This archive report was first published on 27 November 2019.
As the Finance Act 2019 took effect on November 7, 2019, the increased excise duty on alcohol by 21 per cent was implemented. However, bar owners can still maintain fair prices for their customers by optimizing their supply chain and pricing strategies.
Before alcohol reaches the consumer, it passes through several stages, including manufacturing, wholesaling, distribution, and retailing. Bar owners can reduce costs by renegotiating rental and labor agreements, relocating, or hiring more efficient staff.
Technology can also play a crucial role in marketing and promoting products. Instead of traditional full-blown promotions, mobile apps can be used to communicate with customers about the latest offers, making it cheaper and more convenient.
Suppliers can also influence distributors to move more of their products by offering incentives, promotions, or store visits with sales representatives. This can help increase sales and revenue for both the supplier and the distributor.
Ultimately, the end consumer's decision to buy is driven by the quality of the product and its price. Unfair pricing can harm the entire supply chain and lead to the closure of businesses, denying customers their favorite drinks.
Bar owners need to understand basic mathematics to survive in the industry. They must consider factors such as the economic environment, pricing policy, and the type of establishment they operate.
Bars typically mark up their drinks more than liquor stores, and restaurants have a 'pour cost' room for free drink promotions. However, bars have advantages such as low costs for bottled beer and canned beer sold at the recommended retail price.
Establishments selling canned beer at the RRP have the highest advantage, followed by draft beer, fancy beer, wine, and hard liquor. The last has thin margins due to the high cost of fancy glasses and the tendency for consumers to get drunk on a lower volume.
It is essential for bar owners to know which class of products they want to sell and to price them close to the recommended retail price to increase sales and revenue.
