Is It Worth It? How to Model Velocity Requirements Before Saying Yes to a New Retailer

Key Takeaways

• Velocity, not store count, determines whether a retail partnership is financially sustainable, making it the single most important metric to model before committing.

• A modest dip from 2 to 1 unit per store per week can cut your profit in half, underscoring how sensitive profitability is to small changes in sales velocity.

• BBG’s velocity modeling framework shows that even at 4 units per store per week, it may take an entire quarter to break even after upfront costs like slotting fees and free-fills.

• Before signing with a retailer, founders should quantify launch costs, benchmark category velocity, confirm performance expectations, and ensure they can support sustained in-store execution.

The email lands in your inbox, and your heart jumps. A buyer from a respected regional chain wants to bring your winery into all 50 of their stores. It’s the moment you’ve been working toward: proof that your brand has legs beyond the tasting room. The temptation is to say yes immediately and start planning the first shipment.

Before you do, I invite you to pause. As an FP&A leader who has spent years in the trenches of the wine industry, I’ve seen how that moment of euphoria can become a source of financial pain. A new retail is a huge investment and opportunity, and like any investment, it demands rigorous analysis before you commit a single dollar.

The success of that investment hinges on one metric, and that’s velocity, or the number of units you sell, per store, per week. Without a clear understanding of the velocity required to be profitable, you’re not making a strategic decision — you’re taking a gamble. Let’s build the model that will tell you if the odds are in your favor.

Why Velocity Is the Hidden Dealbreaker

In the world of CPG retail, store count is vanity, but velocity is sanity. It doesn’t matter if you’re in 10 stores or 1,000 — if your wine isn’t moving from the shelf into the shopping basket at a steady clip, the partnership isn’t sustainable. Velocity is the engine of a retail partnership. Without it, you’re just a parked car taking up valuable space.

From a financial planning perspective, low velocity is a venom that seeps into your P&L. For a winery, a low rate of sale has four brutal consequences:

• Triggering punishing chargebacks and penalties from distributors for slow-moving inventory

• Forcing you into deep, margin-killing discounts just to clear out aging product

• Damaging your relationship with your distributor, who sees your brand as a low-return effort

• Leading to being discontinued by the retailer, making your next sales pitch that much harder

A core part of any sound CPG retail expansion strategy is understanding that buyers and distributors are constantly monitoring your sales per store per week. You need to be modeling and tracking this metric with even more intensity than they are.

The Basic Formula: Your Breakeven Velocity Model

Let’s get practical. You can build a simple velocity calculator for food and wine brands to determine your breakeven point. 

First, calculate the gross profit you make on a single bottle sold through the retail channel: Wholesale Price - (Cost of Goods Sold + Distributor Fees + Promotional Costs) = Per-Unit Gross Profit

Then, you can determine how many units you need to sell to cover your fixed costs associated with that retailer. Let’s start with a simple example. Imagine you’ve produced a Sauvignon Blanc with a wholesale price of $11.25.

• Your COGS for the wine, glass, cork, and label is $5.50

• Your distributor takes a standard 25% margin ($11.25 x 0.25 = $2.81)

• You budget 10% for promotions and trade spend ($11.25 x 0.10 = $1.13)

Let's do the math: $11.25 - ($5.50 + $2.81 + $1.13) = $1.81 gross profit per bottle 

Now, consider the impact of velocity. In a 50-store chain, what’s the variance between a good week and a bad week?

• At 2 units/store/week: 100 total units sold x $1.81 = $181 weekly profit

• At just 1 unit/store/week: 50 total units sold x $1.81 = $90.50 weekly profit

A seemingly small dip in velocity cuts your profit in half. Unfortunately, that’s the operational reality behind the numbers, and it’s why answering the question, "Is a retailer worth it?" requires a calculator instead of a gut feeling.

Case Study: 3 Velocity Scenarios in a 50-Store Chain

Let’s deepen this analysis. Say you’re launching that Sauvignon Blanc in a 50-store chain, and you’ve invested $5,000 up front in slotting fees and free-fill inventory to get on the shelf. Let's model your financial outcome over one quarter (13 weeks) based on three different CPG velocity modeling scenarios.

Scenario 1: The Cash Burn (0.75 Units/Store/Week)

This is the danger zone. Your wine isn't resonating, and the financial damage is real:

• Quarterly sales: 50 stores x 0.75 units per week x 13 weeks = 488 units

• Quarterly gross profit: 488 units x $1.81 profit/unit = $883

• Net outcome: $883 profit - $5,000 launch costs = -$4,117 Loss

• The FP&A verdict: It would take almost 6 months just to recover your initial costs at this rate, so you’re basically paying for the privilege of having your wine gather dust. Each week, your cash conversion cycle lengthens while your margin evaporates.

Scenario 2: The Working Capital Trap (2 Units/Store/Week)

You're hitting the minimums, but you're stuck on a treadmill:

• Quarterly sales: 50 stores x 2 units per week x 13 weeks = 1,300 units

• Quarterly gross profit: 1,300 units x $1.81 profit/unit = $2,353

• Net outcome: $2,353 profit - $5,000 launch costs = -$2,647 loss

• The FP&A verdict: While you’re generating some cash, it’s not nearly enough to recoup your initial investment in a reasonable timeframe

Scenario 3: The Profitable Partnership (4 Units/Store/Week)

At this velocity, the retailer becomes a genuine growth engine:

• Quarterly sales: 50 stores x 4 units per week x 13 weeks = 2,600 units

• Quarterly gross profit: 2,600 units x $1.81 profit/unit = $4,706

• Net outcome: $4,706 in profit - $5,000 spent on launch costs = -$294 loss

• The FP&A verdict: You'll earn a strong $4,706 in profit each quarter and erase the remaining $294 loss within the first few weeks of the next quarter, validating your CPG profitability metrics

How to Stress-Test a Retailer Pitch Before You Commit

Your financial model is only as reliable as its inputs. Before you sign a contract, your primary job is to gather the data needed to run these scenarios with confidence. Use this as a due diligence checklist:

• Quantify the all-in costs. Get firm numbers, not estimates. What are the exact slotting fees, new item setup costs, mandatory promotional spends for the first 6 months, and free fill requirements in cases?

• Validate the volume assumptions. Ask the buyer directly, "What are the weekly velocity expectations for my category?" and "What do the top-performing brands sell per store per week?" Compare their answer to third-party retail velocity benchmarks from sources like Nielsen IQ or Spins.

• Understand the performance thresholds. What happens if you fall below their target velocity? Is there a probationary period? At what point does a conversation about discontinuance begin? Knowing their process removes ambiguity.

• Assess your support capacity. Do you have the cash reserves to fund introductory offers, staff trainings, and in-store demos for the first two quarters? Velocity doesn't happen by accident; it's the result of sustained investment.

If your model only looks good under a perfect, best-case scenario, the risk is likely too high. I always tell founders that a great partnership should be profitable, even in their realistic, base-case forecast.

Shelf Space Is a Bet. Make Sure It’s Worth Placing.

Every new retailer is a bet on your brand’s performance. My goal, as an FP&A professional, is to help founders place smart bets. That means doing the analytical work before you commit your inventory, your cash, and your focus.

Running gives you the clarity to negotiate better terms, the foresight to build an adequate support budget, and the confidence to walk away from a deal that simply doesn’t pencil out. 

If you’re evaluating your next retail opportunity and want to make sure it’s built on a solid financial foundation, reach out. Our operations team and finance team can help you model the scenarios, forecast your velocity, and build a launch plan that sets you up for long-term success.

Let’s model your retail launch together. Get in touch with BBG today.