Action Stations for PKW Diversification Strategy

He rangi tā matawhāiti, he rangi tā matawhānui.

A person with narrow vision has a restricted horizon; a person with a wide vision has plentiful opportunities.

The implementation of the PKW diversification strategy is leading the organisation into a period of focused investment to deliver improved outcomes for the business and its shareholders.

Achieving a more balanced investment portfolio by leveraging PKW’s core asset, its whenua, to invest in opportunities that will secure sustainably increased return rates has been a key focus of the PKW strategy for the the last 2.5 years. Now the plan is being put into action with the announcement of two new investment initiatives.

“This is an exciting time for PKW as we are moving progressively forward by making tangible investments through the identification of opportunities and partnerships that align with our core values and strategic goals,” says Warwick Tauwhare-George, CEO of PKW. “These investments are ones that have been carefully considered to deliver long-term benefits, as well as helping other Māori businesses and organisations to follow their aspirations.”

The purchase of the Novotel New Plymouth Hotel for $23 million was made possible through the partnership of three Taranaki Māori entities - Parininihi ki Waitotara Incorporation (PKW Inc), Te Atiawa Iwi Holdings (TAIH) and Taranaki Iwi Holdings (TIH). This new joint venture took over the operation of the hotel on New Year’s Day under the name of Ngāmotu Hotels Ltd.

Above and below: The Ngāmotu Hotels Ltd - partnership is the first foray into tourism for PKW.

It is the first time that PKW Inc and Ngā Iwi o Taranaki have come together in this way and shows a promising start to further potential partnership initiatives in the future.

“The Novotel New Plymouth Hotel is a very high-performing facility under the Novotel brand, and we anticipate an excellent return on investment year-on-year,” said Warwick. “This is our first exciting step into the tourism sector and I am keen to see where it will lead us, given the positive outlook for visitor growth to Taranaki.”

The number of visitors to the region reached 1.1 million last year, which is equal to just over 2.1 million guest nights. This helped visitor spend across the region increase to $400m, which placed Taranaki as ninth largest region in NZ by visitor spend, and the second-largest year-on-year growth rate.

The Taranaki regional economic development strategy ‘Taranaki Visitor Sector – Action Plan’ has forecast 7.5% annual visitor growth to 2025 with annual visitor numbers increasing from 1.1m to 1.8m, and visitor spend up from $400m to $600m.

“Our involvement in the hotel opens up potential opportunities for our people in lots of different directions,” says Warwick. “We will take our time to consider the options and make decisions that are in the shareholders’ interests. Exciting times are ahead.”

PKW Farm 16, on Tiromoana Road near Eltham, holds another exciting proposition for the organisation in the shape of 300 Coopworth ewe lambs – the starting point for a sheep dairying proposition. Sheep dairying is an emerging industry that offers significant potential for investors, driven by high consumer demand for environmentally sustainable, alternative milk products. Although sheep milk farming is present in New Zealand, the Government via the Provincial Growth Fund has started a 14-month feasibility study which will assess the economic viability of developing a nationwide sheep dairy industry.

The study will look at a national business case to identify export opportunities, estimates of the milk volumes required to meet potential demand, and the best locations for processing plants.

A member of the steering committee behind the study, Warwick is confident there is a future market for sheep milk, cheese, ice cream and protein powders (such as infant formula) - the four products considered to hold highvalue potential.

However, Warwick warns of significant challenges to be overcome.

“The first is economies of scale,” he explains. “In order to be commercially viable, you need a flock of 25,000 ewes, each producing 400 litres of milk per annum. It will take us three to four years to build up our flock to around 2,500 ewes so we are already having conversations with potential partners with the aim of setting up a collective.”

Second is the requirement for a processing plant. Finance, timescales and location will all be vital to the success of the PKW sheep dairying concern. And last is finding the channel to market.

“We know the export demand for sheep dairy is significant,” says Warwick. “It’s actually larger than bovine (cow) dairy. But access to export markets and selling your products is a whole new ball game and one that PKW is yet to play.”

“I am confident that the huge potential in this largely untapped market will be worth the mahi and to be in at the start of it all puts us ahead of the pack, so to speak.”

Building up the flock will see East Friesian rams put across the ewes to produce a cross known for its superior milking genetics. They are also good meat animals, which means that the ram lambs will be fattened and sold, providing a useful revenue stream to make the project cost-neutral in its initial stages.

Warwick adds, “I am looking forward to providing regular updates about the progress and performance of these two investment areas to shareholders. The inception of Ngāmotu Hotels Inc and our entry into sheep dairying reflects our commitment to following a diversification strategy that doesn’t just focus on profit but considers the provision of opportunities to Taranaki Māori that deliver on our core purpose of He Tangata, He Whenua, He Oranga - sustaining and growing our people through prosperity.”