Liquor Store Profit Margins

Business

1 Jul 2021

Facebook Twitter LinkedIn

If you're a liquor store owner or are thinking about opening one, you may be wondering exactly how much to charge customers in order to have sustainable liquor store profit margins. In our complete guide, we explain what goes into price-setting and what a healthy liquor store profit margin could look like for your business.

Not quite at this stage of your business journey yet? Check out our how to open a liquor store first!

Identify your costs

Every business has start-up and ongoing costs that you'll need to offset with the amount of revenue you earn from liquor sales. You can do this, in part, by wisely setting your retail prices.

Before you can decide what prices to set, and how much profit margin you'll need to have in order to stay afloat and succeed in the liquor store market, you need to understand your costs.

Typically, you'll have at least some (if not all) of the following operating costs to recoup:

Inventory (the items on the shelves)
Utilities
Rent/mortgage
Business taxes
Employee wages/benefits/taxes
Liquor licence fees/renewals
Other specialised licences/permits (depending on your state)

Once you know what your overhead costs are, you can start to figure out selling prices and profit margins. To do this, you first need to figure out your cost per unit.

Cost per unit

This tells you how much each bottle, 12-pack, or other individual product you sell costs you, beyond just the wholesale price you've paid for it. The cost per unit should take all the factors listed above into financial account.

A simple formula for calculating cost per unit takes your total fixed costs plus your total variable costs and divides that number by the total units produced.

Cost per unit = (Total fixed costs + Total variable costs) / Total units produced

As a retail liquor store, you're not going to be actually producing any units, so we can replace that with the total bottles of wine or 12-packs of beer purchased.

Let's say you've determined that your fixed costs (taxes, salaries, rent, etc.) and your total variable costs (inventory, etc.) total $30,000 and you're selling 5,000 cases of beer. Your unit cost (or cost per unit) would be $6 per case.

Now that you know how much each case of beer is costing you, you can set a reasonable retail price based on your desired (or allowed) profit margin and location.

Current market trends (2026)

The liquor retail landscape shifted fairly rapidly in 2025, and these broader industry trends are reshaping profitability and what drives it for store owners in 2026. Below are a few of those trends.

One clear pattern is the decline in traditional alcoholic beverage sales. Retail sales volumes of beer, wine, and spirits in Europe have fallen. for example, alcohol sales dipped by about 1.7% over the past year, with younger consumers driving the shift toward alternative products and health-oriented beverages.

While this trend is driven by the young, it's having an impact across cultures and demographics. More people are trying to drink less or abstaining either for health or financial reasons, including nearly half of all Americans! Across the major markets, no- and low-alcohol beverages are among the fastest growing segments, expanding at a projected +7% compound annual growth rate projected through to 2028, outpacing traditional alcohol categories as drinking norms evolve.

Alongside non-alcoholic growth, innovations like ready-to-drink (RTD) beverages continue capturing more of the market share thanks to convenience and flavour diversity, even as some core beer and wine categories soften. Meanwhile, emerging alternatives to alcohol are attracting interest from consumers seeking novelty or health benefits, broadening the competitive set beyond traditional alcohol products. These include cannabis and hemp drinks, which are projected to reach 2.8 billion dollars in sales by 2028, and non-alcoholic wine which saw a 41% rise in sales in 2024. Whether that novelty will solidify into a long-term market share remains to be seen, but for now at least, these products are changing the liquor market in a very tangible way.

How these trends affect margins:

Traditional alcohol margins may tighten with slowing volume growth and greater price sensitivity.
NA and alternative drinks often carry lower wholesale costs and can fetch premium retail pricing, helping offset decline in legacy categories.
An inventory mix strategy now matters more than ever: retailers that embrace high-growth segments stand a better chance of preserving overall profitability in a changing market.

Sign up to our newsletter

Typical liquor store profit margins

On average, liquor stores tend to have an overall profit margin of between 20% and 30% annually. You can aim for a 50% profit margin if you choose (and are allowed to by your state).

There are pros and cons to aiming for higher profit margins since you'll need to charge customers higher prices for your products, which might not make your store as appealing as a lower-priced competitor.

Of course, the profit margins your store has are going to vary greatly depending on the types of alcohol you choose to sell, the type of business you have, and your location. We take a closer look at each below.

Types of businesses

Grocery stores and gas stations that sell alcohol may be able to handle smaller profit margins from alcohol sales than liquor stores because they're not relying solely on alcohol for their profits.

Restaurants and bars can get away with a much higher profit margin for alcoholic beverages since they're selling by the drink/glass and not typically selling an entire bottle or 12-pack to the consumer.

Normally, restaurants have profit margins of around 80% for each drink they sell because they're looking at "pour cost," not wholesale cost. Pour cost refers to the cost incurred by a restaurant or bar to pour or serve a single drink. It takes into account not only the wholesale cost of the ingredients used in making the drink but also other expenses such as labour, overhead, and wastage. For example, if a cocktail costs $1.50 in ingredients (wholesale cost) and $0.50 in other expenses (labour, overhead, wastage, etc.), then the pour cost would be $2.00.

And bars tend to have the highest margins of all, sometimes marking up alcohol by 200% or more.

So, a simple liquor store (no groceries, gas, sit-in bar areas, or cooked food) will tend to have lower profit margins than restaurants and bars but may have higher margins than grocery stores and gas stations that are involved in the sale of alcohol.

Types of alcohol

Beer, wine, and hard liquor are generally marked up at different rates. It's typical to charge a 20-30% markup on beer. If you're working with craft brewers or hard-to-come-by products, you could have profit margins as high as 40-50%.

If you're selling a national brand, for example, you might pay $16 for a 24-pack of beer. You could sell that 24-pack for $19.20 at 20% markup, or $20.80 at 30% markup.

For wines, you can typically get away with 50% markup (or higher, depending on the brand/rarity of the wine).For example, if a bottle of wine costs you $15, you could sell that bottle for $30 at 50% markup.

Be aware that some states determine the wholesale cost and/or limit the amount you're allowed to charge customers, and it may not be up to you as the owner to determine how much of a markup you'd like to place on each product you sell. These states may also have strict regulations regarding the distribution and sale of alcohol that you must follow.

Market saturation

As with any business, location makes a difference. If you're competing with several other liquor stores within a short distance of yours, you may have to accept smaller profit margins in order to stay competitive.

If you're a small business located near a warehouse-type seller that can offer discount pricing because they have such high volume, you may have to drop your prices just to remain competitive, which means smaller profit margins, as well.

However, if you're the only liquor store in town (or in your area), you can probably get away with higher profit margins without losing customers.

Even if you're surrounded by other liquor stores, if your store offers something unique that your competitors don't, you should be able to maintain average to above-average profit margins since you're providing something your customers can't find anywhere else.

For example, you could offer wine-pairing classes or specialised selections of alcoholic beverages that aren't sold in nearby stores. You may even want to think about alcohol delivery to your customers if you live in a state that allows this.

Again, if you live in one of the states that control alcohol pricing in some way, you may be limited on how much you can charge customers, or have other pricing limitations placed on your liquor store.

The bottom line is that a liquor store in the right location, with a business owner who knows their market and can properly price their beverages, is a great business opportunity. Just don't forget one key ingredient for your liquor store business—a powerful point of sale (POS) system.

Effective cost management

In the pursuit of sustainable profit margins, effective cost management is key for liquor store owners. By diligently controlling expenses and optimising resource allocation, businesses can reduce operating costs, mitigate financial risks and enhance profitability.

One key aspect of cost management is identifying areas where expenses can be reduced or eliminated without compromising operational efficiency or customer satisfaction. This may involve renegotiating supplier contracts, implementing energy-saving measures to reduce utility bills, or exploring cost-effective staffing solutions.

Moreover, leveraging technology, such as a robust POS system, can streamline operations and reduce administrative overhead (we'll get on to this in our next section).

Furthermore, investing in employee training and development can improve productivity and customer service quality, ultimately driving sales and enhancing the overall customer experience. By empowering staff members with the knowledge and skills they need to excel in their roles, liquor retailers can cultivate a motivated workforce that contributes to business success.

Understanding Net vs Gross Profit Margins

The figures you've seen so far are net profit margins, but it's important to know whether you're discussing net or gross profits when planning and analysing your sales. So let's take a quick moment to go over the difference between net and gross profit:

Gross profit margin

Gross profit margin looks at how much money you've made after paying for the products themselves. It can be represented as GP = R − COGS (gross profit equals revenue minus cost of goods sold). This basically means your gross profit will be the amount of money you add on to each item sell after buying it wholesale. As we mentioned earlier, liquor stores typically have a gross margin between 20–30%, depending on product mix and pricing strategy. This number tells you whether your markup is strong enough to cover expenses, but it doesn’t reflect the true profitability of your business.

Net profit margin

Net profit margin is a better representation of a businesses health. It shows what’s left after all operating expenses are paid. This includes:

Rent or mortgage payments
Utilities
Wages
Taxes
Insurance and licensing fees
Marketing
Shrinkage
Overhead and miscellaneous business expenses

After these deductions, most independent liquor stores see net margins closer to 10–15%, often even less.

Here’s a simple example: imagine your store generates $1 million in annual revenue. If your gross margin is 25%, that leaves $250,000 in gross profit (that one's easy to calculate!). Once you subtract operating costs, say $125,000 for rent, labour, utilities, licensing, and everything else we listed above, your net profit drops to $125,000, or 12.5% net profit.

The complete retail POS system

Delight shoppers, speed up sales, and grow your business. Tailor your Epos Now retail POS to your exact needs with our App Store.

Get your offer

Strategies to Increase Liquor Store Profitability

Now you know a little more about how to calculate different forms of profitability, it's useful to have a few tricks up your sleeve to get those numbers moving in the right direction. So here are a few ideas to get you started:

Optimize your product mix and in-store placement

Not all products contribute equally to your bottom line, so your shelf space shouldn’t treat them equally either. Product placement has a huge influence on sales, so your most profitable stock should get prime position on your shelves. That means high-margin items (private labels, craft spirits, premium wines etc) that generate more of your money should be the most visible.

You can use your POS reports to identify profit generators if you're not sure which products to prioritise. But once you know which products need moving, place them at eye-level, on end shelves, and on checkout displays. Meanwhile, products with lower-margins that people know they'll buy before they come in can be out the way, on lower shelves, and at the back of the store. This is doubly useful, because it means those customers are passing your profit-drivers to get to the other products, leaving room for those juicy impulse purchases!

Bundle slow movers with popular items

Every liquor store has inventory that sells slowly and ties up cash. Rather than marking down these products and reducing your profits from them even further, try using product bundles.

Product bundles can turn your dust-gatherers into a more exciting or intriguing prospect. Either by pairing them with fast-selling items to encourage bulk sales, or putting a combination of unusual products together to make a tasting kit for those looking for new flavours. For example, a themed bundles like “cocktail starter kits” that include mixers, glassware, and spirits can get customers buying in bulk and clearing your shelves.

Price the bundle slightly below the combined retail value so it feels like a deal while still protecting margins. This strategy improves inventory turnover, frees up shelf space, and reduces the need for deep discounts that cut into profits.

Expand into non-alcoholic and premium categories

Consumer preferences are shifting, and it's really important that independent liquor stores follow these trends to ensure they stay relevant and profitable. Alcohol-free options, premium products for special occasions, non-alcoholic beers, zero-proof spirits, hemp-derived drinks (when legal!), and functional beverages are all really important product lines. Stocking these helps you capture customers who might otherwise buy from supermarkets or online.

At the same time, premium and craft offerings often carry higher markups and attract shoppers less sensitive to price, so forging partnerships with craft breweries are well worth the effort. Highlight trendy product lines with dedicated displays and knowledgeable staff recommendations to show your store knows what's hot.

Stocking a variety of products helps diversify your revenue streams and protects profitability when traditional alcohol volumes slow, helping stabilize margins across changing market conditions. In other words, it makes sure you have eggs in lots of different baskets!

Use third-party delivery apps strategically

Delivery platforms are key for capturing customers, reaching new markets, and providing convenience to your customers, but they cost money. Any sale made via delivery loses a commission fee and is less profitable than if the customer came into your store. So use delivery apps for the thing they're best at: acquiring new customers.

List a curated selection of high-margin items or bundles on these apps to offset fees, and include incentives that encourage customers to order directly next time, whether that's loyalty points, in-store discounts, or products they can only get in-store or on your website directly. Find ways to promote the channels that help your liquor store margins!

If possible, build your own online ordering system through your POS provider to avoid higher commissions. The goal is to capture the convenience shoppers you want to win while gradually moving repeat customers to more profitable channels.

Negotiate smarter supplier agreements

Supplier relationships can have a direct impact on your margins by reducing your cost price (which your customers much prefer to raised sale prices!). Instead of accepting standard pricing, use your business's spending power to negotiate for volume discounts, mixed-case deals to make your stock more affordable.

You can share your sales data to demonstrate volume potential and show the supplier that this can be mutually beneficial, and request promotional support like display materials to help you sell more of their products. You can also consolidate purchases with fewer vendors to increase that bargaining power. Even small reductions in wholesale cost, just a few percentage points, translate into higher gross margins.

Review contracts regularly and compare suppliers to ensure you're getting the best deals. Treating restocking as strategically as you treat selling in-store can make it much easier to raise your liquor store margins, thanks to a two-pronged approach: lower costs coming in, high margins going out.

Host tastings and in-store events

Events can be transformative for a liquor store. They turn it from a simple source of supplies into a warm and friendly venue, and a key spot within the community. And there are lots of different events you can do, from tastings to product launches, meet-the-brewer/merchant nights, and any other social gathering you can imagine!

Partner with suppliers either to share costs or secure samples and support. Promote events through your and their email, social media, and other marketing channels to increase attendance. During the event, merchandise featured products prominently and offer limited-time bundles or discounts to encourage immediate purchases. Beyond sales, events build relationships and position your store as an authority in your industry, boosting repeat visits. The result is stronger customer loyalty, more premium purchases, and healthier long-term margins. Events really are a no-brainer!

Implement a tiered loyalty program with exclusive perks

Loyalty programs are a great way to boost repeat visits and engagement. Whether you tie your loyalty program in with special events and offers to make membership an exciting prospect, or you offer discounts on sales, there are lots of ways loyalty membership can help your business.

Not sure what liquor store loyalty looks like? Here's an example: customers earn points or move into tiers based on annual spend, unlocking perks such as early access to allocated bottles, members-only releases, tasting invitations, or small discounts on premium items.

These benefits feel special but cost you little compared to straight price cuts. Use your POS system to track purchases and automate rewards, making it easy to manage. The goal is to increase customer lifetime value rather than the profit of one-off transactions. When shoppers return more often and trade up to premium products to reach the next tier, you protect margins while strengthening loyalty and reducing the risk of customers defecting to competitors.

After all, a one dollar profit on a single sale is no different to a ten cent profit made ten times more!

How can a liquor store POS system help make your liquor store profitable?

How profitable is a liquor store? That depends on many factors, including their tech! Implementing a robust POS system in your liquor store can significantly impact your profit margins and overall business efficiency. Here's how:

Streamlining inventory management: A liquor store POS system can help you effectively manage your inventory by tracking stock levels, providing real-time updates on popular products, and integrating your in-store inventory with online sales. With historic sales data, you can also forecast sales to reduce instances of overstocking or understocking, optimising purchasing decisions and make sure you have the right stock at the right times!
Ecommerce and delivery apps: Liquor stores still make more of their sales in-store than out, but if you want to maximise sales, you need to compete everywhere. That means setting up online and offering customers the convenience of delivery. With a strong POS setup, you can do both with very little hassle. Processing sales through online and app-based portals, and linking them to your instore inventory.
Price optimisation: Most retail POS systems are equipped with advanced analytics tools that provide insights into pricing strategies. By analysing customer purchasing patterns and competitor pricing, you can adjust your prices dynamically to maximise profitability while remaining competitive in the market.
Automating purchase orders: Automating purchase orders through your POS system can streamline the procurement process. By setting up automatic reorder points based on sales data, you can ensure that you never run out of popular products while avoiding excess inventory that ties up capital.
Rewards programs: Utilising rewards programs to boost customer loyalty through a Liquor Store POS System is paramount. By implementing incentives such as discounts, exclusive offers, or points for purchases, these programs encourage repeat patronage, fostering stronger bonds between the store and its clientele. This heightened loyalty not only drives sales but also ensures sustained profitability and growth within the liquor retail business.
Efficient sales processing: A liquor store POS system facilitates speedy and accurate transactions, reducing wait times for customers and improving overall service. Features such as barcode scanning and integrated payment processing ensure smooth checkout experiences, increasing customer satisfaction and loyalty.
Compliance management: Liquor sales are subject to strict regulatory requirements, including age verification and compliance with licensing laws. A POS system with built-in compliance features (or via POS integrations) can help automate these processes, ensuring that you remain compliant with legal regulations and avoiding costly fines or penalties.
AI-powered reporting and analytics: Every day, AI analytics are getting better at predicting sales trends, and POS providers have worked to integrate that into their software. By gaining actionable insights from your POS software, you can make informed decisions for liquor stores to optimise operations, refine product offerings, and maximise revenue potential. Check our functional reports provided by Epos Now POS guides for some inspiration.

Pouring up our final thoughts

In conclusion, understanding and managing liquor store profit margins is essential for the success of any liquor retailer. By carefully considering overhead costs, market dynamics, and regulatory requirements, liquor store owners can establish sustainable profit margins that support business growth and longevity.

Remember, leveraging tools such as a liquor store POS system can further enhance profitability by streamlining operations, optimising pricing, and improving customer experiences. Ultimately, a combination of strategic planning, effective cost management, and the right technological solutions can help liquor retailers navigate challenges and capitalise on opportunities in a competitive market, making their liquor store ventures not only financially viable but also thriving and profitable enterprises.

Liked this blog? Check out our additional resources below:

Discover some cost saving ideas for workplace to help you save some dollars.
Learn about effective menu pricing strategies and stay ahead in the competitive market.

Frequently asked questions

How much profit do liquor stores make per year?: Annual profits vary widely based on location, competition, and store size. A small independent store might earn $75,000–$150,000 in net profit, while high-volume or premium-focused stores can generate significantly more. With typical net margins of 10–15%, a store doing $1 million in annual revenue could expect around $100,000–$150,000 in profit after expenses.
What is a good profit margin for a liquor store?: Most liquor stores aim for a 20–30% gross margin, which covers product costs and leaves room for overhead. After rent, labour, utilities, licensing, and other expenses, net margins typically settle around 10–15%. If you consistently hit or exceed that range while maintaining steady cash flow, your business is operating at a healthy level.
How much does a liquor store owner make?: Owner income depends on net profit and how much is reinvested into the business. Many owners pay themselves from profits after expenses and taxes, often taking home $60,000–$120,000 annually for a mid-sized store. Alternatively, owners can give themselves a salary and leave any remaining profits for reinvestment. Higher sales volumes, strong margins, and multiple locations can significantly increase personal earnings over time.
What is the average markup on beer, wine, and spirits?: Markups vary by category. Beer is usually priced with a 20–30% markup, though craft products can go as high as 50%. Wine carries a 50% markup or higher, while premium spirits exceed even that. Bars and restaurants typically mark up far more, but retail liquor stores need to stay competitive with local pricing.
Are liquor stores still profitable in 2026?: Yes, but profitability requires adaptation. Traditional alcohol sales have softened, while non-alcoholic, ready-to-drink, and premium products are growing. Stores that optimise product mix, manage costs carefully, and diversify into higher-margin or emerging categories can still achieve strong margins and steady profits despite changing consumer behaviour.
How much does it cost to start a liquor store?: Startup costs vary by state and size, but many new stores require $100,000–$500,000 or more. Expenses include inventory, licensing, rent deposits, shelving, refrigeration, POS systems, and working capital. It's also important to have some money set aside for unexpected costs. Liquor licences alone can be a major cost in some areas, so budgeting carefully upfront is essential.
What affects liquor store profit margins the most?: Product mix, location, and operating costs have the biggest impact. Wholesale pricing, rent, labour, competition, and state regulations all influence how much margin you'll manage to maintain. Poor inventory control or overstocking can also hurt profits. Effective pricing strategies and tight cost management make the greatest difference over time.
How can I increase my liquor store’s profitability?: Focus on selling more high-margin products, optimising pricing with POS data, bundling slow movers, and building customer loyalty. Expand into premium and non-alcoholic categories, negotiate better supplier terms, and host events to drive traffic. Small improvements in margin and repeat purchases compound quickly and can meaningfully boost overall profit.

Ready to boost your liquor store's efficiency and profits? Let's talk about upgrading to the perfect POS system tailored to your business needs. Our expert team is here to guide you through the process and help you find the ideal solution. Reach out today to schedule a consultation and revolutionize your liquor store operations!

Liquor Store Profit Margins

Identify your costs

Cost per unit