Industry Analysis & Industry Trends
Despite declining demand from developed markets, rising incomes and aspirational consumption in emerging markets have kept the industry growing over the past five years. During the next five years, companies will continue seeking growth opportunities in emerging markets, particularly in Asia. Major distilleries will continue aggressive acquisition activities, and large companies will increase market share through premiumization. As a result, revenue is expected to maintain its upward trend... read more
Starting a New Business
Overall, barriers to entry into this industry are high and steady. Barriers to entry include the high level of capital intensity, the long lead time for production (particularly for aged spirits), and the cost of legal compliance.
The production process for spirits is highly capital intensive and economies of scale are substantial. This results in larger producers having significant cost advantage over smaller producers, and channel revenue into advertising, enforcing trademarks, and maintaining their band image. Thus, producers have to be able to reach a sufficient scale before being able to enter the global spirits industry. This can be achieved, however, if producers are successful first in their domestic market before becoming multinational companies... read more