The Government has backed down on plans to restrict the sale and strength of "ready-to-drink" beverages and will let the liquor industry set its own rules for the sweetened alcoholic drinks.
Industry giants lobbied Justice Minister Judith Collins to scrap proposed limits on the number of standard drinks and alcohol content in alcopops, which are highly popular with young drinkers.
Yesterday, the minister said: "The Government has decided to give the alcohol industry the opportunity to introduce its own measures to limit the harm to young people caused by RTDs."
If the industry rules were ineffective, the Government would have regulation-making powers to limit the RTDs' strength and places of sale.
The news marks a significant retreat from the initial proposals for alcopops in the Alcohol Reform Bill, which could come before Parliament next Thursday.
The Law Commission, in a report the reforms were based on, said RTDs were commonly used by binge drinkers, and were the drink of choice for 14- to 24-year-olds, especially women.
The legislation originally proposed restricting RTDs to 5 per cent alcohol and limiting them to containers holding no more than 1.5 standard drinks.
At the select committee stage the cap on alcohol strength was raised to 6 per cent, and only restaurants and bars could sell higher-strength RTDs.
Now the cap has been scrapped altogether and the industry will be left to create its own voluntary code.
Asked whether the change was a back-down to the industry, Mrs Collins said: "It's an inspired move, actually.
"A regulation-making power, which ... takes a matter of weeks as opposed to years, is a very inspired way of dealing with an industry that has over the years shown itself to be adept at changing the way it operates to suit the circumstances."
The Law Commission also noted in its report in 2010 that targeting RTDs might not be feasible because the alcohol industry would create alternatives, and young people could simply switch to straight spirits.
Last month, the managing directors of industry heavyweights Bacardi, Jim Beam, Brown-Forman and Diageo met Mrs Collins and urged her not to restrict the sale or content of alcopops, a major source of their revenue.
RTDs make up 12 per cent of the alcohol market by volume, and up to 180 million alcopops are sold each year.
RTDs are generally 5 to 12 per cent alcohol by volume, and most are sold in bottle stores.
Distilled Spirits Association chief Thomas Chin said a large part of the industry already self-regulated by setting a cap of two standard drinks per bottle.
A 330ml bottle containing two standard drinks would have an alcohol content of around 8 per cent.
Yesterday, the Labour Party tabled 10 amendments to the reform bill.
The party feels the most important parts of the Law Commission report have been ignored, so it is making a last-ditch attempt to introduce measures on alcohol pricing, marketing and sponsorship.
The amendments include a minimum price for alcohol and warning labels and nutrition guides on beer, wine and spirits.
Law Commission recommends alcohol laws be changed to allow banning of "undesirable" products.
Government proposes limiting RTDs to 5 per cent alcohol.
Government raises proposed limit to 6 per cent in RTDs sold in bottle stores.
Proposed limits on RTD alcohol content and where they can be sold scrapped. Industry told to form its own voluntary code, with Government able to step in and force limits.