Selling syrup through a local store front?

Retail in general is you buy a widget for one dollar and you sell it for two. I was the owner/operator of restaurants for over 20 years and if you were purchasing an item and turning around and selling it say, at a sandwich shop selling a bag of chips. There’s a much higher profit margin on the sandwich they prepared from scratch but the bag of chips is sold for twice what was paid for it.

You said they showed you your competitors pricing? Where was that landing?


I have the option of expanding to be able to take on other vendors if I wanted to produce more and it made sense financially.

Some of our prices were 2 dollars off others were like 6. Varied by product. Ours is bottled in glass the competition had only jugs.

Yes we were approached. They do create heavy traffic so I think we'd have a good chance selling everything from a farm stand. We had a lot of big expenses this year due to expansion so I have a hard time letting someone walk away with 30% of our perspective profit.

The competition is located in a super rural location where not much traffic is and their retail price is lower to start. They need the wholesale or they wouldn't be able to sell what they have so they are more in a bind to move products. Our retail prices are similar to what they sell them for in the store. We are in Saratoga county and can kind of demand a higher price because people pay it.

I just wanted to make sure I wasn't being crazy. And I dont want to lock is into something I can't back out of.

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Originally Posted by M&M Maple Grove

Retail in general is you buy a widget for one dollar and you sell it for two. I was the owner/operator of restaurants for over 20 years and if you were purchasing an item and turning around and selling it say, at a sandwich shop selling a bag of chips. There’s a much higher profit margin on the sandwich they prepared from scratch but the bag of chips is sold for twice what was paid for it.

You said they showed you your competitors pricing? Where was that landing?


I have the option of expanding to be able to take on other vendors if I wanted to produce more and it made sense financially.

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It seems to me that bulk prices provide a more uniform benchmark on wholesale market pricing. For example, let's look at a 1/2 gallon and say that this year's bulk price will be $2.40/pound:

Bulk Syrup = $13.20
Container= $2.35 (plastic jug)
Labor to Fill Container = $ 2.00 (varies)
Handling/Delivery = $2.00 (varies)
15% Overhead & Profit on costs = $ 2.93
Total = $22.48 per 1/2 gal

Therefore, one should expect a minimum of about $22.50 per 1/2 gal at a wholesale rate. If your retail rate is $30 then you would give a 25% discount off and the retailer would sell for $30, or even more. My sense is that this analysis is very reasonable since the numbers between bulk, wholesale, and retail seem to fall where I'd expect.

For our business, we do about 15% of our syrup as direct retail (which is easy without a significant effort) and the remaining as bulk sales. It makes more sense for us to skip the extra packaging and marketing costs for that 85% we sell in bulk even at a lower revenue level.

Ken

Everyone’s costs for production are different and all of the expenses that have been mentioned are reasonable. I have no experience bringing Maple Syrup to market however, plenty in retail. I can only speak from that side of the spectrum and due to all of the overhead a retail store indoors, A 100% markup is typical.

I’m curious myself what producers are getting in local markets and if they were able to do better than that.

The typical wholesale for maple in retail size containers runs from the low side at 10% up to 20% on the high side. Typical markup from their wholesale price is from 25% up to 35%. This is for pure maple syrup, not clothing, hardware or anything else you buy from a retail store.

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Originally Posted by bill m

The typical wholesale for maple in retail size containers runs from the low side at 10% up to 20% on the high side. Typical markup from their wholesale price is from 25% up to 35%. This is for pure maple syrup, not clothing, hardware or anything else you buy from a retail store.

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I agree with that range.

Thanks for the input. OK, so I can see how those numbers can work for everyone. If you’re selling at 25% off of your typical retail price, the retailer is most likely, bumping it up to hit their 50% profit margin. They may go down to a 35% profit margin for their own reasons. I can see that on one of the high-end glass bottles. Typically however, the rules apply to everything that sits on the shelves equally.

Although the 3rd edition of the maple manual isn't yet out, the spreadsheets (Excel format) from the economics chapter are already available at: https://mapleresearch.org/pub/econom...le-production/

There is also a lot of information and tools from UVM Extension at https://www.uvm.edu/extension/agricu...le/bizmodules/ and from Cornell at https://blogs.cornell.edu/cornellmap...aple-business/