Research this for your Beer Store business plan

This post is Part 2 in “So you want to open a beer store…“. In this follow-up, we’ll delve into two areas: beer is a controlled substance, and the downfalls of supply and demand.

Beer is a controlled substance

Learn about your local alcohol requirements from your state’s Alcohol Beverage Control Board (ABC).

“Following national Prohibition, the 21st Amendment to the Constitution provides states with broad powers and authority to regulate the sale and distribution of alcohol within their borders. (This is in addition to Federal requirements.) Each state created its own unique system of alcohol beverage control. There are two general classifications. “Control” states…[and]…“License” states…”

This means you will need to follow rules set by others when operating your business. Liquor laws dictate when you can sell alcohol, where you can sell it and purchase it, what can be sold and purchased, to whom you can sell it, and how you can advertise and promote it.

You will need to consider things such as:

• Brick & Mortar: What are the licensing requirements, rules and regulations, and tax reporting requirements of selling beer in my state? (This means checking in with your state’s ABC.)

• Online Store: What are the licensing requirements, rules and regulations, and tax reporting of selling and shipping beer into other states? (This means checking in with the ABC of every state you intend to ship into; including your own as there may be different licensing requirements for in-state shipping vs. sales at a retail premise.)

As well as…

• What business model do I want to pursue (sell beer to-go, serve beer and sell it to go, offer growlers, etc.)? Your model will dictate the type of state liquor license, as well as the rules and regulations that navigate your business.
• What limitations are there on selling beer in my state (alcohol-by-volume limitations, rules on selling individual bottles vs. by the pack or case, how growlers must be packaged, etc.)?
• What beers are available in my state? Is there adequate supply of craft and import beer posted for distribution and sales in my state?

Choose not to follow State and Federal laws, and your business can quickly become subject to complaints, resulting in correction that can take the form of verbal correction, written correction, monetary fines, and even forced closures.

And, to throw a cautionary word out, just because you see another retailer doing something doesn’t make it legal. I’ve fallen in this trap before and had to make subsequent correction. Promotional moves such as “buy 6 and get a free glass” can be illegal in your state, so always check with your liquor agent rather than following the example of another business.

So the main lesson here: When your business is sales of a controlled substance, you give up a certain amount of business control.

Recognize the downfalls of supply and demand

You may see a need for craft beer in your area, but are breweries making their beers available in your region? Do they have sufficient production to meet the big demand?

When researching in advance of creating your business plan, you may reach out to other local beer store owners. Be prepared to realize: Your excitement will not be matched. What goes through the owner’s mind is likely something like this, “Great, I already can’t get enough of Brewery X’s beer to supply my customer demand, and now this guy wants to encroach on the already-limited supply.”

While I’m a believer that there are enough beer drinkers to go around, my experience tells me that there is clearly not enough of certain craft beers produced to suffice the demand.

We see this in beer news when breweries pull out of states in order to meet demands in others.

As more and more grocery stores establish verbal supply contracts and bring in displays of craft beer, the little-guy beer store can be the one that experiences decreased product allocation.

It is true that craft beer is growing, volumes were up 14% in the first six months of 2011, according to the Brewer’s Association. But we see more new breweries opening than we do existing breweries expanding. That means those limited, rare, sought-after beers are only getting more limited, rare, and sought-after.

And it means introducing beer drinkers to new beers. This means, as a beer store owner, that you’ll need to keep bringing in new breweries and focus on promoting the new, in addition to common favorites. And your only worry about the limited stuff is: How to get enough? How to share the beer love across all my customers?