What markup % on Alcohol?

[S90GAM]

Hello there,

I'm currently in the start-up stage of launching a new spirit brand in the UK. We have name, trademark and branding sorted, but now need to spend time on the marketing side.

I'm currently trying to put together a press pack to send around to potential distributors/small independent retailers with price information and a sample bottle of our spirit.

I'm stuck on what price to charge them per bottle. (Ideally, I will only sell per case of 6 but for the following lets just use a per bottle example)

For example, if my unit price for a bottle was £12ex vat to manufacture and I plan a retail price of £29.99 (24.99ex vat) What price would retailers or wholesalers realistically want to pay per item and what % they work on and expect from orders/sales?

Look forward to your replies.

Steve

 

[ethical PR]

Sorry I can't help with alcohol mark up. However a press pack is not for distributors - it is for the media to tell the story of your brand with content which is relevant to the media you are targeting.

 

[billmccallum1957]

Hello there,

I'm currently in the start-up stage of launching a new spirit brand in the UK. We have name, trademark and branding sorted, but now need to spend time on the marketing side.

When do you plan on starting your business planning????

Knowing the mark-up for distributors and independents should have been phase 1 of your market research.

 

[S90GAM]

When do you plan on starting your business planning????

Knowing the mark-up for distributors and independents should have been phase 1 of your market research.

Sorting that now hence the question.

 

[Chris Ashdown]

Its seems a bit late to now start

Your plan should include visits to distributers and any other likely buyers and talk to them about your plans and expectations, they are your potential customers and experts in spirits and other drinks

How did you come up with your manufacture costs have you included all costs and office costs plus distribution, HMRC customs and is it make and sell or like many spirits leave to get depth in the taste for a few years

Your first post comes across as very amateurish, hopefully I am wrong on that matter

 

[S90GAM]

Its seems a bit late to now start

Your plan should include visits to distributers and any other likely buyers and talk to them about your plans and expectations, they are your potential customers and experts in spirits and other drinks

How did you come up with your manufacture costs have you included all costs and office costs plus distribution, HMRC customs and is it make and sell or like many spirits leave to get depth in the taste for a few years

Your first post comes across as very amateurish, hopefully I am wrong on that matter

I know exactly my manufacturing costs. Have a full UK trademark, liquid (spirit) sorted. Bottler, Branding, WOWGR, AWRS so far from amateurish.

I just need to know what % they expect before I visit.

 

[Chris Ashdown]

Well in that case, you know both your costs of making it and your overheads and you know what price rage you hope people will sell at though you cannot control the last bit

Somewhere between is the price you are looking for

Trouble is there is no formula, if your product is going to sell in large volumes then the distributer will accept a small mark-up themselves that a small turnover as the selling work by them will be basically the same

You know your costs and what you can afford to give away for the distributers costs against selling direct to your local area first like micro brewery's and slowly expanding to a position where quantity sales make larger distribution a requirement

People spend millions on start up drinks marketing to get a foothold in the mass market, take the new craze of Gin, there are over two hundred different gins on the market in the UK, I am lead to believe, of which I could probably name4 or 5

 

[S90GAM]

Well in that case, you know both your costs of making it and your overheads and you know what price rage you hope people will sell at though you cannot control the last bit

Somewhere between is the price you are looking for

Trouble is there is no formula, if your product is going to sell in large volumes then the distributer will accept a small mark-up themselves that a small turnover as the selling work by them will be basically the same

You know your costs and what you can afford to give away for the distributers costs against selling direct to your local area first like micro brewery's and slowly expanding to a position where quantity sales make larger distribution a requirement

People spend millions on start up drinks marketing to get a foothold in the mass market, take the new craze of Gin, there are over two hundred different gins on the market in the UK, I am lead to believe, of which I could probably name4 or 5

Hi Chris, thank you for your reply. Yes, you are right there is no formula which is why I asked if anyone knew what the average or standard was. In my business planning, I have worked on a basis of retailers making a 33% markup and myself a 33% profit.

Yes you are right with the gin craze. I'm tapping into another market which is also on the incline.

 

[The Byre]

This is one of those classical questions that reveals that the person asking the question has never worked in the industry, knows none of the industry's fundamentals and needs to get some experience before going any further!

 

[Ian J]

People spend millions on start up drinks marketing to get a foothold in the mass market, take the new craze of Gin, there are over two hundred different gins on the market in the UK, I am lead to believe, of which I could probably name4 or 5

I've got about 20 different bottles of gin so must have about 180 more to go then. I'll try a bit harder this summer

Incidentally many of the smaller gin distillers use gin festivals around the country to get exposure for their brands

 

[Deleted member 59730]

If it helps I was told that with scotch the bottle and label cost more than the contents. The rest is the cost of tax, distribution, advertising etc.

 

[Chris Ashdown]

The ingredients are hardly expensive, I guess the wooden sherry barrels are the most expensive just a large dose of water a bit of grain and a bit of heat

 

[Chris Ashdown]

I've got about 20 different bottles of gin so must have about 180 more to go then. I'll try a bit harder this summer

Incidentally many of the smaller gin distillers use gin festivals around the country to get exposure for their brands

What a retirement you have to look forward to Ian

 

[S90GAM]

This is one of those classical questions that reveals that the person asking the question has never worked in the industry, knows none of the industry's fundamentals and needs to get some experience before going any further!

I don't need to have worked in the industry to launch a new brand! I certainly don't need to get experience before going any further. What I do need to do is stop asking questions on forums like these full of know it all, know FA armchair experts like you that just criticise people for asking a simple question and don't actually give any useful help or advice.

 

[Scalloway]

In my experience mark ups in the drinks trade are a trade secret. I recall great consternation when one of the local drinks wholesalers poached a member of staff from another.

 

[The Byre]

I don't need to have worked in the industry to launch a new brand! I certainly don't need to get experience before going any further. What I do need to do is stop asking questions on forums like these full of know it all, know FA armchair experts like you that just criticise people for asking a simple question and don't actually give any useful help or advice.

Thank you for those friendly words!

There is no set mark-up and you have to calculate the various taxes into the whole rather complex set of figures. Also, the level of taxes varies according to who you are, the size of your operation and what type of alcohol you are producing.

Realistically speaking, you need to have worked in the industry and on the marketing side, to be able to pitch your prices, volumes and rebate levels, including your annual credit note levels to retailers and regional wholesalers. It is a very complex field and is made all the more complex by the various taxes involved.

It is for that reason that I said what I did. You need somebody who understands that field to guide you through a minefield, with the Revenue Man on the one side and giants like SAB-Miller and Diageo on the other, doing their level best to stop independents gain shelf-space, on the other side.

That person should also understand your capital and marginal costs and be able to pitch the various prices for the various volumes and annual contracts in such a way that you can make a profit.

You can of course, always rock-up with boxes full of bottles at convenience stores and offer them the stuff at half RRP net and see if you get any takers. But without an experienced marketing person who understands the off-licence market, I fear for your enterprise.