The growth of Wine and Spirits Wholesaling industry in the US is restrained by strict regulations imposed by the government, according to market research report by research firm IBISWorld.

However, the industry as such will be high on the revenue but the profit margin will be low.

During recession, the profits for wine and spirits wholesaling industry went down as many consumers shifted towards low-margin goods.

IBISWorld industry analyst Agata Kaczanowska said although sales of wine and spirits at the retail level held up during the recession, wholesalers were less fortunate as retailers liquidated.

But after recession, wholesaling industry saw 1.4% growth per year in revenues during five years to 2012, which is expected to reach 3% to $73.7bn in 2012.

The supply chain for Wine and Spirits Wholesaling industry rely on one key part – the three-tier distribution system.

Kaczanowska said the three-tier system requires that producers sell alcoholic beverages to distributors who can then sell them to the retailer, and only retailers may sell directly to consumers.

But, government’s interest and emerging trends of direct-to-consumer sales and online sales could prove risk to the three-tier distribution system which will be devoid of its distribution tier.

Moreover, companies under the Wine and Spirits Wholesaling industry are coming up with services like tasting seminars and promotional events to retain their positions in the supply chain.

Wine and spirits wholesalers are primarily engaged in buying and reselling wine, distilled alcoholic beverages, and ethyl alcohol used in blended wines and distilled liquors.