On-site sales vs. liquor store

[Palmetto Coast]

Since there seems to be a lot of "Tasting Room" chatter, it got me thinking about this...

I was wondering if anyone was offering some sort of "incentive" program for on-site sales. Has anyone tried it? Is it allowed or not allowed in your state? We are required to "maintain pricing of the alcoholic liquors sold at the licensed premises at a price approximating retail prices generally charged for identical alcoholic liquors in the county where the on site premises is located."

Obviously, we keep more if they buy it on-premise.

I wouldn't want to anger the local liquor stores, but it might bring in a little more on-site sales, which according to many of you, fuels your bottom line.

What other pros/cons can you think of? If you offer any incentives, what ideas have you come up with? Example: After purchasing your 5th bottle, you get a free shirt.

Curious to hear what you have to say.

Todd

[Sherman]

In Kentucky, they allow gift shop sales collocated with the distillery.

But there are a couple catches.

1. You have to run it through a wholesaler using a paper trail but not a physical movement. This is because KY taxes the wholesalers and the retail sales.

2. If you make it available in your gift shop it must be available to every retail liquor store in the state.

This can be used in your favor if you are a liquor store owner and like something you see at a distillery's gift shop which is supposed to be a gift shop "Exclusive"

[Vokurka]

To avoid pissing off local liquor stores you need to price your products a couple of bucks higher than the typical retail price...so as not to be in competition with the liquor stores.

[grehorst]

We purposely price our product slightly higher than the area stores selling it. It keeps our liquor retailers happy and I'd rather keep them happy and loose a sale at the tasting room than piss them off to the point they stop carrying and hand selling my products. Frankly, we're not a liquor store- if we can get people to try our products and they decide to buy elsewhere thats fine- I still get a sale- only this time through the retailer. Our tasting room sales are very strong and it hasn't damaged the sales of our retailers either.

[porter]

I know Missouri law has a problem with give-aways. There are some fine lines relating to 'enticement to drink'. giving something with the product is different than the punch card idea of buying x many to get a free gift.

As for added incentives on-premise, I am looking at the idea of selling smaller size, maybe 175 or 200 ml bottles at the distillery only. We would make them available to the retailers, but the liquor stores wouldn't be interested in these small sizes and would probably place them behind the counter, but for tourists they make a very nice sampler. I know when we travel around I'd give $10 for a 200ml and buy a couple before I buy a single 750ml for $25. You get a better margin on the 200ml and sell more product variety.

How many times have you gone by the sampler bins and picked up several new brands because you could get them for only a buck? If Crown Royal, Jack, Turkey and others see a reason to sell small sizes why not us? I don't think we want to bother with the small 1oz sizes, but the 200ml would work.

[Palmetto Coast]

I know Missouri law has a problem with give-aways. There are some fine lines relating to 'enticement to drink'. giving something with the product is different than the punch card idea of buying x many to get a free gift.

As for added incentives on-premise, I am looking at the idea of selling smaller size, maybe 175 or 200 ml bottles at the distillery only. We would make them available to the retailers, but the liquor stores wouldn't be interested in these small sizes and would probably place them behind the counter, but for tourists they make a very nice sampler. I know when we travel around I'd give $10 for a 200ml and buy a couple before I buy a single 750ml for $25. You get a better margin on the 200ml and sell more product variety.

How many times have you gone by the sampler bins and picked up several new brands because you could get them for only a buck? If Crown Royal, Jack, Turkey and others see a reason to sell small sizes why not us? I don't think we want to bother with the small 1oz sizes, but the 200ml would work.

I had assumed the pricing on some of the above comments. I really don't want to step on the retailers toes.

Our laws also state the following:

"sell at retail at the licensed premises only in quantities of 750 milliliter bottles the alcoholic liquors produced at the licensed premises, but only if the labels for the bottles are marked ‘not for resale’"

So we do not have that option. Luckily, as a micro-distillery, we are able to produce up to "one hundred and twenty five thousand cases a year."

Oh my gosh!!

No word on whether they are 6 or 12 bottles per case.

Todd

[cowdery]

The suggestion to keep gift shop prices slightly higher than prevailing retail is a good one but that shouldn't prevent you from promoting; within the local law, of course. Use promotions strategically; to introduce a new product, incent an add-on purchase, stimulate impulse sales, blow-out a discontinued product, etc. Always have something for people who can only buy things on deal. The temptation is to cut a lot of prices because your margin is so good but you should go the opposite way to support the intrinsic value of your product, then use incentives to plus-up the total register ring. Sometimes the best premium is a promotional item the consumer might not ordinarily buy. For example, if you're already printing cardboard coasters for on-premise, use a set of them as a gift-with-purchase premium.

[Charles@AEppelTreow]

I try to price to match other retailers. In almost 10 years, I've had a few complaints (one rather intense) that my pricing is higher than some other retailers. It's a moderately common expectation that prices at the cidery will be cheaper - like a factory outlet store.

I explain with two points:

1) I can _suggest_ a retail price. I can't order it. There are retailers who accept a lower margin and underprice me. They do it on purpose, since that's _their_ business model.

2) You get a lot more coming directly to the cidery than just the product. You get me, my partner orchard, you get the sampling, the experience and the education about what we are and what we do.

It's worked so far.

Regarding side items: hasn't worked for us. Amounts to about 3% of tasting room revenue. Except for cheese - and then only when we sample it out like the rest of the products.

[coop]

We tell all our accounts what we are selling each product for at our store. How they price it is up to them. From our guest register we send out post cards to all locals that have signed it from the three counties around us once a year for a customer appreciation day. All stores do this. We provide non alcoholic drinks, some snacks things like that and put everything on sale that day. It cost us about $500.00 to do that including everything and after covering all cost we make about $3000.00 net. This is how business is done. We even invite all the local accounts to this so as not to miss anyone. Coop

[Collin]

In terms of pricing, we do the same thing that Coop does -- we have a suggested retail price to all our customers -- which is what we sell at. Some will go over that and some under, we can't control what they do. If asked I will tell people this, and they usually still end up buying from us because of the added benefits of coming to the distillery. Works great for us, we get the extra profit because these bottles are sold at retail not wholesale price.

[AdirondackVodka]

Hope this is on-topic enough...for liquor store sales, who uses a scalable wholesale price (discounted down for volume purchases) and if so how much? e.g. wholesale minus .50 for up to two cases, minus .80 for three to six? Anyone try anything in this neighborhood?

Steve