Competition puts a cap on beer prices

19:40, Feb 09 2014

A dozen beers are cheaper to buy now than a year ago, with one analyst suggesting New Zealand has a "beer glut".

Kiwis had access to nearly 500 million litres of alcohol last year, but greater availability has not seen more bottle caps popped.

Brewers say prices are static because of increased competition in the sector, as more drinkers switch to premium alternatives.

A recent report from broker Forsyth Barr said beer prices had fallen in the past year, while wine prices were growing at their slowest rate for five years.

"We expect wine and beer price inflation has been weighed by an industry glut in recent years, albeit we expect a recovery. . . "

The report said it believed there were also pricing and demand challenges for alcoholic beverages.


For the quarter to December, 2013, Statistics New Zealand figures showed a dozen bottles of beer was priced at an average of $20.45.

That was down from $20.90 in December, 2012, and below the year's peak of $21.09 in March.

A cask of white wine had risen slightly over the year, to be valued at, but not necessarily worth, $24.21 in December last year.

DB corporate relations manager Matt Wilson said the company did not set retail prices for alcohol but it expected static beer prices were a result of intense competition.

This was particularly the case with grocery sales, which was the predominant retail outlet.

"In volume terms, the beer category actually grew slightly in 2013 - DB believes it to be just over 1 per cent growth - and basically there was flat growth of beer consumption per capita."

He said that meant beer consumption had kept pace with population growth, reversing the recent declining trend.

He believed it was the result of innovation in beer combined with a "an excellent summer".

According to Statistics New Zealand, about 285 million litres of beer was available for purchase in the year to September, 2013.

As a proportion of the total volume of all alcoholic beverages, beer has fallen from 81.6 per cent in 1996 to 61.4 per cent in 2013.

Wilson said within the beer category there was a "story within a story", as premium and craft beer segments continued to grow.

About 12.5 million litres of beer with an alcohol content above 5 per cent, which craft beers tended to be, was available for consumption during the September year.

But cider had grown about 30 per cent in the last year, he said, and was expected to continue to grow in 2014.

"We also expect beer volumes to come back slightly in line with longer-term trends.

"We do not believe there is an oversupply of beer or cider in New Zealand, but simply that there continues to be stiff competition on price."

A Lion spokesperson said its own analysis suggested wine pricing had increased about 2 per cent, while beer was flat.

Beer production was planned according to demand, so the concept of a "glut" was not applicable, it said.

"We would suggest the modest increase in wine pricing is a reflection of growth in international markets absorbing some of New Zealand's excess supply of the past few years.

"Where beer pricing is concerned, the lack of upward movement reflects a very competitive retail market.

Lion also said cider was the only category showing increased consumption. Fairfax NZ

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