The typical markup on spirits at liquor stores ranges from 25% to 30% before the bottles are made available for sale. This percentage represents the additional cost a liquor store adds to the price it paid to its distributor.
Understanding Liquor Store Markup
Markup is a common business practice where a percentage is added to the cost of a product to determine its selling price. For liquor stores, this markup covers various operational costs, including rent, utilities, employee wages, insurance, and marketing, while also ensuring a profit margin. It's a crucial component in how retail prices are set for alcoholic beverages.
The Typical Markup Range
While markups can vary based on numerous factors like location, competition, and the specific product, the general rule of thumb for liquor stores is an additional markup of 25% to 30%. This is applied to the price at which they acquire the spirits from distributors.
The Journey of a Spirit: Distributor to Shelf
It's important to understand that the liquor store's markup is part of a larger supply chain, each stage of which adds its own cost. Before a bottle even reaches the liquor store, it typically passes through a distributor. Distributors also apply their own markup:
- Distributor Markup: From their wholesale cost, distributors generally mark up spirits between 25% to 30%.
- Liquor Store Markup: Following the distributor's markup, the liquor store then adds an additional 25% to 30% before the product is displayed on shelves for consumers.
This layered approach means that the final price a consumer pays reflects markups from multiple points in the distribution chain.
Here's a simplified breakdown of the typical markup stages for spirits:
| Stage in Supply Chain | Typical Markup Range | Basis for Markup |
|---|---|---|
| Distributor | 25% - 30% | From wholesale cost to liquor store |
| Liquor Store | 25% - 30% | From distributor's price to consumer |
