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- South Africans drink a lot of alcohol - and dozens of businesses exist to take advantage of this. Many of these are franchises that are turnkey booze businesses.
- Chief among them are liquor stores, with some estimates putting the total number of outlets in South Africa at around 5 000.
- And you can buy into a known franchise or start one under your own brand - starting at R300 000.
- For more financial news, go to the News24 Business front page.
South Africans drink a lot of alcohol - at last count, around 9.5 litres of pure alcohol per year. Converted into wine, that's around one and a half litres per person per week. Or about three times that many litres of beer per week.
As the World Health Organisation points out, excessive alcohol consumption is problematic on many levels. But this hasn't halted its popularity - or its contribution to South Africa's economy. South African Breweries said in 2021 that it alone contributes around R18.5 billion towards SA's fiscus in excise duties, PAYE, VAT, and income tax.
Although much of South Africa's alcohol moves through bars, shebeens, and restaurants, the rapid expansion of liquor shop networks and franchise operations in South Africa in the last 15 years speaks to the profitability of in-store sales.
All leading supermarket groups have seen the opportunities by opening standalone bottle stores, alongside traditional liquor-only franchises and small independent stores, together amounting to a total national store count of around 5 000.
Many of these businesses live in closed ecosystems - they're either run by a corporate head office or, in the case of some supermarket liquor outlets, paired only with an existing supermarket franchise. This, together with logistical tasks like obtaining licenses, forming partner agreements, and organising cash collections, makes opening a new liquor store in a prime location difficult, but not impossible.
Although buying a liquor franchise is not necessarily the cheapest way to tap into this market, it may be the easiest. And unlike some franchise sectors, operating a liquor store does not require particularly complex equipment or training. Stock and its shelf life are easier to manage than a supermarket's, most stores keep close to normal business hours, and partner agreements keep the products and competitive deals flowing.
Many well-known franchises also start at relatively competitive prices - at least as far as brand-name franchises go. And at least one operation gives you the logistical and setup support you may need but lets you remain independent and build your own brand.
Here's how much you'll pay for a Liquor City, Tops, Overland Liquors, or eLiquor franchise in 2023.
Liquor City
Liquor City opened its first store in South Africa in 1994 and became its largest independent liquor group. It only began franchising the brand in 2007, and since then, many stores under its umbrella are now franchisee owned and run.
They're still taking onboard new franchise applications. As part of their turnkey bottle shop package, they offer franchisees exclusive access to cheaper private-label brands, assist with liquor license applications, and facilitate shop fitting and opening accounts with suppliers.
Existing stores can also buy into the brand by converting stores into Liquor City franchises.
The cost of a new Liquor City store depends on its size and location, but franchisees can expect to pay around R2 million. Existing stores wanting to convert to a Liquor City will pay lower fees but need to finance signage, licence changes, staff uniforms, and in some cases, renovations.
Overland Liquor Group
Overland started in 1993 with a liquor warehouse in Klerksdorp. In 2002, it decided to franchise its operation and has since launched two associated brands: Liquor Zone and Spot-On Liquors.
The franchise comprises 336 stores - 275 Overlands, 58 Liquor Zones, and 24 Spot-Ons. They support franchisees with regional managers and via a head office and are looking to grow their franchise footprint. They have franchise options for existing bottle stores, retailers who want to open a store within their business, or those wishing to start a new outlet.
The cost of an Overland franchise varies depending on the store type. The cheapest option is a convenience store with an estimated setup cost of R661 000, which, together with initial stock of R475 000, puts the total cash needed at R1.1 million.
A larger Overland retail store will with more stock costs around R2.8 million.
Tops @Spar
At last count, Tops had over 890 franchises in South Africa, all coupled with Spar stores. It's a business that's been a boon for Spar shareholders and franchisees, with a 42% jump in sales last year to the same period in the previous year. In the same period, the group also opened 26 new stores.
It's not possible to buy a Tops store without already being part of the Spar family. A new Spar franchise costs R5 million for a KwikSpar, R8 million for a Spar, and R10 million for a SuperSpar. After that, a new Tops franchise typically costs upwards of R1 million, 50% of which must be available as unencumbered cash.
eLiquor
eLiquor is a liquor store franchise that offers scant information on its store network and a lot of details on its various franchising opportunities. It operates an unusual model in that it sells the initial liquor store setup as a turnkey-style business without any recognised branding - and then charges separately for maintenance and other callouts.
According to the eLiquor website, eLiquor offers two turnkey bottle shop franchises.
The first, for small stores of up to 120 square metres, costs R260 000 in setup fees. The second, for stores between 120 to 200 square metres, costs R330 000.
Both options include shop fitting and all related equipment but exclude VAT and opening stock. Initial stock costs between R200 000 and R300 000 and comes from the franchisor's approved list of suppliers. The franchisee is responsible for locating a site and developing branding and identity for the new liquor store.
