I have spent more of the last two years than I would have expected in conference rooms with distributor executives. Not because I sell to them. Because the smart ones have started asking a very specific question, and the question is more important than anything the trade press is reporting.
The question is some version of: "if the brand knows the customer better than we do, what exactly are we selling anymore?"
That is the sound of a business model realizing it needs a new one, in real time, out loud, in front of a guy who runs a first-party data platform. And whatever the answer turns out to be, it is going to redraw the map of consumer goods over the next five years. Not just in spirits. In every category with a middleman between the brand and the customer.
For the readers who don't live in beverage alcohol, here is the architecture. In the United States, alcohol is sold through a regulated three-tier system. Producers sell to distributors. Distributors sell to retailers and on-premise accounts. The middle tier is where the market power has historically sat. Two companies, Southern Glazer's and Republic National, together move a large share of the wine and spirits in this country. Their sales reps are the people who decide whether your brand gets the shelf placement, the menu listing, the back-bar pour, the endcap at the chain that matters. For decades, if you were a brand, the middle tier was a black box. You sold in. Somebody else took it from there. You got depletion reports and IRI scans and a quarterly business review where a distributor executive told you what they thought you needed to hear.
That model is breaking. And it was always bullshit.
It is breaking for three reasons that are true in beverage alcohol and also true, at some depth, in almost every category with a distribution layer between the brand and the customer.
The first is that consumer behavior has fragmented in a way the middle tier was never designed to handle. The old distributor playbook was built for a world of national brands, big bets, broad demographics, and a handful of category-defining SKUs on every shelf. That world is not coming back. The world we are actually in has thousands of craft brands, hyper-local preferences, generational fault lines that turn on a five-year age gap, and a long tail nobody in the middle has the time or the data to service properly. Distributors are drowning in SKUs. Retailers are drowning in choices. Nobody in the traditional operating model has enough signal to make a coherent bet, and everybody knows it.
The second is that retailers and on-premise accounts have woken up to first-party data, and they are not going to give it back. The Total Wine of 2026 knows more about its customers than its distributors do. The fine-dining group running thirty restaurants across three cities knows which bottle moved at which table at what time of night. The Sephora, the Ulta, the Target, the Kroger. All of them have spent the last decade building consumer intelligence infrastructure that their upstream partners never bothered to build. The retailers are becoming the source of truth. The middle tier is becoming the last to know.
The third is the one most people miss, and it is the most consequential. The consumer now has a direct relationship with the brands she loves that bypasses the middle tier entirely. She follows the founder on Instagram. She joins the club. She visits the distillery. She signs up for the newsletter. She books the experience. Every one of those interactions generates signal that the brand can see and the distributor cannot. Fifteen years ago the distributor knew the customer better than the brand did. Today, at brands that have built the right infrastructure, that fact has completely inverted. The brand knows the customer. The distributor sees a purchase order.
Now let me tell you what this pattern looks like when it plays out over thirty years in a category that seemed unbreakable.
I have been shaving with Gillette razors exclusively since I was thirteen years old.
When I started, Gillette had somewhere around 70% of the US wet-shave market. It was a category-defining monopoly, the kind of dominance Warren Buffett once described as one of the great franchises in American business. Gillette owned the shelf. Gillette owned the innovation cycle. Gillette owned the male grooming customer, or so it looked from the outside. Today, that share has fallen to something in the mid-40s, and the loss of roughly 25 points of market share in fifteen years is one of the most instructive case studies in modern consumer marketing.
Procter and Gamble has no idea who I am. They have never known who I am. I have been buying their product every four to six weeks for three decades. I have paid them thousands of dollars over the course of my adult life. And if you asked P&G's CRM system to tell you a single fact about Jonathan Yaffe as a razor customer, the answer would be nothing. No email. No purchase cadence. No blade preference. No birthday. No shipping address. Nothing at all.
Meanwhile, the DTC brands that ate Gillette's lunch, the Harry's and the Dollar Shave Clubs of the world, built businesses on knowing exactly who their customers are. They see the reorder rate, which tells them the beard type. They see the frequency, which tells them the shaving habits. They see the shipping address, which tells them where their customers live and work. They have the email, which means they can talk to their customers directly whenever they want. They know the birthday, because they asked. They know which product got returned, which sample got upgraded, which referral came from where, and which customer is about to lapse based on a change in reorder rhythm. All of it lives in an operating system that treats the customer as a compounding relationship, not as an anonymous cash register transaction.
The distinction between Gillette and Harry's is not that Harry's has a better razor. The razor is fine. Gillette's razor is arguably better. The distinction is that Harry's built a business model on knowing the customer, and Gillette built a business model on paying rent to a middleman and hoping the customer showed up.
For a hundred years, that worked. The retailer and the middle tier knew the customer well enough. The brand did not need to. And then the middleman's data advantage evaporated, DTC collapsed the shelf-space bottleneck, and Gillette woke up on a Tuesday to find that a company started by a few guys with a viral YouTube video had walked off with a quarter of their market share.
That is the middle-tier compression I am describing, playing out over three decades in a category that seemed unbreakable to anyone who was buying razors in 1998.
The Gillette story is not unique. It is the pattern for every category that has spent the last generation letting somebody else own the customer relationship. Beauty brands versus their retail partners. CPG brands versus their grocery chains. Apparel brands versus their wholesale accounts. Toy brands versus their big-box buyers. Anywhere a middleman has been the source of truth about the customer, the source of truth is moving upstream to the brand and downstream to the retailer at the same time, and the middle is getting compressed from both sides.
Here is what I have actually watched happen inside the middle tier over the last two years, and it is not the graceful pivot I wish I could write about.
Most distributors are not repositioning. They are contracting. The economics of the traditional model have gotten worse every quarter for the last five years, and the response from most of the major players has been the response of a business in decline: cut the long tail, consolidate the book, focus the sales force on the twenty accounts that still write big checks, and ignore everybody else. If you are a craft brand doing under a million cases a year, you already know this. Your rep does not call you back. Your allocations get cut. Your promotional support disappears. Your placements get quietly killed to make room for whatever national brand paid for the endcap this quarter. The middle tier is not becoming a data partner. It is becoming a bottleneck that only serves the customers big enough to force it to.
The brands still getting attention are the top twenty percent of the distributor's book, and even those brands are getting a version of the relationship that would have been considered inadequate a decade ago. Real market intelligence has been replaced by depletion reports that arrive late and mean less. Sales rep tenure has collapsed. Institutional knowledge has walked out the door with every reorg. The QBRs have become presentations of numbers everybody in the room already knew, with no coherent story about what to do about them.
The reason the middle tier is not evolving is structural. Distributors are private, family-controlled, or private-equity-owned businesses whose entire economic model was built on a scarcity that no longer exists. Their margins come from being the only path to the shelf. When that scarcity dissolves, and it is dissolving now on both sides, the rational move for the current owners is to harvest the business rather than reinvent it. Reinvention requires patient capital, technology investment, cultural change, and a five-year vision that would be hard for any consumer business to fund right now, let alone one whose owners are watching the value of their franchise erode in real time.
I have been in conversations with executive teams at the major distributors, and I want to be careful here about what I say publicly. Some of the smartest people I have met in consumer goods work inside these companies. They see the problem clearly. They know the traditional model is breaking. What most of them will tell you privately is that they do not have the mandate, the capital, or the time to build the alternative from where they sit. The organizations are not set up to become consumer intelligence partners. They are set up to move cases and clear inventory, and the incentives at every level of the business reinforce that mandate.
What that means for brands is that hoping the middle tier will evolve into a data partner is not a strategy. It is a wish. The distributors that figure this out and actually rebuild are going to look like generational winners inside their categories, and I hope some of them do. But planning your next five years around that outcome is planning around a coin flip. The brands that are going to win the next decade are the ones who assume the middle tier is not going to save them, and build the consumer intelligence layer themselves.
Look at your own distribution partners. Your retail chains, your wholesale accounts, your platform partners, whoever sits between you and the person who actually buys your product. Ask yourself who knows the customer better right now: you or them. If the honest answer is them, you have work to do. If the honest answer is nobody knows the customer, which is the most common answer, you have even more work to do, and the good news is that whoever builds the intelligence layer first wins the category. Build the first-party infrastructure. Own the direct relationship where you can. Do not wait for your distribution partners to bring you data they do not have, using systems they have not built, on a timeline they cannot commit to. That is how you spend a decade watching a Harry's-shaped competitor walk off with a quarter of your market share while your distributor rep tells you the category is soft.
The middle-tier compression in beverage alcohol is going to be the case study every consumer category gets taught from, five years from now. The brands that saw it coming and built around it are going to have written the playbook. The distributors that saw it coming and rebuilt are going to be the exception, not the rule.
This is the most underwritten strategic shift in consumer goods right now, and the honest version of the story is not the one that everyone is trying to talk about.
The middle is getting compressed.
The question is not whether it evolves.
The question is who owns the customer when it collapses.