Dear Client:
Reyes Beer Division struck again with yesterday’s announcement that it will purchase Capitol Wright Distributing, the 16 million case Molson Coors – Constellation et al distributorship serving Austin and surrounding counties, just three weeks after announcing the purchase of DET Distributing in Nashville, pushing Reyes north of 300m cases and 10% of total U.S. beer volume. The Reyes’ M&A formula we referred to then — purchasing distributors in growing metro areas with Constellation — continues to bear fruit (see BBD 09-12-2022 Grokking the Paradigm Shift in Distributor M&A). You just don’t get much hotter than Nashville and Austin.
Texas has long been a coveted market for the Reyes organization (they were rumored to be close to even acquiring Houston’s Silver Eagle Distributors before Redwood Capital stepped in). The state not only has a strong franchise law and a cash law, the operating margins are high due to a manageable account base that has a nice foundation of chains with strong independents and on-premise layered on top; plus low wages, low fuel prices, low taxes, low regulation, and year-around good delivery weather.
Plus, any drinkers they’ve lost in their SoCal Harbor territory will show up in their Austin and Nashville numbers.
SLOW AND STEADY. The story of the Reyes brothers’ remarkable rise to mega-beverage-status was not an overnight success by any means, but about fifty years of measured, steady, and completely self-financed growth (meaning no outside equity investment that we know of). When you look at their acquisition timeline, it started slow with same-market vertical acquisitions which freed up free cashflow for future acquisitions, until they reached the scale to be able to make horizontal acquisitions, like that of DET and Capitol Wright. (Ed. Note: The latter which will be styled Capital Reyes Distributing, referring to the Texas capital city of Austin, rather than Capitol, meaning the capital building which resides in Austin — a distinction I’m sure was only noticed by Duke Reyes, a noted reader of the classics.) What started as a ‘slow and steady’ acquisition strategy has now turned into ‘fast and steady’, as their deal pace has picked up after the cash sale of their Reinhart Foodservice division in 2019.
THE ROAD TO 300 MILLION CASES. Reyes has grown from a little Schlitz distributorship in Spartanburg, South Carolina to the largest U.S. beer wholesaler by far, set to deliver over 300 million cases in 11 markets from 20 distributorships by year’s end.
Let’s take a look back at some of the major moves for Reyes Beer over that span.
1979: REYES HITS CHICAGO AND MILLER SYSTEM. The first distributorship to come on board Reyes Beer Division was Chicago Beverage Systems, with the acquisition of Campbell Distributing in Chicago back in 1979. At the time it joined Reyes, it had only 25 employees, delivering less than one million cases of what was predominantly Miller per year, representing Reyes’ entrance into the Miller system. Chicago Beverage Systems now delivers over nine million cases.
1989: REYES COMES TO CALIFORNIA. A decade later, Reyes expanded to the West Coast with the purchase of Harbor Distributing, a four-million case business in the South Bay of Los Angeles. Reyes’ Harbor now distributes over 48.1 million cases.
2006: REYES EXPANDS ON EAST COAST. In 2006, Reyes established more operations on the East Coast (one in South Carolina and another in Maryland). In South Carolina that year, Reyes purchased Henry J. Lee Distributors in Charleston and Beaufort, South Carolina, which is now known as Lee Distributors, a 5.7 million case operation. And in Maryland, Reyes acquired Erwin Distributing Company as well as Larkin Wholesale, giving way to Reyes’ Premium Distributors of Maryland, which now delivers over 2 million cases.
2007-2010: A SPREE IN SO CAL AND VA. Acquisitions between 2007-2010 for Reyes focused largely on two areas: Southern California and Virginia.
In 2007, Reyes purchased Gate City Beverage Distributors in Indio, California, which sold over 10.4 million cases at the time. Reyes’ Gate City now delivers about 23 million cases. RBD also built out its East Coast presence that same year, purchasing Dearing Beverage Company and Preston I. Moffett Distributors in Winchester, VA.
In 2008, the company bought 8.5 million case Mesa Distributing in San Diego, California and brought on Crest Beverage in the city the following year, giving way to Reyes’ Crest Beverage, now a 17 million case operation.
And in 2010, Reyes kept rolling in Virginia with the purchase of Fredericksburg Distributing Company and Freeman Beverage.
2011: REYES’ FIRST FORAY INTO FLORIDA. Reyes entered Florida in 2011 with the purchase of 14 million case Schenck in central Florida, creating the Florida Distributing Company. Reyes’ Florida Distributing Company now delivers 18 million cases.
2012: MORE MOVES IN VA, AND CHICAGOLAND. In 2012, Reyes acquired yet again in Virginia with the purchase of 6 million case Chesbay Distributing, and later Kozak Beverages.
The company also bolstered its presence in Chicagoland in 2012 with the purchase of craft house Windy City Distributing.
2014-2015: REYES BECOMES LARGEST BEER DISTRIBUTOR IN U.S. A pair of acquisitions between 2014-2015, helped solidify RBD as the largest beer wholesaler in the U.S. Those acquisitions included its 2014 purchase of 13 million-case Allied Beverages in Sylmar, California; as well as the 2015 purchase of 27 million case Gold Coast Distributors in South Florida.
2018: CONSOLIDATION OF CONSTELLATION IN CALIFORNIA BEGINS, MORE MOVES IN VA. In the summer of 2018, Constellation announced a “pre-emptive move” to adjust its distribution footprint in San Diego, moving from Markstein Beverage to Reyes in the area. The “adjustment” was followed with similar moves, as Reyes later acquired the Constellation business from Triangle Distributing, Beauchamp Distributing and Ace Beverage in 2018. The 2018 moves in Southern California resulted in about 15 million cases of added Constellation brands for Reyes.
That same year, Reyes also struck a deal to acquire Loveland Distributing Company, a 4.6 million case in Richmond, VA, closing the gap between Reyes’ two houses in the state: Premium Distributors of VA and Chesbay Distributing.
2019: REYES MAKES MOVES UP NORTH IN CA. Reyes began its move to Northern California in the summer of 2019 with the acquisition of DBI Beverage Inc.’s beverage distribution business (26ish million cases). That purchase resulted in the formation of Reyes’ NorCal subsidiary, Golden Brands.
Later in 2019, Reyes acquired W.A. Thompson, a 7.1 million case business in Bakersfield, California (mid-sized city north of Los Angeles).
Then in March of 2020, Reyes’ Golden Brands cut a deal with Saccani Distributing in Sacramento, adding about 1.5 million cases to its operations. A month later they bought up Bay Area Beverage, tacking on another 8 million cases. In June of 2020, Reyes announced an agreement to acquire Monterey Bay’s Elyxir Distributing, which brought on 2.5 million more cases. And in the spring of 2021, Reyes acquired Redding Distributing Company, adding another 2 million cases. So in about two years’ time, Reyes became about a 40 million case business in Northern California, and Reyes’ Golden Brands has only grown since then, now distributing over 52.3 million cases, making it the company’s largest distributorship in California.
2020: REYES ENTERS INDIANA. While Reyes made its march up to Northern California, the company simultaneously began its moves to the Midwest, announcing a massive deal in 2020 to acquire Indiana’s Monarch Beverage Company, a 16 million case operation, that resulted in the formation of Reyes’ Monarch Distributing.
2021: REYES MOVES INTO MICHIGAN, EXPANDS IN SC. A year after its initial move into the Midwest, Reyes followed up with another: purchasing Michigan-based Powers Distributing Co., a 5.7 million case business, that gave way to Reyes’ Premium Distributors of Michigan.
Earlier in 2021, Reyes announced the purchase of 2.8 million case Greenco Beverage Company in Greenville, South Carolina, resulting in Reyes’ Greenco Distributing in the state.
2022: TENNESSEE AND TEXAS TWO-STEP. Now, in the year of 2022, Reyes has deals to enter two new markets: Tennessee and Texas. Recall, the agreement to enter into Tennessee follows last month’s announcement to purchase 9 million case DET Distributing in Nashville, which will give way to Reyes’ DET Beverages in the state after its scheduled close in November. And, of course, there’s yesterday’s news of Reyes’ plans to purchase 16 million case Central Texas distrib, Capitol Wright, which upon completion in December, will be renamed to Capital Reyes Distributing.
And don’t forget the building out of a refranchised Coke network in tandem, Reyes Coca-Cola Bottling Co., which makes and sells Coke products in California, Illinois, Kentucky, Michigan, Minnesota, Nevada, Tennessee, and Wisconsin.
BREAKDOWN OF REYES BEER VOLUME BY MARKET
CALIFORNIA: 167 MILLION CASES.
- Golden Brands 52.3 million cases
- Harbor Distributing 48.1 million
- Gate City Beverage 23 million
- Allied Beverages 18 million
- Crest Beverage 17 million
- High Desert Distributing 8.7. million
FLORIDA: 48 MILLION CASES.
- Gold Coast Beverage 30 million CEs
- Florida Distributing Company 18 million
ILLINOIS: 12 MILLION CASES.
- Chicago Beverage Systems 9 million CEs
- Windy City Distributing 3 million CEs
VIRGINIA: 23.5 MILLION CASES.
- Premium Distributors of Virginia 18.5 million CEs
- Chesbay Distributing 5 million
TEXAS: 16 MILLION CASES (SLATED TO CLOSE IN DECEMBER).
- Capital Reyes Distributing 16 million CEs
INDIANA: 16 MILLION CASES.
- Monarch Distributing 16 million CEs
TENNESSEE: 9 MILLION CASES (SLATED TO CLOSE IN NOVEMBER).
- DET Beverages 9 million CEs
SOUTH CAROLINA: 8.5 MILLION CASES.
- Lee Distributors 5.7 million CEs
- Greenco Distributing 2.8 million
MICHIGAN: 5.6 MILLION CASES.
- Premium Distributors of Michigan 5.6 million CEs
WASHINGTON D.C.: 2.8 MILLION CASES.
- Premium Distributors of Washington D.C. 2.8 million CEs
And there you have it, 50 years of Reyes. Our deep-throated sources on the ground say Reyes will be good for one more deal announcement — soon — and then we can rest for the holidays — until next year.
BREWPIC: A long and winding road: Reyes’ original Schlitz distributorship in Spartanburg, SC; and below their latest acquisition, Capitol Wright Distributing in Austin, soon to be Capital Reyes Distributing.
Until tomorrow,
Harry, Jenn, Jordan & Bianca
“Some things have to be believed to be seen.”
– Ralph Hodgson
———- Sell Day Calendar ———-
Today’s Sell Day: 3
Sell days this month: 21
Sell days this month last year: 21
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under 0
