How We Got Here: RNDC’s Accelerating Exit
RNDC’s troubles did not materialize overnight. The first crack appeared in early 2023 when Sazerac terminated its long-standing partnership with RNDC after the distributor allegedly defaulted on $38.6 million in invoices. That dispute proved to be a harbinger of much larger problems.
The real avalanche began in early 2025 when Tito’s Handmade Vodka, one of the country’s best-selling spirits, moved its California business from RNDC to Reyes Beverage Group. The defection triggered a cascade effect. High Noon, Cutwater, and other major brands followed. By June 2025, RNDC announced a complete withdrawal from California, a market that had generated approximately $2 billion in annual sales, laying off its entire California workforce in September 2025.
The shakeout then accelerated dramatically in 2026. What began as a seven-state conversation between RNDC and Reyes Beverage Group in January 2026 grew into a confirmed eleven-market transaction by March, encompassing Arizona, Colorado, Florida, Hawaii, Louisiana, Maryland, Oklahoma, South Carolina, Texas, Virginia, and Washington, D.C. That deal, representing roughly $6 billion in RNDC revenue, is on track to close by the end of May 2026.
And the deals kept coming. In April 2026, RNDC signed letters of intent with Martignetti Companies to exit its control state operations, including Alabama, Iowa, Maine, Mississippi, Montana, New Hampshire, North Carolina, Ohio, Pennsylvania, Utah, Vermont, West Virginia, and Wyoming, as well as brokerage arrangements in Idaho, Michigan, Oregon, and Virginia. Separately, Columbia Distributing signed a letter of intent to acquire RNDC’s Oregon and Washington markets and establish an asset arrangement in Alaska.
RNDC is also evaluating its Plains States business, reportedly in advanced discussions with an unnamed buyer covering the Dakotas, Colorado, and Texas (the latter already earmarked for Reyes). Its joint ventures in New York (with Opici Family Distributing), Illinois, Kentucky, Indiana, and Michigan are each under review. The RNDC-Opici New York joint venture has agreed to sell distribution rights to Manhattan Beer & Beverage.
Put simply: RNDC, once operating across 38 states, is in the process of divesting essentially its entire national footprint.
What This Means for Suppliers: Legal Rights and Risks During a Change of Distributor
For suppliers, from global spirits brands to small regional producers, the RNDC collapse raises urgent questions about their legal rights when a distributor relationship changes hands involuntarily or through acquisition. The answer depends heavily on state law and the specific terms of each distribution agreement.
The Three-Tier System as the Legal Foundation
The United States regulates beverage alcohol through a three-tier system, suppliers, distributors, and retailers, a structure rooted in the 21st Amendment’s grant of power to individual states to regulate alcohol within their borders. The middle tier, the distributor, is not merely a logistical intermediary. In many states, once a supplier appoints a distributor, the relationship is governed by franchise laws that fundamentally alter the supplier’s ability to exit that relationship.
Franchise Laws: The Distributor’s Shield
More than twenty states have enacted franchise laws that protect beverage alcohol distributors from termination by suppliers. These laws, which exist for malt beverages, wine, and spirits (in varying combinations by state), generally require that a supplier demonstrate “good cause” before terminating a distribution agreement. Good cause has been narrowly defined by state courts and regulatory agencies, making it difficult to terminate even a chronically underperforming distributor.
Franchise law obligations don’t just apply to the original distributor. They frequently transfer to a successor distributor. In the context of the RNDC transactions, this is a critical point: a supplier’s existing franchise obligations may follow the brand from RNDC to Reyes, Martignetti, Columbia, or whomever acquires the distribution rights. The successor distributor generally steps into the shoes of the predecessor, inheriting the franchise protections the prior distributor held under state law.
The implications are significant. A supplier that was unhappy with RNDC’s service or performance may not have a clean escape route simply because a new entity is taking over. In most franchise states, that supplier will need good cause to terminate the incoming distributor as well.
The ‘Successor Manufacturer’ Exception: A Limited Window
A handful of states provide a limited window for a “successor” supplier to reassemble its distribution network following a brand acquisition. Ohio, for example, permits a successor manufacturer to terminate a distributor without cause within 90 days of acquiring a brand, provided the distributor is compensated for the value of the distribution rights lost. But as litigation in Ohio and other states has demonstrated, courts have construed these exceptions narrowly and refused to extend them beyond their precise statutory scope.
In the current RNDC situation, the question is somewhat reversed: it is the distributor, not the supplier, that is voluntarily exiting markets. While this creates different legal dynamics than a traditional forced termination, suppliers should not assume they are automatically free to redirect their brands. Depending on the state, the distribution rights and associated franchise protections may transfer contractually or by operation of law to the acquiring distributor.
Notice, Approval, and Compensation Requirements
Depending on the state, a change in distributor ownership or assignment of distribution rights may trigger additional legal obligations:
- Notice requirements. Some states require formal written notice to the supplier, often by certified mail, before distribution rights may be assigned or transferred.
- State agency approval. Certain states require regulatory approval before a termination or transfer of distribution rights becomes effective.
- Inventory repurchase obligations. Suppliers in some states may be required to repurchase a departing distributor’s inventory at fair market value.
- Compensation for distribution rights. Some states require suppliers to compensate distributors for the value of distribution rights terminated. The penalties for non-compliance can be severe, in North Carolina, for example, improper termination can result in permit suspension and financial penalties up to $35,000.
Practical Considerations for Affected Brands
Whether you are a national spirits importer, a regional winery, or an emerging craft brand, the RNDC shakeout likely affects your distribution chain in one or more markets. Here is what brands should be doing right now:
1. Audit Your Distribution Agreements State by State
The first priority is understanding exactly what your current distribution agreements say about assignment, change of control, and termination.
2. Identify Which States Have Applicable Franchise Laws
Franchise laws vary significantly by state and by product category (malt, wine, spirits). A brand distributed by RNDC in Florida, Maryland, or Virginia may have substantially different legal obligations than the same brand operating in Texas or Colorado. This analysis must be done on a market-by-market basis, accounting for both the applicable state statute and any contractual terms that may modify the default legal framework.
3. Engage Early with Incoming Distributors
Reyes Beverage Group, Martignetti, Columbia Distributing, and the other acquirers are likely managing hundreds of supplier relationships simultaneously across newly acquired territories. Brands that are proactive, reaching out early, establishing contact with the right people, and documenting their service expectations, will be better positioned than those who wait for the new distributor to come to them.
4. Understand the Risks Before Attempting to Self-Help
Some suppliers, frustrated with RNDC’s service decline or eager to join a different distributor’s portfolio, may be tempted to treat the transition as an opportunity to unilaterally move their brands. This approach carries serious legal risk. In franchise law states, unilateral termination without good cause, even in the middle of a distributor’s collapse, can result in litigation, injunctions halting your ability to ship product, permit revocation, and significant monetary damages.
5. Document Service Failures Now
If RNDC’s service has deteriorated in your markets, missed deliveries, declining sales force coverage, failure to meet contractual performance targets, document it now. In franchise states, good cause for termination typically requires demonstrating material breaches of the distribution agreement.
The Bigger Picture: A Consolidating Middle Tier
The RNDC situation is dramatic in its speed and scale, but it is part of a longer-running consolidation trend in the distribution tier. According to Impact Databank, total U.S. distributor revenues for wine and spirits are expected to slip approximately 1% this year to roughly $70 billion, a subdued backdrop against which the remaining large distributors are competing intensely for business.
Southern Glazer’s Wine & Spirits retains its position as the dominant national player. But the rise of Reyes Beverage Group signals a meaningful shift in who holds leverage in the middle tier.
The franchise law framework, designed in an era when distributor fragmentation was the norm, was not necessarily built with this level of consolidation in mind.
Beverage alcohol law is inherently state-specific, and the intersection of franchise law, contract rights, and regulatory requirements demands careful analysis across every market you operate in. Now is the time to conduct that analysis, understand your rights, and engage counsel familiar with the three-tier system, before the window for strategic action closes.