ELECTION PRIORITIES 2023

The Brewers Association will work with Government to:

• Develop a prioritisation model for label change requirements in New Zealand.

• Cap the excise rate to align with the range given to the Reserve Bank via the monetary policy remit, to keep CPI within (1-3%.)

• Apply a keg specific excise rate 1/3 less than the existing rate for beer.

• Modernise the regulation around e-commerce alcohol sales.

• Establish a dedicated ministerial portfolio for the hospitality sector.

• Provide greater capability and resilience training for hospitality and support the sector to attract, train, and develop New Zealanders in hospitality.

• Review issues within the alcohol licensing area creating certainty for applicants and regulators.

The brewing sector’s success depends on several interconnected industries, including agriculture, transport, food and beverage retail, and hospitality. Without a stable economic environment for these sectors to operate in, the brewing industry will suffer. The hospitality and tourism sectors are vital complementary industries for the brewing community, with sales through hospitality accounting for a significant portion of total beer sales in New Zealand.

The current economic challenges, recession and high inflation, impact the cost of input goods and decrease demand for discretionary goods like craft and premium beer. Additionally, record levels of alcohol excise increases are projected to cost the brewing sector an extra $60 million over the next year. Maintaining a stable economic operating environment offers several advantages for the brewing
industry, enabling an environment which fosters consumer confidence, enables long term planning and investment and business confidence and growth.

Supply chain security and domestic production
The New Zealand beer industry requires various input goods and extensive distribution to numerous outlets. Security of supply chains and input goods is vital for operational sustainability. Government support in transitioning to alternative energy sources, more sustainable materials for manufacture, and C02 capture for the brewing process helps the brewing and hospitality sectors. The brewing sector has faced logistical issues due to worker shortages, and BANZ supports fit-for-purpose immigration settings to address this. Domestically, brewers produce 357 million litres of beer annually, and an additional 77 million litres is imported. The production process relies heavily on locally sourced ingredients, such as homegrown grains and hops, with collaboration between brewers, growers, and producers contributing to the production of this local product. BANZ supports government to ensure appropriate regulatory settings for agricultural production of input goods through new research and development opportunities, access to workforce and low barriers to land development for these uses.

Regulatory Burden
Brewers face a range of regulatory pressures and compliance costs including but not limited to:

• Annual alcohol excise increases.

• Continuous changes in label requirements.

• Inconsistent licencing conditions.

• Local Alcohol Policies.

• Sale and Supply of Alcohol Act review.

• Substantial rate increases.

• Alcohol licencing fees.

• Customs Controlled Area licences.

• Food Safety plans.

• Impending changes to the NZ waste system (see packaging and sustainability).

The below focuses on just the first three factors of this list.

Annual alcohol excise increases
Government budget documents predict alcohol excise to increase by approximately $93.8m or close to 7% over the coming year. Beer constituted 32.8% of alcohol excise tax in 2021/22, which projects a yearly increase of $30.5m for beer in 2023/24. The Government has the authority to raise excise up to the level of CPI but the discretion to increase it at a lower rate also. We continue to advocate for a variable keg rate such as is the case in Australia, supporting hospitality businesses and promoting alcohol consumption in supervised environments. The proposed 2023/24 excise increase would mean $88.67 in excise per 50-litre keg of beer.

Labelling
Over the past five years, the brewing sector has undergone and is currently undergoing time-consuming and expensive changes in product and packaging label requirements. These include mandatory pregnancy warning labels, energy labelling (calorie and KJ), and reviews of claims about low carbohydrates or sugars. Each change has been made individually, leading to multiple costly label and design modifications. Research indicates that a single label change costs the industry between $859 to $7,315 per stock keeping unit (SKU), with a total estimated cost ranging from $61.2 to $521.4 million.

Inconsistent Licencing Conditions
It has become more apparent that alcohol licencing conditions are becoming more obscure, harder to define (and therefore comply with) and in some cases, of questionable legality. The imposition of conditions including restricting single serve beers, setting a minimum price, or restricting one product type over another have become increasingly prevalent. With the prohibitive cost of appeals and often the need for a business to be operational licensees are increasingly having to accept these restrictions on trade just to survive. BANZ believes that many of these conditions (including price) are best set at a higher policy level than being imposed by regulatory agencies or District Licencing Committees. BANZ suggests including this matter in any review of the Sale and Supply of Alcohol Act or preferably a more prescriptive definition of appropriate conditions to be applied to On and Off Licences within the Act.