Beer consumption in 'notable decline' amid cost of living crisis

The demand for beer is in sharp decline amid the cost of living crisis, the Brewers Association of New Zealand says.

Figures from Stats NZ, released today, show the volume of alcohol available for consumption had a "notable decline" of 4.4% for the year ending December 2023, after seeing a modest rise of 0.5% in 2022.

Brewers Association executive director Dylan Firth said while the "broader economic factors influencing beer consumption trends are multi-pronged", consumers' economic constraints and increasing operational costs are "a core driver".

"This decline is indicative of the tightening economic constraints faced by consumers, which have undoubtedly contributed to subdued demand across various sectors, including hospitality," Firth said.

"The adverse impact of the Covid-19 pandemic, rising costs of living, and uncertainty in the global economy have all played a role in dampening consumer spending habits."

Firth said when looking at beer across its various categories based on alcohol content, it was "clear the decline in consumption is widespread".

"Beer with alcohol content up to 2.5% experienced a decrease of 5.7%, while beer with alcohol content between 2.5% and 4.35% fell by 6.0%. Even beer with higher alcoholic content above 5% saw a decline of 3.2%," he said.

While beer consumption has dropped notably, 0% alcohol beers were "the only bright spot" after rising 8% in the last year — a mammoth 267% growth since 2020.

"While these figures underscore the breadth of the challenge facing the brewing industry in New Zealand, they also show us changing trends," Firth said.

"With beer containing around 4% abv traditionally linked to mainstream brands declining by 48% in the last 5 years, beer with up to 5% abv has grown by 29%, reflecting more premium and craft brands."

He said the brewing industry body was particularly concerned about the "disproportionate impact of declining beer consumption on the hospitality sector, which heavily relies on beverage sales to sustain its operations".

"As beer volumes decrease, businesses within the hospitality industry face significant revenue losses, exacerbating existing challenges posed by staffing shortages, supply chain disruptions, and regulatory pressures."

The sector is already under immense pressure amid the "escalating excise tax burden", which rose 18% in three years.

The tax has lead to inflated production costs, Firth said, which are then pushed on to the consumer.

While the decline in beer consumption is proving challenging for brewers, it's also led to a decrease in hazardous drinking, according to Stats NZ.

The rate of hazardous drinking in adults decreased from 18.7% in 2021/22 to 16.0% in 2022/23 — the lowest level on record.

"This decline, equivalent to approximately 110,000 fewer New Zealanders drinking harmfully, reflects the success of ongoing efforts to promote responsible drinking behaviours," Firth said.

While he acknowledged the importance of drinking responsibly and in moderation, Firth sad it was also "essential to recognise the broader economic realities that impact beer consumption trends".

"Addressing these challenges will require collaborative efforts between industry stakeholders, policymakers, and community organisations to support the resilience and sustainability of New Zealand's brewing sector."