The questions independent drinks founders ask most — answered. Distilled from years of community knowledge so the good stuff never disappears in the feed again.
The key principle is to avoid channel conflict by keeping pricing aligned across wholesalers and retailers, then building your model backwards from RRP. Many large UK wholesalers (Matthew Clark, LWC, Carlsberg, Molson Coors) don't supply retailers, so don't assume a traditional retail-first model. **Pricing structure for spirits (example: £40 RRP):** - £40 RRP / 1.2 = £33.33 exc VAT (your net sell-out price) - Apply 25% retail/wholesaler margin: £33.33 × (1 – 0.25) = £25 Wholesale Selling Price (WSP) - Subtract duty (c.£9 for a 70cl spirit at 40% ABV) = £16 net WSP - Typical gross margin target: 65%, which yields ~£5.60 COGS **Key caveats and variations:** - Gross margins vary by channel: 45% for retailers/wholesalers down to 10% in some cases - **Exclusive distributors** typically require 20–30% gross margin on net sales (can be higher or lower depending on volumes) - Wine, RTD, and beer margins differ significantly from spirits - **Direct-to-bar pricing:** Set this at the wholesaler sell-out price (£33.33 in the example above) to avoid undercutting wholesale customers. Some members set it between wholesale and ecommerce prices. - **Independent retailers:** Price at the same level as direct-to-bars (the wholesaler sell-out price), as they typically order smaller quantities - **One unified price across wholesalers and retailers** is strongly recommended, especially when companies operate multiple channels or face buyouts (Matthew Clark/Booker/Tesco scenarios). Members warned that having different pricing models for different channels creates exposure during consolidation and can be "a world of pain." You can always add retroactive incentives or volume discounts without changing base pricing. **Important warning:** Major acquisitions in distribution (e.g., Bargain Booze buying MCW, Tesco buying Booker) have historically created significant problems for brands with inconsistent pricing across channels.