A wine shop is a retail outlet that retails different brands and types (alcoholic and non-alcoholic) of wine for on-and off-premise consumption. The Beer, Wine & Liquor Stores industry in the US is labor intensive which means that businesses are more reliant on labor than capital. The highest costs for businesses in The Beer, Wine & Liquor Stores industry in the US are Wages (6.8%), Purchases (71.1%), and Rent & Utilities (3.5%).
Statistics have it that in the United States of America alone, there are about 44,307 licensed wine and liquor stores responsible for employing about 171,766 employees, and the industry rakes in a whooping sum of $50 billion annually. The industry is projected to grow at 1.7 percent annual growth between 2017 and 2022.
Steps on How to Start a Wine Shop Business
Table of Content
Conduct Market Research
Conducting market research before starting any business is key to the success of the business hence you must not open a wine shop without conducting market research. This is so because Market research provides critical information about your market and your business landscape. It can tell you how your business is perceived by the customers and clients you want to reach.
It can help you determine where your customers are, and which customers are most likely to do business with you. In essence, thorough market research will help you understand how your target customers think and adapt to their needs to turn them into regular customers.
a. Who is the Target Market for Wine Shop Business?
If you are thinking of opening a wine shop, then you should make target demographics all-encompassing. It should include corporate executives, socialites, students, migrants, entrepreneurs, celebrities, tourists, and every adult in the neighborhood where your wine shop is located.
b. Is Wine Shop a Profitable Business?
Yes, the wine shop business is profitable, but according to a recent Forbes study, wine shops are among the top five least profitable businesses, taking home a profit of 1.7 percent. Owners who can run their own business take home an average salary of $21,000 – $51,000, depending upon size, location, and sales.
c. Are There Existing Niches in the Industry?
No, there are no existing niches when it comes to wine shops because wine shop is a niche idea in the beer, wine & liquor stores industry.
d. Who are the Major Competitors?
- Flatiron Wines & Spirits
- Grand Cata
- The Austin Wine Merchant
- Bay Grape
- Brooklyn Wine Exchange
- Chambers Street Wines
- Arlequin Wine Merchants
- The Wine House
- The Wine Bottega
- Liner & Elsen
- McCarthy & Schiering
- Buzz LA
- Appellation NYC
- The Royce
- Lucille Wine Shop & Tasting Room
- MCF Rare Wine
- Leon & Son Wine and Spirits
- Dandelion Wine.
e. Are There County or State Regulations or Zoning Laws for Wine Shop Business?
Yes, there are county and state regulations and zoning laws for wine shops in the United States. Please note that the Food and Drug Administration (FDA) sets the federal Food Code. However, the FDA doesn’t oversee individual wine shops. Instead, the various states use the Food Code as the basis for their food codes. They may adopt its rules, interpret them differently or set their own rules.
Please note that in the United States, you are required to follow your own state’s food service code. Visit the FDA website for a list of food service codes by state. Use this to find the state authority handling restaurants and bars and view the laws that apply in your state.
f. Is There a Franchise for Wine shop Business?
Yes, there are franchise opportunities for wine shops, and here are some of them;
- Wine Lovers (Liquid Capital Required: $87,000)
- Crescent Wines (Investments: $50,000 – $100,000)
- Vintner’s Circle (Investments: $95,000 – $145,000)
- Vintner’s Cellar (Initial Investment: $75,000-$300,000)
- Vino 100 (Total initial investment range – $65,000 to $430,825)
- The Connoisseur (Investment – $175,000 – $175,000)
- Rosevine Winery (Initial Investment – $246,000 – $425,000)
- Borvin Beverage (Investment – $71,000 – $76,000)
- Grape (Liquid Capital Required: $875,000 – $1,200,000)
- Unique Imported Wines (Initial Investment: $8,500).
g. What Do You Need to Start a Wine Shop Business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Good Shop facility
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Suppliers of different brands and types of wines
- Startup Capital
Memorable Wine Shop Business Names
- Themes Place© Wine Shop, Inc.
- Phi Delta® Wine Shop, LLC
- Marvel Jades© Wine Shop, Inc.
- Wine Racks® Wine Shop, Inc.
- Mister Dave™ Wine Shop, Inc.
- Wine Lovers™ Wine Shop, LLC.
- Your Choice© Wine Shop, LLC
- Jonny Moore® Wine Shop, Inc.
- Wine Access© Wine Shop, Inc.
- Black Street© Wine Shop, Inc.
- Joel Steve and Sons® Wine Shop, LLC
- Ferbos Company® Wine Shop, LLC
- Eden Garden™ Wine Shop, LLC
- Left Turns© Wine Shop, Inc.
- Tims Tyson® Wine Shop, Inc.
- Luiz Garcia™ Wine Shop, Inc.
- Romans Club™ Wine Shop, Inc.
- All Shades© Wine Shop, Inc.
- Winepress® Wine Shop, LLC
- Robert Marcelo™ Wine Shop, Inc.
Register Your Business
a. What Type of Business Structure is Best for Wine Shops?
The truth is that there are several options when it comes to the business structure of a wine shop, but the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits. Please note that an LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Wine Shop Business?
- General Business License
- Health and Safety Permit
- Food and Drinks Handlers’ License
- Zonal Permits
- Signage Permit
- Operational State Facility Inspections
- A music license if you want to play live, recorded, or stream music in your wine shop
- A dumpster placement permit that specifies where you can put your trash dumpster outside your wine shop
- A valet parking permit if you plan to offer valet parking for customers
- Sidewalk permits if you plan to offer outside seating
d. What Type of Certification is Needed to Open a Wine Shop Business?
You don’t need any certifications to open a wine shop business.
e. What Documents are Needed to Open a Wine Shop Business?
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering opening a wine shop business, usually you may not have any need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Wine Shop Business?
There is no clear-cut startup cost for a wine shop, but available data shows that the costs for a small to medium wine shop can range from $50,000 to over $300,000.
b. What are the Costs Involved in Starting a Wine Shop
- The total fee for registering the business in the United States of America – is $750.
- Legal expenses for obtaining licenses and permits as well as accounting services – $1,200.
- Marketing promotion expenses (2,000 flyers at $0.04 per copy) for the total amount of $80.
- The cost for hiring a business consultant (writing of business plans inclusive) – is $2,500.
- Insurance (general liability, workers’ compensation, and property-casualty) coverage at a total premium – $2,400.
- The cost of accounting software, CRM software, and payroll software – $1,500
- The cost for payment of rent for 12 months at $1.76 per square foot in the total amount of – $35,600.
- The cost for shop/facility remodeling – $25,000.
- Other start-up expenses including stationery – $500
- Phone and utility deposits – ($2,500)
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000
- The cost for start-up inventory – $16,027
- Storage hardware (bins, utensil rack, shelves, glasses case) – $3,720
- The cost for store equipment (cash register, security, ventilation, signage) – $3,150
- The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $8,000.
- The cost of launching an official website – $600
- The cost for our grand opening party – $3,000
- Miscellaneous – $2,500
c. What Factors Determine the Cost of Opening a Wine Shop Business?
- The size of the wine shop
- The choice of location
- The required licenses and permits
- The type of facility
- The type of wines and related products retailed in the shop
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing of the wine shop business
- The cost for furnishing and equipping the wine shop business – facility
- The cost of insurance policy covers
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
- The cost for the grand opening of the wine shop business
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
In reality, it is not compulsory to build a new facility for your wine shop business, but if you have the required finance, it will pay you to build your facility. The truth is that building or reconstructing a facility will allow you to come up with a facility that will perfectly fit into your business goals and vision.
e. What are the Ongoing Expenses of a Wine Shop Business?
- Supplies (inventory expenses)
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees
f. What is the Average Salary of your Staff?
- Shop Manager (Owner) – $45,000 Per Year
- Accountant – $30,630,000 Per Year
- Sales people – $27,100 Per Year
- Cleaners – $25,000 Per Year
- Security Guard -$24,000 Per Year
g. How Do You Get Funding to Start a Wine Shop Business
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Our business is a neighborhood wine shop that will be located in a centralized area between a residential neighborhood and a busy business district in downtown West Chester – Ohio. We are aware that Ohio is one of the states that allow individuals to operate wine and liquor stores which is why we have decided to open our wine shop in West Chester – Ohio.
We have been able to secure a 10,000 sq. ft. facility for our wine shop as required by the law in the United States of America. We are in the wine shop business to make profits and at the same time to give our customers value for their money.
b. Products and Service
- Alcoholic and non–alcoholic wines
- Non–alcoholic beverages
c. Mission Statement
Our mission is to establish a wine shop that will make available different types of wine in the United States and other parts of the world to our highly esteemed customers.
Our vision is to establish a one-stop wine shop in West Chester – Ohio and other cities in the United States of America.
d. Goals and Objectives
The goals and objectives of a wine shop business are to provide a retail outlet where patrons can go to buy different types of wines.
e. Organizational Structure
- Shop Manager (Owner)
- Sales Boys and Girls
- Security Guard
a. SWOT Analysis
- Ideal location for a wine shop business
- Highly experienced and qualified employees and management
- Access to finance from business partners
- Availability of different types of wines.
- Reliable and efficient inventory management system.
- Financial constraints may restrict the publicity and branding of the business
- A new business that will be competing with well-established wine shops and bars in the city.
- Inability to retain our highly experienced and qualified employees longer than we want during the teething stage of the business.
- A rise in the number of wine lovers within our market space
- Online market, new services, new technology, and of course the opening of new markets.
- The arrival of a new wine shop within our market space
- Economic uncertainty
- Liability problems
- The U.S. Food and Drug Administration (FDA) could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
b. How Do Wine Shops Make Money?
Wine shops make money by selling the following products;
- Alcoholic and non–alcoholic wines
- Non–alcoholic beverages
c. Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards/Point of Sale Machines (POS Machines)
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
d. Sales & Advertising Strategies
- Introduce your wine shop business by sending introductory letters alongside your brochure to corporate organizations, socialites, celebrities, and other key stakeholders throughout the city where your wine shop business is located.
- Advertise on the internet on blogs, forums, and social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business to give your business an online presence
- Directly market your products.
- Join local wine shop associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word-of-mouth marketing (referrals)
a. How Much Should You Charge for your Product/Service?
The industry standard to mark up a bottle of wine is between 200 to 300% over its retail sales price. Thus, if a high-end wine retails for $20 at a wine retail store, it is likely to sell for $60 to $80 at a restaurant. For rare, expensive, or specialty wines, the markups could be as high as 400%.
b. How Much Profit Do Wine Shop Owners Make a Year?
It depends, but the available report shows that on average, a wine shop in a less desirable location or state will make up to $70,000 annually. Other businesses can make between $100,000 to $150,000 on average. Most owners make somewhere between $20,000 and $50,000 a year.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the wine shop
- The types of wines and other drinks retailed in the shop
- The location of the wine shop is covering
- The management style of the wine shop
- The business approach of the wine shop
- The advertising and marketing strategies adopted by the wine shop.
- The number of years the wine shop is in business
d. What is the Profit Margin of a Wine Shop?
The profit margin of a wine shop is not fixed. On average, wine shops tend to have an overall profit margin of between 20% and 30% annually.
e. What is the Sales Forecast?
Below is the sales forecast for a wine shop. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year: $420,000
- Second Fiscal Year: $650,000
- Third Fiscal Year: $740,000
Set Up your Shop
a. How Do You Choose a Perfect Location for Wine Shop?
- The demography of the location especially as it relates to people that drink wine regularly
- The demand for the wine and related products offered by wine shops in the location
- The purchasing power of businesses and residents of the location
- Accessibility of the location
- The number of wine shops, and bars in the location in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City is Best to Open a Wine shop?
- Las Vegas, Nevada
- Los Angeles, California
- New York City, New York
- San Francisco, California
- Washington DC
- Chicago, Illinois
- Dallas-Fort Worth, Texas
- Atlanta, Georgia
- Boston, Massachusetts
- Palm Beach, Florida
c. What Equipment is Needed to Operate a Wine Shop?
Before you can open a wine shop, you should budget and buy chairs and dining tables, POS and receipt issuing machines, storage hardware (bins, rack, shelves, food case), (Flat Screen TVs, sound system, DVD players, Satellite dish and decoder, furniture (table, stools, and sofas), telephones, filing cabinets), store equipment (cash register, security, ventilation, signage), and fancy lightening amongst others.
When it comes to hiring employees for a standard wine shop, you should make plans to hire a competent shop manager (you can occupy this position), account clerk, sales boys and sales girls, cleaners, and security guard.
Launch the Business Proper
In recent times, no wine shop opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party. The bottom line is that with the proper launching of the wine shop, you will be able to officially inform people that your wine shop is open for business.
a. What Makes a Wine Shop Business Successful?
- Choose a good location and shop facility to launch the business
- Make sure your shop is well stocked with different types and brands of wines (give your customers options)
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your wine shop business
- Leverage on all available online and offline platforms to promote your wine shop business
b. What Happens During a Typical Day at a Wine Shop?
- The shop is open for the day’s work
- The serving areas, bottles of wines, serving wares, chairs, and tables are properly arranged
- Walk-in customers are attended to
- Deliveries of orders are made
- Stocks are taken and reports are written and submitted to superior officers
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Wine Shop Business?
- Excellent customer services skills
- Interpersonal skill
- Accounting and bookkeeping skills
- Business management skills
- Bargaining skill
- Work experience in a wine shop environment
- Experience in managing people
- Experience in business administration
- Experience in identifying different types of wines.