The alcohol industry in New Zealand
It is important to learn about the alcohol industry as they have a large influence on national and local alcohol decisions in New Zealand.
In New Zealand, the production and sale of alcohol is a multi-billion dollar industry. The key players can be broadly categorised into four groups:
- Growers – e.g. vineyards;
- Manufacturers - wineries, breweries and distillers;
- Retail distributors - supermarkets, bottle stores, grocery stores
- Hospitality sector – cafés, restaurants, bars and clubs.
This section will focus on the alcohol industry as it relates to consumption in New Zealand.
Background: What New Zealanders drink
Amount of alcoholic beverages we drink
Because a tax is placed on all alcohol beverages, every 3 months (when the amount of tax paid on alcohol is released) we can see how much alcohol is available for consumption in New Zealand and how much is exported. From the domestic figures released by Statistics New Zealand, in the year 2019:
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490.8 million litres of alcoholic drinks were available for domestic consumption:
- 297.8 million litres of beer,
- 108.3 million litres of wine,
- 84.8 million litres of spirits and spirit-based drinks.
New Zealanders drink more beer by volume - we drink over 2.7 times as much beer than wine, and over 3.5 times as much beer than spirits & spirit-based drinks.
Volume of pure alcohol from these beverages
The same volume of different beverages can contribute different amounts of alcohol for consumption. For example, one litre of spirits has a higher alcohol content than one litre of beer.
Therefore in terms of pure alcohol available, each type of alcoholic beverages contributes a similar proportion of pure alcohol:
- 13.1 million litres of pure alcohol comes from beer,
- 11.2 million litres from wine,
- and 11 million litres from spirits and spirit-based drinks.
This totals 35.3 million litres of pure alcohol per year or 8.9 litres per person aged over 15 years. This means that every New Zealander drinks an average of almost 2 standard drinks per day. However, in reality, we know that rather than New Zealanders drinking small amounts daily, almost half of all alcohol (46%) in New Zealand is consumed in heavy drinking sessions.
Generally, about 87% of all the alcohol sold in New Zealand is produced locally, and 13% is imported. Bottled spirits are more frequently imported in comparison to beer and RTDs which are often made in New Zealand. We also export about 33% of all alcohol made in New Zealand.
The largest producers of alcohol in New Zealand
The two major alcohol producers in New Zealand are Lion Pty Ltd and DB Breweries Ltd. Both companies are owned overseas. Among the top five producers, only Delegat’s wine is a New Zealand-owned company.
The beer industry
Two major breweries dominate the New Zealand beer market: Lion and DB Breweries. The key consumers of beer in New Zealand are young adult males.
Although beer became available in supermarkets in 1999, there has been a downward trend in the volume of beer sold in New Zealand, from 322.5 million litres in 2008 to 279.9 million litres in 2012. Since then, there appeared to have an increasing trend in the volume of beer available for consumption. in 2019, there were 297.8 million litres of beer available for consumption.
Recent trends show that there has been growth in sales volumes of premium brand craft beers and also in low-strength beer (following the introduction of the lower blood alcohol limits for drivers in 2014).
The wine industry
There are almost 700 wineries in New Zealand. By far the biggest wine producers in New Zealand are Lion (Japan), Pernod Ricard (French), Treasury Estate Wines (NZ), Delegat's Wine Group (NZ), Constellation Wines (USA), and Villa Maria (NZ).
Since becoming available for sale in supermarkets in 1989, consumption of wine has more than doubled since 1984 to 95 million litres in 2009. In 2019, there were 107.8 million litres of wine available for consumption. New Zealand research has shown that the introduction of wine into supermarkets had a significant impact on consumption. Today, around 60% of all wine is sold through supermarkets.
Wine has shown the greatest increases in affordability over time. Today, New Zealanders drink almost twice as much white wine as red wine.
Wine contributes significantly to trade. It is New Zealand’s fifth largest export good.
It is important to note that New Zealand is only major wine producing nation to have a single industry body, representing and advocating for the interests of its entire grape and wine industry. This is called the New Zealand Winegrowers Association.
Spirits, RTDs, and Liqueurs
In 2019, 84.8 million litres of spirits and spirit-based (RTDs & Liqueurs) beverages were available for domestic consumption (rose 5.6 per cent from the previous year). The volume of spirits increased from 9.4 million litres in 2003 to 14.8 million litres in 2019 (rose 4.8 per cent from 2018). The volume of spirit-based beverages increased from 34.5 million litres in 2003 to around 70 million litres in 2019 (rose 5.8 per cent from 2018).
In 2010, Minister of Justice Simon Power announced plans to prohibit the sale of RTDs with greater than 5% alcohol content or 1.5 standard drinks per container. However, this plan never came to fruition and the Government decided not to introduce regulations regarding the maximum strength of an RTD, but rather, permit manufacturers to set up their own rules. The industry decided that the maximum strength of an RTD would be 7% or two standard drinks per bottle or can.
Spirits are consumed by all age groups and across both sexes. Pure spirits are more often consumed by older age groups whilst RTDs are preferentially consumed by young men and women.
The contribution of spirits and spirits-based drinks to New Zealand’s pure alcohol intake has been increasing over time, from 23% in 2004 to 31% in 2019. There is strong evidence since the introduction of RTDs into the market increased alcohol consumption markedly among young females aged 14 to 17 years.
The largest retailers of alcohol in New Zealand
In New Zealand, the purchasing of alcohol from off-licences has increased over time. From 1986 to 2016, the proportion of all alcohol sold was from off-licences increased from approximately 59% to 75%.
The 3000-plus off-licences in New Zealand comprises bottle stores, grocery stores, supermarkets, winemakers, taverns/hotels, breweries, catering companies, and others. Over one-third of off-licences are standalone bottle stores, whilst >10% are grocery stores, and >10% are supermarkets.
Supermarkets
The supermarket (which can only sell beer, wine (includes cider) and mead) is the most widely used channel for purchasing alcohol.
Alcohol sales from supermarkets have changed considerably over time. In 2000, the supermarket share of beer sales was 12% and for wine it was 43%. In 2008, they sold around 30% of all beer and just under 60% of all wine. In 2008 it was estimated that beer and wine sales in supermarkets were worth $1 billion.
There are two major supermarket chains in New Zealand: Woolworth New Zealand (184 Countdown stores, 62 Fresh Choice and Supervalue stores) and Foodstuffs (140 New World stores, >50 PaknSave stores, 240 Four Square stores).
The Ministry of Justice has stated that the price is so cheap that many smaller bottle stores buy their alcohol products from supermarkets.
New Zealand research has shown that the introduction of wine into supermarkets had a significant impact on consumption.
Today, around 250,000 residents of West Auckland cannot buy alcohol from their supermarkets as off-licence supply is controlled by the Portage and Waitakere Licensing Trusts. No supermarkets in the Invercargill Licensing Trust can sell alcohol.
Bottle stores
There are over 1000 bottle stores in New Zealand. It is important to know that many of these are owned by larger alcohol producers and retailers.
For example, Liquorland and Henry’s Beer Wines & Spirits are owned by Foodstuffs. In 2016, Foodstuffs bought the retail chain The Mill Liquorsave from Independent Liquor Ltd, and rebranded them as Liquorland stores. Liquor King, is owned by Lion.
Hospitality sector (on-licences)
The number of on-licences has trebled from 2423 in 1990 to 7565 in 2010. From 2000 to 2009 there was a 26% increase in the number of pubs and a 37% increase in the number of licensed cafés and restaurants.
The NZ Hospitality Association plays a major role in the supply of alcohol in the on-licence sector, representing 3,000 hospitality and commercial accommodation businesses throughout the country. The Association advocates on behalf of its members. They have been involved as an interested party in the appeals to Local Alcohol Policies around New Zealand.
The Restaurant Association of New Zealand also represents the interests of those working in the restaurant business.
Take Action
Consult local regulatory agencies in your area
If you feel your supermarket is not limiting exposure and promotion of alcohol to a single area(s), consult your local regulatory agencies. As a starting point, contact your local PUBLIC HEALTH UNIT.
You may also contact the licensing team of the local council in your area as they deal with Local Alcohol Policies or Licence Applications. Here is a list of LOCAL COUNCIL whereby you may search for contact details of the respective alcohol licensing team in your area.
Get Prepared
The Sale and Supply of Alcohol Act 2012 introduced restrictions on where supermarket and groceries stores can display and promote alcohol. This is now confined to a “single area” within the store. Promotions must not be seen or heard outside of this area or from outside of the store.
Click here to read the legislation relating to single areas for supermarkets.
Consult your local regulatory agencies for the most updated information on alcohol areas in supermarkets. A good starting point is contacting your local PUBLIC HEALTH UNIT .
You may also contact the licensing team of your local council as they deal with Local Alcohol Policies or Licence Applications. Here is a list of LOCAL COUNCIL whereby you may search for contact details of the respective alcohol licensing team in your area.
Case for Change
In 1989, wine and mead became available for sale from grocery stores and supermarkets. This was followed in 1999 with beer. The sale of spirits is not permitted.
The introduction of wine sales into New Zealand supermarkets increased the affordability and consumption of wine markedly. New Zealanders are now drinking twice as much wine as they used to.
There are two major supermarket chains in New Zealand: Progressive Enterprises and Foodstuffs.
Alcohol is the biggest selling caterory in the supermarket. Many New Zealanders buy their alcohol from supermarkets.
On average, the same alcohol product is sold more cheaply from supermarkets than bottle stores.
The number of supermarkets and grocery stores in New Zealand communities has been linked with a range of alcohol-related harms: antisocial behaviour, dishonesty offences, property abuses, property damage, sexual offences and violent offences.
The placement of alcohol in everyday settings, next to commonly purchased products, may normalise alcohol use in our society. Especially among children. New Zealand children are regularly exposed to alcohol in supermarkets.
Tobacco can't be displayed in supermarkets, but alcohol can. Yet alcohol is the most harmful drug in our society.
Get Prepared
New Zealand laws on alcohol promotions (including discounting)
New Zealand law restricts the promotion and/or advertising of alcohol that:
- encourages excessive consumption
- advertises or promotes discounts of 25% or more
This means that it is only against the law to advertise and promote a discount - it is not against the law to have a discount of 25% or more.
This law applies to anyone undertaking a business including on-licences, off-licences, club licences and special licences and to any promotions run by a person or company which is not licensed.
Section 237 of the Sale and Supply of Alcohol Act is called Irresponsible promotion of alcohol. This section prohibits:
- Any person that encourages people, or is likely to encourage people, to consume alcohol to an excessive extent, whether on licensed premises or at any other place
- Any person to promote or advertise a discounted alcohol product that leads people to believe the price is 25% or more below the normal price of the product (other than in a licensed premises or in an off-licence catalogue)
- On-licensed premises to promote or advertise discounted alcohol that leads people to believe the price is 25% or more below the normal price of the product AND can be seen or heard from outside the premises
- Promotions or advertisements of alcohol that is free of charge (does not include free sampling)
- Offers goods and services or the opportunity to win a prize on the condition that alcohol is bought
- Promotions which are in a manner aimed at, or that has, or is likely to have, special appeal to minors
Although off-licence catalogues are excluded from the section, other media is included – such as billboards, window displays, etc.
Examples of acceptable and unacceptable promotions at on-licences and off-licences have been developed by the Health Promotion Agency.
ON-LICENCE ALCOHOL PROMOTIONS OFF-LICENCE ALCOHOL PROMOTIONS
The Sale and Supply of Alcohol Act 2012 also includes restrictions on where supermarket and groceries stores can display and promote alcohol. This is now confined to a “single area” within the store. Promotions must not be seen or heard outside of this area or from outside of the store. For more information on single areas in supermarkets, please click here.
Background
Promotion of discounted alcohol beverages
Of all supermarket products, alcohol is the most sensitive to price promotion
Discounting is a common strategy used to encourage alcohol sales, particularly within off-licences but also in bars and restaurants through the use of ‘happy hours’ etc.
In New Zealand, the majority (55%) of drinkers purchased their alcohol when sold on promotion (cited in the 2014 Ministry of Justice Report).
Supermarkets are more reliant on promotions to drive sales when compared to specialist liquor stores (e.g. bottle stores). In supermarkets, almost 6 in every 10 dollars spent on all items (including alcohol and groceries) in 2018 were sold on promotion, compared to 2 in every 10 dollars spent in liquor stores. In the year ending March 31 2018, 71% and 70% of dollars spent in supermarkets on beer and wine sales respectively, were for products on promotion. This compares to 23% and 31% in liquor stores.
Off all items in supermarkets, sales of alcohol have been shown to be the most sensitive to price promotion, particularly cask wine and beer followed by bottled wine. Simply put, shoppers are very responsive to discounted alcohol. Compared to alcohol sold in supermarkets, individual grocery items (e.g. coffee, toilet paper, confectionery) are less sensitive to promotion in price.
Price-based promotions are the key types of promotion activities for alcohol products
A study of 24 off-licences in Perth and Sydney found that there were 427 unique forms of promotion used across the alcohol outlets. The study found:
- Price-based promotions (including but not limited to discounts) represented 61% of all the types of promotion activities;
- Supermarkets had a higher number of price promotions compared to liquor chain stores;
- The most common form of price promotion was offering multiple items for a discounted price; and
- Wine had the highest number of price promotions, followed by spirits, beer and RTDs.
Effects of price promotions of alcohol in point-of-sale
A US study found that alcohol products in larger-volume packages (e.g., 12-pack) were more likely to be promoted than smaller packages (e.g., 6-pack). This finding has significant implications for reducing the harm from heavy episodic drinking.
An Australian study found that drinkers who participated in point-of-sale promotions report purchasing a greater quantity of alcohol than those who did not participate. This is particularly evident for beer purchases (average of 26.8 standard drinks vs 16.4), followed by RTDs (11.5 standard drinks vs 8.9) and wine (16.1 standard drinks vs. 13.8). Young drinkers were found to use descriptors such as ‘Price’ and ‘Cheap’ as the main reason that they purchased wine.
Another study also found that young people are very aware of in-store sale promotions in order to maximise their alcohol purchases within their budgets. Cheap alcohol may also facilitate social get-togethers, that would not have occurred otherwise.
NZ laws on the discounting of alcohol
New Zealand law stipulates that any person commits an offence if they advertise discounts of 25% or more, where the advertisement can be seen or heard from outside of a licensed premise. Discounts of 25% of more are permitted inside a licensed premise or in an off-licence price catalogue. It is important to note that it is only the advertising, not the offer of the discount, that is prohibited. In other words, heavy discounting activities (e.g., 60% discounts) inside supermarkets (and other premises) continue to be seen in New Zealand, especially during the Christmas and New Year holiday period.
Note that it is illegal to offer free alcohol. Read more in the next section - GET PREPARED
Progress and impact of prohibiting different types of price-promotion
Take Action
Take action on the low price of alcohol
- Share any information on prices and promotions you have gathered with others through our Facebook Group. It could be useful in planning for advocacy efforts at the national level - please check out the section on advocacy for more information.
- Take opportunities to raise awareness of the effectiveness of pricing strategies with local decision makers and influencers. For tips and assistance, please check out the section on advocacy for more information.
- Raise the issue in the media through a letter to the editor or offering an opinion piece – for more tips and assistance, please check out the section on engaging with mainstream media or connect with community champions.
- Include price issues on any submissions on draft legislation (i.e. Bills) which relate to alcohol. We will develop a submission template on price measures when opportunities arise.
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Submission template - price measures on alcohol |
- To assist you, read more information on ALCOHOL EXCISES TAXES MINIMUM UNIT PRICING
- Join or support other advocacy efforts towards the implementation of more effective price controls, please check out the section on Mobilising Others for more ideas.
Get Prepared
The price of alcohol
- Cheap and discounted alcohol increases the demand for alcohol and encourages heavier drinking.
- The introduction of alcohol (beer, wine and mead) into supermarkets (wine in 1989 and beer in 1999) had a considerable impact on lowering the price of alcohol. The price of any particular beer or wine is generally found to be cheaper in supermarkets than bottle stores.
- The introduction of ready-to-drinks (RTDs or alcopops) also had a considerable impact on drinking, particularly on young people. They are relatively cheap and attractive to young people.
- Increasing the retail price of alcohol is one of the most effective strategies to reduce accessibility and alcohol-related harm. It can be achieved in a number of ways including; increasing excise tax, introducing Minimum Unit Pricing, restricting the promotion of discounted alcohol.
Case for Change
The low price of alcohol is a key driver of our drinking culture.
In 2017, alcohol was found to be more affordable than ever before. Wine has particularly become more affordable. This means that it now takes us less time to earn enough money to buy a standard drink.
In New Zealand, off-licences are now selling approximately 75% of all alcohol. Supermarkets are big players in the retail market.
High liquor outlet density in a community may lead to competition, which drives prices down.
Increasing the price of alcohol is one of the strongest tools in our kete / basket to reduce harm. A large body of high-quality research suggests that a 10% increase in price reduces overall alcohol consumption by 5%. In fact, it is the most important strategy to reduce inequities in alcohol harm.
Take Action
Consult local regulatory agencies in your area
If you feel your supermarket is not limiting exposure and promotion of alcohol to a single area(s), consult your local regulatory agencies. As a starting point, contact your local PUBLIC HEALTH UNIT.
You may also contact the licensing team of the local council in your area as they deal with Local Alcohol Policies or Licence Applications. Here is a list of LOCAL COUNCIL whereby you may search for contact details of the respective alcohol licensing team in your area.