Which countries are dominated by only a few alcohol suppliers?

The supply of wine is of interest to the wine industry in several ways, including the available supply of grapes, the various ways of processing them, the packaging / labeling options, the distribution channels in existence, and the retailers willing to stock the wines.

One of the most interesting parts of this for the customer is just how concentrated are the last two (distribution and retailing), since this also includes beer and spirits. That is: how many distributors and retailers dominate the various national markets around the world?

Let's briefly start with the last one, first. Below is a graph showing a number of alcohol retailers from various countries, ranked by total revenue in 2021.* As you can see, one Australian retailer dominates its market, whereas the next three share the United States market between them. You may not have expected the Australian market to be concentrated in this way.

There are various other countries involved in the graph, including the Netherlands (Gall and Gall B.V.) and Finland (Alko Oy). The latter is a government owned (but not operated) retailer, as also exist in Sweden (Systembolaget AB) and Norway (AS Vinmonopolet). If Sweden was included in the graph, it's (sole) retailer would be 5th in the list (with 390 million USD).

Clearly, retail monopolies make you No. 1 in your country, but this does not actually make you a big cheese globally.

Moving on, we can look at importers and distributors. The Annual Database of Global Wine Markets contains data for 2009 and 2014. This illustrates market concentration by showing the combined market share (percentage) of the four largest firms, for each of a series of countries, based on sales volume. The data are graphed below, with each point representing one country, located based on the 2009 data (horizontally) and the 2014 data (vertically).

I have labeled those countries where the concentration of distributors is >50%, plus those where the situation changed notably between 2009 and 2014. I have also highlighted Sweden in pink, which I discuss below. You can read the list of all countries for 2014 at the AAWE Facebook page.

The AAWE page notes:

Amazing. Extremely high wine market concentration in Chile (= little competition) — 4 companies account for >90% of the market. Extremely low concentration in Belgium-Luxembourg and Germany (stiff competition). This is one of the reasons why BEL-LUX and GER have low wine retail prices.

Note that both Thailand and India moved into a similar position to Chile, over the 5 years, and a few other countries headed that same way, including New Zealand. Its nearest neighbor, Australia, on the other hand, headed the other way, along with, most notably, Japan, but also Finland, Taiwan, Greece, Portugal, and China. The movement of China towards more diversity is important, given that it is potentially the biggest alcohol market in the world. Canada and the Ukraine also increased their diversity somewhat, although the latter is now a moot point, given subsequent political events.

So, there was a general movement towards less concentration of distributors, so that only 10 of the 39 countries had >50% concentration in 2014. However, this did include the USA, which really should do something about this situation, especially given the size of the national market. (No-one will do anything, though, because "mergers and acquisitions" is the big thing in the US business world; and the three-tier alcohol distribution system doesn't help. either).) Americans have oodles of blog sites trying to identify a few value-for-money wines, and you can now see why.

Global Wine Markets: A Statistical Compendium lists the four biggest companies in the USA as (in descending order):

• 2009: E&J Gallo Winery Inc, The Wine Group Inc, Constellation Brands Inc, Foster’s Group Ltd
• 2014: E&J Gallo Winery Inc, The Wine Group Inc, Constellation Brands Inc, Trinchero Family Estates **
  

These lists surprise no-one (in the industry). After all, the lists for 2003 and 2021 are not that much different (Has U.S. wine industry consolidation gone too far?).

Moreover, the global list of companies is not that much different, either, just a slightly changed order:

• 2009: Constellation Brands Inc, E&J Gallo Winery Inc, The Wine Group Inc, Foster’s Group Ltd
• 2014: E&J Gallo Winery Inc, Constellation Brands Inc, The Wine Group Inc, Accolade Wines Ltd **
  

Sweden, as an alternative example, has no such concentration issue. Even though Sweden has a single wine retailer (Systembolaget), it has many wine importers and distributors. Back in 2012, An extensive list of importers of wine to Sweden listed 242 companies; and Sweden now apparently has more than 1,000 importers (The top distributors in Sweden). For a country of 10 million people, that is an awful lot. The Statistical Compendium lists the top ones as:

• 2009: Pernod Ricard Groupe, Foster’s Group Ltd, Distell Group Ltd, MGM Mondo del Vino
• 2014: Treasury Wine Estates Ltd, Kleine Zalze, Oenoforos AB, Altia Oyj

So, there has also been considerable turnover of suppliers, in this particular country, which adds to the diversity. This diversity helps keep the retail prices low, due to competition.

However, the prices are also low because the single retailer has a government-mandated lack of profit motive (Why are there wine monopolies in Scandinavia?). This keeps the prices down because there is a standard retail mark-up across all products (Why is wine often cheaper in Sweden than elsewhere?). I have earlier listed a few specific examples of wine prices (Can we trust between-country or between-state comparisons of wine costs?).

The bottom line here is that concepts like “market share” tell you very little about the concept of monopolies. The market concentration at either wholesale or retail may be the key. In Sweden there is high concentration at retail but not at wholesale, whereas the USA has much higher wholesale concentration (and higher retail prices). Australia actually has one very large retail chain (first graph above) but much less concentration at the supplier level (second graph).

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* I have no idea where I got this graph (in May this year). If anyone knows its origin, then please let me know, and I will add the correct web link.

** In 2011, Foster’s Group split its beer and wine divisions — the former became Carlton & United Breweries, and the latter became Treasury Wine Estates. Also in 2011, Constellation Brands sold off its Australian and European divisions, which became Accolade Wines. Both of these events immediately  changed the size of the companies associated with the original names.