You're here: Home / Alcohol knowledge centre / The alcohol industry / Factsheets / Who are the major participants in the alcohol industry?

Who are the major participants in the alcohol industry?

In the broadest terms, the alcohol industry consists of all the companies that participate in the alcohol value chain, and so contribute to bringing alcohol to consumers. These companies fall into five categories: 

  • Raw materials suppliers: Primarily farmers, who grow ingredients such as barley, hops, apples, grapes and sugar
  • Producers: Companies that manufacture alcohol, managing processes such as brewing, distillation, and bottling
  • Distributors & Wholesalers: Intermediaries who connect producers and vendors, typically storing and transporting the product
  • Vendors: Sellers of alcohol – both on-licence (where drinks are bought and consumed on the premises e.g. pubs, club and restaurants) and off-licence (where the drinks are bought and then taken away to be consumed e.g. supermarkets)
  • Input Suppliers/Contractors:  Companies that supply products and services to any of the above e.g. providing farm machinery, distillation equipment, freight services, marketing, consultancy, lobbying etc.

Raw materials

Raw materials for the alcohol industry are supplied by a large and fragmented set of farmers, specialising in different crops, such as barley or grapes. Occasionally these crops will pass through third parties before reaching producers – for instance, specialist companies responsible for processes such as ‘malting’, a necessary pre-condition for producing whisky from barley.

Producers

Alcohol producers are often taken to be synonymous with the entire alcohol industry, as they generate most of the industry value, and are the only element of the value chain that typically focuses exclusively on alcohol. Figure 2 lists the largest global alcohol producers:

Industry structure varies substantially between drinks categories. A few large global firms dominate the beer market, while the wine market is extremely fragmented, with no single company holding a substantial market share. The global spirits market is somewhere in between: Diageo and Pernod Ricard are clear market leaders, but there is a ‘long tail’ of smaller local producers that still account for the majority of the market.

 

In Western countries, domestic alcohol markets broadly reflect the global picture, with some specificities unique to each country. The dominant producers tend to be the same in each market, but their most successful brands tend to differ from each market to the next. For example, in the UK, AB InBev’s highest selling brands are Stella Artois and Budweiser, two of its ‘global brands’.[1] However, Molson Coors, despite being another multinational brewer, promotes Carling, a traditional British beer, as its leading product in the UK. SABMiller has less of a presence in the UK than elsewhere. Another distinctive feature of the UK landscape is the size of the cider market, with Strongbow amongst the top ten alcoholic beverages, though this too is owned by a global brewer (Heineken).[2] Large drinks companies tend to have a broad portfolio of products, catering to a wide range of products. For example, the C&C Group produce relatively premium ‘craft’-style cider, such as Addlestones, mass market products such as Magners and Tennants and strong, cheap ciders such as K and White Ace, in a category that has been particularly associated with harmful drinking.[3]

Distributors and wholesalers

There are a number of companies that purchase drinks from producers and distribute them to on-trade and off-trade retailers. According to IBISWorld, in the UK this market is relatively fragmented – comprising 2,675 businesses,[4] with the top two players (Matthew Clark and Diageo’s distribution arm) accounting for 11% of the market.[5] Distributors and wholesalers can be alcohol-focused specialists, such as Matthew Clark, which focuses on pubs; or general suppliers, such as Palmer & Harvey, which typically serves supermarkets.

On-licence vendors

In the UK, as in many other countries, a licence from the state is required to sell alcohol, with different licences depending on whether alcohol is consumed on the premises (see the Availability and Licensing factsheet). As of 2014, there are 116,200 licenced on-trade premises in England and Wales.[6] These include pubs, bars, clubs, hotels, restaurants, theatres and sporting stadia. However, of these, only pubs and bars rely on alcohol for their primary revenue stream. The largest UK pub operators are detailed in figure 7 (note that average revenue per pub varies substantially between pub operators due to differences in business models, with some pubs owning more of their estate – see the section on ‘Vertical Integration’).

In 2014, 33% of the alcohol consumed in the UK was purchased on premises, though this varies substantially by type of drink – beer is much more likely to be consumed in the on-trade than wine.[7]

Off-licence vendors

As illustrated in figure 8, around 67% of UK alcohol sales occur in the 52,400 licenced off-trade premises.[8] Supermarkets account for two-thirds of off-trade sales – that is, a little under half of the total market. Convenience stores represent a further 10% (approximately) of the off-trade market.[9] These are operated by the major grocery retailers – Tesco, Sainsbury’s, ASDA, Morrisons, Aldi and LIDL. Specialist alcohol retailers (Majestic, Oddbins and Bargain Booze), as well as corner shops (SPAR, Londis and independents) make up most of the rest of the off-trade market.

 

Previous: What is the alcohol industry?       |       Next: The economics of alcohol production


[1] AB InBev website, Global Beer brands. [Accessed 17 December 2015].

[2] The Grocer (2015), Britain’s 100 Biggest Alcohol Brands

[3] Goodall, T. (2011), White Cider and street drinkers: Recommendations to reduce harm. London: Alcohol Concern

[4] PRWeb (2015), Alcoholic Beverage Wholesaling in the UK Industry Market Research Report Now Updated by IBISWorld. [Press Release].

[5] PRWeb (2015), Alcoholic Beverage Wholesaling in the UK Industry Market Research Report Now Updated by IBISWorld. [Press Release].

[6] Tettenborn, M. (ed.) (2015), British Beer and Pub Association Statistical Handbook 2015. London: Brewing Publications Limited, p. 64

[7] Tettenborn, M. op. cit., p. 32

[8] Tettenborn, M. op. cit., p32, p. 64

[9] Green, M. (2014), Convenience stores eat BWS market share, Off Licence News [Online]. 4 April. [Accessed 17 December 2015].