Why Is It More Profitable to Place Larger Orders?
Read Time: 4 min.
Tequila brands investors have their work cut out for them in learning all the nuances of the spirits industry. From first crafting the ideal product profile for the consumer to figuring out how to brand and market their spirit, there are many details in the product creation process alone. But when it comes to production, things can get quite confusing and even costly for those who don’t know what they’re doing.
In this article we’re going to discuss the ins and outs of bottle production so you can be equipped as a savvy, educated investor. We’ll tell you why it’s actually more profitable to have larger bottle productions and walk you through the process to demonstrate the numbers.
Higher Volumes, Lower Costs
With the tequila industry on the rapid rise, tequila suppliers are constantly looking for the most effective and least costly ways of keeping up with demand. As Steve Lauth, CEO of Tequila Partida, says, “When times are good, people drink. When times are bad, they drink more.” Tequila sales grew over 46% in 2020, even during a global pandemic and worldwide unrest.
Every tequila brand must calculate how to meet these massive demands while covering all of their production costs. While at first it may seem nerve wracking to investors to order larger quantities, ultimately it’s the wisest business choice. Larger quantities equal lower overall costs in the long run.
Accounting for Your Materials
One of the primary things to be aware of when selecting your physical materials for bottling and packaging is the minimum quantity required in supplier orders. Think about the glass bottles, labels, caps, corks, and other packaging materials you’ll need to mass produce and ship your product.
Each of these different suppliers will often require a certain minimum for the material order. If you’re considering using sustainable and eco-friendly packaging, these will often run you a bit more due to the supplier’s cost of producing them. However, this may be a smart choice for your business based on your brand strategy. In either case, ordering materials in bulk will behoove you
Legal Requirements To Start A New Tequila Brand In The US
If you’re looking into how to make your own liquor label, you’ve probably already been considering the legal requirements. If you want to ultimately sell your product in the United States — which is a great idea, as we’ll explore below — there are different legal implications surrounding the import of alcohol.
Shipping and Logistics
Especially in the case of glass tequila bottles, working with reputable packaging and shipping companies that take great care with your products is of the utmost importance. It’s true that shipping, especially internationally, can be costly. But again, larger orders will equal greater profitability for you.
Consider that full truck load shipments decreases individual unit costs and turns better profitability for that distribution channel. The same concept applies for international shipping. Depending on the origin and destination, shipping tequila products overseas or across borders can be incredibly pricey, but shipping greater quantities will decrease the shipping costs of the individual units and thus increase your profit margins.
Refining Your Product Portfolios
First time investors in the tequila industry may have their sights set on one particular spirit, but a smarter long-term growth strategy is to consider how multiple product portfolios can help your brand succeed. Even new tequila brands can be introduced with multiple profile options to choose from, based on different niches and usage within their markets.
While this is a marketable, and therefore quite profitable, approach, keep in mind that each profile will require a minimum volume of production in order to be sustainable and profitable. However, especially in the case of logistics and shipping, it can be financially beneficial to have multiple product lines being distributed under the umbrella brand.
Contact Aceves Spirits
If you’re ready to launch your own tequila portfolio, you need to assure that your partner is going to thoroughly assess your order development and work with you as a team in order for your project to be profitable and successful.
If you’re a tequila brand investor who needs some assistance sorting out the logistics of bottling, packaging, and shipping, Aceves Spirits can help. With three generations of expertise at hand, we know the tequila industry landscape intimately and can guide you on the most effective and economic decisions to make when it comes to order volume. Aceves’ team of advisors can help you launch your brand, grow it internationally, and remain profitable over the long haul.