Mudpuppy
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Posts posted by Mudpuppy
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Thanks for the resposnse. I was just wondering what we could talk about for 1-1.5 hours. Hopefully it will be the same repetitive questions the TTB tends to ask.
Thanks,
Mudpuppy
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I am curious about what exactly the TTB asks during the telephone interview. I was told the interview last about an hour. Could someone explain the types of questions that were asked? Thanks for the help.
Sincerley,
Mudpuppy
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I am wondering if someone had a DUI like 5 years ago. Would this be something that would cause them to be denied a permit? Im not sure if they are concerned more with something like being convicted of selling to minors or what.
Thanks
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I have talked to a few distributors/salesmen and none seam to really take me serious. Does this all change once you get your federal and state permit? Has anyone else had this problem?
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Federal Excise Tax is applied once.
Some producers apply the tax to the bill of materials, and thus mark-up the tax. Speak to your accountant. The correct action is (probably) to apply the tax at the time of sale. When selling to a bonded warehouse you can probably get him to pay the tax and thus have a lower price.
In Bill's book, the tax was considered part of the cost of the product for the sake of simplicity...it has to show-up somewhere. If it had not been there, everyone would have taken the editor to task.
The spreadsheet is too simplistic, but that's life when you're trying to get top-level concepts across in a small space. The fact is that the markup from wholesale to retail is not relevant to the producer's income statement, though it is relevant to product positioning. In other words, the producer can not derive revenue from the retail price, but if he gets it wrong, he may leave money on the table, or not make money at all. So, the profit at retail is interesting, but it's not "available" to the producer.
Most retailers want about 30% markup. Grocery stores may be a bit less - 25%. Big-box stores may be as low as 10% or 15%.
Most wholesalers want 30% too, especially for lower volume products. When you're big, you may get a lower number.
So, let's say your costed-BOM for a product is about $6 without the tax of $2.16 fed and .66 California ($2.82)
Scenerio #1 - You pay the tax and consider it a cost of production:
6 + 2.82 = $8.82 (costed BOM)
8.82 x 2 = $17.64 (the books say the MFGR needs a minimum 2x profit)
17.64 / .7 = $25.20 (the wholesaler pays $17.64 and marks-up to 30% margin)
25.20 / .7 = $36 (the retailer pays $25.20 and marks-up to 30% margin) the retail price is now $36.
Note that $17.64 is 49% of $36. This is about 50% (.7 x .7 = .49)
Scenerio #2 - You pass the tax to the warehouseman under bond:
6 x 2 = $12 (this is the new wholesale price without the tax)
12 / .7 = $17.14; this is the warehouse margin, and now we add the tax of 2.82
17.14 + 2.82 = $19.96 (this is the new wholesale price to the retailer)
19.96 / .7 = $28.50 (this is the new retail price at 30% margin)
Note that $12 is 42% of $28.50 - very close to the 41% you suggested.
Thus, #1 positions his product above the pack. His "profit" appears to be $8.82, but his sales are likely lower.
In contrast, #2 makes only $6, but his product falls well within the <$30 category, so his volume may be much higher.
In some states, producers are permitted to sell directly to retailers, omitting the "middleman." In this case, it's wise to understand that while you appear to have a higher margin, you're also satisfying (doing the work of) other channel functions, so you're experiencing higher costs as well. In this case, switch hats when you sell to retailers...you can't sell to the retailer at $12 + $2.82 and "give-away" the profit you need to operate the sales and logistics part of the business.
Remember, your mileage may vary.
Will
Thanks for clearing that up Will I really appreciate it.
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I have a question regarding taxes. I was under the impression that after taxes for federal, state, and indirect taxes that you get about 41% for a 750ml bottle plus marketing etc. Is this not the case? I got confused when I read the down and dirty business plan in Bill Owens book and it said after retail you get 50% and then you have to pay the federal tax. How many time is a 750ml bottle taxed by the feds? Is it taxed at retail and also by the supplier? Please someone clear this up for me.
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I would like to know if there is any certain specifications for pumps. Should they be FDA approved pumps or will any kind of pump meet our requirements? What about pumps for mash with grain solids in it? should I use a unused sewer pump? Thanks for any help in advance.
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I am curoius about those of you that make gin. I am wondering if you leave your botanicals in the alcohol after maceration or do you take them out after mcaeration for redistilling? Thanks in advance I know it is kind of a silly question.
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Is high diastatic malt used for making grain Vodka?
Thanks,
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I am very curious about what type of equipment people are using to boil grain prier to fermentation. I am just not sure what one would use to bring a large quantity of grain to a boil for making NGS. I am also wondering what type of equipment some of you are using to carbon filter and who the manufactorer is. Thanks for any help that might come from this.
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yes I am just interested in learning I might just buy a couple books for starts. Thanks for the help
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I am in the process of buying a small still to start to learn the art of distilling. I am curious about which still would be best for someone who wants to learn how to make quality liquers. I was looking at the stills at milehidistilling.com. Would they be of good quality to start learning how to make flavored vodkas etc? If anyone knows of another company that makes better quality for that I could further the art a little farther please let me know.
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thanks guys for the great response. 55 gallon drum is a geat idea. Would you have to throughly clean them before fermenting another mash?
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I am curious are the Fermentation tanks Beer Breweries use the same as the ones Distillerys use? I am new and learning as much as I can. Thanks
TTB Telephone interview?
in Federal Gov't
Posted
Thanks for the constructive response.You cleared it up for me.
Sincerely,
Mudpuppy