According to Grand View Research, the global wine market size was valued at USD 417.85 billion in 2020 and despite the COVID-19 pandemic, it is still expected to expand at a compound annual growth rate (CAGR) of 6.4% from 2021 to 2028.
While the wine retail sector stands as one of Nigeria’s most profitable industries, it remains characterized by underpenetration. This phenomenon can be associated with the high entry barriers arising from the elevated initial investment requirements. Furthermore, the demand for wine predominantly emanates from the upper and middle socioeconomic strata, thus limiting market expansion.
The capital-intensive nature of establishing a wine retail enterprise serves as a deterrent for potential small business entrepreneurs who are looking to explore this venture, thereby, restricting the market to a niche demographic.
Given the razor-thin profit margins inherent in the wine industry, purchasing wine in bulk is a strategic approach to maximizing profits. By buying in larger quantities, businesses can take advantage of volume discounts and lower per-unit costs, ultimately increasing their profit margins.
As an entrepreneur, you can increase your chances of long-term success by adeptly advising and guiding potential customers on the selection of wines tailored to specific occasions. This approach fosters trust, nurtures enduring relationships, and establishes a foundation for confidence with clientele.
As with any serious business, you must have basic accounting and bookkeeping skills to succeed financially. So, if you fall short of that, you must start taking weekend courses on that. In most cases, reading helpful guides like this one can go a long way.
Why you should consider starting a wine business
1. The wine business is one of the most lucrative businesses you can start
Wine retail and distribution is a very lucrative yet unsaturated business. Wines are seen as exclusive, but there is still potential to expand the target demographic to include individuals in the lower middle class. This underscores a compelling need for initiating this venture, as it positions you to capitalize on both the middle-class and the affluent segments capable of indulging in the luxury of fine wines.
Furthermore, expanding your distribution channels to club owners and bars could significantly enhance the business’s prospects. If executed judiciously, there is a considerable likelihood of witnessing substantial growth within a relatively short timeframe.
2. Variety of income-generating options
The wine industry offers many income-generating options, including plugging in the supply chain as a distributor, supplier, importer, dealer, and wholesaler, all down to opening a wine bar. There is always an opportunity for significant profit in the wine business.
Steps for starting a wine retail business
1. Acquire some knowledge of wines
Learning about how wine is manufactured and the pressures that necessitate an entire business to bottle, transfer, and sell it, will help you to be a more conscientious dealer of wine. Wine education is interesting because it is hands-on, especially when tasting is involved. On a serious note, wine tasting provides immediate gratification because you get to experience the so-many flavors, and wine varietals on the market.
There are reasons why Italians make wines that are rightfully high in acid, fresh, and fruity, just as there are reasons why Santorini, Greece producers make bright, high-acid, mineral-driven wines. Wine education includes a study of foreign culture, food, and lifestyles. If you want to manage a wine business properly, you must have some wine expertise, just like any other business. Knowing about wine will elevate your authority in the eyes of your prospective consumers.
Wine and food are two of those things that can bring people together, help them connect, and spark discussions that may otherwise feel forced or monotonous. Even if your goal isn’t to become a full-fledged winemaker, learning a few of the fundamentals might be a fun way to become engaged in the business.
The wine business requires that you know a lot about what you are offering, such as their tastes, alcoholic content, if any, most liked by clients, and which wine complements each specific stand.
You’ll get fresh perspectives on farming and what it means to plant organic vs. biodynamic grapes, and you’ll quickly realize that there are genuine reasons why certain nations impose stringent controls on grape cultivation as well as laws on grape production. This is known as “Wine Law”
2. Market Research and Competitor Analysis
Who are your prospective customers? and who do you have to compete with in order to have a share of this wonderful population?
Well, let’s help you do some of the homework.
3. Choosing a Business Name and registering with the CAC
You’ll need a business name in mind before you start your wine business. You should double-check that the name you desire for your business is available and that it hasn’t previously been taken by another. This will be crucial when it comes to actually selling your wine, as a name can go a long way in terms of branding and making your wine stand out and be remembered.
In Nigeria, the Corporate Affairs Commission (CAC) plays a crucial role in the regulation and supervision of corporate entities within the country while in the United Kingdom (UK), the equivalent regulatory body responsible for registering companies and overseeing corporate affairs is called “Companies House.” In the United States (US), there isn’t a single national body for company registration; instead, business registration is typically handled at the state level. Each state has its own agency or department that oversees business registrations, such as the Secretary of State’s office or a similar entity.
You will also need a domain name so that you may build a website and set up a professional email account such as contact@yourbusiness.com.
Other steps such as creating Instagram, Facebook, and X accounts may also be considered. All these things help with what we call “social proof”.
To stay compliant, you need to learn about the local rules governing the selling of wine or other alcoholic beverages in your vicinity.
4. Outline your budget and Business Plan
Truth is, you need money to start a wine business, and you need money to manage a wine business. Money is quite important in this area of business, depending on the type of wine you want to stock. Some wines are relatively expensive, and the pricey wines are what a large number of people want to buy.
Depending on where you live, you should budget at least, between 3,500 USD and 5,000 USD to start your small wine business. That is for a small-scale wine store, and it does not cover the cost of renting a store or installing wine racks. For starters, the sum is for stocking your business. You may want to know how to achieve your budget process.
The more sales you make, the more your store will be filled, and you will steadily develop from there. If you are not able to raise 500-700k on your own, you may seek outside help by taking up a loan. If you only have a little business with a few wines on the shelf, no one will want to patronize you, so it’s best you start this with a reasonable amount of capital.
5. Pen down your wine business strategy. Pen it down!
The importance of penning down your business strategy can never be over-emphasized. As you may have noticed, I mentioned it twice in the subheading above.
When creating your business strategy, you should conduct comprehensive research on the industry and your competitors. Include a synopsis of your business to begin, followed by a company overview, market analysis, detailed specifications on the products you want to sell, financial predictions, and other information.
You may use a business plan template or create your own. In any case, it should be thorough and incorporate a substantial amount of research. It’s also not a static document; it should be modified as your wine business evolves and your objectives shift. Consider it from the standpoint of a potential investor: What information would you like to see if you were considering investing in a business?
6. Choose a good location
Location is a key thing to consider before embarking on your path into the wine business. It is important that you must get your store location in the urban area of your state in order to attract a large number of clients who can afford and patronize you at any time. Having a large shop is beneficial to your business because you will have enough space to showcase a large selection of wine, which will attract clients and entice them to return, if not to acquire the same drink, but to try a different sort of wine.
Consider your consumers and target market, who are upper and middle-class folks who reside in the high-classed regions, before deciding where you may secure your location. For example, if you wish to sell or distribute alcoholic wines, you should avoid locations with high concentrations of Muslims, as such drinks are considered not “Halal”. Just so you know, Halal is a dietary law derived from Islamic teachings, meaning “lawful or permitted.” On the contrary, foods that are not considered halal are considered “Haram” or “not permitted.” Unfortunately, these also include alcoholic food and drinks of any concentration.
7. Find Reputable Suppliers
It is critical to have a dependable supplier who only sells genuine items. Find a dependable source that will give you the quantity you want at a fair price. Get someone who can deliver on time as well, as this is critical to your business.
Having high-quality wines delivered on schedule establishes your service as trustworthy in the eyes of your clients. Always contact or talk with your supplier on WhatsApp to stay up to date. You may also need to ask your suppliers these questions often; What are the most popular wines right now? What are the most often requested wines?
8. Find a logistics partner
As a new wine business owner, you may be confused when it comes to picking a logistics partner to handle all of your online orders. You need someone who can plan, execute, and control the movement of your parcels with your shipping partners (individual carriers or aggregators), from the time they are picked up from your warehouse until they are delivered to your client.
Depending on their business model, different logistic providers undertake various fulfillment activities. If you wish to form a distinct relationship with individual carriers or aggregators, consider the following:
- Coverage area
- COD vs. NON-COD service (COD means Cash on Delivery)
- Time required for delivery
- Shipping charges are based on the number of orders placed. Customer assistance is available.
- Attempts at redelivery
- Remittance time frame
- Procedures for booking
- Create shipping labels automatically
- Automatically assign package dimensions
- Auto-assign a carrier for shipping
- Order monitoring
- Order status changes in real-time
9. Promote your Wine business online
Always be prepared to promote yourself at any available time; have a business card, business flyers, roll-up banners, etc., with you or around your business location at all times. These are invaluable tools for creating awareness. Using word of mouth, inform people about your new business, show them where it is, and even offer to accompany them to your store. Advertise on billboards (if you have the budget), and radio stations in your area.
If at all feasible, create an e-commerce website for your business so that people know what you sell and that they can easily reach you by phone or through the website. Discounts could be given to individuals who buy in bulk, as a way of enticing them to buy more or come back.
You can also promote your business through social media, influencer marketing, blogs, directories, google adverts, etc. Promoting your business does not always have to cost an arm and a leg.
Other Requirements
- Equipment: Refrigerators, shelves and racks, delivery vehicle or bike
- Shelves and racks
- Office or reception
- Tasting room
Staffing Requirements
1. Driver or Deliveryman:
Delivery man or Driver to ensure that items are delivered to your clients on time. Delivering a broad range of things is one of the delivery driver’s tasks. You may need one. Here are the responsibilities of a driver or delivery man.
- Following delivery driving routes and timetables
- Loading, unloading, prepping, checking, and running the delivery vehicle
- Providing a diverse range of products
- Following delivery driving routes and timetables
- Loading, unloading, prepping, checking, and running the delivery vehicle
- Deliver a large range of things to various places and via various routes
- Routes and timetables should be followed.
- Load, unload, prepare, examine, and drive a delivery vehicle.
- Request feedback on the services offered and handle any concerns from clients.
- Collect payments
- Inform customers about new goods and services.
- Complete logs and reports
- Observe DOT requirements and safety standards.
2. Salesperson:
- Ensures that all client contacts (e-mail, walk-in centre, SMS, or phone) offer the client a tailored customer service experience of the highest calibre.
- During phone interactions with consumers, take advantage of every chance to pique the client’s interest in the company’s products and services.
- Manages administrative responsibilities assigned by the human resources and administrative managers in an efficient and timely way.
- Consistently keeps up to date on any new information about the business’s goods, promotional activities, and so on in order to provide accurate and helpful information to clients when they make inquiries (answer customer queries regarding the store and the wines)
- Determines the needs of the consumer, recommends, selects, assists in the location of the appropriate item, and describes the qualities and advantages of a product.
- provide recommendations and encourage the acquisition of items
3. Inventory manager or storekeeper:
- In charge of overseeing the store’s everyday operations.
- Ensures that the retail facility is in good working order and that it is welcoming to consumers.
- Checks stock, places and expedites purchases, and evaluates new goods to keep office supplies in good condition.
- Ensures equipment operation by performing preventative maintenance needs and requesting repairs.
- Participates in educational opportunities, reads professional publications, maintains personal networks, and participates in professional organizations to keep job knowledge up to date.
- Improves the reputation of the department and the company by embracing responsibility for completing new and diverse demands; identifying ways to add value to work successes.
4. Social media manager
- Manages online research and coordinates all information sources in order to keep the organization’s top customers and recruit new ones.
- Analyzes the amounts of transactional data generated by consumer purchases
- Identifies, prioritizes, and contacts potential partners and commercial possibilities, among other things on all social media platforms.
- Responsible for overseeing implementation, advocating for the requirements of customers, and online communication with clients.
- Contributes to the company’s growth and sales via the Internet.
Conclusion
Having a wine store or running a wine business involves numerous problems, such as acquiring clients and making sales, but this should not discourage you because every business has its own set of challenges. Start the business, understand the method, put in the effort, and be patient, and you will be successful.
Regardless of your wine business plan, remember that the ultimate success of your company is dependent on catering to your customers and keeping up with their changing tastes, spending patterns, and the industry as a whole. This is one of the most important aspects.
These are my final thoughts, to be successful in this business, attend wine parties, network with people, and capitalize on your positive relationships. Request referrals from your customers. If they are pleased with your services, they will gladly recommend you to their friends.
