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DB forecasts cider sales to double in the next five years

12 Mar 2015

DB Breweries chief executive Andy Routley is forecasting cider sales in New Zealand to double in the next five years to about 12 percent the size of the beer market.

Auckland-based DB is the market leader in the category with a 46 percent share locally and burgeoning exports, and Routley said cider was one of New Zealand's fastest growing categories with a 25 percent compound annual growth rate.

The overall beer market continues to decline with Statistics New Zealand figures showing the total volume of beer available for consumption falling 2.3 percent in 2014 to 282 million litres.

Cider has been around for centuries but started booming in the UK in 2008 alongside the popularity of craft beer and has been growing in New Zealand since 2009 after it shook off its fusty, old-fashioned image.

In the UK, cider now accounts for about 20 percent of the beer market, Routley said, so there was room to grow the category in New Zealand, potentially doubling in the next four to five years.

"After that I don't know. I have to be cautious because you could keep investing a lot in stainless steel plant to make it and find that growth is not sustainable. You also have to back yourself for success as well because if you don't, you won't stay at 46 percent market share and the dominant player in the market," he said.

Lion is a little more downbeat on growth projections for cider, saying the market will continue to grow, but not as fast as it has been. Lion, the country's number one beer retailer, won't reveal its market share for cider for commercial reasons but did say it was around 3 to 4 percent of its total beer volume and similar to that of rivals Independent Liquor and Treasury Wine Estates.

Dave Pearce, Lion's category marketing director - wine, cider and craft, said there was a danger the cider market may not quite develop as it has in Australia and the UK if the right products are not introduced.

"It could go down a rabbithole of sweet flavours and not reach its full potential," he said.

The leading brand in New Zealand is DB's Rekorderlig which it makes under licence to Aslo in Sweden. Rekorderlig's flavour range tends to be sweeter than some on the market.

DB gained Rekorderlig when it bought a majority shareholding in Nelson cider and fruit wine maker Redwood Cellars in 2009. They set up the joint venture, Redwood Cider Company, incorporating their brands, Old Mout and Monteith's and launched the new brand Orchard Thieves late last year.

Lion also has a range of brands including Isaac's, Speight's, Kirin, Sun Dog, Brambles, and recently launched a new range of Mac's ciders with more sophisticated flavours - chilli and lime, and blood orange and cardamom, for example. It's still early days but Pearce said the Mac's ciders may appeal more to a male drinker.

"We're trying to innovate in quite different styles of cider. Mac's is quite different to anything else on the market. For cider to continue to grow we have to find the next big thing."

DB said the skew among its cider drinkers is 65 percent female/35 percent male, while Pearce said the overall market is more like 55 percent/45 percent.

Part of cider's growth has been because it appeals to a wide range of drinkers as an alternative to their normal tipple.

But Routley said one of DB's big challenges to achieve its forecast growth for cider, which delivers a higher profit margin than beer, was finding clever ways to bring more men into the mix.

"That is one of the areas we have to ensure we tackle, understanding why some Kiwi men perceive cider is not something they want to drink regularly. That's not replicated around the world."

Lion is yet to export any of its brands though it is an avenue it's currently exploring, Pearce said.

DB, on the other hand, is well down that track, and is seen as something of a test bed for cider for its Dutch parent globally with Monteiths, Old Mout, and Orchard Thieves in Heineken's global brand portfolio for potential development in other countries.

Routley said some 56 percent of Old Mout cider is sold outside of New Zealand and the UK pays DB a royalty for making the brand there. DB directly exports its cider brands into Australia and western Europe and is now eyeing up Asia.

"By the time 2015 is out we should have broken into one of the big Asian markets," Routley said.

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