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

Because a tax is placed on all alcohol products, 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 2018:

By volume, we drink over 2.5 times as much beer than wine. However, by alcohol content or standard drinks, 12.9 million litres of pure alcohol comes from beer, 11.3 million litres from wine, and 10.5 million litres from spirits and spirit-based drinks. This totals 34.8 million litres of pure alcohol per year or 8.8 litres per person aged over 15 years. On average, this means that every New Zealander drinks almost 2 standard drinks per day. However, in reality, we know that rather than New Zealanders drinking small amounts daily, around half of all alcohol 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 32% of all alcohol made in New Zealand [42].


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 [42].

 

Ranking in the Deloitte's Top 200 Firms in 2018 

Company

Beverage sector

Ownership

Revenue ($NZmillion) 

68

Lion Co. 

Beer, RTDs, spirits, wine

Japan (Kirin Holdings)

$606

81

DB Breweries 

Beer, RTDs

Netherlands (Heineken)

$513

104

Independent Liquor

Beer, RTDs, spirits, wine

Japan (Asahi Group Holdings)

$409

147

Delegat's Wine       

Wine 

New Zealand

$271

173

Treasury Wine     

Wine

Australia 

$233


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 million litres in 2008 to 282 million litres in 2015. Since then, there appeared to have an increasing trend in the volume of beer available for consumption. In 2018, there was 293 million litres of beer was available for consumption [7,45]. 

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) [57]. 


The wine industry

There are over 670 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) [46].

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 2018, there was 109 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 [48-49]. 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 [46].

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.


The spirits and RTD industry

In 2018, 80.3 million litres of spirits and spirit-based (RTDs) beverages were available for domestic consumption. Spirits sales increased from 11 million litres in 2004 to 14.2 million litres in 2018. RTD sales increased from 28 million litres in 2001 to 66.2 million litres in 2018 (rose 4 per cent) from the previous year. [7].

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 [50].

Sprits 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.

Since the introduction of RTDs the volume of spirits-based drinks has more than doubled, from 28 million litres in 2001 to 66.2 million litres in 2018. There is strong evidence since the introduction of RTDs into the market increased alcohol consumption markedly among young females aged 14 to 17 years [52].


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% [1].

The 4000-plus off-licences in New Zealand comprises bottle stores, grocery stores, supermarkets, winemakers, taverns/hotels, breweries, catering companies, and others. Over one-quarter of off-licences are standalone bottle stores, whilst >10% are grocery stores, and 10% are supermarkets [54].

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 $1billion [1]. 

There are two major supermarket chains in New Zealand: Progressive Enterprises (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 [42].

New Zealand research has shown that the introduction of wine into supermarkets had a significant impact on consumption [48][49].

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 [54]. 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 [1]. 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.

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