working out an RRP

[ben83]

Hi there,

I'm brand new to the site so I apologise if I'm not following the correct protocol here.

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I have a glass bottled soft drink that I am importing into the UK after it's success in Germany. Import costs plus the original cost of the product make it pricey: I'm currently selling it to retailers at 90p exc VAT per bottle...

I understand that different areas have different rents/business rates to take into consideration, but some places are selling at £2.25 whereas others say it would be impossible to sell for less than £3.50. Seems like a massive difference, and obviously nobody will pay £3.50 for a soft drink so I lose the deal.

Increased UK brand awareness will eventually let me buy more product and therefore push the costs down, but until then I think a fair RRP would be beneficial for me to have in my mind.

Any advice?! Thanks, Ben83

 

[Scott-Copywriter]

What sort of soft drink is it? How big is the bottle? Does it have any sort of premium branding or image?

If not, then this could be a no-go idea. Even £2.25 is far more than almost all drinks out there on the market, nevermind £3.50. You need a GOOD reason to make people cough up £2.25, or they will simply opt for something which is less than half the price.

No matter how much you like the idea, it may simply not be financially viable, no matter what you try to do with it. It's pointless importing these drinks if you're going to struggle to sell any.

The only other option you have is to take the plunge and drum up some investment, so you can buy a significantly larger bulk order and get the costs right down to average levels.

 

[Bri]

3.50 thats more than a cheap bottle of wine, the sums are easy by volume alone you'd have to sell three times as many at 99p, even 99p at wholesale is expensive. A sports drink will come in at 60p for retail at 1.50 which is accepted.

 

[danielmeade]

I would have to agree with Scott here, I can't see the british public taking to a softdrink costing even a penny more then £2... take energy drinks for example, the likes of Monster and Relentless are priced at around £2 each, but that's really as far as they could go. They however have one up on a general soft drink, as they are a provider of energy, something the public are willing to spend that little bit extra on.

I think your options lie in either driving down the price per unit from your own supplier or to try and take it to a different market. What type of soft drink is it? Is it luxury? If so you could aim for high end UK bar's and cafes, they may want to stock it but of course these will only be in small quantities.

Good luck

 

[ben83]

thanks for the quick responses!

It's a 330ml glass bottle (with embossed 200ml glass bottles which I'm not importing yet, but will eventually be aimed at hotel mini bars)

it's a range of drinks, with the brand being built around the cola (which contains roughly twice as much caffeine as Coca Cola, roughly 2/3 as much as Red Bull. There is a coffee flavoured cola which is generally considered the 'Marmite' of the brand - ie you either love it or you hate it. Then there are 6 other flavours, including melon, cloudy lemonade and my favourite: cherry, apple and elderflower.

So... I'm looking at competing with 'Fentiman's' which regularly retails in London (where it seems logical to push so I'm spending time down here) but also have the options of pushing the energy element, or food matching and going at the restaurants/delis etc.

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I personally think that £2 is a fair price for the product to be sold at... and I have scope to drop the price... but when I get distributors on board I don't want the retailers being hit by a big price hike... if that makes sense???

so, thinking about it, I guess the real questions I want to know the answers to are a) how much should I charge the retailer (ex VAT) in order for them to be able to retail at £2, and b) how much are distributors likely to charge me? (maybe I'll send some speculative emails out to distributors?)

Thanks again everyone.

 

[Bri]

so, thinking about it, I guess the real questions I want to know the answers to are a) how much should I charge the retailer (ex VAT) in order for them to be able to retail at £2, and b) how much are distributors likely to charge me? (maybe I'll send some speculative emails out to distributors?)

I guess your looking arse backwards at this, have you had any samples sent over, I wouldnt sell a product once simply on its look and price. It has to have a market and I dont think youve probed that yet. I would get samples out there to get a response, pitch a marginal wholesale price and retail to outlets, not distributors, will it be sale or return, its a perishable so highly unlikely so you'll have to get rid of high volume of stock before sell by dates.

 

[ben83]

I guess your looking arse backwards at this, have you had any samples sent over, I wouldnt sell a product once simply on its look and price. It has to have a market and I dont think youve probed that yet. I would get samples out there to get a response, pitch a marginal wholesale price and retail to outlets, not distributors, will it be sale or return, its a perishable so highly unlikely so you'll have to get rid of high volume of stock before sell by dates.

Hi Bri,

yes, I've got it selling in 4 places in London already and have some more meetings set up - I've only been doing it for 2 weeks though.

I know that it's a great product due to it's success in Hamburg and Berlin, but appreciate that the UK market is completely different.

And yeh, I appreciate that I'm a bit clueless, this is completely new to me.

So far, Ive got it into places by giving them stock with no upfront charge: They sign to say how much they've recieved, and when it sells, I get 90p ex VAT per bottle - IF it doesn't sell and they want it out, I'll simply shake their hands and take back the unsold stock. I thought this was a good way to play things with an unknown product??

 

[Bri]

So far, Ive got it into places by giving them stock with no upfront charge: They sign to say how much they've recieved, and when it sells, I get 90p ex VAT per bottle - IF it doesn't sell and they want it out, I'll simply shake their hands and take back the unsold stock. I thought this was a good way to play things with an unknown product??

At least your covering your outlay, when do you go back to the stores to monitor performance and more importantly as Peter Kay always says' Eye line is Buy line'. Its no good if the store has got it way past the biggest sellers and hidden out of view. Do you stay and do your own prom trying to push it when your in the store, gives the owner a little impetus in selling it for you.

 

[ben83]

As it's in bars/delis at the moment, I feel it would be too much to be there pushing it, but I visit every 2 or 3 days to see how things are going/work out if there's anything I can do to help the product sell better/have some general banter.

Loving the Peter Kay quote! Currently being stocked on great eyeline shelves, 3/4 on the same shelf as Coca Cola in every place - Retailers seem keen to help the 'little guy' rather than the corporate giant... perhaps it's the current economic climate, or just the fact that they're independent businesses themselves... most likely the latter.

To back track, in your opinion, do you think 75p ex VAT would make it reasonable for retailers to sell at £2? If that's the case, then when the distributors get on-board it'd hardly be worth doing... but then if it got big I'd have good distribution channels in place to potentially introduce more products into the country - ie import lagers or other soft drinks...

perhaps this is more high risk than I thought... not so much on the capital outlay front, but on the sheer amount of time I'll be committing to the project.

Still... I'm enjoying doing it and I have other incomes to pay the rent etc etc so I shall battle on

 

[Scott-Copywriter]

I personally think that £2 is a fair price for the product to be sold at... and I have scope to drop the price... but when I get distributors on board I don't want the retailers being hit by a big price hike... if that makes sense???

Personal opinions can sometimes be the killer when it comes to business. What you personally think could be way off from how the market will realistically take it. You think it's a fair price, but I think it's quite expensive, so there's already two completely opposite views from two different people.

If you want to make a serious go of it, then you need to do some thorough research and testing before you put any serious money or time into the venture. Supplying your existing sellers with some bottles for re-sale is already a good start, and will help you build up a picture of how well they will sell. It's even better if they're all charging different prices, as you will get a rough idea of how well the market will respond to different costs.

I'd say keep that up and invest in more research until you have a clearer picture. However, be prepared to drop the idea if it turns out that they aren't going to sell without a miracle.

 

[ben83]

Personal opinions can sometimes be the killer when it comes to business. What you personally think could be way off from how the market will realistically take it. You think it's a fair price, but I think it's quite expensive, so there's already two completely opposite views from two different people.

If you want to make a serious go of it, then you need to do some thorough research and testing before you put any serious money or time into the venture. Supplying your existing sellers with some bottles for re-sale is already a good start, and will help you build up a picture of how well they will sell. It's even better if they're all charging different prices, as you will get a rough idea of how well the market will respond to different costs.

I'd say keep that up and invest in more research until you have a clearer picture. However, be prepared to drop the idea if it turns out that they aren't going to sell without a miracle.

Thanks Scott - good advice.

I've price checked drinks in over 100 delis/cafes/bars in London which is where I've come up with the £2 figure.

Maybe I need to talk to my existing clients, ask them how much they'd need to buy it in to sell it on for £2 in order to get a better picture.