With double the tax of wine and beer, consumers drinking less and economic headwinds, it didn’t seem to be a very bright end to 2024 – yet Spirits NZ’s CE, Robert Brewer, says there are some hidden positives for New Zealand’s vibrant local industry.
“Not many people realise that 60 to 70% of the retail price for full strength spirits is made up of excise tax and GST,” Brewer says.
“This means it doesn’t take much to trim slim profit margins should the economics of the industry change.
“Yet 2024 has also shown the resilience and commitment of local producers to produce fantastic product and there are signs amidst the harder times that the sector is continuing to grow.”
Brewer says wine and beer globally have almost been in free-fall in some markets and volumes are certainly down in New Zealand. However spirits have been somewhat insulated from this until very recently because of two key factors.
“Although consumers are drinking less and less harmfully when they do spend they tend to buy premium which is right in the spirits industry’s sweet spot,” he says.
“Add to this the popularity of gin and of the so-called cocktail culture and you can see why there has been a slower decline in NZ spirit consumption – nominally down about 3% compared with October last year.”
Another sign that local producers continued to do their best to push through tough times was the almost record number of entries in this year’s New Zealand Spirits Awards.
In the six years the awards have been running, only one year has topped the 451 entries into 2024’s awards.
“And we’re also seeing continued product diversification with increases in aged or ‘brown’ spirits such as rum and whiskey,” says Brewer.
Brewer says 20 years ago you could have counted the truly commercial New Zealand distilleries on two hands.
“Today there are almost 200 and although some will struggle given the current trading environment I get the sense that, in true Kiwi fashion, most will come through and continue to put New Zealand on the global map as a premium spirit producer.”
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