Do you want to start a wine distribution company? If YES, here is a complete guide to starting a wine distribution business with NO money and no experience.
Okay, so we have provided you an in-depth sample wine distribution business plan template. We also took it further by analyzing and drafting a sample wine distribution marketing plan backed up by actionable guerrilla marketing ideas for wine distribution businesses. In this article, we will be considering all the requirements for starting a wine distribution business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Wine Distribution Company?
A wine distribution company is one business that requires low startup capital and but has a high profit margin. If you love flexibility and you want to quit your 9 to 5 job, then you should consider starting your own wine distribution company. The good thing about this kind of business is that you can choose when and how to work and you can start it alone or with one or two other people.
The fact that wine is generally consumed by people of all culture and class makes it a viable and profitable business to go into. The process of establishing this kind of business is easy, but you require good marketing and managerial skills if you truly want to make it big in this type of business.
With a wine distribution company, you won’t have to worry about production costs and even the core advertising cost. Your only worry would be how to create more distribution channels for your wine. Just ensure that you have multiple wine production companies that you are helping to distribute their products and you will no doubt make great returns on your investment.
If your desire is to make good returns on your investment, then you must make it a point of duty to carry out a comprehensive market survey so that you can identify areas where you can distribute your wine and also the brand of wine that is really selling well in the market.
During your market survey, you would have to talk to owners of groceries stores, liquor stores, bars, country clubs et al to know the brand of wine that they need in their wine racks and the amount they will be willing to pay. This would guide you to know the type of wine production companies to align with. Besides, your market survey will enable you create effective distribution channels.
So, if you are serious about starting your own wine distribution company, all you need do is to read this article and you will be well equipped.
Starting a Wine Distribution Company – A Complete Guide
- Industry Overview
One of the easy to enter and thriving businesses that an entrepreneur can go into is the retailing or wholesale distribution business. The retail and wholesale distribution business is indeed a vast business and wine distribution is a part of it.
Basically, wine distribution companies distribute wine, distilled alcoholic beverages and various neutral spirits. Alcohol products are purchased from alcoholic beverage manufacturers and sold at wholesale volumes to licensed alcoholic beverage retailers.
If you are close observer of the Wine and Spirits Wholesaling industry, you will agree that the industry will continue its steady rebound following the recessionary slowdown that caused consumer sentiment and per capita expenditure on alcohol to stall. Renewed demand from downstream alcohol retailers and declining average excise taxes have boosted the revenue generated by the industry.
Going forward, there will be an impending concern among industry operators that the three-tier distribution system may be subject to further deregulation. In addition, external competition will threaten the industry’s status. However, the industry is projected to increase steadily.
The Wine and Spirits Wholesale industry is indeed a very large industry and pretty much thriving in all the parts of the world. Statistics has it that in the United States of America alone, there are about 5,896 registered and licensed wine and spirits wholesale distribution companies responsible for employing about 91,104 employees and the industry rakes in a whooping sum of $90 billion annually.
The industry is projected to grow at the rate of 1.1 percent annual growth between 2011 and 2016. The wine and spirits wholesale distribution companies that have the lion market share in the industry are Republic National Distributing Company, Southern Wines and Spirits of America, and The Charmer-Sunbelt Group.
A recent report published by IBISWorld shows that the wine and spirits wholesale industry establishments are dispersed across the United States and are generally concentrated in more densely populated regions. The report shows that the West, Southeast and Mid-Atlantic regions hold a significant share of both wine and spirits wholesalers and the US population.
The West holds 17.1 percent of the US population and 25.8 percent of industry wholesalers, the Southeast holds 25.4 percent of the US population and 20.1 percent of establishments and the Mid-Atlantic holds 15.5 percent of the population and 18.6% of industry establishments.
The bulk of the West’s wholesale wine and spirits comes from California, due to the state’s large population and its high concentration of vineyards. With 12.1 percent of the US population, California holds 19.1 percent of all wine and spirits wholesaling establishments.
The wine and spirits wholesale industry will continue to blossom because people will not relent in consuming wine, spirits and related products. Despite the fact that the industry seems over-saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own wine distribution companies.
Over and above, the wine and spirits wholesale industry is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business; you can choose to start on a small scale distributing the products of just a company or you can choose to start on a large scale distributing the products of loads of companies in several key cities all across the United States of America.
Starting a Wine Distribution Company – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who consume wine and spirits cut across all genders; male and female above 18 years with the financial means, hence the demographic composition for wine distribution company is all-encompassing.
The truth is that when it comes to selling wine and spirits, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just a group of people or business but to all outlets that retail wine, spirits and other alcoholic drinks and beverages.
So, if you are thinking of starting a wine distribution company then you should make your demographics all encompassing. It should include bars and night clubs, liquor stores, wine stores and every approved outlet in the neighborhood where wines are retailed.
List of Niche ideas Within the Wine Distribution Business That You Can Specialize in
It is important to state that there is no known niche area when it comes to wine the distribution business. Every player in this line of business are basically involved in distribution of wine, spirits and similar products to retailers. They usually engage in procuring wine and spirits from alcoholic beverage manufacturers, transporting them, providing financial assistance by supplying products on credit, assisting in properly labeling and inspecting the goods, distributing wine and spirits to licensed alcoholic retailers, and stocking and itemizing products at locations.
The Level of Competition in the Wine Distribution Business
The competition that exists in the wine and spirits wholesale industry goes beyond competition among wine distribution companies. You will be expected to compete with wine stores, liquor stores, night clubs, bars and every business that also retails wine.
This is so because they may decide to bypass wine distribution companies and purchase directly from the manufacturers. So, it will be right to say the competition in the wine and spirits wholesale distribution business is tough.
The truth is that, no matter the level of competition in an industry, if you have done your due diligence and you promote your products or business properly, you will always make headway in the industry. Just ensure that you distribute the wine brands that are in demand in your business location and you know how to attract and reach out to your target market.
But over and above, there are several wine and spirits wholesale distribution companies scattered all around the United States. So, if you choose to start your own wine and spirits wholesale distribution company in the United States, you will definitely meet stiffer competition among wine and spirits wholesale distribution companies within your business location. Besides, there are larger wine and spirits wholesale distribution companies that determine the trends in the industry and you should be ready to compete with them for customers.
List of Well-Known Brands in the Wine Distribution Industry
In every industry, there are always brands who perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long while and so are known for that, while others are best known for how they treat their customers.
These are some of the leading wine and spirits wholesale distribution companies in the United States of America and in the globe;
- Republic National Distributing Company
- Southern Wines and Spirits of America
- The Charmer-Sunbelt Group
- Wine & Spirits Wholesalers of America
- Southern Wine & Spirits Distribution Company
- MHW, Ltd.
- Epic Wines & Spirits
- American Northwest Distributors, Inc.
- Indiana Wholesale Wine & Liquor Company, Inc.
- Pacific Edge Wine & Spirits Distribution Services
- Global Wine & Spirits Wholesale Distribution Company
- Majestic Wine & Spirits USA
- Indiana Wholesale Wine Co
- Hill Top Spirits
- Park Street
- Quality Wine & Spirits Inc
- Surf Beverage (Liquor, Beer & Wine)
- Cana Distributors LLC
- Capitol-Husting Beverage Distributors
If you are looking towards successfully launching a business and maximizing profit, then you need to ensure that you get your economic analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.
Wine and spirits wholesale distribution business is not a green business; as a matter of fact, you will come across several vans and trucks of wine and spirits wholesale distributors all across major cities in the United States of America.
So, if you are mapping out your economic analysis, you should carry out thorough market survey and costing of the required amount needed to purchase distribution vans/trucks and also the running cost to successfully run the business.
Over and above, if you are considering starting a wine and spirits wholesale distribution business, then your concern should not be limited to the cost of purchasing distribution vans/trucks, but also on branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the business.
Starting Your Wine and Spirits Wholesale Distribution Business from Scratch vs Buying a Franchise
If you are looking towards starting a wine and spirits wholesale distribution company, you would have to start from the very scratch simply because you can hardly get a franchise of a wine and spirits wholesale distribution company to buy. It is a business that is open to all and sundry.
Besides, starting a wine and spirits wholesale distribution company from the scratch is less stressful when compared to other small scale businesses which usually requires detailed groundwork before launching the business. With a wine and spirits wholesale distribution company, you should just try as much as possible to secure a distribution van/truck, build business relationship with wine and spirits manufacturers and then leverage on every marketing tool within your disposal especially the internet when it comes to marketing your wines and spirits.
Please note that most of the big and successful wine and spirits wholesale distribution companies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success and of course you can build your own wine and spirits wholesale distribution company brand to become a successful brand with corporate and individual customers in your city and from all across the length and breadth of the United States of America if you choose to become a distributor of wine and spirits all across the United States of America.
Possible Threats and Challenges You Will Face When Starting a Wine and Spirits Wholesale Distribution Company
If you decide to start your own wine and spirits wholesale distribution company today, one of the major challenges you are likely going to face is the presence of well-established wine and spirits wholesale distribution companies in your business location. The only way to avoid this challenge is to create your own market.
Some other challenges and threats that you are likely going to face is economic downturn; if the economy is in bad shape, history has it that businesses such as wine and spirits wholesale distribution companies and the likes usually struggle to maintain their old customers or even welcome new customers.
So also, unfavorable government policies can also hamper the growth of your wine and spirits wholesale distribution company. There is nothing you can do as regard these threats and challenges other than to stay positive that things will work well for you.
Starting a Wine Distribution Company – Legal Matters
- Best legal entity to use for a wine distribution business
When considering starting a wine and spirits wholesale distribution company, the legal entity you choose will go a long way to determine how big the business can grow; some wine and spirits wholesale distribution companies design their business for neighborhood market, some for city wide market, while others for national market via franchising.
Generally, you have the option of either choosing a general partnership, limited liability Company which is commonly called an LLC, or a sole proprietorship for a business such as wine and spirits wholesale distribution company.
Ordinarily, sole proprietorship should have been the ideal business structure for a small scale wine and spirits wholesale distribution company especially if you are just starting out with a moderate start-up capital in a small neighborhood.
But people prefer limited liability Company for obvious reasons. As a matter of fact, if your intention is to grow the business and distribute wine and spirits all across the United States of America and other countries of the world via franchising, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
Catchy Business Name Ideas Suitable for a Wine and Spirits Wholesale Distribution Company
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
If you are considering starting your own wine and spirits wholesale distribution company, here are some catchy names that you can choose from;
- Kelly Lippy Wine & Spirits Distribution, Inc.
- Sharp Flame Wine & Spirits Distribution, LLC
- Classic Wines Distribution, Inc.
- Cletus & Titus Wine & Spirits Distribution Company
- Luke Bernard & Sons Wine Distribution, Inc.
- Double Deal Wine & Spirits Distributors, Inc.
- The Wine & Spirits People, Inc.
- Park Lane Wine & Spirits Distribution, LLC
- Top Performer Wine & Spirits Distribution, Inc.
- Sothern Sun Wine & Spirits Distribution Group
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your wine and spirits wholesale distribution company.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own wine and spirits wholesale distribution company in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Credit insurance
- Motor vehicle insurance (comprehensive insurance)
- Deposit insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
Intellectual Property Protection/Trademark
If you are considering starting your own wine and spirits wholesale distribution company, usually you may not have any need to file for intellectual property protection. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.
Is Professional Certification Needed to Run a Wine Distribution Company?
When it comes to wine and spirits wholesale distribution company, you do not need to have any formal training or special certification before you can be allowed to start a wine and spirits wholesale distribution company. All you need is informal training that will expose you to the in and out of wine and spirits wholesale distribution process.
With that, you will be able to maximize profits in the business. On the other hand, if you come across any form of certification that can aid you to conduct your wine and spirits wholesale distribution business pretty well, then by all mean try and pursue such certification.
List of Legal Documents You Need to Run a Wine and Spirits Wholesale Distribution Company
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own wine and spirits wholesale distribution company in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID/Tax Identification Number
- Business Plan
- Non – disclosure Agreement
- Commercial Vehicle Operator’s Registration
- Appropriate driver’s licenses for drivers (Commercial driver’s license (CDL)
- Assistant’s licenses for assistants
- Proof of ownership, proper identification and vehicle license
- Foods and drinks handler certificate
- Proof of district-issued food and drinks manager identification card
- Copy of license for the service support facility (warehouse) and/or a recent inspection report
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Building License
- Liquor License
- Cabaret License
- Franchise or Trademark License (optional)
Financing Your Wine and Spirits Wholesale Distribution Business
Starting a wine and spirits wholesale distribution company can be cost effective if you choose to start on a small scale with just one distribution van distributing for just one manufacturing company. Acquiring a distribution van is part of what will consume a large chunk of your start-up capital, but if you choose to start the business on a large scale with fleets of distribution vans, then you would need to go source for fund to finance the business because it is expensive to start a standard large scale wine and spirits wholesale distribution company.
No doubt when it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start–up capital for your wine and spirits wholesale distribution company;
- 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 loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
Choosing a Suitable Location for your Wine and Spirits Wholesale Distribution Company
When it comes to choosing a location for your wine and spirits wholesale distribution company, the rule of thumb is that you should be guided by the demand for such products, the numbers of wine stores and easy access to manufacturers of assorted liquors, wines and spirits. Of course, if you are able to start your wine and spirits wholesale distribution company in the right location for such business, you won’t struggle to make headway with the business.
It cannot be overemphasized that the location you chose to start your wine and spirits wholesale distribution company is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power and lifestyle.
If you make the mistake of starting your wine and spirits wholesale distribution company in an area where you can hardly find wine stores, bars and outlets where wines, spirits and alcoholic beverages are retailed you will struggle to grow the business.
These are some of the key factors that you should consider before choosing a location for your wine and spirits wholesale distribution company;
- The demography of the location
- The demand for liquors, beers and wines in the location
- The purchasing power of the residents of the location
- Accessibility and road network of the location
- The number of wine and liquor stores in the location
- The local laws and regulations in the community/state
- Traffic, parking and security
Starting a Wine Distribution Company – Technical & Manpower Details
On the average, there are no special technologies or equipment needed to run this type of business except for Point of Sales (POS) Machines and relevant software applications. So also, you will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
You would need a distribution truck or van for this kind of business and you would have to procure one. In some cases, depending on the agreement you reached with a wine production company, they might provide you with their own branded truck or van that you can use for the distribution of wine to your customers.
As regard leasing or outright purchase of a warehouse facility, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short term rent/lease while test running the business in the location. If things work out as planned, then you go on a long term lease or outright purchase of the property but if not, then move on and source for other ideal location/facility for such business.
When it comes to hiring employees for a standard wine and spirits wholesale distribution company, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Merchandise Manager, Warehouse Manager, Sales and Marketing Officer/Distribution Van Drivers, Accounting Clerk, and Cleaners. These are some of the key employees that you can work with. On the average, you will need a minimum of 5 to 10 key staff members to run a medium scale but standard wine and spirits wholesale distribution company.
The Service Process Involved in a Wine and Spirits Wholesale Distribution Company
When it comes to distribution of products, there are no hard and fast rules about it. Basically, it is the duty of the merchandise manager or marketing manager to help the organization source for wine and spirits manufacturing companies to help distribute their products.
They go out there to source for good wholesale distribution deals and ensure that they do not only distribute at the right prices that will guarantee them good profit, but also, distribute wines and spirits that are in demand in their business location.
Once the deal is sealed, the marketing executives cum distribution drivers either load their trucks directly from the wine and spirits distribution company or from their warehouse and then go around town sourcing for wine stores, liquor stores and every other outlet where wine and spirits are retailed.
Once the products are distributed, they either collect money on delivery or they come back later to collect their money. Usually there will be a business agreement where the wine and spirits manufacturing companies and wine and spirits wholesale distributors can access credit based on their capacity.
For instance, a wine and spirits wholesale distribution company can deposit $20,000 to a wine and spirits manufacturing company, and they can have access to goods worth over $50,000. So also, stocks are taken after the close of business every day and accounts are balanced. This will enable them place demand for more wine and spirits from manufacturing companies.
It is important to state that a wine and spirits wholesale distribution company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility.
Starting a Wine Distribution Company – The Marketing Plan
- Marketing ideas and strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a wine and spirits wholesale distribution company, then you must go all out to employ strategies that will help you attract customers or else you will struggle with the business because there are well-known brands determining the market direction for the wine and spirits wholesale distribution industry.
These are some of the marketing ideas and strategies that you can adopt for your wine and spirits wholesale distribution company;
- Introduce your wine and spirits wholesale distribution company by sending introductory letters alongside your brochure to bars and night clubs, liquor stores, wine stores and every approved outlet in the neighborhood where wines are retailed
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on the social media or those who read blogs can know who to call when they need to purchase wholesale wine and spirits within your location
- Create a basic website for your business so as to give your business an online presence
- Directly market your products
- Engage in road show in targeted communities from time to time to sell your products
- Join local wine and spirits wholesale distribution company 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 page ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Strategies to Boost Your Brand Awareness and Create Your Corporate Identity
If your intention of starting a wine and spirits wholesale distribution company is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening chains of wine and spirits wholesale distribution companies and franchising, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is a dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Your corporate identity as a lot to do when it comes to building a business that is profitable and last long.
Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your wine and spirits wholesale distribution company;
- Place adverts on both print (newspapers and health magazines) and electronic media platforms
- Sponsor relevant community based events / programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
- Install your Bill Boards on strategic locations all around your city or state
- Engage in roadshow from time to time in targeted neighborhoods to create awareness of your wine and spirits wholesale distribution company.
- Distribute your fliers and handbills in target areas
- Contact bars and night clubs, liquor stores, wine stores and every approved outlet in the neighborhood where wines are retailed and other key stakeholders throughout the city where your wine and spirits wholesale distribution company is located informing them about your business and the products you distribute
- List your wine and spirits wholesale distribution company in local directories/yellow pages
- Advertise your wine and spirits wholesale distribution company in your official website and employ strategies that will help you pull traffic to the site.
- Position your Flexi Banners at strategic positions in the location where your wine and spirits wholesale distribution company is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo.
Creating a Suppliers/Distribution Network for your Wine Distribution Company
Firstly, in order to successfully run a wine and spirits wholesale distribution company, you must establish good business relationship with manufacturers of wines and spirits. Of course, you would need steady supply of wines and spirits from manufacturers in order to remain in business.
The fact that you are an independent wine distributor means that you can distribute different brands of wine at the same time to your clients. The truth is that you stand the chance of making great sales and profit if you deal in varieties of wine.
So, what you need to do is to work with the report you generate from your market survey so that you will be properly guided on the wine production company that you need to talk to in order to become their distributor. In some cases, you might have to create another market channel for yourself especially when a wine production company already has a distributor covering a certain area in a state. They do this to create advantage for their distributor.