Hello,
I acquired a cold press juice business in June. We are gearing up to distribute our juices and want to see what others have seen for margins when wholesaling.
Margins are thin especially with the HPP costs but with volume it works.
Any other advice people have who have gone down the wholesaling path?
Thanks!
Jerad
According to Ryne O’Donnell in my most recent podcast 40% of retail price goes to retailer and 25% of wholesale price goes to distributor. So you have to work backwards from your end price.
At a retail price of $8.00:
Retail price: $8
Price to retailer: $4.80
Price to distributor: $3.60
So you have to make it cheap enough to sell at a profit for $3.60. And that’s at $8.00 final price…
Food cost in juice is extremely high compared to other beverages. Most of the beverages at the grocery store are made up of mostly water. Juices from concentrate, soda, energy drinks, teas are all basically water in pretty packaging. That’s what makes real juice unique. It actually costs a lot to make.
The nation-wide HPP juice lines now contain a lot of water, sugar, purees, and even powdered vegetable ingredients in order to cut down on costs so they can price it at $4 - $5. Go to the website of evolution fresh or suja and see how many juices you can find that don’t include water or puree. (Tea as an ingredient is a great way to add water).
I guess my point is that margins are really thin / non existent unless you can charge a premium for the product, like $8 - $9 and even then it can be tough. If charging a premium, somehow customers need to choose yours when it’s sitting next to Suja on the shelf for $4.
Not an easy business!
Thanks Charlie. We have an X-1 but also reserved (2) X-1 Minis. We believe we can grow our cafes with fresh made to order juices but also go down the distribution path as people will recognize our brand and juices from the cafes in stores. However I believe to start we will focus on hotels, catering companies etc. rather than grocery stores since those seem to be very crowded.
I had a successful meeting with a distributor partner just 2 days ago. They also sell us the produce for our juices, so they have an incentive to represent our juices to their clients since they make money on both sides. They’re willing to pay $3.25 a bottle at most but I believe I can get all costs down to about $1.80/bottle.
Interesting alignment with the distributor. Lets us know how it goes. At $1.80 cost you’re definitely making money.
I think that’s a good strategy. Sitting on the shelf near 5 other brands is a lot different than being on the menu as the only option in a hotel.