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Home / Business

Flat beer market forces innovation

By Errol Kiong
NZ Herald·
31 Dec, 2008 03:00 PM3 mins to read

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Healthy brews are catching on with drinkers. Photo / Richard Robinson

Healthy brews are catching on with drinkers. Photo / Richard Robinson

KEY POINTS:

Healthy beer. It's almost a contradiction in terms.

But those in the know would point out that beer is the only alcoholic drink to contain vitamins B6 and B12, plus some essential amino acids. Practically medicinal, then.

Beer's nutritional properties, however, have failed to counter years of stagnant
sales.

Crunched at both ends of the alcoholic beverage spectrum by ready-to-drink spirit mixes and wine, brewers have had to tinker with the ancient brew in a bid to bring back the buzz.

First, came the revival of beer's craft tradition, which, while succeeding in restoring healthy margins and growing a cottage industry of boutique breweries, did not convert the masses in droves.

Next came the health and wellbeing brews - the Steinlager Pures and Speight's Summits that emphasise the all-natural ingredients and an absence of preservatives and additives. An organic movement for beer, if you like.

The battleground has now shifted to a subset of the health and wellbeing category, the low-carb beer market. Right now, the New Zealand low-carb market is well, small beer, making up just 1 per cent of the $1.4 billion retail beer market.

But it is also the fastest growing, with year-on-year growth of around 20 per cent since Australian brewer Carlton introduced Pure Blonde to our shores in 2005.

And a slowdown is looking unlikely, if overseas trends are any indicator. In Australia, the growth of low-carb beer is a stratospheric 90 per cent, while in the US, lite beers, as they are dubbed over there, already make up nearly half the total market.

It is the prospect of spoils like this that prompted DB Breweries to jump into the fray in October with Export 33.

DB's general manager of marketing, Claire Morgan, said that while it had sold beyond initial expectations, she was realistic about its place in the market.

"We are establishing a new market, so we're not expecting it to be absolutely massive.

"What we're wanting to do here is sell a reasonable volume of it but also nurture and develop the market at the same time, which is why we launched it under a mainstream brand."

The risk, of course, is that the low-carb beer simply takes sales away from more traditional beer products, while not increasing overall sales.

Lion Nathan's beer marketing director, Stephen Smith, estimates that the wellbeing category of beers now accounts for about 10 per cent of the total New Zealand market.

Its appeal spans all age categories.

"In older consumers, for instance, for years they've probably been told by their doctor that if you do want to have a drink you should drink red wine because it's full of antioxidants. They've been looking for a reason to stay in the beer category.

"For a younger consumer, because of the way these brands are presented, they are relevant as well. Wellbeing as a trend is right across the board."

Last year, total beer production grew by about five million litres after years hovering around 315 million.

Of the new brew categories, the runaway success has been Lion Nathan's Steinlager Pure, which garnered a 5 per cent market share within a year of its launch in June 2007. Market share is forecast to reach double digits within 18 months.

And Smith says its low-carb product Mac's Spring Tide is still the dominant player in the subset market, with a 10 per cent annual growth rate in an overall flat beer market.

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