I worded it poorly. Revenues are 15% higher for NA, costs are 10% higher. So your margin on the NA ends up being slightly higher but compared to the alcoholic version (because it's a higher revenue base) it's a much higher profit. Let me illustrate:
Very good question. I think there are two factors. One is the "let's try it" new drinker or other brand loyalist who creates an extension of the brand. Then there's the drinker loyal to the brand extending their engagement. Personally, I don't like to drink past 5pm in the evening, but I'll gladly pick up a NA at 8pm as a refresher.
I worded it poorly. Revenues are 15% higher for NA, costs are 10% higher. So your margin on the NA ends up being slightly higher but compared to the alcoholic version (because it's a higher revenue base) it's a much higher profit. Let me illustrate:
Regular beer: $100 revenue, $78 cost = $22 profit or 22% margin
NA beer: $115 revenue (15% greater than regular), $86 cost (86/78= 10% greater than regular) = $29 profit or 29% margin.
Difference is 7 percentage points of margin but 29/22 = 32% greater profit.
Very good question. I think there are two factors. One is the "let's try it" new drinker or other brand loyalist who creates an extension of the brand. Then there's the drinker loyal to the brand extending their engagement. Personally, I don't like to drink past 5pm in the evening, but I'll gladly pick up a NA at 8pm as a refresher.