OBJECTIVE: Alcohol outlets tend to be located in lower income areas, exposing lower income populations to excess risks associated with alcohol sales through these establishments. The objective of this study was to test two hypotheses about the etiology of these differential exposures based on theories of the economic geography of retail markets: (a) outlets will locate within or near areas of high alcohol demand, and (b) outlets will be excluded from areas with high land and structure rents. METHOD: Data from the 2010 National Drug Strategy Household Survey were used to develop a surrogate for alcohol demand (i.e., market potential) at two census geographies for the city of Melbourne, Australia. Bayesian conditional autoregressive Poisson models estimated multilevel spatial relationships between counts of bars, restaurants, and off-premise outlets and market potential, income, and zoning ordinances (Level 1: n = 8,914). RESULTS: Market potentials were greatest in areas with larger older age, male, English-speaking, high-income populations. Independent of zoning characteristics, greater numbers of outlets appeared in areas with greater market potentials and the immediately surrounding areas. Greater income excluded outlets in local and surrounding areas. CONCLUSIONS: These findings are consistent with the hypothesis that alcohol outlets are located in areas with high demand and are excluded from high-income areas. These processes appear to take place at relatively small geographic scales, encourage the concentration of outlets in specific low-income areas, and represent a very general economic process likely to take place in communities throughout the world.