Sales - Typical Net Revenue

[CountySeat]

Hi -

Can anyone give me a basic idea of what the typical net revenue is on a bottle of spirit sold A) through a distributor and direct to consumers? In other words, the amount that is paid for a bottle of alcohol back to the distillery (who then allocates that revenue to costs of production, bottling, labeling, etc and potentially profit.

By way of example:

If I sell a 750ML bottle of spirit for $30 to a consumer out of state, how much goes to:

1. Federal Govt.

2. State

3. Distributor

4. Revenue to Distiller

I understand that the amounts will often vary but I'm trying to get a ballpark figure for how much revenue distillers ultimately realize per bottle.

Thanks.

[Panoscape]

1. $2.14

2. Depends on state, here in Oregon it's a controlled state so after tax, case, stocking fee's it's ball parked to 50%.

3. distributor typically want's 40%-45%

4. Not much

So, lets say you have a bottle retailing for $30. The state takes half, you're now at $15. The feds take their share and you're at $12.86. Lets say you get a distributor to take you on for 40%, that's a cost of $5.14, you're now left with a wholesale cost of $7.72. Minus COGS of lets say using GNS, you're left with about $5 net per bottle. Less net if you're making it from grain.

As you can see by these ruff numbers, it pays to distribute it yourself. It's a business of quantity sales. A distributor won't even look at you until you can fill a pallet on a constant basis.

[Mash]

Your kind of going the in wrong direction, taxes are fixed, (Fed per proof gallon), mark up to distributor, mark up to retailer, mark up to the end user. So what you get back is a function of what your cost(s) and most importantly what kind of state you operate in.

In Virginia they mark up my cost to them by 20%.

[Panoscape]

Sorry, I always start with MSRP and work backwards. It's my way to insure that the product hits the right price point and then I see if it's cost effective.

[Mash]

Ok ,that makes sense. My businesses have always use cost, plus gross margin....just different methods.

[CountySeat]

So, for a small distillery, until you can get to a large quantity, selling directly is a huge benefit. You would make way more per bottle selling directly. Makes sense. I'm in PA. We can sell directly now. I'm toying with the idea of opening a distillery and focusing on selling directly. Probably 4-5 years from saving the funds to start.

[bradocaster]

1. $2.14

2. Depends on state, here in Oregon it's a controlled state so after tax, case, stocking fee's it's ball parked to 50%.

3. distributor typically want's 40%-45%

4. Not much

So, lets say you have a bottle retailing for $30. The state takes half, you're now at $15. The feds take their share and you're at $12.86. Lets say you get a distributor to take you on for 40%, that's a cost of $5.14, you're now left with a wholesale cost of $7.72. Minus COGS of lets say using GNS, you're left with about $5 net per bottle. Less net if you're making it from grain.

As you can see by these ruff numbers, it pays to distribute it yourself. It's a business of quantity sales. A distributor won't even look at you until you can fill a pallet on a constant basis.

Great info, thanks. when you say a pallet, and constant basis, what do you mean? how many 750 ml bottles/pallet? constant being a pallet a month? week?

Thanks again,

Brad

[jwymore]

Hey Panoscape,

Where is the Oregon State tax information documented. Have been looking online but can't seem to find anything. Is it under OLCC or do I need to look at Department of Revenue?

Thx

[Panoscape]

@ bradocaster, 1440 bottles/120 cases are on an average pallet. Constant basis quantity is in relation to your product sales and distributor push. For some its quarterly, for hot products it could be weekly. It's all up to your product demand in the marketplace.

@ jwymore, call the main office at OLCC and ask for their markup pricing sheet for wholesaling spirits through them. It's not listed or hosted on their site. They'll e-mail it to you.