Despite the doubled tax on wine and beer, consumers drinking less, and economic headwinds, Spirits New Zealand’s CE and Robert Brewer said there were some hidden positives for the vibrant local industry.
“Not many people realise that 60 to 70 percent of the retail price for full-strength spirits is made up of excise tax and GST,” Brewer said.
“This means it doesn’t take much to trim slim profit margins should the economics of the industry change.”
He added that 2024 also showed 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 said wine and beer globally have almost been in freefall in some markets and volumes are certainly down in NZ. 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. 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 three percent 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,” Brewer said.
“Twenty years ago you could have counted the truly commercial NZ 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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