Less than a decade after craft beer felt unstoppable in New Zealand, the people who brew it say the good times have well and truly drained away. Rising costs, an unrelenting annual tax, a squeeze on the gas they need to make beer and a fight over who controls the kegs it travels in have left many small breweries wondering how much longer they can keep the lights on.
Brian Watson, co-founder of Hamilton brewery Good George and chair of the Brewers Guild of New Zealand, told RNZ the industry had enjoyed a golden run where everything seemed to be growing. That has changed. “The tide’s going out as it does in a lot of industries. It will come back again, it’s just a case of when,” he said. “No one really knows what’s coming next. We seem to have had year after year of challenges.”
The numbers tell the story. There were roughly 200 craft breweries operating around the country at the start of last year, two thirds of them in the North Island, but a string of well known names have gone under or been put up for sale. Epic, Deep Creek, Zeelandt and Cowabunga have all closed or been liquidated in the past couple of years, and 8 Wired has been on the market. Each closure removes a familiar tap from bar fridges and a local employer from a small town economy.
The pressures are stacking up from several directions at once. Brewers point to weak consumer confidence, with cash-strapped drinkers trading down to cheaper mainstream beer or simply going out less often. Younger New Zealanders are drinking less than their parents did, which thins the crowd at the very taprooms and pubs that built the craft scene. On top of softer demand sit higher wages, dearer hops and grain, and volatile freight costs that spike whenever fuel prices jump.
Then there is the excise tax, which lifts automatically every year in line with inflation. Because the increase is indexed and applies regardless of how a business is faring, brewers face a guaranteed cost rise each July whether sales are up or down. The guild has argued for years that the country’s beer tax is among the steepest in the world and that small producers carry it least comfortably, yet successive governments have left the annual indexation in place.
A shortage of food grade carbon dioxide has added another headache. Brewing relies on a steady supply of the gas to carbonate beer and protect it from spoiling, and the supply has become tighter and more expensive as the country’s natural gas reserves have dwindled. Carbon dioxide is a by-product of industrial gas processing, so when those plants throttle back, brewers further down the chain feel the pinch. It is an unglamorous input that most drinkers never think about, but without it there is no fizz in the glass.
The most acute worry right now is the humble keg. Most small breweries do not own the stainless steel kegs their beer is poured from. Instead they lease them from specialist pooling companies, an arrangement that frees up cash and saves brewers from buying thousands of expensive containers up front. Christina Pickwell, co-founder of Helensville’s Liberty Brewing Co., said the leasing firms “were a godsend” when they arrived. Kegs are no small matter for Liberty, where keg sales make up about 30 percent of the operation and carry a better margin than packaged beer.
That model has been thrown into doubt by the collapse of one of the two big keg pooling companies. With Konvoy in financial trouble, Kegstar would be left as the only operator of any scale, and the prospect of a single supplier controlling the market has rattled brewers who depend on it. The Commerce Commission declined to clear Kegstar’s bid to acquire Konvoy’s assets over concerns it would lessen competition, and the decision is being appealed. In the meantime brewers are left guessing about what they will pay and whether they can get hold of enough kegs at all.
For Pickwell the uncertainty is stark. Individual kegs cost around 230 dollars each, and buying a full fleet outright could run a brewery into the hundreds of thousands of dollars, money that small operators simply do not have. “We are hoping for the best outcome because there is no way we can afford to purchase all of our own,” she said. “It is terrifying, actually, to see how hard business is at the moment.”
None of this means the craft scene is finished. New Zealand still has a deep bench of skilled brewers, loyal drinkers and a reputation for hoppy beers that punch above the country’s size, and consolidation has long been part of the industry’s cycle. The brewers who survive this stretch are trimming ranges, leaning on their taprooms and cellar door sales where the margins are healthiest, and waiting for confidence and spending to recover. The wider hospitality sector is watching the same dials, hoping that easing inflation and lower interest rates filter through to fuller venues later in the year.
Both Watson and Pickwell stop short of writing the industry off. “I’m still optimistic,” Pickwell said. “I still feel like collectively we are all going to be okay.” Watson frames it as a tide that has gone out before and will come back, even if no one can say exactly when. For now the message from the brewhouse floor is that making good beer in New Zealand has rarely been harder, and that the next year or two will decide which of the country’s breweries are still pouring when the water rises again.
Are you still buying craft beer, or have rising prices pushed you back to the mainstream brands? Have a favourite local brewery you would hate to lose? Share your thoughts in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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