The history of New Zealand’s beer industry
New Zealand’s beer industry has completely changed over the past 65 years.
In the early 1900s, New Zealand’s beer industry was relatively straightforward, you either drank ales, ports, or stouts supplied by one of two breweries. Fast-forward to 2022, and the beer industry is booming.
A shift in consumer preferences has enabled the emergence of craft beer. As a result of fast growing demand, craft beer has established itself as a new and innovative sub-sector. Low alcohol beer has experienced a similar growth in demand, and has found a sweet spot in the market as a result of growing consumer awareness.
New Zealand’s beer industry is estimated to be worth $2.8 billion in 2021.
The evolution of our beer industry started in the 1930s, when a New Zealander, Morton Coutts, invented the continuous fermentation method that led to the creation of lagers. Quickly growing in popularity, lagers became the first choice for many New Zealanders, and this method of production was later widely adopted internationally.
Apart from this innovation, the industry was also heavily influenced by the government introducing the closure of pubs at 6pm. Although introduced in 1917, what became known as the ‘six o’clock swill’, which required bars to close by 6pm, really took off in the 1940s when the alcohol content of beer was reduced as a war measure. Instead of acting to reduce alcohol consumption, the 6pm mandate partnered with lower alcohol content, only did the opposite.
New Zealanders spent what little time they had after work consuming as much beer as they could before the clock reached 6pm. Some credit the ‘six o’clock swill’ for contributing to New Zealand’s long-standing binge drinking culture. It was not until 1967 that the 6pm mandate was eventually lifted.
The beginnings of New Zealand’s beer industry duopoly.
Throughout most of the twentieth century, the number of breweries in New Zealand declined. New Zealand Breweries (now known as Lion), formed by ten breweries in 1923, and Dominion Breweries (now known as DB Breweries), were establishing their own duopoly in the domestic beer market.
Many smaller breweries were either bought out, or just could not compete. The duopoly dominated the market for decades, and was still very present in the twenty-first century. In the late 2000s, the duopoly was estimated to account for 90 percent of beer sales by volume.
The past decade has been transformative for New Zealand’s beer industry, with the emergence of craft beer and low alcohol beer.
The growth of craft beer has been expansive.
Following a shift in consumer preferences, with many opting to pay more knowing they are getting a premium, often locally brewed product, craft beer has quickly emerged as its own innovative and fast-growing sub-sector within New Zealand’s beer industry.
Offering a large variety of flavours, craft beer breweries are often selling directly to consumers, offering the chance for consumers to learn more about the production process whilst supporting local entrepreneurs. Between 2012 and 2022, the quantity of high alcohol beer, typically craft beer, available for consumption quadrupled in New Zealand.
An important component of the craft beer sub-sector has been the establishment of clusters of breweries, with complementing tourist/retail businesses, as well as the promotion of festivals such as Beervana that attracted 16,000 people last year. The success of these clusters has proved to be very beneficial for local economies. An example of this success is Upper Hutt’s Brewtown, which draws in both local and non-local consumers and generates significant spending.
Similarly, demand for low or zero percent beer is also on the rise.
Between 2020 and 2022, low alcohol beer (no more than 1.15 percent alcohol) increased by a staggering seven-fold in New Zealand. Growing numbers of people are becoming increasingly aware of the negative effects of alcohol consumption and are turning to low or zero percent options. Finding a sweet spot in the market, low or zero percent beer enables people to still participate in the social aspect of drinking without experiencing the negative effects of alcohol consumption.
New Zealand’s beer industry has boomed in the past decade or so. The sudden rise in demand for craft beer, and low or zero percent beer, has enabled the establishment of this niche, supplied by entrepreneurs and innovators in these sub-sectors within the market. As high-value sub-sectors, driven by domestic demand, craft and low alcohol beer will continue to be a key driving force in New Zealand’s beer industry.