The largest beer wholesaler in the U.S. has made another big acquisition in California.
Reyes Holdings today announced that subsidiary Harbor Distributing LLC has reached an agreement to acquire DBI Beverage Inc.’s assets in Northern California. The news comes one week after Reyes sold its Reinhart Foodservice division to Performance Food Group Company for $2 billion.
Financial terms of the DBI purchase, which is expected to close in September, were not disclosed. However, according to beer industry consultant Mike Mazzoni, who has worked on previous transactions involving DBI, the deal is believed to be among the largest recent acquisitions of a single wholesaler. He estimated that Reyes spent more than $400 million to buy the DBI business, which is less than Redwood Capital Investments spent to acquire Silver Eagle Distributors’ Houston-area territory earlier this year, less than Reyes’ acquisition of Florida’s Gold Coast Beverage Distributors in 2014 and less than the Meritage Group’s 2012 purchase of Oregon’s Columbia Distributing.
According to a press release, Harbor will add about 28 million cases of beer and non-alcoholic beverages to its portfolio and pick up nearly 14,000 new retail accounts.
DBI, which is headquartered in La Vergne, Tennessee, operates nine warehouses in Northern California, including locations in Sacramento, Chico, Truckee, San Francisco, Fairfield, Ukiah, San Jose, Stockton and Ceres. Its list of beer suppliers includes MillerCoors, Heineken, Boston Beer Company, and Mark Anthony Brands. Other popular beer brands offered in parts of DBI’s territory include Sierra Nevada, Dogfish Head, New Belgium, Lagunitas, Russian River, Karl Strauss, Oskar Blues, Firestone Walker, Founders, and Pabst Brewing.
Perhaps most important for Reyes is the addition of the coveted Constellation Brands portfolio — including popular Mexican import labels Corona, Modelo and Pacifico — from DBI in Modesto, San Joaquin, San Jose and Ukiah.
According to Mazzoni, the overall transaction is another indicator that Reyes remains “very bullish” on the Constellation Brands business in California.
In a press release, Reyes Beer Division West president Tom Reyes called DBI “a great company” with “strong operations in Northern California.”
“We are grateful for the opportunity to continue to grow our business and expand our footprint to the northern part of the state,” he said. “We anticipate a smooth transition and look forward to welcoming our new employees and building new relationships in the local communities.”
DBI Beverage chairman David B. Ingram added that the “business is in good hands” with Reyes.
Reyes Holdings, the ninth largest privately held company in the U.S., boasts annual sales of more than $33 billion. The company currently distributes more than 155 million cases of beer annually to around 71,000 retail accounts throughout California, Florida, Illinois, Maryland, South Carolina, Virginia and Washington, D.C.
Harbor Distributing alone currently sells more than 26 million cases of product annually to 12,825 customers, according to its website. Last October, Harbor opened a 355,000 sq. ft. distribution center in Santa Fe Springs to accommodate recently acquired business in California.
The deal for DBI marks Reyes’ fifth transaction in California over the last 13 months.
Earlier this year, Harbor Distributing acquired the assets of Central Coast Distributing LLC in Santa Maria, California. That deal added 2.6 million cases of product and 1,000 accounts across San Luis Obispo County and Northern Santa Barbara to Reyes’ beer business.
The Central Coast purchase followed a 2018 in which Reyes acquired the distribution rights to Constellation Brands’ beer portfolio from four Southern California wholesalers forced to sell the distribution rights by the alcoholic beverage maker. In separate deals, Reyes acquired the rights to sell Constellation’s offerings from Ace Beverage in Los Angeles; Triangle Beverage in Santa Fe Springs; Beauchamp Distributing Company in Compton; and Markstein Beverage Co. in northern San Diego County.
Reyes also struck deals outside of California last year. In August, Reyes subsidiaries Chicago Beverage Systems and Windy City Distributing acquired pieces of the Skokie valley Beverage Co. business in Illinois, including 1 million cases of Mexican import labels Modelo and Corona, according to the Chicago Tribune. Then, in October, Premium Distributors of Virginia acquired the assets of Richmond-based Loveland Distributing Company, adding 4.6 million cases of beer and 2,100 retail accounts.
“Over the past year, we’ve grown our operations in Chicago, Richmond, San Diego, Santa Fe Springs and Santa Maria,” Reyes Beer Division CEO Tom Day said in the press release, “and we are thrilled to add Northern California to that list.”
The announcement of the Reyes-DBI transaction also comes one day after the Alcohol and Tobacco Tax and Trade Bureau issued a “special edition” of its newsletter announcing a “temporary voluntary disclosure program.”
According to the bulletin, through December 31, the TTB will allow “the significant number” of alcoholic beverage wholesalers and importers “who have undergone a change in control (a change in who controls a business) or change in proprietorship (a change in the person or company that owns a business)” but didn’t file a new permit application within 30 days of the change to come into compliance without facing civil or criminal penalties.