What gross profit margins should drinks brands target when selling through different channels (direct, on-trade, wholesale)?

Typical gross profit margins vary significantly by channel. Brands selling direct (DTC) should target **50–60% gross profit**, while those working through distributors typically see **40–50% gross profit**.

**Channel-specific considerations:** - **On-trade (pubs/bars)** — Margins often vary by product within a single listing. Spirit margins may be lower while mixers carry higher margins; the key is ensuring the overall blend works financially. This flexibility can be a useful negotiation tool when pitching new listings, particularly for products that aren't rock-bottom cheap. - **Wholesalers** — Often targeted on average GP across their book rather than individual product margins. Wholesale AMs are typically measured on overall profit vs. turnover, so they may accept lower margins on some products if the basket GP is strong enough. - **Contracted supply** — Route-to-market teams won't sign off prices below a certain margin *unless* they have 100% contracted supply locked in for a fixed period (e.g. multi-year agreements). For larger volumes ("chunky bits of business"), the focus shifts entirely to overall basket GP rather than individual product pricing.

**Caveat:** Members emphasised that small per-unit margin gains (e.g. 25p per case, or £0.01 per serve) compound only at significant scale, so don't over-negotiate small margins on high-volume accounts.