Wine & Spirits Distributors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 2,170 wine and spirits distributors in the US represent the second tier of the federal three-tier system of approved alcohol distribution. This system, which has been in place since the lifting of Prohibition, requires that a supplier sell to a distributor, who then sells to a retailer (bar, restaurant, grocery store, liquor store, or other consumer-oriented channel). Spirit sales account for 56% of industry revenue, while wine accounts for about 41%.
Regulatory Changes
Challenges to the current federal three-tier system for alcohol distribution could disrupt the relationships between suppliers, distributors, and retailers.
New Product Proliferation
Liquor suppliers are focusing on product innovation and line extensions to position themselves in the future marketplace.
Industry size & Structure
Industry Forecast
Wine & Spirits Distributors Industry Growth
Recent Developments
Apr 8, 2024 - Record Wholesale Prices in 2023
- Employment by wine and spirits distributors continued its steady climbs last year, growing 3.5% in December compared to a year ago after rising 4.7% in the previous annual comparison, according to the US Bureau of Labor Statistics. Average wages at alcohol distributors moved in the opposite direction, falling 2.3% year over year to $25.58 per hour in December, BLS data slow. The producer price index for beer, wine, and distilled alcoholic beverage merchant wholesalers, which measures prices before reaching consumers, ended 2023 at a new high.
- Declining demand for America’s best-selling whiskey brand reflects shifts in consumer spending and how people consume alcohol, The Wall Street Journal reports. Sales of Jack Daniel’s Old No. 7 have been falling for months and its maker, Brown-Forman, is forecasting a sluggish US whiskey business for at least the next year, according to WSJ. Whiskey makers’ US revenue – which soared during the pandemic along with that of other spirits makers – fell 2.2% in 2023 to $12.3 billion, according to the Distilled Spirits Council of the United States, while revenue was flat overall for makers of spirits. Inflation and high-interest rates have some consumers spending less on alcohol, while others are reducing their alcohol consumption for health reasons – or choosing marijuana instead – per WSJ. Meanwhile, some drinkers of Jack Daniel’s Old No. 7 – often used to make the popular cocktail Jack and Coke – are trading down to cheaper alternatives.
- The beverage alcohol industry faces a challenging road ahead in 2024, according to a January press release from the Wine & Spirits Wholesalers of America (WSWA). Wholesaler inventories for wine, spirits, and beer are at historic highs as US consumers and retailers pull back, SipSource depletion data shows. Economic headwinds confronting wholesalers include inflation, interest rates, and consumer debt, which continue to impact US consumer spending habits. Generational trends are also impacting demand. The industry needs to respond to today’s more diverse customer base and changing tastes, warns SipSource analyst Danny Brager, noting that today’s more diverse consumers are embracing spirits more than wine. In a constrained market, wholesalers must focus on in-demand categories, including ready-to-drink (RTD) premixed cocktails and tequila. Higher-end price tiers are expected to continue to slow, with the best rates of growth in the mid-priced groups.
- The Congressional 21st Amendment Caucus was formed in December, marking the 90th anniversary of the amendment's ratification, according to the Wine & Spirits Wholesalers of America (WSWA). The 21st Amendment, whose creation coincided with the end of Prohibition, grants US states virtually complete control over whether to permit the importation or sale of liquor and how to structure the liquor distribution system. “This new caucus will educate policymakers about the importance of the alcohol industry’s effectively regulated chain of custody, which keeps consumers safe and promotes competition and variety while ensuring revenue is collected in the form of excise and sales taxes,” per a WSWA press release that adds caucus’s creation is timely as special interests are seeking to change or weaken these regulations. Threats to the current liquor distribution system include direct-to-consumer shipping of alcoholic beverages, which bypasses wholesalers.
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