Southern Glazer's pays $12.5m in US bribery settlement

Southern Glazer's Wine & Spirits has agreed to pay $12.5 million to resolve a federal investigation into improper payments made to retail buyers in California, the US Department of Justice said on 10 September.

The non-prosecution agreement closes an inquiry into conduct between 2016 and 2024, according to the DOJ's Northern District of California office. Investigators said employees of the distributor funded and concealed payments to staff at chain retailers in exchange for preferential treatment of its products on store shelves.

The inducements included cash, prepaid gift cards, flights, golf trips, resort stays and luxury goods, the department said. Southern Glazer's also created false invoices to hide the payments from its own compliance systems, according to the agreement.

The agreement resolves the case without admission of guilt or criminal charges.

The Alcohol and Tobacco Tax and Trade Bureau, which regulates the industry alongside the DOJ, said it would take no further action against the company. TTB assistant administrator Anthony P. Gledhill said industry members are "accountable not only for their own conduct, but also for the actions taken on their behalf by third party affiliates."

What the settlement requires

Southern Glazer's will pay the $12.5 million penalty and commit to strengthened internal controls over the next two years, the DOJ said. The company must also continue cooperating with any related criminal cases the department brings against current or former employees.

Southern Glazer's chief executive Wayne Chaplin said in a statement that the company was "gratified to resolve the investigation in this fashion, and to be able to focus on earning the trust of our customers." He said the conduct "does not reflect Southern Glazer's values, culture, or standards."

A distributor with outsized reach

Southern Glazer's is the largest wine and spirits distributor in the United States, supplying retailers and restaurants across most states from its base in Florida. Its position gives it influence over which bottles reach supermarket shelves and restaurant lists, a type of leverage regulators have examined at smaller distributors before.

The DOJ did not name the retail chains involved in its announcement, nor did it say whether any individual employees face separate charges. The agreement leaves that possibility open, the department said.

The case follows a decade of tighter federal and state scrutiny of payments between distributors and retailers inside the three-tier system that governs how alcohol reaches shelves in the US, according to the TTB. Leadership across the wine trade has shifted too this year: in August, The Wonderful Company named its new wine president.