U.S. MARKET PRICE STRUCTURE MODEL

© 2015 Steve Raye

A Beverage Trade Network Webinar

Steve Raye President of Bevology, Inc. Marketing consulting company helping

export brands enter and grow in the U.S. market.Steve RayeBevology Inc.401 Park Ave. So, 10th FloorNew York, NY 10016+1-860-833-6272Steve@BevologyInc.comwww.BevologyInc.comBlog: OH-pinions

Simple Formula to Estimate Retail Shelf Price

3.5 times Ex-Cellar Price or2 x Distributor Laid-In Cost

NB: this is a rough estimate

Retail Shelf Price =

Formula is a Simplified Model and Point of Reference Only

Factors that are incorporated into this formula Marketing support from winery and importer

(usually 5% each). Can be via direct contribution or % of sales for wine dinners, in-store tasting events, PR etc.

Samples allow 2% for net total, (usually funded half from winery/supplier and matched from distributor). For new products sample budget may be higher/more the first year.

Simplified Formula for U.S. Wine Price Structure

Georgia 1.51$ 3.59$ Hawaii 1.38$ 3.28$ Idaho 0.45$ 1.07$ Illinois 1.39$ 3.30$ Indiana 0.47$ 1.12$ Iowa 1.75$ 4.16$ Kansas 0.30$ 0.71$ Kentucky 3.18$ 7.56$ Louisiana 0.11$ 0.26$ Maine 0.60$ 1.43$ Maryland 1.35$ 3.21$ Massachusetts 0.55$ 1.31$ Michigan 0.51$ 1.21$ Minnesota 1.17$ 2.78$ Mississippi -$ -$ Missouri 0.42$ 1.00$ Montana 1.06$ 2.52$ Nebraska 0.95$ 2.26$ Nevada 0.70$ 1.66$ New Hampshire -$ -$ New J ersey 0.88$ 2.08$ New Mexico 1.70$ 4.04$ New York 0.30$ 0.71$ North Carolina 1.00$ 2.38$ North Dakota 1.06$ 2.52$ Ohio 0.32$ 0.76$

Variable Charges Including Freight, Duty Warehouse

Est. Ocean Freight $ 3.00 Est. Marine Insurance $ 0.20 Ad Valorum & Harbor Tax $ 0.34 Duty $ 0.62 Warehouse Charges $ 1.50 Total 5.66$

State Excise Tax RatesState State Excise

Tax $/gallonState Excise Tax

$/9L caseState Excise Tax $/gallon

State Excise Tax $/9L case

State Excise Tax $/9L case

Alabama 1.70$ 4.04$ Missouri 0.42$ 1.00$ Alaska 2.50$ 5.94$ Montana 1.06$ 2.52$ Arizona 0.84$ 2.00$ Nebraska 0.95$ 2.26$ Arkansas 1.42$ 3.38$ Nevada 0.70$ 1.66$ California 0.20$ 0.48$ New Hampshire -$ -$ Colorado 0.32$ 0.76$ New J ersey 0.88$ 2.08$ Connecticut 0.72$ 1.71$ New Mexico 1.70$ 4.04$ Delaware 0.97$ 2.31$ New York 0.30$ 0.71$ Dist. of Columbia 1.61$ 3.83$ North Carolina 1.00$ 2.38$ Florida 2.25$ 5.35$ North Dakota 1.06$ 2.52$ Georgia 1.51$ 3.59$ Ohio 0.32$ 0.76$ Hawaii 1.38$ 3.28$ Oklahoma 0.72$ 1.71$ Idaho 0.45$ 1.07$ Oregon 0.67$ 1.59$ Illinois 1.39$ 3.30$ Pennsylvania -$ -$ Indiana 0.47$ 1.12$ Rhode Island 1.40$ 3.33$ Iowa 1.75$ 4.16$ South Carolina 1.08$ 2.57$ Kansas 0.30$ 0.71$ South Dakota 1.27$ 3.02$ Kentucky 3.18$ 7.56$ Tennessee 1.27$ 3.02$ Louisiana 0.11$ 0.26$ Texas 0.20$ 0.49$ Maine 0.60$ 1.43$ Utah -$ -$ Maryland 1.35$ 3.21$ Vermont 0.55$ 1.31$ Massachusetts 0.55$ 1.31$ Virginia 1.51$ 7.19$ Michigan 0.51$ 1.21$ Washington 0.87$ 2.07$ Minnesota 1.17$ 2.78$ West Virginia 1.00$ 2.38$ Mississippi -$ -$ Wisconsin 0.25$ 0.59$

Wyoming -$ -$

Terms and Terminology Distributor = Wholesaler: they are synonyms FOB: Technically means Free on Board/Freight on Board

In practice simply means the price that is being charged…from supplier to importer or from importer to distributor. Ownership and liability changes from seller to buyer at this point.

Get a specific and firm agreement for what it includes in your deal

Laid-In Cost: the fully loaded cost to distributor before markup and before state taxes.

Wholesale Price: The frontline (undiscounted) price charged to retailer

Terms and Terminology FET: Federal Excise Tax Duty: a tax on imported products separate

from FET State Excise Tax: Tax on alcohol component

of the product, definitions may vary by state. Discounts: DA (Depletion Allowance), SPA

(Special Purchase Allowance), FSA (Floor Stock Adjustment), RIPS (Retailer Incentive program), MIPS (Management Incentive Program)

Contact

Steve RayeBevology Inc.401 Park Ave. So, 10th FloorNew York, NY 10016+1-212-613-2713 (office)+1-860-833-6272 (cell)Steve@BevologyInc.comwww.Bevologyinc.comBlog: OH-pinions