Alcohol consumption in New Zealand is declining, according to Circana’s latest Liquor Report. The report pulls together grocery store sales and combines these with national statistics on liquor store sales, alcohol production and consumer survey data to build a comprehensive view of liquor trends and consumer behaviours. And it raises some important questions for the New Zealand liquor sector, because Kiwis – like consumers around the world – are drinking less and less.
In some ways, this is a story common to all retail sales. The overall retail sector has been depressed as cost-of-living pressures force shoppers to tighten their belts. Total retail sales volumes (everything from household goods to clothes, food, drink and electronics) fell 5.2% per capita in the March 2024 quarter. Food and beverage services were down 2.7% in volume for the December quarter and down 0.6% for the March quarter. Market conditions are clearly challenging wherever you look. However, the trend is particularly pronounced in the alcohol categories. Overall speciality liquor store sales volumes fell 16.1% in the December 2023 quarter compared to the previous year – and then fell a further 4% in the March quarter.
New Zealand alcoholic drink manufacturers are reacting by producing less and less. The latest Stats NZ data on alcohol volumes available for consumption show a decline in the past year of 4.3%. Standard drinks available per person per day fell 5.3%, the biggest decline in 15 years. After years of volume growth, spirits have declined year on year by 5.7%. Wine volume only fell 2.4% and is now slightly ahead of spirits. The total volume of beer available fell 4.4%, marking the biggest year on year percentage decline since 2012 when it dropped by 6.6%.
What’s going on?
One explanation comes from the grocery market. According to Circana’s grocery market data, total alcohol sales have fallen 1.8% in volume in the past year. Once the second highest performing department, Alcohol has been relegated to fifth place – behind non-alcoholic beverages. In 2020, alcohol spending was 27% higher than beverages, but in the past four years beverages have grown 34% to $1.7 billion, making it worth 7% more than Alcohol at $1.6 billion. This suggests consumers are increasingly turning from beer wine and spirits to energy drinks, carbonated beverages, sports drinks and coffee.
According to the latest New Zealand Health Survey the total number of drinkers has declined from 81.6% of the total adult population in 2019 to 76.3% in 2022 – a decline of 5.3 percentage points.
More kiwis are choosing to drink less or not at all as a lifestyle choice. (The Dry July movement is reporting a 15% increase in uptake compared to the same time last year at the time of writing this article.) And consumers are enjoying the variety and health benefits of specially prepared non-alcoholic options. While these account for a mere fraction of overall alcohol grocery sales, they are growing rapidly at 37.5% compared to the prior year.
This raises the question – is there any hope for New Zealand alcohol suppliers? The good news is that the picture is a little more nuanced when we look at specific alcohol categories.
Wine is worth $0.9 billion a year in supermarkets but is currently down in all metrics: value, units, and volume. However, there are some very bright spots behind the headline stats; Shiraz, Sweet Aromatics, Rose, and Low & Light Alcohol wine varieties have all experienced growth in the past year.
Prosecco, the new darling of the sparkling category, is up 17.5% year-on-year as Kiwis look for affordable options. However, it’s not all about cheap and cheerful. Wine priced in the $20 to $24.99 price range has hit a sweet spot and has grown in value compared to last year. Reds made a splash within NPD representing the majority of new releases into market. There are four Shiraz alone within the top 12 wine category performers.
Olly Wilson, GM Sales & Marketing for Constellation Wines said, “Although the market faces challenges, there are pockets of trends providing new and exciting offers for the New Zealand consumer. We have seen really strong growth in Premium Californian Wine particularly Chardonnay through our Robert Mondavi brand with bold/buttery flavours. Ruffino has been a pillar in Prosecco growth for the past five years, but we are now starting to see growth through Premium Prosecco brands like Tipping Point.”
Beer has performed even better, increasing in value by 4.2%. While units are down 4.3%, volume is only down 1.0% as customers switch up pack sizes. Many of the gains can be attributed to the success of low-carb options, which account for 61% of value growth. Its volume has increased by an astounding 18.6% in the last year, as consumers flock to this healthier option. Many well-known beer brands have entered the market, with six of the top beer NPDs providing low-carb options. No-alcohol beer is up 22.8% in sales with Asahi, Peroni and Speights driving 70% of the value growth.
Annemarie Browne, Marketing Director, Lion New Zealand commented, “The shape of the beer, wine and spirits industry is changing along with consumers. The vast majority of New Zealanders drink responsibly and are looking for balance – they want to live full lives and to make the most of the moment, which means being able to socialise and enjoy alcohol in moderation. This is a really positive thing for our community, it is where we are seeing the most growth and is a key focus of our new product development. Low-carb and low-alcohol beverages are continuing to increase rapidly in popularity – New Zealand’s no.1 beer is now a low-carb beer, Speight’s Summit Ultra. And recently launched Steinlager Ultra Low Carb is also fast rising, providing New Zealanders with the option to enjoy their favourite beers in a way that meets their changing needs.”
While the market is currently under pressure and facing challenges, some brands have established strategies that are clearly working. Innovation and new releases stimulate consumer interest and sales. Adapting to new trends and tastes is crucial. The consumer’s desire for something healthier and better-for-you is a major motivator when it comes to beer. Drinking less while still seeking quality has seen higher priced wine doing well.
It seems there are plenty of opportunities for growth remaining – it’s just a question of working harder to find them.
We’ll drink to that. Cheers!
By Julie Bramley, Market Insights & Research Consultant, Circana New Zealand
For the NZ Circana Liquor Report, request a copy via the QR code:
Sourcing: Stats NZ Retail Trade Survey Dec 2023, Mar 2024, Actual Retail Sales Volumes Percentage Change from same quarter previous year | Stats NZ Alcohol Available for Consumption Year ending Dec 2023 |
Circana MarketEdge Grocery MAT 28/04/24 | Ministry of Health, NZ Health Survey 2022/23
