Starting a liquor business in Kenya requires a well-laid-out plan, that will enable you to run your young business smoothly to maturity. This strategy will prevent any significant losses as you begin the wines and spirits business or in the future. Further, a well-organized startup will ensure you start reaping profits as soon as possible.
For hustlers, the liquor business act as a catapult into financial success. All you need to practice is discipline and consistency.
What is a liquor store?
A liquor store is a wine and spirit shop. Here, alcoholic beverages are sold to individuals of legal age (18+) at a profit.
Liquor stores are usually small cubicles that may accommodate around three individuals. Most of the liquor sold is for take-away. Bars, on the other hand, offer seats, music and entertainment to clients.
Is it easy to start a wine and spirit business in Kenya?
Depending on your location and competition, starting a liquor shop can vary in difficulty. In Nairobi, for example, you will have very stiff competition from already established enterprises as compared to starting the same in places such as Baringo. Simply, the more developed your place is, the harder it is to start up and maintain the business.
In matters of law and order, the Kenyan police have a special liking for these businesses as they are prone to violation of laws. All you have to do is be a law-abiding citizen and all your business will be fine.
What you need before your start a wines and spirits business
Before you set foot into this business, you need to have a lot of information regarding location, laws, licenses and potential setbacks you may face when you decide to invest in this market venue.
All businesses require capital to start. For successful liquor store businesses, you need at least KES200,000-KES300,000 or more that will enable you to buy inventory and pay your rent 3 months in advance.
Potential sources of capital to start a liquor business include:
- Loans – before being legible for a loan, you must be creditworthy. Banks and other lenders assess your credit reports and scores. Good credit scores in Kenya range between 300-850. Excellent loanees have a score of above 600. Read More: How to improve your CRB credit score in Kenya.
- Money from friends and relatives.
- Savings – Personal savings count as much as any source of income when you choose to start any business. See how to save money with a low-budget income here.
- Grants (it’s really hard to get your hands on liquor store grants).
What is the capital used for in the liquor store business?
- Rent payment
- Purchase of inventory
- License fee payment
- Market research
- Marketing of your business
Can you start your liquor store business anywhere?
Many people ask about the best place to start a liquor business. For this enterprise to work for you, you will need a location with very many people. Not everyone drinks and therefore, maximizing probability is essential.
Starting a store in a village with few people, say 1000, will limit your sale to approximately an eighth of the total population. Many wines and spirits shops thrive well in environments such as towns and city centres.
The laws of Kenya prohibit the opening of liquor shops next to;
- Churches (ACK, Catholic etc.)
- Residential areas
4. Licenses and permits
There is a lot of misinformation about how much liquor store licenses cost in Kenya. The best way to find out is to walk into the city council/county offices/huduma offices and get first-hand information from the licensed dealers.
License fees vary from place to place. In areas around Nairobi, the fee may be KES70,000+ while in areas such as Kiambu County, the fee may total to, ironically, KES100,000. You cannot predict the fee you’ll be charged.
Seeking information from already established liquor store owners may lead you to misinformation as different policies are usually formulated as time passes, in regards to the liquor store business.
Obtaining licenses for liquor store business operations can be a long and lengthy process, so it is important to have this in mind. Take care not to despair in the process.
The most important license costs you half of your total license fee payments. Other licenses required in this business venture are:
- NACADA license
- Health Certificate
- NEMA approval certificate
- MCSK license, etc.
- E-Citizen Account that will cost you KES3,500. This fee may vary if you opt to start a liquor manufacturing industry.
You will get more information about licenses once you visit your local huduma centre or county offices.
5. Understand the law
It is very easy for you to understand the regulations set by the government against these liquor businesses. In Kenya, drinking has gotten out of hand leading to the need for such laws. Violation of these laws may lead to expensive fines and termination of your business licenses.
Make sure you sit down and read the Alcohol Drinks Control Act – 2010 (commonly known as Mututho Law) before you start your liquor-selling business.
6. Brand and Marketing
Bill Gates once mentioned that if your business is not online, then it is doomed to fail (not his exact words). Branding and marketing are essential are important if you want to reach more clients and make more profit. Having a blog/static website will enable you to have online orders. An SEO (Search Engine Optimization) strategy will enable your business to beat the competition in a short period of time.
Of course, the longer this piece of information is out there, the more people implement it. In no time, this will not be special information. Therefore, the sooner you implement this, the better.
You may opt for local marketing using posters and banners. Choose what is best for you and implement it.
Common questions many people ask about the liquor business
Is a liquor store business profitable in Kenya?
Liquor stores depend on many things that determine success. To predict profitability, assess whether you have a market gap and whether you are following the regulations set by your local authorities.
Are small liquor stores profitable?
As long as you are selling, profit will flow in and that is all you need for a profitable business venture. With time, if you choose to reinvest your profits, you can expand your business and reap more in less than two years.
How long do liquor stores take to make a profit?
Liquor stores take an average of three to six months to pick up and start making a profit. If it takes longer than 9 months, assess what you did wrong and make the necessary changes.
Where to get stock/inventory for your liquor business
Purchasing inventory is critical for your business. You have to look for a genuine distributor and make sure you always purchase from the same distributor.
Finding the right distributors can be quite challenging. Here are the necessary steps to follow:
- Research local wholesalers and retailers online.
- Talk to other liquor store owners you trust to get information on good distributors.
- Visit local wine fairs or exhibitions, talk to suppliers and understand how the liquor market works.
- Look for wholesalers who may offer you better prices compared to their competition