New report shows growing focus by kiwi craft brewers on exports; off premise sales up 42%

Thursday 13th August 2015

More than a third of New Zealand’s craft beer brewers are exporting and another third say they plan to expand into global markets within two years, an ANZ Bank New Zealand industry survey shows.

Although overall beer consumption has fallen 12 percent in New Zealand since 2008, the volume of high strength beer has almost doubled since 2009 reflecting the growing demand for craft beers as the number of craft brewers also jumped to 111 from 52 in the past five years.

Off-premise retail sales of craft beer rose 42 percent in the past year, partly with more people drinking at home or with friends since the new drink drive laws came into effect. Within the past two years the craft segment has risen to 13 percent from 9 percent of New Zealand’s total beer sales, according to ANZ’s Craft Beer Industry Insights report, released on the eve of Wellington’s Beervana expo. That figure includes craft beer from the major brewing companies, DB Breweries and Lion, while independent craft brewers are understood to account for around 2 percent of total beer sales.

With intensifying domestic competition, the report says 25 craft brewers are pursuing sales overseas, and another 20 are considering doing so in the next two years.

ANZ regional manager Rob Simcic said there has been a material shift in thinking about overseas markets in the past year with production soaring.

“New Zealand breweries are now selling beer in over 40 countries and they tell us exports are just getting started,” he said.

Sales to Asia have more than doubled in the past two years to $2.7 million, half of which is going to China, the world’s largest beer consumer overall. However, on a per capita basis China consumes just over half that of New Zealand. The US craft market is the most developed and grew 18 percent in 2014.

The report says there is a high level of collaboration across the industry including the NZ Craft Beer Collective started in February which was modelled on the successful 'Family of Twelve' wine export collaboration.

The collective involves five companies - Yeastie Boys and Tuatara Breweries in Wellington, Renaissance Brewing from Blenheim, 8 Wired Brewing Co from Warkworth, and Three Boys Brewery from Christchurch. It signed Instil Drinks Co as a distribution agent in the UK and Tuatara chief executive Richard Shirtcliffe said all the companies have since had phenomenal growth in that market.

Tuatara Brewery alone has seen a 350 percent increase in UK exports, he said.

“I don’t care if the other companies in the collective gain more foreign market share than we do as long as we have good earnings growth,” he said.

Other craft brewers will eventually be invited to join the collective and the existing ones are eyeing up other markets to target collaboratively. Shirtcliffe said kiwi companies in general don’t tend to collaborate well in offshore markets despite the obvious benefits of selling a unique New Zealand story with a myriad of brands.

The report found NZ craft brewers are attracting investment at twice their annual revenue which is higher than other industries and markets and reflects strong growth expectations.

Some 80 percent of brewers cited 'following my passion' as their top reason for being in business.

BusinessDesk.co.nz

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