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Cider/Perry Cannibalising Sales from Other Categories in New Zealand’s Alcoholic Drinks Market

11/24/2017
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While volume sales of alcoholic drinks reached an 18-year low in 2016, the unprecedented popularity of cider/perry continued to build, with 16% growth in total volume sales recorded in the category over the course of the year. The popularity of the category has exploded over the last ten years as it has attracted a wider range of consumers, with DB Breweries Ltd in particular leading new product development activity in the category and focusing on transitioning a more premium orientation to the category. Additionally, a number of craft beer brands have entered the category, owing to the abundance of locally sourced apples and pears as well as the similar production techniques employed for the production of both cider/perry and beer.

The popularity of cider has been driven by strong new product development activity, although, crucially, this has not expanded the overall consumer base for alcoholic drinks. As such, the strong growth in cider/perry has come mainly at the expense of other categories, particularly RTDs/high strength premixes, where consumers who have typically been drawn to the category due to flavour innovation and the sweetness of these products, have been tempted towards cider, owing to strong flavour innovation in the category. This has been particularly prevalent among female consumers, although it should also be noted that there has also been a strong shift among male beer drinkers to cider as well, a trend which contributed to the more subdued performance seen in beer over the review period and which also helps to explain why a growing number of craft beer producers are intensifying their presences in cider/perry.

Outlook

Cider/perry is expected to be the only category in alcoholic drinks to exhibit positive volume growth over the next five year period, with a 10% total volume CAGR expected in the category. Thus, phenomenal growth is expected to continue being seen in cider/perry, with strong natural demand, new product development and rising penetration all contributed to this. Of the two major players which dominate alcoholic drinks in New Zealand, DB Breweries Ltd is the one with the stronger focus on cider/perry and, given the strong growth potential of the category, it remains to be seen whether or not the industry’s other main player Lion Pty Ltd will look to close the gap and expand its presence in the category, particularly with the large number of craft beer brands now present in the category, which leads to the expectation that level of segmentation in the category will continue to grow.

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