Saturday, 2 March 2013

UK Slush Market

It's reported that the slush market in the UK is worth £320,000,000 per annum and is expected to grow by 16% over the next 3 years. Some of this growth is expected in 2 key areas, the convenience sector and the licensed trade, both of these sectors we'll have a look at below.

Convenience sector. First of all it's worth pointing out that growth in this sector has been driven by the independents, convenient stores, sweet shops, forecourts etc.  What has been and will be driving growth in this sector is quite simple. More and more retailers have realised the margin opportunity selling slush so more and more are purchasing slush machines for their business, hence increasing the overall sector performance. They have discovered how easy it is to add incremental income to the bottom line and how quickly the cost of buying slush equipment is recouped.

Licensed trade. The growth here has been significant in areas such as bars, clubs and pubs including family pubs. Since the introduction of alcoholic slushy cocktails, such as Margarita and Strawberry Daiquiri, bars and the likes have been enjoying enormous profits serving these types of cocktails. Most bars have been selling these drinks at between £4 and £8 per drink, with a base cost of 50-75p. We've been told by some bars we've supplied slush equipment to that offering these cocktails has actually saved their business from the serious risk of closing down.

So looking back at the market value of slush at £50M, who reaps the majority of this value? Is it the retailer, the slush syrup manufacturers, the supply chain or HM Revenue? Well let us take an example of a 7oz (200ml) slush serving for which the retailer charges 75p and which costs a total of 10p, the profit or value is listed below, the figures won't add up to 75p because they are based on gross profits;

Retailer: 54p (or 65p if you are not VAT registered)
VAT: 11p
Manufacturer & Distributor: 2.5p

It's clear to see that it's the retailer, quite rightly that reaps the vast majority of the profits selling slush.

If you are considering entering the slush market and looking to buy a slush machine and slush syrup, it's important to buy quality and not be tempted by the influx of cheap Chinese machines that cost less but will dissapoint in the medium term. Cheap slush machines are exactly that, cheap. Equally so, make sure you also buy a good quality slush syrup concentrate. Most slush machines are worked hard, running 10 hours a day so don't be tempted to save a penny per portion on substandard syrups that are made to a price rather than for performance, colour and flavour.

Call us on 08000 14 18 18 for advice, SlushCo are leading slush experts in the UK.

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