Pricier craft beers rising to the top
Industry’s rapid growth eases but opportunities abound, says expert
The average price for a litre of craft beer has risen in the past year, a sign that consumers are increasingly prepared to pay a premium for quality beer.
But industry growth slowed in 2016 despite craft beer still managing to take a larger share of the total beer market, according to the annual ANZ Craft Beer Industry Insights report.
The report released yesterday showed there were now 194 craft breweries in New Zealand, up from 168 in 2015 and 96 in 2014, producing more than 1600 unique beers.
Small breweries accounted for 5.8 per cent of total beer consumption by volume — up from 4.9 per cent in 2015.
But by value they account for 10 per cent of consumption, up from 8.5 per cent in 2015.
The survey defines small breweries as those whose total production volume is less than 1 per cent of the total volume of beer produced — that included NZX-listed Moa as the largest independent brewery.
While the industry growth rate had dipped — down from 28 per cent to 22 per cent by volume, and 32 per cent from 39 per cent by value — it was too soon to say it had peaked, said John Bennett, ANZ general manager, central region, commercial & agri.
But there was a sense that the industry was approaching a crossroads where supply was meeting demand, he said.
“Obviously it’s all a question of relativity, there are plenty of industries that would be happy to grow at that rate.”
The opportunity and challenge for the industry was to keep growing demand and the way to do that would be to keep the focus very much on quality, he said.
The report found that the median price per litre for craft beer had risen year-on-year to $15 per litre and the average price was up slightly at $8 per litre.
The rise was being driven by big volume increases in the $10-$15 per litre category and a sharp increase in the $20 per litre category.
The report warned that the continued growth in new entrants presented some risk.
The impression of strong sector growth makes opening a small brewery appear financially attractive to investors, banks and life partners, it concludes.
“This attractive impression may well be fuelling the race to enter the sector.
“The sector is young and inexperienced — even assuming no one has dropped out of the sector, at least 37 per cent of the production breweries operating in 2016 had been in the sector for less than three years.
“And all of the small brewing sector’s expansion phase has happened in the stable economy after the global financial crisis. Very few of the small breweries currently working in New Zealand have survived a recession.”
But broadly the industry looked to be in good shape both structurally and financially, Bennett said.
And there was still plenty of opportunity.
“People who are consuming craft beer are always going to be looking for something new so there are always going to be those opportunities to come into the market,” Bennett said.
Exporting remained a challenge for the industry with exports remaining static at about 10 per cent of beer production.
There were issues such as cool chain continuity impacting the shelf life of the more volatile styles of craft beer, Bennett said.
“It’s a challenge worth solving. The more mature New Zealand wine sector exports approximately 80 per cent of annual production for export earnings in excess of $1.6 billion.”