As the New Zealand liquor industry continues to rebuild after COVID-19, we asked executives to reflect on 2023 and share their insights for the year ahead.
Dylan Firth
Executive Director, Brewers Association of New Zealand
The New Zealand beer industry in 2024 will unlikely see significant growth, but after a turbulent 2023, ‘steady’ is a relief for some as inflation levels gradually recede from the highs experienced in 2022 and 2023. This positive trajectory, however, occurs against a backdrop of ongoing challenges, including high levels of debt for both consumers and business owners alongside continued interest rate pressure. The recent closures of some breweries, which can somewhat be attributed to this perfect storm of economic factors, have been an unfortunate outcome.
As inflation eases, one positive impact on the New Zealand beer industry is the potential relief on production cost increases. Breweries may find some respite in what has been a steady increase of input good prices. This could be particularly beneficial for small and independent breweries that have traditionally seen greater impact by these shifts.
Inflation is also linked to the level of annual alcohol excise increase, and with the last two years of record increases since the current excise model was introduced, any reduction in the CPI to the year ending March 2024 will be welcome. Although this is still expected to be sitting around the 5% mark if current trends are anything to go by.
Despite a more favourable inflationary environment, the burden of existing debt may constrain spending and investment, affecting the industry’s overall growth. Breweries will need to navigate this challenging environment by adopting prudent financial strategies and exploring other opportunities such as focusing on hyper local markets through tap rooms and their own ecommerce platforms with lower overheads than traditional distribution through third parties.
Amidst these challenges, certain trends are expected to persist and shape the industry’s landscape. The growing demand for low and no-alcohol beers is anticipated to continue. Health-conscious consumers have for the last few years driven this segment of the market and more breweries are looking to make their mark in this space finding new avenues for growth.
Simultaneously, the low-carb category is predicted to maintain its strong presence. As with the low and no alc segment, the appeal of low-carb beers aligns with changing consumer preferences.
2024 will hopefully see some stabilisation of the economic environment, allowing breweries to focus on their core role of providing quality product to market and planning for future innovation to an ever-changing consumer preference.
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