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.
What pricing strategy should we use when alcohol excise duty increases?
When excise duty increases, members strongly recommend passing the full increase directly onto customers rather than absorbing it into margin. **Key points:** - **Pass on the full increase** — Members emphasise this is "the only cost increase where the buyer cannot argue about the level or source of it." In the current cost climate, absorbing any part "would be madness" and the cost would simply get lost among other rising expenses. - **Customers expect it** — Buyers will always pass duty increases onto shelf price, so you should too; they understand duty is a fixed, transparent cost. - **Example calculation** — For a 37.5% ABV spirit in 70cl, a duty increase from £28.74 to £32.82 per pure litre equates to approximately 33p per bottle, which should be passed through directly. - **Stock timing opportunity** — If advance notice of the increase is available (members mentioned February 2023 as a possible implementation date), consider moving stock out of bond ahead of the increase or negotiating bulk pre-increase purchases with customers at a slightly elevated price—they will be trying to beat the increase anyway, creating a brief window to capture additional margin. - **Price-marked packs complexity** — One member flagged that adjusting price-marked packs post-duty increase is complex and worth planning for. - **Confirm through industry bodies** — The WSTA (Wine and Spirit Trade Association) receives HMT confirmation on duty decisions; membership is recommended to stay informed on timing and implementation.
What are effective strategies to compete with other sellers (like Master of Malt) for the Amazon buy box and maintain control over your product listings?
The buy box typically goes to the lowest-priced seller, but your strategy depends on which Amazon selling model you use. Here's what members have tested: **Selling model choice:** - **Amazon FBA (Fulfillment by Amazon)** — Prioritised by Amazon's algorithm over third-party sellers and gives Prime eligibility. You win the buy box if your price is lowest among FBA sellers. Members report this is the strongest position for controlling your brand and pricing. - **Amazon Vendor** — Gives you automatic buy box control (Amazon handles pricing), but you lose price control and Amazon may push you to match aggressive competitor pricing elsewhere on the web. **Tactics to maintain the buy box at better margins:** - **Price strategically above cost and let competitors match** — Rather than a race to the bottom, raise your price and add a retro (discount/rebate). Master of Malt will typically increase their price to match yours once you stop cutting, and you'll win the buy box again at the higher price point. This works because they want margin too. - **Block resellers via brand exclusivity** — You can apply to be the official seller and prevent anyone else selling your product on Amazon. The downside is Amazon requires a bespoke QR code on every pack sent via their channel, which may cost more than the margin gain. - **Opt out of Amazon's pricing algorithm** — Available but hits your sales rate significantly on Amazon, so members don't recommend it. **Margin reality check:** - If you're selling direct-to-consumer via FBA at RRP minus Amazon fees, that margin should be higher than wholesale to Master of Malt. If not, you're pricing wrong. - Selling to resellers like Master of Malt may actually yield better margin per unit than FBA after accounting for Amazon's fees (fulfillment, referral, advertising), so some members sell both channels. - Amazon only compares pricing on Amazon itself, not across external sites like eBay or your website, so you can maintain RRP elsewhere without triggering repricing. **Key caveat:** Members who've succeeded used FBA plus brand exclusivity (blocking other sellers) to avoid the race to the bottom entirely—this drove them to three #1 bestsellers. However, the QR code enforcement cost needs to pencil out against your margins.
How are UK spirits and brewing founders responding to rising material and energy costs, and what pricing strategies are they using?
Rising input costs across the supply chain are forcing producers to pass increases to consumers to maintain margins. Cost pressures are significant and widespread. **Cost increases members reported:** - Glass up 11% (though some suppliers reported energy-related hikes up to 25% on their own costs) - Cardboard rising sharply - Botanicals and juniper up substantially (juniper prices now approaching double what they were 5 years ago) - Energy bills up nearly 30% - Sealing wax and other ancillary materials all rising - Shipping costs up across the board **Pricing response:** - **Major brewers** raising prices by 5% in Q1, with expectations of another 5% rise mid-2022 - Members acknowledge they must pass some costs onto consumers or margins will be unsustainable **Key caveat:** The member consensus is that cost inflation is broad-based and severe ("everything from sealing wax to botanicals and blinking cardboard is well up"), making it difficult to absorb costs without retail price increases. Members are watchful about further energy price increases, which remain uncertain.
How should we communicate duty rate increases to our trade customers?
Members recommend a straightforward, factual approach that avoids apologising and clearly attributes the increase to HMRC policy changes. **Messaging approach:** - **State HMRC changes clearly** — use language like "in line with the HMRC changes to current duty rates, please find enclosed updated pricing". This removes ambiguity and avoids an apologetic tone. - **Consider political framing** — some members have taken a firmer stance, opening with commentary on government policy (e.g. "Due to our governments incompetence..."), though this is more pointed than the neutral approach. **Timing tactics:** - **Set a clear last-order deadline at the current price** — Members recommend giving customers advance notice of when the price increase takes effect. One member specified "last delivery date at the current price will be 31st July" with a last-order date of 26th, giving customers roughly a week to decide whether to order ahead. - **Encourage advance ordering** — explicitly tell customers they're welcome to place orders before the increase kicks in, which can help smooth cash flow and shift volume forward. **Key takeaway:** Factual, HMRC-focused language cuts through, and a clear deadline with advance-ordering window gives customers agency and reduces pushback.
What percentage of spirits are sold on promotion in UK supermarkets?
Members report that the proportion of spirits sold on promotion in UK supermarkets varies significantly by category and brand, but typically ranges between 70–80% of volume. **Key benchmarks from member experience:** - **70/30 split** (70% on promotion, 30% at full price) is cited as a rough industry guide - **80/20 split** reported by some members in their own experience - **Category-dependent variation**: Some categories spike to 80%+ on promotion - **Brand examples**: Baileys is approximately 83% sold on promotion (often funded by supermarkets themselves as a Christmas footfall driver), while Guinness (also Diageo-owned) is closer to 40% on promotion despite being in a similar category **Context:** Members note that the variation reflects how different brands are used strategically by retailers—premium spirits with less direct competition may have lower promotional penetration, while brands serving as footfall drivers (particularly seasonally) are promoted more heavily.
What gross profit margins and pricing strategies should we use for export sales, and how do we calculate ex-duty pricing for new markets like Australia?
Members recommend keeping export prices within a 15% variance of UK bonded/ex-works pricing as a baseline framework. Here's what the community shared: **Export pricing approach:** - **15% variance rule** — Price ex-works export list price within 15% of your UK bonded pricing; this acts as an anchor point - **Domestic vs. export margin gap** — Export prices are typically lower than domestic to account for importer costs and avoid parallel trading concerns. Large brewers sometimes price higher to actively prevent parallel imports - **Ex-duty calculation** — Ex-duty pricing equals your cost of goods plus your desired markup; the importer/buyer then factors in transport, import duties, and their own margin. You don't need to include those costs in your quote - **Competitive benchmarking** — Ask the importer for pricing of competitor brands in their market; use those to guide your position - **Deals and A&P on top** — Any promotional support or marketing spend sits *above* the 15% variance band, not within it **Key caveats:** Members emphasised that margins vary significantly based on individual cost structures and desired markups, so the 15% rule is a guideline rather than law. One member noted that larger brands sometimes price *higher* on export to prevent parallel imports, so category and channel strategy matter. For a first export (like Australia), asking the importer for comparables is especially important to avoid leaving money on the table or pricing yourself out.
How do major UK hospitality groups evaluate tender bids for spirits and wine, and what strategies should independent suppliers use when competing?
Major hospitality tender processes in the UK are heavily dominated by portfolio players. Portfolio suppliers (particularly **Diageo**, **Pernod** and **Bacardi**) win the vast majority of contracts—members report they secure "99% of the time." Evaluation criteria vary, but some tenders are assessed purely on price first; however, **sustainability credentials** and responsibility messaging are increasingly important to large bar groups, alongside retro incentives and listing fees. **What members have observed in practice:** - **Price compression is intense.** One member successfully negotiated Seven Tails XO brandy down from £26 to £18 per bottle by coordinating margin reductions across supplier, importer and route-to-market partner—and still lost the contract to a portfolio incumbent (Martel/Pernod). - **Backhanders and incentives are common.** Members report wholesalers soliciting and offering 15% backhanders to secure contracts pre-tender completion, and note the need to match or exceed these incentive offers (e.g., 16% retro) in future bids. - **Sustainability messaging matters, but money talks.** Large groups (e.g. bar groups moving to large formats in spirits, cans or premix) publicly emphasize sustainability, but acknowledge that "big brand money" and Diageo/Pernod deals will capture the lion's share of business. - **Tender timelines are tight.** Intent to bid deadlines (e.g., 14th) precede actual bid submission by two weeks (e.g., 28th); missing these dates excludes you entirely. - **Portfolio scope is significant.** Members reference tenders covering 8,000+ bottles across multiple locations (e.g., London and Manchester for a single brand). **Caveats:** Members describe some national tender processes as "Kafkaesque time waste," and note that independent suppliers face structural disadvantages against portfolio players backed by major distributors and established relationships with hospitality groups.
Why are high-marketing-spend products underperforming on Amazon while lower-RSP products with no marketing spend are gaining traction?
Members have observed a recent shift in Amazon's algorithm where traditionally strong-performing products are slowing despite increased marketing spend, while lower-priced products without marketing support are outperforming. The exact cause remains unclear. **Key observations:** - High-marketing-spend products are underperforming across multiple sellers' catalogues - Lower RSP (retail selling price) products with minimal or no marketing spend are gaining algorithmic favour - Even top historical sellers have slowed down noticeably **Potential strategy if facing MoM (Marketplace Manager/competitor) buy-box pressure:** - **FBA should theoretically win the buy box** if your offer is compliant, so the focus should be on sustainable pricing rather than constant promotional spend - **MoM competitors typically price-match aggressively**, but they also increase their own prices to maintain margin when you stop lowering yours—you can regain the buy box by holding firm at a higher price point - **Selling to MoM as a wholesale partner** may earn better margins than selling via FBA after accounting for Amazon's fees, even if you lose the buy box - Note: If MoM wins the buy box and customers buy from them instead, you still make a sale as a supplier, though you lose direct customer data **Caveat:** The root cause of the algorithm shift is not definitively understood by members; this represents current observations rather than confirmed Amazon policy changes.
Should a premium indie spirit brand (£55+ price point) sell through Amazon at the early growth stage, and how does it affect pricing with other retailers?
The community consensus is to **delay Amazon entry** until you've established price floor with premium retailers first. Amazon's vendor model can undercut your positioning and lock you into a lower price point across all channels. **Strategy:** Build distribution through higher-margin channels before Amazon: - **The Wine Emporium (TWE)** — recommended as a first-tier premium retailer; members report being stocked in their stores - **Hedonism Wines** — another high-end retailer to secure placement with early - **MOM (Majestic/other premium lists)** — establish relationships here to set baseline pricing - **Hard to Find Whiskies (Birmingham)** — independent premium retailer praised for quality customer base **If/when you do Amazon:** - Research competitor brands at your price point to see how they're positioned - **Own your own listing** rather than letting third-party sellers list you (which erodes control) - Consider **creating exclusive SKUs for independent retailers** and explicitly excluding those from Amazon to preserve differentiation - Be aware that if Amazon acts as a vendor, they can and will crash your price if sales don't meet their targets—and that floor price then becomes your negotiating position with all other retailers **Key caveat:** Members flagged that "lots of indies complain about Amazon pricing," suggesting it's a common pain point. The timing of entry matters more than the entry itself; establish your brand and retail relationships first, then you have leverage.
What are typical all-in fulfillment costs for DTC orders, and should delivery costs be itemized or bundled into product pricing?
Members report paying around **£7.50 per shipment all-in** (pick, pack, courier) for next-day delivery, preferring single flat fees over itemized picking/packing/management charges to avoid complexity. On pricing strategy, the community consensus is to **bundle delivery costs into the per-unit product price rather than itemize them separately**: - **Built-in delivery model** — Multiple members recommend incorporating fulfillment costs into per-bottle or per-can pricing and marketing delivery as "free". This approach was validated after speaking to both brands and buyers. - **Amazon effect** — Consumers psychologically prefer "free delivery" and don't perceive value in transparent delivery charges, even when the total price is competitive or cheaper than itemized alternatives. - **Subsidy approach** — One member subsidizes next-day delivery at £6/case for direct trade customers, stepping down to £0 on a sliding scale at higher volumes, but reports customers still perceive this as expensive. **Caveat:** If you're currently itemizing delivery costs and receiving feedback that pricing is high, bundling those costs into product pricing (rather than listing them separately) may improve perceived value and conversion, even at the same net price point.
What happened to consumer prices, distributor margins and sales volumes when alcohol tax was removed, and what should we expect if it's reinstated?
When tax was removed previously, **most retailers did not pass savings on to consumers** — prices stayed the same rather than dropping. This suggests that if tax is reinstated, increases will likely be **passed directly to end customers rather than absorbed by distributors**. Members expect distributor margins to remain relatively stable, with the tax burden flowing through to the till price. The actual impact on sales rates remains unclear from available data; members noted this is largely anecdotal consumer observation rather than industry-wide analysis. One member indicated they had a contact with potential insight into the mechanics, though no detailed findings were shared in the discussion.
What is a typical average order value for online spirits sales, and what tactics increase it?
Members report AOVs around **£45 (inc VAT)** as a baseline, though this fluctuates seasonally (higher at Christmas). Tactics to increase AOV: - **Product mix strategy** — focus inventory and merchandising on higher-ticket items rather than budget SKUs - **Bundling lower-ticket items** — group cheaper products together to push transaction value up - **Remove single mini bottles (5cl)** — members noted these are too low-margin even wholesale and act as a drag on AOV; removing them from the range forces customers toward larger formats - **Monitor alongside conversion rate** — members emphasised AOV should not be optimised in isolation; a higher AOV with lower conversion may not improve total revenue Members noted AOV is best tracked seasonally, as Christmas and other peak periods naturally lift basket size.