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 wholesalers be charged for delivery, and what's the best approach to implementing price increases to wholesale partners?
Members emphasize two key principles: delivery should always be included in the wholesale price (never charged separately to the wholesaler), and price increases should be implemented annually rather than ad-hoc to avoid larger, more damaging jumps later. **Delivery pricing:** - Always quote a delivered wholesale price—build your average delivery cost into the per-unit pricing rather than invoicing separately - Use minimum order quantities (MOQ) as a lever: if orders fall below a certain threshold (e.g., less than a case or below pallet quantities), you can introduce an additional delivery fee to protect margin - Some regional or friendly wholesalers may even collect from you, but this should never be assumed **Price increase strategy:** - Implement annual increases as standard practice, even if COGS haven't moved significantly. Members stressed this builds the habit with wholesalers, who expect it and typically request pay rises themselves annually - Typical increases range from 3–12% depending on circumstances; members who delayed increases for 5 years faced the risk of needing a large catch-up adjustment later - Provide 3 months' notice before implementation (typically end of September for January implementation) - Use the phrase "Price Movement" rather than "price increase"—it's more palatable - Always provide clear rationale: cover both macro issues (inflation, duty, COGS) and micro issues (brand positioning, retail price barriers) - Consider your brand's market position and the impact on retail shelf price; be aware of psychological price barriers (e.g., £20, £25, £30 for spirits) - Don't over-communicate; treat increases as routine market adjustment, not a major negotiation **Initial wholesale pricing:** When setting up direct-to-hotel or direct wholesale arrangements, build in a "wholesale buffer margin" (estimated at 15% or £5–6 per case) to protect yourself if the wholesaler later needs to source through a distributor. Wholesalers typically expect 50% of retail selling price as gross profit.
What margins do luxury department stores like Selfridges and Harrods typically expect from drinks suppliers?
Luxury department stores generally target **40–45% gross profit margins**, though this varies significantly by product category and proposition strength. **Direct experience from members:** - **Selfridges**: Members report margins of 35–40% depending on timing and volume. One member went direct in 2019 at 35%; another estimates their GP at 40%. Buyers may work via distributor relationships (e.g. **Hammonds**, **Diverse Fine Food**) as an alternative to direct. - **Harrods**: One member with direct experience targeted 42% but found **cash flow was the priority**—buyers were willing to drop to mid-20s margins if the product had strong pulling power and high perceived value. **By product type:** - **Wine**: Highly variable, ranging from 20% to over 80% depending on positioning and exclusivity. - **Spirits (whisky, vodka, brandy)**: Generally north of 45%, often above 50%. - **Lower price-point categories** (beer, tonics, soft mixers): Required 45%+ margins, mostly above 50%, to justify shelf space. **Key caveat**: Volume and cash position matter as much as margin percentage. Luxury retailers prioritise products that drive customer footfall; a compelling proposition can negotiate lower margins if it supports their overall strategy.
What wholesale discount structure should craft drinks brands offer to UK retailers and online wholesalers?
Members suggest working backwards from RRP (ex VAT) and assuming the retailer takes a margin, then offering a wholesale discount that leaves them room to trade profitably. **Discount levels:** Members reference several anchor points— - **20% discount** off RRP (ex VAT) as a starting point; one member noted this allows the retailer a 20% margin and is used as an opening negotiating position - **25% discount** mentioned as a possibility for online and offline retailers combined - **30% discount** suggested as a "normal" wholesale level for premium lines **Key dynamics:** - You cannot dictate final retail pricing—only recommend it. Retailers will undercut if it suits their strategy. - Dual-channel partners (wholesalers who also sell direct to consumers on their website) create tension: one member reported their wholesale partner was buying at 20% discount but subsequently undercutting them online, compressing margins as volumes grew. - Larger online retailers (e.g., The Whisky Exchange) may push for steeper discounts (22% margin, or ~30% off RRP) to drive volume, which can trigger complaints from MOM (Members of the trade) if list prices collapse. - Buyer relationships matter: new buyers may be less flexible on pricing and margin protection than predecessors; consider relationship-building alongside negotiation. **Caveat:** Price increases on the back of cost inflation are a separate conversation, and communicating these to consumers and trade partners requires careful handling.