Australian supermarket group Coles Myer has admitted defeat in the takeover battle for Australian Leisure and Hospitality Group (ALH) after rival bidder Woolworths said it had secured more than 20% of its target.

Woolworths, with pub operator Bruce Mathieson, was forced to raise its bid to A$1.33bn (US$0.99bn) in an effort to knock Coles Myer out of the race.

The liquor retail market is seen as the next expansion and competition battleground for the two retail rivals. Woolworths already has a 22% share of the national liquor retail market, while Coles Myer has 17%. ALH has a market share of about 4%

Acknowledging defeat, Coles Myer said it would look elsewhere for opportunities to grow its liquor business, reported Reuters.

"In our view, a greater offer would not be in the best interest of CML's shareholders," chief executive John Fletcher was quoted as saying.