Cash Margins

MARGINS - G. P. % or CASH
Traditionally the licensed trade is used to the concept of using a fairly consistent mark-up on the wines it sells. Accountants and financial advisors recommend such an approach because of the benefits that result with regard to budgeting, stock control and the like.

But we should never forget that the ultimate aim is the continuing long-term profitability of the business. One fundamental ingredient is the objective of obtaining repeat business with preferably an increased spend per head.

Encourage your customers to "drink up the list" and they should enjoy themselves even more.

A simple way is as follows.

Say your House and Entry level wines are priced to give you a 65% return and sell (including VAT) at between £9.95 and £12.95.

Your profit is between £5.50 and £7 a bottle.

Your next band of wines should make you more than £7 of course. But if you decide to make a fixed amount, say £8.50, on anything costing you more than £5.25, you can offer your customers very up-market wine for just over £15. They will then be sorely tempted and you will make more money and have even more satisfied customers.

Be it Chablis, New Zealand Sauvignon Blanc, Champagne, Claret, Barolo, Rioja Reserva, an encouraged customer will be a happy customer.

So this approach should give you the following:

• More cash profit because you may sell more of your up-market bottles.
• No increased stockholding costs because the price from H.B. Clark stays the same.
• Happier customers who will not only come back more often but, as Raymond Blanc has recently said on television, will be the best promoters of your establishment and the cheapest too!

So let us see how it works.
If you list a bottle of Chablis Christian Simon and look to make 65%, your current sales price will be £32.95 and your cash profit will be £18.62.

If you sell at £23.95 as per the list opposite, you make £8.72. Chablis is very popular and at £23.95 as against £32.95, you will generally sell much more in our experience.

Do think about it and do not hesitate to ask us if you would like any further information.

 

For more details contact:

	Sales Director	01924 373328	07801 922478
	Sales Director - Pub Groups	01924 373328	07801 922480
David Robertson	Wine Development Manager	01924 373328	07813 662863
	Wine Key Account Manager	01924 373328	07837 193677
Peter Skuse	Pricing and Sourcing Manager	01924 373328	07801 922461
	Wine Administrator	01924 373328	07842 126966