The failure of a new Republic National Distributing Corp. warehouse to work as planned is the biggest threat to the middle tier since the U.S. Supreme Court okayed direct shipment of wine by vintners.
In fact, it may be a bigger threat.
After all, the only reason for a distributor is to deliver products to retailers. But if the distributor can’t deliver orders, what is the retailer to do?
The answer: Drive to the warehouse and pick up your orders yourself.
In Michigan, Liquor Control Commission says it has logged more than 800 complaints in November. The Michigan LCC chairman, Pat Gagliardi, says the problems show what can happen when a distributor has a large share of the market.
Pam Hamilton, director of the commission’s financial management division, says problems with the new system are “definitely worse.”
It turns out that these problems have been festering for a long time, and have gotten worse.
Republic National’s delivery woes have cost the state $58 million in gross sales, resulting in a $7 million lost liquor taxes. “We could be getting anywhere close to $100 million by the end of the year,” Hamilton said, citing missing invoices dating back to August.
The new 500,000-square-foot warehouse in Livonia, Mich., became operational in July when the company began gradually moving its distribution operations there from warehouses in Brownstown Township and Grand Rapids. Because of the distribution glitches, Republic National has moved 20 percent of its business back to the Brownstown Township facility, Gagliardi said.
The LCC has received 762 written complaints about Republic National’s service from on-premise and off-premise operators since Nov. 8. It’s also gotten 85 phone complaints.
Michigan’s system involves the state buying liquor from suppliers and then selling it to RNDC, which in turn sells it to retailers.