The Liquid Brief | 26/09 No.1 | When Flexibility Becomes an Advantage

The Drinks Industry Enters a Resource Reallocation Phase: Labour, Distribution and Market Access Come Under Review

The global drinks market correction is becoming more tangible.

Over the past two weeks, pressure has moved beyond slower sales growth and portfolio adjustments. Republic National Distributing Company (RNDC) has continued to reduce its local operations, Diageo is cutting jobs at its North American headquarters, and tensions between the US and Canada are beginning to affect whether certain alcoholic beverages can enter the market at all.

At the same time, Brown-Forman’s latest results show that a weaker consumer environment does not affect every price point, format or drinking occasion in the same way.

The challenge for drinks companies is therefore becoming less about waiting for the broader market to recover. The more immediate question is which labour, inventory, distribution relationships and market investments still justify their cost — and which resources need to be redeployed more quickly.

Weekly Highlights

RNDC Turns Distributor Risk Into an Operational Issue for Brands

The financial problems surrounding Republic National Distributing Company are now having a direct impact on local market operations. The closure of related operations in Georgia affects 558 jobs.

For suppliers, the consequences extend well beyond simply finding another distributor.

When a major partner exits a market, brands may need to reassign accounts, locate inventory, deal with receivables, rebuild sales relationships and restore distribution. Even when a replacement partner is found, the transition can still leave a meaningful gap in market coverage.

This adds another criterion to distributor selection that has often received less attention: financial and operational stability.

Market reach remains important. But if a distributor cannot continue operating, even a large account network can lose value very quickly. The risk is particularly acute for smaller brands that depend heavily on a single distributor across multiple accounts or markets.

US–Canada Alcohol Tensions Move From Cost Pressure to Market Access

The US has announced that, from 29 September, imports of most Canadian alcoholic beverages will be banned, including spirits, wine and some beer.

That represents a different category of commercial risk from tariffs.

Tariffs raise costs. Companies can still respond through pricing, margins, supply-chain adjustments or promotional strategy. Import restrictions, by contrast, can determine whether a product is able to enter the market at all.

The broader trade environment is also becoming more difficult. According to spiritsEUROPE, the value of EU spirits exports fell by 6% in 2025, with exports to the US down 9% and shipments to China down 15%.

For global drinks companies, geographic diversification has traditionally been one way to reduce exposure to individual markets. But when several major export destinations are simultaneously affected by weaker demand, policy changes and trade friction, international diversification itself requires more contingency planning.

Brown-Forman Points to Demand Fragmentation, Not Simply Downtrading

Brown-Forman reported a 1% decline in first-quarter net sales. Its Tequila portfolio fell 12%, while Herradura was down 17%.

Over the same period, ready-to-drink sales rose 20%, with New Mix growing 48%.

The most important message from these numbers is not simply that RTDs continue to perform.

The more significant development is the widening gap between different drinking occasions within the same company and market environment.

Higher-priced Tequila is facing pressure from consumer downtrading, while lower-entry-price products with a clear occasion and straightforward consumption format are still capable of growing.

That makes broad statements such as “the spirits market is weak” increasingly inadequate for resource allocation. Categories, price points and drinking occasions need to be assessed separately.

Diageo Pushes Cost Control Into Organisational Structure

Diageo plans to eliminate 305 positions at its North American headquarters in New York. Its North American business previously reported an 8.4% decline in annual organic sales, while the region accounts for roughly 37% of group sales.

Large drinks companies have already spent several years simplifying portfolios, selling selected assets and improving operating efficiency. Workforce reductions show that the adjustment is now extending into fixed organisational costs.

During periods of rapid growth, companies can build sales, management and support capacity ahead of demand. When revenue falls, maintaining those structures becomes a cost in itself.

The industry’s efficiency drive is therefore no longer only about deciding which brands deserve investment. It increasingly involves deciding which capabilities still need to remain permanently inside the organisation.

Industry Trends

Distribution Strategy Is Adding Resilience to Reach

Drinks companies have traditionally evaluated distributors according to market coverage, account access and sales capacity.

The RNDC situation shows that these factors remain important, but they are no longer sufficient on their own.

Brands may increasingly need to assess the financial health of their partners, payment capability, inventory visibility and the ease with which business can be transferred if something goes wrong.

For large groups, a distribution disruption may be an expensive operational problem. For smaller brands that depend heavily on one partner, it can become an existential one.

Distribution strategy is therefore beginning to address a second question alongside reach: if one route fails, how quickly can the business recover?

A Weaker Market Is Not Producing a Single Move Toward Lower Prices

Drinking less and buying only cheaper alcohol are not the same thing.

Brown-Forman’s results already show that while some higher-priced products are under pressure, more convenient products with clearly defined occasions can still grow.

Recent reporting and market interviews across hospitality and drinks media have also pointed to a similar pattern: some consumers are reducing overall drinking frequency while remaining willing to spend more when they do choose to drink, particularly when the product or experience feels worthwhile.

That is closer to the reality of the current market.

Consumers are not moving uniformly from premium to value. They are making different choices depending on the occasion. Everyday consumption may become more restrained and convenience-led, while dining out, travel or special occasions may still support higher-priced purchases.

For brands, when a product is consumed is becoming almost as important as what it costs.

Brands & M&A

Henkell Freixenet acquired a 60% stake in Irish importer and distributor Cassidy Wines. The strategic relevance lies less in the size of the deal than in gaining greater control over local importing, sales and market execution.

As uncertainty around distribution increases, more direct control over local routes to market can improve both visibility and response speed.

MGP Ingredients offers a different example.

Long known for distilling and supplying whiskey for other brands, MGP has launched a 10-year Bourbon under the MGP Distillery name, bringing a reputation built within the trade directly to consumers.

The move reflects a broader question for upstream producers: beyond supplying products to other companies, how much brand value and consumer-facing margin can they retain for themselves?

New Product Developments

The most commercially significant product development this period was not a new flavour, but a packaging change.

Ardnamurchan has introduced a 50cl PET bottle for its single malt in Norway, designed to work with Vinmonopolet’s purchasing requirements and local deposit-return system. The distillery describes it as the first single malt Scotch to use this type of PET returnable packaging format.

The significance goes beyond the choice of plastic.

Alcohol packaging has traditionally been treated largely as part of brand presentation. Increasingly, bottle weight, transport efficiency, breakage, carbon impact, recycling systems and retailer procurement requirements can directly affect whether a product is commercially viable in a particular market.

Packaging engineering is therefore becoming part of market-access strategy.

For some products, competitiveness may depend not only on the liquid, price and brand, but also on whether the packaging fits the local retail and logistics system.

Bar & Hospitality

Two operational developments are worth monitoring across bars and restaurants: wider use of reservations and the appearance of ABV information directly on some drinks menus.

The two trends are not directly related, but both improve predictability.

For operators, reservations can help manage peak periods, seating efficiency and staffing. For consumers, ABV information makes it easier to understand the strength of a drink without relying entirely on its name or an explanation from the bartender.

Neither development is yet strong enough to describe as a global long-term trend.

But both point toward a more practical direction in hospitality: good service is not only about offering more choice. It is also about helping operators manage capacity more effectively and making those choices easier for customers to understand.

Marketing & Campaigns

US sports remain an important battleground for drinks brands competing for specific consumption occasions.

Jameson has launched NFL activity focused on bars and restaurants, including bar tabs and a tool that helps consumers locate participating sports bars. Jim Beam is also running NFL-related activity, while Captain Morgan is taking its brand directly into American football tailgate culture through a series of event activations.

During the US Open, Grey Goose’s Honey Deuce has also continued to extend beyond the tournament itself into bars across New York.

The common thread is not sports sponsorship.

The commercial objective is to reduce the distance between brand exposure and an actual order.

As marketing budgets come under greater scrutiny, simply securing event branding or visibility is becoming less persuasive. Brands increasingly need to show where consumers can drink the product, what they should order and whether the activity ultimately generates sales.

MJFLAIR Insight

The industry’s current adjustment is moving from controlling growth to controlling fixed costs and the cost of changing direction.

RNDC highlights the risk carried by distribution partners themselves. Diageo is reducing organisational headcount. Trade restrictions are making market access less predictable. Brown-Forman, meanwhile, shows that products and occasions can generate very different returns even within an otherwise weak demand environment.

Over the next six to 12 months, the ability to redeploy resources may become more important than simply increasing scale. Alternative distribution arrangements, lower fixed inventory, adaptable packaging and production models, and marketing budgets that can move quickly between opportunities may all reduce the cost of being wrong.

If consumer demand, trade policy and distributor finances remain volatile over the next 18 to 24 months, the industry’s definition of efficiency may also change.

Scale will continue to offer advantages in procurement, manufacturing and negotiation. But the more fixed a company’s assets, workforce and market investments become, the more expensive it is to change course. The next source of competitive advantage may therefore be not how many resources a company controls, but how economically it can move those resources when conditions change.

As demand, distribution and trade policy become harder to predict, should drinks companies continue prioritising scale — or focus first on reducing the cost of changing direction?

This industry brief is compiled and analyzed from publicly available industry information and news published during the specified period. It is provided for commercial reference only and does not constitute investment, legal, or business advice.