Managing Beer Margins

Due to Consumer and Competition legislation CCV cannot publish “Recommended Prices” (as this may be interpreted as price fixing) although we do understand that clubs often seek guidance on pricing points to achieve industry standard gross profit benchmarks.

Many Beverage suppliers will be able to assist with pricing schedules and be able to answer questions concerning pricing trends in your area.

In relation to Pross Profit a simple way to look at the profit impact of pricing is through continual assessment of functional area gross profit.

Gross profit  or gross margin is the simple expression of the difference between revenue and cost.

Gross profit  or gross margin can be assessed and monitored for any functional area of the business, or for any product line item.

To calculate gross profit:

Gross profit = Sales revenue – Cost of goods sold   X   100%

                                                Sales revenue

In this example, we look at gross profit  for draught beer on a per keg basis:

1. Assume a bar sells 1 keg of Carlton Draught per week.
2. Assume the following costs
   1. $280.80 per keg delivered
   2. Beer sale price is $5.10 per 285ml.*
   3. Yield per keg is 165 pots (285ml).*
   4. Total sales revenue per keg = $841.50
   5. Gross profit  per keg is
      1. ($841.50 – $280.80) / $841.50  x   100%, thus
      2. $560.70 / $841.50   x   100%, thus
      3. 66.7%

*From this example it can be seen that the two critical underlying factors affecting gross profit  for draught beer are sale price and yield.

For current wholesale CUB prices, please contact your CUB representative.