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New Zealand consumers have developed a strong affinity with craft beer and this ultimately transitioned into the emergence of craft ciders. Recognising the growing influence of craft beers and cider, the major alcoholic drinks companies, such as DB Breweries Ltd and Lion Pty Ltd developed the craft portfolio in both beer and cider. The strength of craft beer can be seen in the emerging beer festival scene, with Beervana in Wellington the most prominent.
New Zealand craft beer trends are similar to global trends towards craft beers in regards to small-scale production, higher quality and ABV, new flavours, aromas and personality and the importance of provenance. In nearly all consumer goods categories and retail channels, New Zealand is around five years behind the trends of Western Europe and North America. This was noticeable with craft beer, as the New Zealand industry began to blossom around five years after it took off in North America. This is mainly due to the small New Zealand market.
This is an interesting facet of the New Zealand market, as craft spirits recently started to emerge. Quality, sophistication and product and flavour innovation are additional aspects associated with the rise in popularity and growth of craft spirits. Craft spirits offer New Zealand consumers more refined and sophisticated products than the mainstream brands, which are targeted toward the median consumer.
One difficulty craft spirits has, which was also observed in the infant years of craft beer, is limited distribution capability. Social media has helped develop brand recognition and awareness, however, craft spirit makers have found it difficult to get their products on store shelves and have resorted to internet retailing.
Local player Aotearoa Distillers Ltd, established in 2008 and most well-known for its Zumwohl brand of schnapps went into liquidation in 2014. A major difficulty the company had was distribution and securing supply agreements. However, the strength of the local spirits industry is such that up to 10 potential suitors are in line to purchase the company, with this expected to be settled in 2015. Additionally, local player Rogue Society Gin, which was only launched in 2014, has secured a distribution agreement with Hancocks Liquor Merchants, a prominent alcoholic drinks distributor.
Craft beer and cider are expected to continue to grow. While volume sales growth will not be as high as value growth, this will be attributed to the higher price points of these products. Craft beer and cider are becoming more mainstream, with their availability greatly increasing and this is expected to continue. Brand equity is expected to be developed as craft beer brands become more prominent and it can be expected there will be a continued focus on ingredients and quality sourcing will continue to attract New Zealand consumers to craft beer.
Craft spirits is expected to be an area for significant growth. Spirits in New Zealand has long been dominated by mainstream brands and the trend toward craft spirits observed in international markets is expected to be followed in New Zealand. Continued craft spirit growth will also result from an increasing focus from manufacturers on the production, promotion and distribution of craft spirits brands. Focus areas for craft spirits are expected to be vodka and gin, as these are categories where local flavours can be used as a point of difference to international competitors and facilitate strong export earnings; effectively the same model employed by successful local brand, 42 Below.