Nov 17, 2022
Beer Consumption Returning To Pre-pandemic Levels. But Rising Costs Likely To See Profitability Gains Lost.
“Just released Statistics New Zealand figures show that overall beer consumption has returned to pre-pandemic levels. The data for the first six months of 2022 shows overall beer available for consumption in New Zealand has rebounded from the lows seen in 2020 due to the enforced lockdowns which closed hospitality businesses. The 7.25%[1] increase for the first six months of the year compared with the same period in 2020, reflects the work businesses are doing to remain open and return to normal trading.” Said Brewers Association Executive Director Dylan Firth.
“There has also been a continued shift from the traditional mainstream 4% alcohol by volume products to beer of 4.5% Alcohol by volume and over which has increased nearly 30% in the last 6 months. These types of beers traditionally would represent craft and premium brands. This reflects our understanding from sales data that consumers are looking to focus on quality and premium brands when they choose to enjoy a beer.”
“The data comes on the back of some slight volume decreases at the end of 2021 when Auckland experienced a prolonged lockdown.”
“What we saw over the last 2 years was when lockdowns were announced there were some short bursts of retail activity, where consumers would stock up. But over the course of these lockdowns, people would be drinking less overall. This very much goes against the narrative that some were portraying of New Zealanders drinking to excess over this period.”
“While it is encouraging to see the industry rebounding from an extremely difficult time, the road ahead is certainly not free from difficulty”
“In 2021 New Zealanders paid $1.22 billion in alcohol excise, set to increase to $1.3 billion for 2022. An increase of $28.3 million for beer alone, due to record levels of inflation which is linked to level of alcohol excise tax.”
“Not only are we seeing record levels of excise increase, which are likely to continue into 2023. Proposals from government on a mandatory container return scheme will mean beer producers will be hit with over $8 per 24 pack costs. With a range of other costs already increasing, brewers have little or no capacity to incur this extra cost and will likely need to pass it on to consumers.”
“With New Zealand in a period of high inflation and resulting cost of living pressures on our customers, the government looking to add such a significant extra cost onto the price of our beer is extremely concerning”
“The New Zealand brewing industry was worth $2.8 billion last year. Supporting over 6,600 jobs through brewing and the purchase of intermediate inputs into the brewing process, paying over $409m in wages. Not to mention $810 million last year in GST and Excise Tax.”
“The sector is extremely diverse and the largest to smallest breweries have really worked hard with major shifts in how they do business to pull back from a hugely difficult 2020 and 2021. While we are seeing some positive trends, there is no doubt difficult times ahead.” Said Firth
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