Liquor & Spirits Production in the US - Industry Market Research Report

Historically, the alcohol beverage industries have been recession resilient. While they are not immune to economic slowdowns, they have typically achieved muted growth in difficult times. IBISWorld estimates that revenue for the Liquor and Spirits Production industry will total $6.73 billion in 2010, reflecting moderate growth of 1.4% from 2009. Revenue will increase at an average annualized rate of 1.8% over the five years to 2010, which is robust, given the poor consumer sentiment over the period. Profit margins have been trimmed slightly, but they are a healthy 20.0% of industry revenue. The popularity of cocktails has reestablished liquor and spirits in social drinking locations such as bars and nightclubs. Helped by advertising and promotion by major industry players, the role of cocktails has expanded from just a drink into a symbol of class and sophistication over the five years to 2010.

In response, customers have "premiumized" their purchases, moving from the bottom shelf toward the top tiers of quality. Instead of compromising the quality of the products they purchased, consumers are saving money by drinking liquor and spirits at home. In 2010, the industry is facing challenges associated with a continued lull in consumer sentiment and squeezed household budgets. However, because of off-premises drinking, distilleries will be less adversely affected than other discretionary goods producers. Industry revenue will benefit from a growing population of legal drinkers. Furthermore, premiumization is projected to become even more popular as public sentiment and spending increases. This trend will drive up the annualized revenue growth rate to 3.9% over the five years to 2015, with liquor and spirit distillery sales reaching $8.16 billion. The industry is characterized by a high degree of concentration, with major players Diageo, Brown Foreman, Fortune Brands and Pernod Ricard accounting for 83.7% of domestic production. Acquisitions and a return to trusted brands during the recession have supported the market share dominance of these players. Competition from imports, which makes up more than 40.0% of domestic demand, has helped restrain the influence of these major players to date. However, imports will become less of a presence, reflecting the decline in the US dollar and disposable incomes.

INDUSTRY MARKET RESEARCH REPORT

This is the replacement for the October 2010 edition of Liquor & Spirits Production in the US

About this Industry

This Industry Market Research report provides a detailed analysis of the Liquor & Spirits Production in the US industry, including key growth trends, statistics, forecasts, the competitive environment including market shares and the key issues facing the industry.

Industry Definition

This industry consists of distilleries that purchase a range of ingredients such as grains and sugar, and manufacture them into spirits (i.e. not beer or wine). These spirits are then bottled and sold to liquor wholesalers, bars, casinos, restaurants, hotels and other retail stores.

Report Contents

The About this Industry chapter provides general information about the scope of the industry such as an industry definition and a list of the main activities of the industry.

The Industry at a Glance chapter provides a brief snapshot of the key indicators of the industry such as industry revenue and forecast growth rate.

The Industry Performance chapter covers the following: Executive Summary, Key External Drivers, Current Performance, Industry Outlook and Industry Life Cycle. The Executive Summary section is a brief summary of the overall chapter. The Key External Drivers section looks at the key factors outside the control of an individual business that determine the industrys performance. The Current Performance section provides analysis for the industry over the past five years with key performance indicators discussed. The Industry Outlook section is a key analysis section of the report and outlines expectations for the key industry indicators over the next five year period, including forecasts. The Industry Life Cycle section provides a discussion of where the industry is at in its life cycle and how that is affecting industry performance.

The Products & Markets chapter covers the following: Supply Chain, Products & Services, Demand Determinants, Major Markets, International Trade and Business Locations. The Supply Chain section lists the key buying and key selling industries associated with this industry. The Products & Services section lists the products and services the industry provides including percentage breakdowns by key segment. The Demand Determinants section provides an analysis of the determinants behind the level of demand for the industrys products. The Major Markets section gives an analysis of the markets for the industrys products and how these markets may have changed over time. The International Trade section provides a discussion of the importance of trade to the industry. The Business Locations section highlights where the industry operates and why.

The Competitive Landscape chapter is a discussion of the characteristics of an average operator in the industry and who controls the market for the products of the industry. It includes the following sections: Market Share Concentration, Key Success Factors, Cost Structure Benchmarks, Basis of Competition, Barriers to Entry and Industry Globalization. The Market Share Concentration section discusses the level of concentration of the industry. The Key Success Factors section looks at the key internal factors that contribute to the success of an operator in the industry. The Cost Structure Benchmarks section discusses the average costs faced by operators in the industry. The Basis of Competition section is a discussion of the factors that can give a company in this industry a competitive edge. The Barriers to Entry section looks at the factors preventing new companies from entering the industry. The Industry Globalization section provides an indication to which the industry is affected by global operations and trends.

The Major Companies chapter analyses the companies that have the most substantial influence on the industry. Market Share figures and a discussion of the major companies operations within the industry are given where possible.

The Operating Conditions chapter covers the following: Structural Risk Index, Investment Requirements, Technology & Systems, Industry Volatility, Regulation & Policy, Industry Assistance and Taxation Issues. The Structural Risk Index section provides an indicator of the level of risk faced by operators in the industry. The Investment Requirements section is an analysis of the level of capital investment required to operate in the industry. The Technology & Systems section discusses the key technologies used by the industry. The Industry Volatility section looks at the level of in the industry and the factors behind this volatility. The Regulation & Policy section looks in to the regulatory measures the industry is subject to and the corresponding compliance burden faced by operators in the industry. The Industry Assistance section discusses the level of assistance the industry receives from Government. The Taxation Issues gives a comparison between the level of tax burden on this industry compared to other industries and discusses industry-specific taxation measures placed upon it.

The Key Statistics chapter provides the key indicators for the industry for at least the last three years. The statistics included are industry revenue, industry value added (or gross product), establishments, enterprises, employment, exports, imports, wages, domestic demand and any relevant industry-specific data where appropriate. There is also a Historical Performance section that discusses the key past events that have determined industry performance.