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Pricing to Liquor Store vs Bar/Restaurant

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I've spent many years as a liquor buyer for bars, I know that our pricing was always higher than what a liquor store paid for the same bottle. Many times I would step into a liquor store and find the bottle cheaper than what the distributor charged me, although due to our state laws(which was the same for Colorado and Wisconsin) we could only spend $500 a year as a bar for alcoholic products that weren't from a distributor, limiting us to use that alottment for those moments that we ran out on a friday and had to go grab something for the weekend. So my question here is what is the difference in percentage from what you charge a liquor store to what you charge a bar/restaurant? Say if my bottle wholesales to a liquor store at $25 for a $35 retail bottle(all of my liquor stores use a 40% markup), would you increase it 20% and charge a bar/restaurant $30 at wholesale, or would you go higher, lower or stay the same across the board? I am looking to jump on a mini sales tour in my town next week to catch our last two big festivals(Telluride Film Fest and Telluride Blues and Brews). Just a note we are self distributing. Thanks!

~Abbott

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Our wholesale price is the same for everyone, but we self-distribute. Just like we can't decide what kind of drinks a bar wants to make with our products, we can't tell anyone what they should charge either. We currently don't sell to retailers (and probably never will in Hawaii), but even if we did, I would give the same wholesale price to the bar and the retailer.

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I don't have any problem using the same pricing for both, I know its a little different though and I don't want to upset one or the other.

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Some states have set it up so that the re-sellers pay more. North Carolina is a good example...control state, everything goes through the state package store. Bars and restaurants pay a HIGHER price for spirits, per bottle, than the consumer. I understand the idea of putting the tax burden on those who profit the most, but it drives the cost of a cocktail into the $8-15 range for a premium drink, and consumers tend to drink at home. OTOH, some states stipulate that EVERYONE pays the same price, and even regulate pricing and constitution of mixed drinks!

Because the craft beer industry has been so effective at lobbying for themselves over the past decade, we've ended up with a double-standard (and sometimes a triple-standard in wine-protection country) with regards to how pricing and distribution is regulated. The system, overall, favors larger, multi-state distributors who can afford local representation. If we, as crafty distillers, want to level the playing field (do we?) then it's going to take some dollars to re-define things. And a lot of organizing and lobbying.

Personally, I think that pricing should be level across the board to consumers and re-sellers (since they are paying for whatever attracts people, other than booze, and staffing, and...) but I'd like the flexibility to adjust my prices demographically...instead of pan-state. I'd also be happy to see more adjusting based on demand in control states, so that the market drives the price, rather than the opposite

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Quantity discounts. This is a matter of tied house law in many instances, but in many cases a retailer can obtain a quantity discount if it purchases a certain quantity of spirits. Needless to say, a grocery chain that centrally warehouse, where allowed, or purchased directly from a producer, where allowed, buys in significantly grater quantities than does a bar or restaurant and can command a quantity discount, where allowed. Think Costco pr Safeway or Kruger.

The business buying a thousand cases pays less than a business buying a single case. Because of delivery costs, this can mean that a neighborhood bar can end up paying a distributor more for the product than it could buy it for at a chain outlet and the numbers can crunch in a way that justifies both prices. Costco is a wholesaler to small businesses where this is allowed. However, this is the economics of large scale producers and volume retailers. It is not the economics of small distillers whose products do not sell in sufficient quantities to make volume discounts possible.

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On 8/20/2014 at 12:58 PM, Telluride said:

I've spent many years as a liquor buyer for bars, I know that our pricing was always higher than what a liquor store paid for the same bottle. Many times I would step into a liquor store and find the bottle cheaper than what the distributor charged me, although due to our state laws(which was the same for Colorado and Wisconsin) we could only spend $500 a year as a bar for alcoholic products that weren't from a distributor, limiting us to use that alottment for those moments that we ran out on a friday and had to go grab something for the weekend. So my question here is what is the difference in percentage from what you charge a liquor store to what you charge a bar/restaurant? Say if my bottle wholesales to a liquor store at $25 for a $35 retail bottle(all of my liquor stores use a 40% markup), would you increase it 20% and charge a bar/restaurant $30 at wholesale, or would you go higher, lower or stay the same across the board? I am looking to jump on a mini sales tour in my town next week to catch our last two big festivals(Telluride Film Fest and Telluride Blues and Brews). Just a note we are self distributing. Thanks!

~Abbott

 

your $35-retail bottle wholesales to the liquor store at $25; the bar/restaurant would expend effort going to the liquor store to obtain the bottle, so you do in fact provide value to the bar/restaurant at $30/bottle.   the bar/restaurant still saves $5 for not having to go to the liquor store when they run out, and you've delivered to them.   The "up charge" sounds fair.  Oops, now I see the age on this discussion -- how did the cold calling go, and what was your final decision?  Did you keep that price differential?   Always interested in theory and real   world practice of pricing choices!   Cheers!

 

 

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Old discussion.  But, I'll offer old knowledge in response.  When I knew, and I have no reason to think things have changed much, the price to a liquor store, or to a chain, was usually lower than the price to a bar (assuming we are talking call items and not well) because the bar bought in limited amounts.  Really big buyers, who could afford to centrally warehouse, got even better prices, because of quantity discounts no retailer who did not centrally warehouse could purchase.  Plus, if they warehoused, they could take advantage of post offs to buy at the right time.  Or in some states get direct delivery, going around the wholesaler tier completely., 

Price structure based on quantity meant that it was sometime (if not often) cheaper for a small  purchaser (bar or neighborhood liquor store that stocked bottles, not cases) to buy from someone like Costco than to buy from the wholesaler.  In fact, in at least one market with which I was familiar, the wholesalers, who really served as a merchandising service, not a sale organization, prefered that small retailers go to large retailers to buy and set prices designed to encourage just that. 

I'm answering this in the hope that someone who knows more about current conditions than I do can fill me in on the situation now, but I know that as recently as the Washington conversion from state monopoly to privatized distribution, given the quantity discount rules, central warehousing rules,  and direct sales rules that Costco got into the bill,  those persons who bought small liquor store licenses went broke fast.  With the advent of distribution systems that allow just in time delivery, so that a chain can ship a case of whiskey in the nightly restocking of a store from a central warehouse, small became increasingly untenable.  

i'd like to hear comments on this from those who know more than I do.

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My State is a 3 tier system (distillery, distributor, retailer), but State has no direct input on price at any level. What we initially found was, Our price to distributor, Distributor+30%, Retailer +30%. But each step is negotiable/variable. Distributors do seem to discount for Quantity.

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On 11/19/2019 at 12:51 PM, Falling Rock said:

My State is a 3 tier system (distillery, distributor, retailer), but State has no direct input on price at any level. What we initially found was, Our price to distributor, Distributor+30%, Retailer +30%. But each step is negotiable/variable. Distributors do seem to discount for Quantity.

We are also 3 tier, but the typical MARGIN at each level is 30%, not the MARK UP, which would be closer to 42%. Hence, typical retailer price on shelf is often double the wholesale price, depending also on state taxes. Typically discount for quantity, or even charge more for broken case or less-than-case orders. This can really hurt sales to small bars, but some distributors will give the full multiple case discount to bars, to get product placed on the back bar as a form of marketing.

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