Pricing and positioning a craft gin
A price is a claim about quality, a promise to the trade and a number that has to cover your costs. Get all three to agree before you print a label.
Three questions behind every price
First: what does a finished bottle cost you, including duty and your share of overheads? Second: what do the distributor, the retailer or the bar need to earn? Third: what will a drinker in your target market pay for a gin of your style?
If those three do not meet, no clever story fixes it. Work through the first with the cost of a bottle. This guide covers the other two.
Work backwards from the shelf
Start with the shelf or menu price you believe the drinker will accept. Take off taxes. Take off the retailer's or bar's margin, then the distributor's if there is one. What is left is your price to the trade. Compare it to your cost.
An illustration with hypothetical round numbers: suppose a shelf price of 100 includes 30 of tax and duty, leaving 70. If the retailer takes 14 and the distributor takes 10, you receive 46. If your cost is 55, the gin loses money at that price however good it is. Margins and taxes vary by country and Indian state, so use your own numbers.
Look at the shelf, not at a report
Visit the shops and bars where you want to sit. Write down the prices of every gin you would compete with, the bottle sizes, the strengths and what they claim on the label. Group them: entry, mid and premium.
Then ask where your gin truly sits. A drinker who sees a small-batch gin at the price of a mass brand will wonder why. A drinker who sees an ordinary gin at a premium price will notice. Our guide on market research before launching a gin shows how to gather this properly.
Positioning: what you stand for
Positioning is the short answer to "why this gin?". It could be a style (a classic London dry), a botanical (a local ingredient), a way of drinking (made for a gin and tonic), a place or a method. It has to be true and it has to be something the drinker can taste or see.
Positioning must also match price. A drink priced like a gift needs packaging and a story that justify it. A drink priced for everyday mixing needs to be good in a long drink. Avoid claims of superiority you cannot show. Avoid health claims of any kind.
Price ladders and range
If you plan more than one product, think about the steps between them. A core gin, a limited release and perhaps a flavoured version give different drinkers a way in. Keep the range small at first. Every additional product adds stock, packaging and complexity. The case for flavoured lines is in flavoured gin: the business case and the risks.
Discounts, promotions and the long game
Early discounting is tempting and hard to undo. A price cut teaches the trade and the drinker what your gin is worth. If you promote, do it with a plan: for a short time, for a reason and at a price you can afford. Keep your price consistent between your own shop, your online store and the trade, or the trade will notice.
Alcohol promotions are regulated in many places. Responsible marketing never targets minors. Check local advertising rules.
Test the price and check the pack
Before you fix a price, talk to the people who will buy the gin. Take a sample to a few bar managers and shop owners and ask them what they would expect to pay for it. Ask how much they would need to earn. Ask how it compares with what they already stock. People often give a useful range. You also learn which part of the chain objects first.
Run the test responsibly. Samples are for professionals who are choosing stock, not for pushing drinks on anyone.
The first thing a drinker sees is the bottle. If your pack looks like a bargain brand but your price is premium, the trade will push back. If your pack looks luxurious but your price is low, your margin pays for the pack. Cost the pack and the price together using the packaging guide.
Review the price every year
Costs move. Spirit, glass and freight rise and fall. Put a date in the diary to rebuild the sum and decide whether to hold, raise or change pack size. A small, announced increase is easier than a margin that quietly disappears.
Common questions
Should I price low to get distribution?
Only if the margin still works for you. A price that cannot be raised later can trap the brand.
How premium can a new craft gin be?
As premium as your quality, pack and story honestly support and as the market in your channel will pay. Test it with real buyers.
Is a bigger bottle better value?
It lowers glass cost per litre but raises shelf price and may not suit your channel. Test it with trade buyers.
Who sets the final shelf price?
Often the retailer or the bar, subject to local pricing rules. You control your price to them and your recommended price.
