The Shout Magazine (New Zealand)

The Shout NZ Leaders Forum Series – Richard Wilson, Distilled Spirits Aotearoa

As the New Zealand liquor industry continues to rebuild after COVID-19, we asked executives to reflect on 2023 and share their insights for the year ahead.

Richard Wilson
Chairperson, Distilled Spirits Aotearoa

Year In Review

Craft spirits in New Zealand have been moving along at a staggering pace with no sign of slowing down.

With now over 170 craft distilleries in New Zealand, all varying sizes, from micro-distilleries in small rural regions supplying truly boutique spirits, right up to large-scale industry, creating world bests and world firsts, exporting right around the globe.

There is diversity in shape, size, volume, and category of spirits being produced.

Gin still holds the lions share, with dominant sales volume nationwide, the majority of the country’s distilleries producing at least a few different gin labels each.

Challenges ahead…

All distilleries, big and small are faced with one constant challenge, and that is the ever-rising cost of excise tax, this year being raised by 6.7% alongside the rise in the CPI to just over $64 per litre of alcohol, making an average bottle of New Zealand made spirits contain around the $20+ mark of tax.

The Health Promotion Agency Levy (HPA) is also set to increase exponentially in 2024.

This reduction in margins and onwards cost to the consumer is squeezing both the production and sales of spirits in New Zealand even further.

This forces two things to happen, the cost of production must pull up its trousers, finding new ways to lower cost of goods, and with the tightening of margins, this will encourage producers to go one of two ways – either increase the premium quality of the product, or decrease it. Staying in the middle is no longer becoming an option. Sharp-eyed consumers will start to see this.

However, the trends are slightly shifting, both distillers and consumers alike are becoming curious.

The trends…

While rum and whisky are still hot on everyone’s lips as the next contender of in-trend spirit, less conventional offerings are presenting themselves more and more.

Vermouth, aperitif, absinthe, and brandy are lifting their heads and becoming noticed.

Over the last few years, the ambition of people at home to make cocktails has informed us on how to use these once mysterious products. Everyone had heard of a Negroni, most had tried one, but now we know how to make it.

While they do not yet hold the hearts of the majority of at home consumers, they show promise, as the chain reaction of normalising spirits in Aotearoa progresses.

We see this in the way drinks are ordered over the bar, when once someone may specify the gin we use in our Martini, now a customer may specify the vermouth too.

We look forward to seeing the normalisation of spirits continue to grow and grow, with the use of domestic products hand-in-hand.

The on-premise…

Cocktails in bars and restaurants are becoming more and more popular, both for the attention and admiration of the customer, but also for the gross profit of the premises.

This is moving hand-in-hand with New Zealand’s ‘buy local’ desire, where cocktails are being shaken or stirred, and both customers and bars alike want to see them constructed with domestic offerings, with a noticeable presence of New Zealand made products proudly displayed on menus throughout New Zealand.

Placement on menus is making the difference for New Zealand-made wares.

Cocktails on menus are taking up space where once only beer and wine existed. When once it was only appropriate to have a beer or wine while sneaking away for a midweek work lunch, it is now entirely accepted to pick the Negroni spritz or a gin and tonic off the menu, and no one blinks an eye.

And to be fair, they are more likely to stick to a single standard drink per serve too.

Come post dinner time, and spirit-forward cocktails are called for, it is the pre batched cocktails that are starting to shine, becoming the offering of choice of more and more hospitality venues. As they say, a good cocktail is 90% preparation.

Pre-batch cocktails allow premium spirits, alongside skilful mixing, to create high end drinks without compromise.

This, with the long shelf life of batched cocktails mean that venues can serve to a really high standard, in a fraction of the time, and a single staff member can tend twice as many tables.

This is a trend moving quickly through on-premises, and we expect it has only just started.

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