Licensing considerations around the retail sale of liquor in Queensland

As featured on the QHA website on 29 May, 2020.

Supermarket chain Aldi has been selling alcohol from its stores in Victoria since 2003. Its liquor offering has proven a success, and Aldi’s range of alcohol is now available from most of its stores throughout the country. The notable exceptions are in Queensland and South Australia, where – much to Aldi’s frustration – liquor licensing laws prevent alcohol from being sold in supermarkets.

Until recently, Aldi had been hoping to exploit a loophole in South Australia’s new liquor licensing categories that were introduced on 18 November 2019. Six of Aldi’s South Australian stores had applied for Liquor Production and Sales Licences late last year, and the conditions of those licences would have allowed those stores to sell beer, wine and spirits produced by local breweries, wineries and distilleries at Aldi’s direction, so long as those products were unique to Aldi.

However, on 14 May 2020, South Australian Attorney General, Vickie Chapman, announced that the Government would further amend the legislation to prevent Aldi from doing this. “This [loophole] goes against the Government’s clear position that alcohol should not be sold in supermarkets,” she said.

Sale of alcohol from Queensland supermarkets

In Queensland, the Liquor Act 1992 (the Act) specifically provides that Commercial Hotel liquor licences – which permit the consumption of liquor on or off the licensed premises where they are sold, and therefore are ordinarily sought by applicants seeking to operate a hotel or tavern – must not be granted for premises that are “used primarily as a supermarket”.

Queensland laws also permit alcohol to be sold from separate retail shops known as detached bottle shops (DBS). This concept is relatively unique to Queensland as a DBS can only be operated by a licensee who holds a Commercial Hotel Licence for separate premises. Generally, the DBS must be located within 10km of the main Commercial Hotel premises by road, although some exceptions apply such as when a licensee proposes to operate a DBS in a remote area where there are no other takeaway alcohol stores.

The Liquor Regulation 2002 states that a Commercial Hotel Licensee may have up to three DBSs for any one main licensed premises. Those DBSs must:

• have a floor area of no more than 150m²;
• not have direct access from any other business premises;
• have direct access from a public place;
• not have a drive-in or drive through facility; and
• be occupied only by the Commercial Hotel Licensee. In other words, the Commercial Hotel Licensee must not allow another person to operate the DBS such as by leasing or licensing the shop premises or the DBS business to someone else.

You can read more about DBS guidelines in a previous QHA Review article, titled ‘Detached Bottle Shops – what are the rules you need to know?’

Similar to the South Australian Liquor Production and Sales Licence, Queensland laws also provide for a Producer/ Wholesaler licence which covers both the production of liquor and the wholesale sale of liquor produced on the premises for distribution. There are two main reasons Aldi could not use such a licence to sell alcohol in their Queensland supermarkets:

• A producer/ wholesaler licence authorises the licensee to:
  • make retail sales of alcohol that is produced on the premises. By contrast, Aldi presumably has no intention to brew its beers, ferment its wines or distil its spirits on the same premises where its supermarkets are located;

OR

• make retail sales of other liquor that is produced off the premises, but only to the extent that the licensee is a wholesaler of that liquor, and only to the extent that it is provided to customers for consumption on the premises and sold in association with a meal to be eaten in a dining area on the premises. By contrast, Aldi is not a wholesaler of liquor and does not offer dine-in services in any event.

• If Aldi did want to produce its alcohol range onsite at its supermarkets, then they would not be able to obtain a producer/ wholesaler licence in the first place. This is because the Act requires that a producer/ wholesaler licensee’s principal business must involve the production and wholesale sale on the licensed premises of liquor made on the premises, and/ or the wholesale sale on the licensed premises of liquor (whether or not made on the premises). By contrast, Aldi’s principal business activity is as a supermarket selling groceries and other products – the business of selling liquor is merely incidental to this.

Implications for big box liquor stores

“Big box” liquor stores such as Dan Murphy’s cannot operate as detached bottle shops in Queensland because as above, DBSs are limited to a maximum 150m² in size.

The result is that big box stores must instead operate from premises with their own Commercial Hotel Licence. This results in further complications, because in order to operate under a Commercial Hotel Licence your business must meet additional requirements set out in Part 4, Division 2 of the Act, which include that the licensed premises must have:

• the capacity to seat more than 60 patrons at any one time;
• toilet facilities for male and female patrons;
• a commercial kitchen; and
• at least two of the following facilities:
  • a dining facility (restaurant or bistro-style);
  • self-contained accommodation of at least three rooms for paying guests; and
  • a function room facility available for hire by members of the public.

Plainly, big box retailers do not include these features. The solution therefore is for big box stores to operate from premises immediately adjacent to a tavern or hotel which does provide such facilities.  The “licensed premises” for the purposes of the Commercial Hotel Licence may then include both the big box store and the tavern on the one licence.

Conclusion

Despite Aldi’s push to sell alcohol instore Australia-wide, the Queensland government has not announced any formal plans to change the liquor licensing laws that currently prohibit the sale of alcohol in supermarkets. This South Australian example does, however, serve as a reminder of the conditions and requirements that apply to DBSs and Commercial Hotel liquor licences relevant to many Hoteliers in Queensland. 

Should you have any questions about the terms and conditions applying to your own liquor licence, or if you need help to apply for approval to operate a DBS, then please feel free to give me a call on 07 3224 0230.

Article written by Curt Schatz (Managing Partner) and Glen Rolley (Associate).