Wholesale & distance selling alcohol from home

[DarrenHM]

Morning all!

I would like to start selling my homemade liqueurs to local hotels, shops and directly to customers online via a website to supplement my income, though having conducted extensive research, have realised it's not going to be that straightforward...

Seemingly my rented home can't be a licensed premises and I have to set up a company for a wholesalers license by the looks of it, neither an attractive (or affordable) option to me.

Has anyone here set up a successful alcohol business from home and if so how did you do it?

Many thanks,
Darren.

 

[james_firmsites]

Hi Darren,

My understanding of this, from discussing with clients who sell online or have considered it, is that the place the alcohol ships from must have a licence. So if you are packing orders from home then that is the location that has to be licensed. This is further complicated if you intend to sell wholesale rather than to customers as that requires the wholesale license you mentioned.

There is no way around it, your only other choice would be to parter with a company that already sells and is licensed but I don't know why they would want another wholesaler involved.

 

[The Byre]

You must have a license to make beers, wines and spirits for profit.

 

[Mr D]

If not an affordable option then you cannot afford to sell.
Try selling something different first to save up to get the required license.

 

[DarrenHM]

Thanks for your replies. To be honest, the prospect and cost of obtaining a license isn't really the issue, its that I have to rent a premises for retail licenses and form a company for wholesale licenses. Amd it's those costs which I can't afford. Really all I wanted to do was license my home address and myself and get selling online.

James's response was thought provoking; say I partnered up with a local microbrewery, using their premises for production, storage and shipping and offered 20% of sales in return, I wouldn't need any licenses for online retail sales would I? I wouldn't be competing with them as our products would be different, all I'd need is a food hygiene certificate from the council surely?

 

[Rafael Mediator]

I used to own an alcohol business a few years ago. You will need a license for the premises as well as a personal license. The personal license is obtained by taking a training course certified by your local Council, and it lasts for a few years. The premises license needs to be renewed every year.

A residential property may be eligible for a premises license; it will depend on the precise location of the premises, and the security of the premises [alcohol is an attractive target for thieves]. It will also depend on how you plan on interacting with your customers - do they come to you to collect the product, or do you deliver. Speak to a licensing lawyer in your area to get an idea of the feasibility of your plan.

I did not know that to sell wholesale requires a special license.

 

[Mitch3473]

You could take a leaf out of this guys book

 

[DarrenHM]

Thanks Rafael. My home is a rented terraced house on the fringe of a large town centre, as secure as anywhere really, fortunately the burglary rate is virtually zero in my area. I could install a CCTV camera otherwise it's occupied at night and making small batches, I wouldn't be carrying much stock. I'll take your advice and speak to the council licensing officer.

My retail plan would involve taking internet orders from my website and delivering by courier or suchlike so no visitors to the house.

I have found a local microbrewery attached to a bar/restaurant in my town so as an interim measure I'm going to prepare an approach where I use their premises for production, storage and shipping in exchange for 20% of sales. Does this sound fair? I would then operate the website and physically despach the orders by visiting their premises 3-4 times per week. Would this get round the premises/personal licence requirement or would I still need a personal license?

 

[Rafael Mediator]

The premises license of the microbrewery may cover your activities, or it may not. Each premises license specifies certain activities and businesses. You would need to check with the licensing lawyer who drew up and applied for their premises license to be sure.

You would still need a personal license, because you would be operating an alcohol business. There are many training providers who offer the course. When I did it, it was a day course with a multiple choice test at the end. The course provider will file all the paperwork for you with the council and you will get your license in the post.

Google 'alcohol personal license course'.

 

[ethical PR]

Offering what is basically a deal where the brewery only get paid based on your sales is not one the brewery will see as fair.

You basically want to use their premises to run all the major aspects of your business and in return offer them a percentage of your sales. Works for you but definitely wouldn't work for them!

Do research on what this is likely to cost you to rent a suitable premises then offer them this.

 

[webgeek]

Partnering - great idea. Proposed implementation of it - not a great idea.

These people have contacts, costs for their facility, staff, insurance, lights, heat, etc. You're likely not really wanting to run an entire business under their roof.

Instead, sell them on your products, their appeal and then work out an exclusive arrangement whereby they take on the big nut and you do it for a % of gross revenue.

Once you get the product flowing at a good clip you can revisit/renegotiate/cancel the agreement, if you want. Or, you can continue spending you time developing the product, branding, etc - the parts you've done so far - which must be the part you enjoy, otherwise, you'd have done the other steps first, and left these steps until last.

Start thinking of unique ways of packaging your product, with theirs, in gift sets, tasters, wholesale lots, or however you think it could go out - but the idea is to get some brand awareness, affinity and product flow so your cash flow can start working out well.

Again, consider how you can offload as much of the non-secret-recipe stuff to them, so they can earn their share, and how you can focus on the recipe/brand building, and how you can co-promote your products with theirs.

 

[Awinner2]

Remember that conducting a business from rented home premises is usually prohibited by your landlord.

 

[Mr D]

Remember that conducting a business from rented home premises is usually prohibited by your landlord.

They may ignore you sat at a computer doing paperwork, they may have issues with del boy's flat method of keeping stock.

 

[DarrenHM]

Great advice, thanks all.

My current tenancy agreement does prohibit business activities but that's the same standard agreement the agents draw up for everyone, I'm on really good terms with my landlord on a personal basis and think he'll be fine with it, should check him 1st though obviously. Del boy... yes, I hear you!

However, taking all the above onboard it does look like I'm going to have to bite the bullet and find premises, not really what I wanted to do for a little sideline income but there you go, speculate to accumulate etc.

I've been researching fulfillment/warehousing businesses too as a possibility but early days on those enquiries.

I appreciate my proposal would not have potential partners panting with enthusiasm, more thought required there. I think the kind of arrangement suggested by webgeek above is absolutely sound, but I'm not sure it's really where I intended to go with this. I want total control of the products, sales and marketing of them and I'm not sure how well I'd be able to work with a partner with a primary interest in their own product and who could simply take my idea and do it themselves using their own existing infrastructure.

Being a hobby, the recipe refinement and fancy labels, logos etc have been a labour of love for me, bit of fun, and it's only now I've realised I've got something really unique that I've started looking at these possibilities. I reckon it's time to go away and consider how I'm going to do this and how much money I can afford to put into it. Perhaps it will remain a hobby though if I do end up making a living out of it there's a bottle in the post for you all.

I really appreciate your help and advice so thank you all for taking the time to write.

Watch this space!

 

[DarrenHM]

If not an affordable option then you cannot afford to sell.
Try selling something different first to save up to get the required license.

In fact, having just re-read this thread, this post has triggered a Eurika moment for me, I could set up initially selling my non-alcoholic products and confectionary (originally supplementary products/by products of my liqueur production) and use the income generated to reinvest in the boozy stuff when I have enough... no licenses required, same customers and would help me to establish my brand before going into the minefield that is the alcohol business. Does this sound like a goer?

 

[The Byre]

Dunning Kruger syndrome has claimed another victim!

It's sad really.

 

[DarrenHM]

Dunning Kruger syndrome has claimed another victim!

It's sad really.

Is this because I didn't directly respond to your inane post stating the bleeding obvious?

 

[The Byre]

No, it's just that your post reminded me of a guy I met in LA who told me that he wanted to open a recording studio. I pointed out that almost all recording studios lose money, so he told me that he would open a bar and use the income from the bar to support the studio.

His closing argument was "I've been in a bar and I've seen a pretty girl sell a guy a beer and I worked out, you don't need a whole lot of smarts to sell a guy a beer!"

I mean, hey go for it! But the spirits business is really for insiders who know what they are doing. Just getting all the licenses kills most, but what is not killed by the rules and regulations, is annihilated by the white heat of the market and getting distribution and shelf-space.

Radio Caroline was started by a guy who had signed up a band called The Rolling Stones and he could not get any radio play, so he started a pirate station. It's still on the air, so go for it - but be 100% prepared!

 

[DarrenHM]

Dunning-Kruger syndrome is quite an insult to casually toss into a discussion and quite misdirected; I actually recognise my ineptitude, which is why I'm here asking for help!

I'm not a businessman as I'm sure you've gathered. What I do have is a great hobby and some potential products I believe in, and the drive to do better than my 9-5 job. I have adequate income for my family so this doesn't really have to work. To my mind if you cant sell a few bottles of homebrew online, what can you do? Try something else and come back. I'm not talking about a bar, I'm talking about a specialist high quality product that simply does not exist in the market and I think will sell. I have no Dunning-Kruger type delusions about superiority or grandiosity, merely something I fancy having a go at as you only live once.

The story about your encounter in LA says to me; maybe he didn't get his studio, but perhaps his bar was a huge success. Who knows. We can only try these things.

 

[The Byre]

We can only try these things.

This!

But do it right!

The older I get (66 and counting!) the funkier I get (well in today's parlance the 'Sicker' I get - so I am like now well-sick!) and the spirits market could do with a kick up the arse, but get ready for battle.

Easy it am not!

 

[DarrenHM]

The kick up the arse for them has happened already: the craft beer revolution. The guys are drinking brewdog punk instead of jagerbombs.

 

[webgeek]

Brewdog isn't a great example. They have outstanding grass-roots support, a wicked brand image and this David vs Goliath positioning, but their products, mostly, taste like urine.

Pursuing your passion is great - but think about what it is that you're passionate about. Is it coming up with new tastes, perfecting old ones, mass producing, working out distribution arrangements....? There's 1000 tasks related to what you've talked about - but probably only a handful those things you enjoy/will enjoy. Figure out which they are and then how to leverage other people's efforts to do the rest. That's the Timothy Ferris approach to making money - because it works.