Monday, 5 January 2009

NZ Beer is too cheap... Yeh Right ;-)

A story out today says the country's breweries believe packaged beer is far too cheap in New Zealand, and they are planning price rises of 5-10% to claw back millions of dollars in lost profits.

DB and Lion say an intense price war between the two breweries has effectively cost the country's top brewers and supermarkets around $66 million over the past year.

DB's managing director says the preoccupation with market share doesn't deliver profits, with margins squeezed as both companies continue with supermarket discounting. Beer is often used as a "low leader", with the promotional price for an average pack of beer around the same price as it was 15 years ago.

Attempts by DB to try and increase its margins a few years ago fell flat after just three months, after customers went for cheaper alternatives instead.

DB says it will introduce a 5% increase for all its packaged beers from March 1st. Australian-based rival Lion is also considering a price rise of 7-10% before July.

Breweries say the economic downturn has seen people turn to cheaper stocked beers, with sales down significantly in rural South Island and the lower North Island.

But it's not all bad news for the breweries... DB's Tui brand is its best selling beer in the North Island, with a sideline income of $1.5 million worth of Tui-branded food and merchandise.
The quirky and politically incorrect "Yeh Right" marketing campaign has helped the Tui brand become one of the country's favourite beers. The old Tui Brewery in Mangatainoka is being transformed into the "Tui National Park", which DB says will be "not your usual brewery tour experience".

Tui HQ in Mangatoinoka already attracts around 35,000 visitors a year, and turns over $1.25 million per annum. Weddings and on-site events are becoming increasingly popular.

Tui sells 7,000 bottles a week of its "Tuimato sauce", making it the second best-selling brand in country after Wattie's. 5,000 Tui pies are sold every week, along with a growing range of clothing and merchandise.

* Stuff: Tui barrels ahead with million-dollar sideline
* Stuff: Price war flattens beer profits

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