As the final negotiations are underway to agree a free-trade deal with New Zealand which could see the removal of tariffs on UK and New Zealand goods, what should we know about New Zealand and the opportunity it could provide for UK drinks brands looking for export markets?
New Zealand is a small market with a population of 4,822,233 and only the World’s 52nd largest economy with a GDP of 224,94 billion. However, with 87% of the population living in the urban towns and cities and being ranked number 1 in the world on The World Bank’s Ease of Doing Business rankings, it is certainly a market worth considering in more detail.
In 2020, 494 million litres of alcohol were sold in New Zealand which represented a 0.8% increase from 2019. As the most consumed alcoholic beverage, 293 million litres of beer were sold, followed by 113 million litres of wine and 89 million litres of spirits or spirit-based drinks. The average industry growth from 2016-2021 was 0.8% and is forecast to be 1.6% between 2020-2025.
Spirits are increasing in popularity. In 2004 spirits contributed to 23% of pure alcohol intake and this increased to 31.6% in 2020.
Over 2.5 million Kiwis enjoy a drink and almost half of all alcohol is consumed during heavy drinking sessions. Whilst Kiwis drink less than the Irish and British and slightly less than Australians, they drink more than Americans, Canadians and South Africans.
Supermarkets can only sell beer, cider and wine with an ABV of 15% or less. Spirits and RTDs must be bought in bottle shops/liquor stores. There are two main supermarkets; Woolworths and Foodstuffs and almost 1,000 bottle shops. Many of the bottle shops are owned by larger alcohol producers and retailers. There are very few distributors that cover both islands with most focusing on the North Island.
As it is a small country, volume sales are likely to be small and the limited shelf space is often prioritised for big international brands. Retail pricing tends to be between $5-10 more than pricing in Australia, which provides a good opportunity for brands to make the margin they need to make exporting worthwhile. Retailers do like to offer big promo discounts though, so be prepared to help support these to help drive volume.
Getting products over to New Zealand can take a long time as they have to travel a long way and due to customs becoming a lot stricter over the last few years, it is sensible to allow for an additional week on top of shipping times for goods to clear customs. Caution should be exercised when sending samples as customs will check packages and if they don’t think the value of the goods detailed in the documentation is realistic, they won’t be let through.
The kiwi consumers always prefer to support local brands, so it is advisable to team up with complimentary local brands where possible. For example, if you’re a spirit brand, you could look for an opportunity to partner with a kiwi mixer. At the very least it would be preferential to choose a distributor that works with local brands and not just export brands.
As with all southern hemisphere countries, it is important to remember that the seasons are opposite to ours. Putting snow on Christmas promotional material just shows the consumer you aren’t in touch with them. Don’t forget the time difference will need to be factored in when organising meetings with distributors.
The current alcohol industry trends in New Zealand include a rising health-consciousness leading to a desire for more premium, niche offerings in smaller amounts and higher quality wine and craft beer. The country relies a lot on tourism which is non-existent at the moment due to the borders being closed to the world because of Covid.
New Zealand may not be the most lucrative export market, but it could be worth looking into, particularly if you are experiencing some success with Australia.