Brothers Beer shop, brewery and tasting lounge in Auckland draws in punters with over 200 flavours on offer. Photo / Richard Robinson
When it comes to celebrity, brewers are not the first who come to mind as fitting the "rockstar" tag.
But as Epic brewer-owner Luke Nicholas found out recently, there is a degree of fame to be found at the bottom of a bottle. "I was coming home from somewhere recently and rocked up at Customs ... and my Customs form says 'brewer' and the guys asks me who I am and when I tell him, he says: 'Epic, yeah I've drunk some of your beer - it's got a lot of flavour.
"And suddenly, there's another guy running at me from across the room and I'm thinking, 'What's going on here?' and he says to me: 'You're Luke Nicholas from Epic, right?'.
"Yeah."
"I love Hop Zombie."
"They were both so excited and wanting to chat and I'm thinking I have to go and get my bag but they were just so passionate."
For Nicholas, being accosted at Auckland Airport by fawning fans because he makes beer was almost unthinkable 20 years ago when he started out as an assistant brewer at now defunct the Cock & Bull chain.
In his two decades as a brewer, which he celebrated on January 17, Nicholas has seen huge change.
Just five years ago he estimated the audience for craft beer in New Zealand to be about 10,000 dedicated people.
"That was a realistic guess at the size of the market based on sales and how many people it would take to consume that amount of craft beer," he says.
"Back then there were a lot of people who were transient, who would come in and sample but they wouldn't really stick to anything. They'd go back to their green bottle lager."
Today he's happy to say that guess has increased tenfold to an "underestimate" of 100,000 and, like his fans at Auckland Airport, they're committed.
But despite massive growth in the industry, Nicholas fears there's a regression of sorts at work - it's almost as hard now to sell beer as it was back in the day when he was knocking on doors until his "knuckles are bleeding".
"The other day I was trying to figure when we were in the 'golden age' of having the right number of breweries and customers and I think it was 2012 - that was the time before all the me-toos started coming on board.
"Every wannabe homebrewer, every person with money who wanted to buy a brewery, every branding guy who says, 'Look at this double-digit growth, I'm jumping on that.'
"People who are doing that now are already late because things are going to get tough."
ANZ released an industry insights report last August that stated: "Our research suggests total sales of craft beer are up by 35 per cent in the past year, with a number of breweries growing at rates substantially higher than the overall category. We estimate craft beer accounts for around 15 per cent of domestic beer sales."
The report was highly criticised by industry players for being too loose with definitions - it included big brewery owned brands such as Mac's, Monteith's and Boundary Rd in the craft basket - as well as having no real hard data.
Website beertown.nz followed by commissioning Statistics NZ to look at craft growth from 2013-15 based on figures from Customs and Excise.
Data showed that although overall beer production fell by about 1.5 per cent per year from 2013-15, craft beer production increased about 27 per cent per year from 2013-15.
Much of that growth was driven by new players to the market. The number of breweries doubled from about 80 to 160 since 2013.
Some breweries have grown hugely in the past four or five years - notably Wellington trio Garage Project, Panhead Custom Ales and ParrotDog, all of whom featured on the Deloitte's Fast 50 list of booming companies over the past two years.
And Liberty Brewing, now at Helensville, has twice outgrown its production capacity in the past two years alone. These were the exceptions.
Beertown writer Martin Craig, a former business journalist, concluded overall production growth is attributable mostly to the newcomers rather than a rising tide lifting all boats.
It was a view backed by Annika Naschitski of Wellington's Tiamana. She came to the industry three years ago after 10 years as business consultant.
She observed recently: "In the last year it certainly feels that New Zealand's craft beer market is reaching a level of the dreaded 'saturation' that makes it difficult for existing breweries to get by - and more or less impossible for new breweries to establish remarkable brands that can safely make it through the next years."
Dominic Kelly, bar owner, distributor and importer, said the ANZ report neglected the two big issues faced by small New Zealand brewers: "Their access to the on-premise market is still, for the most part, blocked and very, very few are making any money."
It's certainly true that although production is increasing, money isn't rolling in.
Moa, as a publicly listed company, is obliged to report its financial position. Its half-year report last September showed, despite a 13 per cent growth in revenue, a loss of $1.2 million.
ParrotDog, which made the Deloitte Fast 50 list in 2015, revealed in its prospectus ahead of raising $2m in crowdfunding for a brewery expansion, that it lost $156,000 in 2015-16 and forecast another loss this year before booming into profit.
The hardest aspect for established players, says Nicholas, is the finite space on supermarket and bottle store shelves and what the industry calls "tied taps" in most bars.
On the first issue, securing shelf space is tough at the best of times and once you do, standing out "in the wash of colour" is the next challenge.
And Nicholas is convinced sales in pubs and bars are effectively capped for most in the craft sector as the big breweries - Lion, DB Breweries and Independent - control pourage rights through ownership or contracts.
"There is a natural ceiling for a craft brewery in New Zealand," Nicholas says.
"You can't get to 80 per cent of the on-premise market because the big breweries have them tied up. So any craft brewery can only get to a certain size. I don't know what that place is, maybe a couple of million litres.
"Maybe Moa and Tuatara are there, where you just can't sell any more beer in New Zealand and have to export if you want to grow.
"We're all trapped under this glass ceiling and the only way to break through is to be like Emerson's or Panhead and get bought by Lion."
He believes some newer brewers will be hit hard when a maturing market stops its rampant experimentation and starts to play favourites.
"We're quickly heading into a space where the consumers who created all this demand will say, 'We now know enough and we're not going to drink these brands any more.'
"Brewers are going to find their stuff's not selling any more."
Not everyone sees a red flag or a turning tide, however.
Aucklander Adam Sparks, a former champion home brewer, launched his own label, Sparks, two years ago with a foreign extra stout. He followed that with a Belgian farmhouse ale and a Belgian blonde ale - with not an IPA or a pale ale in sight.
"I have watched the market get saturated and I can see why it's a challenge for breweries with big market share," Sparks says. "Finding that extra percentage of growth is really difficult.
"I like saturation, though. I like wandering down a supermarket aisle filled with a rainbow of beer labels and styles. But I look at it as the same way as I look at music - there's always room to cater for the specialist and when the landscape gets filled with similar styles of beer like pale ales and IPAs, the fringe styles that we do can start to stand out.
"Despite the saturation, we have seen continued growth - particularly for our stout."
Sparks recently took on a new distributor in Auckland, Eco Foods, and he says their observation is that having something different to sell is crucial.
Nicholas agrees. "If you're making a pale ale or an IPA, what are you doing that's different?" he says. "How are you using hops and malt differently? You can't. Or what about making a sour?
"We played around with sours last year on a small scale and I thought 'these are good, but they don't stand out, they're not epic and they're not significantly different to anything else that's already on the market ... what's the point'.
"I will only do something if I can make something better or find a new angle."
Sparks and Nicholas also agree brewpubs are the way forward.
The model has worked for the likes of Galbraith's, Hallertau, Deep Creek and Brothers Beer.
"If you have enough people in your community you can make a brewpub work," Nicholas says. "If you own that space, you win. You can have a nice lifestyle out of it."
It's something Sparks noticed when he first had his beer brewed under contract at Scott's in Oamaru. After starting out in Kelston, husband and wife team Phillip and Tyla Scott headed to Oamaru three years ago run a brewpub and pizzeria.
"There is more scope for brewpubs," Sparks says.
"New Zealand's really ripe for that culture. Scott's are a good example. The locals are all over it.
"You wouldn't have thought Oamaru would have embraced it but it's just perfect in the local community, there's just enough people and there's nowhere else to go."
Sparks is adamant we haven't reached peak beer yet, for the simple fact Lion bought Emerson's and Panhead. "They want a return on their investment and they can see the market growing over the next 10 years. I think that's a clear indicator. But it's obviously getting difficult for the likes of Epic, Tuatara and other bigger craft breweries who are competing for that larger market share."
Another area for growth is exemplified by Auckland newcomers Outlier Cartel, who brew at Hallertau in Huapai.
Brewer Carlos de la Barra said the small brewery last year focused on lots of new releases, going for a high turnover of small volume batches.
Like Sparks, they had unusual beers, such as a honey and chestnut ale and Apricity, a spiced beer based on Dutch speculaas biscuits, made with cinnamon, nutmeg, cloves, ginger, cardamom and white pepper.
It was a huge sell-out success. "When we set up Outlier we decided to do one release a month," de la Barra says.
"Rather than making big volumes we wanted to build organically and slowly by staying relevant and getting people to talk about it naturally, rather than putting sponsored ads on Facebook."
Although he sees the market has slowed down, he points to a subtle change of direction rather than a worrying U-turn. Educated consumers are starting to regard beer the way they do food, looking for artisanal and local.
"There is a trend back to interesting food and to hyper-local - and that's a niche. As a small player, we are finding we can make money. It's a totally different business model that goes with the way consumers are changing.
"Other niches can be explored but they are not readily available for bigger producers because of the volumes they make. There's room for nano- and micro-producers who make batches of 2000 litres as opposed to 20,000."
He believes there's plenty of scope, especially in Auckland, for more boutique player, but only if they are prepared to survive off smaller volumes and leave bigger production to the likes of Liberty, 8-Wired in Warkworth and Epic, which brews out of Steam, in Mangere.
Even suburban brewpubs aren't out of the question, like the original Cock & Bull model, where Nicholas started.
"I hear there are plans for someone to open in Kingsland - they won't struggle locally but they won't be everywhere. It's just a different business model.
"Hipsters might die off soon but I think it's unlikely the craft beer bubble will burst, it's just changing."
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