The Beverage Industry

The beverage industry includes manufacturers and distributors of soft drinks, bottled water, energy drinks, sports drinks, milk products, coffee and tea based products, nutritional drinks, and alcohol products. Some factors that influence the consumption of these products can include the time of day or other environmental situations, but consumer tastes, demographics and lifestyles are the engine that drives the demand for beverages. Large companies benefit from economies of scale in production and distribution. Small companies can compete by producing new products, catering to local tastes, or nimbly reacting to changes in the marketplace. The beverage industry is a huge part of our economy that affects many different sectors. Non-alcoholic beverages include a large variety of drinks, but sodas account for about 60 percent of the market. The manufacture and distribution of most national soda brands is a two-tiered process. The primary manufacturer produces syrup called concentrate, and local bottlers manufacture and distribute the finished product. The flavored syrup, corn syrup (as a sweetener), and filtered water are mixed in the right proportions, carbon dioxide gas is injected, and the finished soda product is poured into bottles or cans, which are capped, labeled, and packaged. The market for U.S. milk and dairy products, both domestically and internationally has been growing dramatically in recent decades. As a result, U.S. farm milk production has grown to about 190 billion pounds per year. Although milk is processed, it is not an engineered or fabricated food. It is about 87 percent water and 13 percent solids. The fat portion of the milk contains fat-soluble vitamins. The solids other than fat include proteins, carbohydrates, water-soluble vitamins, and minerals. Fragmentation occurs when many competitors jockey for dominance in a category. For example, the top 50 companies in the beer wholesale industry account for about a third of industry revenue. The wine and spirits wholesale industry is concentrated, with the top 50 companies account for more than 70 percent of industry revenue. Major alcohol products are beer, wine, and distilled spirits (hard liquor). Distributors tend to specialize in either beer, or wine and spirits. About half of overall industry revenue comes from the sale of beer, 30 percent from liquor, and 20 percent from wine.