DB Breweries profit falls as alcohol demand drops, excise costs rise

DB Breweries has lowered its baseline carbon emissions by 55% since 2018, but consumer confidence is having an impact on the breweries' profit.

Lower demand for alcohol from pubs and bars has hit DB Breweries in the pocket with its latest financials revealing a 73% drop in profit between 2023 and 2024.

But managing director Matt Wilson believes while the market is feeling the effects of the wider economy, the success of its sustainability efforts is something to be proud of.

The business reported 2.3% growth in total sales from $580.9 million in 2023 to $594.4 million in 2024, although the business’ profit fell from $18.8m to $4.9m.

Wilson said soft consumer spending had driven the decline, but added that the truest reflection of the business was its operating profit, which fell from $34.7m to $25.9m.

“It’s particularly hit our hospitality business, where that drop in consumer demand has been hard to recover, as well as obviously high input costs. I think the impact on the hospitality industry has been pretty well documented,” Wilson said.

Despite the fall in profit last year, he said, the company was not backing off from its sustainability commitments and ambitions.

DB Breweries managing director Matthew Wilson says that excise rate rises have been "really hard to stomach" over the past few years. Photo / Supplied

In the business’ newly released sustainability report, the company has reduced its carbon emissions by 55% on its 2018 baseline, driven by changes in the use of water, fossil fuels and energy use.

Over the past 10 years the brewery has reduced its water use by a total of 82,500,000 litres, equivalent to 33 Olympic-sized swimming pools.

While in terms of energy, since 2014 DB Breweries has reduced its fossil-fuel consumption for steam and hot water by the equivalent of 700 households’ total energy consumption.

Wilson said the business was now on track to achieve carbon zero emissions in production by 2030.

“There’s a couple of big initiatives at Waitemata Brewery which are going to get us there because particularly our thermal energy supply at this site here is the single largest source of emissions we have left. It’s a big one, but at least it focuses the mind on what we need to do.”

He pointed to a number of initiatives across its sites including the decarbonisation of its Timaru brewery after switching its coal-powered boilers to one using biomass.

Wilson said he wouldn’t know an aggregate figure on how much the business has spent over the past decade on its sustainability programme, but believed it was a misconception to view the spending as a cost rather than an investment.

“I think one of the really important things for this entire area is that you’re investing for the future and to be sustainable into the future and to reduce costs down the line.”

Wilson said while some initiatives came with large investments if it didn’t act now it would likely face higher costs in the future or issues around energy or water supply.

Wilson, who sits on the Sustainable Business Council, has been a vocal critic of companies reliant on purchasing offshore carbon credits to meet emissions reduction goals.

“You take something like energy or carbon footprints, if you haven’t reduced your reliance be it gas or coal in the coming time and you’ve bought an offset, you haven’t actually changed your supply source.

“In the coming time those energy sources will either become unavailable or a lot more expensive, so I don’t think buying offsets is going to fix the issue.”

He said taking steps now was about mitigating future risk.

“You’re protecting your business so it can grow and be profitable in the future. If you haven’t taken some of those steps, they’re going to catch up with you sooner or later.”

The brewery’s spending on excise costs, raw materials and packaging did grow from $369.7m in 2023 to $386.5m in 2024, although Wilson explained this was more inflation-driven than anything else, particularly because of its purchasing power in the industry.

Although, he did acknowledge the impact rising excise rates have put on the industry. Since 2021, excise rates have increased by roughly 20%, and it’s something, he said, has been challenging to pass on to the consumer.

“That’s really hard to stomach. And I think if you look at other markets around the world, because you’ve got a hospitality industry that’s really struggling post-Covid and then the recession that’s come after that, that particularly hits that industry quite hard.”

He advocated for similar reforms seen in markets overseas such as Australia where they have lowered the excise rate for keg beer, or the UK which has frozen excise rates entirely to try to help the hospitality industry get back on its feet.

Wilson said sales for the business in 2025 are mostly in line with where they were last year because of soft consumer demand, and it is particularly hard from a revenue perspective.

The brewery’s hospitality arm is making efforts to better control costs which is helping it in the face of pressure, but he was hopeful that further interest rate cuts and Kiwis having more disposable income would help the business bounce back.

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.