Today, the demand for alcohol is growing tenfold. In the U.S. alone, alcohol is a billion-dollar industry as of 2017. Many experts predict that online liquor sales of beer and wine grew by at least 32 percent over the last 3 years.
When you're contributing to the ever-growing market, or you're looking to venture into one of the most profitable business industries, it's good to ensure you understand what wholesale alcohol is. There's a lot to know about this industry.
From rules, regulations, and laws to mixing drinks and beyond, the opportunities to grow our knowledge are endless. However, in this article, we’re going to start with the basics. This includes knowing what wholesale alcohol is, where to buy it, and what to know if you’re interested in becoming a distributor.
What Is Wholesale Alcohol?
Liquor, an umbrella term, describes a variety of alcoholic beverages. Many distributors sell alcohol in bulk to other retailers, who sell the alcohol to customers at a higher price. This is the wholesale definition in any application throughout the wholesale industry.
Namely, alcohols produced by fermenting fruits, grains, and other plants fall under this umbrella. These plants produce CO2 and ethanol, which naturally turn into alcohol over time.
Some of the most common types of alcohol include vodka, rum, gin, brandy, whiskey, and so much more. Alcohol that falls under any of the above names usually has an alcoholic volume, or ABV, of at least 20 percent.
However, many are known to have a volume as high as 50 percent. These drinks are referred to as alcohol or hard drinks.
This is the most basic understanding of liquor. Many liquors are not the same. Some contain added sugars, oil, or extracts. A good example of this is wine; wine alcohol content is normally very different from that of hard liquor.
The ABV also affects the kind of liquor you're buying. Examples of alcohol with high ABV include vodka, Irish creams, and rum. An Irish Cream is a perfect addition to popular winter cocktail recipes–think about this when the holidays come around.
Where Can I Buy Wholesale Alcohol?
Before you start looking to buy wholesale items, there are a few things you should know. Let's start with alcohol distribution.
Alcohol operates within a three-tiered system: manufacturers, wholesalers, and retailers. A manufacturer is a person or company that creates alcohol. Common alcohol manufacturers include Tito's, Smirnoff, and Crown Royal.
Manufacturers only sell alcoholic beverages to distributors. The distributor will then sell to retailers, who sell the alcohol to customers. However, there is one state where manufacturers are able to sell directly to retailers--that is Washington. Other states including Alabama, Iowa, Maine, Montana, Michigan, and Ohio have a state monopoly over parts or all of the distribution tier.
This means that these states and their alcohol products dominate over others. There are few to no competitors in these states, so consumers must purchase alcohol from a specific distributor.
What to Know as a Wholesale Liquor Distributor
As a liquor produce wholesaler and distributor, you'll likely buy alcohol and spirits from local or international suppliers. Local sellers like distilleries and warehousing companies like Costco or Specs are usually the go-tos.
Depending on who you choose, the wholesale price will vary. In order to get the best prices, you can start by contacting bulk suppliers in your area.
When you speak to them you'll be able to request a quote or negotiate prices. For large quantity orders, it's not uncommon for the supplier to offer you a discount. Although, they'll ask for payment upfront.
Another option would be to check with online liquor sellers as well. Sometimes, you'll find better deals there than you would from a direct supplier. However, keep in mind that quality is always the best option and should be one of your top three factors in choosing a supplier.
Other factors you should consider include:
- Inventory management
- Product demand
Unlike other industries, working in the alcohol industry will either hurt or benefit you. If a profitable long-term business is what you're looking for then the first thing on your list to check off should be inventory management.
Inventory management will make or break your business. It's your job to update and monitor your regular stock as well as your safety stock on a regular basis. Using tools like a warehouse inventory management software platform can make all the difference for you and your business. It'll be up to you to implement demand planning strategies to keep your business on top of any changes.
This means keeping track of what products are in high demand and ensuring that you have enough to meet that demand. For example, if one of your whiskey products is always in high demand during the winter, stock larger quantities during this time. This way, you won't have angry customers on the other end of the phone asking why a popular product is already sold out.
You can keep track of your products that are in high demand by checking your monthly sales reports and DTC trends. It may even be in your best interest to hire an inventory control manager to help you manage, especially if you're a small business owner.
They'll be able to implement the best inventory tracking methods for your business while you stick to other aspects of your business. This way you'll avoid potentially costly mistakes.
Something that goes hand-in-hand with inventory management is product demand. Demand is the number one contributor to your inventory stock. Once you establish yourself as a trustworthy business, ideally your sales will grow.
As a result, you'll quickly find out that customers want what they want when they want them. So, you'll need to be ready to keep up with the constant flow and order fill rate.
You can do this in three ways:
- Focusing on core competencies
- Having scalable resources
- Staying ahead of demand using a wholesale marketing plan
- Taking advantage of technology, including hospitality software
Focusing on Core Competencies
Focusing on core competencies is the best way to keep up with demand. This means not spending time or money on tasks your company isn’t built for. All this does is create more errors, accidents, and overall decreased deficiency.
To solve this, consider working with third parties to do the jobs you can't. You can focus on what you're good at, while they focus on their strengths.
Have Scalable Resources
Many think the more resources, the better. While this is true, it's more important to have resources specifically designed to help you succeed. Scalable resources are designed in such a way that they help you during busy periods.
For example, transportation technology that increases your shipping capacity during busy periods, or 3PL companies that offer flexible storage and delivery options. Knowing how to ship alcohol properly, without issue or delay, will be key to your success.
Stay Ahead of Demand
Getting ahead during slow periods means exactly what you think it does: get ahead and stay ahead. Obviously, when demand is high you make sure you're constantly stocked and ready to go. However, many businesses slack off while demand is low. This is the time to get ahead of customer demand by conducting an ABC analysis.
Take Advantage of Technology
Finally, there's the forgotten art of embracing technology. Technology is one of the biggest advantages in this industry. Companies that take advantage of it find themselves soaring above the competition.
Technology like smartphones with access to social media is probably the best piece of technology you can invest in. Your business might even benefit from using a shipping label printer. This is a relatively inexpensive piece of technology that will save time and money. 3D printing is another option that's on the rise. There's no right or wrong option here, simply choose what works best for your company.
Frequently Asked Questions About Wholesale Alcohol
What Is Wholesale Alcohol?
Wholesale alcohol–also called liquor–is a term that refers to alcohol sold in large amounts to a retailer, who then sells the product for a better price to consumers in his area.
How Do I Become an Alcohol Distributor?
To become a wholesale alcohol distributor you’ll need to start with three things: a business plan, acquiring warehouse space, and applying for a liquor license/wholesale license within your state. All other necessities come further on in your business.
Who Is the Largest Liquor Distributor?
The largest liquor distributor in the United States is Southern Wine & Spirits of America. They’re a Florida-based company and have been in business since 1968. Today, they operate in over 35 states and distribute more than 5,000 brands of liquor every year.