Australians are famously inclined to support the alcohol industry. Thankfully, this reputation has shifted from quantity to quality. Australia now has the lowest rates of per capita drinking since 1961. Consumers are now favouring premium beverages over cheaper options, making for a very exciting environment for independent alcohol companies.
The landscape for companies involved with beer, wine, and spirits has changed dramatically over the recent decades. In this article, we investigate these market trends, analyse key value drivers that make businesses popular with buyers, and take a look at some notable transactions from the last 24 months.
Nash Advisory has distilled everything you need to know about the changing alcohol industry. For more insider knowledge and expert analysis on market segments using real world examples, visit our Industries page.
Before 2000, Australia’s liquor markets were dominated by a handful of major beer companies with high market share, and a limited selection of offerings. These players had large scale manufacturing and large distribution.
The spirits market was dominated by international spirits conglomerates which distributed a relatively light selection of spirits. Take vodka, for example. Most Australians would have only been familiar with Stolichnaya, Grey Goose, and Smirnoff.
In the wine market there were a handful of major Australian names making waves, such as Penfolds, Jacob’s Creek, and De Bortoli.
Nearly two decades on, and the alcohol market has fundamentally shifted:
The attractive qualities of an Australian alcohol company comes in the form of a key value driver. In 2019, the key value drivers for the alcohol industry are:
To learn more about how how key value drivers affect business sales, visit our resource on business valuation by the multiples approach.
Take a unique whisky from Tasmania which has stellar growth and brand awareness. This company could command a strong multiple of profit of around 10x.
However if the company has a limited supply chain and a small inventory, then the business is likely to sell for considerably less.
What is less important in 2019 versus 2000 is:
Essentially, a large multi-national alcohol company is always on the look out for the next big brand or product. Whether it be a ginger beer, a cider, a boutique gin, or a whisky, the multi-national will be trying to establish:
Listed below are some transactions that have occurred in the last 24 months:
We found these interesting, especially considering that some of these companies were yet to achieve a stable level of profitability.
If you're considering selling an alcohol company, it pays to know exactly where the particular business sits. It's important to seek out expert knowledge and key insights before you make your decision, so that you can avoid some of the top 10 reasons businesses fail to sell.
There are potential buyers waiting to acquire your businesses. For insider knowledge and exceptional analysis into some of Australia's most profitable industries, visit Nash Advisory's Industries pages.