PART IV: The Future
So, where do we go from here? There seems to be a very encouraging trend on the part of a number of microbreweries towards producing high-quality products, not just quantity for a competitive price. These breweries, and future ones like them, are the ones we expect to see around in ten years. The growth curve seems to have plateaued at around three to four new breweries per year, and that trend will probably continue for some time. Kiwis, particularly outside the major Auckland region, tend to be quite provincial, and they like their local sports teams and their locally produced beer, although for some the deciding factor may be price over quality.
Trends in Consumption
It is encouraging to note that New Zealand’s microbrewing industry is, from all indications, thriving in spite of steadily declining alcohol consumption in the general population. The country’s per capita consumption of total alcohol has dropped dramatically in recent years, from a peak of approximately 7.8 litres in 1989 to about 6.3 litres in 1997. And most of the decline in consumption during this period was in the form of beer, which dived from 4.6 litres (60 percent of the national total) to 3.4 litres (54 percent). During the same period, alcohol consumed in the form of wine increased slightly from 1.7 to 1.9 litres per person, while alcohol from spirits dropped from about 1.5 litres to just over 1 litre.
Per capita consumption estimates for alcohol contained in beer and wine during 1998 are relatively unchanged over 1997, but consumption from spirits is projected to increase substantially to approximately 1.4 litres, just a little under where it was ten years ago. This increase is mostly due to the high popularity of recently introduced RTDs, ready-to-drink cocktails, in the 5 to 6 percent ABV range. Substantial factors in the general decline in New Zealand’s alcohol consumption have been major public awareness programs regarding the dangers of drinking and driving together with strict enforcement of laws regarding such behavior. Taxis abound and are reasonably priced, and the designated driver is now a standard fixture for most evening outings.
Certainly, the relaxation of New Zealand’s liquor laws, beginning in the 1960s, set the stage on which craft brewing and consumer choice could later grow. In 1961, licenses were issued for the first time for restaurants separate from hotels and, also for the first time, at least since the 1880s, licenses were issued for taverns, whether or not they served food. In 1967, the 6:00 p.m. mandatory bar closing requirement, which was instituted strictly as a war-time measure in 1917, was lifted. Liquor licenses were first issued for theaters in 1969, followed by airports, cabarets in 1971, and bottle stores in 1976. Liquor licenses covering all categories of outlets have risen from 1,100 in 1960 to about 10,500 today.
Current liquor laws in New Zealand are a mixture of the old and oppressive with the modern and refreshing. No alcohol, except wine, may be sold in supermarkets, and even this may not be sold on Sundays. There is no Sunday selling of alcohol, period, except in eating establishments under the condition that, at least theoretically, the customer is planning to consume a meal. A full range of spirits, beer and wine is available at bottle stores. There are many BYO (bring-your-own) restaurants where you may take in your own wine (sometimes beer), and have served, at little or no charge, with your meal. Also, although the current legal drinking age is 20, persons over 18 may have a drink in restaurants, so long as they are accompanied by their parents. And you can go into your local multi-screen theater and sit down and have a drink while waiting for the show to start. Finally, all packaged alcoholic beverages, even imports, sold in the country must have the ABV content clearly printed on the label. At the present time, ABV disclosure is not required on-site for bar drawn beers, but many pubs and restaurants display these figures voluntarily as a convenience for their customers. Knowing the alcohol content of the beverages you are buying or consuming can be particularly valuable in light of New Zealand’s strict drinking and driving laws.
A major revision of New Zealand’s alcohol laws is currently under consideration in Parliament. Provisions, all of which need not be adopted,. include lifting of the wine-only restriction for supermarkets, allowing alcohol to be sold generally and consumed on Sundays, and lowering the legal drinking age to 18.
Also of interesting note is the quantity of home brewed beer produced (legally) and consumed in New Zealand, with the annual quantity brewed being equal to about 3 percent of national commercial production. Unfortunately, because of the relatively high cost of beer in this country, due in no small part to a high excise tax rate (NZ$19.36/litre of alcohol, equivalent to approximately U.S. $10.07), most of this homebrew is targeted towards high quantity at low cost. Cheap, pre-hopped, extract beer kits can be purchased in any local supermarket. A growing number of home brewers here are gaining interest and expertise in producing high-quality, all grain beers. These are the individuals, hopefully, who will be the craft brewers of our future.
Local Hop and Barley Production
All commercial hops in are now grown in the Nelson region, at the north end of the South Island, at about the same latitude as the California/Oregon border. All are harvested in February or March, depending upon the weather, and virtually all are sold pelletised.
In the early years, hops of one quality or another, mostly traditional varieties, were grown throughout much of the country in close proximity to the major regional brewing centers. Gradually, during the same period that brewery consolidation was occurring, commercial production drifted toward Nelson, which calls itself “the sunniest spot in New Zealand.” A decline in the number of growers has paralleled the consolidation of the brewing industry itself, dropping from 200 in the 1920s to 130 before World War II, to the current 25, even though total area planted over the last five decades has remained in the 750 to 850 acre range. The total 1948 production was 444 thousand kilograms, compared with a projected 1999 harvest of 750 thousand kilograms.
Until quite recently, all hop production in New Zealand was focused on locally developed, high alpha acid, triploid varieties, such as Super Alpha (approximately 14%) and Pacific Gem (approximately 16%), which are used for aroma as well as bittering. Starting only five years ago, with the strong support of Lion and DB, planting of New Zealand varieties of aroma hops, such as Hallertau and Saaz, commenced. The 1999 harvest will consist of approximately half aroma hops (up from 25 percent only two years ago) and half the traditional high alpha, dual purpose varieties. Eighty-five percent of this harvest will be exported, with approximate 15 percent shares going to Germany, North America, Ireland/UK, and Japan, and the remainder to mixed smaller users. Year-to-year plantings are based on the anticipated needs of these overseas customers and futures contracts with the domestic majors. Over 80 percent of the 1999 harvest is pre-sold, and all remaining inventory from the 1998 harvest is committed. By current law, which is now under review, all New Zealand commercial hop sales, both domestic and overseas, must go through the Hop Marketing Board, to which all the growers belong.
New Zealand’s hop industry, by world standards, is quite small, only about 5 percent of the total. And it is not at all unreasonable that the growers, particularly after being badly burned in the past by overproduction in a unstable world market, would try to tailor their output as closely as possible to the requirements of their proven historical and contracted customers. However, it is often very difficult, if not impossible, for New Zealand’s rapidly growing craft-brewing industry, which thrives on variety, and often has unpredictable long-term needs, to fill its aroma hops requirements from domestic supplies. As a result, we have recently begun bringing in aroma hops from Hop Union to help meet the needs of this under-served market.
Barley can be grown successfully in many parts of New Zealand, but production today is concentrated in three areas of the South Island and one area of the North Island. Of the typical 75,000 metric tons harvested annually by about 600 growers, approximately 60,000 tons is malted for brewing, and about one-third of that is exported, mostly to Japan.
At the turn of the century, there were some 30 malthouses in New Zealand, and today only three serve the industry. The Canterbury Malting Company operates two large plants, one on the South Island at Heathcote, near Christchurch, and the other at Marton, on the North Island. McCashins also operates a small malthouse for their own requirements.
The Canterbury Malting Company is jointly owned by Lion and DB and serves the needs of those two majors, as well as some small and large independents in New Zealand and breweries in the South Pacific islands. Base and specialty malts for craft brewers are also being imported from Australia and the UK by others.
Malting barley grown in New Zealand is two row, with the principal variety being Valletta. The malt produced is primarily lager, with lesser quantities of specialty malts.
by Luke Nicholas and Tony Rutherford
Appeared in New Brewer International, March 1999
PART III: A New Age in Brewing
The traditionally recognized benchmark for New Zealand’s current age of microbrewing was 1981, when former All Black rugby player Terry McCashin converted a cider operation in Nelson into a brewery. Over the following four years, other breweries opened and closed, but only McCashin’s remains today from that early period.
But perhaps a more accurate reference year for the beginning of the current microbrewing renaissance would be 1986, when the Shakespear Tavern & Brewery (New Zealand’s first real brewpub) opened in downtown Auckland. From then, the movement grew fairly steadily until a crescendo was reached in 1995, when 11 of today’s 54 micros were established. Four new microbreweries opened in 1996, three in 1997 and four in1998. Yet another is nearing completion, and two more are rumored to go on line this year.
New Zealand’s microbreweries, based on kettle capacity, range from under 1,000 litres up to 10,000 litres. The 1,200 litre system is by far the most common, but almost two-thirds fall between 1,200 and 2,500 litres.
It is estimated that New Zealand’s 54 microbreweries will produce approximately 14.5 million litres of beer in 1998, or about 4.5 percent of the 332 million litre national total. The combined annual capacity of these breweries is estimated at 26.5 million litres.
By comparison, Australia, with a population of about 18.5 million, or almost five times that of New Zealand, has only 23 microbreweries, and Sydney, with a population of 3.5 million, almost equal to that of New Zealand, has a mere one.
There are three typical styles almost universally produced by New Zealand microbreweries; draught, lager and dark, all in the 4 percent ABV range, and all generally reflecting the mainstream beers produced by the majors. Draught is a relatively sweet, low bitterness and low aroma amber beer which has evolved over time to become New Zealand’s most popular style. Lager is pale and relatively sweet, with medium bitterness and sometimes with hop aroma. Dark typically has substantial malt flavor, with low bitterness and aroma. An emerging fourth style, strong lager, is pretty much the same as regular lager, but with an alcohol level of around 7 percent ABV. Most breweries use one of two main strains of bottom fermenting yeast and control flavor and, to some degree, style by controlling fermentation temperature. For the last six months the authors have been importing a full range of Wyeast from the U.S., and quite a few brewers have begun using this to produce a much wider variety of beers.
The beer produced in New Zealand before World War II was typically styled after English ales. During the war, however, the government dictated, ostensibly for austerity reasons, that wort gravity could not exceed 1.036, which pretty much works out to the 4 percent ABV finished beer we generally produce today. After the war, and after consumer tastes had been altered, the 4 percent standard stayed around, and the loose style names evolved into those currently used today.
Michael Jackson commented on his 1997 visit that our beers really have a character of their own, which could probably be defined as “New Zealand Draught Style.” A number of micro-breweries are making serious efforts to introduce new styles and to educate the public in the joys of variety. If you know where to look, which isn’t always easy as they are often in isolated locations, the following styles can now be found in New Zealand: Abbey-style ale, hefe weizen, dunkel weizen, Kolsch-style, American pale ale, raspberry wheat, porter, mild, IPA, Old ale, stout, English bitter, best bitter, and ESB.
The majority of New Zealand’s current 53 microbreweries are serving very local markets, and 23 operate in brewpubs. Five other breweries are jointly owned by groups of publicans and produce beer for their own establishments as well as others in the area.
The Current Environment
Micro-breweries are not difficult to establish in New Zealand. Some components, particularly fermenters, often consist of surplus dairy equipment, which can be purchased and converted relatively inexpensively. Also, the reduction in tied establishments has created a surplus of the ubiquitous hotel serving tanks of earlier years, and many of these units have become available for conditioning, bright beer and storage.
In 1998, for example, one Australian microbrewery purchased 70 of these stainless-steel tanks and relocated them back across the ditch. Also, there are a number of excellent stainless-steel fabricators who can build out the basic brewery system for a fairly competitive price. A recent alternative has been the prefabricated system. Two complete breweries, a three barrel and a five barrel, were containerized, shipped and installed by DME for customers in the North Island and South Island during 1998.
Import taxes are not a significant deterrent to shipping in “turn-key” brewing systems. The most successful breweries seem to be associated with pubs and/or restaurants, particularly those in good locations, as these provide ready outlets for their products. Those without attached pubs typically sell their beer across the counter in 1.5 to 2 litre plastic, screw-top flagons-known as “pub PETS” or “riggers”-and also distribute kegs to local clubs, bars and restaurants. The big problem comes if a brewery wants to grow beyond that point, as the relatively massive bottling, distribution and marketing costs typically outweigh the potential additional income. Because of the relatively small market, bottling equipment is not presently manufactured in New Zealand, so it must be brought in from overseas.
In addition, it must be kept in mind that this is a very small country with fairly widely separated population centers, so it is very difficult at best for breweries to penetrate beyond a very limited regional market. What we have here, in general terms, is a lot of independent, local microbreweries, some with marginal equipment and marginal budgets, serving very local or regional markets. So what has spawned this explosive growth? There was no demonstrable, pent-up demand, no major marketing study stating “Kiwis want microbreweries.”
Certainly the liberalization of the country’s liquor laws, which allowed for the separate licensing of taverns and restaurants and expanded hours of operation, made the growth possible. But these changes occurred well before the 1980s. Instead, it was probably more of a “build it and they will come” phenomenon in an increasingly sophisticated consumer market, similar to that in the U.S., which simply desired greater variety and adventure.
Obviously, if the present growth continues, a saturation point and a concomitant shake-out of the less able competitors must occur somewhere down the road. However, there is no current indication that such brakes are being applied, if even gently. And certainly, whatever the future may bring, there can be no return, under any circumstances other than the lobotomizing of the entire beer drinking population, to the dreary brewing environment of the 1970s.
by Luke Nicholas and Tony Rutherford
Appeared in New Brewer International, March 1999
PART II: The Push for Prohibition
From the 1880s through World War II, all legal alcohol sales in New Zealand were through licensed hotel bars. Such hotels were the focus of virtually every community, whether or not actual room accommodations were available, or even existed. The beers were typically English ales, delivered from the local or regional brewery in casks and served at or just below room temperature. These hotel licenses were issued to specific individual “proprietors” for specific locations, and they were not transferable. However, the premises could be bought by a brewery, and the hotel could continue to be operated by the licensee, who, in effect, became an employee. The licenses were coveted by the breweries, and the race was soon on to either buy outright, or “tie” by exclusive contract, as many of these outlets as possible.
It was not just beer sales, per se, that eventually made the creation of the two brewing giants that came to dominate so attractive, it was, even better, the potential for the sole rights to provide virtually all of the beer sold throughout most of the country. During this same period of almost frantic hotel license acquisition, the actual number of licenses was steadily declining, from 1,719 in 1894 (the earliest figure available), to 1,156 in 1920. This was due to the efforts of a growing prohibitionist movement, which strongly resisted the issuance of any new licenses as existing ones expired, were revoked, or the license holder retired, died, or otherwise left the scene. Naturally, this decline further increased the value of those licenses which remained.
In 1835 at Kororareka (in the same year and community that Joel Palack opened New Zealand’s first brewery) the first Temperance Society was established. This initial movement, in light of the strong, often adulterated spirits being consumed at that time, was probably not totally unjustified. Interestingly, the first area to temporarily go “dry” during this pre-colonial period was the settlement at sunny Nelson, which later became the focus of New Zealand’s hop growing industry.
The prohibition movement grew steadily throughout the remainder of the 1800s and into the early 1900s, and a number of districts throughout the country went dry by local option. The influence of the “wowsers,” as they became known, reached it’s zenith in 1911, when 56 percent of the electorate-just short of the three-fifths majority required-voted for countrywide abstinence. By the next election in 1914, voter apathy and the country’s preoccupation with the WWI had taken their tolls, and the movement began to loose some of its steam, although its forces helped to perpetuate New Zealand’s archaic liquor laws, such as restricted outlets, no Sunday selling, and 6:00 p.m. closings, through the middle of this century. Today, there remain only two small areas in the country where alcohol cannot be sold: a neighborhood in Auckland and a suburb of Wellington.
While New Zealand’s consumption of alcohol had substantially moderated since the 1880s, it is generally agreed that this moderating trend was due not to the efforts of the wowsers, but was instead the result of a natural maturing of the society.
An interesting side-note to the anti-alcohol movement in New Zealand is that in 1893 its women were the first in the world to receive the right to vote in national elections. This resulted in no small part from the efforts of the wowsers, who believed that women would vote overwhelming for prohibition. There is no evidence they did.
The Early Giants
In 1923, the first New Zealand brewing giant, under the name of New Zealand Breweries (since renamed Lion), was born through the merger of ten major regional breweries (including all of their licensed hotels and tied independents) located in the major metropolitan areas of the country. Although exact figures are unavailable, it is probably safe to say this new company controlled well over half of the country’s beer production and distribution. In subsequent years Lion continued to grow, not through capital investment in new plants, but by buying additional regionals, closing some and bringing others into the corporate fold.
In 1930, the Coutts family, which had been involved in brewing since the gold rush days, founded the Waitemata Brewery in Auckland. This operation, which was to become Dominion Breweries and eventually New Zealand’s second giant, immediately ran smack into Lion’s formidable and exclusive marketing network and was soon in danger of foundering. In the preceding few years, with its virtual monopoly of the industry seemingly assured, Lion had slacked off somewhat on its independent hotel relationships, but with the opening of the Waitemata plant, these exclusive contracts were again strictly enforced, putting even more pressure on the newcomer. Lion reportedly even worked behind the scenes supporting its arch rivals, the wowsers, in their efforts to pressure the government into withdrawing Waitemata’s license. Although the prohibitionists were not successful in this instance, they were able to put enough pressure on the government to ensure that no new brewery licenses were issued for the next 20 years.
Rescue for Waitemata came in the form of a partnership with Henry Kelliher, whose Lever and Company Limited owned a bottling plant and had wholesale contracts with numerous independent hotels. By 1945, this second giant had gained a quarter share of New Zealand’s 20 million gallon annual beer sales.
The big brewers, first Lion and then DB, continued to acquire those regional breweries which remained, retaining some and closing others. But, surprisingly (or maybe not), they got their heads together in the 1950s to jointly develop the continuous fermentation process, a New Zealand invention. The real brains behind making this process work was DB’s Morton Coutts, since retired, but at 94-years-old still deeply involved in brewing research. Initially, both majors invested heavily in new, highly efficient, high-output continuous fermentation plants. But Lion eventually drifted back to batch brewing in the 1980s in order to produce a larger variety of beers. DB is still heavily involved in continuous fermentation.
The majors gained another, and substantial, competitive advantage from the 1950s with fleets of beer tanker trucks in which they transported product to their hotel pubs. This bulk beer could be efficiently and cheaply delivered to the hotels, and then quickly transferred into waiting serving tanks, typically sized at 1,200 or 2,400 litres, in the basements.
The growth of Lion and DB continued unabated and unchallenged through the 1950s and 1960s. Their highly efficient plants and massive, exclusive distribution systems made it impossible for the remaining regional breweries to compete. By 1955 there were 22 breweries left in New Zealand. By 1960, that number had dropped to 11, and total extinction was approached in 1970 when there were reportedly only four breweries, including Lion and DB, in the country. A dismal decade would pass before the picture would even begin to brighten, and a further five years would elapse before a lasting growth curve would begin to evolve
by Luke Nicholas and Tony Rutherford
Appeared in New Brewer International, March 1999
Way down under, little New Zealand was one of the last areas to be discovered and settled by Europeans. And with European settlement came, naturally enough, beer. Between Captain James Cook’s first voyage here in 1769 and the early part of the 20th Century, New Zealand arguably produced some of the world’s best beers in some of the most modern regional breweries. But in the 1920s and 1930s, two domestic giants, Lion and Dominion Breweries (DB), came on the scene and began to aggressively gobble up the regionals in ever increasing bites, By the 1970s, virtually all domestic competition had been eliminated. However, a remarkable resurgence of independent craft brewing has occurred over the last 20 years, to the point where New Zealand can now boast the highest number of breweries per capita anywhere in the world.
PART I: Early History: New Zealand is a small island country in the South Pacific. It’s 103,000 square miles of land area, slightly smaller than the state of Colorado in the U.S.A., is comprised of two main islands-North Island and South Island-plus much smaller Stewart Island and a smattering of others.
New Zealand’s population is quite small, only about 3.8 million (approximately the size of Connecticut in the U.S.A.) and is primarily of British Commonwealth origin, with a smaller endemic Maori population (about 9 percent) and, more recently, Asian immigrants. It’s major trading partners are its nearest neighbor, Australia, which lies some 1,000 miles northwest, Asia, and to lesser degrees, Great Britain, continental Europe, and the U.S.
In March 1773, within a week of completing a four month, 11,000 mile, non-stop voyage from England, the crew of Captain Cook’s Resolution put down New Zealand’s first brew. Cook was a stickler for protecting his crews from the ravages of the common shipboard diseases of the day, including scurvy, and he had this first brew prepared primarily for that purpose, using basic ingredients brought along on the voyage plus local vegetation, including tree bark, found near the landing site. Thus commenced New Zealand’s first two and a quarter centuries of craft brewing.
In the decades after Captain Cook’s first microbrew, New Zealand grew slowly. Although there were reportedly numerous brews and spirits concocted by the early European settlers, it wasn’t until 1835 that New Zealand’s first commercial brewery was established by Englishman Joel Palack in the far north shantytown port of Kororareka (now Russell), then the major supply and trade station for the thriving whaling industry and renowned as the “hellhole of the Pacific.”
As in the British Isles, from where the majority of the early immigrants had come, most communities of any consequence eventually had at least one brewery, often a prominent structure in town. The importance of having a locally produced source of beer was furthered by the country’s terrain, which is mostly vertical, making early inter-community travel difficult or impossible, except by sea. Even today the country’s major inter-city highways are only two lanes wide.
Gold was discovered in a number of locations in the early 1860s, and the resulting rush to the diggings, which lasted through the following decade, brought on New Zealand’s greatest surge in brewery growth. In 1867, when the country had a population of only about 240,000, there were at least 50 breweries operating. By 1877, when the population had almost doubled to 430,000, the figure was 91. This was a remarkable ratio of one brewery for every 4,725 men, women and children in the country. With the inevitable petering out of the gold fields, followed by the worldwide depression of the 1880s, the number of breweries subsided to 50 or so, large and small, coming and going, which were still around in 1923 when New Zealand’s rapid brewery consolidation commenced. !
by Luke Nicholas and Tony Rutherford
Appeared in New Brewer International, March 1999