How to Open a Wine Shop

Part 1 - How to start a How to Open a Wine Shop business - Background

Wine shops are usually run as physical retail stores, though some shops operate online. While it’s not impossible to operate a wine shop exclusively online, it can be more difficult due to inconsistent state liquor laws. For example, some states ban the importation of wine and liquor unless it’s done through approved vendors and distribution channels (most of which are not direct to consumers).

Our guide is in 3 parts:

• Part 1 - How to start a Wine Shop business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a wine shop?

To be successful in the wine business, an entrepreneur will find a background in accounting helpful because of the thin margins in the industry. In many states, alcohol is tightly regulated, licensing is strict, and paperwork is plentiful. Some states, like North Carolina, do not allow private ownership of liquor stores, so wine stores are restricted to selling wine and beer. So, business owners entering this industry need to be willing to deal with regulators and bureaucrats constantly. They also need good business sense and organizational skills to manage what can be, at times, a complex ordering and distribution process.

States also require stores to hold a liquor or alcohol license before they can sell or distribute alcohol.

Read our wine shop purchasing guide to learn about the materials and equipment you’ll need to start a wine shop, how much to budget, and where to make purchases.

What are the ongoing expenses for a wine shop?

Wine stores charge their customers per bottle of wine or based on volume sales (e.g. case discounts). Pricing may be restricted by state.

Fixed costs can include:

• Building lease: $30,000 – $50,000

• Administration: $20,000

• Salaries: $80,000 – $150,000

• Tastings: $3,000 – $5,000

• Inventory: $25,000 – $50,000

• Marketing: $5,000 – $25,000

Variable costs can include cost of goods sold (COGS) exceeding $190,000 in the first year.

Who is the target market?

Every state requires wine and liquor stores to ID customers for age verification. Since it is illegal to sell alcohol to anyone under the age of 21, wine stores must target adults as their ideal customers.

How does a wine shop make money?

Wine stores make money by buying wine and over alcoholic beverages at wholesale or discount pricing and marking them up to sell to customers. Customers are charged a price per bottle and sometimes offered discounts based on volume purchases. For example, a wine store might sell a case of wine (12 bottles) at a discount. Wine stores also sell alcohol-related paraphernalia, like wine stoppers, bottle openers wine glasses, shot glasses, mixers, and other related items.

How much can you charge customers?

A wine store can start out as owner-operated and stay that way forever (for the most part). However, entrepreneurs who want to grow and expand find it difficult to operate without an administrative team with a background in accounting and bookkeeping. Profit margins on alcohol can be extremely thin due to wine being heavily regulated.

Salaries for store clerks are typically minimum wage. Management might make between $20,000 and $50,000 per year, while the owner may make $80,000 to $100,000 per year.

How much profit can a wine shop make?

Profit margins can be extremely thin on wine sales depending on the state you live in Colorado, for example, has very strict laws on the sale and distribution of alcohol. Other states may allow higher margins. It’s not unusual for wine stores to seek a 30 to 50 percent margin.

How can you make your business more profitable?

Making a wine store more profitable often involves growing and expanding the business. Identifying a niche or underserved market is also helpful. However, successful wine stores typically have one thing in common. They have a theme. Large wine sellers, like Total Wine, for example, sell wine at a discount and appeal to a mass market.

Other wine stores may choose to focus on wines from a specific region of the country. Whatever theme you choose, make sure you have little or no competition in your local area.

Day-to-Day and Growth

What happens during a typical day at a wine shop?

Store owners are responsible for managing employees, ordering supplies, and managing day-to-day activities. Depending on the size of the store, this might include servicing customers. Many wine stores offer wine flights (where a selection of wines are offered for sampling purposes) during select days of the week or month, which store owners typically host.

What are some skills and experiences that will help you build a successful wine shop?

This type of business can be run as a small or large-scale operation. Most chain stores, like Total Wine, operate by buying a high volume of inventory that they believe has mass market appeal. Smaller wine shops typically cater to connoisseurs who may be looking for specialty wines or particular vineyards.

It’s not unusual, for example, for small wineries and wine stores to be family owned and operated. These small wine stores and wineries are usually located next to or on vineyards and the wine is made in-house and sold in their store.

For example, Lakewood Vineyards is a family-run winery in upstate New York which also runs a wine store where they make, bottle, and sell their own wine.

To run this type of wine store, a business owner would have to purchase a vineyard and learn how to run it.

Wine resellers, on the other hand, don’t need to be quite so involved. They may contract with wineries to sell their wine. Under this arrangement, the winery will usually sell the wine store their varietals and blended wines at special wholesale pricing for volume purchases. The reseller then marks up the bottles and sells them to the general public.

Resellers can also buy from larger distributors.

What is the growth potential for a wine shop?

Clients and customers for wine stores are usually in the local community. Wine stores typically run local advertising if they don’t have an Internet presence. Otherwise, they may run online ads to attract business. Coupons and flyers are still common practice in the industry.

Should you consider joining a franchise?

Joining a wine shop franchise can be a good option for entrepreneurs who prefer to use a proven model rather than start from scratch. While joining one can mean slightly higher initial costs and less control, a quality franchise offers great benefits such as initial and ongoing support, marketing assistance, and brand recognition.

Opening a wine shop franchise typically requires $200,000-$500,000.

Interested in joining a wine shop franchise? Check out our favorites.

How and when to build a team

Wine stores sometimes find it difficult to differentiate themselves from other stores. This can be, in part, due to government regulation of the industry. However, a wine store can generally compete by marketing itself to a select market or implementing themed events. For example, a wine store might organize wine flights from various regions around the world and host them several times per month or during different seasons.

Read our wine shop hiring guide to learn about the different roles a wine shop typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.

Part 2 - Is a How to Open a Wine Shop business the right fit for you?

Part 3 - Action plan to launch your How to Open a Wine Shop business in 90 days