How To Start Alcohol Business In South Africa
What is Alcohol Business?
The alcohol industry is the segment of the commercial drink industry that is involved in the manufacturing, distribution, and sale of alcoholic beverages.
How To Start Alcohol Business In South Africa
1. SAPS Clearance.
You need a SAPS clearance certificate confirming that you do not have a criminal record. This step can take up to six weeks, so start with this before you do the rest.
- Take a copy of your I. D. document and R59.00 to your local SAPS during office hours.
- Ask them to do your fingerprints for the purpose of an application for a Liquor License.
- Once you have your fingerprints taken, hand the fingerprints together with your receipt of R59.00 and a copy of your I. D. document to:
The Criminal Records Centre, First floor, Bothong Plaza West Building, 271 Francis Baard Street, (Previously Schoeman Street) Pretoria and deliver the original Police clearance Certificate to our office or you can send us the original finger prints, copy of the receipt of R 59.00 per set of finger prints and a copy of the Identity Document/s and we will deliver it to Pretoria and arrange for collection at an additional cost of R 800.
2. Premises.
You need a premises before you can even apply for a Liquor License. The public area must not be less than 50m2. The ideal is that your premises is +500m or more from a church, school or similar business. However this is not always possible. Do not start spending money on renovating the existing building or start building a new building or sign a lease contract on the building before you have cleared the following:
- Visit your local Municipality’s Town Planning or Land Use department and confirm with them that the premises or stand that you want to use are suitable for a Liquor Store. (You need the ERF number of your premises)
- Request a Zoning certificate from the Municipality on the stand that you intend to use. Your Liquor License Consultant must be convinced that the zoning is correct. In Gauteng you need a Local Authority Approval (A letter confirming you may apply) for a Liquor Store in addition to the zoning certificate.
- Negotiate a Lease Contract. If you are not the owner of the property then you require a lease contract between you and the landlord. Be careful when signing the lease contract. Read the conditions very careful, especially with regards to the following”
- Escalation clause. This means the amount the rent will increase after every year. An annual escalation of up to 8% is acceptable in today’s economy. (Do not accept a 12% escalation clause for this is too high in today’s terms 2014.)
- Right to renew. The renewal clause gives you the right to renew the lease contract after the expiry of the lease. There should be a % increase or a rand figure of the first year’s renewal increase in rent with an escalation clause for every year thereafter until the end of the renewed contract. The applicant is welcome to contact the writer for more information. (Do not accept a clause stating “The lessee has the right to renew the lease contract, without a clear stipulation of the cost of the lease after renewal.)
3. SARS clearance.
Apply for your Tax clearance certificate at SARS. If the applicant is a juristic person such as a Company, the Tax Clearance must be in the name of the company otherwise the tax clearance certificate must be in the name of the applicant/s.
4. Liquor License.
- Contact a reputable Liquor License Consultant to give you a quote clearly confirming all cost. Investigate the Liquor License consultant and ask for references. Make sure you know what is included and what is excluded in the quotation. Apply as soon as possible because a Liquor License Application can take a long time. (4-6 months or longer) You can apply on an existing premises or on a stand on which there is no building yet.
5. Start planning your shop
Decide on your target market. (High income, Medium income or Low income group). Your products that you will sell depends on this decision as well as the outlay and image of your shop. (We will assist you). For a Liquor Store you may decide on a self service or service counter shop. This depends on safety and security and income level of the area. A self service Liquor store will require much more starting- up stock than a service counter shop.
6. Budget.
Work out a Budget. Without a Budget you can fail before you opened your doors. Remember to budget for the actual and hidden cost
Frequently Asked Questions (FAQs)
How much money do you need to start a liquor store in South Africa?
The cost of starting a new Liquor City store varies according to size and location. The average store costs between R1.7 million to R2 million. There are fewer costs incurred if converting from an existing store.
How much does a liquor licence cost in South Africa?
The cost is between R15,000 and R25,000.
Is alcohol business profitable in South Africa?
Even with the high taxes on liquor sales, people still buy alcohol regularly. A liquor store can be a highly profitable venture, especially if you go the franchise route in which the franchisor helps you through the entire set-up process.
How do I register to sell alcohol in South Africa?
All macro manufacturers and/or distributors of liquor must be registered with the National Liquor Authority (NLA). The prospective registrant has to complete and submit the required information in a prescribed manner and submit it to the NLA.
How much profit does a liquor store make in a month in South Africa?
South African liquor stores have the highest turnover in the country, a new report by retail software platform Vend found. The Retail Benchmarks Report for independently operated stores found that South African liquor stores have an average monthly revenue of R506,251, followed by shoe stores with R325,015.
Do you need a liquor license to sell alcohol online South Africa?
Although technology now makes it possible to order liquor online or via an app, the Liquor Act, 2003 (Act 59 of 2003) that regulates retail sales requires a licence holder to keep records and issue invoices containing prescribed information.
How much is a tavern license in South Africa?
The cost is between R15,000 and R25,000
How long is a liquor license valid for in South Africa?
SPECIAL REQUIREMENTS FROM THE GAUTENG LIQUOR ACT OF 2003 Renewal of licenses and lapse of licences Section 98 of the Gauteng Liquor Act 2 of 2003 stipulates that every licence shall be renewed annually within twelve (12) months from the date of issue by payment of an annual prescribed fee
How much does it cost to open a small liquor store in South Africa?
The cost of starting a new Liquor City store varies according to size and location. The average store costs between R1.7 million to R2 million. There are fewer costs incurred if converting from an existing store.
Do bottle shops make money in South Africa?
On average, liquor stores tend to have an overall profit margin of between 20% and 30% annually [4]. There are pros and cons to aiming for higher profit margins since you’ll need to charge customers higher prices for your products, which might not make your store as appealing as a lower-priced competitor.
Do I need a liquor license to sell cocktails in South Africa?
If you sell alcohol in any type of establishment – bottle store, grocery shop, bar or restaurant – you need a liquor licence. You also need a licence if you are holding an event and wish to sell alcoholic drinks.