Distillers

The US distillers industry includes about 80 companies with combined annual revenue of $6 billion. Major companies include Beam Global Spirits & Wine, Brown-Foreman, Constellation Brands, and Heaven Hill Distilleries. The industry is highly concentrated: the top 25 companies account for 90 percent of industry revenue.

The industry includes businesses that distill, blend, or mix liquors. Some businesses distill alcohol onsite; others take neutral spirits and infuse alcohol with flavoring agents.

COMPETITIVE LANDSCAPE

Demand is driven primarily by trends in alcohol consumption and personal income. The profitability of individual companies depends on efficient operations and strong distribution channels. Large companies have advantages in brand recognition and economies of scale. Small operations can compete effectively by specializing in high-end or unusual spirits. The industry is capital-intensive: Average annual revenue per employee is about $1 million.

US distilleries compete with wine and beer producers and with global spirits companies for alcohol spending.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products include whiskey and bourbon (30 percent of industry revenues); vodka (10 percent); cordials and liqueurs (10 percent); bottled cocktails (10 percent); gin (5 percent); and distillers dried grains used for animal feed (5 percent). Other products include unflavored (neutral) spirits and unclassified or specialty liquors.

Making liquor involves six steps: mashing, fermenting, distilling, maturing, filtering, and bottling. A distiller first cooks (mashes) sweet or starchy raw materials to convert starch to sugar. With whiskey, the mash is corn with a blend of ...