More booze on New Zealand shelves in 2016 as craft beer in demand

Friday 24th February 2017

Higher retail spending and improving consumer confidence looks to be spilling over into New Zealand's liquor market.

Data from Statistics New Zealand showed the total volume of all alcoholic drinks available for consumption rose 4.2 percent in 2016. Beer, wine, and spirits volumes all increased. This contrasts with 2015 when there was little overall change in the total volume available and a 2 percent fall in 2014. The volume figures reflect the volume of alcoholic beverages released to the domestic market, rather than what is actually consumed.

The total volume of pure alcohol, expressed as the number of standard drinks available per person a day, rose 5.1 percent in 2016, following a 2.2 percent fall in 2015.

“There was enough alcohol for each adult New Zealander to drink the equivalent of two standard drinks a day,” international statistics manager Nicola Growden said. “This is 500ml of 5 percent alcohol beer, or two glasses of wine per person.”

New Zealand's economy has been underpinned by an expanding population, strong tourism, and a buoyant property market stoking consumer spending, while the labour market has remained robust with new jobs being created for the inflow of migrants.

Retail spending data backs up the trend with recent data showing the total value of retail sales, seasonally adjusted, rose 1.1 percent on quarter in the December quarter to $21.08 billion. The value of liquor sales rose 1.9 percent on the quarter to $407 million.

While the ANZ-Roy Morgan consumer confidence index eased to 127.4 in February from 128.7 in January, it was up on a seasonally adjusted basis. "The economic landscape looks pretty radiant for consumers," ANZ Bank New Zealand chief economist Cameron Bagrie said at the time.

Statistics New Zealand also noted 17 percent more high-strength beer was available than in the prior year, when it jumped 38 percent. "The volume has doubled in the last five years, reflecting the growing demand for craft beers," said Growden. Major brewers have sought to cash in on that demand with a recent string of deals.

Earlier this month, Lion - Beer, Spirits & Wine (NZ), the local unit of Japanese brewer Kirin Holdings, announced it will pay as much as $25.1 million for its newly acquired Panhead Custom Ales craft beer brand. Lion agreed to buy Panhead in May last year from the family of founder Mike Neilson and New Zealand managing director Rory Glass said the brewer had struggled to keep pace with demand. Glass cited sales growth for its craft beers and the trend of "premiumisation", where consumers seek out better and more expensive beers, for the company's 12 percent gain in profit in 2016.

In late January, Heineken-owned DB Breweries, which owns bars and liquor brands including Tui, Monteiths and Redwood Cider, announced it bought Kapiti boutique brewer Tuatara Brewing Co for an undisclosed sum.

In contrast, the amount of available low-strength beer - below 2.5 percent - fell 3.5 percent in 2016.

BusinessDesk.co.nz

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