The TV series “Halt and Catch Fire” offered a dramatized take on the impact of the creation of the personal computer market in the 1980s as well as the initial days of the World Wide Web in the ‘90s. In an interview upon the shows completion with USA Today in 2017, co-creator Christopher C. Rogers is quoted for saying: “One of the show’s themes is about reinvention ― that tech is about failing fast and changing quickly. That felt like it gave us license to do that.”
In today’s beverage market, change in consumer preferences also is happening quickly, resulting in brands and distributors reinventing portfolios and go-to-market approaches. Leading North American beverage wholesaler Breakthru Beverage Group recognizes these changes and the impact they’ve had on the U.S. alcohol market.
“The market has been challenging to predict over the last several quarters due to a variety of factors, from the rate of inflation and price increases to normalizing retail and staff shortages,” says Tom Bené, president and CEO at Breakthru, New York. “But we’re cautiously optimistic. The industry is projected to grow in value by roughly 3.5-4% over the next five years, mostly driven by spirits.”
As the industry has grown, Breakthru has continued to gain market share, and expand it footprint during this time, Bené says. But the alcohol market also has seen a deceleration in growth, he adds.
During this time, the company has seen consumers gravitate toward premium products as well as innovative flavors and ingredients, Bené explains.
“This is also true for wellness-focused beverages, a small but emerging category that is growing in popularity this year as consumers look to expand their options,” he says. “Whiskey and tequila have seen tremendous growth this year, along with sparkling wine, led by Prosecco. And of course, [ready-to-drink] (RTDs) have been the talk of the business over the last several quarters. Much of the growth in that space is driven by spirit-based beverages from core suppliers and entrepreneurs alike.”
Noting the relevance of trends that emerged during the pandemic, Bené says these trends still hold true as consumers navigate inflation concerns.
“Many consumers continue to enjoy more at-home entertainment, rather than dining and drinking out,” Bené says. “We’re also seeing a surge in small-format retail that offers trending, high-quality products in a convenient shopping format as well.
“Breakthru is also working to recruit the Gen Z consumer, and we’re excited by the challenge this generation presents,” he continues. “For example, 45% of Gen Z-ers who are 21-plus abstain from alcohol. Understanding their shopping behaviors, how they view bev alc, other alternatives and what interests them are factors we constantly evaluate to help our customers reach this group.”
Given these variables, Bené pinpoints the ways that Breakthru has cultivated a company with a brand-building mindset that has allowed the company to evolve while focusing on the end consumer.
“First, we’re building an enhanced route-to-market model with a consumer-centric approach to portfolio strategy,” Bené says. “That includes two specialized portfolio teams: Aspect, which focuses on fine wine; and Trident, for emerging beverages. Aspect represents Breakthru’s overall commitment to fine wine and offers partners the experience of working with a small, specialized wine operation while taking advantage of the benefits of a large wholesaler, including our digital capabilities and strategic insights. With Trident, we offer a personalized approach and route-to-market strategy that helps young, emerging brands grow into household names. This includes non-alcoholic alternatives, too.
“These teams, along with our teams focused on core suppliers, ensure we are offering our customers a high-quality, well-rounded portfolio that appeals to the consumers they serve,” he continues. “Consumer preferences shift quickly, and we pride ourselves on aligning our portfolio to their desires.”
Another way the wholesaler has adapted to this market is through BREAKTHRU NOW, the company’s proprietary eCommerce platform, which allows it to stay ahead of trends and fulfill consumers’ evolving demands.
“Though we have seen tremendous success with the platform and recently surpassed $300 million in lifetime sales, we continue to evolve and innovate the platform,” Bené explains. “We just launched an AI tool within BREAKTHRU NOW that learns from each customer and offers personalized recommendations, similar to other popular online shopping platforms. This tool will expedite and improve their ordering experience.”
For all these reasons and more is why Beverage Industry has selected Breakthru Beverage Group as the 2023 Wholesaler of the Year.
Rooted in family
With more than 9,000 associates and annual sales of more than $8 billion, it can be easy to forget that Breakthru Beverage is a company rooted in family. Originating in 2016, Breakthru Beverage was created from New York-based Charmer Sunbelt Group and Wirtz Beverage Group, Chicago, two family-run distributors of wine, spirits and beer.
W. Rockwell (Rocky) Wirtz, who suddenly passed away in July 2023, and Charles Merinoff leveraged their years of knowledge of the wholesale community to lead the new organization as co-chairmen of the Board.
The amalgamation of these two businesses did more than just combine operations, it brought together family roots, which continue to be an important part of the company today.
“Everything we do at Breakthru is rooted in our family values, and we have dedicated, experienced region and market leaders who ensure that our operations are consistent so that we live out those values from top to bottom,” Bené says. “Some cross-market efforts to support our culture and values include our Associate Resource Groups, which give diverse people from across the company the opportunity to gather around a shared identity or cause. We also consider culture and values when we evaluate M&A candidates, like with Wine Warehouse, our most recent acquisition in California. It was important to us that our cultures meshed well, and we even did a culture analysis to ensure that we integrated well as we became the Breakthru California team.”
As Bené noted, earlier this year, Breakthru Beverage acquired Wine Warehouse, allowing the company to accomplish the major milestone of expanding into California.
“It not only gave us a presence on the West Coast, but there was also a fantastic team already in place,” he says. “They had a great book of business and many of our suppliers had been encouraging us to enter California, so we knew it was the right time for us to enter this key strategic market. We are pleased with how things are going, and we see tremendous growth opportunities there.”
Bené says the same holds true for its recent acquisitions in Missouri and Minnesota.
“For every M&A effort we undertake, we look for the best partners with existing assets and partners of their own that will integrate well into Breakthru,” he says.
In the approximately seven years that Breakthru Beverage has been serving communities in the United States and Canada, the company has not only expanded its physical footprint but also deepened its portfolio while still delivering the same service that its partners have come to expect.
“Our expansion efforts are successful because we make holistic investments in the business to maintain Breakthru’s standards of service,” Bené says. “While expanding geographically, we invest in resources, infrastructure, operations and logistics in new and existing markets — all the elements that make us an excellent distributor partner.
“This helps us quickly improve our service offerings for existing partners and attract new partners who like our focus on being the easiest distributor to work with,” he continues. “Deploying integration teams during these activities also helps us keep the focus on our core business while maintaining a relatively flat organizational structure that keeps our operations relatively simple and responsive.”
Given the impact M&A can have on operations, Bené details the care and thought that goes into integration practices to support all parties involved.
“We deployed an integration team that worked diligently to ensure there were no disruptions during the transition for any of our stakeholders, including the former Wine Warehouse associates who essentially became our Breakthru California team,” he says. “For example, customers and suppliers continued to work with the same representatives, while we worked to onboard the market into our organizational structure and equip our new associates with additional capabilities needed to be even better partners. We are also in the process of adding significant resources to help us reach new customers and better serve existing customers and parts of the market.”
Bené adds that training and development is an important aspect for associates at all levels of the company.
“We pair some of the top industry certifications, like WSET with trainings from our internal learning and development team to provide instruction on our digital capabilities, industry and consumer trends and more,” he explains. “We are able to stay nimble and responsive because our people are equipped with the knowledge and capabilities to do so, which in turn provides the best possible experience for our partners.”
Whether Breakthru will look to expand its operations beyond the more recent acquisitions, will depend upon not just geography, but also the cultural fit that Bené highlighted earlier.
“Breakthru has a bold vision for continued geographic expansion and base business growth,” he explains. “We consistently look at M&A opportunities in new and existing markets and are always looking for smart ways to grow our business to better deliver on behalf of our partners. As was mentioned earlier, cultural fit is important to us, and having said that, we are also interested in expansion opportunities beyond M&A, including partnerships, joint ventures and other ways of working with new partners to provide the best services to our suppliers and customers.”
Leading by example
Balancing consumers’ desires for legacy brands as well as an eagerness to try new things, Breakthru has developed a portfolio with this need state in mind.
“As a leading total beverage alcohol distributor, we pride ourselves on working with many of the top suppliers and most-recognized brands across all categories, as well as many exciting, emerging brands that we incubate through our Trident portfolio,” says Kevin Roberts, chief commercial officer at Breakthru. “Diageo, Brown Forman, O’Neil, Gallo, Moet Hennessey, Tito’s, William Grant & Sons, Duckhorn and Treasury Wine Estates are some of our top wine and spirits partners, with robust portfolios our customers demand.
“In beer, some of the larger suppliers include Molson Coors, Mark Anthony, Constellation and Heineken, as well as a slate of great regional and local brewers across our markets,” Roberts continues. “Red Bull and Keurig Dr Pepper lead our non-alc segment, and Recess is one of our top partners in the CBD beverage space. Our specialized portfolios, Aspect for fine wine and Trident for emerging and craft beverages, round out our portfolio offerings with some unique partners. Through Aspect, we work with Rombauer Vineyards, Wilson Daniels, Silver Oak and Folio. Blue Run Whiskey, Mijenta Tequila and Michter’s American Whiskey are some of our top Trident partners.”
The creation of the Aspect fine wine team not only allows the team to work with unique suppliers, but also is helping to tap into the premiumization trends influencing various consumer purchases.
“Premiumization is having a deep impact across our portfolio, especially in wine, tequila and whiskey,” Roberts explains. “We’re seeing it across the board, from our regular portfolio offerings to our specialized strategies in Aspect and Trident. In fact, premiumization is part of why we created our Aspect fine wine team—we saw the boom in premiumization coming in that space and wanted to be a leader in offering a fine wine solution to our partners.”
Breakthru also is keeping close watch on spirits categories that are garnering headlines such as tequila and mezcal, though Roberts notes that mezcal still accounts for only a small share of the total agave segment.
“Compared to all spirits, tequila has been the fastest growing category and a large contributor to overall spirits growth, making up 50% of spirits growth over last two years,” he says. “We anticipate continued strong growth in the years ahead.”
Although Breakthru might be well-known for its wine and spirits activations, the company’s understanding of consumer shopping habits has resulted in operating as a total beverage alcohol portfolio to meet those need states through a diverse portfolio ― including beer ― Roberts explains.
“Launching Yuengling in St. Louis is a great example of that — we have seen an incredible acceptance and excitement around this brand from consumers in the St. Louis market,” he says.
Highlighting Breakthru’s focus on meeting consumer demands, Roberts adds that the wholesaler has become increasingly interested in alcohol alternatives as well as wellness-focused solutions. In late 2022, Breakthru announced a national partnership with non-alcohol brand Lyre’s
“Our partnership with Lyre’s is a perfect example of how our specialized Trident portfolio can work with these types of brands,” he says. “We saw non-alcoholic alternatives performing well and knew we needed to get into this space with the best partners, and Lyre’s was at the top of the list.”
Recognizing that non-alcohol (NA) solutions remain niche in terms of share, Breakthru anticipates these alcohol alternatives will continue to accelerate, Roberts says.
“NA beer has been successful with brands like Heineken 0.0, and NA spirits and wine are growing more successful at lower price points,” he says. “Innovation has helped attract more consumers into the space and rising awareness of the benefits of moderation will continue to drive activity.”
With such a diverse portfolio, Breakthru has ensured that its sales and distribution personnel are equipped with the latest in technology.
As Bené noted earlier, the wholesaler offers its proprietary eCommerce platform, BREAKTHRU NOW, where it has added artificial intelligence (AI) capabilities.
“Our eCommerce platform BREAKTHRU NOW is a great tool that supports our sales staff by eliminating the need for them to spend time on small administrative tasks, freeing them up to focus on personalized, consultative selling with our customers,” says Julian Burzynski, chief operating officer at Breakthru. “Recently, we upgraded the site with enhanced, AI-driven merchandising and personalization so each account sees the products that are most relevant to them in that moment.”
Burzynski adds that onboarding time for associates can be completed in as little as a one-hour training session.
“Simplicity is one of the great things about the site,” he explains. “Customers can sign up in as little as five minutes ― all they need is their account number and most recent invoice and they’ll be on their way.”
Noting that some tools will take only 15 minutes while others might take months to reach a level of comfortability, Burzynski explains that the learning and development teams work “tirelessly to onboard new associates to all our tools as well as providing ongoing trainings for the entire organization throughout the year.”
The company also utilizes programs that can provide direction, drive execution and track performance, Burzynski says.
“Our internally created performance management application allows us to provide smart, directional goals to our sales associates to achieve sales goals,” he says. “This tool is directly connected to the sales associate’s CRM as well as the organization’s CPG Data. CPG Data collects roughly 2 million points of activation data across our footprint each year, enabling us to provide very robust supplier execution to our supplier partners.”
But field operations is not the only way that Breakthru is equipping operations for the future. The company actively is engaged with automation integration to streamline warehouse and distribution centers’ productivity.
“In Cicero, Illinois, we have a high-density storage system with embedded case picking modules, which include five tiers of full pallet storage or 25,000 pallet spots, and use high-speed cranes for pallet put-away and automated replenishment to pick lines,” Burzynski says. “Our case shuttle system in Colorado is an automated system for the storage and retrieval of individual cases that helps us process returns and efficiently handle low volume SKUs. At the end of July, we automated a number of warehouse capabilities in California, including a conveyor automation upgrade, [which] will increase our capacity and ability to better service the market.”
For Breakthru’s drivers, the wholesaler utilizes routing systems and GPS tracking technology to support efficiency as well as truck tracking technology to ensure the best and safest driving practices, Burzynski adds.
These aspects are helping make Breakthru a leader in the future of wholesaler operations.
Remembering a visionary
When Beverage Industry was discussing the 2023 Wholesaler of the Year nominations, Breakthru Beverage Group stood out for the many reasons discussed in the annual feature article. However, the timing of the article was bittersweet as the decision to profile Breakthru came as the company announced the passing of Co-Chairman W. Rockwell (Rocky) Wirtz.
In a memoriam shared across the Wirtz Corporation business entities, including Breakthru Beverage Group, son Danny Wirtz shared: “Our hearts are very heavy today. Our dad was a passionate businessman committed to making Chicago a great place to live, work and visit, but his true love was for his family and close friends. He was a loving father, a devoted husband to Marilyn, a brother, a nephew, an uncle and a doting grandfather to his six remarkable grandchildren. His passing leaves a huge hole in the hearts of many and we will miss him terribly.”
Rocky and Charles Merinoff co-founded Breakthru Beverage Group in 2016 because of a shared vision of their core values.
“In forming Breakthru, Rocky and Charlie Merinoff both saw the potential to think differently and build a better business,” says Kevin Roberts, chief commercial officer at Breakthru. “There’s something special about a legacy, family-owned business that operates with those traditional core values while thinking and operating with dynamic, strategic insights and capabilities that keep them ahead of the game and delivering for partners. They both saw the opportunity with the creation of Breakthru to be a true leader in this industry not just in terms of performance, but also in terms of culture and partnership.”
Roberts pinpoints the value that Rocky placed on building strong, authentic relationships, which could be seen in all that he did while working in the wholesale community.
“He had a supplier-first mindset and enjoyed being in the trade, talking with suppliers and customers about the evolving landscape and how Breakthru could provide more value,” Roberts says. “He was an active member of WSWA, serving on the Board of Directors for 20 years including one term as chairman and receiving a Lifetime Leadership Award in 2014.”
Roberts adds that this mentality extended to the associates at all levels of Breakthru.
“It was important to him that the family leadership be accessible to everyone and that Breakthru had a flat organizational structure,” Roberts notes. “He had a personal touch and care for associates that impacted everyone who knew him. Lastly, he was very operationally minded and enthusiastic about using technology to simplify and improve service levels. He was proud of Breakthru’s operational efficiency and reach — the work he did with Diageo and Canada in 2013 to take then Wirtz Beverage international was a big moment for him.”
The impact that Rocky left on the wholesale community, though, is not just exemplified by his list of contributions, but has been seen by the kind words that his contemporaries shared following the news of his passing.
“The outpouring of love and support from our friends in the beverage alcohol industry has been tremendous, from suppliers, wholesalers and customers alike,” Roberts says. “It has meant a lot to us at Breakthru and to the Wirtz family, and it is truly demonstrative of Rocky’s impact on our industry. He will be remembered as a titan of our industry, but his legacy will be one of kindness and respect for everyone, above all else.”
Yet, the members of Breakthru will look to continue Rocky’s legacy in many ways, including the Blackhawks Foundation as he was the principal owner and chairman of the Chicago Blackhawks prior to his passing.
“We are looking at many ways to honor Rocky, but chief among them are opportunities to bring our associates together and celebrate his life,” Roberts says. “We held a ‘Remembering Rocky’ day across all our markets in early August that included shared meals, a moment of silence and other tributes. He would have wanted people to come together and have a good time, so we made sure of that.
“We encourage everyone interested in honoring Rocky to donate to the Blackhawks Foundation, whose mission of creating a healthier, smarter and more secure world for children and families throughout Chicago was very close to Rocky’s heart,” he continues. “Above all, our role in preserving his legacy will be to continue his work at Breakthru — striving to be the best wholesaler partner in the industry by leading with the family-first values he instilled in the company.”