	AllExperts > Beverage Distribution
	Search

About Eric Hofer
Expertise
Over 27 years experience, with 17 in international FMCG in back office operations and in field sales and data collection, including design, development and deployment of Handhelds, Marketing Equipment (Service, Tracking and Return on Investment), reporting and Vending management. Have participated on the launch of operations in new markets, and re-engineered the back office in several countries.

Experience
Designed and led the development and deployment internal ERP system for Pepsi used in On-Premise/Vending in 13 markets. Designed 2 handheld systems, the latest is now deployed in 4 markets internationally. Re-engineered the back office functions (settlements, despatch, invoicing, credit control, etc) for over 20 snack, confectionary and beverage operators. Developing software: Progress, VB, Access, C, Sybase, SA

Organizations
Innovative-Selling Solutions

Publications
BudapestSun

Education/Credentials
State University of New York - BA Economics NYU - Courant - Graduate work - Computing

Past/Present clients
PepsiAmericas PepsiCola International PepsiCola Company British Steel British Telecom Britvic (Pepsi's bottler in the UK) AT&T BellSouth Mars Overseas Bottling Pepsi France Matutano (Frito-Lay Spain) Frito-Lay Pepsi Foods International Chase Manhattan Bank Kidder Peabody National Power SmithKline Beecham Mars Overseas Bottling (Pepsi Azerbaijan) A&P Bottling (Pepsi Serbia & Montenegro) Iberia Bottlers (Pepsi Georgia)

You are here: Experts > Industry > Beverage Distribution > Beverage Distribution > Distribution and Retail Mark Up

Beverage Distribution - Distribution and Retail Mark Up

Expert: Eric Hofer - 10/26/2009

Question
Hi Eric, I am extremely impressed in the many answers you have provided on the beverage industry. We are a Natural Mineral Water company starting up in Canada. We have a very unique premium water for this part of the world and have worked for the last 2 years in developing our business plan. We are building a plant on site and will enter the market with a glass bottle initially targeting restaurants and hotels. The question I have is in regards to how much distributors typically mark up bottled waters before it is passed to the restaurants. We know what a typical price point is in the restaurants and hotels, but find it difficult to obtain distributor pricing in this market. Our goal is to price our product favorably so that everyone in the supply chain profits. Since our product is not yet in production, answers are hard to come by. Any help from yourself would be appreciated.
Thank you

Answer
Jim,

Not an easy one to answer in a general way. In On-Premise (restaurants, etc.), pricing is at a premium and therefore, there's a lot of competition.

Usually the ratio is 100% markup; and in on-premise, you'd see, a markup on that could also be 100% again.

The challenge you face comes down to a simple rules of economics and asymmetric information. You don't want to leave money on the table, but you have insufficient information to know what price is a price-too-high to be acceptable.

Usually one tinkers with pricing throughout the life of a product; adjusting it due to seasonality, competition, cost of capital, supply and stock-in-the-warehouse. While I can identify the factors, this is the realm of a seer; and if I had that skill, I'd be somewhere else right now, REALLY!

So what can you do? Effectively you have to test the market. You'll have to start by working back from the consumer pricing you can expect. You'll know what price the competitive products are listed on menus; you'll be able to estimate (looking at invoices, for example) what others are charging. And of course determining what margin you can work within, and therefore what you can afford to give away.

YOu'll be challenged with what you'll need to spend to establish your brand, presence, etc. Take a look at a mineral water that came from out of nowhere call Szentkiralyi in Hungary. They managed a superb launch with minimal advertising (having won assay awards in France a summer previously). Though they did not go after On-Premise for their first few years, they instead established themselves as a high quality, local take-home brand; and then easily moved to establish their premium segment.

You'll need to establish key accounts; SDOs; etc. This in turn requires a game plan that coordinates resources and spending.

Managing your sales force in a systemic, focused fashion is key. Look into the facilities offered by www.salessuite.net. They can offer not just order taking, but more so, a way to grow one's sales capability from a small team, to a national sales organization.

Hope this helps...

Add to this Answer Ask a Question