Global Business-Advisory Firm AlixPartners conducted a poll of 1,000 consumers in February 2010 as part of a study to gauge the consumer market for fine beverages. The report isn’t encouraging, saying that about 20% of non-alcoholic beverage companies and 35% of alcoholic beverage companies are in danger of going under over the next two years. That isn’t good news for sure, though it seems to be something of a misleading statistic given the ambiguity of it.
According to the AlixPartners study, “Juices and coffees are the only categories expected to see higher consumption, with all other categories studied – teas, sports drinks, bottled water and carbonated beverages – showing expected declines. AlixPartners estimates that the U.S. non-alcoholic beverage sector – a $197 billion market — could see a revenue loss of $2.7 billion due to lower consumption.
The report found similar demand pressures in the alcoholic beverage sector, with 89% of consumers responding that they plan to spend the same or less over the 12-month period. Some 26% of the respondents said they would spend less on beer, representing a potential $3.5 billion in lost revenue. Similar expectations are seen in both the wine and spirits categories, which along with the decline in beer consumption, could result in lost revenue of $5.2 billion, out of the $147 billion U.S. market.
“The findings show that in today’s economy, beverage companies will continue to struggle in generating top-line growth,” said David Garfield, a managing director of AlixPartners and leader of the firm’s Consumer Products practice. “Given flat demand, and little flexibility on pricing, it’s imperative for the global beverage companies to aggressively improve their cost structures. Otherwise, a number of industry players, particularly weaker ones, could be in financial jeopardy quite soon. For some, it could literally be a matter of survival.”
I feel compelled to release my own study, “500 Reasons Why the Fine Beverage Universe Is Awesome and Will Always Triumph”, so far I have polled myself and the results are looking somewhere between incredible and outstanding. More to come, stay tuned…