How Important Are Margins in Off-Premise Sales?

When a consumer sets foot into a brewery’s taproom, they sort of know that pricing for each kind of beer can be across the board. Margins are made in taproom sales, it’s what can drive a brewery to be able to fund a future.

Putting a brand into the marketplace is a different animal. Line pricing is the norm and margins aren’t as high. Market standards have been set and a consumer is going to turn their nose up to a high-priced item unless it tells a good story.

That means a smaller brewery, even though it may be using the highest quality in all aspects is losing out by entering an off-premise situation. Changing prices to stay not just competitive, but relevant is possible.

Brian Buckman of Illuminated Beer Works in Chicago said sacrificing some from the top, bumping a case price $10 to retail helped lower costs for sales, but it also meant a loss in profit. That trade off can be worth it since it means IBW brands have a better shot of being bought  although changes in packaging wasn’t needed.

“We definitely will sacrifice some revenue for accessibility,” he said.

That means a lower margin, yet a chance to sell more versus having that larger profit but less sales.

It’s all a balancing act.

“We find ourselves beholden to stay within the market range,” Buckman said, indicating that. in many ways it affects the brewery’s recipe formulation as opposed to the reverse.

“That said, we have a standard price for bottles and draft that we like to hit and then another price point for wild, fruit, barrel or very rare beers that we hit,” he said. “But, again, at the end of the day, the ultimate goal for where we are at as a company now is to get the beer in people’s hands more than making the most money.

“Visibility is most valuable to us presently.”


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