Booze bankruptcy: Atlanta-based alcohol distributor lays off hundreds

An 128-year-old alcohol distributor based in metro Atlanta recently filed for bankruptcy and will lay off more than 500 Georgia workers, according to state filings.

The layoffs come after Republic National Distributing Co., with headquarters in Cobb County, filed for Chapter 11 bankruptcy protection in July, when it said it had about 1,460 employees.

In notices filed with the state of Georgia, the company said it “has been exploring various strategic alternatives that would secure capital to avoid liquidation” of its Georgia operations, including at its headquarters on Wildwood Parkway in Cobb and a facility near Fulton County Executive Airport.

“Unfortunately, there currently is no financing available” to continue operations of the facilities, the company said in Worker Adjustment and Retraining Notifications to the state. The advance notifications are required under the WARN Act for certain plant closings and mass layoffs.

The company said it expects to cease its operations at the Atlanta area facilities and terminate the employment of 558 employees of Republic, affiliate Young’s Market Co. and two other affiliated companies at those facilities.

The terminations are expected to take effect Oct. 19 or within the two weeks following.

A spokesperson for Republic in a statement said “in light of the challenging operating environment and financing requirements of the Georgia business,” the company made the decision to wind down its operations in the state and would support its employees, customers and suppliers through the process.

The implosion of Republic has shaken up a heavily regulated, capital intensive and competitive industry grappling with an oversupply of inventory following the pandemic and a decline in alcohol consumption.

Alcohol distributors are essentially the middle men in a three-tier system set up in the U.S. following the repeal of Prohibition. The regulatory framework is separated by production, wholesale distribution and retail sales.

Republic’s bankruptcy has “created a shift specifically for the suppliers. They’ve had to move their distribution rights around rather rapidly,” said Christopher Fagan, partner and transaction advisory practice area leader for accounting firm Moore Colson.

“So, it’s created feeding frenzy among the remaining distributors to try to acquire distribution rights specifically for the high velocity brands, or the brands that are moving.”

In its bankruptcy filing, Republic estimated it had between $500 million and $1 billion in assets and more than $1 billion in liabilities.

The impact of the bankruptcy is broad, with the company estimating it has more than 100,000 creditors. Republic’s affiliates include Young’s Market Co. and K&L Beverage Co., among others.

Its customers have included Walmart, Costco and Kroger, as well as mom-and-pop liquor stores, restaurants, bars and hotels, according to the bankruptcy filing.

National Distributing Co., a majority owner of Republic, is not part of the chapter 11 filing.

Since 2007, National has operated as separate legal entity from Republic and serves the Georgia and New Mexico markets, according to the filing. However, Republic has provided business support services to National and the companies have cooperated on inventory and supplier issues, the filing says.

Republic’s bankruptcy filing comes after the company earlier this year sold its business in 11 states to beer distributor Reyes Holdings, along with efforts to sell assets in other states.

“The court-supervised process is intended to give us the time and flexibility to continue working with parties that have expressed an interest in acquiring our other markets and conduct an orderly wind down of our remaining operation,” the company said in a separate statement on its Chapter 11 filing.

It’s not immediately clear whether National maintains facilities or employees in Georgia.

Pre-Prohibition beginnings

Republic’s roots stretch back to 1898 in Pensacola, Florida, where Newman Goldring, an immigrant from Eastern Europe, started the first licensed beer distributor in the Sunshine State, according to a bankruptcy filing.

The company had to cease operations after the 1919 ratification of the 18th Amendment for Prohibition, but reopened in 1939, several years after the repeal, according to the company.

Meanwhile, during the period after the repeal of Prohibition, Greek immigrant Chris Carlos founded the Dixie Wine Co. in Atlanta. That company grew into National Distributing, which, through consolidation with Goldring’s company and other firms, eventually formed Republic.

Carlos’ son, Michael C. Carlos, served as CEO of National Distributing and with his family was a major benefactor in Atlanta. His name is on Emory University’s Michael C. Carlos Museum and the Atlanta Ballet’s Michael C. Carlos Dance Centre.

An attempt to reach Republic partner Chris Carlos, grandson of the Dixie Wine founder and son of the late Michael C. Carlos, was not immediately successful.

Changing tastes

At its height, Republic had about $12 billion in annual revenue with operations in nearly 40 states, selling about 390,000 cases of alcohol a day. It once had more than 10,000 employees and was the nation’s second-largest distributor of alcoholic beverages, according to the bankruptcy filing.

Then the COVID-19 pandemic hit.

“During the first two years of the pandemic, alcohol consumption spiked, and distributors like RNDC raced to meet the unprecedented demand. When bars and restaurants closed, consumers increasingly purchased alcohol at stores and through delivery services for in-home consumption,” according to the bankruptcy filing.

“But when the pandemic began to subside in late 2022, alcohol sales precipitously declined, and distributors were left with significant excess inventory that has yet to normalize.”

Stymying those efforts at recovery were inflation, higher labor costs, supply chain delays and high interest rates, the company said. Republic had relied on debt-financed acquisitions to grow its market share.

Over the last few years, the company lost several suppliers accounting for more than $3 billion in annual revenue, putting it in a more vulnerable position subject to fierce competition from other distributors seeking to take market share, it said.

Driving many of these challenges was that “consumer preferences dramatically shifted — Americans began drinking less, and younger generations began opting for more health-conscious alcohol alternatives,” the bankruptcy filing said.

“Republic got overleveraged,” said Fagan with Moore Colson, adding his clients in the industry are focused on managing cash flow. “Everyone is really tightening the belt in that space to try to survive this downturn in consumption.”

A Gallup poll released this month found alcohol consumption among Americans remains at a record low of 54% for the second year in a row, the lowest reading dating back to 1939.