Entrepreneurs just starting out in the alcohol business--be it beer, wine or liquor--have the wind at their backs more than any other time during the past five years.
American wholesalers of beer, wine, and distilled alcohol have seen a substantial increase in sales growth in the past 12 months. Sales grew by nearly 8 percent during that period, compared to less than 2 percent growth the previous year, according to financial data company Sageworks. Profit margins, meanwhile, have grown during both of the past two years, peaking at 4 percent in September.
“The outlook for this industry is quite positive right now, as Sageworks data shows significant sales growth accompanied by the highest profit margins the industry has seen during the last six years," says Sageworks analyst Jenna Weaver.
It is unclear whether Americans are buying more alochol or businesses in this sector are simply raising prices, there is some data supporting the latter explanation. Alcohol sales in bars and restaurants fell by 1.3 percent in 2013, while retail volume declined by 0.7 percent, according to data from research group Technomic.
However, overall sales growth in recent years appears to be spread across all sectors of the industry. The wine market in the United States, which became the top wine-consuming nation in the world in 2010, continued to grow in 2013: shipments increased 3.2 percent, according to industry market researcher Gomberg, Frederickson & Associates.
“The success of these types of wholesalers generally comes down to two main drivers: either selling more product, or demanding a higher price on products sold,” says Sageworks analyst Kevin Abbas.
“It’s unclear based on our data whether volume or pricing had the biggest impact on sales growth, but certainly, outside data indicate favorable trends on both fronts for these wholesalers.”
Earlier this year, the Distilled Spirits Council of the United States reported spirits exports surged in 2013, eclipsing $1.5 billion for the first time ever, thanks to shipments of Kentucky Bourbon and Tennessee Whiskey that topped $1 billion for the first time ever.