Wines and spirits business in Kenya is growing with shops sprucing up in our neighborhoods daily. This is due to the increase in demand for these products in the country. These shops are replacing the traditional bars and clubs that have characterized the liquor industry for a long time.
It is a change that is opening numerous opportunities across the country for wines and spirits shops. If you have ever thought of starting your shop, this is the article for you. Do you know what it takes to run this business successfully?
The demand for alcoholic products makes this business have a ready market across the country. With the consumption of these products exceeding 150 billion annually, the market has become attractive to many investors.
Ready market not only helps reduce marketing costs for the business but also makes it possible to set up the business across the country.
Below are some of the challenges that face this business.
The government maintains tight control over the alcoholic business due to the potential harm it could cause to society. Some of the ways they control it include making the licenses more expensive and limiting the operating hours.
The high demand for these products has attracted a lot of business people. Over time, this has made competition grow making it harder for new entrants to compete. Hence, you need to take advantage of some factors such as strategic location and good customer service to remain in business.
There is also growing competition by online sellers that don’t necessarily need to have a physical shop.
To start and run a wine and spirits business successfully in Kenya, you need to meet the below requirements;
- Regulatory requirements
- Business requirements
These are the legal requirements you must fulfill before the business starts operations. Failure to do so makes the business illegal and can lead to prosecution. They include;
- Business registration
The business requires a business registration certificate or a certificate of incorporation if it is registered as a company. To do this you also need to have a Kenya Revenue Authority PIN to facilitate tax compliance. Learn more on how to get a KRA certificate.
Registering a business is simpler, faster, and cheaper in comparison to registering a company. How to register a business name in Kenya.
However, if you want to register a company, you can learn more about the company registration process in Kenya.
- Business Permit
This is the permit issued by the county government authorizing the business to operate. A business permit comes at a cost. However, the cost varies depending on the county. Hence, it is necessary to engage your local county offices to understand the relevant costs.
A business permit is a mandatory requirement and failure to have it makes the business operations illegal.
If you are operating In Nairobi, Learn more about how to get a single business permit.
- Liquor License
This is a license that is specific to those dealing in the liquor business. The type of liquor license depends on the nature of the business. As an example, the license for a supermarket selling alcoholic products is different from that of a wine and spirits shop. However, a general retail alcoholic drinks license costs 50,000 shillings.
The licenses are mandatory and strictly controlled by the National Authority for Campaign Against Drugs (NACADA). This is a famous organization from the well-known Mututho Law.
These are some of the major regulatory requirements essential to starting a wines and spirits shop.
Just like any normal business, there are several business requirements necessary how to start and run a wine and spirits business successfully in Kenya. These include;
Capital is the startup funds to get the wines and spirits business in Kenya running and sustain its operations, especially in the initial days. It is your role as the business owner to provide capital. Some of the key sources of capital include savings and loans. Learn more on factors to consider before taking a loan in Kenya.
The amount of capital needed is based on the size of the business. The bigger the business, the more the amount of capital you need to set up.
Below are some of the uses of the startup capital
- Paying for the regulatory permits
- Payment of business rent
- Salary payments
- Purchase of stocks
- Meeting emerging costs
- Physical Shop
A wines and spirits business requires a shop where you sell the products. The shop should be located in a strategic location such as in an area with high traffic of people. It should also be spacious to accommodate your stock and any expansion needs.
A good shop location increases the chance of getting more customers translating to more income. However, there are some restrictions regarding where you can locate this business. Some of these include near a school. Hence, you must familiarize yourself with all these requirements to avoid breaking the laws.
A shop should be well branded for easier recognition by your customers. Other tips to maintain an edge include ensuring it is safe and clean.
Even if you are selling your products online, you require storage space to achieve this.
This refers to the liquor that you are selling. Different products sell in this business. Some of these include wines, spirits, and soft drinks.
Hence, you must ensure to have all these to serve your customer’s needs. The key strategy in this business is maintaining a balance while stocking. This becomes easier over time after you have the market understanding enabling you to understand what’s the best-selling products.
It is also very critical to maintaining a good relationship with your suppliers as they play a key role in stocking through some actions such as paying them on time.
Employees are an integral part of the wines and spirits business in Kenya if you can’t run it alone. Some of the situations when the business needs employees include when you are unable to be at the shop full-time or due to expansion.
Hence, you need to ensure you have the right staff as they will be a key factor in determining the business’s success.