Kiwis are drinking less and beer remains the nation’s favourite. But does the Budget reflect this reality?
- Total alcohol available for consumption down 10.7 per cent from 2020
- Beer’s share of total beverage volume rose from 59.9 per cent in 2020 to 60.8 per cent in 2026
- Brewers Association estimates Treasury is likely overstating total alcohol excise revenue by up to $180 million per year by 2029/30
Beer is the nation’s clear favourite as all beverage categories decline
New government data confirmed the long-term sustained decline in New Zealand alcohol consumption. But as volumes fall and the Budget passes without excise reform, the Brewers Association has put Treasury’s own revenue forecasts under the microscope.
Statistics New Zealand data released last week for the year to March showed per capita consumption of pure alcohol had fallen to 7.24 litres per person in the year to March 2026, the lowest level ever recorded, and a 16.5 per cent decline from 8.67 litres in 2020.
Total volumes of beer, wine and spirits available for consumption were 447 million litres, down 10.7 per cent from 2020.
Beer held up the strongest of all major beverage types, declining 7.6 per cent over the same period to 268 million litres. The result is that beer’s share of total beverage volume has edged higher, from 59.9 per cent in 2020 to 60.8 per cent in 2026.
Brewers Association of New Zealand Executive Director Dylan Firth said while consumption is declining, beer remained the nation’s preferred choice by a wide margin.
“The data confirms what the brewing industry has been seeing on the ground: New Zealanders are drinking less and drinking more responsibly. At the same time, the vast majority of adult New Zealanders who choose to drink are more often than not reaching for a beer," said Firth.
“Beer is proving more resilient than other beverage types, with a huge range in styles and naturally lower in alcohol. In a contracting market, this reflects real loyalty and product innovation.”
The broader picture of behaviour is equally clear. According to the New Zealand Health Survey, hazardous drinking has declined 22 per cent since 2020.
Binge drinking (or heavy episodic drinking) stands at 17.5 per cent, well below the OECD average of 27 per cent and lower than Canada, the United States, Australia, Italy, Ireland, Germany and the United Kingdom. Since 2020, it has declined 21.8 per cent.
“The New Zealand public is being done a disservice by outdated narratives about how we drink – moderation is by far the norm, and we are well below the OECD average on binge drinking. This is important context in policy conversations and effective alcohol regulation,” said Firth.
Government excise forecast does not add up
The Brewers Association is now questioning whether Treasury’s excise revenue forecasts stack up against the most recent consumption data. Without any immediate government intervention, the excise rate is set to rise again by 3.07 per cent on the 1st of July 2026.
Budget 2026 forecasts total alcohol excise revenue of NZD 1.308 billion in 2026/27, rising to NZD 1.486 billion by 2029/30. That trajectory assumes growing alcohol volumes. The Stats NZ data published last week shows total beverage volumes have fallen 10.7 per cent since 2020 and declined a further 4.9 per cent in the year to March 2026 alone.
Applying the scheduled 3.07 per cent rate increase against realistic volume assumptions, the Brewers Association estimates Treasury is overstating alcohol excise revenue by up to NZD 180 million per year by 2029/30.
Even under the most optimistic assumption, that volumes stabilise at current levels and decline no further, the overstatement reaches NZD 105 million by the same year. Treasury's import excise forecast is a particular outlier, projecting a NZD 49 million or 10.9 per cent jump in a single year against a backdrop of rising unemployment and sustained cost-of-living pressure.
"Treasury is forecasting excise revenue on growing volumes. The Stats NZ data published last week shows they will not, at least not on any near-term horizon. The excise system is eroding its own revenue base by accelerating a demand decline that is already well underway," said Firth.
Excise relief justified
The recent Budget contained no relief on alcohol excise, despite sustained industry calls for reform and continued cost-of-living pressure for everyday Kiwis and hospitality businesses.
Annual CPI-linked increases have seen beer excise climb more than 26 per cent in five years, from NZD 29.84 in early 2020 to NZD 37.84 per litre of pure alcohol today. The current regime makes no distinction between packaged retail products and draught beer served in hospitality venues, despite draught directly supporting hospitality productivity, employment, and our tourism sector.
A Curia survey in March 2026 found that the high cost of going out for a beer is a consideration for almost half of New Zealanders, with 47 per cent choosing to drink at home at least some of the time.
In recent years, on-premise alcohol sales have fallen from around 40 per cent of total alcohol sales to approximately 15 per cent. With a third of the price of a keg made up of alcohol excise tax, hospitality businesses are being hammered by a discretionary government tax.
“Industry has pointed to the discretionary ability for successive governments to look at this measure as a way of alleviating cost-of-living pressures on New Zealanders and businesses. It’s not like it’s a novel approach. In particular, this government's previous decisions to pause annual increases in fuel excise reflect a recognition that, in periods of heightened global uncertainty, automatic indexation mechanisms can amplify rather than relieve pressure on households and businesses.”
Australia paused the excise indexation of draught beer for two years in early 2026. Both Australia and the United Kingdom also apply a reduced excise rate on draught.
“The Prime Minister last week said he is “concerned in general” about the number of hospitality businesses going into liquidation and that they wanted to “[make] sure we’re not making things worse”, also that “We want to minimise the impact on inflation and minimise the impact on growth”. The government has had the ability to minimise the impact, which would have been by making the decision to pause the 1 July indexation and for a longer-term structural conversation about a keg-specific rate consistent with the approach already adopted in Australia and the United Kingdom before more venues close and more jobs disappear," concluded Firth.
