LEGAL/ LICENSING/CONSTRUCTION AND COSTING REQUIREMENTS
Bearing the fact that many people prefer to buy alcohol and drink at home (or house parties), the potential for wines and spirits business in Kenya will only keep growing. The ideal location for a wines and spirits business is in urban estates with people who have disposable income.
In order to start a wine and spirits business in Kenya, there are a few legal and licensing requirements that you must adhere to including business registration, tax registration and county business permits.
Most of the legal/licensing procedures can be undertaken online without having to physically visit many government offices.
From 15th October 2017, no manual registration of businesses will be done by the registrar of companies. Therefore, one can now do a name search and even register their business fully online on eCitizen.
Here is the new process you’ll follow to start a Wines and Spirits business in Kenya:
A. Company/business name reservation
- Register with eCitizen (FREE)
This is a one-stop portal for accessing most Kenyan government services
- Apply and pay for company name search (Ksh 150 per Name). You can apply for up to 3 names in one order.
- Obtaining a company name reservation in 1-3 days is Free if Name Search is successful. This is usually sent to your email/eCitizen account and can be downloaded.
B. Company/business registration
- Apply and pay for company registration on eCitizen. It costs about Ksh 11,000 for a limited company (can have a single director or more), which is the most ideal business type. Alternatively, you can register a Partnership (costs about Ksh 2,500) or Sole Proprietor (costs about Ksh 850)
- Submit signed application forms
- Obtain company registration documents (2-3 weeks)
C. Kenya Revenue Authority (KRA) PIN
KRA is the Tax authority in Kenya and all companies must have a Company Tax registration PIN number.
The entire registration process can be done online on the KRA iTax Portal. The process entails:
- Taxpayer registration (Submit Director(s) Personal KRA PIN plus ID Copies
- Apply for company PIN (Online, KRA iTax Portal)
- Submit PIN acknowlgement receipt
- Obtain company PIN
D. Obtain Liquor License in Kenya
This is the most critical component when starting a wine and spirits business in Kenya.
You cannot operate a wine and spirits business in Kenya without a valid liquor license.
The cost breakdown for Liquor License (in Nairobi) is as follows:
- Liquor license application 6,000
- Liquor license 50,000 (Valid for 1 year)
E. County Business Permit
For you to conduct or start a wines and spirits business in Kenya, you also need an annual business permit from the County Council.
Talk to your local County Government officers on the cost and they may visit your premises to confirm the size of the location and they will advise on how to pay. You will get a receipt when you pay, and then the certificate itself after about a week or same day depending on the efficiency of the office.
F. New Regulations (Nairobi County Unified Business Permit)
Just recently, the Nairobi County Government announced the launch of the Unified Business Permit which consolidates all the requirements for running a business within the County.
This is a one-stop source whereby, after acquiring your Unified Business Permit, you will have paid for a:
- Single business permit (Trade license),
- Fire Clearance Certificate,
- Advertising Signage (300mm by 600 mm or less),
- Health/Sanitation Certificate, and Food Hygiene.
G. Obtain a fridge from Coca-Cola and EABL
This is as simple as calling the local Coke/EABL distributor in your area, explaining that you’re starting a new shop and need to set up an account. They’ll want your business number and you’ll have to fill out an application. Then they’ll have a sales rep contact you to see your needs and how you’re planning on selling their product. You have to make it clear to them on how you want to market their product so the fridge is a need otherwise they’ll just throw posters and coasters at you. And if you get the fridge, you have to sign a contract for however long saying you’ll only sell their products from their fridge. One of the initial requirements is that the initial purchase you have to make a full order to fill up the stated refrigerator.
H. Building shelves in your shop
This involves getting a good carpenter or interior designer who can design and create good and presentable shelves for your shop. The cost will depend on the size of your shop and the type of wood/glass/material you intend to use. But for a simple to a modest start I would budget between KES 40,000 – KES 100,000
I. Ensure you have a sink and a Toilet for your shop
This is a sanitation requirement for every wines and spirits shop.
J. Getting a wholesaler/supplier
Getting the best wholesaler who won’t delay your orders, who values you as a customer and who will sell genuine products to you at the best price counts a lot in your business growth. We highly recommend to make your purchase from Fystar Wines and Spirits Limited at recommended wholesale prices. To partner with us you can contact us here.
The company advices a startup stock /inventory capital of a small retail wines and spirit to range between KES 300,000 – KES 500,000 (This will include most of the commonly purchased brands) The profit margin for most wines and spirits (Retail) is 15% to 40% depending on various factors such as:
- The size of the product such as (250ml/375ml/750ml/1litre/1.5litre/2.0litre/5.0litre),
- The demand of the product,
- Competitor pricing (The biggest hindrance of this industry is the cut throat pricing from competitors, it’s unfortunate that the enforcement of this menace is what has led to emergence of fake or ingenious products and thus you end up having purchased a product without the correct KRA stickers. As a first-time business person who does not know the industry well you may end up on the wrong side of the law when the government comes for an impromptu visit to check how genuine your products are.
For you to start or a distribution / wholesale shop for Wines and spirits you will need all the stated above requirements with the following additions:
- Product /stock capitalization of over KES 10,000,000 minimum.
- At least 2-3 distribution vehicles
- At least 2-3 distribution/sales motorbikes
K. Acquiring a good POS
Managing a wines and spirits shop manually is hectic and could lead to huge losses in your business. You need to acquire a good and the simplest POS that will help you manage your inventory, your sales as well as your sales representatives. For the best POS systems, get in touch today via [email protected] or call 0113507036 / 0741761232 and see your business grow!
For a small wines and spirits of less than 5 users your will require at least KES 20000 as minimum for a good POS plus KES 5000 for Training of the same. The prices depend on the features of the software and the user requirements.
L. Installing CCTV systems in your shop
This is a very important security measure for your business. The size of your shop will determine how many CCTV cameras are to be installed thus dictating the cost. It is always best when CCTV cameras are installed to cover the whole view of your shop both inside and outside. For CCTV cameras installation, you can get in touch today via email at [email protected] or call 0113507036 / 0741761232 for the best and most affordable deals.
For a small wines and spirits of less than 4 cameras your will require at least KES 36,000 as minimum for a good Security Camera for both external and internal cameras.
The security of your business is paramount as it is a cash or what seems as a money minting business the cameras and security system will ward off the following:
- Thieves intending to steal
- Rogue Employees whose integrity values are questionable.
- Rogue Policemen/ county official or any government officials who come to ask for Bribes or Harass your legally opened business.
Another important requirement is Comprehensive Insurance for your wines and spirits shop. This could cost KES 28,000 to KES 38,000 depending on the stock value and assets you have at your shop.
The table below shows the minimum estimated capital required to start a wines and spirits shop in Nairobi.
|Type of business||Sole Proprietorship||Partnership||Company|
|Business Name Search||150||150||150|
|Liquor License Application||6,000||6,000||6,000|
|1 Year Liquor License||50,000||50,000||50,000|
|Liquor Facilitation fee (Miscellaneous)||10,000||10,000||10,000|
|County Business Permit||36,500||36,500||36,500|
|POS Acquisition and Training||25,000||25,000||25,000|