Love Cork Screw LLC (LCS) is a small, fairly new wine & distilled beverages wholesaler based in Las Vegas, Nevada. The product line includes varieties that offer the sophisticated and novice wine enthusiasts a range of choices for any palate. Each sleek wine bottle is colorful, whimsical and fun. Additionally, LCS offers 2 types of Scented Candles, each with a unique name and the “Lampley” Cigar, a high end Dominican cigar that serves as the perfect complement to have a full “Love Cork Screw” experience. The Love Cork Screw brand has risen in popularity since its launch in 2013, landing at over 40 Chicago-area restaurants and retailers, including all local Mariano 's Fresh Markets.
Revenue
According to Dun & Bradstreet (n.d), Love
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For every employee, Love Cork Screw LLC brings in an estimated $66,666 in revenue a year, which is 7% less than its wholesale wine & distilled beverages competitors in the United States (where the median is $72,000 per person). To put this in perspective, the typical company in the United States brings in $57,000 per employee, suggesting that companies in the industry generate more revenue per employee on average.
Beer, Wine & Distilled Spirits Wholesalers Industry Profile
Companies in this industry distribute beer, ale, wine, and distilled spirits on a wholesale basis. Major US companies include Charmer Sunbelt Group, Glazer 's, Reyes Holdings, Southern Wine & Spirits of America, and Wirtz Beverage Group. Demand for beer, wine, and spirits is increasing in emerging economies worldwide and creating opportunity for alcohol wholesalers. Africa, the Asia/Pacific region, and Latin America are key growth markets for the alcoholic beverage industry. The US beer, wine, and spirits distribution industry includes about 3,400 companies with combined annual revenue of about $135 billion. Key growth drivers include technological advances in distribution and a growing interest in locally produced and distributed wines, beers, and liquors. Suppliers and customers of beer, wine, and spirits distributors are covered in separate profiles for Breweries; Distilleries; Wineries; Bars & Nightclubs; and Beer, Wine, and Liquor Stores.
Competitive Landscape
As this brewery will be a start-up brewery, one of the most important aspects of the distribution side of the business to consider is can the new brewery keep up with demand and still provide the same consistent product (Craft beer distribution: Study the market, distributors and your own operations, 2013). By using a distributor to market and distribute the new beer line, the distributor assists with promoting the product to potential points of sale, which would be challenging for a new start-up brewery with a new product (Craft beer distribution: Study the market, distributors and your own operations, 2013). These distributors know the territory, know the potential points of sale that would be interested in the product, and know the market segments that would provide the most potential sales of he new beer. The distributor also has interest in the new beer line for their own business
Political Forces. The political forces affect the beer industry to a large extent. The rates of the beer in various parts of the country are affected by the taxes and duties applied by the Government. The political forces also affect the pricing of the beer by lowering the duties or deregulating the distribution channel. This leads to lower margins for the distribution channel partners. Leinenkugel will need to set up a distributor in the New England area to effectively distribute to this area.
A price estimate of a 6-pack of bottle Coors beer today is $5.59, and using the Consumer Price Index for 1990 it was determined that a 6-pack of bottle Coors cost approximately $3.43 (see Appendix A-2). Using Study F Cost of Goods Sold is 77.1% of sales. The contribution margin was then calculated as 22.9%. Fixed costs summed up to be about $250,000 including salaries, equipment & land depreciation, utilities, insurance, taxes, maintenance and janitorial services, and other miscellaneous expenses. Break-even Sales computed from the aforementioned figures turns out to be $1,211,790.39 (see Appendix A-4). Variable Costs per unit were determined using the contribution margin and price variables, and the result came to $2.65 (see Appendix A-4). Break-even quantity then was calculated at around 320,513 units, or gallons in 1990 (see Appendix A-5). A 6-pack of bottle beers holds approximately 72 fluid ounces, this makes up about 0.5625 gallons resulting in a price of roughly $5.35 per gallon (see Appendix A-6). Projected demand of beer in 1990 in South Delaware is about 5,400,397 (see Appendix A-1) and the Coors estimated market share of this demand according to Study C is 8.9% which computes to 480,635 gallons, therefore projected sales of Coors in the 2 county South Delaware distribution area is around $2,573,404.10 in 1990 (see Appendix A-7). The break-even market share of Coors in the 2 county distribution area of
“The beer industry in the United States generates $75 Billion in annual sales.” (Abelli, 4)
The International Beverage Corporation (IB) is a publicly traded company that produces and markets beverage brands including wine, imported beer, and soft drinks. IB owns not only vineyards and bottling capacities, but also select distribution channels in the United States and abroad. IB’s net sales are just over $3 billion with a net income of just under $200 million. Bel Vino Corporation (BV) is a publicly traded high-end California winery, known for its classic vintages and strong brands. BV’s annual sales is just over $370 million. The final company is Starshine Vineyards (SS). Starshine is a midsize, publicly traded wine producer with annual revenues of approximately $525 million.
iii. Import beer companies: These companies include Beck’s(Germany), Heineken (Holland) and Corona (Mexico). They control about 12% of the region’s market. However, these companies are seen to operate at disadvantage due to higher shipping costs, weaker distribution networks and an inability to control product freshness
Based on data found, there is a high amount of competition in the Mexican spirit market. In Mexico, Costco sells American-made whisky including: Jack Daniels and Johnnie Walker (Costco Mexico, n.d.). Walmart sells American-made bourbon including: Bulleit and Jim Beam (Walmart, n.d.). Furthermore, tequila is the leading alcoholic beverage consumed with Casa Pedro Domecq Mexico SA de CV leading the market in 2014 with 13% of total market sales. The distribution channel used is producer to retailer to consumer (Spirits in Mexico, n.d.). Without local connections and proper marketing, SOA will have a hard time building a customer following.
Retailers. The current trend, further than the wine market, is clearly the concentration of the “off-premises” retailers. The well known Wal-Mart and others became very large retailers, concentrating as well high bargaining leverage. For example, Costco is currently the largest wine retailer in the U.S.
The current system of the LCBO, the Beer Store and the off-site winery stores perform nearly identical functions in providing alcoholic beverages and products to consumers. In fact, their retail stores are sometimes located across the street from one another. But limited competition and separate business objectives prevent these companies from capitalizing on each other’s profits and market shares.
By 1980 Anheuser-Busch, Miller Brewing, Pabst, and Stroh’s were the main four that made up nearly 80% of the market. By the mid-nineties it was down to three major players: Coors, Miller, and Anheuser-Busch. The beer industry includes packaging manufacturers, shipping companies, agriculture, and other businesses who depend on brewing. The American brewing industry employs approximately 1.66 million Americans today. There are generally three tiers of beer suppliers in the United States: domestic giants like Anheuser-Busch and Miller, importers, and craft brewers.
Within the craft beer market, consumers have many products to chose. A product is anything offered within a market that which fulfills a want or need (Armstrong & Kotler, 2015). In 2012, over 1,750 breweries operated in the United States (U.S.), with over 1,920 the following year (Brewers,
distributors, brewers and retailers. A change suggested in Grolsch’s historic strategy is not to adapt the market completely in this case because it is an industry that gives importance to the country-of-origin. Markets Targeted: South Africa: Monopoly Market, No.1 SABMiller (Market Share: 98%) Brazil: Occupied by major Brewery Groups. China: Competitive Market. How to Compete: South Africa Brazil China Additional Line with SABMiller Co-Promotion with SABMiller
The three major participants in US market: concentrate producers, bottlers, and retail outlets. In the U.S. market, there are about 500 bottlers, and Concentrate producers are either owned or
In the United States the beer industries are regulated by the state and the federal governments. The state and the federal government pass their opinions in term of production, advertisement, distribution,
Global beer market development over the last 18-24 months has led to the leading players becoming increasingly isolated at the top of the rankings, with little chance of smaller players challenging their hegemony. Even with its sizeable investment, Heineken is struggling to keep in touch with the big three. As such, it is entirely feasible that second tier companies, behind the major three, may group together to amass scale and distribution. One such possible triumvirate is Heineken, Molson Coors and FEMSA.