Craft Beer Bubble In New Zealand?

Over the last week or so, some interesting conversations have happened for me around where craft beer is at and going in New Zealand.

I’ll roughly outline some of the points and ideas that have been raised. Not saying I agree with them all, or that there is any specific measurable information available to prove any of the following.

2013-03-07 16.52.09Three Lamps craft beer bar closing. Rent was too high? but the possible main point was they couldn’t get enough customers through the door to buy craft beer, in one of the most affluent parts of New Zealand. Location, parking, rent, passion? may have been contributing factors.

House on Hood (plus the other two bars) sold in Hamilton. Sky Sports Grill for sale/on the market. Why are craft beer bars being sold? cause they are(n’t) viable businesses? profitable? or location? or owners cashing up? These bars plus Three Lamps could see the loss of up to 100 craft beer taps back to the large breweries in Hamilton/Auckland.

Supermarkets and bottle shops, finally rationalizing the range of craft beers on their shelves, as the market continues to become more competitive. The slow-moving beers are being dropped, or just not re-ordered.

Prices dropping, as new players come into the market and try to win market share. They are sacrificing margin for volume. Is this a good move? Is it sustainable?

It seems there have been a lot of breweries open in the last year, whether through building a brewery or starting a brand and contract brewing. There is now a feeling in the market that supply has now outgrown the growth in demand from the customer. Has the growth in the number of new drinkers for craft beer in NZ slowed?

Sky Sports GrillOn the back of this possible slowing of new drinkers, comes the elephant in the room, beer quality. There is a number of beers in the market that are problematic and just not that good. This was highlighted when I had a story relayed to me about a guys friend saying he has given up on trying craft beer cause “you can’t be sure if it is going to be good or not”, “best to stick to the known brands”

Also the recent New Zealand summer was patchy at best, and not a shade on the previous summer which delivered some incredible growth for the beer market.

All in all things in the craft beer market in New Zealand have gotten a whole lot tougher in the last 6 months. Time for a reality check. Improve quality, sharpen prices, offer better value (not necessarily dropping prices), better service and maybe creating some interest in the beers. (many opportunists flooded the market in the last couple of years, offering beers masquerading as craft but really weren’t much more than Crafty Beggars).

Has the shine started to come off craft beer in New Zealand?

Is the craft beer bubble about to burst?

 

 

UPDATE: always good to read the feedback on Facebook after I post a rant. It gets me a little more focused.

I forgot to mention the Sprig & Fern closing in Auckland (more craft beer taps lost)

Maybe my focus should be on the number of craft beer taps lost in Auckland & Hamilton in the last 5 years (or is it 7 years since the Cock & Bull got bought out). We are looking at approx. 100 craft beer taps being lost. But we have gain possibly as much. So maybe for the region we are where we were for craft taps as we were in 2007. The new operators seem to be more passionate about craft, and offering a wider and better(?) range of beers on tap.

UPDATE II: my reference to bubble is more about a correction vs “craft beer is dead”. Kind of like a property bubble or an IT bubble. It bursts, there are casualties, but it doesn’t goes away, and the survivors are stronger, and the growth continues.

  • Ian Allen

    Good points Luke. There has been so much said about spending what it takes to drink decent craft beer and of course, as an enthusiast and AG home brewer I must agree. BUT, the cost of living has driven up and up in NZ this last decade and people just have to count the pennies. So for example a rigger of Sprig and Fern IPA at around $11 constitutes pretty good value and the stuff flies off the shelves to people who can’t suffer generic slop but can’t afford two or three pints a night at $9 a pop. When I go into our supermarket I see the likes of Epic (not just putting your shares up Luke!) at a pretty affordable price, whereas there is much else that I would like to drink but buy only as a treat because I just can’t justify the cost. So, say what you like, cost is a big factor and always will be – doesn’t matter how much passion you have for craft beers. Of course when you go out to a great pub for a special occasion you are less fussed and will often spend more, but for those regular drams at home of an evening, well, folk are finding it tougher.
    Cheers,
    Ian

    • pdubyah

      I have to say that I’ll spend more on a (hopefully) better craft beer and get less volume but more enjoyment than a 12 pack domestic. But that’s just me. When I don’t have discretionary money might be different. Not looking forward to that day.

  • I live in New York City, and I must say I was surprised when I went back home to Auckland over Christmas at the lack of sour/wild and barrel-aged ales in New Zealand.

    This spectrum of the craft beer market is really where all the innovation is currently happening, and has really taken over from IPAs for craft beer geeks here.

    The reason I was surprised at the relative lack of such styles in NZ was because we make some of the best wine in the world! I can see how it’s a fair bit harder to get your hands on whiskey and other spirits barrels in NZ, which explains the lack of bourbon barrel stouts, but wine – c’mon! Part of the reason for the surge in popularity of sours is how similar they are in flavor profile and texture to wines, which is probably why I’ve noticed a lot of women who don’t count themselves as craft beer fans get surprised at how much they like sours when they first try them (even more so than guys who are craft beer fans, who generally take a bit longer to get into sours).

    TL;DR I’m with Luke: NZ brewers need to up their game. There’s too much generic, low quality craft beer in NZ right now.

  • pdubyah

    Enjoyed the 3 Lamps when it was a Belgium beer place, otherwise not so much. Sky sports is great beer not so great venue for craft beer perhaps. A lot more taps at bottle shops now though for the take away.

    • Three Lamps was a great venue but unfortunately the location was poor, the far end of an affluent suburb that doesn’t have craft beer in it’s blood. Sky Sports Grill is my idea of heaven, unfortunately craft beer and sport don’t mix for 99% of the market, generally you pick a venue for one or the other.

      • pdubyah

        I’d never take MrsPhil to the skysports bar though. I’d have thought that would alienate a fair chunk of target market beer+sports being its thing. I’d be at a loss if it closed for decent variety on tap.

      • Sanctuary

        “…unfortunately craft beer and sport don’t mix for 99% of the market…”

        Craft beer is most usually just another middle class hipster appropriation of a working class drink, presumably as part of their ongoing aesthetic festish for being “authentic” and “original”. I say it is an appropriation because hipster craft beer bars are not about creating a dialogue; it is about stealing someone elses commonplace drink, applying an artificial scarcity and ramping up prices that eventually prices it out of the range of the people you stole it from. Quality of much craft beer is poor because the people making it are often more interested in making a dollar from a fashion statement than in making beer.

        Craft beer would work if people made good beer at decent prices that makes quaffing affordable to all. Craft beer should be about locals offering a decent local alternative to cheap industrial beer at comparable prices
        in ordinary bars, not about making $15 750ml bottle of beer with an art nouveau label that comes with tasting notes that read like a parody of a suburban wine snob and has been shipped here from Massachusetts, all
        served in an “authentic” dive of a bar where no expense has been spared to make sure the uncomfortable second hand furniture is mis-matched.

        • Hey Sanctuary. I thought you might have been trolling at first, but I think you raise something that a lot of people outside the industry (and I include passionate consumers/evangelists in “the industry”) commonly come up against.

          Firstly, on the topic of price, it’s been well covered in the past. One of the first good articles on the whys and wherefores of this common punter bugbear is from Dominic Kelly here: http://theliquorladder.blogspot.co.nz/2012/11/the-price-of-beer.html

          Then Stu from Yeastie Boys penned an excellent breakdown on the costs of your pint of craft beer here: http://www.stuff.co.nz/dominion-post/capital-life/the-beerhive/9547443/Whats-in-my-beer

          Finally, the blog meister here summed it all up in this very organ: http://www.luke.co.nz/2014/04/price-beer-right/

          So that’s price covered. I agree, it’s expensive. It can hurt if you’re a volume/session drinker (and I am) and or you like to try “one of everything out there” (and I do). But the TL;DR takeaway from those articles above is a) it’s pretty much the tax (and markup on the tax) and b) there aren’t many rich brewers laughing all the way to the bank while you drink their beer.

          On the topic of classism, I think it’s sheer nonsense to be blunt. Beer has never been a working class drink. Throughout history it’s been the drink of the extremely poor, the extremely wealthy, and everyone in between. Sorry, but I’m sick and tired of hearing this lame canard repeated ad nauseum. Beer is beer. Class has nothing to do with it. There’s cheap beer and expensive beer (and if you read the above links, you’ll know why) but nobody is making beer thinking “right, I’m off to oppress the humble blue collar worker today”! No, people make beer because they love beer in general. As in any industry, I’m sure there are/have been/will be a few seeking to simply cash in, but they are in the minority, and if they pull it off, more power to them.

          Finally, hipsters. I’m not going to pretend I don’t know what you’re talking about here. I agree to a point. All I can say is don’t let who is drinking something colour your opinion of it. Some of my favourite bars are considered “hipster”, but if you met me, I think you’d say I’m pretty far from what’s considered hip and cool. 😉 If a place really bugs you, by all means, don’t drink there. But for every “hipster” bar, there’s either a side to it you’ve not considered (great, passionate staff perhaps?) or if not, another more down to earth bar giving this craft beer thing a whirl. Drink there. Encourage them.

          Cheers.

  • Pingback: MR | Third Edition, May 2014 – Good Beer Week ’14 | Drunken Speculation()

  • Pingback: Brew Hui Meets: Luke Nicholas | Brew Hui.()

  • Pingback: Moa Shareholders Will Be Happy? | Luke's Beer()

%d bloggers like this: