This rapid growth in scale and scope comes as the Mexican beer portfolio of one of Reyes’ main suppliers, Constellation Brands, sees sales that well ahead beer in general. But it also comes like the federal government and California regulators are responsible for reviewing Reyes for possible anti-competitive practices.
Reyes’ ties to arguably the nation’s most important beer company – and the wholesaler’s ability to buy in markets where he can also influence how beer is ordered, moved and placed on shelves – not only cements the level of beer distribution, but power throughout the industry. As Reyes goes, so goes American beer.
WHY IS IT IMPORTANT
There’s no reason to think Texas couldn’t be another California for Reyes. The Lone Star State is a particularly strong beer territory, with sales performing better than the rest of the United States. For the rolling 52 weeks ending September 11, the beer category in Texas declined -2.5% while this category declined -5.6% nationally. . Year-to-date, 13% of all beer sold in retail chains nationwide has been sold in Texas stores, and growth is being driven by the import category, where Constellation (and now Reyes) has the opportunity to deepen ties.
“Texas and Tennessee, in particular, have been on our radar due to the growth both markets have seen over the past several years,” a spokesperson for Reyes said via email.
Nor does it appear that regulatory review will slow the pace of Reyes’ acquisitions.
“Whenever we have the opportunity to engage in a transaction, including with Capitol Wright Distributing, Paradise Beverages and DET Distributing Company, we work with applicable state and federal regulators to ensure the transaction is reviewed and approved in accordance with the letter of the law. “, said the spokesperson by e-mail.
Through his purchase of Capitol Wright, Reyes will earn 16 million cases of beer and flavored malt beverages from some of the state’s most popular brands. These include Constellation Brands (Modelo, Corona, Pacifico), Gambrinus (Shiner), Boston Beer Co. (Twisted Tea, Truly), Mark Anthony Brands (Mike’s Hard Lemonade, White Claw), Diageo (Lone River Ranch Water), Yuengling (who entered Texas last year with much fanfare), and Texas craft brands including Saint Arnold Brewing Company. Last month, Sierra Nevada Brewing Co. announcement it would end three distribution deals aligned with Anheuser-Busch InBev (ABI) in California in favor of Reyes; Whether he will make similar moves in Texas after the Reyes/Capitol Wright deal remains to be seen.
As in California, Constellation’s Mexican imports will be Reyes’ lead horse in Texas. Sales of imported beer—of which 80% comes from Mexico in national data – followed an upward trajectory in Texas. Imports have increased their share of overall beer sales in this state from 15.6% in 2018 to 20% of year-to-date sales in 2022. The vast majority of these beers are nested within the Constellation portfolio , which Reyes is aligned with.
California and Texas are also border states with large Latinx populations:
40.2% of Texas residents identify as Hispanic/Latino according to 2021 US Census Bureau estimates; California has the same percentage.
It is not only significant that Latinx drinkers are consumers of Mexican imports, but that they are consumers of beer in general.
According According to the National Institutes of Health’s National Institute on Alcohol Abuse and Alcoholism, beer is the preferred drink of all Hispanic groups.
[Good Beer Hunting typically uses the term Latinx in place of Hispanic, but will retain the word Hispanic when it is the terminology used by a data-collecting body in order to preserve the integrity of that data.]
Texas entry moves Reyes forward rivalry with ABI-aligned wholesalers, a dispute that began in the Golden State. This adds fuel to the fire as imports boost sales and premium light beers like Bud Light continue to decline (-9% last year). Reyes’ distributor takeovers in Tennessee and Texas were both Molson Coors (MC)-aligned wholesalers, creating a scenario in which the prime-time battle in years to come is not between the so-called “red (ABI) and blue (MC)”, but between “red and gold (Constellation)” houses. Given his Constellation-aligned portfolio, Reyes has a strong wind at his back.