Sales of high-quality, high-margin alcohol products have grown, boosting profit
New York, NY (PRWEB) January 17, 2015
The Beer, Wine and Liquor Stores industry fared well over the past five years, as industry operators have benefited from more consumers purchasing premium, high-margin alcohol. Per capita alcohol consumption is anticipated to decline slowly over the five years to 2015. However, this trend can be attributed to more individuals switching from purchasing low-quality beer, wine and liquor in bulk to premium alcohol products, which are typically packaged in smaller volumes. Furthermore, many province- and territory-run alcoholic-beverage retailers dominated the industry landscape, benefiting from a lack of regulatory hurdles that has limited small, niche retailers from entering the market.
Stringent alcohol-labelling requirements, coupled with regulations for interprovincial alcohol distribution, prevented many privately operated alcohol retailers from entering the market over the five-year period. Additionally, each province and territory in Canada establishes minimum prices that restaurants, bars, supermarkets and other alcohol retailers must charge for alcohol. While this trend has benefited large-scale, government-run alcohol retailers due to their ability to leverage low supply-side costs, it hindered small alcohol retailers' ability to mark down prices and, therefore, boost sales volumes. Furthermore, large government-run alcohol retailers secure favourable contracts with global and Canada-based distilleries, wineries and breweries by purchasing in bulk; they also generate alternative revenue from selling alcohol licences to private retailers. Over the five years to 2015, industry revenue is anticipated to grow slightly due to growing demand for premium alcohol and a larger drinking-age population. According to IBISWorld Industry Analyst Sarah Turk, “Profit is expected to rise marginally between 2010 and 2015, attributable to more consumers buying high-margin alcoholic beverages, such as fine whiskies and ready-to-drink cocktails.”
The Beer, Wine and Liquor Stores industry has a moderate level of market share concentration. In 2015, the top four industry operators are expected to make up about half of industry revenue. According to 2012 information (latest available data) from Statistics Canada, 14.3% of establishments are nonemployers, which includes small, independently operated liquor stores that are either family operated or hire mostly contracted and part-time labour. Furthermore, establishments with fewer than five employees account for a significant share of total establishments. In Canada, liquor laws vary by province or territory. As a result, it is difficult for large alcohol retailers to develop alcohol-retailing chains across Canada, keeping market share concentration moderate. Nevertheless, the emergence of large, government-owned companies, which provide alcohol licences to retailers, have increasingly dominated alcohol retail sales in certain provinces and territories.
Over the next five years, less stringent regulations for alcohol retailers will result in the entrance of large retailing chains. “Industry operators will strengthen their market share by investing in specialized products to attract a market niche and establishing a strong customer base through advertising and marketing,” says Turk. Additionally, the entrance of large players will intensify competition among industry operators, as large alcohol retailers will be able to secure favourable supply-side contracts and negotiate competitive prices with wineries, distilleries and breweries.
In the five years to 2020, industry revenue is forecast to grow slowly. The regulatory environment will likely constrain industry revenue growth; for example, individuals will likely transport wine between provinces and territories, hampering industry retailers. As regulation in this industry decreases, competition for large alcohol retailers will intensify due to local wineries directly providing wine to consumers.
For more information, visit IBISWorld’s Beer, Wine and Liquor Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry includes stores and agencies that are primarily licenced to sell alcoholic beverages for off-premise consumption. The industry excludes wholesalers and grocery, convenience and gas station stores.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios
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