In our new Q&A series, we ask executives in the New Zealand liquor industry for insights into their companies, the industry as a whole and what we can expect in the future.
This week we speak to Michael Morton who has been Managing Director of independent beverage distributor, Federal Merchants, since January 2024.
With the growing consumer demand for premium and craft spirits, how is your company adapting to meet these expectations?
“At Federal we have always been focussed on premium products and growing value, so we are well placed to meet this demand. Consumers have so much choice nowadays, so products have to be good otherwise they simply won’t sell. We have a wide range of brands in all categories, and we like to make sure we have a mix of local and international products.
“One thing we are doing is investing more time to upskill our team and offering tastings and training to on- and off-premise customers so they all feel more confident to be able to sell the premium-end products we have.”
Sustainability and responsible drinking are key industry topics – what initiatives is your brand implementing to support these values?
“Sustainability has gone from being something that businesses can opt into to something that is a must do. Not just because it is the right thing to do but when we are pitching for new business, our clients and customers are demanding it and asking questions about what our sustainability practices are. You now need to include information on them in new business tenders, which I think is great.
“We have a number of our own sustainability practices in our office and warehouse, such as removing the use of any plastic space fillers in cases.
“Our brand partners have many examples of things they are doing and they all take it very seriously. One example is Glenfiddich, which has pioneered a completely closed loop transport initiative, running its fleet on biogas made from residues from their distilling process.”
How has the rise of low- and no-alcohol beverages impacted the market, and do you see this as a long-term shift or a passing trend?
“The moderation trend is here to stay. More and more people are choosing to drink less, drink lower or non-alc, and trends like “zebra striping” and “damp drinking” are now part of what we talk about when looking at changing consumer drinking behaviour.”
What challenges are currently facing the liquor industry in New Zealand?
“The market is still tough for suppliers, retailers and on-premise owners. On the supply side, all production costs are going up, the New Zealand dollar is weak so imports are costing more, distribution costs are higher and we have a super-sensitive consumer who is dealing with their own cost of living increases. So it’s very hard for everyone in the supply chain to maintain margins.
“As always, we need to constantly adapt to the ongoing changes in the way we are regulated and how we can operate as an industry. For example, we have seen the introduction of 9pm closing [for off-premise businesses] in Auckland recently and I am expecting to see that rolled out around the rest of the country this year.”
Looking ahead, what innovations or new product developments can we expect in the coming year?
“We can expect more innovation in the low- and no-alcohol space and we all know how important NPD is in the RTD category. At Federal, we have a busy innovation pipeline coming in RTD this year.
“Consumers are still looking for convenience when hosting at home, so premixed cocktails and large format RTDs are also likely to see more innovation this year.
“My wildcard pick that is popping up overseas is the increase in beverages with functional claims. It is difficult to get right, and suppliers need to be careful with any claims they make but don’t be surprised if we see some beverages with functional claims hit stores this year.”
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