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  1. #1
    Enthusiast
    Join Date
    Jul 2003
    Location
    Victoria Canada, Whistler, Maui
    Posts
    454

    Outrageous Retail Markups

    A point of interest for those of you lucky enought to live and play in the states of KY, OH, TN, VA, AL etc.:

    Our government controlled liquor distribution has just raised their retail markup on spirits. It now stands at a whopping 159%. This is completely ridiculous.

    For example, here are a few selections and the approximate price, US dollars:

    WT 80 proof 750ml, no age statement: over $21US
    Buffalo Trace, 750ml $29
    Knob Creek 750ml $31

    With these sorts of markups, I image a bottle of Blantons would sell for $90 or more.

    Most retail outlets are run by the government, although in the last few years, private retailers have been allowed to sell spirits, often at an even higher price (but NEVER lower) and the only US whiskey sold is normally JD.

    I'm curious about the local laws in your state/province. Are retailers allowed to define their own markups?


  2. #2
    Apprentice
    Join Date
    Oct 2002
    Location
    Ann Arbor, Michigan
    Posts
    33

    Re: Outrageous Retail Markups

    Funny, I just posted something about this on an older thread.

    In Michigan, prices are controlled by the LLC. Every store in the State must sell a product for exactly the same price. No mark-ups are nice, but there are never any sales either.

    But at least you can walk into a store "up-north" and know you're not paying extra becuase of the remote location.

    I still love shopping for bargains in Chicago though...

  3. #3
    Connoisseur
    Join Date
    Nov 2003
    Location
    Birmingham, AL
    Posts
    540

    Re: Outrageous Retail Markups

    Retail prices in NY aren't regulated by the State Liquor Authority. Most retailers standard markup is to add about 30% of their spirits cost, but smaller stores often are below that. I opened my store by adding 20% of my cost to my spirits prices. The clincher is that larger volume stores get bigger discounts for bulk buying where I'm often buying a bottle or two of spirits and rarely more than a case at a time. It's tough to keep competitive prices with larger volume operations when my base costs are higher.

    To beat it all, distributors generally charge more for NYC retailers than every where else in the State. Distributors often have two prices posted with the liquor authority... one for NYC and one for everyone else. Not only are we paying higher rents, higher insurance, higher liquor license fees, but higher booze prices, as well, just to run a business in the Big City. Gotta love it! Someone in the retail business told me when I first moved here, "If you can survive here...you can survive anywhere."

  4. #4

    Re: Outrageous Retail Markups

    The standard in Tennessee is 29% markup for spirits, 49% for wine. There are nominal differences between stores of the same size, as one might round up every price to end with .99, for example. Interestingly, while we sell a 750ml bottle of Knob Creek only a few cents less than your government-mandated $31, the store where I work could save you nearly $10 a bottle on Buffalo Trace.
    The real scandal in Tennessee is that there is no competition among distributors. Although there are five distributors in our area, there is only one who carries, for example, Buffalo Trace while another is the exclusive distributor for Jim Beam. Plus, Tennessee law gives exclusive control over the producer-distributor arrangement to the distributor -- Brown Forman can't change distributors if it doesn't like the service it's getting unless the distributor releases it from its contract.
    An additional note about the prices/markups -- store size and the size of its purchases make a big difference. An area liquor 'supermarket', if you will, retails some items at a lower price than our wholesale cost from the distributor because it purchases those items in such large quantities and gets a much better wholesale price. However, of course, it's illegal for us to go buy those items cheaper from him at retail than pay the higher wholesale price to the distributor.

  5. #5
    Connoisseur
    Join Date
    Nov 2003
    Location
    Birmingham, AL
    Posts
    540

    Re: Outrageous Retail Markups

    After looking for a storefront for my shop in NYC for over a year, I started jonesin' for a simpler way of life I knew in the South, especially when I knew I could pay cash for a home in Chattanooga, TN and that same money might buy me a cracker box here. After researching TN liquor law, though, I gave that idea up. Needless to say after reading your post, I realize I made the right decision. It's amazing how each State can have such different control over pricing and such.

  6. #6
    Advanced Taster
    Join Date
    Feb 2001
    Location
    Pittsburgh, PA, USA
    Posts
    224

    Re: Outrageous Retail Markups

    In the great control state of Pennsylvania, the state government controls all wholesale and retail sales of alcohol. All liquor stores are owned and operated by the state, so, as in Michigan, prices are the same at every store, whether that store's in Philadelphia or Punxsutawney. The state marks up all wine and spirits 30 percent then tacks on another 18 percent under the Johnstown Flood Tax. At retail, another 6 percent state sales tax (7 percent in Philly and Pittsburgh) is added on at the register.

    This taxing structure leads to generally higher prices for the most popular items (white zin, JD, Beam, Captain Migraine, Bacardi, etc.). However, I have found that prices for "premium" products--including premium bourbons--are competitive and, in many cases, lower than elsewhere. For example, when Preston Van Winkle learned that the VW 15/107 was selling for $35 in PA, he was surprised and said something about moving here :-)

    Plus, each month various items go on sale, usually for about 10 percent off. There's also the occasional close-out sale during which prices can eventually be reduced by 40-45 percent.

    Product selection could be better, but, in general, things aren't so bad here when compared to what I've seen elsewhere.

    SpeedyJohn

 

 

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