Michigan Fines Liquor Distributor $3M Over Supply Shortages
Michigan on Wednesday announced a $3 million fine against the state’s largest liquor distributor over delays in shipping booze to vendors.
NWS Michigan, which does business as Republican National Distributing Co., acknowledged 88 violations of state law to settle an investigation stemming from liquor supply shortages in late 2019. The deal requires an independent audit of the business, puts it on probation for a year and requires the company to submit monthly compliance reports.
Attorney General Dana Nessel and Michigan Liquor Control Commission Chairman Pat Gagliardi called the penalties unprecedented in liquor regulatory circles.
“The state will not tolerate vendor mismanagement that results in financial hardship which impacts the livelihood of liquor retailers across Michigan,” Nessel said in a statement.
The state said the distributor’s “logistical failures” — tied to a consolidation of operations from facilities in Grand Rapids and Brownstown Township to a new one in Livonia — began in the spring of 2019 and contributed to shortages that extended through the end-of-year holiday season. The state received hundreds of complaints from liquor retailers that could not stock their shelves.
The Liquor Control Commission, which is the sole wholesaler of liquor in Michigan, uses three private distributors. Republican National Distributing has two-thirds of the market, selling 6.6 million cases to 9,200 on-premise licensees such as bars and 4,600 off-premise licensees such as grocery stores during the last fiscal year.
The distributor received $48 million in fees in 2018, according to the state.
“We are glad to have this matter behind us,” said Joe Gigliotti, the company’s regional president of control states. “We have apologized for the short-term difficulties that startup problems caused our customers and the state. But we also know RNDC is providing even better service today thanks to our investment in Michigan, and we plan to be an exemplary partner with the state for years to come.”
Texas-based Republican National Distributing has operations in 23 states and Washington, D.C.