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Word Count: 1,655
The global liquor market has changed immensely in the last 20 years Since the early eighties people have discovered that it is better for their health if they drink in moderation as opposed to heavy drinking Due to this change in consumers drinking habits people generally drink less liquor than they used to According to our text the per capita consumption of liqueurs liters per person over 18 dropped from 1 liter in 1986 to 090 liters in 1990 In addition to consumers drinking less liquor makers like Baileys were faced with increasing tariffs and taxes At the time of this case study the tax margins between retailer and distributor were fairly close in the US 15-20 for retailers and 10 for distributors The United States also imposed a 22 per case import duty and state excise taxes were as high as 20 If you were a foreign liquor producer at the time and you sold a case of liquor at a price of 150 to a retailer in the US you would see 128 after the import duty which forces liquor makers to greatly increase their prices up to 177 For example the retailer has 177 case of liquor that he has to pay a 20 Paddington tax which makes the case cost him 21240 Now the retailer gets to add his or her profit margin to the case of alcohol lets pretend that the retail price of the case is 250 In this case when the consumer finally gets to buy this product he or she has to pay for the 6240 in taxes thus far plus an additional 20 in taxes on the final retail price Basicly a case of liquor that originally costs retailers 150 now costs consumers about 305 American companies also have all of the taxes just not the import duties which can cause enough of a price increase to urge consumers to buy American For Baileys Irish
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