The wines and spirits business is one of the most lucrative ventures in Kenya largely due to huge demand.
Statistics show that an estimated 13 million Kenyans drink daily spending an average of Ksh 250/= each time. This translates to daily revenue of 2.6 billion Kenya shillings and as a result, many people are venturing into this business so that they can get a share of this revenue albeit small.
If you are wondering how much it will cost you to start a wine and spirits business , wonder no more as we have spelt out in detail the cost of establishing one.
Cost of starting a wines and spirits business
Below is a breakdown of the cost of starting a wines and spirits business;
| Item | Breakdown | Total (Ksh) |
| Licenses | ||
| Alcoholic drinks license | 1 | 50,000 |
| Business permit | 1 | 15,000 |
| Public health license | 1 | 3,000 |
| Fire Safety certificate | 1 | 5,000 |
| Individual medical certificate | 3 employees @ 1000 | 3,000 |
| MCSK | 1 | 10,000 |
| NEMA | 1 | 2,200 |
| Sub Total | 88,200 | |
| Equipments | ||
| Chairs | 30 @ Ksh 1000 | 30,000 |
| Tables | 6 @ Kshs 1500 | 9,000 |
| TV | 2@ Ksh 30,000 | 60,000 |
| DSTV | 1 | 7,800 |
| Music System | 1 | 20,000 |
| Crockery | Assorted Items | 20,000 |
| Wine display and counter | 1 | 30,000 |
| Sub Total | 176,800 | |
| Premises | ||
| Rent | 2 months deposit + 1 month rent.@ Ksh 30,000 per month | 90,000 |
| Renovation | 50,000 | |
| Branding | 30,000 | |
| Sub Total | 170,000 | |
| Working Capital | ||
| Stock | 50,000 | |
| Salary | 3 @15,000 | 45,000 |
| Electricity and water | 10,000 | |
| Miscellaneous | 25,000 | |
| Sub Total | 125,000 | |
| Total | 566,000 |
Below is a detailed explanation of the items in the table above;
Wines spirit licenses
- Alcoholic retail license
A general retail alcohol license is required by bars and related outlets whose core business is selling alcohol. You can obtain this license from your local liquor licensing board in your county.
- Single business permit
This a trading license that is issued to all businesses operating in a county. The cost varies from county to county and the type of venture .Its average cost is Ksh 10,000 which is renewable annually.
- Public health license
This license is issued by the county public health department after inspecting your business premise to confirm that it is fit for occupation.
To pass inspection, ensure you have water and toilets in your premise, there is proper drainage and waste disposal, there are no defect on the walls and floors such as cracks and the building has good ventilation.
The cost of a public health certificate is Ksh 3,000
- Individual medical certificate
This license is a requirement if you are handling food and beverages in your business .Ensure that all your personnel are tested for any communicable disease at a local government hospital .If they pass the test, they will be issued with a medical certificate. The cost of this certificate is Ksh 1,000.
- Fire safety certificate
This is a vital document that you ought to have. It is issued by the local authority in your county. Prior to issuance of this certificate, officials from the county fire department will visit your premise to confirm whether it meets the fire safety standards.
To pass inspection, ensure you have marked fire exits, you have a designated fire assembly ,an evacuation plan in case of a fire and have fire extinguishers and blankets that can be used to put out a fire before it spreads.
Its cost vary from county to county but its average cost is Ksh 5,000.
- MSCK License
This is a requirement for all businesses playing music so as to avoid copyright infringement.
To obtain a MSCK license, visit any of their regional offices countrywide whereby you will give details of your business and then an assessment will be carried out where you will be invoiced the amount to pay.
- NEMA License
This license is given by the National Environment Management Authority to ensure you do not pollute the air by blasting loud music.
Ensure your wine and spirits business is sound proof before NEMA inspects your premises.
The cost of the license is Ksh 2,200.
Wine and Spirits equipments
- Chairs and tables
If you want an establishment where customers can enjoy their drink in your premises rather than do take away, you will need to purchase furniture such as chairs, stools and tables.
The kind of furniture you choose will depend on your branding. i.e. either high end or low end ,the space available and the amount of capital you have to inject in your company.
Plastic chairs range from Ksh 800-1000 depending on where you are purchasing and whether they are arm less. Arm less chairs are quite expensive as compared to the normal plastic chairs.
Metallic chairs and stools range from Ksh 800-1500.The price depends on the quality and where you are buying from. The best place to get cheap but quality metallic furniture is from a ‘Jua kali’ artisan.
As for tables, you have the option of plastic tables, metallic tables or wooden tables. They too will vary in terms of price.
- Wines display and counter
The cost of the wines display and the counter depends on several factors;
- The type of material-Is it glass or wood? Glass is slightly more expensive.
- The length of the display.
- The quality-It goes without saying, the better the quality, the more expensive it is.
- Television
This is a must have in any wines and spirit business because of the recent craze of football among Kenyans. They love watching football as they sip on their favorite drink.
The cost of TV has dramatically over the years and as you can purchase a 40 inch TV for just Ksh 30,000 from Jumia.
Consider buying a smart TV rather than a digital TV as you can be able to stream music online on the former while you cannot on the latter.
- DSTV
If you want to retain customers in your establishment, subscribe to DSTV and get access to premium channels that broadcast sports.
DSTV is a must have as it’s the only pay TV in Kenya that televises the English premier league football which is a favorite to many.
- Music system
Another must have in a liquor business is music. A survey was done that showed that customers tend to spend more when they are having a good time and dancing to the beat.
If you want to see your sales soar, buy a music system. You can purchase one from Jumia as their products are of great quality and are fair in price.
- Crockery
Purchase items such as flasks, glasses and jugs that will be used to serve customers. You can purchase these items from supermarkets or wholesalers shops where they might be cheaper.
Wines and spirits premises
- Rent
The cost of rent of a premise depends on several factors;
- The location-Is it a high end or a low end neighborhood?
- The size of the premise-Rent in a commercial property is measured per square feet. The average price, in a standard location is Ksh 80 per square feet. The more the square feet, the more expensive the rent.
- Renovations
The cost of repair will depend on the status of the premise before renovations. How much work will the premise need? Does it need to be overhauled or is it just minor repairs to be done?
When allocating capital for renovations, target on the higher side as this might eat up the bigger chunk of the capital.
Bear also in mind that if you install high end fittings, the cost of renovations will be quite high.
- Branding
Put a signboard to make known of your presence known in the neighborhood.
Also consider painting the premise with your brand colors to stand out from the crowd and enable people recognize your establishment in an instance.
Wine and Spirits working capital
- Stock
When purchasing stock, take into account your target market. For example if you are targeting a high end market, there is no need to stock KEG.
Purchase a little of every brand of alcohol that you think your target market might consume, to avoid having a lot of dead stock in the event one brand doesn’t sell.
To start off, have a working capital of Ksh 50,000.This is sufficient to buy stock which you can later on increase as the demand increases.
- Salaries
When starting a company, it is advisable you have a lean staff and increase when demand increases.
Don’t forget to factor in the statutory deductions such as NHIF, NSSF and KRA when negotiating salaries so that you do not get into trouble with the law.
- Electricity
Set some money aside to cater for the electricity costs in your establishment .Alternatively you can install solar with the objective of reducing your electricity bill.
- Miscellaneous
It is advisable you put some money aside to cater for unforeseen costs .Better have a backup pan rather than being caught off guard.
Conclusion
The above capital is not cast on stone. Use it as a guideline to start your wines and spirits business.
Adjust it accordingly, depending on your preferences and requirements and be on your way to establishing your first liquor business.
To your success!
