A new report into New Zealand beer reveals that after years of stagnation and decline, the industry is beginning to achieve growth. The report from beverage industry analysts Canadean describes a rise of almost three per cent in volume as a psychological threshold for the country's two main producers, who are keen to exploit the opportunity to invest in key premium brands.
The Canadean report focuses on the impact of the upturn in sales for the dominant players: Lion Breweries and Dominion Breweries, as well as their smaller competitors who between them account for less than one sixth of sales.
The country's beer market is mature by world standards with a high per capita consumption of 84 litres and a brewing industry that is relatively concentrated. Lion Breweries' top three brands account for a quarter of all consumption and Dominion Breweries top three account for a fifth.
Despite this, last year saw developments that herald the beginning of an extended period of change for the industry as a whole in which premium and super premium products will play a major role, according to Canadean.
Lion Breweries' premium Steinlager brand regained lost ground with more than 15 per cent volume growth in domestic consumption and made a major contribution to the 5.3 per cent increase in exports. Lion's other major brands all experienced growth with the exception of the mainstream market leader, Lion Red.
The company addressed this threat by opening a small brewery in Wellington with the aim of supplying tap beer on premise to local customers, although Canadean believes that further attempts to restore tap beer volumes will face difficulties.
Dominion Breweries' volumes were also up but market share was down and the company has now announced a commitment to building a stronger, long term competitive position through improved operational efficiencies and the promotion of value through its brands. The importance of the super-premium image was emphasised by the fact that Heineken (produced under licence by DB) enjoyed almost 12 per cent volume growth, due in part at least to a strong programme of media advertising centred on reinforcing the brand's position as the leading premium global beer.
Glass bottling, used principally for premium beer, is now the main packaging growth area while the rise in both imports and exports is seen as reflecting an increasing two way traffic in premium products.
Looking to the future, Canadean predicts that beer consumption will rise by about nine per cent between the end of this year and 2008. Budget brands, which lost almost ten per cent volume last year will benefit least from this anticipated growth but expansion of the premium and superpremium segments will maintain momentum leaving brewers with the challenge of how best to fuel sustainable growth in the large mainstream segment.
For further details on The 2003 New Zealand Beer Report contact Kevin Baker.