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Home / Business

Brewers keen to join craft club

NZ Herald
2 Jan, 2012 04:30 PM7 mins to read

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Kiwi beer consumers are rapidly getting a taste for a better-quality drop, says the Brewers Guild of New Zealand. Photo / NZ Herald

Kiwi beer consumers are rapidly getting a taste for a better-quality drop, says the Brewers Guild of New Zealand. Photo / NZ Herald

Last year Moa, a Blenheim-based boutique brewery, proudly announced it had become the first craft beer-maker to sell its products in New Zealand duty-free stores.

The news was by no means earth-shattering, but that didn't stop DB Breweries from raining on Moa's parade. The Otahuhu-based brewing giant swiftly disputed the South Island firm's claims, saying its Monteith's products had been "in and out" of local duty-free stores since 2007.

The debate highlights the rise of craft beers as a force in New Zealand's liquor market, as discerning drinkers opt for the quality offered by smaller labels ahead of quantity and value.

Deciding on the winner of the Moa/DB argument depends on your definition of what constitutes an authentic craft beer, and Moa general manager Gareth Hughes doesn't think Monteith's makes the grade.

The brand could have claimed the title before it was acquired by DB and mass produced, he says.

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Hughes says a genuine craft beer is "made by man".

"You can market and make people think you're making a craft beer but the reality is that to really craft it we've probably got as many guys working in our brewery as they have working at the big breweries at any given time."

Monteith's, which was acquired by DB in the 1960s, still brews some of its products at its Greymouth brewery, which is being redeveloped and will reopen in May.

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But most Monteith's beers are produced at DB's breweries in Otahuhu and Timaru, which the company says is partly because of export demand for the brand, mainly from Australia.

According to the Brewers Association in the United States, a genuine craft beer-maker must be "small, independent and traditional".

Less than 25 per cent of a craft brewery should be owned or controlled by a company which is not itself a craft brewer, the association says.

DB communications manager Jo Jalfon says the definition of a craft beer has nothing to do with ownership or brewery size.

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"Samuel Adams in the USA, for example, is a craft brewery even though it's owned by The Boston Brewing Company and listed on the New York Stock Exchange," Jalfon says.

"What matters most, and this is definitely true for Monteith's, is brewing passion and the beer itself."

Brewers Guild of New Zealand president Ralph Bungard says Kiwi beer consumers are rapidly getting a taste for a better-quality drop, and losing the "buying a 12-pack and glugging it down" mentality.

"People are now realising that you can sit down and have a meal and have a beer that suits the style of that food."

Bungard, who owns Christchurch's Three Boys Brewery, says the big breweries' craft offerings play an important role in the boutique market through introducing consumers to new kinds of beer.

While DB has its Monteith's range, New Zealand's other brewing giant - Lion - has Mac's, a craft brand it bought from Nelson's McCashin's Brewery in 1999.

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The third biggest player in the market, Papakura-based Independent Liquor, launched its Boundary Road craft beer range last year.

Julian Davidson, Independent's chief executive, says a genuine craft beer needs to offer unique or unusual choices to consumers.

"In the US I think the craft beer market is now between 7 and 8 per cent of the [total] US beer market."

Davidson says that as a result of their size some of the US craft firms have breweries bigger than Lion's, DB's or Independent's in this country.

"But they're still craft beers," Davidson says. "To me, craft doesn't necessarily just mean backdoor production runs."

Bungard says craft's share of the total New Zealand beer market could be approaching 8 per cent if Monteith's, Mac's and Boundary Road are included.

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Excluding those brands, the share is likely to be within the 3 to 4 per cent range, he says, although others in the industry give lower estimates.

Bungard says the Brewers Guild, which counts 50 individual New Zealand breweries as members, is in the process of conducting a survey that will gather some solid statistics on craft's share of the market.

Carl Vasta, founder of the Kapiti Coast's Tuatara Brewery Company, says his firm has enjoyed 70 per cent annual revenue growth over the past five years.

The company has sales in the range of $4 to $6 million, according to a newspaper report.

Demand has been so great that the company is in the midst of moving its brewing operations from a shed on Vasta's property in Reikorangi, near Waikanae, to a new facility in an industrial area of Paraparaumu.

Wellington is Tuatara's main market, and Vasta says the capital is a couple of years ahead of Auckland in terms of the availability of craft beer in bars and pubs.

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The bars in the capital that are successful and growing are the ones that stock craft beer, he says, while the ones that still serve only mainstream beers are becoming less popular with the punters.

The freedom on-premise operators have to stock new beer brands will have an impact on the extent to which craft brewers will break into the Auckland market, Vasta says.

The big breweries sometimes have arrangements with bars and pubs that restrict the entrance of new beer brands.

"It's anti-competitive," says Vasta. "It's pretty much bribing the bars to not allow other beers in."

Independent Liquor is currently making a push into the tap beer market, which until now has been dominated by DB and Lion.

Davidson says he hopes the company's move into the market will break up a "cosy duopoly" that has existed between the two brewing giants and allow craft breweries to gain better access to on-premise operators.

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Independent, he says, is also looking to partner with craft breweries to distribute their beer. "Or we could buy them [craft breweries]," Davidson says. "We're in the market for anything right now."

Hughes says Moa doesn't have any interest in being acquired by one of the big brewers at the moment.

"We've got a whole lot more growing to do and we want to keep growing and pushing what craft beer stands for in New Zealand," he says.

Hughes says Moa - which already exports about 50 per cent of its products to the United States, Australia and Asia - has aspirations of becoming "New Zealand's international beer".

"At the moment I don't know if we've got a really proud international beer," Hughes says.

"If there is one it [Steinlager] has got a German name and is owned by a Japanese company [Kirin, which owns Lion]."

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He says Moa's sales have doubled this year and, like Tuatara, the company is in the process of expanding its brewing facilities to meet surging demand.

When the company was founded in 2003 by Josh Scott, son of Marlborough winemaker Allan Scott, it supplied one local pig farmer with waste grain from its beer-making process.

"Now we're supplying about seven pig farmers with our spent grain," Hughes says.

Running a craft brewery might sound like a fun lifestyle, but Bungard says it's a relatively tough way to make a buck.

"There aren't many brewers around that have really cracked it," he says. "But if you are good at what you do and you can keep your costs down then you can be quite successful."

WHAT IS CRAFT BEER?

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Gareth Hughes, Moa: A beer that is "made by man".
US Brewers Association: Less than 25 per cent of a craft brewery should be owned or controlled by a company which is not itself a craft brewer.
Jo Jalfon, DB: "What matters most ... is brewing passion and the beer itself."
Julian Davidson, Independent Liquor: Craft beer needs to offer unique or unusual choices.

Bigger gulp

up to 8pc Craft sector's share of total NZ beer market, including Monteith's, Mac's and Boundary Road brands.
3-4pc of the market not including those brands.
70pc rise in revenue growth for Kapiti Coast's Tuatara in past five years.
50pc of Moa's beers are exported to the United States, Australia and Asia.

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