Is beer really recession proof?

It might be the running joke but craft brewers say the squeeze is on prices, with everything from a carbon dioxide shortage to a proposed recycling scheme playing a part. Avina Vidyadharan reports.

‘‘Celebration or commiseration, it’s time for a beer’’ is turning into an expensive expression for enthusiasts and more price rises are likely.

One Hamilton craft brewery recently put prices up for the first time in four years while another says the $10 beer barrier is ‘‘really burst’’.

Piling on the pressure is a carbon dioxide shortage, higher taxes and packaging costs, and a proposed container return scheme, they say.

Brewaucracy mashmaster general Greig McGill says he had no choice but to increase prices.

While beer prices at his taproom have gone up by an average of 10% to 15% this year, the basic costs have gone up by 40 to 50%, he said.

‘‘The running joke with beer is that it’s recession proof and that people will kind of keep drinking it no matter what.

‘‘However, we have noticed a lot more people coming in less frequently.

‘‘But at the same time, we are also seeing new faces.’’

McGill had noticed regular craft beer drinkers either drinking less, drinking at home or in some cases brewing their own.

‘‘We believe if you are drinking the beer where it is made, there’s a reasonable expectation that it should be cheaper. But the realities of the cost of making it have just got to the point where we cannot sustain that.’’

Most people visiting Good George Brewing are looking for quality, so that and customer experience are higher priorities than price, co-founder Darrel Hadley said.

A glass of beer has gone up $1 to $1.50 at the Hamilton-based brewery.

‘‘We used to worry about people paying more than $10 for a beer, and we kept it below that for such a long time. But now it has really burst through that barrier and if you go to some places, you might pay $15.’’

The increase was not driving customers away, instead the venues were getting busier and events booked out as summer approached, Hadley said.

A lot is riding on this summer, he said, after a year of dealing with Covid-19, a bad winter, and huge cost increases.

‘‘We have noticed in the last six weeks, the trade starting to get back and our Christmas functions are booking up quite quickly. The mask mandate coming off was a psychological boost too.’’

The brewery supplies 70 bars and restaurants across the country, and Hadley said they were seeing some optimism coming back more in some areas than others.

At the supermarket shelves, craft beer remains at least five dollars more than mainstream brands like DB or Lion, co-founder Brian Watson said.

’’The more you move over $20 for a six-pack, you are sacrificing sales volume for that profit margin.

Companies like ours believe we don’t have to sell trucks full of beer, but the stuff we do need to sell, needs to be made sustainable.

‘‘Craft beer is a brutal game, unless you are growing, are in consumers’ faces and have got new products, you will start to lose relevance quite quickly.’’

What is driving up the beer prices?

An acute shortage of carbon dioxide, as a by-product of shutting down of Marsden Point Refinery, has doubled the price of CO2.

Brewers are now importing the gas from Malaysia or sourcing it from the country’s only commercial supplier of liquid carbon dioxide, Todd Energy’s Kapuni gas field in Taranaki.

The war in Ukraine has created a global shortage of wheat. Hence, brewers are convincing New Zealand farmers to not plant wheat, but plant barley and hops for beer, paying 30% premium.

Harvesting season is coming up in March-April next year and Hadley says they’ve been told the price of malt is jumping 32% in January.

The alcohol excise tax, which depends on inflation every year, has seen the highest increase of 6.9% in the last 30 years.

On top of that were increases to the price of cans, bottles and other packaging, and labour costs, Hadley said.

Container Return Scheme – another potential price rise?

A Government-proposed container return scheme is aimed at getting bottles, cans and the like recycled or reused by including a refundable deposit of 20c in the purchase price.

Hadley said it was basically a massive tax that could add three to four dollars to a six-pack.

‘‘As opposed to Australia which has 10c, they are proposing 20c in NZ plus there’s a 8c administration fee and we have to pay up front. That 28c, we will have to pass on.’’

Consultation on the scheme ended in May and a Cabinet decision is expected later this year. If approved, it could be operating by 2025 at the earliest.

Brewers Guild executive director Melanie Kees said the brewers welcomed the scheme but a 20c deposit on each container was too much.

‘‘A lot of our brewers export to Australia, so they’ll have to do different labelling for all of their products. It will increase the cost to the brewers who will then have to pass it on to customers.’’

Brewers Organisation executive director Dylan Firth estimated the scheme would potentially increase the grocery price of beer for up to $8 to $10 for a 24-pack.

‘‘One of the biggest things is whether the consumers are willing to pay a little more for the things they enjoy at the end of the day or week.’’