Beer Cartel has announced it will close its Artarmon store and transition to an online-only model. The decision follows the company’s move to a new warehouse in St. Leonards to bring its retailer and gifting arms in-house.

Director and co-founder Richard Kelsey said the decision was led by the demand of the online side of the business, which was propelled through COVID, along with its beer gifting business Brewquets.

“At the start of 2020 or 2021, we actually were under so much pressure at our one location that we had to get a second location for Brewquets, which was basically operating out of five different Kennards storage sheds for the last couple of years,” he told Brews News.

“That, in itself, was never going to be a long term solution. It was basically kind of allowing us to make sure that we could fulfil all the orders that were coming through and manage everything.

“But I guess we knew that we needed to take it a step further for the business and bring it back to one location.”

As the lease for its physical store in Sydney’s Artarmon was set for renewal, the business decided to bring both units in-house at one warehouse, including the production of its beer advent calendar project.

“So normally, each year, we’re doing that off site and it’s a pretty massive project, that means that we’ve got to put trust into someone else’s hands,” Kelsey said.

“By bringing it on to the one location, we can now make sure it’s all being fulfilled under our watch and knowing the quality and how we do things, gives us a bit more security on making sure it’s done to the level that we’d love it to be done.”

Online growth

Beer Cartel first launched as an online only retailer in 2009 before launching its bricks and mortar store in 2011. While it has always had an online focus, director Richard Kelsey said now is the right time to transition to an online-only model.

“Online is still a growing area,” he said. “So I think around about 25 per cent of Australians in the last year purchased online and that’s only going to continue to grow.

“Basically COVID kind of accelerated things, and then coming out of COVID, lock downs and everything, it’s kind of fallen back a bit. But what we’re expecting is over the next few years, that’s going to continue to increase.”

Having a wider range is not feasible with a sole bricks and mortar store, which can be limiting for businesses trying to scale, according to Kelsey.

“So if you’re going to have a retail store, with the same kind of range, you do need to have something that’s pretty reasonable in size,” he said.

“A store allows you to service one area, whereas online allows you to service all of the country.

“So it means that you’ve got a much bigger population base that you can reach out to and I think that is probably the biggest opportunity and probably the biggest attraction of online, is that you can get much bigger growth than then you could from having a single store.”

While its bricks and mortar store has seen few competitors, according to Kelsey, the business has invested heavily in marketing, with its 2022 financial year results reporting a 107 per cent increase in advertising and marketing expenses.

It also completed a $1.5 million crowdfund raise last year, which was intended to be used as a boost for infrastructure and marketing capabilities.

“The increase is in part driven by the crowdfunding raise done and having sort of additional funds to be able to focus on to advertising,” Kelsey explained.

“We were trying to, I guess, try different areas of growth, to see what the opportunities were for scaling things and we’re still sort of working through that.”

He also explained that advertising costs continue to rise for e-commerce businesses.

“I think the other side of it is that the last year has become more expensive just to advertise online, which we’ve definitely seen.

“If you talk to most e-commerce retailers at the moment, there’s that definite higher advertising costs that people are experiencing.”

Despite the challenges in maintaining a physical store, Kelsey said it could still be on the cards in the future, with the right partnership.

“I think there’s definitely opportunity in bricks and mortar and we’re definitely not writing it off,” he said.

“It would be something that we’re interested in and ideally it’s finding a partner within the industry that has that sort of bricks and mortar experience or capability to then leverage that.

“It’s a different kind of philosophy from online, and it’s probably a different approach to what we do day in, day out.”

Beer Cartel’s store at Reserve Road will have its last day of operation on 31st December before transitioning to online-only.

“The main thing for us is we’re excited about the shift and we definitely appreciate everyone that has visited the store over the last 11 years, and definitely without having the store, we wouldn’t be where we are today,” Kelsey said.

“From here, our philosophy is trying to bring offline sides of business online, so that you’re not missing completely on the experience that you’re getting in store.

“As well as looking at the opportunity for Beer Cartel down the road, whether it’s additional stores or how we can kind of work to get close to the customer.”