ABC store pricing and scotch tariffs (buying, taxes, live)

[goingjoey]

With a 25% tariff being imposed on single malt scotch starting Oct 18, I'm wondering how this affects the pricing at ABC stores. The ABC store website has already posted their price lists through January 2020, and the cost of my usual scotch looks the same as it has in the past. Does anyone know if the ABC store can modify their price list once it's already been posted?

[Edward Teach]

Why not just call your local ABC store and ask?

[SFspiderman]

Pretty sure it’ll take a while for the tariffs to have an impact on retail prices, as distributors probably have months’ worth of product already imported and have been rushing to beef up supplies even more than usual before the deadline.

[turkeydance]

well, if they use the last in, first out accounting, then it should not take long to see the difference.

[GVoR]

Originally Posted by turkeydance

well, if they use the last in, first out accounting, then it should not take long to see the difference.

I agree.

Gas stations use replacement cost to set pump prices; I worked at the corporate offices of the NE equivalent of Sheets 2006-2007; they used to change pump prices many times a day when oil prices were super volatile.

Not saying booze is done the same way here, but it wouldn’t surprise me.

[don6170]

Originally Posted by GVoR

Gas stations use replacement cost to set pump prices; I worked at the corporate offices of the NE equivalent of Sheets 2006-2007; they used to change pump prices many times a day when oil prices were super volatile.

I'll take your word as a insider, but it sure seems the prices go up much more quickly than they come down, with respect to the rise/fall in wholesale prices.

[SFspiderman]

I would expect distributors to significantly slow imports if they’ve been able to build up a glut in advance of the deadline, hoping for a relatively quick resolution. They will likely also smooth any price increases using their available inventory. Gasoline doesn’t seem like a good comparison as it is definitely an outlier with its pricing volatility.

Also keep in mind that a 25% tariff translates to a retail price increase of maybe half that. The tariff is applied to the value the distributor pays to import it. But then they mark it up to make a profit when they pass along to the retailer, and then the retailer marks it up. So the price you pay can be half what the distributor paid for that bottle, although it varies widely.

[GVoR]

Originally Posted by don6170

I'll take your word as a insider, but it sure seems the prices go up much more quickly than they come down, with respect to the rise/fall in wholesale prices.

For sure, and that is why it isn't truly a LIFO construct.

Super simple example

Gas prices at pump are based on what the wholesale price of oil is.

Say your gas station buys 1,000 gallons of gas at $2 a gallon. Total Price of the delivery is $2,000

Lets say the price of oil (and thus gas) increases to $2.50 a gallon. Their next gas delivery will be 1,000 * $2.50 = $2,500.

They immediately start setting pump prices based on the gas they will be buying (2.50/gallon), not the price they paid for what is already in the ground (2.00)

Now to your point, the reverse would be something like this.

Station buys 1,000 gallons at 2.50/gallon ($2,500)

A couple of days later, the price drops to 2.00/gallon. If they drop the pump price immediately to reflect the drop, then the gas still in the ground that they paid 2.50/gallon for, they would be selling it for less than they paid for it. Only once those "1,000 gallons I paid 2.50/gallon for" are sold, then you would drop your prices.

So in short, wholesale price moves up, retail price moves up to counter immediately to protect against increased replacement costs.

Wholesale price moves down, retails price delays in terms of it's move down because the product in the ground paid the higher wholesale price, not the replacement cost.


Given tariffs are nothing more than taxes, I would expect the price of Scotch to spike (to counter the increased wholesale cost) quickly, and then when the government gets rid of the stupid tariff, the price will come back down, slowly.

[Stringbender]

What’s good for the goose is good for the gander. The EU slapped a 25% increase in tariffs on US whiskey last year.

[GVoR]

Originally Posted by Stringbender

What’s good for the goose is good for the gander. The EU slapped a 25% increase in tariffs on US whiskey last year.

Ummmm aren't these in retaliation to the EU subsidizing Airbus? Which ironically we also got caught doing to our manufacturers.


ETA - Then again, when the head of your trade policy references literally made up people in their books as a "see this expert agrees with me!", this nonsense is what you get.