I asked brewers around the country their opninion on the state of the nation beer-wise, and whether their pint glass was half-full or half-empty.
To my surprise, they were overwhelming optimistic despite a tough few Covid years and now with inflationary pressures, carbon dioxide shortages and supply chain issues.
Ralph Bungard (Three Boys, Christchurch)
The short answer from us here is that the cup is half full.
We have had a great summer of hot weather (sorry north) and that combined with our first real summer for a few years without disruption from Covid, business has been very good.
We have always had a strong Ōtautahi and Te Wai Pounamu focus and that has paid dividends in recent years with the way the city is thriving.
Price increases have been a pain, but we have taken the attitude recently that we can only pass those cost on. The way we do that is largely just to have an annual, scheduled, price increase at the rate of the CPI. We find that tracking with CPI annually pretty much covers all the subtleties of price increases in our manufacturing from wages through rent to ingredients. You do win some and lose some using CPI, but as long as we make it happen annually, then it does not come as a great shock to our customers, and it is very easy to explain the logic of the increase if we are ever asked.
Having said all that, the issue with alcohol pricing from large multinationals and supermarkets in NZ is not helping smaller providers stay ahead — it seems that the large multinationals/supermarkets have continued to negate, or absorb, price increases on their budget booze; probably simply a reflection of how those companies see booze sales as a valuable marketing tool.
On that note, we have not seen punters tightening their belts when it comes to our sales (touch wood!). Three Boys work hard to stay in the “affordable treat” end of the market and it could be the old “stockings and lipstick” adage. All in all, things are looking very positive in the market and we look forward to that continuing.
Bruce Turner (Urbanaut, Auckland)
The recent CO2 shortage has made brewers reconsider their CO2 consumption and consider or even fast-track investment in CO2 capture & recovery. It’s been tough for many breweries to maintain production, but the longer term benefits with breweries with having more self-sufficiency, lowering emissions and breweries have the unique position compared with other users of CO2 (food production / hospitals / venues) we can recover from fermentation and processing, so it frees up CO2 for other industries that rely on it, but can’t produce their own.
Evaluating emissions and reducing environmental impact will become a key parameter for breweries. The longer-term benefits will be realised as consumers and trade partners expect it. By breweries making this a priority it will contribute to New Zealand being a quick adapter in climate change progression.
Consumer-driven flavour exploration is constantly growing and evolving. Our Hazy IPAs featuring flavours like Jam Donut, Raspberry Lamington and Toasted Marshmallow continue to be our fastest selling special releases. For brewers it tests our skills in creating flavours not usually seen in beer, while maintaining a true to type beer style as the foundation. It leads to more creative approaches to ingredients and brewing processes which challenge and reward, with the outcome of bringing new drinkers to our industry and reinvigorating the beer drinking experience.
With increasing material and freight costs, we review every business spend and seek efficiency improvements to find where we can reduce costs, before needing to pass on increases to customers. There will likely be a continuation of this throughout 2023.
Hospitality in Tāmaki Makarau Auckland seems to be thriving even with talk of tightening of consumer spending. Possibly the increased cost of supermarket purchasing gives apparent value to going out to eat and drink.
It’s a great time for breweries to spread risk by maintaining different revenue streams. With the ‘don’t put all your eggs in one basket’ mantra, mitigating risk through exporting, contract work, running your own venues, festivals that deliver a profit to the brewery, merch, partnering with on-line retailers etc is crucial in times of unknown times ahead.
Jos Ruffell (Garage Project, Wellington)
I think we’re just starting to match what we’ve seen in the United States – if you’re a brewpub and that’s your focus, that’s fantastic. What we are going to see go away are brewpubs thinking they should contract brew to release for supermarkets, that’s what disappeared out of the states. Distribution is hard and expensive and supermarkets are starting to rationalise down the sheer number of SKUs (stock-keeping units) as well so if you’re small to medium and doing retail distribution that’s where the crunch point is.
If you’ve managed to get a bit of scale, it’s not so bad but if you’re trying to grow volume it comes at a cost.
Are we in good position? Yeah. We’re diversified across the number of markets, number of channels and the number of beers. Even having diversified production bases we’ve been able to move beers back from bStudio to Aro Street to get them moving [when there was no CO2 at bStudio].
Paul Finney (Emporium, Kaikoura)
We didn’t have a benchmark of pre-earthquake here in Kaikoura or Covid, so for the first time since we started, we’re looking at a clear run. And things seem to be going ahead in Kaikoura, there’s a new Sudima hotel opened, and it’s been busy.
I think it can get hard when you’re chasing constant growth or chasing the supermarket shelf space because soon there won’t be room for everybody. I’m not chasing that constant growth. We do a little bit of contract brewing to help out.
Trying to keep cost of beer down is impossible. When we started, we had everything at $10 in the pub and some have crept up to $11 but we’re still relatively cheap. You pay $14 for a pint of Supercharger down the road. Despite all the rising costs of CO2 and malt, the budget shows we’ll make some money this year — I might even be on minimum wage soon!
Luke Robertson (Shortjaw, Westport)
It’s a hard question to answer for us as every step has been a battle. Moving home during Covid, setting up during flood evacuations, and costs rising daily. If I’m honest I spend much of my time staving off (and having) panic attacks. And after a year in Westport, I realise why this brewery has sent multiple people bust. It’s an old money-pit of a building trying to sell 2500-litre batches in an isolated part of the world.
However, of course my glass is half full. How can it not be? I’m walking into an industry where breweries have paved the way, educating people on beer. I have customers, well into retirement. asking for hazies, and all genders drinking pints of dark lager. As an industry we’ve achieved so much in a short time. Even if Shortjaw doesn’t make it through the next 12 months, we’ve done our best to champion local ingredients, support other small businesses, and add value to our local community. It might send us broke, but it’s a journey and for us, that’s the whole point.
Jesse Sigurdsson (Shining Peak, Taranaki)
We’ve been going really well. We’ve got a popular restaurant and bewpub and it goes well in the sense of feeling of comfortable. And we’re in the early stages of growth where we’ve been very Taranaki focused and limited in what we’ve sold around the country. But we’ve just signed up for Hop N Vine for distribution, and once we’re more established with them and in a few more places around the country I think we’ll see those fluctuations but at the moment it’s growth, after growth, after growth and it feels good, but it’s probably a honeymoon kind of a feeling and it’ll be interesting to see, once we’ve hit that saturation point, what they can do for us and what we can do for ourselves. Brands that are already in every supermarket and in as many bars as they can be, it’s probably a very different story and there will be some businesses hurting. But people aren’t going to stop liking beer – things are skewed at the moment, but everything will balance out eventually and I’m always optimistic.
Grant Caunter (State of Play)
The beer landscape is at its best when the big brewers need, want and follow what the independents are doing. We have seen this in the past with acquisitions, following trends like IPAs and hazies, and new formats. So it’s not great for NZ craft when DB had to look to Australia and bring in Better Beer.
The problem is that the NZ craft industry has gifted all their secrets to big beer. And the global players are now taking these trends and techniques and storylines for their advantage. That’s what they do. It’s good business. The issue is that NZ craft hasn’t had a cycle of reinvention in the past three years to keep the big guys guessing, acquiring and chasing.
The answer: to be the leading edge of innovation and address the new needs of drinkers in NZ who will pay more, when there is a good reason to. The drinker wants to drink good beer, with a good story, that’s worth paying more for. That includes beer with functional benefits (low carb, no alcohol), social benefits (you follow the money and it ends in a good place), new social experiences, with a genuine local story (a better Better Beer story), a human connection. New styles and new techniques – especially around natural flavours, yeast and hop formats will be important as will formats – as we now all look the same in store, in the same cans and packs. New distribution concepts to get around grocery reliance include the direct-to consumer model pioneered by Beer Hug, Beer Jerk, Craft Box Direct. All this is what the craft industry does, especially when it looks a bit grim, that’s why I’m optimistic. Buckle up.