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  • Margins

    I'm starting a new beverage company and trying to get a general idea of 1) what margins I as a manufacturer should put on the product, 2) what margin the distributor will put on his cost to the retailer, and 3) what margin the retailer will put on to the consumer.

    Is there a general rule?

    Thank you.

  • #2
    I'd love to help, but I think it's tough to generalize as every distributor and retailer will have their own needs and wants. I've had distributors add on a flat rate and sell at a single price to every outlet, and others who build in a very price front-line price so they can deal on quantity buys or give away "free" cases. As far as retailers go, if your product is an NA and merchandised by distributors, they might work on anywhere from 20 to 40% margin for multi-pack items, higher still for some single serve items. You might start by deciding what you think a reasonable regular retail price would be and then work backwards. Would like to hear more about your venture.


    • #3
      Gross margins are (somewhat) irrelevant for a startup beverage co. What you need to do is estimate the cost of your product, run an income statement and cash flow projection, determine your break even point and see if you can make money or not. This may sound boring to you, but its the only way to go. When you are up and running, then you can worry about improving your margin.

      There is no margin standard for the beverage industry as a whole, but if you really want to know, you need to look at a specific market segment, i.e. bottled water, soft drink, etc. But I can't help you with that.

      As for retailer and distributor margins, you can look at past threads in the industry discussion for detailed (and helpful) answers.

      Hope this was helpful. Good luck.

      Startup Dude, aka Mr. Indie


      • #4
        Start up dude just gave you some real good advice and is obviously been through these before. Not much to add except to say track and trend everything you do. Best of Luck to you,