Hi QP - I just grabbed conservative numbers off the top of my head this morning. Conservative in mind that Marani could be trying to keep their price down for more profit to distributor and retailer. My point was that the product could be sold on a military base for much less than $32 per bottle. And furthermore estimating with conservative numbers I won't set too high of a profit expectation from Marani.
I do recognize Marani does not run the distillery and I am glad they do not. (1) They do not have time to run a distillery - they need to focus on distribution and sales. (2) They don't have a distiller and I don't think too many people can distill as fine a product as the one bottled for Marani. (3) They do not have to deal with the overhead of the distillery.
I would strongly advise anyone serious about the distilling business to look at adiforums.com Once you begin to understand the obstacles Marani has overcome to have a product on a shelf you will realize how dedicated they are.
I based my estimations off of figures from this forum but not this particular discussion:
http://adiforums.com/index.php?showtopic=1108
This is a quote from the forum:
"So, let's work backwards:
Let's say MSRP is $40, and let's guess that "street price" will be $35.
$35 * .66 = $23.10 - this is the price the retailer wants to pay for the product.
$23.10 * .66 = $15.25 - this is the price the wholesaler wants to pay for the product.
These figures allow each of your channel partners to "hit the numbers." In some cases, they'll take less margin, but rarely less than 25%.
$15.25 / $35 ~= 44% - this is your selling price as a percent of street price.
1/.44 = 2.3x -- this is the channel markup, it's an interesting number - it expresses how much the channel costs to operate as a function of your sell price.
1-.44 = .56 or 56% this is the channel margin - it's another interesting number...but I digress."
So by the above referenced calculations, Marani's numbers could be:
$32.00 Retail
32.00 X .66 = 21.12 price to retailer
21.12 X .66 = 13.93 price to distributor
My morning est. were $10.66 at each step:
31.99 Retail
21.32 price to retailer
10.66 price to distributor
There is a price difference between the 2 calculations of $3.27 for the distributor.
The numbers I pulled out of this morning are conservative numbers that I have contemplated (and some distillers do use) using if I started my own business. Because if I could take a bit less the distributor could make more profit and would therefore push your product harder.
Realize neutral grain sprit (ngs) can be purchased from a distillery for around $3.00 per gallon. You filter it, cut it with water to 80 proof, bottle and market it. It's cheap stuff. With thousands of vodkas out there you better have reason for a distributor to want to sell your product over another - and money talks.
Either way the mark up for the distributor and retailer is big.
Keep in mind these numbers can be tweaked to hit price points.
Again my point this morning was solely that Marani could be sold on a military base much less $32.00 per bottle.
I do recognize Marani does not run the distillery and I am glad they do not. (1) They do not have time to run a distillery - they need to focus on distribution and sales. (2) They don't have a distiller and I don't think too many people can distill as fine a product as the one bottled for Marani. (3) They do not have to deal with the overhead of the distillery.
I would strongly advise anyone serious about the distilling business to look at adiforums.com Once you begin to understand the obstacles Marani has overcome to have a product on a shelf you will realize how dedicated they are.
I based my estimations off of figures from this forum but not this particular discussion:
http://adiforums.com/index.php?showtopic=1108
This is a quote from the forum:
"So, let's work backwards:
Let's say MSRP is $40, and let's guess that "street price" will be $35.
$35 * .66 = $23.10 - this is the price the retailer wants to pay for the product.
$23.10 * .66 = $15.25 - this is the price the wholesaler wants to pay for the product.
These figures allow each of your channel partners to "hit the numbers." In some cases, they'll take less margin, but rarely less than 25%.
$15.25 / $35 ~= 44% - this is your selling price as a percent of street price.
1/.44 = 2.3x -- this is the channel markup, it's an interesting number - it expresses how much the channel costs to operate as a function of your sell price.
1-.44 = .56 or 56% this is the channel margin - it's another interesting number...but I digress."
So by the above referenced calculations, Marani's numbers could be:
$32.00 Retail
32.00 X .66 = 21.12 price to retailer
21.12 X .66 = 13.93 price to distributor
My morning est. were $10.66 at each step:
31.99 Retail
21.32 price to retailer
10.66 price to distributor
There is a price difference between the 2 calculations of $3.27 for the distributor.
The numbers I pulled out of this morning are conservative numbers that I have contemplated (and some distillers do use) using if I started my own business. Because if I could take a bit less the distributor could make more profit and would therefore push your product harder.
Realize neutral grain sprit (ngs) can be purchased from a distillery for around $3.00 per gallon. You filter it, cut it with water to 80 proof, bottle and market it. It's cheap stuff. With thousands of vodkas out there you better have reason for a distributor to want to sell your product over another - and money talks.
Either way the mark up for the distributor and retailer is big.
Keep in mind these numbers can be tweaked to hit price points.
Again my point this morning was solely that Marani could be sold on a military base much less $32.00 per bottle.
