Executive director of the New Zealand Alcohol Beverages Council, Virginia Nicholls, said the industry was facing challenging times with international supply chain disruptions and locally with extreme weather events.
Cost increases continue to climb, including staff, ingredients (including commercial-grade carbon dioxide), packaging, higher interest rates, insurance, energy and transport costs. On top of this, the excise tax is increasing each year alongside the CPI.
“The industry is faced with the tough decision whether to continue to pass these increasing costs onto consumers who are also facing challenging times,” said Nicholls.
Product innovation and appealing to shifting consumer preferences is vital to keep ahead of local and international competition.
It is also essential to be financially sustainable. The NZABC is seeing organisations thinking outside the square and some industry collaborations.
Providing teams with a safe and healthy workplace is essential with the extra pressure on businesses. Finding support with similar businesses will also be imperative as the industry undergoes massive changes and challenges.
Sustainability and a connection through story and provenance continue to be necessary.
Climate change is one of the greatest threats facing society. Its impacts will be far-reaching and potentially disrupt the industry’s value chain, from the supply of raw materials to the distribution of products.
The industry’s proactive approach to sustainability aligns with the New Zealand government’s goals of reducing carbon emissions by 2050.
Still, many in the industry are accelerating their ambitions to 2030 and are already well on their way. They see it as a journey not just for the company and its employees but for their partners, suppliers, growers, and farmers.
Many wineries, breweries, and distilleries have already become net carbon neutral or are working on programmes and accreditations that drive them towards that goal.
Growth is seen in high-quality zero (alcohol-free) and low-alcohol options and low-carb and gluten-free beverages. Part of this is some consumers are more health conscious.
New Zealand breweries, distilleries, and winemakers have invested heavily in innovation to enhance their no/low alcohol offerings with more excellent choices and better flavours.
Demand here mirrors the global trend. A poll of 1,250 New Zealanders in December 2022 found that 56 percent of respondents drink low-alcohol beverages at least some time (compared to 47 percent the year before), and many of us prefer low-alcohol beverages.
Some of choose these beverages because they are driving. Some find it easier to track alcohol consumption, and some are more mindful of health and well-being.
Consumers sometimes choose a drink that may cost a little more, such as a craft beer, a fine wine, a cocktail or a premium spirit or liqueur and then take a ‘sip and savour’ approach to enjoy the flavours and experience the drink in a slow and relaxed way.
Parliament has recently passed the Sale & Supply of Alcohol Act (Community Participation) Bill, making getting and renewing a liquor licence harder than it already was and threatening the commercial future of responsible hospitality and alcohol retail operators.
This means that owning and operating a bottle store, bar, pub, restaurant, cellar door, or any other business that sells alcohol should hinge on a set of rules that can change at any time, with no right of appeal.
This is a massive blow for a sector so critical to the fabric of New Zealand’s retail, hospitality, and tourism industries, especially on the heels of a tough few years, thanks to COVID-19 restrictions.
These law changes were meant to give communities a more significant say over who gets a liquor license. However, the legislation will not do this. It will make it harder for communities to have a say and, in the process, make retailing alcohol, whether in a retail store or hospitality venue, unsustainable.
For example, individuals or groups from anywhere in New Zealand can now object to a licence or a licence renewal in any part of the country. This means someone in Auckland can have a say in whether a retail store in Wellington should have their licence renewed.
This is manifestly unfair and goes against the intent of the amendments to the Act, which was to strengthen the ability of communities to decide how alcohol should be sold and supplied in their neighbourhood.
Under the legislation, a LAP allows proximity provisions to sites such as schools or a church. This could force the closure of a pre-existing on or off-licence, irrespective of whether it was well-run or valued by the community.
The law changes mean any alcohol retail store or hospitality venue that has been operating responsibly in a particular location for decades could be forced to close because a ‘sensitive site’ decides to locate close by.
A neighbourhood bottle store or restaurant, which has operated responsibly for years, may find themselves having their re-license refused because a new medical centre has opened along the road.
Nicholls also expects the changes will mean more licensing hearings, which will be longer and more involved, with higher costs for everyone involved – from the community to the licence applicant.
The legislation removes the party's ability to appeal Local Alcohol Policies (LAPs) to the Alcohol Regulatory Licensing Authority (ARLA), which will restrict the appeal rights in the community. This ignores the ability to challenge decisions that unduly impact trading rights or may not be based on evidence.
Removing the appeal provisions will not necessarily speed up the LAP process since most delays are caused by using legitimate judicial reviews, which have nothing to do with the current Act.
Since 2010, the number of licences nationwide has declined by more than 23 percent. We expect these law changes to see that decline continue, which will mean responsible operators shutting up shops, communities and visitors to New Zealand having less choice about where and how they socialise or buy alcohol and, critically, no reduction in alcohol harm.
See more insights from the 2024 Buyer's Guide below:
