Possible Profits From Owning a Liquor Store

by Clayton Browne; Updated September 26, 2017
Shopping for wine

Although owning a liquor store is not the most glamorous business, and it is typically quite competitive, it is a reliable, recession-proof retail business that often has a significant number of repeat customers. The overhead costs and management skills required to run a liquor store are also manageable, making it a good business for an entrepreneur with relatively limited business experience. Due to varying state laws, the package-store business is highly fragmented and no major companies dominate; the top 50 companies only represent about 20 percent of total sales.

Profit Margin

Your profit margin is always the most important part of running a business. With that in mind, a well-managed liquor store will try to sell as many high-margin items as possible. For example, if someone wants a bottle of vodka, you should offer them the brand with the highest profit margin. It's often a win-win situation, as the higher-margin product might be less expensive than the name brand liquor, so the customer gets more for his dollar while you make a healthy profit.

Specialty Promotions

Liquor stores generally organize advertising and specials around special holidays and events like New Year's Day and Super Bowl Sunday. Another approach to promote periodic sales, especially for those stores with significant wine or premium beer sales, is to establish a Wine of the Month Club and/or a Beer of the Month Club. The seemingly endless number of different wine and beer varieties facilitates this approach - entrepreneurs will never have to repeat a selection. While state regulations in many cases require liquor stores to observe minimum pricing requirements, making it difficult to offer special discounts, stores can generally offer other non-alcoholic items to promote sales.

Impulse Items

One good tactic to make some extra profits is to have a nice selection of high-profit impulse items close to the checkout for last-minute purchases. Items like bottle openers or fancy corkscrews, various high-end snacks and ice are all typical impulse buys.

Increase Advertising and Other Marketing

One other way to increase profits at a liquor store is to bring more customers in the door. The best way to do that is with effective marketing and advertising. Every business needs a website and a Facebook page, so that should be step 1 if you don't already have these basic marketing tools in place. You can also consider radio spots or increased print advertising, or even in-store promotions to get your name circulating in the public sphere.

Partnerships

One other possibility for increasing profits is strategic partnerships with manufacturers and/or distributors. These kinds of partnerships typically work out best at a certain economy of scale, such as if you have a large operation or own several package stores. However, many beer, wine and liquor distributors are willing to work with smaller liquor store owners on promotions.

About the Author

Clayton Browne has been writing professionally since 1994. He has written and edited everything from science fiction to semiconductor patents to dissertations in linguistics, having worked for Holt, Rinehart & Winston, Steck-Vaughn and The Psychological Corp. Browne has a Master of Science in linguistic anthropology from the University of Wisconsin-Milwaukee.

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