Australian retailer Woolworths is to take a 25% stake in boutique brewer Gage Roads as part of a 350,000 case annual supply deal.

Woolworths - unconnected with the collapsed UK retailer or South African chains of the same name - will pay AUS1.9m (US$1.4m) to Gage via a private placement.

The funds will be used to increase Gage's capacity from 300,000 to 400,000 cases per year in order to supply Woolworths with a so-far unnamed private label beer.

"It's a very good quality-tasting beer - we haven't made a beer at Gage Roads that hasn't won an international award," said Gage CEO Nick Hayler.

The beer will be Woolworths' second private label brew, following last year's launch of Platinum Blonde, a reduced-carbohydrate product made under licence by Independent Liquor.