Trade pricing guide for drinks producers

The RRP is the price a customer pays on the shelf. It includes 20% VAT, so the first step is to strip VAT back out to get the net retail value. This is the starting point for the rest of the ladder.

UK alcohol duty is calculated on the litres of pure alcohol in each product. The rate depends on the product type and ABV. Once you know the duty per bottle, you can subtract it to see what is left for the product and the margin.

Use the duty rates reference to find the current rate for each product type and strength.

A typical UK drinks ladder has four trade tiers: retail, trade, wholesale and distributor. Each tier takes a discount from the one above it. The tier margin is the difference between what the buyer pays and what they receive after their own selling price.

• Retail — the price the end consumer pays, including VAT.
• Trade — bars, restaurants and independent retailers.
• Wholesale — larger independents and smaller distributors.
• Distributor — the price you receive from your route-to-market partner.

Ladder shows the margin left after duty and VAT at each tier. This lets you spot whether a distributor price still leaves you enough room, or whether the RRP needs to move.