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HomeOPINIONThe craft beer property sector is fizzing

The craft beer property sector is fizzing

Craft beer is not only changing the consumption habits of discerning Kiwis, but also impacting on the commercial property sector.

ANZ’s New Zealand Craft Beer Industry Insights report shows that the niche craft beer market is the fastest growing category of beer. Figures show off-premise retail sales were up 42 percent in the 12 months to August 2015, and the number of craft beer brewers doubled in the last five years.

While mainstream beer consumption overall is decreasing, analysis by ANZ reveals that the craft beer segment of the total New Zealand market has grown from nine percent in 2013 to 13 percent of total beer sales today. More than a third of New Zealand craft beer brewers surveyed by ANZ are already exporting their brews, while a further 30 percent have ambitions to enter the export scene within two years.

The remarkable growth of the craft brewing sector has had an equally positive effect on the commercial property market across New Zealand. Brewers and their businesses are seeking bigger and more high-profile premises to produce and sell their amber liquid wares from.

National director of commercial real estate for Bayleys, John Church, said the property demands and locations of craft brewers largely reflected their eclectic position in the beverage market.

“Craft brews tend to come from the proverbial left-field in their creations. The beverage styles and flavours have enormous character and stories associated with them – and the same can be said about their premises,” Church said.

“New Zealand has some amazing craft brewery commercial premises – from a converted church as the home of Good George Brewing in Hamilton, to a former library building protected by the Historic Places Trust where Galbraith’s Brewing Company is found in Auckland.

“From a decommissioned petrol station now home to the Garage Project brand in Wellington, through to a former engineering workshop occupied by Invercargill Brewery – craft breweries have become a colourful addition to New Zealand’s commercial property scene.”

Church said the boutique scale litre output of smaller craft breweries meant they simply did not need the vast industrial style premises demanded by the sheer production volumes emanating from the likes of Lion Breweries, DB Breweries or Independent Liquor.

“The ‘big three’ on New Zealand’s brewing scene obviously need purpose-built industrial-scaled plants with considerable infrastructure for receiving goods, brewing, administrative and manufacturing personnel and shipping end product out,” he said.

“Most of New Zealand’s craft brewers operate some sort of retail activity from their locations – as either on-premise or off-premise – and as such, they have to reflect a degree of retail and hospitality ambience. This aspect is completely irrelevant for the bigger breweries who are solely focused in production capacity and efficiencies.”

Mr Church said that for obvious reasons, craft breweries were some of the most popular tenants amongst their neighbouring premises.

“Whether it’s the wonderful wafting aroma of freshly mashed malts, or easy access to product at the end of the day, craft breweries seem to have the happiest neighbours,” he said.

With more than 100 craft breweries currently operating in the New Zealand market, the types of commercial spaces being utilised cover the spectrum, from CBD industrial units and semi-rural warehouses through to heritage buildings.

Church said that for a commercial premises to be utilised as a craft brewery, the building and business was required to meet any food production by-laws laid down by the relevant local authority.

“The brewery will obviously also need to comply with new health and safety regulations and with any resource consents around emissions and waste water disposal,” he said.

“The property would also have to comply as a Customs Controlled Area under New Zealand Customs legislation, and potentially have to apply for an off-licence or on-licence certification depending on how the beer was sold.”

This story originally appeared in NZRetail magazine issue 744 June / July 2016

 

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