Competition from on-premises sales will stifle growth, but specialization will boost demand
Los Angeles, CA (PRWEB) March 14, 2012
Uncertainty and unemployment have constrained consumer budgets and, as a result, consumers are saving money by buying more alcoholic beverages from the Beer, Wine & Liquor Stores industry instead of going out, according to IBISWorld industry analyst Agata Kaczanowska. As a result, industry revenue is expected to grow at an average rate of 0.1% per year over the five years to 2012. Industry revenue is expected to total $43.6 billion in 2012 with a year-on-year decline of 3.9% as state deregulation of liquor laws and wavering consumer sentiment stall industry growth.
Each state is responsible for regulating its sale of alcoholic beverages, and some states are considering privatizing stores they currently run. Privatization is anticipated to slightly increase the volatility of the Beer, Wine & Liquor Stores industry revenue as businesses restructure, mainly because states that reshuffle stores' ownership structures will impose costs and inconveniences on industry sales. Other states have proposed making heavily taxed alcoholic beverages more easily available to consumers through grocery and convenience store sales in an effort to raise state revenue. Deregulation on a state-by-state basis is expected to result in higher competition, squeezing the profit margin for the establishments located nearby, Kaczanowska says. Nonetheless, profit is forecast to as deregulation is also expected to allow stores to purchase more products in bulk and to bypass some distributors.
Competition and deregulation will lead to industry consolidation and specialization. Stores will offer a wider selection of products or specialize in a specific type of beverage to meet consumer demand in particular locations. The overall effect is expected to keep establishment growth low. The concentration of ownership of beer, wine and liquor stores is low due to state regulations that mostly prohibit vertical and horizontal integration. As states lift constraints, the industry is expected to consolidate in the face of increased competition. Not only are large chains expected to purchase mom and pop stores but they are also anticipated to open new locations in order to provide liquor sales in locations convenient to desirable and under saturated markets. For more information, visit IBISWorld’s Beer, Wine & Liquor Stores report in the US industry page.
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IBISWorld industry Report Key Topics
This industry includes specialist and non-specialist stores licensed specifically to sell alcoholic beverages for off-premises consumption. The industry excludes wholesale, grocery, convenience and gas station stores.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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