struggling, it does seem that at least for the moment our side of the industry is having more success.”

The popularity of the natural wine movement and a growing interest in under-the-radar wine regions that are more affordably priced could be a sign of shifting consumer tastes.

Market downturns aside, Southern Glazer’s former employees appear to be the ones who are struggling the most, especially with the holidays just around the corner.

“35 years, done in a 10 minute zoom call,” one user wrote on Reddit. “Don’t be silly and think because you were a dedicated one, more than half your life, really means anything to the man.”