New Zealand will move to level 3 of lockdown on Monday, April 27 at 11:59pm. Alert level 3 will be held for two weeks and then Cabinet will assess whether to move down another level.
Contrary to what you would believe, coronavirus and the anxiety it has brought about in recent weeks has seen the sale of alcoholic beverages fall by more than 20 per cent.
The closure of hospitality venues and retail stores across the country under the national lockdown to stop the spreadof Covid-19 has wiped out business for many alcoholic beverage producers.
Just 40 per cent of alcoholic beverages sales in New Zealand are through retail stores; and despite many Kiwis stockpiling drinks, and the initial spike in sales ahead of lockdown, the New Zealand Alcoholic Beverage Council (NZABC) anticipates a slowdown in the market long after the restrictions are lifted.
One third of Kiwis have not had a drink in the past month, according to the industry body.
NZABC director Bridget MacDonald said the outbreak had had "devastating" flow-on effects for alcohol producers, who had been significantly impacted by the closure of restaurants, bars, clubs and other hospitality venues.
Craft and beer brewers, distillers and winemakers were not immune to the disruption businesses in other industries were facing due to Covid-19, she said.
"We've seen a significant downturn and were estimating a 20 to 30 per cent decrease in total sales. That is going to hit the bottom line of businesses. In the longer term it is going to hit business sustainability and [result in] job losses," MacDonald told the Herald.
"Liquor retail outlets and hospitality accounts for about half of the volume and value of alcohol sales in New Zealand; with both of those gone that's a widespread impact. The closure of hospitality venues has totally decimated on-premise sales so that's a loss of about 20 per cent of total sales volumes to the industry which is about a 30 per cent decrease in value."
The NZ Winegrowers association anticipates that 60 per cent of wineries in this country will experience a 15 per cent drop in sales due to the outbreak.
The spirits segment of the market would be worst affected, MacDonald said, with sales down about 85 per cent.
"There are 100 distillers across New Zealand and they are all struggling," she said, adding that about two thirds relied heavily on tourism tours and tastings to drive sales.
"For some of those small businesses it is getting really tough. Businesses that are not well-established are really going to struggle to try to hang on."
Some craft beer brewers were facing the prospect of disposing product that could not be sold. International tourists to New Zealand spent $246 million on beer last year, without that speed, the brewing sector would also be significantly impacted, she said.
"Without hospitality; that's why everyone is feeling the pinch."
Spirits New Zealand chief executive Robert Brewer said distillers around the country had turned to making hand sanitiser to supplement their income as sales dried up.
He said the spirits segment of the market had been hit the hardest as it did not have the channel to market - supermarkets - that beer and wine did.
"A lot of New Zealand-based distillers have been producing hand sanitiser as a way of getting some cash flow.
"Distilled alcohol, ethanol, we can distill to a high purity and it can then therefore create the basic ingredient of hand sanitiser. Others are mothballing of course, and others are trying to survive by doing online trade."
Struggling distillers have turned to making hand sanitiser to get some cash flow. Photo / Supplied
Brewer anticipates the market will not return to what it was for at least five years.
Online sales of alcohol for some retailers and producers have increased substantially over the past couple of weeks, but MacDonald said the increases in online sales were from a low base and did not offset the huge losses from retail and venue sales.
"Even if people have online sales doubling, tripling or if they are ten-fold it is actually off a relatively low base," she said.
Even after lockdown ceased, MacDonald said there were concerns that job losses would cautions consumers from spending at hospitality venues and on discretionary items longer term.
Sales of no and low alcohol beer have surged by 60 per cent during lockdown. Photo / Supplied
Normality after lockdown would look very different for alcoholic beverage producers and the industries that support them, she said.
"For some businesses it may take a year or so for them to get back on their feet, for others, it is going to take many years."
Sales of cider have increased during lockdown, the NZABC recorded, and many consumers were increasingly swapping craft beer for classic mainstream brands. There had also been a decrease in the sales of premium beverages.
Sales of low and no alcohol drinks had remained consistent, while the sale of low-carb drinks have surged by 60 per cent during lockdown, MacDonald said.
NZABC anticipates that the sale of low and no alcohol categories will increase to higher volumes prior to lockdown.
Tourism key to faster recovery
MacDonald believes domestic tourism is the key to a fast recovery for the alcoholic drinks market, along with the wider economy, getting New Zealanders moving around the country exploring their own backyard.
"Local and domestic experiences are going to become the new norm for New Zealand, people are going to have to experience local; that will become really important to support the industry."
She said a trans-Tasman travel bubble to permit international travel between Australia and New Zealand would provide a significant boost for the market, if that was to eventuate.
"The sooner we can open up the trans-Tasman border that will be the key to our quickest recovery."
