New Zealand: DB Draught Brewery cuts jobs as demand goes flat

A significant drop in expected production has led to the loss of nine jobs at Timaru’s DB Draught Brewery, The Press reported on May 18.

The Washdyke factory, which employs about 60 staff, has also confirmed it will move from two shifts per day to a single shift.

The losses follow consultation with employees, announced last month, which had been driven by an “imminent change” to its forecast production volumes at the site, the company said at the time.

When asked to elaborate on this, DB managing director Matt Wilson said a long-term Australian supermarket chain customer had recently terminated its supply contract.

“Due to increased input costs, we could no longer compete on price, and the contract was awarded to a local Australian brewer,’’ Wilson said.

“Our inability to access the Australian remission scheme for alcohol manufacturers (a breach of the Australia-New Zealand Closer Economic Relations agreement) contributed to the loss of this contract as we were unable to compete on a level playing field.’’

This week, a spokesperson for DB said the job cuts in Timaru reflected the discontinuation of a significant contract, “resulting in a material change to our forecasted production volumes at the brewery’’.

“It is a decision that we have not taken lightly and we thank our team for their continued patience, professionalism and understanding,’’ the spokesperson said.

They said those who had lost their jobs had varying lengths of service.

“And we will be providing professional outplacement services, in-person support and other resources from our employee assistance provider to all those who would like to use them.

“In the interests of protecting the privacy of our people, we won’t be sharing further details.’’

The brewery, in Sheffield St, Washdyke, was one of several DB breweries throughout the country, and in previous years the company had invested significantly in the Timaru brewery.

In 2021, it became the first of the company’s breweries to convert from burning coal to to biomass.

The company began operating its new wastewater plant in October 2023, three years after work started on the project. Previously, the brewery used the Timaru District Council’s municipal wastewater disposal system.

Wilson said the company’s operating profit, “the truest reflection of our trading result’’, was down 25% between 2023 and 2024 because of soft consumer spending, particularly in hospitality, as well as high input cost pressures.

“Topline revenue grew 2.3%. However, input costs rose by 4.5%, outpacing revenue growth, notably with excise increasing by over 20% in the past four years,’’ he said.

“Ongoing economic conditions have meant an inability to pass on the full impact of these cost increases and the lower consumer spend has made things especially challenging for our hospitality group.’’

Wilson said despite challenging market conditions continuing this year, the company remained optimistic with consumer confidence predicted to keep improving.

He was “incredibly proud of the investment’’ the company had made in the Timaru brewery, particularly the wastewater treatment plant that turned the byproduct of treated wastewater into nutrient-rich compost, and its move away from coal-derived energy to biomass.

Having made significant investment at Timaru in recent years, such as adding a can line in 2024, Wilson said the company’s immediate focus was its Waitematā brewery where it had large capital investments coming up this year and next, “on a range of decarbonisation initiatives and upgrading our packaging capabilities’’.

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