Wine & Spirits Wholesale

BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.

CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.

DOMESTIC DEMAND
Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.

CONTROL STATE
A state in which the government, not private entities, manages the distribution of alcoholic beverages. Generally, the control state acts as the wholesaler of spirits and sometimes wine.

DIRECT SHIPPING
A distribution method that permits a winery or retailer to sell and ship directly to a consumer.

DISTILLED SPIRIT
An alcoholic beverage obtained by distillation from wine, other fermented fruit juice or various cereal grains that have first been brewed (e.g. whiskey, brandy and rum).

ON-PREMISE CONSUMPTION
Alcohol purchased at a licensed establishment (e.g. restaurant, bar or nightclub) for immediate consumption.

SHRINKAGE
The loss of product during shipment as a result of damage, fraud, theft, expiration or other form of human error.

This industry's continued relevance, especially relative to other wholesaling industries, is partly the result of US state alcohol distribution laws. Under the three-tier distribution system adopted by most states, industry wholesalers are required to act as an intermediary between producers and retailers. Only licensed retailers may sell directly to consumers, and retail establishments are required to purchase from licensed wholesalers. This structure has prevented most downstream consumers from purchasing directly from manufacturers. The recently granted ability of wine producers to sell limited quantities directly to consumers, however, has created small losses for wholesalers, but this does not currently represent a major threat to industry operators. Major players have continued to enact partnerships and mergers with smaller regional distributors to expand their geographical reach. Industry profit is typically greater among larger players than smaller companies.