Craft Brewing Takes Flight in N.Z. (part II)

PART II: The Push for Prohibition

From the 1880s through World War II, all legal alcohol sales in New Zealand were through licensed hotel bars. Such hotels were the focus of virtually every community, whether or not actual room accommodations were available, or even existed. The beers were typically English ales, delivered from the local or regional brewery in casks and served at or just below room temperature. These hotel licenses were issued to specific individual “proprietors” for specific locations, and they were not transferable. However, the premises could be bought by a brewery, and the hotel could continue to be operated by the licensee, who, in effect, became an employee. The licenses were coveted by the breweries, and the race was soon on to either buy outright, or “tie” by exclusive contract, as many of these outlets as possible.

It was not just beer sales, per se, that eventually made the creation of the two brewing giants that came to dominate so attractive, it was, even better, the potential for the sole rights to provide virtually all of the beer sold throughout most of the country. During this same period of almost frantic hotel license acquisition, the actual number of licenses was steadily declining, from 1,719 in 1894 (the earliest figure available), to 1,156 in 1920. This was due to the efforts of a growing prohibitionist movement, which strongly resisted the issuance of any new licenses as existing ones expired, were revoked, or the license holder retired, died, or otherwise left the scene. Naturally, this decline further increased the value of those licenses which remained.

In 1835 at Kororareka (in the same year and community that Joel Palack opened New Zealand’s first brewery) the first Temperance Society was established. This initial movement, in light of the strong, often adulterated spirits being consumed at that time, was probably not totally unjustified. Interestingly, the first area to temporarily go “dry” during this pre-colonial period was the settlement at sunny Nelson, which later became the focus of New Zealand’s hop growing industry.

The prohibition movement grew steadily throughout the remainder of the 1800s and into the early 1900s, and a number of districts throughout the country went dry by local option. The influence of the “wowsers,” as they became known, reached it’s zenith in 1911, when 56 percent of the electorate-just short of the three-fifths majority required-voted for countrywide abstinence. By the next election in 1914, voter apathy and the country’s preoccupation with the WWI had taken their tolls, and the movement began to loose some of its steam, although its forces helped to perpetuate New Zealand’s archaic liquor laws, such as restricted outlets, no Sunday selling, and 6:00 p.m. closings, through the middle of this century. Today, there remain only two small areas in the country where alcohol cannot be sold: a neighborhood in Auckland and a suburb of Wellington.

While New Zealand’s consumption of alcohol had substantially moderated since the 1880s, it is generally agreed that this moderating trend was due not to the efforts of the wowsers, but was instead the result of a natural maturing of the society.

An interesting side-note to the anti-alcohol movement in New Zealand is that in 1893 its women were the first in the world to receive the right to vote in national elections. This resulted in no small part from the efforts of the wowsers, who believed that women would vote overwhelming for prohibition. There is no evidence they did.

The Early Giants

In 1923, the first New Zealand brewing giant, under the name of New Zealand Breweries (since renamed Lion), was born through the merger of ten major regional breweries (including all of their licensed hotels and tied independents) located in the major metropolitan areas of the country. Although exact figures are unavailable, it is probably safe to say this new company controlled well over half of the country’s beer production and distribution. In subsequent years Lion continued to grow, not through capital investment in new plants, but by buying additional regionals, closing some and bringing others into the corporate fold.

In 1930, the Coutts family, which had been involved in brewing since the gold rush days, founded the Waitemata Brewery in Auckland. This operation, which was to become Dominion Breweries and eventually New Zealand’s second giant, immediately ran smack into Lion’s formidable and exclusive marketing network and was soon in danger of foundering. In the preceding few years, with its virtual monopoly of the industry seemingly assured, Lion had slacked off somewhat on its independent hotel relationships, but with the opening of the Waitemata plant, these exclusive contracts were again strictly enforced, putting even more pressure on the newcomer. Lion reportedly even worked behind the scenes supporting its arch rivals, the wowsers, in their efforts to pressure the government into withdrawing Waitemata’s license. Although the prohibitionists were not successful in this instance, they were able to put enough pressure on the government to ensure that no new brewery licenses were issued for the next 20 years.

Rescue for Waitemata came in the form of a partnership with Henry Kelliher, whose Lever and Company Limited owned a bottling plant and had wholesale contracts with numerous independent hotels. By 1945, this second giant had gained a quarter share of New Zealand’s 20 million gallon annual beer sales.

The big brewers, first Lion and then DB, continued to acquire those regional breweries which remained, retaining some and closing others. But, surprisingly (or maybe not), they got their heads together in the 1950s to jointly develop the continuous fermentation process, a New Zealand invention. The real brains behind making this process work was DB’s Morton Coutts, since retired, but at 94-years-old still deeply involved in brewing research. Initially, both majors invested heavily in new, highly efficient, high-output continuous fermentation plants. But Lion eventually drifted back to batch brewing in the 1980s in order to produce a larger variety of beers. DB is still heavily involved in continuous fermentation.

The majors gained another, and substantial, competitive advantage from the 1950s with fleets of beer tanker trucks in which they transported product to their hotel pubs. This bulk beer could be efficiently and cheaply delivered to the hotels, and then quickly transferred into waiting serving tanks, typically sized at 1,200 or 2,400 litres, in the basements.

The growth of Lion and DB continued unabated and unchallenged through the 1950s and 1960s. Their highly efficient plants and massive, exclusive distribution systems made it impossible for the remaining regional breweries to compete. By 1955 there were 22 breweries left in New Zealand. By 1960, that number had dropped to 11, and total extinction was approached in 1970 when there were reportedly only four breweries, including Lion and DB, in the country. A dismal decade would pass before the picture would even begin to brighten, and a further five years would elapse before a lasting growth curve would begin to evolve

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by Luke Nicholas and Tony Rutherford
Appeared in New Brewer International, March 1999