"Wine is the most healthful and most hygienic of beverages." - Louis Pasteur

Introduction:

Costs management is an important, if perhaps somewhat unglamorous, part of any business. And in the winery world, one of the highest costs is the cost of goods (COGS), so negotiating the best possible deals you can get with your suppliers is paramount to any business that wishes to be financially viable.

It is believed that every bar needs to strike a good balance and ensure that they put forward the best possible product at a commercially viable price.

The following shows how to strike a balanced deal with your wine suppliers.

1. Don’t sign it all with one company

Although more or less every big drink company wants to sign a contract that monopolizes your cocktail list and speed-rail. But there are many reasons this isn’t a good practice. Still, the main one is that it will limit your drink offering and potentially negatively affect the quality of the products you serve. You should be able to contract 70% or so of your list to one supplier. What you are doing is signing up for a volume discount. By promising that you’ll deliver volume from a supplier, you’re given better pricing and financial support. The value of doing this is significant.

2. Prepare your volume in detail

You should prepare a detailed document that forecasts your turnover for the year. This may be hard when opening a new venue. However, you can accurately predict your takings if you detail everything in minute detail. This simply means creating a document that breaks down your sales into each spirit category and beers and wines. The forecast will also reveal what volume comes from the cocktail list and what book comes from the speed rail.

3. Structure your deal

When we negotiate our pouring deals, you can approach it from two different perspectives, first, volume and price, and second, marketing support. Price and volume are the domain of the sales rep you are dealing with. They have to justify all the support they give you based on the volumes you can deliver. Marketing Support is quite different and also a bit harder to get. However, if you are a bartender or bar owner with a good reputation in trade and you can take a creative approach to business, you might find pockets of money available to you via the marketing department that your volumes may not justify.

4. Payment Terms

When opening a restaurant, getting up-front cash to your suppliers can be handy. That said, if a supplier is giving you 30 or 60 day payment terms, they will need to make this back on what they sell to you, and you will most likely not receive as good a price as if you simply go for an off-invoice option.

5. Secondary trade partners

Once you have secured your main supplier, you can then open up the remaining of our cocktail list or speed-rail to brands you want to work with. However, you can negotiate price and support with each brand rather than just choosing a few brands and throwing them on there. There can be some decent volume to be had here for the brand.

In conclusion

Building and executing strategies that work best for your business is the only thing that will fuel your growth. You may only see a positive shift when your goal is definitive, and a plan is on point. But this may take a lot of time and effort and can be a risk to save yourself time and set forth efficient strategies; our agency is here to help you render the best results. 🎯

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