Wests director Alf Loretan says he's "very disappointed" by a recent Alcohol Regulatory and Licensing Authority decision against his Dunedin business.

Dunedin's mayor has lashed out at "ridiculous" alcohol licensing legislation after it cost a local company its licence to sell booze from its factory shop.

Wests (NZ) Ltd has lost its fight to keep its liquor licence. The company has been trading in Dunedin for 140 years.

It claims on its website to be "New Zealand's oldest continuous manufacturer of cordials and soft drinks". It also brews and stocks alcohol.

HAMISH McNEILLY/FAIRFAX NZ To qualify for a liquor licence, Wests needed to prove 85 per cent of its sales were for alcohol, which it did not do.

The case was heard by the Alcohol Regulatory and Licensing Authority (ARLA) earlier this month, after Southern medical officer of health Marion Poore and Dunedin district licensing inspector Martine Cashell-Smith appealed a decision by the Dunedin District Licensing Committee (DLC) to renew Wests' liquor licence.

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The application for renewal drew no public opposition nor any objection from police.

Under the 2012 Sale and Supply of Alcohol Act, councils are required to implement new alcohol licensing laws and can develop a local alcohol policy for their region.

Dunedin Mayor David Cull said the legislation was hard to make sense of.

"To drive a small company out of business because it sells both cordial and alcohol in close proximity, when supermarkets do the same, isn't logical," he said.

Cull said it was pointless to have a local DLC if any decisions it made were going to get overruled.

The appeal focused on the company's use of a curtain to separate the two sides of its business – which trade under "Wests Cordials" and "Wests Southern Liquor".

Poore and Cashell-Smith argued the curtain did not stop all customers using the same till and entering through the same door.

That meant it was the same premises and in order to qualify for a liquor licence, it needed to prove 85 per cent of sales were from alcohol – which it had not done.

ARLA agreed, overturning the DLC's decision to renew Wests' licence.

Wests director Alf Loretan said the irony of the situation was that if more alcohol was sold, then the shop would meet the criteria for selling alcohol under the act.

He was "very disappointed" by the decision, and thanked the community for its support.

"We'll have to see where we go from here," he said.

"It just shows that the local community, in reality, has no say at all."