INSIGHT: Make Money Distributing Drinks

The drinks we consume on daily basis usually go through at least three entities before reaching us. These are distinct businesses within the distribution chain that play their roles to ensure that consumers get their drinks when they want, in a consumable or wholesome state and at the right prices.

From the manufacturer, distributor, wholesaler and retailer, the drinks are passed from the factory to the consumer. In between the manufacturer and the consumer are distributors who through effective supply management make available drinks for the consumers.

Intermediaries are usually business establishments rather than individuals running a one-man business. They invest in logistics and large stock of drinks and employ different levels of skilled and unskilled labour in other to run a smooth and efficient distribution business. Intermediaries are rewarded for their roles and efforts, through mark-ups on the products distributed.

HOW TO START AND RUN DRINKS DISTRIBUTION BUSINESS

To start, you have to duly register a business and meet all regulatory requirements. Location is very important factor in this business as it directly impacts both revenues and expenses. Choosing a suitable location for your office and warehouse should take into consideration factors such as proximity to factory, proximity to market, road network between factory/supplier and market (customers), security among others.

A warehouse or conducive storage space is required to stock the drinks that are unsold at the end of the day. These storage rooms must have the right temperature and lighting– usually indicated on most drinks. Drinks must also be packed in the right manner – suppliers usually will show you how to pack and unpack the drinks.

In addition to these, you need very dedicated staff to help you run this business. A driver, salesperson and an office clerk are usually people you will need to run a small drinks distribution business. Time is very essential in the drinks distribution business. Orders must be placed with supplier at the appropriate times and for the right quantities in order to avoid overstocking and stock-outs, which may impact operating expenses.

Selling is at the heart of the business. You grow only by increasing sales. It is important to seek new customers each day, whilst doing everything possible to retain existing customers. Discounts, speed of delivery, customer service, dependability, and honesty are some of the factors that can help you grow sales.

Some manufacturers segment the market and assign each distributor with a slice. Distributors are therefore expected to play within these geographical boundaries. For such models, usually a security deposit in the form of stated amounts of money are given to the manufacturer. Fortunately for intermediaries, most producers of drinks take care of all advertising for the products, and as such distributors, wholesalers and retailers easily ride on that to increase sales.

MAKING MONEY

Revenue models of drinks distribution businesses are usually of traditional mark-up type. They buy the drinks at an amount and add some profit margin for onward sale. The amounts added per carton may appear slim but the volume of sales drives the business. Business growth is largely based on units sold. The more units you sell, the more revenue the business generates to cover its variable and fixed costs, and then profits.

Competition among distributors can be very stiff especially with drinks that the producer does not regulate pricing.

Below are financial estimates for a drinks distribution business. Estimates are based on common drinks on the Ghanaian market such as soft drinks, energy drinks, beers etc.

Amount Invested (GHc) Average Margin Expected Margin (GHc) Stock Turnover p.a Expected Margin (GHc) Average Operating Expense (GHc) Contribution (GHc)
20,000 7.20% 1,440 50 72,000 48,000 24,000
50,000 7.20% 3,600 50 180,000 120,000 60,000

These are only estimates based on certain assumptions. All figures are pretax.

Operating expenses in the above projections does not include non-cash expenses such as depreciation. It is also based on an assumption that there is no interest payment towards debt. Normal staffing level is assumed. The 50 stock turnovers in a year is a little below industry levels.

Fixed costs come in the form of acquisition of delivery vans or trucks and warehouses. However, smaller start-ups are advised to rent or lease these assets in order to minimize start-up costs.

RISKS AND CHALLENGES

Major risk in this business includes damage to goods in stores or warehouse. Goods may also be damaged in transit. Players are advised to take an insurance policy fit for their businesses.

Summary

Investment sector:      Distribution

Tenor:                         1 year

Expected Return:        120% before non-cash deductions and tax

Payback Period:        10months

Risk:                             Medium

Liquidity:                     High

Attention required:     High

 

We are better placed to assist you in this business

Apply for the digital guide on how to start this business successfully. Business Contact

.

Get more stuff like this

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Related posts

INSIGHT: Make Money from Mobile Catering Business In Ghana

Joseph Amponsah

Money in the Dirt: Are Ghana’s mechanics secret millionaires?

Joseph Amponsah

From Broke to Billions: 5 Strategies These Billionaires Used to Get Rich

Kwabena Okyire Appianing

Family and Business: 5 ways family impacts your business positively.

Joseph Amponsah

How to Use Budgets as Disciplinary Tools For A Comfortable Life

Rebecca Essilfie

How to make money in Ghana’s dumsor crisis

Joseph Amponsah

The Highest-Paid Female Athlete in the World, 2016

Joseph Amponsah

7 Ways to Make Extra Income Even With a Full-Time Job

Desmond Bonsu

The Simple Tricks That Can Make You a Billionaire in 9 Years

Rebecca Essilfie

You can make Money Trading Commodity Futures and Forex Online

Joseph Amponsah

From Broke to Millionaire: 4 Lessons a Serial Entrepreneur Can Teach Us

Desmond Bonsu

Health is Money – Diseases that cost a fortune

Dulcinea Ay-gyeiwa

Make Money Investing in Treasury Bills

Joseph Amponsah

How to Invest and Make Your First GHc100,000 in Ghana

Kwabena Okyire Appianing

5 Ways to Earn Extra Income Even if You Have a Full-time Job

Desmond Bonsu

5 Reasons Why Most People Don’t Become Wealthy

Desmond Bonsu

4 Steps People Who Weren’t Born Rich Can Take to Get Rich

Desmond Bonsu

How To Earn Extra Money

Desmond Bonsu

Trading Forex and Commodity Futures online isn’t as Obscure as You Think

Joseph Amponsah

Getting Fired Was Step 1 to Increasing My Pay 1,000% in 3 Months

Desmond Bonsu

Weird Businesses that Actually Make Millions

Kwabena Okyire Appianing

INSIGHT: Digital Photography Business in Ghana

Joseph Amponsah

11 Ways To Be Frugal Now So You’re Rich Later

Desmond Bonsu

8 People Just Like You Who Made $1 Million

Desmond Bonsu

4 Tips From a 26-Year-Old Who Built a $10 Million Consulting Business

Desmond Bonsu

Health is Money: Ladies, Breast Cancer Could Wipe Your Bank Accounts

Dulcinea Ay-gyeiwa

Overwhelming Opportunity in Cashew Farming and Trading

Joseph Amponsah

From Washing Cars to Running a Multi-Million Dollar Empire

Desmond Bonsu

8 Ways to Make Your Money Work for You

Desmond Bonsu

Fast Moving Businesses in Ghana that Require Small Capital

Joseph Amponsah

Health is Money: Diseases that cost a fortune – Hypertension

Dulcinea Ay-gyeiwa

65 Ways To Make More Money

Desmond Bonsu

How Mobile Money Fraud is Threatening Businesses and Individuals in Ghana

Rebecca Essilfie

12 High-Profile Billionaires and Millionaires Who Aren’t Leaving Their Fortunes to Their Children

Kwabena Okyire Appianing

Banks in Ghana: All about Energy Bank

Joseph Amponsah

How to start and operate a forex bureau in Ghana

Joseph Amponsah

Making Your First Million Is Easy — If You Follow These 5 Steps

Desmond Bonsu

Here’s My Exact Strategy for Turning $15,000 Into $200,000 Every Month

Desmond Bonsu

How to Start Commodity Futures and Forex Trading Online

Joseph Amponsah

The Richest Man in the World

Kwabena Okyire Appianing

10 Steps Everyone Must Take to Get Rich

Desmond Bonsu

Learn How to Make Money With Your Smartphone

Kwabena Okyire Appianing

How Forex Bureaus Make the Big Money

Kwabena Okyire Appianing

11 Business Opportunities in Africa That Will Make More Millionaires

Desmond Bonsu

Do the Side Hustle: 5 Better Ways to Earn Extra Cash

Desmond Bonsu

The World’s 10 Richest Black Billionaires

Kwabena Okyire Appianing

Insights: Cassava farming in Ghana; the business in it.

Joseph Amponsah

How to Make Money Selling Foodstuffs in Ghana

Joseph Amponsah

Earn Money Writing in the Comfort of your Home

Nana Afoa Selorm

5 Habits of the Wealthy That Helped Them Get Rich

Desmond Bonsu

Airtel Ghana Registers An Impressive 61% Of Customer Base On Airtel Data And Internet Services – The Highest In The Telecom Industry

Kwabena Okyire Appianing

9 Habits That May Help You Become a Billionaire

Kwabena Okyire Appianing

How I Went From $40,000 in Debt to a Millionaire by Age 30

Desmond Bonsu

5 Simple Ways to Make Money In Ghana

Joseph Amponsah

11 Ways to Make Money While You Sleep

Desmond Bonsu

Control Your Expenditure To Become Wealthy

Joseph Amponsah

The Richest in Nigeria –Meet Nigeria’s Billionaires.

Joseph Amponsah

INSIGHTS : Make Money from Taxi and Trotro Business in Ghana

Joseph Amponsah

4 Smart Money Habits to Help You Earn Your First Million Dollars

Desmond Bonsu

1 comment

Hoover castano March 29, 2017 at 6:25 pm

Coming to Ghana in 3 weeks

Looking for partner to distribute USA second hand products

Reply

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.