Kiwi’s palates are evolving. The cheerio with tomato sauce has evolved into porcini with crème fraiche, Gordon’s gin into New Zealand’s own double gold medal crafted botanical spirit. We are demanding premium local spirits, and our industry is delivering.
The popularity of spirits in New Zealand has been steadily increasing – the sales volume of spirits has risen each year for the last five years, driven mainly by gin. For the first time ever, spirits have overtaken beer as the No1 selling category in leading liquor stores. While our New Zealand distillers are still only a small part (4.6 percent) of the total value of the market, they are driving the most growth in the spirits category (>25 percent volume growth last year), out-distancing global imports.
Interestingly, the COVID lockdown seemed to have been the epiphany for the New Zealand public – we found our neighbourhood distillery and the joy of a home-made cocktail experience. Gin clubs and tasting groups have popped up on social media, with bloggers and influencers encouraging the public to be more adventurous and aware of quality. With time on our hands, we learned to enjoy the flavours and the experience the spirit in a considered way - to ‘sip and savour’.
New Zealand consumers are following global trends with the move to premiumisation, and a move away from quantity to quality. In December 2020, the NZ Alcohol Beverages Council surveyed New Zealander’s attitudes to alcohol, polling 1000 New Zealanders. They showed that 62 percent of Kiwis had enjoyed a premium drink in the previous 12 months. The choice to enjoy a liqueur or quality spirit is now equal in choice with quality/premium wine (30 percent), while 23 percent of people chose a craft beer, and 20 percent a cocktail.
Our New Zealand spirits may not be the cheapest on the market. Even though many cocktails and mixed spirit drinks contain less alcohol than a glass of wine or strong beer, spirits are penalised with the highest excise rate. The New Zealand government takes a hefty third of the price of a bottle of spirits in tax (excise, HPA and GST).
Our New Zealand distillers struggle to break into the market against this disadvantage. To get on the shelf, distributors and retailers will typically charge up to 50 percent of the recommended retail price (RRP) of a bottle, leaving just 17 percent of the RRP for the distiller to cover materials, production and overheads, and any profit. Many distillers would earn as little as $5 profit on each bottle they make, which means a significant number of bottles need to be sold in order to make a business viable. In many cases the switch to on-line sales over COVID was the key to helping our new distilleries survive.
The massive global growth in the popularity of spirits, increasing costs, focus on origin, sustainability, and quality, plus COVID-related supply delays have already caused New Zealand distillers to seek out local sourcing opportunities for their ingredients. As the Kiwi distilling industry expands there is a parallel opportunity for New Zealand’s own raw material suppliers to gain traction. We are already seeing this in botanicals - several New Zealand growers are currently expanding their crops of angelica and orris root, and the development of a juniper berry industry for New Zealand is underway. Excitingly we are seeing a particular vibrancy to our botanicals due to our unique sun and soil, which could lead to a distinctive sensory profile for New Zealand-made spirits.
And New Zealand’s spirits genuinely do stack up against overseas imports. In the latest NZ Spirits Awards, local and imported spirits were judged side-by-side in blind tastings by 21 qualified judges. New Zealand gin and vodka yet again won the overall trophies for these categories, beating extraordinarily well-known international brands. We expect to see New Zealand distilleries in serious contention for the overall whisky, rum and brandy trophies in the next few years, when these aged products come onto the market.
Summer bought out the love of festivals, with an explosion of Gincredibles, Gindulgences, Gintastics, Dram Fest, Gin & Fin, On the Rocks and Spring Festivals. Kiwis were ready for a cultured, grown-up occasion to enjoy the great New Zealand craft spirits on the market – relaxing in a garden-party type atmosphere, with good music and company. Interest, attendance and overall spend has increased every year these festivals are held.
The responsible adult drinking population has shown that there is a growing enjoyment and appreciation of premium craft spirits, and spirits are deservedly seen as a responsible drinking option alongside beer and wine. New Zealanders’ spirits are coming of age.
by Dr Sue James, Chairperson, Distilled Spirits Aotearoa
