Competition from on-premises sales will stifle growth, but specialization will boost demand
Los Angeles, CA (PRWEB) July 24, 2012
Uncertainty and unemployment have constrained consumer budgets causing consumers to buy more alcoholic beverages from the Beer, Wine and Liquor Stores industry instead of going out in order to save money. “Each state is responsible for regulating its sale of alcoholic beverages, and some states are considering privatizing stores they currently run,” says IBISWorld industry analyst Agata Kaczanowska. “Privatization of state-run liquor stores, notably in Washington state, is expected to boost industry growth.” As a result, industry revenue is expected to grow at an average rate of 1.0% per year over the five years to 2012 to total $45.8 billion, driven mainly by industry growth in Washington state. However, state deregulation of liquor laws is bolstering competition from other liquor retailers, stalling industry growth.
Apart from privatizing liquor stores, some 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 for the Beer, Wine and Liquor Stores industry, squeezing the profit margins of establishments located near deregulated grocery and convenience stores,” adds Kaczanowska. Nonetheless, profit is forecast to increase from 2012 to 2017 because deregulation is also expected to allow stores to purchase certain products in bulk, bypassing distributors.
Competition and deregulation will lead to industry consolidation and specialization. In 2012, 97.7% of firms are expected to employ fewer than 20 people, and no companies are expected to employ more than 50 people. Many stores are family owned and operated. The concentration of ownership of beer, wine and liquor stores is low due to state regulations that mostly prohibit vertical and horizontal integration. 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. 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. Revenue is forecast to grow in 2017 along with rising disposable income and consumer spending, despite the concurrent competition from on-premises sales that improved consumer sentiment will likely bring. For more information, visit IBISWorld’s Beer, Wine and Liquor Stores in the US industry report 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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