Taxes on wine and beer will double, causing economic headwinds as consumers drink less. Although the end of 2024 doesn’t look very bright, Spirits NZ CE Robert Brewer says there are hidden positives in the country’s vibrant local industry.
“Not many people realize that 60-70% of the retail price of full-strength spirits is made up of sales tax and GST,” says Brewer.
“This means that even if the economics of the industry change, it won’t take long to reduce marginal profit margins,” he says.
“But 2024 also shows the resilience and commitment of local producers to produce great products, and there are signs that the sector will continue to grow even during difficult times.”
Mr Brewer said that while global wine and beer were in near-free fall in some markets, and New Zealand certainly saw volumes decline, spirits had not been in this situation until recently due to two key factors. It is said that they were isolated to some extent.
sweet spot
“Consumers are spending their money less on harmful drinks, but more likely to buy premium products that hit the spirits industry’s sweet spot. The added popularity helps explain why New Zealand’s spirits consumption has slowed its decline, nominally around 3% lower than in October last year.”
Another sign that local producers continue to do their best to weather difficult times was the near-record number of entries for this year’s New Zealand Spirits Awards. In the six years the award has been in operation, only one year has seen more than 451 entries for the 2024 award.
“We also continue to diversify our products with the rise of aged and ‘brown’ spirits such as rum and whisky,” says Brewer.
“Twenty years ago you could count the number of truly commercial New Zealand distilleries on two hands. Today there are around 200, and although some may struggle given the current trading environment, there are many true Kiwi distilleries. I feel that most of them will be successful and continue to put New Zealand on the world map as a premium spirits producer.”
