Consumer (8 of 8)

Beverages

About 7 minutes to read in full, or 1 minute for the short version belowFacts checked 1 October 2026

In one minute

Companies make and sell soft drinks, bottled water, beer, wine and spirits, from global brands to local bottlers and breweries.

The big idea: Most drinks are mostly water, which is heavy and cheap, so the finished drink is made close to drinkers while the brand, the recipe and the high-value spirits travel. Profit sits with whoever owns the brand people ask for and controls the route to the shelf and the bar. Growth now comes more from price and mix than from volume, while health taxes and falling alcohol consumption squeeze the old model.

One unit, in numbers: One unit case of soft drinks sold by a bottler to shops: USD 5 comes in, and USD 0.60 (12%) is left after its own costs.What is left is the unit's contribution, before the costs of the whole company. See the worked example
Typical margin: About 20 to 23 percent operating margin for US soft drinks and alcoholic drinks companies; about 15 percent for a large brewer; about 25 to 31 percent for leading brand ownersRoughly how much of every 100 of sales (or income) is left as profit after the running costs. More on margin
Capital intensity: MediumA fair amount of money is tied up, in things like stores, stock or equipment. More on capital intensity
The number to watch: VolumeUnit cases for soft drinks (about 5.7 litres each), hectolitres (100 litres) for beer, nine-litre cases for spirits and wine.

Ask this first in a case

Which category, and are we the brand owner, the bottler or brewer, or both?

Words used above (4)

Unit case:: 24 servings of 8 US fluid ounces, about 5.7 litres: the soft drinks volume unit.
Hectolitre:: 100 litres: the beer volume unit.
Bottler:: A company that mixes, fills and delivers drinks under a brand owner's licence.
Price and mix:: Revenue change from higher prices and from selling more expensive drinks and packs.

The industry's other words are explained in Words to know (12).

On this page (17 sections)

How money is made

Soft drinks brand owners sell concentrate to bottlers and earn a high margin on a small slice of the money.
Bottlers and brewers earn a thinner margin on the heavy work of making, packing and delivering drinks.
Spirits makers earn the highest margins from premium, often aged brands that travel worldwide.
Companies grow revenue through price increases and mix (more premium drinks and packs), not only volume.
Control of the route to market (coolers in shops, distribution to small outlets, bar contracts) protects volume.

Worked example: one unit

Unit economics means the money in and out for one unit of the business. Start from the revenue, take away the unit's own costs, and what is left is its contribution. More on unit economics

The unit: One unit case of soft drinks (24 servings of 8 US fluid ounces) sold by a bottler to shops. Illustrative, rounded figures.
Line	Amount	ShareShare of revenue
Bottler price to shops, after discounts	USD 5	100%
Minus Concentrate bought from the brand owner	USD 1.10	22%
Minus Sweetener	USD 0.45	9%
Minus Packaging (cans, PET bottles, labels, cases)	USD 1.10	22%
Minus Making and filling	USD 0.40	8%
Minus Distribution and selling	USD 1.05	21%
Minus Overheads	USD 0.30	6%
What is left (contribution)	USD 0.60	12%

Check: USD 5 minus USD 4.40 of costs leaves USD 0.60.

So what: The bottler keeps about USD 0.60 a case, a 12 percent margin, while the brand owner earns about 36 percent on the USD 1.10 of concentrate. Packaging and distribution are the bottler's biggest costs after concentrate, so the levers are price and pack mix, packaging cost and route density.

Key measures(8)

Key measures (also called KPIs, key performance indicators) are the numbers people in this industry track. Ask for the first one or two early in a case.

Volume
Unit cases for soft drinks (about 5.7 litres each), hectolitres (100 litres) for beer, nine-litre cases for spirits and wine.
Price and mix
Revenue growth from higher prices and from selling more expensive drinks and packs.
Typical: About 4 percentage points of Coca-Cola's 5 percent organic revenue growth in 2025, with volume flat[2]
Revenue per hectolitre
What a brewer earns on each 100 litres sold.
Typical: Up 4.4 percent at AB InBev in 2025 while volume fell 2.3 percent[3]
Gross margin
Revenue minus ingredients, packaging and production, as a share of revenue. Glossary: Gross margin
Typical: About 55 percent for US soft drinks companies and about 47 percent for alcoholic drinks companies[1]
EBITDA margin of a bottler
Profit before interest, tax, depreciation and amortization as a share of a bottler's sales.
Typical: About 23 percent at Varun Beverages in 2025[4]
Numeric distribution and cooler count
How many shops stock the brand, and how many branded fridges are in the market.
Excise per litre
Tax per litre, per unit of alcohol or per gram of sugar, which can be a large share of the shelf price.
Advertising and promotion as a share of sales
What it costs to keep brands in drinkers' minds.

First questions to ask

When a case lands in this industry, these questions get you to the numbers that matter.

Which category, and are we the brand owner, the bottler or brewer, or both?
Is the problem volume, price and mix, or cost?
Which channels and packs are growing or shrinking: shops or bars, small packs or large?
Has a tax, tariff or currency change moved our prices or costs?
What is our cost per unit case or per hectolitre, and how much is packaging?

Value chain: where the margin sits

The value chain is the steps a product or service passes through, from the first supplier to the customer. Each step below shows how much of the value it keeps. More on value chains

Step 1: Ingredients and packaging: water, sugar, malt and hops, grapes, grain; cans, PET bottles, glass
Thin margin
Sugar and grain traders, maltsters, can makers such as Ball and Crown, glass and PET makers
More than 74 percent of US beer is packed in aluminium cans and bottles, so metal prices matter.
Step 2: Brand owners: own the brands and recipes, sell concentrate, run the marketing
Fat margin
The Coca-Cola Company, PepsiCo, Diageo, Pernod Ricard
Coca-Cola reported a comparable operating margin of 31.2 percent in 2025.
Step 3: Bottling, brewing and distilling: make, fill and pack the drinks
Medium margin
Bottlers such as Varun Beverages and Coca-Cola HBC; brewers such as AB InBev and Heineken; distilleries
Varun Beverages, PepsiCo's big bottler, earned an EBITDA margin of about 23 percent in 2025; Heineken an operating margin of about 15 percent.
Step 4: Distribution: own trucks to shops, or wholesalers and distributors
Thin margin
Bottlers' and brewers' own fleets; wholesalers, which most US states require for alcohol
Step 5: Retail and on-trade: supermarkets, small shops, bars, restaurants and hotels
Margin varies
Supermarket chains, corner shops, bars and restaurants
Bars and restaurants earn high margins per drink but carry high fixed costs.

Profit pool: who keeps the money

Where in the value chain the profit ends up, which is often not where most of the sales are. More on profit pools

The profit sits with brand owners: soft drinks companies that sell concentrate, and spirits makers with premium brands, because their brands command prices and they leave the heavy work to others. Bottlers and brewers earn thinner margins on large revenues and need plants, trucks and coolers. Ingredient and packaging suppliers and distributors earn the least.

Cost structure(3)

The main costs, each as a share of revenue (the money from sales).

Cost of goods sold, US soft drinks companies: About 45 percent of revenue[1]
Selling, general and administrative costs (including advertising), same companies: About 33 percent of revenue[1]
Operating profit, same companies: About 21 percent of revenue[1]

Benchmarks(7)

Typical figures for the industry, to check a client's numbers against.

Operating margin, US soft drinks companies: About 20.5 percent[1]January 2026 data, 27 companies.
Operating margin, US alcoholic drinks companies: About 22.8 percent[1]January 2026 data, 14 companies.
Comparable operating margin, The Coca-Cola Company, 2025: About 31.2 percent[2]
Normalized EBITDA margin, AB InBev, 2025: About 35.8 percent[3]
Operating margin before exceptional items, Heineken, 2025: About 15.2 percent[5]
Operating margin, Pernod Ricard, year to June 2026: About 25.8 percent[6]
EBITDA margin, Varun Beverages, 2025: About 23.3 percent[4]

Typical cases(6)

Case prompts you might hear in this industry.

Profits of a soft drinks bottler in Egypt fell last year. Why?
A European brewer's volume keeps falling. How can it grow again?
How should a cola brand respond to a cheaper rival in India?
A sugar tax is coming. Should we reformulate our drinks?
Should a spirits company build a distillery in India?
Should we launch bottled water in Saudi Arabia?

Common traps(6)

Mistakes candidates make in this industry, and what to do instead.

Mixing up the brand owner and the bottler, which earn very different margins on very different revenues.
Treating revenue growth as healthy when it is all price while volume falls.
Forgetting excise, which can be a large share of the shelf price of beer and spirits.
Assuming young adults will simply start drinking alcohol later, when drinking has fallen in many markets.
Ignoring the route to market: shelf space, coolers and small shops decide volume.
Reaching for a generic framework instead of the real driver of this industry. Instead, start from volume, price and mix, and the cost per case or per hectolitre.

What changed, 2024 to 2026(8)

Recent changes a case could turn on.

People drank less alcohol: global alcohol volumes fell about 2 percent in 2025, the third yearly fall in a row.[8]
Only 54 percent of US adults said they drink in 2025, the lowest in nearly 90 years of Gallup polling.[9]
Spirits slowed: Diageo's organic net sales fell 2 percent in the year to June 2026, with weakness in North America and Asia Pacific.[7]
Brewers cut back: Heineken's volume fell 1.2 percent in 2025 and it announced 5,000 to 6,000 job cuts over two years.[5]
Saudi Arabia replaced its flat 50 percent excise on sweetened drinks with a per-litre tax that rises with sugar content from 1 January 2026.[10]
The WHO launched "3 by 35" in July 2025, urging countries to raise the real prices of tobacco, alcohol and sugary drinks by at least 50 percent by 2035 through taxes.[11]
China put anti-dumping duties of 27.7 to 34.9 percent on EU brandy from 5 July 2025, sparing exporters that agreed minimum prices.[12]
The India and UK trade agreement cuts India's 150 percent tariff on Scotch whisky to 75 percent at once and to 40 percent over ten years.[13]

Players by region(8)

Well-known companies in each region. You do not need to learn them by heart; they help you picture the market.

Global: The Coca-Cola Company
PepsiCo
AB InBev
Heineken
Diageo
Pernod Ricard
Nestle and Danone (waters)
Asahi (Japan)
Europe: Heineken (Netherlands)
Carlsberg (Denmark, with Britvic)
Diageo (UK)
Pernod Ricard (France)
Coca-Cola Europacific Partners
Coca-Cola HBC
Campari (Italy)
United States: The Coca-Cola Company
PepsiCo
Keurig Dr Pepper
Constellation Brands
Molson Coors
Brown-Forman
Monster
Celsius
Middle East: Almarai (Saudi Arabia)
Agthia (UAE, Al Ain water)
Aujan Coca-Cola Beverages Company
India: Varun Beverages (PepsiCo bottler)
Hindustan Coca-Cola Beverages
Reliance Consumer Products (Campa Cola)
United Spirits (Diageo)
Radico Khaitan
United Breweries (Heineken)
Bisleri (water)
Southeast Asia: Thai Beverage
Boon Rawd (Singha)
San Miguel (Philippines)
Fraser and Neave
China: Kweichow Moutai (baijiu)
China Resources Beer
Tsingtao
Nongfu Spring (water)
Africa: Coca-Cola Beverages Africa
AB InBev's African businesses

Words to know(12)

Linked words have a fuller entry in the glossary.

Unit case: 24 servings of 8 US fluid ounces, about 5.7 litres: the soft drinks volume unit.
Hectolitre: 100 litres: the beer volume unit.
Concentrate: The flavour base a soft drinks brand owner sells to bottlers.
Bottler: A company that mixes, fills and delivers drinks under a brand owner's licence.
Price and mix: Revenue change from higher prices and from selling more expensive drinks and packs.
Premiumization: Growing by getting drinkers to trade up to more expensive brands.
On-trade and off-trade: Drinks served in bars and restaurants, and drinks bought in shops.
Excise: A tax per litre, per unit of alcohol or per gram of sugar.
Three-tier system: The US rule in most states that alcohol passes from producer to wholesaler to retailer.
No and low alcohol: Drinks that copy beer, wine or spirits with no or little alcohol.
Refranchising: A brand owner selling its own bottlers to partner companies.
Cooler: A branded fridge a bottler places in a shop.

Business model patterns

The ways of making money this industry follows. Spot the pattern in a new industry and you already know the first questions to ask.

Sources(15)

Facts checked on 1 October 2026. Worked examples are illustrative, shaped by these sources rather than one company's figures.

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