This is marketing research on the Alcoholic Beverages industry and can include information on the background, market structure, definitions, competitors, trends and developments of alcoholic beverages and is related to other topics such as beer, wine, spirits and liquor.

Table of Contents

[edit] Background

Alcoholic beverages are drinks including ethanol. Ethanol is a drug with a depressant consequence. This leads various countries to regulate its trade and use. There are many countries which place strict legal precincts on the dealings of alcoholic drinks. Alcohol monopoly is a government monopoly alcoholic beverage. All Nordic provinces, but Denmark, have monopolies. In the United States as well there are some alcoholic beverage control states.

Since the 1960s, there has been a sturdy tendency of consolidation of the alcohol beverage trade. It is has been distinguished by four waves of mergers, acquirements and associations. This has led the companies to expand their portfolio and regional operational ground. The first three mergers formed the background of the present condition of this industry.

The first wave (1950s - 1960s): It had been characterized by limited geographic range. It was restricted chiefly among the U.K. brewers and wine merchants. The merger between Gilbey’s and United Wine Traders (1962) resulted into International Distillers and Vintners.

A second merger wave (1968 - 1972): It concerned chief brewers from European countries. Heineken acquired Amstel (Holland, 1968) and Carlsberg acquired Tuborg (Denmark, 1970). Spirits and processed-wine firms commenced to join together and to attain other firms.

The third merger wave (1985 – 1988): It has been driven by globalization. This period had also been characterized by the acquisition of the distribution channels. An example of this strategy was the acquisition of the key U.S. alcohol beverage distributors, along with Heublein by Grand Metropolitan (1987).

[edit] Market Structure

The production process of alcoholic beverages has various steps, and it is a rather heterogeneous industry. The production of alcoholic beverages is subdivided into two categories –

(i) Recorded beverage production and (ii) Unrecorded beverage production.

The data on recorded beverage alcohol production is accessible from governmental reports and other public survey services such as United Nation’s FAO. But the unrecorded beverage production includes home production – both legal and illegal, cross border shopping, tourist consumption, smuggling and travelers’ import, substitute alcohol, and beverages with alcohol content below the legally defined limit for the beverage alcohol.

The recorded alcohol production of low income countries is chiefly consumed by the high income public sectors, while people belong to the low income sector largely intake home brews and other unrecorded alcoholic beverages. In a few low and middle income countries, 50% of the total alcohol consumption constitute of this unrecorded production.

According to WHO - “on a regional basis, unrecorded alcohol consumption is estimated to be two thirds of all alcohol consumption in Indian subcontinent, about half of total consumption in Africa, and about one third in Eastern Europe and Latin America”.

Black and Grey markets are swamped with unrecorded beverages. These are produced and circulated illicitly for prohibited sales.

The large portion of the producers of the recorded beverage alcohol consists of the small domestic producers serving the local tastes. These are known as commodity drinks. The market this brand is estimated to be 99% in China, 92% in Thailand, 94% in Russia, 75% in India and 89% in Brazil.

The alcoholic beverage industry can be further divided in three sectors –

(i) Beer Sector (ii) Spirits Sector (iii) Wine Sector.

[edit] Industry Definitions

• Alcoholic beverage control states – US states that have a state monopoly over the selling of some or all types of alcoholic beverages, such as beer, wine, and distilled spirits.

• AV (a/v): It is the estimation of alcohol by volume. It measures the quantity of alcohol (ethyl alcohol or ethanol) in an alcoholic beverage.

• Brewery: It is an industrial unit where a person is licensed to produce beer.

• Denaturant: It composes when methylating substance is mixed with spirit to formulate a product unhealthy for human consumption.

[edit] Market Metrics

The global market for the alcoholic beverages industry can be illustrated with the recent data on the three industry sectors –

The Beer sector – The total beer sales globally estimated 157.8 billion liters in 2005. The top 10 companies produce almost 60% of branded beer production worldwide. There are twenty large multinational and regional producers leading the industry. However, small manufacturers lead according to the “commodity” beer production volume. The “commodity” beer consists of 62% of total beer production. The largest global brewers are basically local brands. Beer is usually consumed in the same region it was produced.

Exports are significant for a small number of countries with prominent brands (e.g., Heineken, Carlsberg, Stella Artois or Guinness).

In North America and Western Europe market the sales are declining for the past few years.

The Spirits Sector - In 2005, the top five spirits brands were entirely nationally explicit. The major spirits brands to be attributed in the top 10 in amount, were Bacardi rum and Diageo’s Smirnoff vodka. Local commercial spirits producers govern the market, and tend to be geographically fragmented due to the persistent popularity of traditional national specialties.

The Eastern European spirits market is directed by, Belvédère, a French company. The second and third placed players in the region are Veda ZAO and Kristall MZ OAO.

The International Wine and Spirits Record catalog over 900 spirits manufacturers. But they produce less than a third of the entire spirits produced globally.

The Wine Sector - The global wine market is extremely heterogeneous with several small and intermediate sized manufacturers. In 2005, there are 1,360 companies (data: International Wine and Spirits Record). It comprises 27% of the global wine market. Top 10 wine producers manufacture just a little share of the total volume (10.69%). The market concentrates in Europe and European-settled areas. The products concentrate in the state of California in the US., Chile and Argentina of South America, South Africa, Australia and New Zealand.

The largest importers of alcoholic beverages are:

Country		Import figures (000 US$)

USA			4142606
Spain			1329299
Germany		846263
France			828661
UK			772177

The largest exporters of alcoholic beverages are:

Country		Export figures (000 US$)
UK			7324475
France			2715993
Ireland			757901
USA			740712
Mexico		611905

[edit] Industry Players

The top 5 beer producers by volume are: 

1.	InBev
2.	SABMiller
3.	Anheuser – Busch
4.	Heineken
5.	Carlsberg

The top 5 spirits producers by volume are:  
   
1.	Diageo
2.	Pernod Ricard
3.	The UB group
4.	Beam Global Spirits & Wine
5.	Bacardi

The top 5 wine producers by volume are: 

1.	Constellation Brands
2.	E & J Gallo
3.	Fosters Group
4.	The Wine Group
5.	Pernod Ricard

[edit] Recent Trends and Developments

The most recent merger wave of the alcoholic beverage industry is the trend where enterprises limited their trades to few global brands and all practicing similar marketing strategies. This wave includes the domestic spirits firms, brewers and wine producers. Quite a lot of chief mergers and acquirements have occurred: (i) Merger of Guinness and Grand Metropolitan (UK, 1997), (ii) Acquisition of Seagram spirits and wine industry by Diageo and Pernod Ricard (2001).

More recent developments have the primary features of consolidations in each of the major sectors:

The wine sector - Foster’s Group occupation of Australian Southcorp; The spirits sector - the acquirement of Allied Domecq by Pernod Ricard The beer sector - SABMiller’s acquisition of Bavaria, Latin America’s second largest brewer.

The future development consists of the newer (Brazil, Russia, India, and China) economies operating as a growth driver for the drinks industry. There is a significant opportunity in emerging economies, such as Peru, Colombia and Mexico to the former CIS states of Central Asia, Turkey, the Balkans, the Czech Republic, Poland, along with other few countries in Africa (e.g., Nigeria and South Africa).

[edit] Sources

• Wikipedia
• United Nations Food & Agriculture organization
• FAOstat
• ICAP (International Centre for Alcohol Policies)
• Answers.com
• Accenture

[edit] Related ResearchWikis

Alcoholism Drug Marketing Research

Beer - U.S. Survey 2007

Beer Marketing Research

Wine Marketing Research

Wine Export Marketing Survey

[edit] Buy these reports from ReportBuyer - Lowest to Highest Cost

• The Worlds Most Powerful Spirits and Wine Brands

• Analyzing the Global Wine Industry

• Spirits in Western Europe to 2011