When Adam Spiegel founded Sonoma Distilling Company in 2010, it was the 15th distillery to open in California. Now the Golden State boasts more than 300 distilleries, more than any other state, and Spiegel is embarking on a new chapter aiming to help revitalize what he calls a “broken three-tier system.”
Spiegel announced the launch earlier this week of Freebrook Imports, a boutique spirit distribution and import company that will initially operate in Northern California. Freebrook will be headquartered in Sonoma County, where Spiegel grew his whiskey business before launching and serving as president of Corning & Company, an industrial services program that takes on production, packaging and warehousing for other spirits suppliers. Spiegel will remain as a consultant at Corning & Company, but with 2,700 distilleries now in the U.S. and a consolidated three-tier landscape, Spiegel sees his next task as expanding the paths to market for emerging brands.
‘It’s not a surprise that the three-tier system is a bit broken,” he said. “It in many ways benefits the bigger brands, and there aren’t many people out there really ringing the bell to help provide services to emerging brands.”
Simmering tensions over distribution have come to a boil in recent years, as slower spirit sales pile the pressure on all tiers. The top 10 wholesalers now hold 80% of market share with the top two – Southern Glazer’s Wine & Spirits and Republic National Distributing Company – accounting for more than 50%, according Shanken’s April 2024 Impact Newsletter.
As major distributors have scooped up smaller regional houses, groups like the American Craft Spirits Association (ACSA) argue that increasing power tips the scale against smaller craft brands that need to develop regional footprints. According to a 2024 ACSA survey on distribution, most craft distillers (72%) are seeking distribution in one or more states, but just over half of them (51%) have been turned down and 22% have given up looking.
“There is a hole in the market that exists,” said Spiegel.
The new business is a return to Spiegel’s roots, when he owned a small distribution company before buying out his partner and taking over Sonoma Distilling Company. But things have changed since the 2010s and Spiegel aims to introduce “innovative distribution pathways” that blend traditional channels with direct-to-consumer (DTC) strategies. Routes to market will be custom – regional, state, chain or even DTC only – he said, but those decisions will still be based on old-fashioned strategies.
“Many distributors nowadays are not building the relationships with the retailers, restaurants and bars that they need to and they’re not building the rapport with the brands to help them actually make the right decisions and put their resources where they need to,” he said.
Spiegel is looking to fill his book with brands that aren’t available in the market, and will be working on building custom private labels as well, which can now be sold directly to on- and off-premise retailers. Whoever joins the portfolio will need to answer key questions.
“Why should your brand come to California? What is it about your brand that makes you a good fit for California? Not only that, but what is it about your brand that speaks for change, or does it not?” he said.
A small distributor won’t be without headwinds: a lack of bigger brands means the company won’t be able to compete on price deals or possibly meet certain minimum order quantities to start. He’s hopeful that with a book of unique brands he can at least offer mixed cases.
“I think we can take a different route by just providing a good service, by telling a really good story about who the brand is and why they exist and why they’re important to that retailer,” he said. “And then I think we can begin to economize by being able to bring on more brands and consolidate shipments and still be able to offer some really competitive pricing.”
Freebrook will cover Northern California before making its way to the rest of the state. The business license covers adult non-alc products, beer and wine as well, which could eventually come into the fold. As he is in talks to grow his staff, Spiegel may benefit from some of the restructuring in the third tier.
“Unfortunately for the industry, the big distributors have let go of some amazing salespeople, and there’s some really good talent out there who are still hungry and still want to accomplish something in this industry,” he said.