Using Consumer Data to Determine Price Points

​At one point, most ​of the pricing for ​craft beer ​was ​loosely ​aligned with ​only a few price tiers​ where a​ ​veteran craft brand​ could set ​a price and others would ​follow along, ignoring​ ​margins and cost structures.

​”​It was something that brewers felt they had to do to compete​,” explained Clement Pellani, Two Roads co-founder and CCO. “Contributing to this pricing parity in the market, was the fact that there was not the rich diversity in styles that we have today and consumers did not weigh as heavily whether a brand was from a small local craft brewery or a large national craft brewery in terms of pricing.

​Now, with a variety of sizes, container numbers in a pack and styles​, it can fluctuate margins because ingredients can cause some to set a price point with very little in profit while not doing the legwork to understand how to maximize each products’ growth.​ Pellani said consumers now place a higher value on beers from a local brewery and are willing to pay more for them.

“This has freed up craft brewers to break the traditional pricing tiers and have multiple price points that truly reflect the cost of producing the beer, freight costs, scarcity, etc.,” he told Brewer.

That means breweries can keep margins closer to ideal means when going on a local shelf. Pricing and price promotions are more complex and tracking numbers can help to organize and analyze pricing and profitability and make the best decisions in the market.

​”​There is increased pricing complexity between brewers, distributors, and retailers because there are more front-line price tiers and more varied deal levels today​,” Pellani said​. ​”​If we want to project revenue and margin, we need to estimate how much volume will sell at each price and deal level and integrate our internal costs.

​”​Projections are never 100 percent accurate so mapping actuals to deal levels improves our ability to increase profit accuracy on an on-going basis.​”​

​Two Roads began using Vistaar ​for its data ​solution, ​and Pellani said they can easily scenario plan ​in each market ​to see ​how various price and promotion strategies work for the consumer and the complete three-tier network.

​”​This allows us to experiment more and more with a price and quickly understand what pricing strategies are working to grow our sales, and what needs a course correction​,” he said.​

​He added that the key is to respond to market conditions quickly and ​having that data provides the visibility needed​ to make course corrections quickly.

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