Low-carb wars: How the big breweries are tapping into the diet market

More New Zealanders are turning to low-carb beers as our top breweries fight to capture the growing market. Photo / 123RF

The popularity of low-carb beers has risen sharply in recent years and New Zealand’s two largest breweries are pushing hard to tap into the change in consumer appetites.

From just 12% of beer sales in 2022 to 18% last year – nearly one in four beers sold are low-carb.

That’s worth $275 million in an industry that now makes up $3.58 billion of New Zealand’s GDP, according to the latest report from the Brewers Association of New Zealand and the Brewers Guild of New Zealand.

Low-carb beers are now the most popular beer in the lager segment.

It’s a statistic DB Breweries and Lion New Zealand can’t ignore.

Now representing 18% of total beer sales, the competition between New Zealand's largest breweries for who can dominate the market is beginning to heat up. Graphic / NZME

DB Breweries

DB Breweries has four low-carb options: Export Ultra, Export 33, Tiger Crystal Ultra and Heineken Silver.

DB Breweries marketing director Fraser Shrimpton said consumer tastes are evolving and the variety of products DB offers is changing to “quench these new preferences”.

“Mirroring the global trend towards beer that is lower in carbohydrates, Kiwis are increasingly seeking out low-carb options. Currently the fastest-growing beer segment in New Zealand, around one in four beers consumed is a low-carb style (up 22% in volume last year, according to a Nielsen market scan),” Shrimpton said.

“We believe there is the potential for this to reach one in two beers in the next few years. Characterised by a lighter, less bitter taste profile than traditional beers, most low-carb beer has around 70% less carbohydrates (versus a comparative product).”

DB brewed its first low-carb beer around 30 years ago, called Hi Lo, which at the time was the first of its kind.

It launched its mainstay option Export 33 around 2008.

DB Breweries marketing director Fraser Shrimpton is predicting the low-carb category will evolve into a more varied segment.

Shrimpton said bitterness is one of the key reasons why people might prefer other drinks over beer, so the smoother, less bitter profile of low-carb beer is an attractive alternative.

He also said craft beer is now evolving to include more low-carb options to satisfy the demand for more complex pallets.

As for DB’s scale in the market, Shrimpton couldn’t provide any sales data but said its proportion is broadly in line with the category.

Shrimpton said it’s likely more entrants will enter into the low-carb category, predicting it will evolve into a more varied segment, with mainstream, premium and craft low-carb products across several different beer styles.

He pointed to DB’s “wide portfolio of brands that cater to different tastes and occasions” as a key differentiator between itself and its largest competitor, Lion New Zealand.

Specifically, Heineken Silver, for which New Zealand is one of only a few markets to offer the low-carb option.

Lion New Zealand

Lion New Zealand brand director for beer Jeremy Meech said low-carb beers are performing “exceptionally well” at Lion, but the category is still growing.

Lion started brewing low-carb beer around 2015 after its team identified early signs and trends emerging in overseas markets.

The brewery started brewing what it claims is the country’s most popular beer, Speight’s Summit Ultra, at the time and launched it in 2017, although it began to take off a few years later.

“Summit ultra-low-carb is the clear standout. It’s the number-one beer in low-carb and has about 50% share of the low-carb market, which is incredible, particularly given how much we’ve seen an increase in the competition the last year or two,” Meech said.

“So to be able to be in that position is really impressive.”

According to data provided to Lion by NielsenIQ, the low-carb subcategory is worth approximately $275m in retail sales. That equates to roughly 48 million litres, 20% value share and 23% volume share of total beer sales.

Speight’s Summit Ultra overtook Heineken in April 2024 (according to a 52-week Nielsen Scan) in off-premise sales. Lion said there is now a $19.8m gap in value between them.

“We feel very lucky to have the products that we do, but we’re under no illusion that the competition is fierce and we’ve got our work cut out for us to ensure that it stays that way.”

Lion New Zealand brand director for beer Jeremy Meech said the competition in the low-carb category was fierce.

He echoed the sentiment the segment will continue to diversify and said it’s likely other traditional lager brands will enter the market with their own options.

Meech explained low-carb beers are slightly more expensive to produce due to the different brewing processes.

The type of packaging has an impact depending on whether it’s in a glass bottle or cans, something Meech said is growing in popularity for sustainability reasons.

As for what he thinks differentiates Lion New Zealand from DB Breweries in the “war for low-carb”, Meech said Lion’s brands and customers were critical.

“As I mentioned, we are consumer-obsessed. Sometimes that might mean we’re a little bit slow out of the box, but we spend a lot of time making sure we make great products first and foremost, and that we make them easy to remember and easy to buy.”

“[There] is fierce competition, so we have to constantly be on our toes. They’re both great businesses and have been doing it in New Zealand for a long time. Yeah, it’s another round, bring it on.”

Changing trends

The rise of low-carb options has, in part, driven the growth of lager beer over other styles which have all seen a slight decline, but to reach the one-in-two beers level, a lot would need to change.

However, the signs of that change are beginning to show. The volume of low and zero-alcohol beer consumed has increased by 750% since 2019, reflecting changing attitudes toward health and wellness.

Brewers Association of New Zealand executive director Dylan Firth believes the market for beers is becoming more diverse, but also healthier.

“I think that’s just part of society. People are more conscious of what they’re doing. We’ve seen alcohol consumption across the board declining, and that’s people being aware that they’re not wanting to drink too much and changing their behaviours,” Firth said.

“But when they do, they’re going,’ Well, if there’s a low-carb option, then we go there, or we’ll have a [zero-alcohol option] instead’.”

Firth said while low-carb and healthier options are on the rise here, exporting those products overseas comes with its own challenges.

“Some other markets it’s not big – like Australia is not as much of a percentage of the market. I definitely see that it’s behind, but we’ve often been quite ahead.

“We often will look to, say, America first, because they’ve got a huge craft scene and anything that comes out of there, people would imitate, copy. That’s how [hazy IPAs] became big in New Zealand. Different markets are really different. The whole 0% beer market in Spain, for example, is about 12 or 13% of the market, which is huge.”

Firth explained the market is very consumer-driven, and any growth in the market will rely on which breweries can tap into those international trends the best.

Are they healthier?

Massey University Associate Professor Andy Towers emphasised the key health-related impacts of alcoholic drinks are not to do with the amount of carbs that people consume, but the level of alcohol a drink contains.

“There are two key reasons that promoting these alternatives are a bad idea. First, it confuses the issue of what ‘healthy’ means when it comes to alcohol use. Reducing carbs focuses consumers on the immediate aesthetic consequences of drinking (i.e. I might put on weight),” Towers said.

“Second, promoting alternatives like low-carb drinks potentially leads to an increase in drinking. This is because people assume that this new ‘healthy’ version is not as bad for them so they can drink more of it. We already have a serious issue with alcohol misuse and dependence in Aotearoa. The last thing we need is a group of drinkers consuming even more alcohol because they think it is better for them.”

Towers pointed to research by the New Zealand Institute of Economic Research (NZIER) which identified the economic burden of alcohol use in New Zealand was $9.1b, roughly one-third of the annual health budget.

It is also responsible for approximately 5% of healthy years lost to life (i.e. people becoming sick because of their drinking) and 5% of deaths.

He said a quick win for the health system would be to explore what it could do to reduce the amount of alcohol people are drinking.

“When you compare the two concerns (carbs v alcohol), it is absolutely clear that alcohol is the more important factor to worry about.”

Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.