What are realistic retail margins for premium spirits, and how do Ocado and other retailers calculate them?

Retail margin differs from markup: margin is calculated as (Sell Price − Cost) ÷ Sell Price, expressed as a percentage of the retailer's selling price (not your cost). Retailers focus on margin because it represents actual cash profit.

**Ocado premium spirits expectations:** Members report **25–30% point of sale (POS) margin**, though this varies. However, margin negotiation is often secondary to the retailer's rotation targets—retailers care more about how much you'll invest to drive sales velocity and cashflow than the percentage alone.

**Key margin factors:** - **Margin percentage inversely correlates with rate of sale.** Faster-moving products command lower margins; slower-moving premium lines can sustain higher margins. A retailer will accept a lower % margin on high-velocity Rémy Martin VSOP than on ultra-premium Louis XIII, because the absolute cash margin on Louis XIII is much larger. - **Wine margins are typically higher than spirits margins** (percentage-wise), reflecting different retail dynamics. - **Product value determines cash vs. percentage trade-offs.** A 20% margin on a £1,000 bottle generates more cash than 40% on a £50 bottle, so premium retailers prioritize cash margin over percentage.

**Tools:** Members recommend **thinkMargin** app, which includes handy calculators for margin, cost, and price conversions to avoid confusion between markup and margin.

When negotiating with retailers, be prepared to discuss your investment in driving rotation as much as the margin percentage itself.