Business Risk in Liquor Retailing

Risk-rating reports can help evaluate the ups and downs of retailing liquor.

In any business venture there is risk, however, risk-rating reports on liquor and spirit production can help assess the business risk in retailing liquor. Three types of risk are recognized by these reports: risk from within the industry itself, risk within the growth of the industry and risk arising from external objects within this industry.

Structural Risk

This is defined by risks within the industry itself including competition, imports and exports, and reliability/unpredictability of the industry as a whole. This risk is defined by the industry as a whole, thus it might not affect the individual seller.

Growth Risk

U.S. Industry Report on wine and spirit wholesaling suggests, "Industry growth will be restrained significantly by strict regulations. The industry will always be one of high revenue but small profit margins." Therefore, this risk can be most identified on the level of the individual seller.

External Risk

This risk is associated with forces beyond control of the industry. For instance, the strict regulations that are put into place by state alcohol, tobacco and firearm agencies brought on by negligence, which also raises risk in terms of unpredictability as there is no way to measure when these might rise or fall. The effects of this risk can be seen on an individual and industry level as a whole.

References

• Liquor & Spirits Production in the US - Industry Risk Rating Report
• Liquor & Spirits Production in the US - Industry Risk Rating Report (IBISWorld)
• U.S. Industry Report-Wine and Spirits Wholesaling

Resources

• Alcohol Retail Monopolies and Privatization of Retail Sales