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The economics of alcohol production

The economics of alcohol production vary between producers, based on their actual activities, efficiency, and market. However, the charts in figure 9 take the examples of two of the leading global producers – Diageo and AB InBev – as an indicative view of the costs and profitability associated with alcohol production. Both companies have net profit margins of around 25%, meaning that a quarter of their revenue is retained by shareholders. These companies invest more in marketing (15%) than their entire employee payroll costs (10-15%). In both cases, tax accounts for around a sixth of pre-tax profit (note that this is tax paid directly by the producer, and excludes taxes borne by consumers, such as excise duty or value added tax).

 

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