31 Aug Is a liquor store a good investment in a coronavirus era?
They say that people drink when the economy is up and when it is down. People drink when they are happy, and they drink on the side. At least that’s the saying on the street that most of us have heard for years.
Recently someone asked Legacy Business Brokers if a liquor store would make a good investment. Data shows that demand for liquor continues to expand. Over the five years running up to 2020, alcohol sales nationwide have grown at a rate of 2.2%.
The coronavirus has also had its impact on the alcohol industry. When officials forced the closure of bars, liquor stores experienced an upswing in sales. According to one liquor store owner, sales exploded in March, April, May, and June.
However, sales returned to normal somewhere in July. Smaller incomes and concern about going out in public felt may be contributing to the leveling off of sales.
Some of the big-box liquor and wine stores have drawn sales away from independent operators. However, savvy independent operators have fought back. Some have provided excellent customer service, intense product knowledge and nimbly reacting to changes in the marketplace. Changes in the market, such as the growing preferences toward more craft beers, continue to provide opportunities for an independent operator.
Too many operators are still applying outdated marketing strategies. Many liquor stores have no marketing strategy at all. Gary Vaynerchuk’s early marketing of wine via social media demonstrated that privately owned businesses could blow the competition away with social media marketing and innovation. He showed the public was interested in learning and appreciated the consistent, innovative efforts. Research some of the early work on Gary V when preparing your marketing plan.
Business data giant, IBIS World, believes the expense per capita will grow 3.5% over the next few years. “Over the five years to 2025, the industry’s success will likely hinge on operators’ ability to boost sales of costlier, high-margin products.” Excellent service and effective, innovative marketing will play a huge part in today’s successful liquor store entrepreneur.
Many factors drive sales and hence the value of liquor stores. Make sure that if you are looking to acquire an existing location, or start one from scratch, that you do your reach and check with your legal and financial professionals for advice. Study your competition and changes in the marketplace. Do your best to discover any new competitors as well. If you see a location for sale in an area that you like, look for the opportunities to improve the business. Then ask yourself if you have, or if you can obtain, the resources to take it to a whole new level.
There are plenty of business owners asking themselves “how do I sell my business?” and “How do I find a buyer for my business.” Make sure you secure the support of a knowledgeable small business attorney and small business accountant. If you are fortunate, you may even find a liquor store for sale with records good enough to qualify for an SBA loan.
If you would like a list of liquor stores for sale in the Florida market, please reach out to Legacy Business Brokers at 833-Buy-Biz1. You may also check BuyBizFL.com. Thanks and good luck.