Lidl to open its first ever pub, as private label readies to shake up alcohol

Key takeaways

• Lidl will open its first-ever pub in Northern Ireland
• The venue will be both a pub and offer off-trade sales of its alcohol products
• Discounters are shifting strategies, upping their game... and thinking far more creatively than in the past

In a bold new move, Lidl has started building a pub in Northern Ireland.

The new 84 sqm public house venue will bring the retailer’s award-winning range of wines, beers and spirits to the public in a way never seen before.

It’ll be Lidl’s first ever public house: which will boast a ‘professionally managed hospitality experience’.

The venue, which will be located off its existing Dundonald store in County Down, is scheduled to open in just a couple of months.

But it’s been some six years in the making. It’s an unusual development that’s been spurred into action by Northern Ireland’s strict licensing laws.

Having been unable to get a standard off-sales licence for its shop, Lidl instead decided to build a pub where it could sell alcohol.

Rivals accused Lidl of using an unlawful loophole to operate an off-licence: but the High Court challenge was dismissed by My Justice Colton, who says the law should not stand in the way of a business taking an innovative approach.

A new creative mindset

And this is the crux of the matter. Discounters like Lidl are known for doing what they do best: big warehouse-type stores with and emphasis on value, copying, pasting and scaling this model worldwide.

They’re not known for being creative or thinking outside the box. And yet that’s exactly what’s happened in Northern Ireland. Lidl came up against a challenge, and turned it into an opportunity.

The venue will allow consumers to shop for alcohol: but it will also “provide the local community with a place to connect and enjoy a quality hospitality experience,” explained Gordon Cruikshanks, Lidl Northern Ireland regional managing director.

It will be a pub (with room for 60 people) with both on-trade and off-trade sales. That’ll include wine recommended by Lidl’s Master of Wine Richard Bampfield; to favourites from local brewers. And, of course, it will offer the retailer’s range of wine, beer, cider, spirits and liqueurs.

Taking category blurring to the next level

It’s the first time Ananda Roy, senior vice-president and industry advisor, consumer goods at Circana, has seen private label take such an innovative approach to merchardising alcohol.

“The first thing that jumped out at me is it’s a very creative bundling of product and services,” he said.

To look at it another way, Lidl is taking category-blurring to the next level: blending alcohol retail with hospitality.

And this interest in hospitality is another intriguing aspect: can discounters put a new spin on hospitality?

“We’re in a time when we’re reading about pubs closing down because of wafer thin margins and cost pressures,” he said (craft beer icon BrewDog, and pub chain Revolution, are both recent, high-profile casualties in the industry).

“It’s quite a contrast that Lidl is opening a new space, and that’s very unusual. What are they seeing that the hospitality industry isn’t? What are they building into their business case that the wider industry hasn’t been able to surface?”

Can Lidl put a modern spin on hospitality? It’s a question that’s all the more interesting when it’s being played out on an island know for Irish taverns, ‘good craic’ and, of course, beer and Guinness.

Opportunity for private label alcohol

This all comes within the context of the rise of private label.

In alcohol, the rise of private label has been less pronounced. Big brands, with decades or even centuries of brand history behind them, have kept themselves front and centre of consumers’ minds.

That’s been a powerful force: and one difficult for private label to challenge.

But things are changing. As economic uncertainty nibbles away at consumer confidence, the historic certainty in premium products is starting to wobble.

People have usually treated alcohol as a luxury category: willing to pay for those treats. And yet there’s only so far they’re willing to go.

At the same time, private label is upping its game: starting to close the gap between luxury, premium and discount.

Take, for example, Lidl’s best-selling Montaudon Champagne: a brand that costs less than half the price of Moet (at £14.99 compared to £43) and even beat the LVMH brand in blind taste tests, according to Lidl.

This dynamic has already been seen before: over the last few years, Prosecco and Cava have emerged as real rivals to Champagne.

Consumers love how the Italian and Spanish versions are cheaper, yet still fancy; affordable, and yet still celebratory.

From protein to alcohol: private label is evolving

Lidl’s move into the pub scene is a big one: but it’s not the first time discounters have looked outside their comfort zone.

Aldi Germany, for example, has introduced its Aldi Sports line (featuring protein balls, snack bars and other protein-enriched items) and accompanied that with an app that serves up nutritional information, gym discounts and events listings.

And Lidl has been upgrading its private label alcohol offering. Its wine range now boasts all the detail and enticement of the world’s best wine regions, the uniqueness of each terroir, and each wineries efforts to become more sustainable.

“Lidl have high quality wines that have been winning taste tests,” said Roy, who notes that their merchandising and presentation also does a good job of positioning their wines as attractive purchases. “They’ve already set the cat among the pigeons in terms of price-value tension.”

Lidl’s pub could shake things up a whole lot more.