Beer consumption was down 8 million litres in the six months to June 30. Photo / Getty Images
Beer consumption was down 8 million litres in the six months to June 30. Photo / Getty Images
Brewing company DB Breweries says its move into the seltzer market could help sales within the beer category rebound.
Growth of beer in the traditional category has been stagnant over the past few years. Across the industry, consumption was down by 8 million litres or 3 per cent in thesix months to June 30 as Covid-19 took its toll on the hospitality industry.
But beer enthusiasts are betting on new and interesting innovations such as "beer seltzers" to revitalise the entire category, like low and no-alcohol offerings have in recent years.
DB Breweries is gearing up to launch its two beer seltzers in early October. The new products, which took about a year each to develop, are different to a typical sparkling water-based seltzers and instead are brewed using the same ingredients as beer.
Its Club Setter was developed in New Zealand, while Pure Piraña is a global concept from Heineken, which will initially only go on sale in New Zealand and Mexico. Both are the first beer seltzer products to go on sale in this country.
Beer seltzer is made the same way as traditional beer with the same ingredients, but with additional flavours and filtering at the end of the process that gives it a clear colour. Fruity flavours are added at the end of the brewing process.
Cider and wine can also be made into a seltzer.
DB Breweries managing director Peter Simons says beer seltzer had the potential to turn around stagnant growth in the beer category experienced over the past few years.
"If you look at craft, when craft started about 15 years ago, it brought the beer category to life again because people started to talk about beer again. You need to revitalise the beer category all the time; and that's what seltzer will do," Simons told the Herald.
"I truly believe it will bring the beer category to the next level. Growth for that category within beer, but also revitalise the beer category as a whole."
Beer seltzer is all the rage overseas, particularly in the United States, where it makes up about 5.5 per cent of the entire beer category. Worth about US$2.6 billion ($3.8b) in the US, the category is expected to triple in size and to US$9b ($13.3b) by 2023.
DB Breweries anticipates the seltzer category in New Zealand could hit $62m over the next three years.
Simons said beer seltzer would not become a primary focus for the company, but it was expected to become a sizeable chunk of its business like low and no-alcohol drinks had, driven by Heineken 0.0.
DB would see how the products were received before making a decision to develop others, he said.
Peter Simons, managing director of DB Breweries. Photo / Supplied
The low and no-alcohol drinks category was growing, and could grow to hold a 10 or 15 per cent share of the total beer category, while beer seltzer could grow to become 5 per cent of the category over the next three years, Simons said.
"The question is - that on top of [current growth] - I believe seltzer will be on top ... but will that be completely on top [of]? No. Some people will switch from wine or cider or beer into seltzers, that will always happen, but we do believe it will revitalise the total beer category."
DB Breweries had been able to carry on production through lockdowns, but the Covid-19 pandemic had negatively affected its hospitality sales. It experienced "good recovery in June and July" but revenue from hospitality sales was still down about 15 per cent, Simons said. The next three months and over summer are vital for core sales.
Dylan Firth, executive director of the Brewers Association of New Zealand, said beer seltzers had experienced massive growth overseas in recent years.
New Zealand was already home to a handful of spirit-based seltzers but DB Breweries products would be the first within brewing.
"Beer seltzer is brewed, still using malts and barley and hops, and adding natural flavours and filtered that extra time to get a lot more clarity. It is innovative and it is at the forefront of innovation in New Zealand and internationally as well," Firth said, adding he expected other products in the category to flood the market in time.
DB Breweries has developed two beer seltzer products it believes will be popular with the increasingly "conscious consumer". Photo / Supplied
"Given it's a brewed product and that enables it to be sold through the supermarket channel as well, and I imagine there will be some uptake and competition out there."
Beer consumption has yoyo-ed in the past five years, reflecting an overall downward trend over the past 20 years, inline with wider alcohol consumption trends.
An NZIER report valued New Zealand's beer industry at $2.3 billion in 2019.
