Ultimately, profitability depends on a lot of factors. Suppliers, customers, inventory, overhead costs, and other variables can either eat away at or improve your profits, but in general, wines and spirits in Kenya are profitable. As you think about different ways to mold your business model, keep in mind that high-end items provide the highest profit margin while more affordable products have lower profit margins.
Why Wines and Spirits Business Ownership is Profitable
Recession-Proof
Alcohol is one of those few products that is considered inelastic, meaning that demand remains high no matter how the economy is doing. In fact, demand increases during economic downturns as people try to find ways to relax and reduce stress. Even when times are tough, liquor store ownership will provide a stable bottom line.
Alcohol is one of those few products that is considered inelastic, meaning that demand remains high no matter how the economy is doing.
Year-Round Demand
Nearly every holiday and special event is celebrated with food and drinks. Whether it is the Christmas or New Year’s, there will always be a demand for alcohol. The popularity of certain products will vary with the seasons, but overall sales will stay steady year-round.
Stable Inventory for Storage
Grocery stores and even restaurants have to use or sell their inventory before it spoils. Liquor and wine, on the other hand, can be safely stored for an extended period of time. There may be instances where you need to make sure certain products are stored in the right climate-controlled conditions, but by and large, your inventory can sit on the shelf without having to worry about waste.
Shelf stability also allows wines and spirits retailers to plan ahead and keep large quantities of products on hand. For instance, you can stock up on popular festive holidays products during the year when you might have more of a surplus of cash. For example, wines and whiskeys can sit in storage all year and will be ready to sell for the holidays without affecting the taste or quality of the product.
Free Advertising
Beer, wine and spirits producers are already spending millions on advertising campaigns to bring attention to their products and generate sales. Meanwhile, wines and spirits store owners in Kenya can reap the benefits of these pre-existing ads campaigns without spending a dime. Best of all, if a customer enters your store as the result of a liquor ad, but decides they prefer one vodka brand over another, you still have the opportunity to sell them a bottle of their choice. All you have to do is make sure that people know about your store.
Applying for and acquiring a liquor license is difficult, but once you have a green light to sell alcohol, you won’t have to worry about a lot of competition moving into your territory.
Low Competition
The Kenyan constitution gives each county the power to regulate the distribution, and sale of alcohol in their jurisdiction. While every county handles this differently, it is common for counties to limit the number of liquor stores in a given area. For consumers, this limits their access to alcohol, but for store owners, it means less competition in your area. Applying for and acquiring a liquor license is difficult, but once you have a green light to sell alcohol, you won’t have to worry about a lot of competition moving into your territory.
How Much Can a Wines and Spirits in Kenya Shop Owner Make?
As you might imagine, store earnings will vary depending on location. Stores located in a less populated area can expect to make around Ksh 50,000 per month. In more high-traffic areas, stores will make an average of between Ksh 200,000 and Ksh350,000.
POS System for wines and spirits in Kenya
While running a wines and spirits business is clearly very profitable, you need to have a reliable POS System to manage and control the shop. Without a POS System, you’re likely to make losses due to stock theft, inaccurate sales records and lack of strategic information like fast moving items, slow movers, debts etc.
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