RNDC’s California Exit Poses Distribution Challenge for TWE

RNDC’s California Exit – A Strategic Crossroads

Treasury Wine Estates (TWE), a leading player in the global wine market, has announced that Republic National Distributing Company (RNDC), one of its key distributors, will cease operations in California effective September 2, 2025. This move marks a significant change in TWE’s distribution landscape within the United States, particularly in California, which represents a substantial portion of its sales footprint.

RNDC’s California operations have historically accounted for approximately 25% of Treasury Americas’ net sales revenue, with California alone contributing around 10% of TWE’s overall group net sales revenue in the first half of FY25. The decision to end distribution in this critical market segment forces TWE to urgently evaluate alternative arrangements to maintain its presence and momentum in California’s competitive wine sector.

Financial Outlook and Market Implications

Despite the disruption, TWE expresses confidence in its ability to manage the transition smoothly, citing its extensive experience with distributors and a strong US network. The company anticipates that the closure of RNDC’s California operations will not materially impact its overall financial results. However, it has revised its FY25 earnings before interest and taxes (EBIT) outlook slightly downward to approximately $770 million, from a previous estimate of around $780 million.

This revision reflects lower expected shipments in the US, influenced by economic uncertainty and softer consumer demand, particularly in the price-sensitive segment below US$15 per bottle. While these factors weigh on near-term performance, TWE’s premium portfolio remains a key driver of resilience and growth potential.

RNDC’s Continued Commitment Beyond California

Importantly, RNDC has reaffirmed its commitment to supporting TWE’s portfolio in the remaining 24 US states where it operates. This ongoing partnership outside California provides a stabilizing factor as TWE navigates the distribution transition. The company’s proactive approach to identifying new distribution partners in California will be critical to sustaining its market share and brand presence in this influential region.

Looking ahead, TWE’s management will need to balance the challenges of re-establishing distribution channels with the broader economic headwinds affecting consumer spending on wine. The company’s ability to adapt quickly and leverage its premium positioning could determine how effectively it mitigates the impact of this disruption.