New Zealand is running the same experiment in reverse. The high relative cost of beer poured from a tap in a hospitality venue (on-premise) rather than sold off a shelf has helped to drive it from 40% of the market to 15% over the past 15-odd years.
Hospitality liquidations rose 49% in the past year; that’s 399 likely small businesses that have failed and three times the average liquidation rate economy-wide. Total hospitality sales value grew just 1.4% last year, against food-price inflation of 4.6%. While there are always multiple drivers of these trends, there is a clear one that the Government can address. It is happening in part because, year on year, the most expensive way to sell beer is taxed at the exact same rate as the cheapest.
Excise has risen by 30% in five years, and in the current environment it’s squeezing the life out of our hospitality sector. When consumers are already reducing discretionary spend and going out less, it’s a double hit, driving up prices when they do.
Excise is now equivalent to roughly a third of the trade price of a typical beer keg before GST – standard beer rose to $38.999 per litre of alcohol on July 1. At the same time, total alcohol excise collected has stagnated at around $1.25 billion for five years straight.
It also means Treasury’s forecasts keep missing. Treasury has over-forecast alcohol excise revenue every year since 2020, assuming volumes would keep growing, and the cumulative shortfall is now over a billion dollars. Budget 2026 still projects alcohol excise reaching $1.486b by 2029/30, but against the volume trend Stats NZ is actually recording, that looks overstated by roughly $105-$180 million a year: revenue the Government is banking on that, on current evidence, is unlikely to arrive.
Australia and the UK have both already made the call New Zealand has not; excise tax is a lever they can pull to support hospitality. Australia’s already differentiated draft beer rate Dann described has now been paused until August 2027. The UK has gone further again. Its Draught Relief scheme that came into effect in August 2023 taxes beer and cider served from a 20-litre-plus keg at a lower rate, and in February 2025 the draft rate was cut again; the first cut to duty on a British pint in a decade, aimed explicitly at keeping a pub pint cheaper in tax than the same beer off a supermarket shelf. Furthermore, recognising the significance of the hospitality sector to employment, socialisation and community, the new UK PM announced a 20% cut in business rates for pubs, clubs, and live music venues, starting in April 2027. Both countries have recognised in just the past 18 months that hospitality matters.
Beer excise has risen 30% in five years.
This matters well beyond the taps. Brewing and the wider industry contribute an estimated $3.58 billion to GDP and support more than 35,000 jobs, about 1.3% of the national workforce. A pub that closes not only stops pouring beer; it stops paying GST, PAYE and company tax, and it stops employing anyone. The Government’s budget does not account for this when it raises excise tax year after year.
Two changes would put New Zealand in line with Australia and the UK. Halving the excise rate on keg beer sold on-premise and pausing the annual CPI-linked excise indexation. While this isn’t a fiscally neutral exercise, keeping on-premise sales from falling further could return millions in GST alone, against a GST decline if nothing changes; this is all before PAYE and company tax are counted. Given Treasury’s own forecasting record, a meaningful share of that headline ‘cost’ may simply be revenue that was never going to arrive anyway.
The reader who wrote to Dann will be back in New Zealand now, paying $12 to $16 for their glass of beer. The saving on offer here was never about the price of their next pint; Dann is right that a few cents a glass will not change much on its own. It is about whether, on the trend sitting in Treasury’s own numbers, there is still a local pub left to pour us a pint a decade from now. Australia and the UK have already decided that question is worth acting on. New Zealand has not, yet.
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