300+ NZ Brands. One Shrinking Market. Will Your Local Favourites Survive?
As market storms wreak havoc on NZ spirits, only some will be savvy enough to stay on the shelf. But there's good strategy ahead, sailors. Read on to navigate the chaos.
Dave Broom recently wrote about whisky’s twenty-year cycles—those giant swells of peaks and troughs that have shaped the industry since the 1960s. “There’s a storm a-comin’,” he warned, noting that many people running firms today have never navigated a downturn. They’ve only known rising sales, benign climates, clear horizons. Now the skies are darkening.
He’s right. But he’s only describing one front of the storm.
For centuries, the spirits industry understood something fundamental: you measure success in decades, not quarters. Plant agave, wait eight to ten years. Fill a cask, wait twelve. Build a brand, wait a generation. The industry’s greatest successes were built on patience, on understanding that demand and supply move like tides—slow, cyclical, inevitable. You batten down during the troughs. You sail hard during the peaks. But you always, always know which part of the cycle you’re in.
Then everyone forgot how to keep time, fell out of rhythm and focused on counting the wrong numbers.
What Broom identified for whisky—that cyclical downturn, falling demand meeting rising capacity—is just the visible wave on the surface. Underneath, four separate storm systems are converging. Climate chaos redrawing where we can grow and make spirits. Geopolitical upheaval closing borders we assumed would stay open. Digital vulnerability turning copper stills into code-dependent targets. And consumers fundamentally rethinking their relationship with alcohol itself.
Each storm alone would demand adaptation. But here’s what makes this existential: each storm is an accelerant to the core problem. We built too many distilleries for a shrinking market. And just when we needed growth to absorb that capacity, four forces arrived to ensure the market contracts even faster.
The Core Crisis: We Built Too Much for a Market That’s Shrinking
The numbers tell the story with brutal clarity.
U.S. craft spirits sales declined for the first time ever in 2023, with producers losing market share—dropping from 4.9% to 4.6% in volume and from 7.7% to 7.5% in value. Yet the number of active craft distillers grew by 11.5% to 3,069. American whiskey volumes grew at 5% annually from 2019 to 2022, then crashed: -1% in 2023, another -2% in the first eight months of 2024. MGP Ingredients—a major contract producer—announced plans to reduce production in 2025.
More distilleries chasing fewer sales. That’s not growth. That’s a glut.
And Asia Pacific is following the same trajectory. Twenty years ago, you could count New Zealand’s commercial distilleries on two hands. Today there are almost 200, with 321 NZ entries in the 2024 New Zealand Spirits Awards. In Australia, the number went from a dozen in 2010 to over 300 today, with distilleries rising by 30% in recent years. Scapegrace just opened a NZ$30 million distillery—New Zealand’s largest—capable of producing 160,000 cases of single malt whisky per annum.
Spectacular growth in capacity. Declining growth in consumption. The maths doesn’t work.
Australian data shows alcohol sales value grew by just 0.7% whilst sales volume dropped 3.9% in the year to June 2024. People are drinking less. The spirits business operates on long pendulum swings—boom and bust, scarcity and surplus, decades of patience followed by decades of reward and peppered with FMCG consumable trends. But somewhere along the way, the industry filled up with people who only understood quarterly growth. Who didn’t know—or didn’t care—that you can’t build a spirits brand on a start-up timeline or based on trends alone.
So they overplanted. Overproduced. Overpromised. And now we have a glut of liquid in a market that’s contracting under the weight of health trends, economic uncertainty, and consumer fatigue.
The standard response? Export. As one Australian distiller noted, domestic use of native ingredients “has reached saturation, and the industry will be looking to international markets to grow.” According to Deloitte Access Economics, whilst only 17% of Australian spirits manufacturers currently export, 40% are interested in doing so. And increasingly, NZ distillers are seeing it as business-critical, not optional.
Except when everyone exports, export isn’t a solution. It’s just moving inventory sideways whilst margins compress and competition intensifies. You can’t export your way out of a structural oversupply problem.
What You Must Do Now:
Rebase your revenue assumptions: If your forecasting model was built during 2019-2022, throw it out. Start with what you actually sold last year. Model for flat to -5% volume growth domestically. Better to plan conservatively than overproduce and carry unsold stock.
Factor in the real tax burden: In NZ, 60-70% of retail price is excise and GST. In Australia, spirits face $104.31 per litre excise—one of the world’s highest. Build your pricing models around this reality. On a $90 bottle, you’re working with $27-36 before production, packaging, distribution, marketing, and salaries. If those margins don’t work, your pricing or cost structure is wrong. And you can’t bank on excise being cut, dropped or frozen anytime soon.
Cut your SKU count in half: Many small distilleries carry 8-12 SKUs when they should carry 3-5 exceptional ones. Every additional SKU costs you in production complexity, inventory management, marketing dilution, and shelf space competition. Many are competing with themselves. Master your flagship products before launching variants nobody asked for.
Only pursue export when domestically profitable: If you’re not profitable at home, export will accelerate your collapse. Export demands volume, consistency, marketing support, and extended payment terms. Treat it as portfolio diversification (spreading risk), not your primary growth engine. And if you are export-capable, you’ll need to find clear space even one market at a time.
Now, here’s why this oversupply crisis is about to get worse. Four external forces are converging to ensure the market contracts faster than the industry can adapt.
Storm One: Climate Chaos Destroys Your Revenue Timing
Climate change isn’t coming for the spirits industry. It’s already here, destroying the revenue patterns you’ve built your cash flow around.
Scotland’s 2018 summer heatwave forced five of Islay’s ten distilleries to halt production, alongside Blair Atholl and Edradour in Perthshire. Glenfarclas in Speyside lost 300,000 litres of whisky—an entire month of production—simply because it was too hot to make whisky. The same heatwave caused a 7.9% decline in UK spring barley production, spiking prices from £145 to £179 per tonne and adding roughly £27 million in costs to an industry requiring 800,000 tonnes annually.
By 2080, researchers predict Scotland will face droughts every 20 years instead of every 40, with summer rainfall declining by up to 18% and temperatures rising by 2°C.
Here in the Asia Pacific, we’re watching our own version unfold. California and Queensland farmers have turned to agave as drought-resistant alternatives. Top Shelf International now farms nearly half a million agave plants in the Whitsundays. Australian grain production is booming but prices are dropping so market forces will look to correct for profitability - so your Australian NGS may not get cheaper. But here’s the immediate crisis for NZ and Australian producers: extreme weather is hitting during your peak revenue periods. Peak summer in New Zealand—January, when hospitality and tourism should drive massive spirits consumption—is increasingly disrupted. Nelson and Hawke’s Bay, two of our most important holiday hotspots, have faced cyclones, floods, and road closures during what should be the highest-revenue period. Remember Cyclone Gabrielle in January 2023? Roads closed. Deliveries stopped. Revenue evaporated. Not to mention contracted, low snowfall ski seasons back to back in the South Island, dropping visitor spend and days in market.
How this worsens oversupply: You built inventory expecting November - February to deliver 15-20% of annual revenue. When extreme weather cuts off key markets during peak season, that inventory doesn’t move. Meanwhile, you’re still producing because the still is running. The glut compounds whilst cash flow collapses at precisely the moment you need it most.
What You Must Do Now:
Remodel seasonal forecasting with climate disruption as baseline: Build scenarios—what does revenue look like if Nelson is cut off for two weeks in January? If Hawke’s Bay faces another Gabrielle-level event? If Auckland festivals are cancelled due to heat warnings? Make January variable (±30%) in your planning, not guaranteed.
Diversify your geographic revenue dependence: If 40% of your revenue comes from two regions, you have a climate risk concentration problem. Develop relationships with accounts in multiple regions so one weather event doesn’t sink your quarter.
Build deeper cash reserves: If your cash flow model depends on a massive Q4/Q1 bump that may not materialise, you need 12-18 months of operating reserves, not 3-6. That changes everything from production scheduling to staff planning.
Invest in climate adaptation proactively: Water management systems, backup power, temperature control. Sustainability can’t be an afterthought—it’s survival infrastructure.
Storm Two: Geopolitics Closes Your Escape Valve
The drinks industry has always relied on a gentlemen’s agreement: borders stay open, tariffs stay reasonable, and spirits flow freely between trading partners. That agreement is dissolving, and it’s destroying the one solution everyone counted on for oversupply—export.
When Trump imposed 25% tariffs on Canadian goods in March 2025, Canadian provinces retaliated by stripping American spirits from government-controlled store shelves. U.S. spirits exports to Canada plummeted 85% in the second quarter. Ontario’s LCBO pulled more than 3,600 American products—Jack Daniel’s, Bacardi, California wines—creating empty shelves overnight.
Brown-Forman’s CEO called it “worse than a tariff” and “very disproportionate,” noting it was “literally taking your sales away.” Michter’s Distillery lost $115,000 in cancelled bourbon shipments to Canada, its largest foreign market. Cedar Ridge Distillery in Iowa had spent two to three years building the Canadian market after being forced out of Europe—only to watch that investment evaporate.
Not because of quality issues or consumer rejection. Because of political decisions made thousands of miles away from any distillery.
How this worsens oversupply: Export was supposed to be the escape valve. Domestic market oversaturated? Sell overseas. Except 40% of NZ distilleries are eyeing the same strategy where they’ll now compete with American whiskies dropping in pricepoint to move volume—cashflow is King. And when borders close or saturate—not gradually, but overnight—all that inventory meant for export has nowhere to go. It sits in warehouses, tying up capital, whilst you keep producing to hit the volume that justified the investment in the first place.
What You Must Do Now:
Diversify export markets before you need to: If you’re established in one market, don’t build 80% of export revenue there. Spread across 3-5 markets minimum. When one closes, you have alternatives. And start building those relationships now, before crisis forces desperate decisions.
Build contract flexibility for geopolitical disruption: Force majeure clauses that specifically cover tariffs and trade restrictions. If you can’t deliver due to political actions beyond your control, you need contractual protection.
Reassess your 20-year distribution strategy: The days of stable, predictable trade relationships are over. Plan for pivots every 18-24 months. That means lighter commitments, faster exit options, and relationships that can adapt.
Strengthen domestic market position first: You can survive losing export markets if your domestic business is solid. You can’t survive losing domestic market share whilst chasing export dreams. Get profitable at home before expanding abroad.
Storm Three: Cyber Attacks Destroy Production When You Can’t Afford Downtime
The spirits industry is digital now, whether it likes it or not. And that’s created vulnerabilities that can wipe out weeks or months of production overnight.
In September 2025, Asahi Group Holdings—Japan’s largest brewer producing Asahi Super Dry, Nikka Whisky, Peroni, Pilsner Urquell, and Grolsch—suffered a ransomware attack that shut down all 30 domestic factories. Production remained halted for days. The Qilin ransomware group claimed they had stolen 27 gigabytes of data. Convenience stores across Japan faced shortages.
Critical ERP systems and manufacturing execution systems were compromised, halting bottling lines and packaging equipment across multiple prefectures. Production control servers became inaccessible, triggering automatic shutdown of plant machinery. While the beer sat in tanks. While distributors pivoted to competitors. While market share evaporated and contracts went unfulfilled.
This isn’t happening in some distant market. This is our neighbourhood. And smaller operations are more vulnerable than the big players because they lack dedicated IT security infrastructure. Even your credit card on file for software subscriptions could fail you in a security breach.
How this worsens oversupply: A ransomware attack hits and production stops entirely—but your fixed costs don’t. Staff still need paying. Rent is still due. Distributors still expect deliveries. Except you can’t access your systems to manage supply chain or cashflow. Meanwhile, competitors fill your shelf space.
What You Must Do Now:
Budget for cybersecurity like insurance: Because it is insurance. If you’re using digital systems for production management, customer databases, or online sales—and you are—allocate $5,000-10,000 annually minimum. Regular backups stored offline, two-factor authentication on everything, employee phishing training, and a disaster recovery plan.
Test your recovery plan: Having a plan that’s never been tested is having no plan. Run disaster scenarios: what if your systems are locked tomorrow? Who has authority to negotiate? What’s the communication protocol with customers? Test it.
Maintain manual backup systems for critical functions: You should be able to run basic production and fulfil existing orders even if all your digital systems are down. Paper backups of customer orders, manual inventory tracking, alternate payment processing. Redundancy saves businesses.
Get cyber insurance with business interruption coverage: Standard insurance won’t cover ransomware losses. You need specific cyber coverage that includes business interruption. It’s not cheap, but a month of lost production is far more expensive.
Storm Four: Consumers Are Drinking Less—Permanently
The “sober curious” movement isn’t a fad. It’s a fundamental recalibration of how people relate to alcohol, and it’s shrinking the market faster than producers can adapt.
New Zealand data tells the story: hazardous drinking among adults declined from 21.3% in 2019/20 to 16.6% in 2023/24. In the year to June 2024, total alcohol consumption fell by 7.2%—the largest decline in eight years—with spirits dropping 14%. This despite the NZ population growing 11% over the same period. Translation: Kiwis are drinking significantly less, with 84% now drinking responsibly, but those who do drink are spending selectively on higher-quality products.
And we’re seeing signs that as people age and life-stage into more disposable income, drinking returns. But not as high or frequent so watch this space.
The market for full-strength spirits is contracting whilst demand for alternatives grows. For industry, this requires a rethink of new product development, branding, and target audience. And a cautious approach because the data is still moving.
How this worsens oversupply: You built capacity assuming 2019-2022 consumption patterns would continue or grow. Instead, the market is shrinking structurally, not cyclically. Fewer people are drinking spirits. Those who do are drinking less. Premium positioning helps margin but doesn’t solve volume problems when the overall market contracts 3-9% annually. You have more distilleries, making more liquid, for fewer consumers buying less alcohol. The mathematics is catastrophic.
What You Must Do Now:
Shift from volume to value immediately: Stop chasing case counts. Start building brands that command good margin from the shrinking but sophisticated consumer base that remains. Better to sell 5,000 cases at healthy margins than 15,000 cases at break-even.
Diversify into low/no-alcohol offerings: Not as token gestures, but as genuine business lines. But a word of caution—you must do the numbers and commit to a long term play or run the risk of the RTD-pop boom: products pushed out to meet boom trends only repeat the cycle of shelf saturation and quick consumer fatigue.
Build direct relationships with consumers: When the market shrinks, wholesalers and distributors consolidate too. They’ll carry fewer brands. Your survival depends on having direct-to-consumer channels that deliver 30-50% of revenue at full retail margins, not 10% at wholesale pricing.
Measure what matters: Stop tracking vanity metrics (social media followers, award medals). Start tracking survival metrics: gross margin per bottle, customer acquisition cost, repeat purchase rate, days of cash on hand, inventory turnover. If you don’t know these numbers monthly, you’re flying blind.
Special Considerations: The Medium-to-Large Distillery Paradox
If you’re producing 50,000 to 500,000 cases annually, you face the most acute challenges. You’re too large to operate on craft margins but too small to compete on multinational efficiency. Small operations can pivot quickly. Global giants have scale and reserves. You’re caught in the middle, with the worst of both worlds unable to just hit pause and ride it out.
In New Zealand, too many small craft distilleries can simply slow production, pull back hours, employee numbers and ride out the storm while managing day jobs to expect the kind of closures the US industry has reported since 2024 (25%). It’s time to be honest, 25% fewer New Zealand brands competing for shelf space sure sounds good, doesn’t it? But this is not Survivor and there’s no way to vote people off the island. And because it’s the medium size distilleries that face the toughest operating conditions, there’s no way to promise the best of the best will survive purely on quality alone. That’s no longer the prize.
Your cost of goods sold might look efficient on paper, but if you’re haemorrhaging value through a distribution model built for volume that no longer exists, time to rethink. You’ve invested in automation, professional sales teams, distributor networks, and marketing infrastructure but now you need to ask: is your infrastructure model delivering return, or just burning cash?
What You Must Do Now:
Apply rigorous brand value to COGS analysis quarterly: For each product, calculate true COGS (including allocated overhead), compare to realised wholesale price (not list price—what you actually receive after discounts), then measure against brand perception metrics. If a product isn’t delivering both margin and brand value (think onward sales opportunity and lifetime customer value), kill it. You don’t have the luxury of carrying dead weight.
Remodel sales forecasts with seasonal change as baseline: Peak summer revenue is no longer guaranteed. If your cash flow depends on January delivering 15-20% of annual revenue, you’re building on sand. Model January as variable, require deeper reserves, flatten revenue expectations across the year. This changes production scheduling, staff planning, and inventory positioning. And remember all the seasons that impact consumer spending in economic crunch—elections, OCR announcements, holiday seasons, winter downturns.
Bring in external commercial expertise: You’re too close to see where you’re burning money. Spending $20-50K on external analysis that finds $300K in inefficiencies or identifies pivots adding $1 million in margin is the highest ROI decision you can make. They’ll identify which channels are stalling versus moving product, which accounts are profitable versus draining resources, and inefficiencies you’ve become blind to.
Prepare for consolidation—as acquirer or target: The shakeout will create M&A opportunities. Either position to acquire struggling competitors’ best assets, or make yourself attractive for acquisition by building genuine brand equity and operational efficiency. Know which outcome you’re building towards.
Navigating the Storm
The perfect storm is here. Climate chaos destroying revenue timing. Geopolitics closing borders. Cyber attacks eliminating production capacity. Consumers drinking less permanently. And underneath it all, structural oversupply in a contracting market.
As Broom wrote: “Batten down the hatches, lash yourself to the wheel. It’s going to get rough.” But I’d add this: you also need to check your charts, recalculate your position, and make sure you’re sailing for a destination that still exists.
These aren’t theoretical concerns. Scotland lost 300,000 litres of whisky production in a single month due to heat. U.S. spirits exports to Canada dropped 85% overnight due to tariffs. Asahi’s 30 factories sat idle for days due to ransomware. Australian alcohol volumes declined 3.9% whilst distillery numbers grew 30%. The forces reshaping this industry aren’t coming—they’re here.
The distilleries that survive won’t be the largest, oldest, or the ones with the best products. No one is entitled to survival. They’ll be the ones who understood early that the rules have changed. Who rebuilt their financial models around disruption, not historical patterns. And kept embracing what customers were saying.
The question isn’t whether the industry can survive. It’s whether individual businesses can remember the principles that built this industry in the first place: patience, quality, and the understanding that some things—good whisky, strong brands, sustainable businesses—simply take time.
The compass is spinning. The survivors know which direction to sail.
And don’t stop there. Have your say in the comments below.