Tough times brewing for New Zealand's craft beer industry amid cost of living crisis

By Tom Kitchin, co-host of RNZ's The Detail

The craft beer industry has boomed over the last decade, but the pressure's coming on many breweries as the cost of living crisis starts to bite. The Detail looks at our changing beer tastes and what's next for our small brewers.

Two well-known New Zealand breweries face an uncertain future and it's put the spotlight on the state of the craft beer industry.

One of the early starters in the market, Epic, went into liquidation and has only just got a new buyer, after earlier failing to get an investor on board for a new taproom and brewery.

Brothers Beer, which has several taprooms and hospitality venues in Auckland, is in voluntary administration. It's looking to restructure to save the business. 

These stories are at the more dire end of the difficulties craft brewers are facing in Aotearoa.

Michael Donaldson, editor of the local craft beer magazine Pursuit of Hoppiness, tells The Detail it follows a global trend.

"Last year it was Britain and there were breweries closing, more than one a week. In America, it's definitely been happening. This year, Australia was suffering quite badly.... as I sat watching this, I was thinking, 'When's it going to hit New Zealand?' and it's starting to cut through now.

"It's the COVID-19 pandemic, which really hit hospitality hard... Unprecedented inflation, which drives up prices for everything to do with beer, from the ingredients, to the packaging to the freight to the excise tax and then, on top of that, we had the carbon dioxide crisis. At the same time, because of inflation, people are cutting back their spending and craft beer is - for want of a better word - a luxury item.

"The old line is 'beer is recession-proof' - and yes, largely it is - but if you're standing there in the supermarket aisle and you think, 'I haven't got quite as much money as I used to, do I really need that $25 six-pack of craft beer?', you make choices."

Ava Nakagawa is the general manager of Pomeroy's, a craft beer pub in Christchurch, and co-owner of Beer Baroness, a craft brewery. She joined the industry back in the early 2010s, when everyone was "charged".

"There was that period of time when it was so exciting discovering it and discovering new styles and how people could push it."

But she says the last year in particular has been "really challenging". 

"I think that for so long, the hospitality industry and the brewing industry were making changes within their businesses to actually try and help absorb those costs, but now it has got to this place where it is really significant and it's really, really hard to explain to the consumer, but the cost has to be passed on."

In terms of the future, Nakagawa says it's "every day as it comes".

"Looking at how we can lower our costs as a business, how we can minimise waste, all of that sort of stuff, looking through your business costs. We're hoping to open a wee taproom at the back of our brewery soon so again, that's going to be a different income stream for us which will be really supportive.

"As a consumer, how do we get through it? I think now it's really important to support the hospitality industry, to support the beer industry, so if you have the desire to, maybe don't go to those bigger breweries."

Donaldson thinks more product development in the non-alcohol, low-carb beer space, single can and online space might be the industry's lifeline. 

"That direct to consumer thing is a huge space. We all online shop, but I think breweries have been, not slow, but COVID made them think about online shopping, and now they've got to be able to leverage it, build email lists, build loyalty programmes, and there will be some that are able to do that."

Hear more about the state of the craft beer industry in the full podcast episode.

Check out how to listen to and follow The Detail here.  


Tough times brewing for New Zealand's craft beer industry amid cost of living crisis