Ask the Collective
The questions independent drinks founders ask most — answered. Distilled from years of community knowledge so the good stuff never disappears in the feed again.
How should spirits and drinks businesses manage pricing in response to duty increases?
The 1st August duty increase is coming, and members recommend being proactive rather than deferring price rises. Here's the collective approach: **Timing and cash flow:** - **Duty comes into effect 1st August** — this is a firm date to plan around - If cash flow allows, **duty-pay stock on 31st July** rather than pre-selling ahead of the increase, to avoid locking in old duty rates - Prepare for the cash flow impact of a 10% increase in duty when calculating working capital needs **Pricing strategy:** - **Stick to your guns on pricing** — don't erode margins by absorbing the increase. The trade expects price moves from major brands, so your customers are psychologically prepared - **Don't lowball the increase.** Deferring pricing just "kicks the can down the road and makes the pain worse." The last decade of low inflation was the aberration; price increases are a normal part of the business cycle - **Check wholesaler maths carefully.** When wholesalers calculate duty-paid pricing and ask you to confirm you're passing it on, verify their numbers — they sometimes get it wrong - **Use price increases strategically.** An increase may let you break a price barrier in the market (e.g. moving from £9.99 to £10.99), which retailers appreciate since they like fixed price points (£9.99, £10.49, £10.89, etc.). This can actually generate more margin per unit **Market context:** - Major brands have been taking increases for over a year, so the trade is already expecting them from smaller players - Everyone faces the same cost pressures — glass prices are rising with limited suppliers, so the entire market will generally move in the same direction - Price increases drive premiumisation; the gap between price points narrows, making premium positioning more valuable - If a customer pushes back saying "I know how much it costs," point out that own-label doesn't command a price premium for a reason — your brand positioning justifies the price **Caveat:** Don't describe increases as a "necessary evil" — frame them as normal business management. This mindset will make the conversations easier.
Do major retailers and wholesalers require Sale or Return agreements, and what impact does SOR have on cash flow and invoice factoring?
Not all major retailers insist on Sale or Return, though some wholesalers do. Members report mixed experiences. **SOR prevalence and negotiation:** - Several members have successfully avoided SOR terms with major retailers (Waitrose, Three Spirit) by maintaining smaller volumes that don't pose significant inventory risk to the retailer. - Some wholesalers insist on SOR "as a rule" but members note there's often limited commercial rationale beyond the wholesaler's desire to avoid being left with unsold stock. - When volumes are small, SOR hasn't caused major problems for members who've accepted it. **Cash flow and factoring impact:** - **SOR agreements create significant cash flow friction when factoring invoices.** Members who factor for working capital have explicitly avoided SOR terms because they "mess things up" — factoring houses typically won't purchase invoices under SOR terms since the debt isn't legally settled. - One member reported that under SOR terms, wholesalers can delay payment indefinitely by claiming prior invoices' stock hasn't fully sold, creating frustration on smaller volumes and potentially serious issues at scale. **Alternative approaches:** - Rather than accept SOR, members suggest exploring alternative distribution channels (Drinks Supermarket, C&Carry, other wholesalers) if a primary wholesaler demands it, reducing the pressure to capitulate to unfavourable terms. **Key caveat:** SOR becomes a real problem only at meaningful volumes. Small listings (e.g. "a case a week") are manageable under SOR but scaling up while locked into SOR could create serious cash flow strain.
What credit insurance providers and products should beverage businesses use, and what do they typically cost?
Credit insurance is viewed as essential protection against wholesaler failure in the drinks trade. Members have seen it pay out significantly: when Waverley went bust, one member recovered 90% of owed money through their policy (with a 10% excess); when MCW nearly collapsed due to unpaid HMRC duty, credit insurance gave peace of mind across the group. **Providers and brokers:** - Main players are **QBE**, **Atradius**, and **Euler**. Members recommend going through a broker rather than direct; one member mentioned a contact at **Carole Peachey** (via Rankin Cork, sales@rankincork.co.uk), though they note broker contact forms are sometimes the easiest route. - If you use **invoice discounting**, your bank may offer a credit insurance product that can be bolted on. **Costs:** - One member reported securing cover for approximately **0.2% of annual revenue** for the next 12 months, paying out **90% of invoice value** on debtor failure. - Rates are expected to be **higher at the moment** due to economic uncertainty and nervousness about the hospitality sector post-COVID. - Cover is "quite expensive depending on cover levels required." **Practical benefit:** - Having credit insurance also gives you leverage with slow-paying customers: you can tell them "the credit insurer won't give me more credit on your account" to encourage payment or justify withholding stock. **Pooling opportunity:** - Members have explored whether businesses can pool together to achieve better economies of scale on premiums, with at least one member running comparisons between single-business and pooled-risk options. Contact members directly if interested in joining a group quote process.
What are the current payment reliability and account strength of major wine and spirits distributors like Enotria and Venus after recent restructuring?
Payment reliability and account base strength vary significantly among major distributors post-restructuring. **Enotria** — Members consistently report serious payment issues. Feedback ranges from "need a lot of chasing" to "absolutely TERRIBLE TERRIBLE payers," and this has been a chronic issue for years. The distributor has undergone multiple restructurings and refinancing cycles. Their account base has changed substantially since they moved away from being a composite supplier, reducing their range and focusing on selective profitable growth. While still considered a valuable supplier by some, working with them requires careful management of terms to minimise supply disruption. Changes in ownership may improve the situation. **Venus** — Described as a reliable option with a solid account base. A Venus listing makes products available to Booker ontrade/catering channels (a positive), though it does not extend to Tesco, which operates entirely separate buying teams and does not migrate Venus products into their systems. **General approach** — Rather than relying on a distributor's team to sell your brand, members recommend basing any listing decision on your target accounts and working backwards from the bar. Distributors have competing priorities and incentives favour larger players, so expect to drive volume through your own sales activity. Opening up route to market is valuable subject to commercial terms.
What are members' experiences with payment reliability from key distribution platforms?
Members have reported mixed payment performance from major distributors, with recent issues emerging on some platforms. **Farmdrop** — Multiple members reported non-payment despite multiple orders. One member stated "They have never paid us despite ordering 6 times." Several members experienced the same issue simultaneously, with payment delays apparently linked to a new ordering system rollout. Previously the platform had been reliable with punctual payments, suggesting the issue is recent. **Saxon** — One member reported a late/unpaid invoice but successfully resolved it by raising the issue through the Kindred network; Saxon agreed to credit and re-print, and responded quickly once escalated. **General experience** — Members report most platforms stay "all up to date," though occasionally require a chase on late invoices; platforms typically pay quickly once reminded. **Caveat:** Farmdrop's current payment issues appear to be ongoing and systemic rather than isolated. Members should contact their accounts team directly or escalate through the Kindred network if experiencing delays. The platform's cash flow situation may be unstable.
What are the pros and cons of moving from 50/50 split payment terms to 60-day payment terms with wine suppliers?
Moving to 60-day payment terms offers improved cash flow and peace of mind, but can reduce your leverage for volume discounts and working capital optimization. The choice depends heavily on your stock turn rate and order growth. **Pros of 60-day terms:** - **Cash flow protection** — No upfront payment means money stays in your bank longer, reducing immediate pressure. - **Risk mitigation** — If product arrives defective or fails to dispatch, you haven't yet sent cash across; you can negotiate from a position of having funds rather than requesting refunds. - **Generally working well in practice** — Members report that moving to 60-day terms is working well for cash flow as long as stock moves within a couple of months. **Pros of keeping 50/50 split terms:** - **Volume discounts** — Larger orders (with payment secured upfront) unlock better per-unit pricing and freight costs. - **Superior working capital** — You can place large orders and only pay the remaining 50% once you've sold through the stock, maximizing working capital efficiency. - **Best fit if growing order-to-order** — Members recommend this route specifically if you're scaling order sizes as you grow. **Key caveats:** - The "insurance" aspect of payment terms is secondary to your trade contract, which should specify who bears responsibility for quality and dispatch failures regardless of payment schedule. - 60-day terms work best if your stock turns within a couple of months; slower-moving inventory can extend your cash conversion cycle dangerously. - If you already have duty deferment in place (e.g., stock bonded at a location), this reduces the urgency to optimize payment timing. The decision should be driven by your specific growth trajectory and inventory velocity rather than payment terms alone.
What are the key duty and cash flow differences between distillers and brewers under UK alcohol duty regulations?
UK alcohol duty treatment differs significantly between distillers and brewers, with major implications for cash flow and growth: **Duty payment timing** — Brewers pay duty on invoicing (when they sell), but distillers must pay duty before sale. This creates a substantial cash flow disadvantage for spirits producers. **Small producer relief** — Brewers benefit from small producer relief on duty, but distillers have no equivalent relief available. Members have flagged this as a major parity issue and called for distillers to receive the same relief as small brewers. **Implications** — The combination of upfront duty payment and lack of small producer relief means distillers face significantly higher working capital requirements than brewers at comparable production scales. Members noted this is a persistent structural inequality in the regulatory framework that disadvantages the spirits sector relative to beer.
What practical steps should I take when a distributor like Enotria delays payment?
Members report that delayed distributor payments are common but recoverable. The key tactic is **direct contact with a named account manager rather than generic customer service**. **Recovery approach:** - **Escalate to a specific contact** — Members had success reaching named individuals at distributors. Harry Berkeley at **Digital Touch** (info@digitaltouch.org) and **Stuart Coleman** were both mentioned as effective contacts for chasing Enotria payment issues. - **Accept payment delays as normal** — One member noted payment from Enotria was "very late, but did get it," suggesting persistence pays off. - **Time follow-ups with next orders** — One member's payment coincided with placing their next order, suggesting you can use reorder conversations as leverage to surface payment disputes. - **Use DMs within the community** — Members recommend asking other members directly for their contact at the distributor rather than trying to navigate switchboards. **Caveat:** The community's experience here is limited to Enotria specifically. Approaches may vary by distributor.
How should we assess and manage the credit risk of supplying major distributors, particularly when they have payment issues or we can't obtain credit insurance?
Assessing distributor credit risk requires weighing the business opportunity against the financial exposure, especially when traditional protections aren't available. **Key considerations members raised:** - **Credit insurance** — The first step is attempting to secure credit insurance coverage. If this fails (as with some larger distributors), it signals elevated risk and makes alternative protections essential. - **Cash on Delivery (COD)** — For new orders or problem accounts, COD is a viable option to eliminate payment risk, though may create friction with larger distributors who expect standard terms. - **Payment terms and credit limits** — These are your primary levers. Members noted the tension: refusing to increase terms/limits risks losing the distributor entirely to competitors, but granting them without confidence in repayment creates cash flow risk. **The core dilemma:** Even when a distributor has payment issues, withdrawal of supply may simply mean they stock competitor products instead. This requires balancing the strategic value of shelf space against financial exposure. **Caveats:** Members did not provide a framework for deciding whether specific distributors are "worth the risk"—this appears to be a case-by-case judgment based on the distributor's market importance, the severity of payment delays, and your own cash reserves. No members shared examples of formal financial risk scoring processes.
Should early-stage brands finance duty upfront or use regular warehousing to save costs?
Members strongly advise against financing duty in advance when starting out. This ties up cash that early-stage brands need for operational priorities, and is effectively paying tax ahead of schedule—most accountants would discourage it. For bonded warehousing, members recommend: - **Law Distribution** — based in St Helms, praised for strong value and reliability. Multiple members have been with them for 5–6 years since starting up. Contact Stan Moyser via LinkedIn, described as "a great fountain of knowledge." - **Tortuga** — offers an all-in-one model handling storage under bond, order management, deliveries, and invoicing for a relatively low monthly cost, if you prefer integrated fulfillment. The consensus is that bonded storage is the right choice for new brands, but avoid the temptation to pay duty early.
What payment terms and credit risks should I be aware of when supplying directly to specialty wine and drinks retailers?
Direct supply to specialty retailers requires careful credit management. Members have flagged significant payment delay risks with certain major retailers: - **Beerhive/BW** — Known for very slow invoice settlement; members report payment delays of 8 months or longer, with multiple complaints from the community about extended payment cycles. The key takeaway: negotiate payment terms carefully upfront and be prepared for extended credit periods with established retail chains. Members recommend treating credit risk as a serious factor in your supply agreements.
Where can you find a freelance financial modeller experienced in cash flow and business valuation for drinks businesses?
Members recommend reaching out directly to trusted contacts in the network for referrals, as several have mentioned having quality resource available. The community has highlighted **Rob at Arjay Consulting** (https://arjayconsulting.co.uk) as someone who does strong work on cash flow and value chain modelling. A previous recommendation came from work done on the Don Papa brand. The best approach is to ask within the community via DM, as members with relevant experience tend to offer their own recommendations or make introductions.
Can you pay duty upfront on beer production instead of using duty-suspended arrangements, and is it faster?
Yes, you can pay duty at the point of production rather than using duty-suspended arrangements. However, **paying duty upfront is not faster than duty suspension** — both routes take similar time to operationalise. **Key options:** - **Pay duty upfront** — you produce beer, pay the duty immediately to HMRC, and are then "free as a bird" to move and sell the product without WOWGR. No requirement for bonded warehouse or movement permits. - **Duty-suspended arrangement (WOWGR)** — move goods without paying duty upfront; pay duty later when the goods leave the warehouse or are released into the market. Requires Warehousekeeper of Wines & Spirits or similar approval. - **Hybrid approach** — obtain WOWGR approval but still choose to pay duty upfront on some or all production, giving you flexibility. You can also keep goods in a bonded warehouse while holding WOWGR status. **Caveats:** The main trade-off is cash flow: paying duty upfront requires immediate capital outlay but simplifies logistics and removes the need for duty-suspended permits. Members note that neither approach is materially quicker than the other operationally. For specific advice on WOWGR logistics and recent legislative changes, members recommend contacting specialists in this area.