Craft Brewing Takes Flight in N.Z. (part III)

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.

The Beers

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

Craft Brewing Takes Flight in N.Z. (part II)

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

Craft Brewing Takes Flight in N.Z. (part I)

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