WINES AND SPIRITS BUSINESS IN KENYA.
Budget (KSh70,000 - 300,000 or more)
Alcohol business in Kenya is very highly regulated. Laws governing this business are very strict but for a good reason. Alcohol abuse has become a big problem in Kenya and these strict laws were an attempt to tame this menace. Despite all these strict laws, wines and spirits business in Kenya is quite profitable. If you have the requisite capital, wines and spirits business in Kenya can be a lucrative venture.
Location
Alcohol is a fast moving consumer good and therefore, your wines and spirits business will be best located in a busy center, whether in a business center or residential center, however, if you decide to locate your wines and spirits business in a residential area, pay very close attention to the license requirements. The law will now allow you to set up such a business very close to residential dwellings.
Since alcohol consumption is mostly a leisure activity, many clients will tend to frequent the most accessible, visible and convenient wines and spirits shop. It is therefore advisable to set up your business in a place that is accessible, has high human traffic and is highly visible.
Requirements
A wines and spirits shop can be set up in a take away model or sit-in model or a hybrid, that is, a mixture of both take away and sit-in. The model employed in your wines and spirits business will mostly depend on the space available, customer requirements and preferences and your location.
For the take away model, your set up will be like a normal shop, where you will stock the wines and spirits and sell to clients to go away with. Such a model may not require so much space to operate from. The size of a normal 10ft by 10ft room or smaller will be sufficient. All you will require will be shelves to store your stock and a counter to sell the alcohol.
In a sit-in model, your clients will come and drink inside your premises. This requires more space since. You will need chairs, tables, a counter and shelves to stock, store and display your alcohol.
In many busy centers such as shopping malls in residential areas, a suitable premises for your wines and spirits business may cost you anything between Sh20,000 and Sh50,000.
Licenses
Since alcohol business is highly regulated, several licenses/permits are required to operate a wines and spirits business in Kenya. The licensing requirements are also very strict. It will be your responsibility to familiarize yourself with these licenses and laws governing the sale of alcohol in Kenya.
Licensing of wines and spirits businesses in Kenya is governed by the Alcoholics Drink Act, 2010. The Alcoholics Drink Act (sometimes called Mututho law) defines the licensing requirements and fees. Depending on which county you operate in, there may be other restrictions or requirements, so it may be important to confirm with your county government.
It is important to mention that the licensing of alcoholic drinks is very specific and you should take keen note of the type of license that you will require. There are licenses for restaurants and hotels which allow them to sell many types of alcoholic drinks such as wines, beer, spirits etc. Other retail shops sell according to the license requirements.
In Nairobi, all these licenses are issued by the Nairobi City County at the City Hall. In other areas, inquiries should be made at the County offices. Below are some of the main categories.
General Retail Alcoholic License
This will apply for a wines and spirits retails business. This license is applicable to sale of an alcoholic drink for consumption in the premises such as bars and related retail outlets whose core business is sale of alcoholic drinks. These are authorized to sell alcoholic drinks from Monday to Friday during the hours of 5.00 p.m. to 11.00 p.m. And 2:00 pm to11:00 p.m. during weekends and public holidays. As you are well aware, many wines and spirits businesses do not follow these rules strictly.
The wholesale License
This license applies to sale of alcoholic drink in wholesale. With this license, you can sell at any hour of your choice.
In fact with this license, you can operate for 24 hours. However, this will depend on the location since the local law enforcement agents such as police and local administration may not allow this.
General Retail Alcohol License (Off License)
This one applies to those who sell alcoholic drinks for consumption elsewhere other than the premises where they are sold. This license does not permit you to sell alcohol for consumption within the premises. This license will allow you to sell alcoholic drink on any day of the week during the hours of 5:00p.m to 8:30 p.m, and only as take away.
Many businesses go for wholesale license because it has more flexible operating hours.
Licensing Process
The alcoholic drinks act categorized the license fees based on the location of the business for instance city, municipality, urban areas and so forth. In most counties the license fee for any alcoholic license is about Kshs.50, 000 per year or Kshs.30, 000 for six months irrespective of location. It is therefore advisable to budget at least Kshs. 50,000 for the license fee though you could pay less say Kshs.30,000.
Requirements for licensing of wines and spirits businesses are strict. These requirements are clearly stated in the Act. Apart from the statutory requirements for the business such as IDs, PIN certificate for applicants, and single business permit, you will also be required to produce a public health certificate, medical certificate for staff, names of persons to manage day to day affairs of the business, sketch to show where the business is located and may be a NEMA certificate in regard to noise pollution. If you intend to play music, you will need a permit from the Music Copyright Society of Kenya (MCSK). You will also be required to display clear and explicit warnings stating that alcohol will not be sold to persons under 18 years.
Many wines and spirits in some areas in Nairobi and other counties operate without licenses. This is mostly because they survive by bribing police officers and administration officials. It is important to have the license and meet all the requirements in order to have peace of mind. You should bear in mind that different counties may have slight variations in their license application process and requirements.
Competition
Wines and spirits business in Kenya is very competitive. With thousands of such businesses all over and more springing up every day, you will need to clearly focus on fully satisfying your market segment in order to keep ahead of competition.
In order to attract more clients, set realistic prices. Compare supplier/distributor prices before making major buying decisions. Harassment by police can also affect your business.
Operation
For a wines and spirits business where clients come to drink within the premises, you will have to invest in comfortable seats, good music, attractive tables and TV screens with DSTV. These will attract more clients to your wines and spirits business.
In many residential areas and urban town centers, suppliers of wines and spirits are easily available. Many will deliver orders above Sh50,000. You can get in touch with them for supplies. You will need waiters, 2 or 3, a cashier, a bouncer to control clients and keep order and may be a manager.
List of some of the suppliers. The list is not exhaustive but you can start from there;
Nairobi Wines and Spirits Distributors
Wines and Spirits Distributors
Mombasa area Wines and Spirits
Kisumu area Wines and Spirits
Nakuru area Wines and Spirits
MOUNTAIN Wines and Spirits
Below is a budget of the requirements to operate your wines and spirits business in Kenya. Keep in mind that these are estimates. Costs may change any time therefore it is your responsibility to confirm the prevailing costs while doing your research. Depending on the amount of money you have available and your location you could omit some items.
Pros
• Can be very profitable in a good location. • Demand for alcohol is everywhere all the time. • May not require a big space to operate from.
Cons
• Strict licensing regime. • Constant harassment by police and authorities. • Rowdy and unruly clients can be destructive.
Finally, as you may have realized by now, two things stand out in regards to wines and spirits business in Kenya; the strict laws/license requirements and cut-throat competition. The strict laws lead to constant harassment by authorities. This can affect your business negatively. Competition is the other factor which has a big impact on wines and spirits business in Kenya. Alcohol shops are springing up all the time in almost all areas, some as small as a small store. If you can take care o of these factors, you will crack this wines and spirit business and make very good returns