Despite being a mature category, the alcoholic beverages market continues to grow. Analysts are forecasting a CAGR of 2% from 2018 to 2025, a performance that’s driven by an increase in young adult consumers and a rise in disposable income.
This is great news for retailers specializing in beer, wine, and spirits. However, it’s important to remember that the industry is heavily regulated — which means you face more challenges around ensuring compliance. If you run stores that sell alcoholic beverages, you must keep them in check by conducting retail audits.
That’s exactly what this post is about. Below, we walk you through the areas you should pay attention to when auditing your beer, wine, or spirits retail store.
Let’s get started.
Check the store’s licenses and permits
There are different licenses required when selling alcohol, and the right ones depend on the type of store and beverage being sold.
Some licenses only cover beer and wine sales, which means stores that sell liquor and spirits need to obtain a different license. The specifics will differ from one location to another, so auditors need to be well versed in each store’s local regulations and requirements.
In any case, the individuals carrying out the audit need to check the following:
- The store has the appropriate licenses and permits for all alcoholic beverages being sold
- The retailer’s licenses and permits are up to date
- The licenses and permits are clearly displayed whenever required
Ensure that the store complies with laws against selling to minors
Retailers are prohibited from selling alcoholic beverages to minors, so your audit needs to determine whether or not this is enforced. Consider adding the following to your audit checklist:
- Employees always ask for a form of identification from individuals who may be considered minors
- Employees refuse to sell alcohol to individuals who are obviously intoxicated
- Employees have a clear line of sight to areas containing alcoholic beverages to prevent use by minors and other prohibited individuals
You may want to consider enlisting the help of another team member or a third party to check whether or not the store’s staff asks for their ID. This person should look relatively young and attempt to purchase an alcoholic beverage. They should then take note of whether or not the person behind the counter verifies their age and asks for their identification.
Pay attention to the signage displayed at the location
Depending on the store’s state and local laws, they may be required to display signs related to selling alcoholic beverages. Some states require retailers to post signs prohibiting loitering and open alcoholic beverage containers.
Signs that advertise and market alcohol are also heavily regulated. For example, California enforces limits to how much space can be used to advertise beer and wine. According to the state’s Alcoholic Beverage Control (ABC) website:
No more than 33% of the square footage of the windows and clear doors may have advertising or signs of any sort. Signage shall be placed so that law enforcement personnel have a clear and unobstructed view of the interior of the store from the outside. This includes areas where the cash register is located.
To that end, inspectors should ensure that:
- The amount of signage and placement are compliant with all government regulations
- The content of the store’s alcoholic beverage signage complies with all government regulations
- Statements made on the signage are consistent with approved product labels
- Health-related statements are displayed whenever required
- No false or misleading statements
The above are just some of the things you should include in your audit checklist. Depending on your store, there may be things that need to be added to your list.
Audit the store’s record-keeping practices
There are strict regulations around record-keeping if you’re a retail store for beer, wine, or spirits.
The Alcohol and Tobacco Tax and Trade Bureau requires retailers to keep records showing all the details relating to alcoholic beverages received on the premises. That’s why when you’re auditing your stores, ensure that the following are in place:
- The retailer has a record book showing the date and quantity of all alcoholic beverages received
- The records also show from whom the goods were received
- Invoices and bills for all beer, wine, and distilled spirits should be kept on file
In addition, retailers that sell more than 20 gallons of spirits, beer, or wines to the same person at the same time are required to document the sale, with very specific details, including:
- The date of the sale
- The name and address of the customer
- The types of liquors they purchased and their respective quantities
- The serial number of any full cases of spirits included in the sale
It’s important that inspectors be meticulous with checking these things, as retailers that fail to comply with these record-keeping requirements may face steep fines and jail time.
Evaluate the store’s merchandising
Merchandising is an important aspect of running a beer, wine, or liquor store. As such, inspectors need to pay attention to the shop’s displays and promotions by taking note of the following:
- Coolers and shelves are well-stocked with merchandise and are compliant with the planogram
- The labels of bottles and cases are facing out and clearly visible to customers
- Product displays and arrangements adhere to all vendor agreements
- Items are priced correctly
Remember, most consumers are highly visual. The manner in which you display bottles and cases can make or break the store’s sales, so it’s important to ensure that your merchandising efforts are on point.
Audit the store’s sampling initiatives
Sampling is a popular tactic in the food and beverage industry, and for good reason: it’s been proven to increase sales. Industry data shows that customers who sample products were 11% more likely to buy that product again within a 20-week period.
The good news is that many beer, wine, and liquor stores can offer product samples, provided that they adhere to local regulations. When auditing the store’s sampling practices, be sure to verify that:
- Customers are carded before being given samples
- Tastings are conducted between the allowed time frames (e.g., 10 am to 9 pm)
- The store adheres to sample size limits and quantities (beer, wine, and spirits typically have different limits, depending on your state)
- Tastings are conducted by authorized staff members only
See to it that loss prevention practices are implemented
Alcohol is among the most commonly shoplifted items in retail, which is why beer, wine, and liquor stores need to keep loss prevention top of mind. In addition to basic store upkeep, investing in tools like bottle tags, security labels, locked cabinets, and cameras can help to mitigate retail theft.
When conducting an audit, be sure to inspect the following:
- Any cameras on the premises are working properly
- Security tags or labels are attached to products
- High-end stock is under lock and key
- The store’s alarm system is functional
- Store personnel are trained in all security procedures
- The premises are well-lit
- Doors and windows are in good condition
- Security codes are changed at regular intervals
It takes time to inspect these different security components, but doing so will go a long way in minimizing theft.
Selling beer, wine, and liquor can be incredibly profitable. However, you also need to make sure that your stores are 100% compliant with all regulations. Reinstating a revoked license or permit costs time and money — not to mention, a whole lot of headaches. Fortunately, with proper audit practices, you can avoid all that and keep selling alcoholic beverages without a hitch.
Take a free trial of Compliant IA and discover how our retail audit solutions can keep your stores in line.
About the author:
Francesca Nicasio is retail expert, B2B content strategist, and LinkedIn TopVoice. She writes about trends, tips, and best practices that enable retailers to increase sales and serve customers better. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores.