Historically the New Zealand beer industry has been dominated by two large brewing companies: Lion Breweries(owned by Kirin) and DB Breweries (owned by Asia Pacific Breweries, now a subsidiary of Heineken). However, emerging craft breweries are challenging their larger counterparts.
Craft beer makes up around 2 per cent of beer sales in New Zealand. If the craft ranges produced by the three bigger breweries are included, this number is around 10 per cent.
This, too, matches statistics in the US, where craft beers have grown by 10 per cent annually over the past five years.
Helping this growth is the upward trend of increased consumption of beer with over 5 per cent alcohol content, and it just so happens that high-alcohol beers tend to be high-hopped craft beers.
“Craft beer is the shining light of the New Zealand beer market,” says Ben Shaw, Head of Beer at Boundary Road Brewery. Craft beer is expected to grow as the Auckland market catches up with Wellington’s, and as New Zealand catches up with more overseas markets like Melbourne and Portland, Oregon.
Creating brand loyalty and expanding supply to meet growing overseas demand for craft beer are key success factors.
Challenges and opportunities
New Zealand has a large number of craft beer brands for its small domestic market and cultivating brand loyalty becomes increasingly important in a crowded domestic market.
“Craft beer drinkers are not easily fooled by sleek advertising campaigns… if it’s a big brewery pretending to be a little brewery they can see it,” says Carl Vasta, founder of Tuatara.
Successful craft brands have an authentic backstory, creating a connection with the region, the ingredients and the brewers.
Craft beer drinkers enjoy variation and tend not to be loyal to a particular brand. Some breweries address this challenge by frequently creating new beers, so their range is ever-changing.
However, large brewers are taking notice and encroaching on the craft space with their own brands aimed at the boutique end of the market. These companies have well-established distribution networks, large teams of sales representatives and high marketing budgets and are well placed to expand abroad.
Bennett says that while the opportunity is enormous, New Zealand brewers and hop growers will need to significantly expand production to take advantage of increasing demand in overseas markets.
The challenge for craft brewers is to grow production quickly and without compromising quality or uniqueness.
“If brewers are serious about taking advantage of this growth, then funding for brewery plant and equipment, working capital commitments and managing foreign currency requirements must be as much a part of their business success story as the right bottle, bitterness and body.”
Stefan Herrick - Senior Manager External Communications, Corporate Affairs ANZ NZ.