Australian liquor groups Independent Liquor Group (ILG) and Southern Independent Liquor (SIL) intend to join forces to form a new entity, ILG Australia, to compete with retail giants Woolworths and Coles.

The consolidation will create a group of 1600 independent liquor stores across New South Wales, Queensland, Victoria and Tasmania.

ILG Australia will be structured as a co-operative owned by its customers and SIL will add its Duncan’s banner group to ILG’s Little Bottler, Pubmart, Clubmart, Basix Liquor, Liquor World and Super Cellars banners.

ILG chief executive officer Doug Evans said ILG Australia would use its buying power to negotiate better deals with liquor suppliers, helping them to be more price competitive.

"For too long, the liquor giants have spoken about us as ‘roadkill’, but we are back. We intend to reverse the domination of the chains which has crept up on our industry over the last decade," Evans said.

SIL MD David Stephenson said the integration will be completed over the next 18 months.

"More immediately, our combined turnover will increase to $340m with immediate benefits and we believe that ultimately $400m annually is achievable," Stephenson said.

"Negotiations will be easier for suppliers as they can access 1600 stores with a single contact person, they will be able to build brands independent of the decisions of the major chains."

The new entity will launch its first campaign ‘Support your Independent’ to garner support from consumers for its banner groups and will also invest in new branding and advertising to boost the benefits of shopping at its local independent bottle shop.

ILG Australia is also expected to compete directly with Metcash, a wholesaler which supplies independent bottle shops trading under the IGA Liquor, Cellarbrations and Bottle-o banners.

ILG supplies wine, beer and spirits to more than 1200 hotels, bottle shops, licensed clubs, bars and restaurants across New South Wales and Queensland.