Soda Business Profit Margin: Bottles, Kegs and Syrup

A craft soda business's margin is decided more by the glass than by the soda. In the example below, a 4-pack of 12-ounce bottles has $1.10 of syrup, carbonation and water in it and $2.60 of bottles, caps, labels and carrier. Sold direct for $12, it earns a 59% margin; sold to a grocer for $7.50, 35%; and through a distributor for $6, 23%. A 5-gallon keg of the same soda for a restaurant's fountain earns 79%, because the keg comes back. Over a month, five ways of selling bring $17,200 of sales and $8,019 of gross profit, and $6,164 is left after the fixed costs. Below is a 4-pack costed, the margins by channel, a month's numbers, what a good margin is, and where it leaks.

The short version

• Cost a 4-pack: syrup, carbonation and water, then the bottles, caps, labels and carrier.
• The packaging costs more than twice the soda; kegs and syrup avoid most of it.
• Direct 4-packs earn 59% in the example, grocers 35%, a distributor 23%.
• Distributors buy at a price that leaves room for their margin and the store's.
• Kegs earn the most, and the keg is a deposit you have to track.
• A broken case, a flat batch or a slow flavor takes the margin first.
• TaroStack keeps the bottles and caps counted, costs every batch, and tracks every keg. More below.

A 4-pack, costed

Gateway Soda Works, a made-up craft soda maker in St. Louis, Missouri, I use in these examples, makes cane sugar sodas in a licensed space and bottles them in 12-ounce glass.

The glass, caps, labels and carrier are $2.60, more than twice the $1.10 of soda. A cheaper bottle, a can, or a bigger size moves the margin more than any change to the recipe.

Margins by channel

The grocer price includes 30 cents of delivery a 4-pack. A distributor takes the delivery off your hands and pays $6 for what the store buys from it at $7.50, so you keep $1.40. The keg holds about 53 servings, uses $13 of syrup and carbonation and $4.50 of cleaning, seals and delivery, and goes back and forth. How distributors set their margins is in distributor margin, and what grocery buyers ask of a new supplier in selling to grocery stores requirements.

A month's numbers

Fixed costs are $1,855 a month: the licensed production space ($1,000), licenses ($50), insurance ($120), the van ($250), sampling and ads ($400) and software ($35). That leaves $6,164 a month, a 36% net margin, with the bottling paid at $18 an hour. Twenty kegs bring more gross profit than 800 distributor 4-packs.

What a good soda margin is

With labor counted, 50% or more on direct sales and 30% or more to grocers leaves room for the fixed costs and the waste. A distributor price under 25% works only at volumes the van and the bottling line can't reach otherwise; check what a store's shelf price leaves at each step before you sign. Margins in food and drink in general are in good profit margin for a food product.

Carbonated beverages are outside the federal acidified foods rules (21 CFR 114.3), but a bottled soda is still a packaged food with a label and a licensed kitchen behind it.

Where the margin leaks

Broken glass. A dropped case of 24 is about $20 of bottles and soda with nothing against it.

Flat or over-carbonated batches. A batch that doesn't hold its fizz can't be sold; record what each batch made, good and rejected.

Kegs that don't come back. A keg left at a closed restaurant is a deposit you'll never see; know where every one is.

Slow flavors. A seasonal flavor left on the shelf ages; date every batch and sell the oldest first.

Get the calculator

Download the soda profit margin calculator. One line for each product and where it's sold: the price, the syrup and carbonation, packaging, labor and fees as a share of the price; the cost, gross profit, margin, markup and the price a target margin needs fill in. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

The sheet uses the costs you type in. Glass prices change by the pallet, sugar by the bag, and kegs move between your space and a dozen restaurants. Margins drift with every new invoice, and a missing keg is invisible until you need it.

How TaroStack does it

TaroStack keeps the bottles and caps counted, costs every batch, and tracks every keg.

Bottling from a recipe. Each soda is a recipe of syrup, water and carbonation, and a 4-pack is a recipe of four bottles, caps, labels and a carrier, so a bottling run takes them off stock, is costed from what they cost, and records good and rejected bottles.

Kegs at their customers. A keg can be stocked at each restaurant's site, so every keg's place is a number; more than one site is on Standard.

Reordering glass. Bottles, caps and carriers come up on a reorder list in days of cover, with each supplier's lead time, so the next pallet arrives before the last case is used.

Recipes, batches and reorder lists are on every plan, from $49 a month; kegs tracked at their customers' sites are on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

What is the profit margin on soda?

In the example, 59% on a 4-pack sold direct for $12, 35% to a grocer at $7.50, 23% through a distributor at $6, and 79% on a fountain keg, with labor counted.

Is a craft soda business profitable?

It can be. In the example, $17,200 of monthly sales leave $6,164 after fixed costs, with the bottling paid.

Why is packaging so expensive for soda?

Glass, caps, labels and a carrier cost more than the soda inside: $2.60 against $1.10 for a 4-pack in the example. Kegs and syrup sold to make soda at home avoid most of it.

Should a soda business use a distributor?

A distributor reaches more stores and does the delivery, for a lower price: $6 a 4-pack leaves $1.40 in the example, against $2.60 selling to grocers yourself.