A federal investigation into alleged bribery involving the nation’s largest alcohol distributor has reached a resolution.
Southern Glazer’s Wine & Spirits has agreed to pay $12.5 million and accept a series of compliance requirements to resolve a federal investigation into improper payments, gifts and false invoicing involving employees of the country’s largest wine and spirits distributor.
The Florida-based company entered into a two-year non-prosecution agreement with the U.S. Attorney’s Office for the Northern District of California announced Sept. 10. Under the agreement, Southern Glazer’s admitted responsibility for conduct by employees who provided improper benefits to alcohol retail employees and used third-party vendors and falsified invoices to conceal some of the payments. The company will pay $12.5 million to the U.S. Treasury and continue cooperating with investigations and prosecutions stemming from the case.
Details From The Southern Glazer's Investigation
The conduct outlined by federal prosecutors went well beyond routine entertainment expenses. According to the agreement’s Statement of Facts, Southern Glazer’s employees and suppliers used outside vendors to fund prepaid gift cards, luxury goods, travel and other benefits. Some Southern Glazer’s employees also received off-book sales incentives known internally as “creative incentives,” which were sometimes held as personal travel funds rather than processed through company payroll.
Federal investigators detailed benefits provided to Patrick Briones, an alcohol buyer for a major California grocery retailer, including prepaid gift cards worth as much as $1,000 each, a Rolex watch, a Gucci bag and trips to destinations including Hawaii, Las Vegas, Pebble Beach and Cabo San Lucas. In one example cited in the agreement, a $20,000 invoice described as a retailer “educational seminar” was instead used in part to cover a Maui resort stay for Briones and a relative. Other invoices concealed expenses for golf trips, casino chips and entertainment.
The Statement of Facts also includes text messages that prosecutors say illustrated how the arrangements worked. In a 2020 message cited in the agreement, one supplier executive wrote, “Extortion fees arrived,” while arranging delivery of payments. In another 2023 exchange concerning whether a wine would remain on a retailer’s sales plan and receive prominent placement, Briones asked whether a supplier had “a kicker,” and a Southern Glazer’s executive responded, “yessir!! 1k.”
A selection of the Jim Beam brands distributed by Southern Glazer's Wine & Spirits. Photograph courtesy of Jim Beam.
Southern Glazer’s Is The Country’s Largest Distributor
Southern Glazer’s traces its roots to two family businesses. The Glazer family entered alcohol distribution in Texas following the repeal of Prohibition in 1933, while Southern Wine & Spirits was established in Miami in 1968. Southern became the largest U.S. beverage alcohol wholesaler by 1992, and the two companies combined in 2016 to create Southern Glazer’s Wine & Spirits. Today the company operates across 47 U.S. markets and Canada.
Its supplier network includes some of the biggest names in American whiskey. Southern Glazer’s has a long-term distribution relationship with Suntory Global Spirits, whose portfolio includes Jim Beam, Yamazaki, Old Overholt and Knob Creek, while Heaven Hill Brands says Southern Glazer’s distributes its portfolio across nearly 80% of the country.
Southern Glazer’s Avoids Prosecution
Under the agreement, Southern Glazer’s accepted responsibility for the conduct described in the government’s Statement of Facts. In exchange, federal prosecutors agreed not to criminally prosecute the company for that conduct as long as it complies with the agreement. The $12.5 million payment will be made in two installments, with half due within 15 business days and the remainder within 12 months.
The agreement also requires Southern Glazer’s to maintain strengthened compliance measures and continue cooperating with federal investigators. In a statement issued following the DOJ announcement, Southern Glazer’s President and CEO Wayne E. Chaplin said the company had “redoubled our efforts” to strengthen its compliance program. The company also said it accepts responsibility for the conduct and compliance failures covered by the agreement, while noting that the investigation focused primarily on activities that occurred in past years.
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