The Mafia Empire
Chapter 20: Chapter 20 The Star Empire Situation

The Free Federation was a country unlike the Star Empire, which was in the midst of reform. In the recently concluded war, the Star Empire had won a bitter victory, while the Free Federation had achieved a major victory.

This might seem confusing to many how could both countries claim victory in a war between them? The answer was not that complicated. For the Star Empire, victory meant defending their territory, ensuring that the invaders didn't seize their land or enslave their people, which was how they defined their victory in the war.

However, for the Free Federation, although they hadn't gained land or cheap labor, they had achieved an unprecedented economic breakthrough, particularly in tariffs and other matters still undocumented in the unofficial post war memorandum between the two nations.

This bitter victory for the Star Empire led to widespread reflection across the empire. Once a mighty power, how had they been reduced to the point where they were bullied by a federation without even a king or a pope? In the midst of this political turmoil, the empire's various factions gradually coalesced around one idea:

The emperor's interference during the war and the rampant class struggle had severely damaged what could have been a favorable situation. After the war, a new notion quickly took hold: the imperial system was outdated, and only a constitutional monarchy could save the Star Empire from the brink of collapse.

The nobles, who had lost their imperial protection, the new reformers aspiring to become the country's ruling class, the capitalists eager to influence politics, and the idealistic rebels seeking to change the world…

These clearly defined groups were now performing a series of shocking political dramas on the brightest stage of the Star Empire.

In such a situation, societal issues were naturally pushed aside by the powerful.

For the capitalists of the Free Federation, the empire now stripped of some of its tariff powers had become a ripe opportunity. Goods of all kinds flowed across the border into the empire. With tax exemptions and even refunds and subsidies, the Star Empire's light and craft industries faced immense pressure, turning the empire into a playground for Federation merchants.

Julian's upcoming meeting was with one such merchant from the Federation.

"You look very young. Forgive me for asking, but are you of legal age?" The blonde, forty something agent with a bushy brown beard looked like his eyes were about to pop out of his head. Julian indeed looked very young. The agent didn't mind doing business with people of different ages or backgrounds, but he was clearly surprised.

Julian shrugged, casually lit a cigarette to make himself look a bit more mature, though it might have had the opposite effect. Flicking the ash with practiced ease, he replied, "I'm already seventeen, Mr. Richard."

Richard gave a noncommittal nod, a hint of nostalgia in his voice as he said, "When I was seventeen, I was still working in a factory for a boss. But you, at seventeen, already own your own trading company..." He shook his head with a smile. "Alright, let's get down to business. I hear you want to purchase some low alcohol wine for resale, is that right?"

Before Julian could answer, Richard continued, "Moonshine has a unique taste, different from the common low alcohol wines on the market. Our wine has a slightly bitter almond flavor, not overly sweet like those juice like wines that can be cloying. With our Moonshine almond wine, you can easily drink five or six bottles."

"More importantly, our price positioning is spot on. We target the mid market, so it's affordable for everyone, while still leaving you enough room for profit."

Julian nodded. He already knew all of this. What concerned him was the price. "Can we discuss the specific price, Mr. Richard? Our target is not just the city of Ternell, but the entire province, and perhaps even the whole empire."

After thinking for a moment, Richard quoted a price of 85 cents per bottle. As he had mentioned earlier, this price was in the middle of the low alcohol wine market. Cheaper wines could go for 55 or 60 cents a bottle, while more expensive ones could cost over a dollar. The 85 cent price was certainly well positioned, but it wasn't a price Julian could accept.

Whether it was selling the wine directly or using it for distillation, the price was too high and awkward. To ensure a profit, Julian would have to sell the wine at a dollar per bottle. When the bars put it on their shelves, they'd need to ensure at least a 30 cent profit per bottle to make it worthwhile.

When the wine reached the customers glasses, the price per glass would be around 30 cents.

A mid range price like this created an awkward situation, which might explain why Moonshine hadn't gained much traction in the empire so far. If customers wanted to drink something cheaper, they could get two glasses for the price of one. Heavy drinkers didn't care about the quality of the wine they just wanted to get the most for their money. As for middle class customers?

They'd rather spend an extra 10 or 20 cents to drink something of higher quality.

Someone who could afford to drink a 30 cent glass of wine wouldn't mind paying an extra 10 cents. What they cared about was prestige.

This awkward price point made Moonshine an unpopular choice in bars, with sluggish sales.

For distillation, it was even less cost effective. It would take three bottles of Moonshine to distill one bottle of high proof alcohol, bringing the cost to about 2.50. Adding in the cost of fruit juice, labor, various losses, and the occasional bottle breakage during transport, the total cost would rise to around five or six dollars.

Selling it to bars would yield only about a four dollar profit, with over a dollar of that going to Graf, leaving Julian with just over two dollars.

Risking jail time for a business with only a 40% profit margin? That would be crazy!