BASIC RULES OF THUMB FOR THE SPIRIT INDUSTRY: THE BROKER COMPENSATION SYSTEM

This short post contributes to our previous threads on Industry Rules of thumb and Trade Secretes we have posted in the past. We will continue to analyze and bring fresh representative best trade practices as applied to the spirit marketplace but more precisely to the cognac trade.

In continuing with this tradition, today we discuss the importance of brokers but importantly we review some compensation principles.

There are many complex nuances that we cannot review here but this is a good ballpark for discussion.


These percentage would also vary if their are national brokers or local brokers supporting specific distributors. In other words, it would make a difference if you are talking about a broker creating the channel of distribution for a country, for a state, or for a local market.

1) Based on Actions
. 5% for simple connections. Limited implementation and maintenance.
. 8% for intermediary involvement.
. 10% when broker works the market.
+ more than 10% if the broker is a 'celebrity broker'.

2) Based on Sales Volume
These % also varie with the sales volume. As the volume grows the % goes down.

3) Type of Cognac
In addition, combined with the quantity sold: 1 palette versus 1 container.
. 5% VS & VSOP
. 8% XO

Bonuses and allowances for promotions for instance are often negotiated.
Finally, these % may be different at the beginning of the relationship to help launch and based on stock depletion rather than POs.