While rebounding consumer spending will facilitate growth, volumes will remain stagnant
Los Angeles, CA (PRWEB) July 09, 2012
While other wholesalers face the threat of bypass or competition from suppliers that vertically integrate, three-tier distribution laws that require separation between manufacturers and retailers insulate beer distributors. After Prohibition, most states implemented laws that require three distinct levels within the supply chain: producer, wholesaler and retailer. As a result, beer wholesalers have a protected role, and their revenue remains relatively stable through good times and bad, according to IBISWorld industry analyst Agata Kaczanowska. As a middleman serving the Breweries industry (IBISWorld report 31212), the Beer Wholesaling industry is in the mature stage of its life cycle, with a relatively steady profit of about 16.1%.
Role security does not mean that the Beer Wholesaling industry has conducted business as usual since 2007. Changing tides from upstream and downstream industries have reshaped the wholesaling landscape, Kaczanowska says. Beer production has changed rapidly, with more than four-fifths of its market share consolidated into just two companies (AB InBev and MillerCoors), and craft brewery popularity is growing. Meanwhile, changing consumer preferences have created other difficulties for wholesalers. Average consumption stagnated as Americans flocked to wines and cocktails during times of prosperity and shifted spending to cheaper brands during the recession. A recovery in 2012 is expected to stimulate a 0.3% revenue increase, and a combination of the above factors has caused revenue to decline at an average annual rate of 0.5% to $57.8 billion over the five years to 2012.
Slowly increasing consumer spending will help the Beer Wholesaling industry's revenue to gain some momentum during the next five years. IBISWorld projects that revenue will grow during the five years to 2017. Once consumer spending rebounds, prices are expected to increase, facilitating revenue growth. Meanwhile, volumes will remain stagnant as strong demand for regional or microbrews cuts into mainstream sales. Revenue growth and a decline in firm numbers means that surviving firms will be larger and average company earnings will increase. Despite consolidation in this industry, the average industry profit margin is expected to stay steady as producers and retailers continue to squeeze the middleman's margins. For more information, visit IBISWorld’s Beer Wholesaling in the US industry report page.
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IBISWorld industry Report Key Topics
This industry comprises establishments primarily engaged in purchasing, storing, selling and distributing beer and other fermented malt beverages that are made by the Breweries industry (IBISWorld report 31212).
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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