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Bill Freehling is a business writer for The Free Lance-Star and Fredericksburg.com. This blog is on Fredericksburg-area business. Send an e-mail to Bill Freehling.

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Warren Buffett chugs along in liquor-business expansion

Warren Buffett’s Berkshire Hathaway continues to expand into the liquor distribution business. Berkshire announced yesterday that its McLane Co. unit is purchasing Horizon Wine and Spirits Inc., a Tennessee-based alcohol distributor. McLane also bought liquor distributors in Georgia and North Carolina this spring and has indicated that more growth is on the way. The company’s McLane Beverage Distribution division has also applied for licenses to distribute alcohol in Virginia, Washington and Florida, as I reported here. McLane has a grocery distribution center in Stafford County that is one of the region’s largest employers.

Berkshire’s expansion into the U.S. liquor distribution business, which is nearly exclusively owned by private companies, has turned a lot of heads in the industry. McLane has the infrastructure in place (trucks, warehouses, distribution contacts) to quickly expand into the liquor business if it can find wholesalers willing to sell, and Buffett has tens of billions of Berkshire’s dollars to invest. It’s the type of business he loves — an industry whose product is consumed by tens of millions and that has no chance of being displaced by technology. No matter how advanced Facebook or Google get, it’s hard to envision them being able to pour you a glass of wine anytime soon. Further, U.S. alcohol distribution laws give wholesalers a near monopoly of a popular product in the territories they serve, which is music to the Oracle of Omaha’s ears.

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Permalink: http://news.fredericksburg.com/businessbrowser/2010/10/28/warren-buffett-chugs-along-in-liquor-business-expansion/

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