Inside the rise of Australian liquor retail giant Dan Murphy’s
From humble beginnings to national dominance, Dan Murphy’s has reshaped Australia’s liquor landscape. But as competition heats up and margins tighten, it’s facing new challenges.
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Once a single Melbourne bottle shop opened by a passionate wine merchant, Dan Murphy’s has grown into Australia’s leading liquor retail powerhouse.
Known for its wide product selection, competitive pricing and warehouse-style stores, the booze giant has not just tapped into the nation’s thirst – it has fundamentally changed the way Australians buy alcohol.
Today it leads the market, backed by corporate muscle and driven by a relentless focus on scale and efficiency.
Independent bottle shops, once the neighbourhood norm, have either hyper-specialised or closed as margins across the industry continue to tighten.
But this industry dominance has also made Dan Murphy’s the benchmark – the player everyone watches and reacts to.
So how is the heavyweight responding to new competition and emerging threats, and what might its future look like?
Built on a bargain
Wine journalist by trade, Daniel Francis Murphy opened his first wine shop on Chapel St in Prahran, Melbourne, next to his father’s pub in 1952.
Murphy, who was 34 at the time, wanted to make fine wine more accessible to the general public, offering a wide range of products at lower prices.
It was a major shift from the limited, high-margin model at the time.
It worked. Consumers liked the ability to shop for wine, beer, and spirits under one roof, at prices better than competitors.
Founder of retail consultancy firm Retail Doctor Group, Brian Walker, said Dan Murphy’s original model was “radically customer-first”.
“(Murphy) personally wrote tasting notes and built direct relationships with importers and winemakers, demystifying fine wine for everyday Australians,” he said.
“That intellectualisation of product, combined with low-margin volume play, was revolutionary.”
Mr Walker said the foundations of Dan Murphy’s growth lay in three clear strategies – breaking the industry norm of high mark-ups, sourcing rare and global wines not found in competitors’ stores and making wine and spirits accessible and desirable, not intimidating.
“Dan Murphy’s grew not just by selling more liquor, but by building a brand that customers trusted,” he said.
“This deep emotional engagement drove loyalty well before loyalty cards.”
Queensland University of Technology marketing and consumer behaviour professor Gary Mortimer said Dan Murphy’s “big box”, warehouse-style retail format also enabled the retailer to thrive.
He said this was different to local bottle shops at the time – which were constrained by size, range and higher leasing costs.
Woolworths acquisition
Decades later in 1998 Woolworths Group acquired Dan Murphy’s, leading to a massive expansion, scaling up to over 250 stores across Australia.
Using its supply chain and buying power, Woolworths cemented the “lowest price guarantee” approach, enhancing the brand’s appeal.
Woolworths spun off its alcohol and hospitality assets, forming Endeavour Group in 2019, which is now the parent of giants Dan Murphy’s and BWS.
This allowed more focused investment in liquor retail, helping Dan Murphy’s maintain its market leadership.
Mr Walker said Woolworths’ acquisition was more than a portfolio expansion – it was a strategic pivot.
“Woolworths recognised that Dan Murphy’s had what most liquor retailers didn’t: brand equity and a scalable model,” he said.
“Backed by Woolworths’ supply chain, property portfolio, and data capabilities, Dan Murphy’s evolved from a boutique disrupter to a national powerhouse.
“Store footprint expanded rapidly – often next to or near BWS, creating an ecosystem of liquor retail under the same corporate umbrella.”
Online and loyalty program investments
Dan Murphy’s was among the first in liquor retail to invest in click-and-collect, online ordering, delivery and personalisation.
“At a time when many in the category were still battling compliance hurdles, Dan’s leaned into convenience and technology – turning a compliance-heavy product into a frictionless digital experience,” Mr Walker said.
“It’s not just that they sold alcohol online – it’s that they integrated online and offline seamlessly.”
Professor Mortimer said getting ahead of the “online curve” was vital.
“As consumers shifted to eCommerce platforms, offering the accessibility of ordering a home delivery enabled them to provide convenience value to their customers,” he said.
The liquor giant was also quick to the mark to develop “My Dan’s” membership – a loyalty program offering discounts, exclusive deals, and personalised offers helped retain customers and build data insights.
With every transaction, Dan Murphy’s was able to learn more about taste preferences, regional trends and buying cycles.
Professor Mortimer said this enabled Dan Murphy’s to identify shifts in consumer behaviour.
“Those shifts may be the growth in consumers seeking low-alcohol, or zero-alcohol options,” he said.
“The data would also enable Murphy’s to detect growth or decline in categories, enabling it to reduce or expand range.”
Emerging threats and resilience
The biggest challenges plaguing Dan Murphy’s include competition from online-only retailers, changing alcohol consumption trends and regulatory scrutiny over booze sales and advertising.
Professor Mortimer said Coles Group owned ‘First Choice Liquor Market’ was Dan Murphy’s key competitor.
Announced earlier this year, Coles will unify its liquor store brands under the Liquorland banner.
This means Vintage Cellars and First Choice Liquor Market will be retired and rebranded as Liquorland, including Liquorland Cellars and Liquorland Warehouse formats.
“This change, it is claimed, will simplify the customer experience, reduce operational costs and offer consistent pricing and promotions,” Professor Mortimer said.
“Both businesses offer the same value to consumers – warehouse-style, big box retail formats, delivering a broad range and low prices.”
He said Dan Murphy’s response to First Choice has been to deliver their “low price promise”.
“Dan Murphy’s advertise that they ‘regularly check and beat competitors’ advertised prices on a wide range of products so you get the lowest price’,” he said.
Mr Walker said subscription wine clubs and boutique eCommerce competitors were also rising, and there had been a cultural shift towards moderation, wellness and alcohol-free alternatives.
“Dan Murphy’s has responded by increasing its no-alcohol and low-alcohol ranges, experimenting with sustainable packaging, and enhancing its experiential retail elements – tastings, education, and digital concierge tools,” he said.
“Dan’s is moving from being just a liquor store to being a beverage curator.
“The consumer of 2025 wants authenticity, sustainability, and health-conscious options.
“Dan Murphy’s has leaned into ethical sourcing, organic wines, and showcasing local craft producers.
“It’s an elegant evolution – keeping the core model while broadening the edges.”
What’s next for Dan Murphy’s?
Dan Murphy’s – collectively with BWS – achieved a 3.7 per cent increase in total retail sales, surpassing $10bn in revenue as of the 2024 financial year.
Despite the sales growth, net profit after tax declined by 3.2 per cent to $512m, attributed to factors such as increased promotional activity, cost-of-living pressures and supply chain challenges.
Endeavour Group previously said they anticipate flat to modest growth for its liquor retail segment in the 2025 financial year, reflecting ongoing consumer caution and competitive market conditions.
It comes after the group reported a slight decrease in its total retail sales in May, dropping from $2.4bn in the first quarter of last year to $2.3bn during the same period this year.
Endeavour Group attributed the decline to subdued trading in the quarter and impacts from public holidays, including Easter and Anzac Day.
Mr Walker said Dan Murphy’s would likely continue expanding its role in direct supplier partnerships, exclusive private labels, and premiumisation – all while balancing its value heritage.
“Expect more omnichannel innovation, personalisation, and perhaps even a move into experiential venues or tasting lounges,” he said.
“The brand equity is strong enough to move up and down the price/value ladder.”
When asked if the Dan Murphy’s model could work internationally, industry experts were sceptical.
“The curated experience, private label development, and digital integration would travel well,” Mr Walker said.
“But liquor licensing, taxation, and local consumption behaviours vary wildly.
“The mechanics could scale, but the magic – the brand’s cultural alignment – is very Australian.”
Professor Mortimer added that most international large format supermarkets, like Tesco, Walmart, Carrefour, already offered a wide range of liquor within the supermarket at low prices.
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Originally published as Inside the rise of Australian liquor retail giant Dan Murphy’s
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