Small Business

Move over, the big bottles are coming to town

Home delivered booze is a service the big players haven't quite yet caught up with.

A fleet of alcohol delivery start-ups is putting grog on the go and disrupting the bottleshop industry along the way. But these newcomers face a major speed bump as bigger names prepare to enter the market.

Such is the threat, Charles Perrottet and wife Anita of Melbourne's Deliver Me Drinks are on the verge of expanding their operations and cutting delivery times from 45 minutes to 30.

"We want to keep putting on that additional pressure in the market for speed because we know the bigger players can't compete on that front," Charles says.

The Melbourne start-up, which launched in 2015, will soon put an extra two refrigerated vans on the roads to broaden their metro delivery catchment. Next year they will tackle Sydney and Brisbane.

Start-ups like Deliver Me Drinks are tapping into a thirsty market of consumers who want the convenience of home delivery or those who have drunk too much to drive to the local bottle-o.

It's a niche relatively untouched by market leader Dan Murphy's and Coles-owned First Choice. Although both offer online orders, their delivery times are slower so they largely cater to corporates.

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That could all change with global retailer Amazon expected to enter the Australian supermarket fray within two years. The e-commerce giant is planning to launch bricks and mortar stores as well as an online supermarket that delivers alcohol.

Looming behind this threat are food delivery services such as foodora and Deliveroo, which under state laws, are permitted to deliver limited amounts of alcohol with food. In Britain, Deliveroo has joined forces with Heineken to create a brand called Brew House to sell Heineken products on Deliveroo's website.

But the owners of one of Australia's earliest online alcohol delivery services are unfazed.

Nathan Besser and David Berger, co-founder of Sydney's Jimmy Brings, say Amazon will lack the agility of their small business.

"Despite Amazon's might, I question whether they will be able to deliver in under 30 minutes," Berger says.

"If a customer is wanting to consume alcohol and it's a spontaneous decision, they want it as quickly as possible, so we don't necessarily believe these big players will be able to organise themselves in such a way to deliver it with such lightning speed."

Besser and Berger are currently applying for liquor licences in Melbourne and Brisbane, where they hope to set up Jimmy Brings next year. They say the company has experienced 10 per cent month-on-month growth and has a turnover of more than $3 million.

Besser and Berger have form in this space. They were behind Suppertime, the food delivery service acquired by foodora last year.

"Ultimately we're a logistics, technology business that sells alcohol," Berger says.

"That has to be the focus and that reflects our experience in the home delivery business over the last eight years."

The technology required to power online deliveries proved challenging for Liquorun. The start-up was one of Melbourne's first alcohol delivery services when it launched in 2013, but closed in 2015 when its owners decided to focus on logistics over alcohol.

Others have been quick to take its place. Melbourne's Ryan Barrington and his team invested $2 million into Tipple, which launched a year ago.

Barrington has been in the liquor industry for 15 years with his family owning eight independent bottleshops under the Cellarbrations banner. He is so confident about his online business, he hopes to bring it to Sydney and Brisbane next year.

"We're doing close to about 5000 deliveries per month, so it's just about keeping on with demand now," he says.

Barrington says he has faced down increased competition before and can do it again.

"When I started in liquor 15 years ago there wasn't as many Dan Murphy's' and we had them pop up within a stone's throw of our businesses, so I've taken on those challenges before," he says.

"I see the competition just opening up the marketplace. Our biggest challenge is getting customers to change their habits to know there is another alternative rather than walking down to the bottleshop .

"In terms of the online market, it's a brand new marketplace."

The online alcohol market is worth $344 million and is predicted to grow by 7.8 per cent each year for the next five years, according to research firm IBISWorld.

Traditional liquor stores are embracing the new trend to stay competitive, says Michael Waters Executive Director NSW and ACT.

"Savvy and innovative liquor retailers believe that success lies in knowing their customer intimately – they are adapting digitally as well as physically, turning this e-commerce threat to their advantage by giving customers a new channel for purchasing, which complements their physical presence," he says.

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