What is Alcohol Trade Finance?
Global declines in personal alcohol consumption per capita belie an array of growth opportunities for the alcoholic beverage sector in mature and developing markets. With the average global consumers’ age, income and geographic location shifting as well as their tastes and behaviours, firms willing to differentiate their product offering or expand into new ventures are reaping the rewards. Trade Finance Global has helped a number of alcohol traders to do just that through its range of trade finance products, designed to help firms constrained by their international order books invest in profitable ventures.
Alcohol Trade Finance
The alcohol market is being disrupted by a series of macroeconomic and demographic factors. Falling wine consumption in Europe is being offset by growth in global consumption. The US and China now account for 21% of global wine consumption, having accounted for just 10% a decade earlier. More broadly, consumer choices are shifting, as spirits and craft beers see increasing sales, and consumers in established markets are increasingly demanding niche products such as low-alcohol or alcohol-free beers. The average alcohol consumer is also now older, better off and more likely to be urban dwelling, with brands shifting their product appeal towards experience-based products like cocktail spirits accordingly.
Nevertheless, alcohol remains a global trade; growers from Australia, Chile and New Zealand dominate global wine brand rankings, and consumers are showing increased interest in Asian-developed alcoholic products like Japanese whiskeys and Chinese beers. However, the sheer volume of transactions and transportation which must be conducted across borders by alcohol traders in order to service wholesalers, bar chains and major retailers can cause severe cash flow issues in otherwise healthy accounts receivable. Trade finance products are specifically designed to alleviate this issue.
Key alcohol products financed include:
- Beers (bottled, canned or keg)
- Cider & perry
- Wine, including sparkling and fortified wines
- Distilled grape spirits
- Gin and Geneva
- Liqueurs and cordials
- You are a well-established trader with dependable revenue streams
- Your business is consumers’
- Your proposed venture is underpinned by a clear business plan
TFG offers lending to firms against the orders and invoices confirmed in their accounts, with financing packages tailored to the needs of both importers and exporters of products. After carefully analysing a firm’s credit application and business plans, TFG can draw on hundreds on funding sources to find lending on bespoke terms which suit the trader’s financial requirements. Once agreed, TFG will extend a line of credit to the transactions buyer, enabling them to pay the seller up front for their goods receivable upon provision of a bill of lading confirming the dispatch of the goods. Once received, the buyer benefits from extended terms of repayment to allow them to complete their forwarding transaction, before repaying the finance from the profits of the successful venture.
What is the SIC Code for Trade in Alcohol?
Businesses manufacturing alcohol products are grouped under a series of six SIC codes varying by product type:
|11010||Distilling, rectifying and blending of spirits|
|11020||Manufacture of wine from grape|
|11030||Manufacture of cider and other fruit wines|
|11040||Manufacture of other non-distilled fermented beverages|
|11050||Manufacture of beer|
|11060||Manufacture of malt|
Separate information regarding sector-specific trade financing is also available for firms interested in Food & Drink Finance and Hospitality Finance.
Full tariff schedules for beer, cider, wine and spirits can be found on gov.uk.
A trusted buyer approached an alcohol wholesaler asking them to source a new beer product from China for their venues. Knowing the goods could be sold on to the customer profitably, the firm was able to obtain trade finance from TFG to issue letters of credit to the international supplier, ship the goods to the UK and forward the freight to complete the transaction.
Speak to our trade finance team
- Partner with private investors on terms appropriate for businesses trading internationally
- Financial products tailored to suit your requirements by trade finance experts
- Facilitation and monitoring to reduce transaction risk