Coles has cut handling and labour costs by using shelf-ready packaging and stacking cartons on pallets, and says it has passed on the cost savings to customers with an everyday low prices strategy similar to that at Kmart.

The range features gold medal-winning wines under $20 and wines rated over 90 points for less than $15.

LiquorMarket stores will also host regular in-store master classes, tastings, events and offer a price guarantee, promising to beat cheaper advertised prices.

Coles' liquor director, Greg Davis, says Coles will gauge customer reaction to the new concept before deciding whether to open more LiquorMarket stores.

"We've focused on delivering a hand-selected, unique and interesting range in LiquorMarket that offers customers the products they really want, without the need to pay top dollars," Mr Davis said.

Coles has been struggling to come up with a big-box format to compete with Dan Murphy's since launching and later abandoning the Quaffers brand more than 20 years ago, opening First Choice in 2005 and testing a Liquorland Warehouse concept three years ago.

Liquor has been a drag on supermarkets since Wesfarmers acquired the Coles Group in 2007, but analysts believe a turnaround under Coles managing director John Durkan and Mr Davis is finally gaining traction.

Deutsche Bank estimates that Coles' same-store liquor sales grew faster than food in the June quarter, rising 4.3 per cent and taking growth for the year to 2.1 per cent.


Deutsche Bank believes liquor continued to grow faster than food in the three months ending September 30, with gains at Liquorland offsetting persistent weakness at First Choice.

Coles has been opening about 30 liquor stores a year for the last six years but also closing a slightly smaller number while refurbishing existing stores, reducing prices and streamlining its product range.

"We're now starting to see some of the benefits of a sustainable strategy," Mr Durkan told analysts in August.

"Just as it was in Coles, it's about getting more customers into our stores, turning those customers' transactions into sales, and eventually turning them into high profitability."