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  • #988711
    ABPY
    Member
    • Total posts: 2
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    Hi,

    I am looking to import into the country beers from Europe. They are large brands in their home country but no easily available here. We have been able to secure rights to about 6 brands to start.

    We are however knew to all this. We have costed up things including customs duties/taxes and shipping costs. Where we are struggling is who to sell to and how. Our coatings have the beers landing in aus for about $35 a case and based on other brands we’d expect it to retail around the $50-$60 mark. We are unsure of how much margin the retailer would whack on it though? I’ve heard only about 5%?

    Just looking for general advice where to start on selling the product.

    Thanks all

    #1168572
    Dave Gillen – Former FS Concierge
    Keymaster
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    Hi there,

    Welcome aboard the forums!

    When you say “Where we are struggling is who to sell to and how” you’ve identified the most important question.

    If you’re looking to sell in bottle shops you need to get out and talk to bottle shop owners. They’ll tell whether they’re interested, what their markup is, how the arrangement would work, who you should really be talking to, and/or who else they think might be interested – i.e. all the answers!

    Good luck!

    Dave

    #1168573
    ABPY
    Member
    • Total posts: 2
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    Thanks!

    I’m glad I managed to get to the heart of the issue.

    From what I can see, the majority of them are owned by either Coles, woolies or metcash. The rest are large in number but small and scattered, and they seem to have co-ops. So it seems to get enough volume id need to get involved with one of the big 3.

    #1168574
    MH08
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    I’ll give you a few pointers now, if you want more in depth knowledge from the drink and food industry PM me and I’ll explain to you how to protect yourself.

    Ok so, the first part to consider is how or who will distribute your product, now only liquor licenced distributors can do this but you also have to be extremely careful of them also (further detail in PM).

    Why I say this? Because your entering a world where pricing (that you buy or sell for) is completely transparent all you have to go by are your wits and how far you can bullsh*t the competition before you find common ground.

    The back street deals and back room deals are very much alive in this arena. What you want to do first is find a bonded warehousing company that can hold your alcohol so you don’t have to pay any duties or taxes, this means you can make distributors or the business your selling to pay all your taxes. Sound’s good right? It’s also best to factor in costs for 3PL centres that can hold your product.

    Well bring’s me to my next point, in alcohol, businesses require super sized accounts 60 days is a minimum and 90 to 120 days with instalments is common.

    If you would like further information pop over a PM and I’m more than happy to help protect yourself. I have alot of friends in imports and I can probably tell you, they already have what ever your beer is already, that agreement is only good for pricing otherwise it’s useless to brutely honest.

    Also who ever fed you that bottles shops rely on 5% margin your surely mistaken. I can buy Corona for $28 per case and sell it for $37.50, be very careful who you receive advice from within the industry, there are alot of big players that have a lot of pull which comes with a lot of kick-backs. The trick is to start building a relationship and network fast with your competition, counter-intuitive? I know, but it’s the best way to keep them off your back.

    Speak soon.

    #1168575
    marketingweb
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    MH08 has given your far more detailed and specific advice than I ever could.

    Just wanted to add a couple things.

    1) Make sure you understand the difference between margin and markup. You used the phrase “wack on” then margin. May be a slip of the keyboard, but margin is a percentage OF and markup is a percentage ON – or in other words markup is what you put onto the cost price, margin is the gross profit percentage of the sell price. They are very different beasts, and if you are in negotiations that involve either, are setting RRP etc, it’s important to have your head around this concept forwards, backwards and sideways!
    An example – $100 cost with 50% markup is $150 Sell price. But this would only be 33.33% margin – because 33.33% of the sell price ($50 out of $150) is Gross Profit. They also scale at very different rates. 5% markup 4.8% margin, but 500% markup is 80% Margin!

    2) I don’t think there is almost ANY business that works on 5% markup or margin. It’s likely that a business may be working on 5% NETT profit, which is the profit AFTER paying wages, rent, expenses etc, but even this wouldn’t be ideal – you could put your money in the bank for the same profit. If a business is in growth mode perhaps, but not as a goal. What you are suggesting at 5% markup is that they make 5% profit then pay all their wages and expenses out of that – not going to happen. And don’t forget GST when workout out your RRP’s.

    There are businesses such as Retail IT that work on about 15% margin (aka 17.65% markup), and others such as some cosmetics where they work on up to maybe 80% margin (aka 500% markup). But what’s more common for most businesses I’ve experienced is anywhere from 33% margin (aka 50% markup) to 50% margin (aka 100% markup). When you are working on this, use ex-GST amounts then add the GST. So if someone wants 50% margin/100% markup and the item was $30, it would sell for $66 which is ($30 x 2) x 1.1

    Hope all this maths hasn’t scared you off, but wanted to explain this as otherwise you could come a major cropper when when discussing this in a negotiation if you aren’t able to work it out. There are online tools and the like to do the calculations for you, but those in high powered negotiations re retail margins and the like may need to think on their feet with all this!

    Matt

    #1168576
    MH08
    Member
    • Total posts: 284
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    You right there, I mean’t 5% NET Profit.

    I know of 3 distributors that have 5% net profit – revenue is $320M per annum.

    Put it this way, a small distributor in Beverages of Foodservice within a year will make $5M, medium size, reach $15M and large, well that number keeps going up.

    The reason for such small margins is because it’s very difficult to measure breakages, expired dates etc. This is why it’s crucial to have an exact figure.

    I won’t mention the name but a very large distributor earning $23M per annum just sold for $1.2M so it goes to show you, how these companies operate even though we are the ones that determine how much you will buy your drinks or food for next time your at a HoReCa location.

    The only way you keep making money with healthy bottom line, is cash flow, the more people pay COD straight away the better then people on accounts. Even 7 day invoices are to long at times. Imagine when we have to bring in lemon lime bitters – $60K per pallet.

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