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 margins and commitments do major UK retailers expect from drinks suppliers?
Retailer margins vary significantly by channel and retailer type. **Off-trade (retail) margins** typically range from 25–40%, though some premium retailers push higher and occasional outliers demand 70%. **Premium supermarkets** (Waitrose, Sainsbury's) calculate margin as NOG (Net on Gross, including VAT), targeting 20–25%; **value supermarkets** (Tesco, Asda) use POR (Profit on Return, ex-VAT), targeting 27–32%. Margins are often blended between on-promotion and off-promotion prices, and the retailer will guide expected basket mix. **Premium independent retailers** like Daylesford may expect margins around 55%. **On-trade (pub) margins** are much higher: independent pubs typically seek 60–75% gross profit (calculated on per-serve pricing, e.g. 10 serves × 6 margin = 60% vs. purchase price). Pubs standard gross profit is 70–72%. **Harrods** specifically targets gross profit of 42–45% and expects back margin of around £1m annually; spirits buyers are nick.fleming@harrods.com and wines buyers are siobhan.irons@harrods.com. A key note: Harrods' vodka and gin sales are weak (c. £3k/week) compared to whisky, Bordeaux and burgundy (£100k+/week), and baijiu and tequila significantly outsell gin and vodka—listing there is a lighthouse for brand and export positioning rather than volume. Members caution that some retailers (e.g. Whole Foods) may not suit alcohol due to margin constraints, and retailers like Cress may demand unsustainably high margins relative to volume opportunity.
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.
What wholesale margins and turnover rates do major UK retailers like Waitrose expect on premium vodka products?
Based on member experience, retail margins on premium vodka at chains like Waitrose have historically been in the **25–30% range**, though one member cautioned that this may have shifted in recent years. On turnover expectations, members reported that **speciality spirits across portfolio typically moved 0.5–1 unit per store per week**, depending on whether the product was a new launch, an established line, or the broader category performance. This baseline was cited as being a couple of years old, so current expectations may differ. Members noted that **return-on-space (ROS) per store** is also a relevant metric for retailer negotiations, though specific figures were not detailed in the discussion. **Caveats:** The margin and turnover figures shared are not current (at least 2 years old at time of discussion), and actual terms will vary by retailer, product positioning, and launch status. Direct conversation with your retail contact is essential to confirm current expectations.