Alcohol beverage industry in the US to reach USD 289.96 B in 2023

The alcohol sales generated USD 253.8 billion in 2018, an increase of 5.1%, or USD 12.4 billion from total sales in 2017.

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Trends
Industry Challenges
Technology Trends
Pricing Trends
Regulatory Trends
Market Size and Forecast
Market Outlook
Distribution Chain Analysis
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References

Definition / Scope

An alcoholic beverage is a liquor generated through fermentation of sugar and yeast. Ethanol is the most common alcohol found in different alcoholic beverages such as wine, beer, and whiskey. Ethanol is usually obtained by the fermentation of various plants such as wheat, corn, barley, etc.

These plants are rich in carbohydrates. Ethanol does not contain essential nutrients, but it provides great energy. Alcoholic beverages can be produced in two forms such as distilled and undistilled.

The most common types of distilled alcohols are vodka and whiskey. There are many different recipes practiced worldwide for producing alcoholic beverages.

Classification of alcoholic beverage by type:

Beer

Ale
Lager
Hybrid

Distilled Spirits

Rum
Whiskey
Vodka
Others

Wine

Sparkling
Fortified
Others

Others

Market Overview

Consumption

The total consumption of alcohol in volume in the U.S. declined -0.8% than last year to 3.345 billion 9-liter cases in 2018. In the previous year, the total consumption volume of alcohol was 3.371 billion 9-liter cases.

Consumption by category

The majority of the alcohol beverages sold in the USA were Spirits and Beer. The sale of Spirits accounted for 46% of the total sales of alcohol beverages while that of Beer accounted for 30% of the total sales. Bud Light holds the top-selling beer spot in the USA followed by Miller.

While the American drank wine the least in 2018, Bare Foot and Sutter Home were the most ordered brands of wine. Within the Spirits category, whiskey accounted for 27% of the total orders.

Likewise, vodka held 23% order share followed by tequila, which accounted for 19% order volume. Jameson, Jack Daniel’s, Tito’s, Grey Goose, Patron, and Captain Morgan are the top-grossing brands in terms of total sales.

Consumer spending on wine increased to USD 72.2 billion, an increase of 49% in 2018. Excluding on-premise markups, the average retail price for a 750ml bottle of wine increased to $10.84 last year.

Similarly, consumer spending on spirits surged by 5% to reach USD 64.3 billion. The average retail price for a 750ml bottle increased to $15.92, excluding on-premise markups. Likewise, consumer spending on beer did increase by 5% generating USD117.3 billion. And the average retail price for a case of beer increased to $31.29.

Vodka remained the largest category billion with USD 6.4 billion in sales value, representing a third of all spirits volume sales. Among other spirits, American whiskey was the second most selling liquor totaling USD 3.6 billion in sales value followed by tequila, which recorded USD 3 billion in sales value.

The USA is the fourth-largest wine producer in the world accompanied by 23.9 million hectolitres in 2018. Italy, which produces 30.9 million hectolitres more wine than the USA stood first in 2018. It is the 8th biggest wine exporter in volume term and 6th biggest exporter of wine in value term. Meanwhile, the USA is the first largest wine importer in value term and the 3rd largest wine importer in volume term in the world.

Overall, the per capita alcohol consumption remains highest in New Hampshire with 4.76 gallons. Spirit is the most preferred drink in New Hampshire. The per capita consumption of spirits was 2 gallons compared to 1.87 gallons of beer.

The four states namely Vermont, Montana, North Dakota, Nevada, and Delaware have the per capita alcohol consumption bracket of 3.00-3.75 gallons. In these states, beer is the most favored drink compared to wine and spirit except for in Nevada and Delaware. In other states like South Dakota and Idaho, the per capita consumption of alcohol is below 3 gallons.

Beer is the highest-grossing beverage in the USA. It accounts for 37 percent of the total alcoholic beverage market. Similarly, spirits held 35.30 percent share in 2018. Wine is the third category of beverage representing 27.70 percent of the total alcoholic beverage market

Market Risks

Operational risks Risks associated with international operations like material adverse effect on the business, liquidity, financial condition and/or results of operations, include:

Changes in local political, economic, social and labor conditions
Potential disruption from socio-economic violence, including terrorism and drug-related violence
Restrictions on foreign ownership and investments or on repatriation of cash earned in countries outside the U.S.
Import and export requirements
Currency exchange rate fluctuations
A less developed and less certain legal and regulatory environment in some countries, which, among other things, can create uncertainty regarding contract enforcement, intellectual property rights, real property rights, and liability issues; and
Inadequate levels of compliance with applicable anti-bribery laws, including the Foreign Corrupt Practices Act

The changes proposed by the U.S. federal government or other governmental bodies to international trade agreements, tariffs, taxes, and other government rules and regulations have an adverse risk to competitors. Significant increases in import and excise duties or other taxes on, or that impact, beverage alcohol products could have a material adverse effect on the business, liquidity, financial condition and/or results of operations.

In addition, federal, state, provincial, local and foreign governmental agencies extensively regulate the beverage alcohol products industry concerning such matters as licensing, warehousing, trade and pricing practices, permitted and required labeling, advertising and relations with wholesalers and retailers. Certain federal, state or local regulations also require warning labels and signage.

New or revised regulations or increased licensing fees, requirements or taxes could have a material adverse effect on the business, liquidity, financial condition and/or results of operations. Additionally, various jurisdictions may seek to adopt significant additional product labeling or warning requirements or limitations on the marketing or sale of our products because of what the products contain or allegations that the products cause adverse health effects.

If these types of requirements become applicable to one or more of the major products under current or future environmental or health laws or regulations, they may inhibit sales of such products.

Top Market Opportunities

Craft Spirits

The revenue from US craft spirits is expected to reach more than USD 20 billion by 2023, growing at an impressive CAGR of over 32% during 2018-2023. The changes in taste and the growing demand for small batch, handmade beverages with unique flavor profiles is contributing to the growth of the US craft spirits market.

The growing number of younger demographic is encouraging the market of these beverages in the US market. The growth of the economy is driving greater flexibility and giving consumers the luxury to demand handcrafted alcoholic beverages in the US market.

The increase in tourism and a surge in interest in visiting distilleries is encouraging manufacturers to invest in the development of new breweries in the US market. The distilleries in the US market are adopting the incubator model of business which allows small brands to access corporate money, either through capital investments or by selling a majority stake while remaining in control of the trade.

These business models will promote the growth of the market and result in the production of unique beverages in the US. The availability of best-selling gins, whiskeys, rums, and vodkas will also contribute to the revenues in the US craft spirits market.

The focus on the mixing of handmade craftsmanship, tons of culture, and locavore ethics are resulting in the thriving craft brewing industry and distilling industries in the US market.

The growing investments in delivering the perfect on-site experiences are augmenting the growth of the US craft spirits market. The new trend of agritourism is leading to the promotion of craft distilleries demonstrating their manufacturing process thereby, simultaneously building brand awareness and loyalty in the US market.

The increase in innovations at tasting rooms and distilleries that enrich the experience of a distillery-tourer will boost demand in the US craft spirits market. For instance, Anchor Distilling Company in San Francisco has a provision of a walk through an edible roof garden along with a penthouse bar to engage consumers in the US market.

The craft distilling industry sold nearly 8.7 million cases in 2018, up 23.7% in volume over 2017, with USD 4.8 billion in sales and 30.1% growth by value. The market share of U.S. craft spirits reached 4.2% in volume and 5.6% in value in 2018.

Wineries

Pink Wine: Rose wine continues to be extremely popular, with double-digit growth across all price points.
Bubbles & Freshness: Sparkling wines and zippy sauvignon blanc wine continue to show growth.
Cider, Sangria, and Wine Cocktails are gaining ground as variety-seeking Millennials explore new beverage options

Low and No Alcohol beverages

Low- and no-alcohol brands are showing dramatic growth in key markets as there is a burgeoning growth for consumers seeking better-for-you products, and explore ways to reduce their alcohol intake. Growth of no-alcohol beer is expected at CAGR 8.8%, and low-alcohol beer at CAGR 2.8%. No-alcohol still wine is forecasted at CAGR13.5%, and low-alcohol still wine at CAGR 5.6%. Growth of no-alcohol mixed drinks is predicted at CAGR 8.6%.
No-alcohol beers offer existing drinkers an option to enjoy the flavor and satisfaction they expect from a beer while reducing alcohol intake and for not consuming alcohol at all when they decide to do so (e.g. when they are driving).

Market Trends

Omni-channel sales

Convenient online channels are revolutionizing the industry. E-commerce sales are rapidly gaining traction across the globe, creating a new frontier for beverage alcohol sales.

A new tech-savvy generation of consumers is turning their back on traditional retail, opting for the convenience and simplicity of ordering online. The speed and ease of service provided by on-demand delivery platforms such as Drizly in the US are one of the fundamental drivers of online purchases.

In addition, on-site sales at local producer-level and drive-through liquor stores are catering to the demand for more convenient purchase options.

Drinking based on lifestyle

Occasion-based drinking concerts, pop-up restaurants, food fairs, and other event-based occasions are all contributing to the rise of the ‘new’ premise where experience sits at the heart of the occasion. With brand activations often tightly integrated into the activity, these non-traditional events and venues are challenging the long-held assumption of specific products for specific occasions.

Product innovation and the blurring of category lines are both helping to further this trend.

The desire for low-alcohol drinks also lends itself well to the growing cannabis drinks trend. There is a growing industry for non-alcoholic cannabis drinks and CBD-infused alcoholic cocktails. Beer producers are looking to develop non-alcoholic beers containing CBD. This trend is most prominent in the US and Canada

Stagnant wages

Since the 1970s, the hourly inflation-adjusted wages received by the typical worker have barely risen, growing only 0.2% per year through the American economy has been growing. Additionally, labor’s share of income has fallen from nearly 65% in the 1970s to below 57% in 2017. This trend reflects the overall industry shakedown in the US.

Industry Challenges

Legalization of marijuana

Ever since medical and recreational marijuana has been legalized in the US, the growing trend towards marijuana is hampering alcoholic beverage industry growth. The US marijuana industry is estimated to reach USD 20 billion in 2020. The marijuana industry is found to be challenging to the beverage industry by taking away customers that consume alcoholic drinks.

Shifting consumer habit

Another challenge is likely to come from the rising wave of health consciousness. ‘Dry January’ movement is gaining traction globally during which health-conscious consumers prefer not to drink alcoholic beverages. In the age of social media viral trend, this campaign could be a tipping point to turn down the spirits and wine industry.

The survey conducted by IWSR report claims that in the U.S., 52% of adults who drink alcohol are either trying now or have tried before to reduce their alcohol intake. Globally, drinkers consumed a total of 27.6 billion nine-liter cases of alcohol in 2018, a decline of 1.6% than in the previous year. The export volume of brandy from the US has declined while the export of gin remained stagnated in 2018.

Technology Trends

Tracing customer preference through big data

Companies are building a data platform to centralize all relevant business information, which allows for deeper analytical insights, driving top-line growth and efficiencies. Moreover, brands are integrating hardware, software and data from thousands of bars around the world to gather insights that will support their customers’ growth.

Blockchain in service delivery

Anheuser-Busch, for instance, has partnered with Civic Technologies to create the age-verifying blockchain vending machine. The app enables the machine to verify a customer’s identity and age. Further, companies are testing a blockchain solution to enhance the supply chain by eliminating the need for printed shipping documents, resulting in cost savings and reducing the use of paper.

Bots and automation

Bots powered by AI that serves up taste profiles, suggests food and beer pairings are being on the test by various alcoholic beverage manufacturers. They are also utilizing AI in the customer-facing area with sales chatbots that facilitate order taking and create a smoother experience for customers.

Packaging technology

Beer manufacturers are exploring new packaging technologies to offer a great consumer experience. For example, Budweiser’s digital printing initiatives permit printing directly onto a bottle or can, which helps the company to connect with consumers in new, more meaningful ways.

This technology was used to create special edition Budweiser bottles for the winners of the 2018 FIFA World Cup Russia. To help extend draught beer freshness, GITeC developed another packaging innovation called PureDraught. This “bottle-in-bottle” keg uses double-layered technology to prevent the contact of beer with CO2, mix gas or air.

Pricing Trends

Excluding on-premise markups, the average retail price for a 750 ml bottle of wine was USD 10.84 in 2018. Similarly, the average retail price for a 750 ml bottle of spirits increased to USD 15.92, excluding on-premise markups. Likewise, the average retail price for a case of beer increased to USD 31.29.

The price for 6 pack of beer was USD 6.3 in 2000 compared to USD 8.8 in 2016. There was a steady growth in the price of beer during 2000-2016. The inflation rate for beer was 3.24% in 2000 compared to 1.82% in 2016. Overall, the inflation rate for beer remained in the bracket of 0.58 to 3.24%.

Similarly, the price inflation rate for wine was 1.49% in 2000 compared to -0.05% in 2016. The overall price remained fluctuated during 2000-2016 with the inflation price falling down negative since 2010.

According to the U.S. Bureau of Labor Statistics, prices for alcoholic beverages were 44.36% higher in 2019 than in 2000. Between 2000 and 2019, Alcohol experienced an average inflation rate of 1.95% per year.

Regulatory Trends

Policy for Importing Bottled Alcohol Beverages Into the United States

Certain requirements apply to imported alcohol beverages imported in packages (i.e., bottles or other non-bulk containers) and persons engaged in the business of importing them. Those requirements are summarized below.

Federal Basic Permit

Persons seeking to engage in the business of importing distilled spirits, wine, or malt beverages as defined in the Federal Alcohol Administration Act (FAA Act) into the United States must apply for a Federal Basic Importer’s Permit (“Importer’s Permit”). To obtain an Importer’s Permit, the importer must file an “Application for Basic Permit under the Federal Alcohol Administration Act” on TTB with TTB’s National Revenue Center (NRC).

If one plans to sell at wholesale alcohol beverages other than those beverages that are directly imported with the Importer’s Permit, one must also apply for a Wholesaler’s Basic Permit, unless those beverages are not subject to the FAA Act.

Taxes, Duties, and Registration

Importers are responsible for all applicable Federal excise taxes and duties. U.S. Customs and Border Protection (CBP) collects all applicable Federal excise taxes on distilled spirits, wine, and beer as defined in the Internal Revenue Code. CBP also collects all applicable duties.

Importers must register as alcohol dealers and complete TTB F 5630.5(d) (PDF), “Alcohol Dealer Registration” before engaging in business. Importers must also file this form with TTB when there is a change in the registration information and when discontinuing their business.

Certificate of Label Approval Requirements

After receiving the Importer’s Permit, the importer must obtain a TTB-issued Certificate of Label Approval (COLA) for each unique product/label for distilled spirits, wine, or malt beverages as defined in the FAA Act. To obtain a COLA, the importer must file an “Application for and Certification/Exemption of Label/Bottle Approval” on TTB F 5100.31 (PDF) with TTB’s Alcohol Labeling and Formulation Division (ALFD).

Natural Wine Certificate

Importers of wine made from sound ripe grapes or other sounds, ripe fruit produced must comply with certification requirements set forth under the Miscellaneous Trade and Technical Corrections Act of 2004 to ensure that the practices and procedures used to produce the imported wine constitute proper cellar treatment. For some grape wines imported from countries with which the United States has an enological practices agreement, no certification is required.

Federal regulations are administered by four main bodies:

Alcohol and Tobacco Tax and Trade Bureau (TTB)
Food and Drug Administration (FDA)
Federal Trade Commission (FTC)
Bureau of Alcohol Tobacco and Firearms (ATF)
States are given the power to regulate sale & distribution of alcohol within their state Liquor control boards
Some states push regulatory authority to the county level (e.g. Montgomery County)

Market Size and Forecast

The alcohol sales generated USD 253.8 billion in 2018, an increase of 5.1%, or USD 12.4 billion from total sales in 2017.

The consumption of beer volume was recorded 200.2 million barrels and consumer spending on beer reached USD 117.3 billion. The consumption of wine volumes increased to 431.8 million 9-liter cases, (which includes 23.7 million cases of cider,) and consumer spending on wine increased by 4.91% to USD 72.2 billion

Spirits volume rose by 2.9% to 235.6 million 9-liter cases, and consumer spending on spirits increased by 5% to USD 64.3 billion.

The total dollar value of the US wine market in 2018 was USD 70.5 billion, with USD 23.3 billion (33%) derived from imported wine.

Export

On the other hand, U.S. wine exports reached USD 1.46 billion in winery revenues and 375 million liters (41.7 million cases) in 2018. 90% of the total export was made from California State. Total exports were down 4.8% in value and 1.2% in volume from the previous year.

The top export markets for US wines are: the European Union’s 28-member countries imported worth of USD 469 million, Canada imported wine worth USD 449 million, Hong Kong imported USD 130 million in value, Japan imported wine valued USD 93 million, and China imported wine worth USD 59 million.

Import

The US imported bottled wine mostly from Italy, France, New Zealand, and Australia. Italy exported 249.6 liters of wine to the US, France exported 133.79 liters of wine, New Zealand exported 47.18 million letters of wine, and Australia exported 85.56 million liters of wine to the US.

The total bottled wine imported reached 729.18 million liters while the import of sparkling wine recorded 136.23 million liters. In value terms, import of bottled wine amounted USD 4.6 billion and that of sparkling wine reached USD 1.3 billion.

In 2018, 82 percent of all beer was domestically produced, and 18 percent was imported from more than 100 different countries around the world. US exported a total of USD 737.6 million worth of beer representing 4.7% of the global beer export in 2018.

US craft beer export reached USD 125 million in 2017. Canada is the largest importer of US craft beer representing 51.3% of total export value. Other importing countries comprised the UK accounted for 10.5%, Sweden accounted for 6.7% and Japan accounted for 2.6%. In 2016, the export of craft beer was recorded at USD 121 million.

There were a total of 5964 breweries registered in the USA till 2018 whose combined production amounted 189 million barrels. Of which 6.5 million barrels were shipped in 2018. 72.6% market is held by brewers that produce above 6 million barrels.

Among wine varieties, Chardonnay saw the most sales in 2018. In 2018, the volume of Chardonnay sold was 30.33 million 9-liter cases amounting USD 25.49 million. Cabernet Sauvignon is the second most sold wine in the US totaling 24.52 million 9-liter cases and USD 25.95 million in value. Red Blends and Pinot Grigio are other varieties equally sold in volume term in 2018.

Within the Spirits division, the production volume of whiskey surged by 10% to reach 17.16 million proof gallons in 2018. However, brandy production slightly slumped by 0.07 million proof gallons in 2018. Also, rum and vodka output were marginally decreased.

Materials like corn, rye, malt, etc used in spirits production in volume were 396.42 billion pounds.

The total export of alcoholic beverage produced in the US was worth USD 1430 million in 2016. Growing at an average CAGR of 11% during 2016-2018, export value reached USD 1799 million in 2018. The revenue from the export of whiskey contributed the most during 2016-18. In 2016, whiskey export generated USD 975 million in revenue. In 2018, the value reached USD 1188 million, growing at a CAGR of 21.8% since 2016.

The US is also the largest importer of whiskey. It imported USD 2160 million worth of foreign whiskey in 2018, an increase of USD 197 million from the previous year. Vodka is the second most imported liquor by value. With a slight fluctuation in import during 2016-18, the import of vodka amounted USD 1484 million in 2018.

Import of gin and cordials was levelled off during 2016-18, however, the import rose slightly in 2018. The import of brandy and tequila was significantly surging since 2016. The import value for brandy and tequila reached USD 1420 million and USD 1441 million respectively in 2018.

Among wine varieties, Chardonnay saw the most sales in 2018. In 2018, the volume of Chardonnay sold was 30.33 million 9-liter cases amounting USD 25.49 million. Cabernet Sauvignon is the second most sold wine in the US totalling 24.52 million 9-liter cases and USD 25.95 million in value. Red Blends and Pinot Grigio are other varieties equally sold in volume term in 2018.

The total export of alcoholic beverage produced in the US was worth USD 1430 million in 2016. Growing at an average CAGR of 11% during 2016-2018, export value reached USD 1799 million in 2018.

The revenue from the export of whiskey contributed the most during 2016-18. In 2016, whiskey export generated USD 975 million in revenue. In 2018, the value reached USD 1188 million, growing at a CAGR of 21.8% since 2016.

Import of gin and cordials was leveled off during 2016-18, however, the import rose slightly in 2018. The import of brandy and tequila was significantly surging since 2016. The import value for brandy and tequila reached USD 1420 million and USD 1441 million respectively in 2018.

Market Outlook

The US continues to inch forward as the world’s most valuable wine market. The sales revenue from alcohol is estimated to value USD 260.65 billion by the end of 2019 and will grow at a CAGR of 2.7% annually thereafter to total USD 289.96 billion in 2023.

The US will drive imported sparkling wine growth over the next few years, by adding 4.6 million nine-liter cases.

In 2018 wine achieved its 24th consecutive year of volume growth in the U.S., aided by more than 13,000 wineries in the country, a number which increased by almost 1,000 in 2018. The still wine segment, which commands 87.3% of the total wine category, was up only 0.2%. Sparkling wine, led by prosecco (+11%), increased by 4.3%.

The output volume of beer is estimated to reach 188.62 million barrels in 2020, an increase of 2.55 million barrels from 2017. The output volume of spirits is predicted to grow at a CAGR of 7.10% producing 1820.23 million proof gallons in 2020. Still, wine both bulk and bottled will, however, shows growth rate less than 0.5% during 2017-20.

Distribution Chain Analysis

In the U.S., alcoholic beverages are primarily distributed by wholesale distributors, with generally separate distribution networks utilized for

beer portfolio
wine and spirits portfolio, as well as state alcohol beverage control agencies

. As is the case with some beverage alcohol companies, products sold through these agencies are subject to obtaining and maintaining listings to sell products in that agency’s state. State governments can affect prices paid by consumers of products through the imposition of taxes or, in states in which the government acts as the distributor of products through an alcohol beverage control agency, by directly setting the retail prices.

Trademarks are an important aspect of the alcoholic business. Companies sell products under a number of trademarks, which companies own or use under license. Throughout the diverse segments, various licenses and distribution agreements for the sale are arranged. These licenses and distribution agreements have varying terms and durations.

Competitive Landscape

The alcoholic beverage industry is highly competitive. Brands compete on the basis of quality, price, and brand recognition and distribution strength. The alcohol beverage products compete with other alcoholic and non-alcoholic beverages for consumer purchases, as well as shelf space in retail stores, restaurant presence, and wholesaler attention. Brands compete with numerous multinational producers and distributors of beverage alcohol products, with varying resources and competencies. The major competitors include in the US market include:

Beer: Anheuser-Busch InBev, Molson Coors, Heineken, Pabst Brewing Company, The Boston Beer Company, Mark Anthony
Wine: E. & J. Gallo Winery, The Wine Group, Trinchero Family Estates, Treasury Wine Estates, Ste. Michelle Wine Estates, Deutsch Family Wine & Spirits, Jackson Family Wines
Spirits: Diageo, Beam Suntory, Brown-Forman, Sazerac Company, Pernod Ricard

Competitive Factors

Brands primarily compete on the basis of quality, price, and brand recognition and distribution strength. Some other competing factors include:

Premiumization of beer: Wine and spirits have already been premiumized compared to beer’s nascent stage in the premiumization. Brands are revamping their core and value products toward high-end products to capture the growth opportunity in this segment.
Differentiation: Companies are sharpening their core brands towards a differentiated brand extension to create meaningful emotional and functional differentiation by celebrating the authenticity of products along with the natural ingredients.
Localization and affordability: Companies are in the race of expansion in low- and middle maturity markets through affordability initiatives. For example, in 2018 Anheuser-Busch launched Nossa and Magnifica in Brazil. These beers were brewed with local cassava and offered to consumers at a considerably lower price point while providing comparable margins.

Key Market Players

Anheuser-Busch InBev

Anheuser-Busch InBev is a multinational drink and brewing Holdings Company based in Belgium. Its products are sold in more than 50 countries. The company’s market capitalization in June 2019 was USD 179.37 billion.

AB InBev recorded worldwide revenue of USD 54.62 billion in 2018, a decrease of USD 1.82 from the previous year. The sales volume was 567.06 million hectolitres in 2018 compared to 612.57 million hectolitres. North American sales volume accounted for 19.53% of its global sales volume.

Constellation Brands Inc.

Constellation Brands Inc. Is an international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, Italy and Canada with brands like Corona, Modelo Especial, Robert Mondavi, Kim Crawford, Meiomi and SVEDKA Vodka.

In the U.S., It is the number one sales growth driver at retail among beverage alcohol suppliers. Also, it is the third-largest beer company in the U.S. market and a leading, higher-end wine company in the U.S. market. In 2018, its net sales were USD 8.11 billion.

The beer segment constituted 64.1% of net sales while wine and spirits segment accounted for 35.9% of the net sales. Similarly, in the previous year, the net sales were USD 7.58 billion, 61.5% contributed by beer brands and remaining by wine and spirits brands. It’s market capitalization as of July 2019 was recorded USD 38.33 billion.

Heineken Holdings NV

Heineken N.V. was incorporated in 1873 as a brewer and seller of beer. The Company operates through five segments: Africa, Middle East & Eastern Europe; Americas, Asia Pacific, Europe, and Head Office and Others. Africa, Middle East, and Eastern Europe segment includes brands, such as Heineken, Primus, Amstel, Walia, and Goldberg. The Americas segment includes brands, such as Heineken, Tecate, Amstel, Sol and Dos Equis.

The Asia Pacific segment includes brands, such as Heineken, Anchor, Larue, Tiger, and Bintang. The Europe segment includes brands, such as Heineken, Cruzcampo, Birra Moretti, Zywiec, and Strongbow Apple Ciders. The Company owns, markets and sells more than 250 brands in more than 190 countries. Its global brand is Heineken.

The Company’s international brands include Amstel, Desperados, Sol, Affligem, Tiger, Tecate, Red Stripe and Krusovice.

Heineken Holding N.V. holds 50.005% of the issued share capital of Heineken N.V., heads the HEINEKEN group. Its shares are traded on the Euronext Amsterdam stock exchange. Heineken Holding N.V.’s shares are also trading Over-the-Counter (OTC) in the USA as American Depositary Receipts (ADRs). It earned a total revenue of USD 33.40 billion in 2018 compared to USD 32.19 in the previous year. Its market capitalization in July 2019 was 64.47 billion.

E & J Gallo Winery

E. & J. Gallo Winery is the largest family-owned winery incorporated in 1933. E. & J. Gallo Winery is the largest exporter of California wine, and imports wines from Argentina, France, Italy, New Zealand, and Spain. With the production of nearly 900 million bottles per year, statistically, E & J Gallo produces one in every three bottles of wine made in the United States.

Many of these appear under brands other than Gallo, including Turning Leaf, Gossamer Bay, Indigo Hills, and Northern Sonoma. The winery, which remains privately owned by the Gallo family, has about 2,500 acres of prime Sonoma land in the vine, making it the largest landowner in the region. It operates four California wineries.

Gallo is also a market leader in sherry, vermouth, and port, marketed under the Gallo trade name; their other leading brands include André sparkling wine, E & J brandy, and Bartles & Jayme’s wine coolers. It held revenue of USD 4.8 billion in 2018.

Diageo PLC

Diageo PLC was incorporated in 1886 as an alcoholic beverage company. The Company operates in various categories, including spirits and beer. Its geographic segments include North America, Europe, Africa; Latin America and the Asia Pacific. Its principal products include Scotch whiskey, Gin, Vodka, Rum, Beer, Irish Cream Liqueur, Wine, Raki, Tequila, Canadian Whisky, American Whiskey, Progressive Adult Beverages, Cachaca, Brandy and Ready to Drink.

It owns manufacturing production facilities across the world, including maltings, distilleries, breweries, packaging plants, maturation warehouses, cooperages, and distribution warehouses.

Johnnie Walker, Smirnoff, Baileys, Captain Morgan are some of the company’s major brands.

North America represented 34.0% of its total sales in 2018. Sales from Scotch accounted for 25% of its total sales from all the products. In 2018, total sales increased slightly to reach 15.14 billion. North America accounted for 33.8% of its global sales. Its market capitalization as of July 2019 stood USD 81.67 billion.

Strategic Conclusion

The Total Available Market (TAM) for alcohol consumers is expected to reach just over 500 million globally over the next decade. Moreover, 730 million more consumers are expected to be able to afford international style spirits over the next decade.

Spirits are the largest segment that represents 52% of the global alcohol market by volume. North America is the largest market for premium drinks in the world. Health conscious consumers in the developed markets are seeking to drink better. They are increasingly interested in trying new brands and categories and are prepared to pay more for products of superior quality, craftsmanship, and provenance.

In emerging markets, increasing wealth means consumers are also seeking to ‘trade up’ into international spirits brands. This trend provides an opportunity to offer international premium spirits to consumers. The world’s informal alcohol market accounts for 25% of alcohol sales globally, with emerging markets accounting for a large proportion of this. Informal alcohol poses risks to consumer health and negatively impacts tax revenues. Providing safer products at affordable price points is the winning opportunity for beverage brands to tap into.