Wine and Distilled Alcoholic Beverages

SIC 5182
WINE AND DISTILLED ALCOHOLIC BEVERAGES

This category includes establishments primarily engaged in the wholesale distribution of distilled spirits, including neutral spirits and ethyl alcohol used in blended wines and distilled liquor. The product range includes bottled wines and spirits, brandy and brandy spirits, cocktails, liquors, wine coolers, and wines.

NAICS Code(s)

422820 (Wine and Distilled Alcoholic Beverage Wholesalers)

In 2001 according to the U.S. Census Bureau, 1,853 establishments were engaged in the wholesale distribution of distilled spirits, including neutral spirits and ethyl alcohol used in blended wines and distilled liquor. There were 63,050 people employed in this industry, with an annual payroll of $3.3 billion. The total number of establishments increased to 2,691 in 2003. Combined, their annual sales were $29.3 billion. The total number of employees fell to 60,804 in 2003. The average sales per establishment was approximately $14 million, and there were about 23 employees per establishment. States with the majority of establishments were California, with 543, New York with 307, Florida with 197, and Texas with 142. Together, they accounted for more than 44 percent of the overall marketplace.

The wine sector accounted for 1,387 establishments and controlled more than half of the market. On the average, their sales totaled $8.4 million. Wine and distilled beverages numbered 583 establishments and accounted for more than 21 percent of the market, with sales averaging about $16.9 million. While brandy and brandy spirits numbered only ten establishments, they generated about $118.2 million in sales. Liquor numbered 543 with $22.8 million in sales while bottling wines and liquors averaged $30 million in sales.

Like other sectors of the wholesale industry, the wholesale wine and distilled beverages business is very fragmented, with a few large companies and many small firms. In 1997, 3,214 establishments operated in this wholesale industry, down from 3,651 in 1993. The majority of operations—1,281 distributors—were small scale, with less than five employees. There were 553 businesses that employed between five and nine workers, 438 listed 10 to 19 employees, while another 439 employed between 20 to 49 workers. Finally, 364 establishments listed more than 50 employees on their payroll.

Most of the wholesalers operating primarily as wine and distilled beverage distributors, a total of 639, had sales in the range of $1 million to $5 million. Another 602 reported sales exceeding $5 million. 549 establishments recorded sales between $500,000 and $999,000, while 370 reported sales in the $250,000 to $499,000 range. There were 204 units that reported sales between $100,000 and $249,000, 30 between $50,000 and $99,000, and only 18 establishments that reported less than $49,000 in sales.

While the number of wineries continued to increase, the number of wholesale distributors for smaller wineries became fewer and fewer as they consolidated with the larger wineries. An abundance of brands brought increased competition for wineries and distributors. As the economy began to improve in 2003, so did the wine industry. Some analysts were calling it a "Sellers Market,rdquo; which is good news for the almost flat sales the wineries experienced over the previous three years. According to the Wine Business Monthly, the wineries were also experiencing a "Buyers Market," when it came to vineyard values. Although there are some that wanted to re—emerge back into the wine industry the number of vineyard space was limited. From October of 2002 and October of 2003, wine sales increased 4 percent.

The top wholesaler in 1998 was Johnson Brothers Wholesale Liquor, of St. Paul, MN, followed by Young's Market Co, Glazer's Wholesale Drug Company, and Sunbelt Beverage Corp.

The wholesale wine and distilled beverages business remained very fragmented in the 2000s, with a few large companies and many small firms. The majority of operations—1,752 distributors—were small scale, with less than five employees. There were 461 businesses that employed between five and nine workers, 362 listed 10 to 24 employees, while another 209 employed between 25 to 49 workers. Finally, 277 establishments listed more than 50 employees on their payroll.

In the mid-1990s, distilleries, losing market share in the United States to beer and wine producers, foresaw greater sales opportunities abroad. California wineries also looked to overseas suppliers to expand their product lines and provide customers with lower-priced alternatives to their premium wines. Faced with the prospect of declining wine consumption, the Wine Market Council planned an advertising campaign aimed at younger consumers. If Seagram's 1996 decision to break with the industry's self-imposed ban on broadcast advertising is any indication of things to come, the distillers may soon follow suit.