Pursuit editor Michael Donaldson is about to publish the second edition of Beer Nation – The Art and Heart of Kiwi Beer. What follows is a short extract from the new book.
The growth of craft beer – however you define it – is not an illusion. The data is undeniable: more and more people are drinking beer made by small, independent breweries. But they are also drinking more Mac’s, more Monteith’s, more Boundary Road. But overall beer consumption in the past decade has been in decline. Total production showed a marginal uptick in 2016 and there’s evidence there may be more growth for the entire market.
But if total beer volumes have remained largely static or declining, and craft is growing, who’s losing? The information on that is closely guarded but the evidence from scan data reveals that what is known as “mainstream” beer is in steady decline, falling as much as 3–4% a year. This is the once ubiquitous New Zealand draught-style represented by Speight’s Gold Medal Ale, Tui East India Pale Ale, Lion Red, Double Brown.
A little bit like the media landscape over the past decade, where publishers relied on ever-dwindling newspaper circulation for revenue while trying to grow digital revenue in the face of disruptive, new media, so the big breweries are facing a struggle with the decline of a once reliable earner while dealing with the force of explosive craft growth.
They need to be where the growth is but are they fast enough, adaptive enough to get into this new space while managing decline in their traditional segments? Unlike the old newspaper barons, are they prepared to jump before they’re pushed? The one advantage breweries have over publishers is that unlike digital media, there’s money to be made in craft beer, especially through acquisition. But how long do they continue to invest marketing dollars and people in slowly dying mainstream brands?
One way is to keep establish brands relevant is by taking them in new direction. After years of Tui being just one thing, you can now get Tui 2.5, Tui Lager and Tui Pilsner. Speight’s – for so long defined by Gold Medal Ale and Dark – has branched out in various directions, with the arrival of Summit in all its flavours. And DB Export has been cut and diced to deliver 33, and most recently, Citrus.
“The moderate decreases in that mainstream segment and continued growth in premium and craft raises the question of how we keep brands within that mainstream relevant,” says Lion managing director Rory Glass. “Speight’s has fared pretty well so it’s not impossible but it is tough – they’ve gone broader in Summit range and into flavoured beers so there are opportunities for big, well-known brands to evolve and stay relevant. Speight’s has done that well but the category in total is going to feel continued pressure.”
Glass says even Lion Red – defined so strongly by its allegiance with rugby league – is not beyond a makeover. “Lion Red is still substantial and still has fantastic recognition Taupo–north. We still support it but more at a local level than a national level. You have to ensure you don’t walk away from the brand because people notice that. I wouldn’t discount adapting it and trying different things but at this stage we’re not. Those big brands are still powerful for a lot of people.”
DB is feeling the same pressure around Tui. “There are pressures on mainstream,” say
s DB managing director Andy Routley, “but we’ve got a brand in Tui that’s one of New Zealand’s most loved – still. Loved. Full stop. People love it but perhaps they’ve been drinking less of it.
“Equally, we’ve got a brand, DB Export, that is in growth – it’s one of New Zealand’s fastest-growing beer brands and it’s come from a mainstream heartland, it’s just that we’ve innovated with it – taken it to Citrus and DB Export 33. We’ve made it relevant to consumers through clever innovation.
“I’ve spent 27, 28 years in different consumer good categories and if there’s one thing I’ve learned it’s that the consumer is at the heart of it. Some of the beers in this country have perhaps not had the same profile as craft beers but they have met a consumer need. There are plenty of people who want something easy to drink, unchallenging, that’s available at the right price, at the right time, is cold and makes them feel good – and it has heritage and history.
“I would never dismiss that because consumers are smart and make good calls about what they drink, but within the craft segment there is a level of ingenuity and artisanship that has reignited the category – the cleverness, the breadth of flavour, the creation, the complexity of flavour, the quality of the beer – there is a depth and interest in those liquids that is great. It’s the excitement, the news, there’s something very special about it. The question for us is how you adapt to it – the industry has been driven by the artisans and innovators.
“So we have to continue to think differently about how to make brands relevant to consumers because if you don’t make them relevant they will spiral down – decline, decline, decline – and that will put challenges around whether expensive sponsorships you’ve invested in over the years are still relevant. We’ve got to continue to think about how we spend our marketing dollars – I’d rather spend the marketing dollars giving the consumer a better experience than putting a brand on the front of a football shirt or an event.”
But one of the more interesting sidebars to the craft revolution that both DB and Lion have noticed is a lift in what is known as premium – the likes of Heineken and Steinlager. Lion has seen Steinlager Tokyo Dry rocket out the gates on its launch but DB has seen nice upticks with Heineken.
“One of the exciting things about craft is that it’s helped reignite people’s interest in beer. One of the curiosities we see is people picking up premium beers again – Heineken had one of its best years for us in 2016 and one of the hypotheses we’ve tested with consumers is that drinkers, as they get reinterested and buy craft, they stay on a beer journey on an evening. They don’t want to switch to wine as they once did but they’ll pick up a Heineken – we’ve seen Heineken become a bedfellow for craft and that’s something for our green-bottle brethren around the world to think about instead of seeing craft as a threat.”
Beer Nation – Another Round. Published by Edify. Available from late August in all good bookstores.