What goes with liquor?

[MrBlue]

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LOTTO

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This right here will pay for most of the overhead associated with the store. It's not a big money generator but will bring in some extra cash. But if you're catering to the Dom Perignon crowd, this would be a very bad idea.

Remember also that during big jackpots you'll get a line out the door and will need 1 person dedicated to the machine. It could also cause unnecessary crowding in your store.

[MrBlue]

Bebo, do you have a basement to store the inventory? Renting storage offsite will be a major pain in the ass. I don't know how it works in Texas, but in NY you can order say 50 cases from Peerless (a wholesaler) and pay them like 2 bucks a month to store the liquor in their warehouse. You just call them and they'll deliver it. The inventory is paid for in full, you're just using their storage space.

[DanJ.]

strippers.

[beboppoker]

Hey again MrBlue,

I do not have a basement to store my inventory. Its gonna be about 1500 sq ft, and thats it. It sounds like I should just have them deliver it to me and have no storage space of my own.

I'm not sure what you mean by paying them money for inventory...does that simply insure that they will DEFINITELY have what I need when I need it? Is this the optimal way to go?

If I simply want them to deliver a set amount on a weekly basis or something, inventory would be free right (and is this a stupid idea that I could manage what people want to buy to this exact degree)? And is delivery from the wholesaler to my place of business usually free or do I need to take care of that myself?

thanks again

[MrBlue]

I'm planning to visit my parents on Sunday night. I'll take a pic of the media beverage book and a page out of it so I can better show you how ordering and discounting works.

[BradleyT]

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I'm planning to visit my parents on Sunday night. I'll take a pic of the media beverage book and a page out of it so I can better show you how ordering and discounting works.

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So he'll get a better discount by ordering 50 cases at once and having them store them until needed compared to ordering 6 cases a week for two months?

The only problem I see with that is if he does it when he first starts his store he'll need a ton of extra capital.

[MrBlue]

So this is a pic out of the Beverage Media book that every liquor store in NY subscribes to. These are prices from Feb 06.

So if you have limited start up capital, you can buy one case of Absolut 1L but as you can see from the chart, your cost is $23. You said the price of 1L of Absolut is $26 in your area so you're making $3 a bottle. You can't order by bottle, only higher end wines and liquors can you order by the bottle.

So you can see that as you order more at a time, your profit goes up without needing to do anything. Of course capital constraints is a big issue.

The biggest problem here in NYC is that there's a liquor store every 4 blocks or so. So if a store wants to mark it up at 18% and sell their Absolute 1L @ $23.43 but you can't afford to buy 50cases and can only buy 1 case at a time, you basically cannot compete at all. They can make a profit of 18% selling at your cost.

If the closest liquor store is 20 min drive then by all means mark that [censored] up! Know your competition. Liquor is a very old and well understood business.

[MrBlue]

So if you use my previous example: You can order 50 cases (assuming you got 50 x $230.59 = $11.5k to pay the wholesaler) and have them only deliver say 10 cases at a time. The remaining 40 cases will be stored at their warehouse for a fee. Whenever you want another 10 cases, call them up and say I want 10 cases of my remaining 40 delivered. They'll usually come the next day. Again, I don't know how it works where you are but wholesalers allow this in NYC. Delivery is free or rather it's already built into the price.

You'll see that it gets to be a huge pain in the butt after you accumulate some working capital. It's much easier to restock from the basement or back room than to call the warehouse every week. What if some guy with a huge party comes in and buys 1 case and you can't get anymore until tomorrow because the warehouse can't deliver it today? But if you have limited capital, you gotta start from somewhere.

Now of course you can order 1 case at a time. But it'll cost you a lot more money on a per case basis. Obviously you don't need to put up as much money upfront if you order 1 case at a time but your profit margin is that much less.

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Btw, some places will allow you to mix and match the 50 cases w/ different sizes and still get the top discount. So you can order 10 cases of 1.75, 25 cases of 1L, 10 cases of 750, 5 cases of 375ml and still get 18% off the whole thing.

[BradleyT]

But that's all for just 1 product (Absolut Vodka) right? Damn, spending up to $11K per product for a 1500 sq. foot store would require over a million bucks start up capital.

[MrBlue]

It's not a cheap business [img]/images/graemlins/wink.gif[/img].

You also don't have to buy 50 cases of a product. That's just an extreme example. There are plenty of stores that buy 5 cases of an item and maybe 50 cases of 1-5 products that move really well.

It's also highly location dependent. There's no way in hell you can move that many cases in a short amount of time unless you're in the middle of times square or something. How often do people buy Maker's Mark? Maybe 2 bottles a week. At that rate, you can mark it up higher (because no one else is going to stock 50 cases of a slow moving product) and work with say a 3 case deal.