Skip to content
Home » Blog » Craft Brewery Struggles: Challenges and Future Outlook for Brewers

Craft Brewery Struggles: Challenges and Future Outlook for Brewers

Craft Brewery Struggles: Challenges and Future Outlook for Brewers

Craft Brewery Struggles: What’s Brewing in the Industry?

From beloved brands like Brothers beer to Deep Creek, breweries have been facing significant financial troubles in recent years. What’s behind these craft brewery struggles, and what could the future hold for this bubbling sector? Let’s dive into the key factors affecting the industry.

Cost-of-Living Crunch Impact on Craft Brewery Struggles

The looming cost-of-living crunch has not spared brewers. As households tighten their belts, luxury items like craft beers often get sidelined. With people spending more on necessities like mortgages, there’s less disposable income for treats and outings to pubs and restaurants.

Data from Stats NZ reveals a drop in beer consumption, down to 281 million litres in the year to March from over 294 million litres the previous three years. The decline in hospitality spending has significantly hurt brewers, especially the smaller ones, who often rely on direct sales at higher profit margins compared to retail.

Excise Tax: Adding to the Cost of Craft Brewery Struggles

One major Pain point is the excise tax. Levied based on alcohol content, it rises annually with inflation. A jump of 4.1 percent this year, following substantial increases in 2022 and 2023, means an added burden for breweries. An excise tax hike of 6c or 7c a litre since a couple of years ago has increased overheads even before sales.

Cost of Production Challenges

The cost of production continues to rise, partly due to increased transport costs and CO2 supply issues. This affects the overall pricing strategy of breweries, pinching their already tight margins.

Supermarket Margins: Squeeze on Craft Breweries

The tension between retailers and producers over pricing is another hurdle. Complaints to the Commerce Commission about supermarket pressure to maintain higher margins indicate craft breweries are struggling to remain competitive. Smaller brands, in particular, face stiff competition on supermarket shelves, adding to their financial woes.

Challenge Impact on Craft Breweries
Cost-of-Living Crunch Reduced consumer spending on luxury items like craft beer
Excise Tax Increased production costs due to rising tax rates
Cost of Production Higher expenses for CO2 and transport
Supermarket Margins Lower profitability due to tight retail margins

Economies of Scale and Tap Contracts

Smaller craft breweries face higher costs for materials like cans, labels, and boxes, missing out on bulk purchase discounts that larger breweries enjoy. Additionally, tap contracts, which favor major brewers over local ones, limit market access for small craft breweries. This contributes to the ongoing craft brewery struggles.

What’s the Outlook for Craft Breweries?

While the outlook may seem bleak, there’s room for optimism. Market experts believe recovery hinges on an increase in disposable income among consumers. Despite facing numerous challenges, from excise tax hikes to supermarket pressures, craft beer remains an affordable indulgence compared to other luxury goods.

Survival in this competitive sector will require innovation and community support. As consumers slowly regain confidence and financial stability, the unique charm of local craft breweries might once again entice beer lovers. Supporting your local craft brewery is crucial during these challenging times.


The craft brewery struggles today reflect broader economic issues, but with resilience and community support, these artisanal havens can weather the storm. By understanding the challenges—whether it’s the cost-of-living crunch, excise tax hikes, production costs, or supermarket margins—we can appreciate the efforts of small breweries and continue to enjoy their unique brews.

Share this post on social!

Ethan Parker is a seasoned craft beer aficionado with a palate fine-tuned through years of exploring breweries worldwide. As the founder of Brew Scoop, he blends his passion for storytelling with his extensive knowledge of brewing techniques and beer culture. Ethan’s dedication to the craft beer community is evident in his efforts to educate and connect beer lovers while advocating for sustainable brewing practices.