How to Value: Wine & Liquor Stores

Industry Description

The Beer, Wine and Liquor Stores industry in the U.S. contain retail establishments licensed to sell alcoholic beverages for off-premises consumption (NAICS 445310).

The following are some basic characteristics of the Liquor Store industry:

  • Liquor Store industry has a combined revenue of $71.6 billion, with a growth rate of 2.0% in 2021-2026
  • There are approximately 43,800 businesses as of 2021
  • The Liquor Store industry employs approximately 211,000 people

Not included in the scope of this analysis is wholesale, grocery, convenience, and gas station store licensed to retail alcohol. In addition, drinking places, establishments engaged in retailing liquor for immediate consumption on the premises, are not included.

Industry Trends

The Liquor Store industry is in the mature phase of its lifecycle with low technological change and steady demand for alcoholic beverages. Operators are highly fragmented with the largest operator estimated to have less than 5% of market share in 2021. Some key factors influencing this industry are (i) growing popularity of ready to drink (RTD) cocktails and low/non-alcohol beverages, and (ii) deregulation and technology innovation are increasing internal and external competition. Each of these is described in further detail below.

In recent years, there has been a shift in consumer tastes which influences the product offerings at Liquor Stores. Consumers are expanding their palate and moving away from mass market and craft beers to ready-to-drink (RTD) beverages. According to NielsenIQ, RTD sales can be broken down into hard seltzer (43%), flavored malt beverages (37%), spirt RTDs (10.5%), and wine RTD (8.9%). Beer lost 10% of its market share to wine and hard liquor from 2006 to 2016; furthermore, total volume sales of RTD beverages have increased 336% from 2016 to 2021 according to Mintel. The RTD beverages demand surged originally under COVID-19 pandemic closures and restricted gatherings. However, the benefit of portability and bar-level quality have kept consumers engaged in post-pandemic lifted restrictions. These products are marketed as containing higher quality ingredients, superior taste experience, and are relatively healthier. Interestingly, even soft drink brands, PepsiCo and Coco-Cola, are entering the RTD alcoholic market with partnerships including Boston Beer Co, Constellation Brands and Molson Coors. 

The low and non-alcoholic beverages are also gaining market traction, with leading brands such as Athletic Brewing Co. Current survey reports show that Millennials and Gen Z are consuming less alcohol than previous generations. According to IWSR, the no- and low-alcohol beverage category has 3% of total beverage alcohol market share in 2020 and total volume is forecasted to grow by +31% by 2024 across 10 key countries.  These changes in consumer tastes influence Liquor Stores’ offerings and can be a source of competitive advantage by offering the right selection for its demographic.

Relaxed state regulations have provided market growth opportunity but also increased competition. Many US states have reduced the monopoly power of state-run liquor stores and permitted other retailers to sell beer, wine and/or liquor. Other states have removed Blue Laws, such as banning alcohol sales on Sundays. In addition, the COVID-19 pandemic triggered further loosening of restrictions to support restaurants and bars during the economic slowdown by temporarily permitting alcohol sales to-go. Many states are considering making such changes permanent.  While these legislative changes have been gradual, it signals a liberation of US alcohol laws. This deregulation increases competition for industry operators and forced many to lower prices.

In addition, another external competition arises from online alcohol delivery services. According to IWSR, the US is expected to be the largest alcohol e-commerce market in the world and is expected to represent 7% of total off-trade beverage alcohol volume by 2024. Direct-to-consumer shipping policies are gradually loosening across the US, with 47 states permitting wine delivery in some capacity. Mobile apps and e-commerce websites, such as Drizzly,, Minibar Delivery, and Instacart, are disrupting industry operators. This moderate technology innovation will likely create severe price and product competition.

Key Performance Metrics

In evaluating the Liquor Store industry, the following metrics can provide useful information in comparing a subject company to guideline companies and transactions.

  • Foot Traffic, including dwell time and shopping behavior
  • Sales per Square Foot
  • Conversion Rate, measured by number of sales by gross foot traffic
  • Average Transaction Value, or basket value
  • Sell Through Percentage, measured of percentage of units sold vs. how much inventory was available to begin with
  • Profit Margin
  • Gross Margin Return on Investment
  • Product Returns

Industry Organizations & Publications

The following organizations publish useful information:

  • International Wine & Spirt Research (IWSR)
  • National Alcohol Beverage Control Association (NABCA)
  • American Beverage Licensees (ABL)

Guideline Information: Private Purchase Transactions

Most liquor operators are privately owned and there is considerable M&A activity in this industry. Data regarding the sale of 100% of closely held liquor operators is generally the best source of information to appraise a subject company. The following are typical appraisal multiples from sale of liquor operators:

  • Revenue multiples between 0.3 and 0.5 times
  • Gross Profit multiples between 1.0 and 2.0 times
  • EBITDA multiples between 3.4 and 9.0 times

In selecting guideline transactions, it is of critical importance to select transactions that are similar to the subject company. Unique factors for any subject company must be considered to yield credible results. Additionally, industry economic conditions also vary over time, which must also be considered.   

Guideline Information: Publicly Traded Companies

Most Liquor operators are privately owned; however, there are a few that are publicly traded, meaning it is possible to compare a subject company based on industry metrics and appraise using industry multiples. However, as with the guideline transactions described above, it is of critical importance to select publicly traded companies that are similar to the subject company. Also be aware that multiples of certain publicly traded companies may not accurately reflect a subject company.  

The five largest publicly traded U.S Liquor operators, which include retailing wine, beer and liquor, ranked by market capitalization are:

  • Constellation Brands, Inc (NYSE: STZ)- $45.7 billion market capitalization
  • Brown-Forman Corporations (NYSE: BF-B) – $33.2 billion market capitalization
  • Molson Coors Beverage Company – (NYSE: TAP) – $10.6 billion market capitalization
  • The Boston Beer Company. Inc. (NYSE: SAM) – $4.2 billion market capitalization
  • The Duckhorn Portfolio (NYSE: NAPA) – $1.56 billion market capitalization

The Price-to-Earnings (P/E) ratios of these five companies range between 14.5 times to 38.3 times. The above listed companies are wineries, distilleries, and breweries, that include retailing alcohol, but services also include marketing, manufacturing, and distributing alcohol. As a result, using the above information will need to be taken into consideration.  

Appraisal Rules of Thumb

Please note you should never use a Rule of Thumb in place of a professional appraisal. You will never see a competent professional appraiser do their work using a Rule of Thumb. The professional standards that govern professional appraisal practice, which all professional appraisers should follow, specifically prohibit the use of Rules of Thumb.

Liquor operators are businesses sold based on sound economics. These economic considerations can be measured using the key performance indicators described above, but such economics cannot be accurately summarized in these simple formulae.