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Has your expenses increased more than your pricing in the last ten years?
Our cost of production, including labor, rent, raw materials, barrels, bottles, labels, utilities, shipping, etc., has increased by 50% or more in the past decade. Our prices for bottles of our spirits have remained the same. This is mostly due to pricing pressure from the large producers, whose prices have remained fairly level or actually went down in the past decade, for the mainstream brands. But this may be a red herring, since most major producers have added upper tier and pseudo-craft brands that sell at significant premiums from their lower tier brands, and this may be allowing them to effectively raise the average price and net revenue? Have others observed something similar?
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1 Reply
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Totally agree,  For aged spirits it’s more of a cash flow thing due to the lag of production to final sale of the product.  To offset the cash flow we decided to develop a line extension of special barrel projects that sell at $129.00 – $189.00 per bottle that are released quarterly for the past year and are available only at the distillery.  These sell through in 5-10 days and increase our net per bottle profit $4.38 per bottle without increasing prices.  With all that said the second / third quarter of 2023 we are going to need to increase bottle prices 14% unless the forecasted (by some) deflationary period comes to a realization.  Cash is king but cash flow keeps you in business.Â
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