In addition to the brand, what makes a beverage worth a certain price? Is it the location where you make the purchase or is it the container, or both?

Branding, packaging, as well as point of sale are all incredibly important in terms of perceived value. How do you find the optimum price that will deliver maximum profitability when the product is sold in multiple channels?

Beverages constitute one of the largest industries in the world and can be divided into two major categories:

  • Alcoholic Beverages
  • Nonalcoholic Beverages, including juices, water, carbonated beverages, milk, energy drinks, tea, and coffee

With experience in both sectors, PriceGain has helped beverage manufacturers, distributors and retailers improve their profitability with strategic pricing and price optimization programs.

The beverage industry presents special pricing challenges.

The beverage industry presents a number of interesting pricing challenges:

  • Highly competitive
  • Brand plays an enormous role in establishing perceived value
  • Huge variety of essentially similar products variations include size, flavorings and packaging among others
  • Multiple channels, including vending machines, bars and restaurants, supermarkets, and convenience stores
  • Large price variations accepted by customers based on the channel
  • Highly regulated (in the case of alcoholic beverages)

Optimize pricing for retail store channels.

Multiple angles must be considered to overcome the challenges of optimizing profitability for a line of soft drinks. For example, in grocery stores and supermarkets, innovation is the key to survival.

PriceGain works with manufacturers to help them develop new product concepts including variations of sizes, packaging and bundling. A typical pricing project involves optimizing prices of all client products in a category.

We conduct systematic and scientifically-based surveys of consumers and then utilize proprietary statistical tools to analyze consumers willingness to pay. Several factors are considered, including brand, sizes, packaging, and price. We also gather detailed information on the attributes and pricing for all competitors in the category.

Based on this data, we develop a custom pricing model for the category that allows the client to determine:

  • How price changes for existing products will affect market share and profitability
  • How much a new product will cannibalize sales for existing products
  • How to identify openings in the market that the client can fill with new products
  • How to respond to competitors’ price changes in order to optimize profitability and market share

Optimize pricing for bars and restaurants.

Bars and restaurants present a very different pricing environment. PriceGain helps beverage companies determine the best product sizes and selections for small independent restaurants, fast food chains or large casual dining chains in terms of optimized pricing.

In this market, manufacturers often provide outlets with signage, refrigerators, advertising money, training, and even inventory financing in return for something approaching a monopoly position. This raises the barriers to entry for new competitors and allows the client firm to optimize pricing within a much narrower range of products. Most of these items may be supplied by the same company.

Taxes and regulations can play a significant role in your pricing strategy.

Taxes and regulations vary enormously by country and region and play an important role in pricing alcoholic beverages. PriceGain’s statistical methods take these variations into account and provide alcoholic beverage manufacturers with pricing models that work for the targeted regions based on current laws. They also allow clients to update the model with new regulatory information as needed.