Red Bull Terminates 3 Massachusetts Wholesalers, Leading to ‘Mass Layoff’ at Burke

Red Bull North America this week announced it would terminate distribution contracts with three Massachusetts beer and non-alcoholic beverage wholesalers in June, as it transitions to a self-distribution model for off-premise accounts. The energy drink maker also announced it would transfer its on-premise business to wine and spirits distributor Martignetti Companies.

Starting June 3, Red Bull Distribution Company (RBDC) will take over the brand’s distribution rights from Burke Distributing Corporation in Boston, Atlas Distributing in Worcester and Williams Distributing Company in Chicopee.

In a statement released to media outlets, Red Bull said its focus is on “providing the most effective and efficient route to market in every geography.”

“We are committed to the three-tier distribution model, optimizing all elements of the value chain and continuing to elevate the entire network’s capability,” the company said. “Route to market changes in recent years have included awarding territory to independently owned third-party distributors in some markets and launching RBDC in others.”

Messages left with Burke Distributing president and CEO Bill Burke, Atlas Distributing owner and president Joe Salois and Williams Distributing president Scott Sadowsky were not returned as of press time.

Unlike beer breweries, non-alcoholic beverage companies are not subject to Massachusetts’ franchise laws, which lock beer brands into nearly unbreakable contracts with their wholesalers. The state’s beer companies and wholesalers have been at odds over reforming those laws for several years, but a resolution has proven elusive.

According to Beverage Business Insights, Red Bull’s distribution arrangements with the three Massachusetts’ wholesalers date back to the late 1990s, and they were among the Austrian energy drink maker’s first partners in the U.S. The company previously made similar changes to a self-distribution models in the Los Angeles and Miami metro areas.

The fallout from the changes is already beginning to surface. In an April 24 notice filed with the state’s Executive Office of Labor and Workforce Development, Burke Distributing’s Bill Burke announced plans to layoff 72 non-union employees at its Randolph headquarters.

“Due to unforeseen circumstances arising out of the termination of a major business contract, Burke Distributing Corporation will be conducting a mass layoff at its corporate offices,” he wrote in the letter to Business Services/Rapid Response Manager Ken Messina.

Burke added that the job cuts are expected to be “permanent,” with the “first separations” slated for June 24. The Boston Business Journal reported that Burke — a third-generation wholesaler whose brands include MillerCoors, Constellation Brands, Boston Beer Company and several craft brands — employed 320 workers as of 2018.

According to the Massachusetts government website, companies “often notify the Rapid Response team of a layoff and invite them to come on site to help the workers who will be laid off.”

As of press time, it’s unclear how many jobs will be lost at Atlas Distributing and Williams Distributing as a result of the contract terminations.

Atlas Distributing — whose portfolio includes MillerCoors, Constellation Brands, Boston Beer Company, Diageo (Guinness) and Dogfish Head offerings, among others — boasts 1,240 on-premise and 560 off-premise beer accounts, in addition to 2,940 non-alcoholic accounts in Worcester County and parts of Middlesex and Norfolk counties

Meanwhile, Williams Distributing — which sell Anheuser-Busch, Constellation Brands, D.G. Yuengling & Son, Sierra Nevada, Harpoon and New Belgium products, among others — services Western Massachusetts.

Red Bull Distribution Company operates in 22 states with 82 warehouses and more than 2,000 employees, according to its website. The company sold 6.8 billion cans worldwide in 2018, a 7.7 percent increase over 2017 levels.

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