Opening a wine/liquor store - Printable Version

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- Forolemiss - 04-09-2003 12:51 PM

Does anyone have a suggestion as to where I can find industry information on the retail sale of wine and/or liquor? I am interested in the average profit margin of an average location (if there is such a thing), licensing requirements, needed inventory levels and turnover, trade terms, and general other suggestions.

- Kcwhippet - 04-09-2003 03:00 PM

Profit margin is variable. First, what you need is to price your wines competitively with the shops in your area that are selling the same or similar wines you want to sell. That will go a long way toward defining your gross profit margin BEFORE expenses, including licenses, employee costs, facility costs, etc. A general rule of thumb is to divide your cost of a case of wine from the distributor by eight to come up with a retail bottle cost. For instance, if you buy a case from your distributor for $240, divide that by eight and your retail selling price is $30 ($29.99 sounds much cheaper to a customer). So, you pay $20 and sell for $29.99 giving you a gross margin on that particular wine of $9.99. Got that?
Licensing is always a local thing, so you have to check with your local licensing authorities, first to see if there's even a license available for the area you want to sell in. Then, do you want a full license, or just a wine and beer license, or even a wine only license. It's all local law.
Inventory levels and turnover all depend on what you decide to carry for stock and how that stock currently sells in your general area. Lots more to consider, but the most important is - if you have little or no experience in this area - DON'T DO IT! I went into a small shop nearby that's going out of business, and no wonder. They had a bottle of 1996 Sutter Home Chenin Blanc on the shelf.

[This message has been edited by Kcwhippet (edited 04-09-2003).]

- winoweenie - 04-09-2003 05:06 PM

Wow KC....Do you remember the price. One of my fav bottles. WW [img][/img]

- Kcwhippet - 04-09-2003 07:16 PM

One of the all time great SW's, and it went for the munificent sum of -- TA DA -- $4.99 (but I could have had it for 20% off because I'm ITB).

- Thomas - 04-10-2003 07:07 AM

I could not agree more with KC's advice, especially the one about no experience--DON"T DO IT.

I have experience and I am trying to figure out why I ever got myself into the retail trade in NY City. The big stores go out of their way in the business to push small stores out by purposely under-pricing, relying on increased volume to make up for low item profit margins. Small stores of course are locked into a certain volume business by the nature of their size and funding sources. That, in a nutshell, is my daily nut, so to speak.

KC, maybe soon I'll need a job...

[This message has been edited by foodie (edited 04-10-2003).]

- Auburnwine - 04-10-2003 01:17 PM

Don't do it, especially in Alabama where the wine distribution monopolies and the state good-old-boys will have you at their mercy. There is no market in Alabama, and you could never compete against Bruno's who do not have to worry so much about overhead and having full-time wine staff.

- winoweenie - 04-10-2003 04:39 PM

Hi Forelmiss and welcome to the board...... AND your welcome. Wild hairs cause more than nasty headaches, and Auburn has given you a $10,000 free aspirin. WW