4. Product Pricing in RSA & GP Margins

CRAFT BEER PRICING IN RSA

The Gross Profit margins we aim to hit in RSA are as follows:

Singles 42%-43% (or greater depending on pricing rules below)

4 packs/6 Packs 32% – 33% (or greater depending on pricing rules below)

Cases 22% (or greater depending on pricing rules below)

Squealers / Growlers: work out squealer price to be 50% margin and then a growler price is 2 x squealer price less $2. E.g. if squealer is priced at $22 to reach 50% GP margin then the growler fill for that beer would be 2 x $22 + $2 = $42. Note, growler and squealer pricing only increases by a whole dollar.

NOTE: Where we receive a discount for buying in volume or other discounts that we may be offered the selling price is calculated on the buying price BEFORE any discounts are loaded. I.e. if the LUC of a beer is $2.50 but we’ve received a buy deal reducing the LUC to $2.35 the pricing and GP margins are still calculated on the $2.50 buying price and we make a larger margin.

Following pricing rules apply

Singles are in increments of 50 cents. If a single price is at $6.50 for example and means the GP margin is 40.2% then an additional 50 cents needs to be added to make it $7.00

4 packs/6 packs are priced ending in .99 cents, e.g. $29.99. If a 4/6 pack at $28.99 gets to 32% then it is then changed to $29.99 as it is unlikely that a customer will be deterred as it is still under the $30 mark (for this example).

Cases are priced ending in .99 cents, e.g. $79.99. Where the pricing for a case is (for example) $67.99 or $68.99 and this reaches the 22% GP target this is then rounded up. The psychology behind this is that a customer that is willing to spend $68.99 on a case will not be deterred by an extra dollar, as long as it stays under the $70 mark (for this example), i.e. $69.99

GLASSWARE PRICING IN RSA

Glass ware also has increments of $0.50 but works on different margins.

Generally speaking glassware is sold as singles and 6 packs (regardless of the format they are delivered to us). The exception to this is Spiegelau which is sold as a twin pack or 4 pack - which is pre-packaged by the manufacturer.

Single GP% is between 60% - 100%. The 60% is for glassware we pay for and the 100% is for pricing we get for free from our suppliers. To detemine a price of a free glass, look at price points for other similar glassware.

6 pack pricing is based on a 5 + 1 pricing. i.e. 5 x the single unit, and then round to nearest $0.99 price point. E.g. if a glass is sold as a single at $12 then the 6 pack price would be $60 (5x12) but rounded to $59.99. Again the exception to this is Spiegelau which we price at approximately a 40-45% margin as there is less re-packaging required and it is a more competitive product in the market, e.g. sold at Victoria's Basement.

DISCOUNTING BEERS (ON OR PAST BB DATES OR EXCESS STOCK)

Beers are placed on special due to holding excess stock or needing to clear stock as a result of being past its Best Before date. For beers that are just on or past their BB dates we often have less than a case so there is only really a need to discount the single and 4 pack/6 pack pricing. As a result only discount the case pricing if more than a case is held.

All special pricing must be loaded into RSA via the pricing module / area.

The Following Rules for Discounting Pricing Apply

Singles – reduced from the average GP of 42%-43% to approximately 32%-33% (i.e. what is normally 4pack/6pack pricing). Reduction in pricing is still only in increments of 50 cents for singles.

4 Packs/6 Packs – reduced from the average GP of 32%-33% to approximately 22%-23% (i.e. what is normally case pricing)

Case rates stay the same unless it is to discount significant excess stock then the selling price is dropped to approximately 18% GP (down from the normal 22%-23% case margins we aim for).

For beers that are past their best before dates by 3 months+ please refer to the table below.

PRICING FOR SPECIALS

The below is a guide to margin applied to products on special pricing depending on the date of the beer.