Whoever wins out in RNDC's collapse, its workers lose

Editor’s note: I’m staying on the biggest story in the booze business with fresh reporting from inside RNDC’s California collapse. If you have tips about this unprecedented situation, please send them to me by replying to this email or texting dinfontay.11 on Signal. Anonymity available. And if you haven’t yet, please consider buying a subscription to support my independent journalism about drinking in America. Here’s 20% off your first year. Hope to see you on the other side of the paywall.—Dave.

A week and a half after I first broke the news that Republic National Distributing Company (RNDC) planned to “withdraw” from California at the beginning of September, more is coming into focus about how the second-biggest booze distributor in the country failed in the biggest booze market in the country The situation is still taking shape, and the firm itself isn’t saying anything substantive. But after speaking with half a dozen current and recently former RNDC employees in California, as well as another dozen or so West Coast suppliers, retailers, and wholesale competitors, I’ve been starting to my get my head around what triggered this multi-billion-dollar middle-tier meltdown, and who stands to benefit from it.

The most acute cause—at least at this point—appears to be years of shortsighted mismanagement of the Golden State market by out-of-touch executives more interested in calling the shots from RNDC’s headquarters in Texas than addressing significant-but-recoverable problems with its West Coast business.

“They never came to actual [corporate] town halls,” Chris Herrera, a current salesperson with the firm who was first hired in 2012 by Young’s Market Company (YMCO), the distributor RNDC fully acquired in 2022. “They never came on road shows. They never came and actually were a part of the business. It [was] like a hedge fund buying a restaurant, never going to the restaurant, and not knowing that the chef never showed up for service one day.”

In multiple email exchanges last week, RNDC’s head of corporate communications declined to answer specific questions about the distributor’s California collapse, or offer more details on its plans for the future beyond those vaguely outlined in interim chief executive Bob Hendrickson’s brief press release last Thursday.

Other current and recently former workers Fingers spoke with requested anonymity for fear of retaliation from the company. “The culture at RNDC & YMCO prior was openly hostile toward anyone who spoke up,” one told me, by way of explanation. But they corroborated the scene Herrera has painted of the firm’s top-down disarray. “It was the arrogance of not wanting to build brands, and fixing the infrastructure, invoices, and delivery issues,” one recently laid-off RNDC CA employee told me. (The term “arrogance” came up a lot.) “They let go a lot of amazing people with a wealth of experience and relationships to be replaced by people from the chains or someone plucked out of another [tier] that didn’t know what they were doing.”

Complicating matters, an employee of a firm that had partnered with RNDC CA told me the org chart was top-heavy and responsibilities were ill-defined. “I've never seen so many VPs of anything and everything in my life,” they said.

Workers past and present at the company, describe a litany of inefficient operational decisions, like renting its warehouse space from the Underwood family (which owned YMCO) and at least a portion of its fleet from Penske, which ate into the wholesaler’s margins. An outdated, much-maligned software system, ORACLE, “is still not functioning properly” after years of misfires that caused logistical chaos and customer dissatisfaction, a retired RNDC CA employee who still stays in touch with their former colleagues told me.

Two recently former RNDC finance employees tell me the company still uses upwards of 15 different software systems across its 39 markets, appendices of a buy-first, ask-questions-later acquisition strategy. “Having a shared services team is not the worst idea in the world,” one of the former finance department staffers, who was laid off from RNDC’s Atlanta office in 2024, told me. “But, if you are working in an industry which is effectively balkanized” by the 50-state regulatory quilt, “the challenge is compounded [because] different states are operating on different systems.” This hodgepodge of systems, they say, dragged on productivity, triggered costly bill-backs, and generally fucked up the works.

Some of RNDC highest-profile suppliers seem to have simply gotten over on the firm’s aloof and/or outmatched executives in California.

“We’re losing money on Gallo left and right,” said Herrera, frustration evident in his voice. “Whoever negotiated that contract just got hosed.” A former worker also flagged Gallo as a supplier that had successfully rolled RNDC’s execs, and told me the firm’s massive deal with Sazerac was also unfavorable.⁴ Other current and former RNDC CA workers describe inbound calls for representation from major brands just going unanswered or ignored.

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