How To Start A Liquor Store In South Africa
What is a Liquor Store?
A liquor store is a retail shop that predominantly sells prepackaged liquors – typically in bottles – usually intended to be consumed off the store’s premises. Depending on region and local idiom, they may also be called an off-license, bottle shop / bottle-o liquor store or other similar terms.
How To Start A Liquor Store In South Africa
1. Create a Liquor Store Business Plan
Before diving into the actions, the best way to start the process of opening your liquor store is to create a sound business plan. This is the researching portion of starting your business. This includes important details about where you’ll be sourcing your products, where you’ll get funding, when you plan to profit, a marketing/sales plan, the overall organization, and any plans you have to expand in the future.
2. Find a Location
Location is everything. A liquor store, like many retail businesses today, will need a physical location in order for you to sell or distribute products from. You will need to either build, purchase, or lease a storefront that has the adequate zoning and space requirements for your store.
3. Form a Legal Entity
In order to be recognized as a legitimate business, you’ll need to establish your liquor store as a legal business entity. This will protect both you and the store in the event there are legal issues. This stage of the process is also where you get to decide on a name for your store. Whatever name you decide on is what the business will be legally known as moving forward.
4. Set Up Business Accounting & Banking
An important step to opening your liquor store is to ensure that all of your finances are in order. You’ll want to choose a bank and open business accounts to run your business from. You may also consider opening a line of credit for your business.
5. Acquire Permits & Licenses for Selling Alcohol
Permits and licenses are especially important for businesses involving alcohol. Prepare for this step to take a significant amount of time, research, and paperwork.
Your business will require a liquor license, which could cost thousands of dollars depending on different factors. Each city, county, and state has different rules and laws you will have to keep in mind when starting your business. These rules may restrict when your license is valid, prohibiting you from selling alcohol on Sundays or before certain times of days for example.
Another important permit is through the Alcohol and Tobacco Tax and Trade Bureau (TTB). This is the office directly responsible for enforcing the laws most affecting your new store. You must register with the TTB and stay up to date in order to follow the industry rules and regulations.
6. Get Your Liquor Store Insured
Obtaining business insurance for your liquor store is very important. Anything could happen to your store, merchandise, or employees and you need to be properly prepared.
Insurance plans including commercial property, general liability, workers compensation, and liquor liability insurance are important and usually necessary for liquor store owners. This is another area that it would be wise to enlist the help of a business attorney and accountant for.
7. Create Your Liquor Store’s Brand
Now it’s time to have a bit of fun with your liquor store. The nature of alcohol sales is generally a little more carefree and relaxed when it comes to branding. A name and visual identity will help customers remember your store next time they wish to make a purchase. Your brand is how people will perceive your store, so create something memorable and fun.
8. Launch a Website
There’s not a business out there today that shouldn’t have a website. Establish a web presence for your liquor store by purchasing a domain. Use the website to share important details such as the location and open hours of your store. Include details about your inventory for customers to search for what they like. Have a page dedicated to your personal story and what your store means to you.
9. Build a Marketing Strategy
Further expanding on your store’s brand, you’ll want to create a sound marketing plan to get your business up and running. Build upon your web presence by creating a Yelp, Facebook, and Instagram page to advertise sales and new products.
What kind of signage will you have in and around your store? Will you send out mailers to homes in your neighborhood? Will your store host events such as wine tastings or cocktail mixing lessons? These are the types of questions you should answer with a solid marketing plan.
10. Stock Your Liquor Inventory
Your inventory is possibly the most important element of your liquor store. It may shock you at first just how much you may have to spend on inventory. Purchase liquor in bulk to keep costs down. Research local breweries, wineries, and distilleries and consider a partnership.
Understand what alcohol items are popular in your area and keep those in stock, as well as staple products. Many liquor stores also offer other items such as tobacco products, cocktail mixers, ice, and snacks.
11. Hire a Staff for Your Liquor Store
Overworking yourself will quickly lead to burnout and poor performance. Accept that you cannot do everything and hire some employees to help you out. Put out an ad in your local newspaper or job board for hourly employees.
Keep in mind that having a staff will come with its own rules and regulations as well as new challenges in scheduling and payroll.
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.
Is owning a liquor store 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 much does a liquor License cost in South Africa?
The cost is between R15,000 and R25,000.
How long does it take to get a liquor license in South Africa?
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.
Can I get a liquor license to sell from home in South Africa?
Therefore you cannot apply for a liquor license on a residential property. The only way to ensure that your land use right is acceptable for an application for a liquor license is confirmation from your local Municipality (planning department or land use department).
Which retail store makes the most money in South Africa?
Despite making a net loss of over R1.4 billion in FY 2018, Steinhoff’s R15.14 billion in retail sales in the year make it largest retailing group in South Africa by some margin, with Shoprite following with R10.59 billion in retail revenue.
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.
Is alcohol sold on Sundays in South Africa?
President Cyril Ramaphosa has announced that liquor traders will now be able to sell drinks everyday of the week. The sale of alcohol is now permitted from Monday to Sunday as SA moves to lockdown level 1 from Friday.
Are there different types of liquor Licenses in South Africa?
Types of Liquor Licenses, Transfers, Special on Consumption, Temporary liquor license, Occasional liquor license, Events licenses, Procure controlling interest, Wine grocer liquor license, Manage a premise (Management Appointments),Structural changes to licensed premise, Storage in an additional premise, Storage in another.
Do you need 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 license. You also need a license if you are holding an event and wish to sell alcoholic drinks.
Can you lease a liquor license in South Africa?
The practice of renting a liquor license is unlawful and can result in the closure of the business and the possibility of further legal action. 11. A liquor license in Gauteng can not be removed from one premises and transferred to another premises. A new application must be made on the new premises.
Can you transfer a liquor license in South Africa?
For the Transfer of a Liquor License you will need: Copies of the following: An affidavit by the applicant that he, she or it is not disqualified in terms of section 35 from holding a liquor license. Certified copies of the identity document of the applicant.