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MINISTER OF TOURISM, KELVIN DAVIS
Growth With Strategic Planning & Consultation I MENTIONED in my 2018 Leaders Forum article that there is nothing quite like a busy summer season to bring the tourism industry’s issues into focus. I can now also say that the rigours of peak season definitely help identify opportunities and clarify priorities for the next year as well. In 2018 MBIE forecast that international arrivals will exceed 5 million per year by 2024. This is impressive growth considering how competitive the international market for visitor travel is, and demonstrates how well the sector and organisations like Tourism New Zealand are doing to promote what is unique about our country. Still, this growth needs to be planned for and managed to ensure that our long term visitor proposition remains world leading. Tourism does not exist in isolation – it is inextricably linked with other portfolios like local government, conservation, regional development and transport. I’ve worked closely with my Ministerial colleagues to ensure that our efforts are joined up, and that the tourism sector will benefit from the sum of our work. Conservation Minister Eugenie Sage and I launched a draft Aotearoa
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New Zealand Tourism Strategy for public consultation in November, and I’m excited to see the responses we will receive after consultation closes in February. The strategy proposes government taking a more active stewardship role in the tourism sector, with a focus on creating sustainable, productive and inclusive tourism growth. Overall, there is greater acknowledgment within the sector that the focus must be on contributing to New Zealand’s wellbeing over the longer term. I know that the draft strategy aligns with some great work that the sector has been doing in this space, such as Tourism Industry Aotearoa’s sustainability commitment. The recently launched Tiaki Promise is another proactive partnership between multiple organisations across the sector, and is timed to encourage summer arrivals to tread lightly and show greater respect for our national parks and tourism destinations. Local government has been very clear that they are feeling the pressure of increased visitor numbers. To get ahead of this problem, we must create sustainable funding models through a range of initiatives. No one single solution will be sufficient. In 2019
MANAGING DIRECTOR-PUBLISHER Dale Spencer dspencer@intermedianz.co.nz
EDITOR Kimberley Dixon kdixon@intermedianz.co.nz ph: 0274 505 502
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IN 2019 THE GOVERNMENT WILL BEGIN IMPLEMENTATION OF AN INTERNATIONAL VISITOR LEVY THAT WILL BRING IN $400 MILLION OVER FIVE YEARS, TO BE SPLIT BETWEEN TOURISM AND CONSERVATION WORKS.”
Right Hon Kelvin Davis, the Minister of Tourism
the Government will begin implementation of an international visitor levy that will bring in $400 million over five years, to be split between tourism and conservation works. Alongside this, the Tourism Infrastructure Fund has now allocated over $30 million to establishing visitor infrastructure, and the Provincial Growth Fund has announced over $100 million in funding for tourism related initiatives. The subject that I receive the most correspondence about, and which gets a large amount of media attention over the summer, is freedom camping. I understand this issue can be polarising, which is why I believe the label responsible camping is more appropriate. We want our campers to behave responsibly, and we want to acknowledge that the activity has both benefits and costs to communities. In 2018 I established a working group, made up of industry, central and local government, and they reaffirmed the place of responsible camping as a quintessential part of our Kiwi way of life. Going forward we will use the aforementioned funding models to help better manage these pressures. $8.5 million has already been made available for councils to manage pressures over the 2018/19 peak season, and to educate travellers, including undertaking a world-first data pilot to facilitate dispersing campers. I’m excited to see the outcomes of this work after the summer. In addition to continuing work already underway and finalising the Government’s tourism strategy, a major focus for 2019 will be the China New Zealand Year of Tourism. We know that tourism provides the opportunity for increased cultural understanding, trade and people-to-people links. It will also allow New Zealanders to showcase our hospitality and warm welcome, our manaakitanga that is so internationally renowned. This deeper understanding is reciprocal, and I am sure that more New Zealanders will enjoy learning about Chinese culture and enquiring about planning their own holiday there. Te Papa is already showcasing the Terracotta Warriors exhibition, and is expecting over 100,000 visitors before the attraction closes in April. I am proud to be the Minister of Tourism. The sector makes a huge contribution to overall economic and regional growth, and providing exciting employment opportunities. When I think back to my youth, growing up in the Bay of Islands, I would have been astounded at the range of choices a career in tourism could have. It is in all of our interests to have a vibrant tourism sector that truly showcases the best that New Zealand has to offer. 2018 was a very busy year for tourism, and I know that, working together, 2019 will be even better.
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HOSPITALITY NEW ZEALAND CEO VICKI LEE
Supporting Fairness for Everyone THE HOSPITALITY industry is run by our people, with the aim of bringing joy to people throughout the community. Our aim is to support our members in their work, which brings opportunities for employment and training to communities across the country. One of the biggest areas where we provide value to our members, and work on their behalf is in our advocacy role. Hospitality New Zealand strives for fairness for everyone involved in employment and industry, and we were consequently pleased to see some of the changes we had fought for come into effect before the end of 2018, such as retaining the 90-day trial option for businesses with less than 20 members in the Employment Relations Amendment Bill. I was also pleased to contribute on the Government Fair Pay Working Group, providing insight and context to the discussion on behalf of small businesses. Other key achievements in 2018 included our advocacy in relation to proposed changes to the Private Security Personnel and Private Investigators Act, which would have seen our members become responsible for additional security licensing when employing crowd controllers for an event, rather than the body supplying those security staff being responsible.
SKILLED LABOUR SHORTAGES During 2018, we have been collaborating with other sectors and meeting with the Minister for Immigration, the Hon Iain Lees-Galloway, to raise our concerns regarding skilled labour shortages and to call for solutions to ease the burden of this shortage on our members. The first positive step has been made, as the government announced late in 2018 that it has opened consultations on the subject. This will continue to be one of our top advocacy priorities for 2019. On 14 January, Hospitality New Zealand launched the Kiwi Access Card, the new photographic evidence of age and identity document, which has been created with the whole community in mind. Hospitality New Zealand has been administering the 18+ Card for nearly twenty years. Last year we sought feedback from agencies such as the Department of Internal
Vicki Lee, Chief Executive Officer of Hospitality NZ
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Affairs, Ministry of Social Development and the Office for Disability Issues, and agreed that there is a large number of people in New Zealand who are not catered for with the current forms of identity available. We received advice that many, such as seniors or those with disabilities, may not have the means to obtain a valid driver license and/or passport. As a result, we created a new look, all-encompassing, evidence of age and identity card that could happily be used by everyone, in order to obtain access to necessary goods and services.
SUSTAINABILITY ADVISORY GROUP We are committed to helping the hospitality industry become more sustainable, and in order to make that possible, we have created a dedicated Sustainability Advisory Group for our members. Since the implementation of our Sustainability Advisory Group, we have teamed up with the Rubbish Whisperer to help our members move away from throwaway materials. In 2018, we created a campaign to help encourage our members to go plastic straw free. We also joined the Glass Packaging Forum, to encourage and facilitate glass recycling among our members. We will be continuing our commitment to sustainability throughout 2019. As a part of that commitment, we are supporting the Tiaki Promise and proliferating its message of care for our environment and culture, throughout our membership base. At the end of November 2018, our Wellington branch successfully launched the sexual assault prevention campaign Don’t Guess the Yes. We teamed up with Wellington Police and Wellington City Council, and the aim was to arm bar staff with the necessary training and tools to help them to try to prevent assault, harassment or abuse. Over 50 Wellington based members signed up to send their staff to the training and participate in the launch weekend. Following
Later this year, we look forward to finding eight more young stars for 2019, and doing this all over again!
HAWKES BAY CONFERENCE VENUE Each year, Hospitality New Zealand hosts the nation’s premier hospitality awards ceremony. In September 2018, we held our annual awards and conference in Queenstown with the theme Innovation, Create, Collaborate, and celebrated a sell-out conference, as well as a record high in our awards applications, with over 200 submissions vying for top place across 16 categories in our Awards for Excellence. On the back of last year’s success, we are looking forward to another record-breaking three days, with ground-breaking international speakers at our 2019 annual awards and conference in Hawkes Bay from 15-17 October. The theme this year will be Expanding Horizons. The conference will be held at the Napier Convention Centre, and registration for tickets will open in April. Make sure you save the date! Our commitment for 2019 will be to continue to bring new and added value to our members, and to advocate on their behalf. Hospitality New Zealand will also continue to collaborate with central and local government on important projects such as Don’t Guess the Yes, with the aim of adding value to the whole community across New Zealand.
the success of the campaign in Wellington, during 2019, we intend to roll the campaign out among our branches nationwide. Plans to do so are already afoot, and at the time of writing, our Taranaki branch will be the next to continue this great work. For the last six years, Hospitality New Zealand has teamed up with our partner SKY to provide a scholarship worth $3,000 to eight promising young stars. The scholars must currently be working in the hospitality industry in New Zealand, and show that they have got what it takes to progress their career in the industry. We reward those scholars with the opportunity to train, and support them financially to undertake the New Zealand Diploma in Hospitality Operational Management Level 5. In December 2018, we announced the eight winners
for 2018, and look forward to welcoming them to our Future Leaders Day towards the end of 2019.
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John McKay, Chief Executive Officer, AsureQuality
2019 – The Food Act 2014 & its implications THERE ARE exciting times ahead for those in the New Zealand hospitality sector. There’s an increasing number of international tourists visiting our shores and we’re attracting first class entertainment, with many major events scheduled for 2019. With the positive influence that these things will bring to the industry, it’s important that businesses are ready to put their best foot forward and take advantage of the opportunities ahead. There have been big changes in legislation for the industry, driven by The Food Act 2014, as it has progressively rolled out around the country. By March 2019, all businesses should have registered to either a Food Control Plan or a National Programme. While some have fully transitioned and are running smoothly, there are still over 17,000* businesses in our main cities alone who are yet to register. This legislation has required quite a shift, which has been challenging not only for businesses involved, but also for the verifiers. Moving from an inspection based verification system to one based on food safety culture and process has seen our team of Food Act verifiers challenge themselves as they’ve worked through the changes in compliance. They have then stepped up to support our customers as they transition their businesses into the new system. Despite the challenges, these changes are definitely positive for the industry as a whole. Food safety is important to everyone – if this basic requirement is compromised, it can have massive implications. It matters because we all need to be able to eat safe, quality food - whether we’re at a quick service restaurant or a high-end dining establishment. The food industry and its regulatory requirements are fast-changing and for businesses to be
successful, it’s critical they understand their obligations around this. AsureQuality has a large team with expertise covering all aspects of food assurance, including a team who specialise in Food Act verifications. We have been working with many of NZ’s larger hospitality businesses providing evaluation and verification services and have seen some positive changes happening as staff are becoming more aware. As a result of the changing regulations, the team at AsureQuality Academy are seeing a higher demand for placements in food safety related training courses. Businesses are becoming more aware of their new responsibilities. We are noticing that customers are now more proactive in their approach to food safety, and this is a great thing. Business owners are ensuring that their staff have a better understanding of what is required and the skills to make it happen. Developing a “food safety culture” in any food-related business is key. This means that every staff member has a part to play in ensuring that all food is prepared in a clean safe environment, and is safe to eat. We are always working towards constant improvement and looking for areas where we can add value to our customers’ business. Having such a depth of experience and expertise certainly helps us here. But we’re also evolving to keep up with the ever-changing landscape in food assurance and keeping ahead of the game. We strive to ensure we can support our customers to succeed –it’s a great business to be in. We’re looking forward to playing a key role as New Zealand’s hospitality industry steps up to the new era of food safety. All whilst continuing to deliver outstanding dining experiences and thriving in 2019 and beyond. *Based on indicative figures from MPI’s website in December 2018
BIO: John McKay John has a strong background in the food industry. He spent 17 years offshore in global branding for Fonterra, before returning home to New Zealand and heading up Hansells Food Group. Since June 2014, John has been leading a diverse business of AsureQuality - a premiere food assurance organisation with a heritage of over 100 years.
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The threat to profitability – hospitality’s biggest hurdle
ALMOST 30 years after the Sale of Liquor Act made it easier for licensed premises to set up shop, new venues continue to spring up almost daily. Almost every new commercial building seems to have space for a licensed venue and Kiwi entrepreneurs are lining up to fill them with cafes, restaurants and bars. Yet, the reality is that the average life of a hospitality venue is just three years. While it might be an easy industry to get into, it’s certainly not an easy one to be successful in – a fact to which the more than 2200 hospitality businesses that closed last year can attest. While there are more options than ever for Kiwis to spend their hospitality dollar, overall consumer spending has dropped significantly in the past 12 months (based on figures from Statistics NZ). Aside from increased competition, hospitality venues also have to cope with costs related to tighter health and safety regulations, employment and licensing requirements, as well as the day-to day expense of running a business. The increasing threat to the profitability of hospitality venues is one of the biggest issues our industry is facing. Yet aside from lease fees, insurances and legal costs around licensing, for example, most costs associated with your venue are controllable. By monitoring and measuring every cost associated with your business you can see which areas can be tightened up, allowing you to boost your bottom line.
Controlling wage costs Staff wages are one of the most significant costs for any hospitality venue. In general, a successful hospitality business will try to keep staff costs between 27 and 30 percent of its overall turnover. If it’s higher than that, you’ve likely got staff sitting on their hands. Any lower and your staff will be over-worked, which always results in poor service and unhappy customers. Ensuring you have the right number of staff rostered on at all times is essential for keeping wage costs at a minimum. This can be trial and error to begin with, especially for new ventures, so it pays to talk to a trusted advisor about finding the perfect balance. Of course, getting this right is more than just a numbers game. Make sure your staff are well-trained, experienced and have high expectations of themselves. Employees that make minimal mistakes are worth their weight in gold.
Dare to be different When developing menus, think about what your competition is offering and do something different. Wine, for example, has a lower Pour Cost than seen in the liquor or draught beer categories, so it’s important to choose varieties that provide a good margin. It is sensible where possible to find wines that are not readily available on supermarket or bottle store shelves. Ensuring your glassware has pour marks – overpouring continues to be one of the biggest issues in beverage. With food when plates are returned to the kitchen with food left you know that you are serving too much but with beverage you don’t know until you discover your losing money. Promotions – such as happy hours, two-for-one meals and special events – are a great way to get people through the door. Make sure that the products you are pushing are giving you a good return. If you’re simply breaking even or using them as a loss leader, it’s time to rethink your promotional strategy.
BY MONITORING AND MEASURING EVERY COST ASSOCIATED WITH YOUR BUSINESS YOU CAN SEE WHICH AREAS CAN BE TIGHTENED UP, ALLOWING YOU TO BOOST YOUR BOTTOM LINE.”
Food for thought Over the past decade, food has morphed from something that venues legally needed to offer to something that drives customers through your door. It’s crucial to ensure that what you put on the plate is not only delicious but provides you the best possible return on investment. Has the produce been sourced in season? Have you designed the menu to meet your gross profit budget? Are your kitchen staff ensuring minimal waste and has waste been factored into the overall cost of the dish? Do you have good relationships with key suppliers and are they giving you the best deal possible? If you’ve answered no to any of these, your margin is being eroded.
Peter Nelson, Sculpture Hospitality Managing Director New Zealand, Australia and Pacific Islands
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TIM PANKHURST, CEO SEALORD
Investment, environment & innovation Tim Pankhurst, Chief Executive of Sealord
INNOVATION-LED INVESTMENT, an increased and concerted focus on the environment and a continuing sustainability drive saw the New Zealand seafood industry end another year on a confident and optimistic note. The investment by seafood giant Sealord in the most advanced and biggest-by-tonnage vessel in the New Zealand fishing fleet was a significant sign of that confidence. The Tokatu was a $70 million investment in a multi-species vessel that is equipped with state-of-the art technology and a sure sign that Sealord had every confidence in the industry’s continued expansion. And export figures are reflecting that expansion. Seafood exports are predicted to increase 6.4 percent annually over the next two years to $2 billion in 2020 with demand from key markets continuing to rise, keeping prices up. While sustainability measures will keep the volume of wild capture fisheries fairly stable innovation is adding value – and the expected growth in aquaculture will result in higher export volumes in the coming years. Rock lobster, hoki and mussels continue to be the top export earners.
GOLD STANDARD ECO LABEL Sustainability remains a core driver in the industry and, while overseas buyers of New Zealand seafood know our fisheries management is world-leading there is still work to do to convince the domestic market, which Seafood New Zealand has been addressing with its ‘Promise’ television campaign. Marine Stewardship Council (MSC) accreditation, the gold standard ecolabel has now been achieved for 74 percent of New Zealand’s deep water harvest, which puts New Zealand in the top four percent of
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the world for providing the highest international standard of sustainable seafood. The environment goes hand-in-hand with sustainability to satisfy the industry’s determination to live up to its social contract with the public. To that end, a number of initiatives are underway to address the global plastics problem. The New Zealand seafood industry recognises that it, like all of us, are a source of plastic pollution in the marine environment and wants to be part of the solution. Already, regulations in New Zealand make it unlawful for vessels to discharge plastics into the ocean anywhere and at any time and, should accidental loss occur, it must be reported. In addition, Sanford, the largest New Zealand fishing company and aquaculture business by both revenue and quota holding, has a range of initiatives focused on marine plastic pollution reduction.
PELOROUS BAY PILOT PROJECT A pilot project underway in Pelorus Bay Marlborough aims to produce New Zealand’s smartest and greenest mussel farm. The farm is replacing plastic lashings on mussel ropes with plantbased eco-ties which break down naturally and is also collecting and recycling around 4,500 plastic floats a year. Sanford also intend to achieve 100 percent replacement of polystyrene boxes used for fresh seafood with cardboard by the end of 2018. Iwi-owned commercial fishing company Moana has partnered
THE ENVIRONMENT GOES HANDIN-HAND WITH SUSTAINABILITY TO SATISFY THE INDUSTRY’S DETERMINATION TO LIVE UP TO ITS SOCIAL CONTRACT WITH THE PUBLIC.” with the World Wildlife Foundation (WWF) to identify areas for improvement and is also reducing single-use plastic packaging. Sealord has introduced a pouch recycling programme, where consumers can choose the recycling option for tuna pockets. These can be free-posted to TerraCycle where they are recycled into park benches, watering cans and waste bins. The New Zealand seafood industry takes its environmental credentials seriously and believes this should go hand in hand with its economic credentials as a major contributor to New Zealand GDP and one of the country’s largest employers. There are challenges, as always, but the industry remains in good heart, in good financial health and confident that it is doing all it can to lessen its impact on the environment.
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CHRIS ROBERTS, CEO, TIA
Celebrating tourism milestones & focusing on achieving more NEW ZEALAND’S tourism industry reached new heights in 2018 – it is now offically worth $39.1 billion a year. This is $12 billion more than the industry was worth five short years ago, in 2013. This tremendous and rapid growth has meant tourism is making an increasingly important contribution to our country’s social and economic wellbeing. The Tourism Satellite Account figures released in December showed that tourism directly employs 216,000 people in New Zealand, with a further 149,000 indirectly employed providing products and services consumed by visitors. That means 13.5% of our total workforce is earning a living from tourism – it’s fantastic to know that tourism is sustaining communities and helping families through creating employment opportunities on this scale.
MANAGING GROWTH
THE TOURISM STORY PROJECT
TIA IS PLEASED TO SEE THE PROVINCIAL GROWTH FUND BEING USED TO ENHANCE AND REGENERATE COMMUNITIES AND SUPPORT NEW TOURISM VENTURES.”
The growth in the contribution of tourism is something to be celebrated, and means we are well ahead of target to achieve the industry goal set in 2014 of an industry worth $41 billion by 2025. Here and now in 2019, the attention of industry leaders is firmly focused on managing this growth, sharing the benefits with our communities and ensuring the industry remains forward-thinking and sustainable.
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At TIA, we are revising our industry’s growth framework. Tourism 2025 & Beyond will be released shortly. It will guide future development and acknowledges major changes in the industry. The Māori values of kaitiakitanga, manaakitanga and whanaungatanga are being firmly woven into Tourism 2025 & Beyond, as well as the principles of the successful Tourism Sustainability Commitment, which we launched in 2017. The number of business sign-ups to the Tourism Sustainability Commitment has surpassed 700, a encouraging response which shows a shared industry dedication to economic, visitor, community and environmental sustainability. We, along with six other private and public organisations, have joined forces to conceive and develop Tiaki – Care for New Zealand, an initiative that actively encourages international and domestic travellers to act as guardians of Aotearoa. Tiaki means ‘to care and protect’ in te reo Māori, and implores travellers to pledge to care for land, sea and nature, tread lightly and leave no trace; travel safely, showing care and consideration for all; and respect culture, travelling with an open heart and mind.
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At TIA we are very aware that achieving sustainable tourism means acknowledging and advocating for the communities that tourism operates in. We want to ensure that the wider New Zealand public has a clear understanding of the benefits that tourism brings to our communities, so we’re working with other tourism organisations on a Story initiative to better inform the public, local government and nontourism businesses about the benefits of tourism. The Tourism Story project has included a partnership with Stuff, made possible through the Tourism Industry New Zealand Trust, to showcase stories of tourism operators supporting their respective communities and environment. We continue to promote these authentic stories through regional media and our own channels. We need our operators telling their stories to their communities and we intend to help where we can.
REGENERATING COMMUNITIES And when there’s growth, there’s a need to manage it. The rapid pace of the growth in our industry has exposed decades of under-investment in infrastructure by central and local government. The pressure on regional infrastructure
in some areas due to increasing tourism numbers is a major risk to tourism’s social licence to operate. TIA is pleased to see the Provincial Growth Fund being used to enhance and regenerate communities and support new tourism ventures. It’s one way of the Government returning some of the $1.7 billion a year in GST it now collects from international visitors. Many of those visitors (Australians being a notable exception) will also be asked to contribute via a new $35 per person International Levy from later in 2019. We are working hard to ensure the money raised by the levy is spent effectively by the Government, addressing community concerns and enhancing our visitors’ experience of our country. We share similiar goals - the Government’s new draft Tourism Strategy is closely aligned with our industry’s Tourism 2025 framework. TIA will always be a strong advocate for the industry and in 2019 we are looking as busy as ever. Our success as a small destination at the bottom of the world will only continue if local and central government and industry organisations such as ourselves are aligned and working together to the benefit of everyone in New Chris Roberts, Chief Executive Zealand, including our visitors. Tourism Industry Aotearoa
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NAOMI FERGUSON, IRD COMMISSIONER
Simplifying your tax obligations YOU WORK in an extremely busy industry and I can understand when employers in hospitality tell us about the difficulty they face balancing their tax obligations with the tasks they’re more passionate about such as providing a great service to their customers. Everyone at Inland Revenue wants to provide a great service too. That means helping you get to a place where your tax obligations seem simpler and more straightforward and you cut down the time you spend meeting them. If we can free up more time for you to serve your clients and develop your business, then we have succeeded. Paying tax will always be an obligation and a responsibility but it doesn’t always need to be a chore. The new requirement from April to file all your employment information to Inland Revenue every payday is an example of this. On the face of it, payday filing may seem like a difficult compliance task to overcome, especially when you are used to submitting this material to us on a monthly basis. But rather than lump you with this new task and walk away, we’ve taken this opportunity to work with customers to better integrate the tax system with their payroll processes.
LOWER COST SOFTWARE OPTIONS The best way to do this is with software. We are working closely with the payroll software
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providers to allow them to connect directly to our systems. Many of them are creating an integrated product where your payday filing obligations can be completed in just a few extra clicks at the end of the payroll process. Whether you want to use software is completely your decision and I imagine there will be some of you wary of making the technology investment. However, there are a range of lower cost options out there tailored to meet the needs of employers with a handful of staff. Many employers are choosing to use the online entry method we’ve designed in myIR, which pre-populates employee information based on your last visit to save you time. One of the key reasons behind our whole transformation programme is to reduce compliance costs for all taxpayers. Once payday filing is up and running, we’ll be able to simplify income tax for all individual taxpayers, including for you and your employees. The employment information you provide will also help your staff who receive Working for Families to be paid the correct entitlement based on their current income information. Payday filing is a key element in helping us to implement the biggest tax changes for individuals in a generation.
LEADERS FORUM AUTOMATIC TAX ASSESSMENTS Subject to parliament passing all the necessary legislation, we will be able to issue automatic tax assessments later this year, which will see around 1.67 million New Zealanders get a tax refund paid straight into their bank account. We will be able to do that because of the timelier information we’ll be receiving from employers like you. It allows us to do more to make sure individuals aren’t overpaying or underpaying their taxes throughout the year rather than waiting to sort it out at the end. This will help many of the people in your industry who are working multiple jobs and may not have regular income throughout the year. If we see someone is paying too much tax for example, we will be able to contact them and suggest they use a tax code to get them back on track. Inland Revenue can help smooth out your taxes as an employer too. You might have heard about our pay-as-you go option for income tax, the Accounting Income Method or AIM, which started last year. This allows you to pay provisional tax only when your business is making a profit. There’s no waiting around for refunds either. If you pay too much tax one month, you can be refunded the next. All the calculations are made by your software. AIM is about to head into its second year of operation and the hospitality industry is one of the biggest early adopters. I can see why too. AIM works great for businesses that experience seasonal fluctuations in income and can’t afford to be paying a tax bill at a time when there’s less money going through the till. It also helps free up cashflow that would otherwise be put aside to pay the provisional tax bill. Our website is full of resources to find out more about all the changes this year. Read about what they could mean for you at www.changingforyou.ird.govt.nz/. There’s more on payday filing at www.ird.govt.nz/ payday, and if you think AIM could be for you visit www.ird.govt.nz/aim.
IF WE CAN FREE UP MORE TIME FOR YOU TO SERVE YOUR CLIENTS AND DEVELOP YOUR BUSINESS, THEN WE HAVE SUCCEEDED.”
Naomi Ferguson, Commissioner of the Inland Revenue Department
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An exciting year ahead NEW ZEALAND wine is celebrating its 23rd consecutive year of export growth, as the industry continues its international success. The new year has kicked off with a bang as Sauvignon 2019 returned for the second time in New Zealand. The world’s leading wine producers, experts and key influencers all shone a spotlight on this diverse, expressive and sought-after variety. The event ran over three days from 28 - 30 January 2019 in Marlborough and explored the complexity of Sauvignon Blanc, emerging styles, vineyard practices, Philip Gregan, CEO, NZ Wine winemaking influences and its future. Throughout the summer months we also look forward to a boom in wine tourism. Of all international holiday visitors, 27% visit a NZ winery, and in 2017 we had 712,000 visitors to our wine regions. The international wine tourist is spending more, staying longer and visiting more regions than the average visitor. There are 279 wineries offering more than 400 wine tourism experiences in New Zealand, with services available ranging from cellar doors with tastings, wine tasting experiences with winemakers, vineyard tours, to restaurants and luxury accommodation. For many of us, Brexit and the uncertainty around what it could mean continues to be an issue. The risk of a “no deal” Brexit is increasing. Whether or not a deal is struck, the UK is New Zealand wine’s largest single market by volume and we are encouraging our members to ensure, at a minimum, that they talk with their UK distributors now to understand their perception of the risks. And finally, in 2018 the world’s love affair with New Zealand wine grew as wine lovers continued to explore our diverse range of wine varieties and styles. It will be interesting to see if Rosé continues to be such a phenomenal success story. Consumers are showing a great fondness for the style, prompting winemakers to produce greater volumes, as they are with Pinot Gris. We don’t see this momentum slowing any time soon! Watch this space as 2019 is shaping up to be another exciting year. 14
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Caro Jensen and Emily Camblin, Founders of Sip NZ / sipnzwine.com
5 wine trends to look out for Conscious Consumers
CONSUMERS ARE increasingly interested in where their products are coming from and how they’re made. Wine is no different and with growing consumer interest organic, biodynamic and vegan friendly wines are “naturally” popular choices.
Bubbles Blossom Sparkling wines, especially Prosecco and Rosecco, will continue to grow in popularity here in New Zealand, turning the drink that has been historically reserved for celebrations into an everyday sip. Launches of small format bottles such as Moët Mini fuel that trend and offer a suitable new format to enjoy bubbles at different occasions.
Rosé is here to stay Once labelled a by-product, Rosé has come a long way with a huge selection of styles available in New Zealand to suit every taste and budget. Kiwis will continue to drink pink over the next year (especially on Rosé Day on 5 February!) and we’ll see more instagrammable wine-based cocktails and new packaging formats as Rosé unleashes its full potential as a lifestyle drink.
The rise of the wine-fluencer Peer to peer and Key-Opinion-Leader (KOL) reviews are becoming as important as wine critics’ thoughts on a product, especially for younger consumers and especially in emerging wine markets. New Zealand’s wine influencer scene is in its infancy, but we predict it is going to mature over the next year(s).
New concepts pop-up Events such as Pinot Palooza and the Urban Wine Walk are shaking up the wine event scene and are offering interesting new ways to taste wines and meet the maker. Exciting pop-up concepts will continue to emerge in 2019 and we are ready for it. Bye trestle tables and laminated tasting notes. You won’t be missed!
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Understanding consumers’ tastes and values
THE WINE industry continues to evolve and change, which means we must do the same or risk losing our consumers. There is an insatiable demand for change within our consumer base across the globe—don’t get me wrong, they still want history, heritage and authenticity within the wine sector. However, they are also looking for innovation and unique experiences that engage them beyond today’s news feed! This means that producers must not only deliver on the values that drive their business but also look outwards to our customers and consumers to understand their tastes and values. A vital part of staying connected with our stakeholders is leveraging digital technology and social media. Giesen is investing in digital capital, including the 2018 launch of our Giesen Group app enabling consumers and distributors to experience our vineyards through cutting-edge drone video footage and detailed wine information across our brands and tiers. We’ll continue to improve and update this resource over the next 12 months, guided primarily by user feedback. Our digital evolution extends to meeting millennials on their own ground. This consumer group is an increasingly important market segment meaning we need to develop relationships with them today, to ensure we are part of their lifestyles tomorrow. Part of this connection is developing a social media-based dialogue with consumers about our beverages and practices. For instance, we are seeing increased demand for organic wines and sustainable packaging, so we are sharing our story about growing, making and selling organic wines since 2009 in a way that engages an increasingly environmentally aware society. Our prized 100% organic Clayvin Vineyard will soon celebrate 35 years, an opportunity to connect with millennials and wine lovers with meaningful short-form storytelling and authentic imagery that invites consumers to be part of Giesen’s evolving heritage. Looking forward we predict an emphasis on shared experiences over material accumulation, an intense curiosity to discover unique products and a desire to integrate sensorial indulgence with health and wellbeing. For Giesen, anticipating these value shifts means offering occasion-based packaging like our eye-catching limited release Christmas sleeves, developing ‘discovery wines’ such as the unique Gemstone Riesling made with the use of granite tanks, offering lighter-alcohol drinks like Giesen Pure Light and new initiatives in health and wellbeing will be a focus. The bottom line is that 2019’s consumers expect that quality is a given, so they will buy based on how a beverage’s look and feel resonates with them—and if it delivers on quality they will ensure their social circles know about it!
WE ARE SEEING INCREASED DEMAND FOR ORGANIC WINES AND SUSTAINABLE PACKAGING.”
Kyle Skene, General Manager, Giesen Group
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WE’RE CURRENTLY EMBARKING ON A MAJOR, ONCE IN A GENERATION, IT TRANSFORMATION.”
Rory Glass, Lion Managing Director
Focus on transformation & sustainability TECHNOLOGY IS continuing to shake up the drinks industry, and it’s only set to continue in the year ahead. Choice is everywhere and technology is giving consumers the ability to review, buy and book restaurants and brands online, and get food and beverages delivered straight to their door. Creating novel brand experiences that facilitate discovery and bring people together face to face will be really important for brands and venues in the year ahead. Our Little Creatures Brewery, opening in Hobsonville Point in February, will be a great example of this. Acting as a real community hub, it will be a place for family and friends to congregate – complete with a giant dining hall, a variety of food and beverage providers, giant kids’ fort and a live microbrewery. For us, technology is also an opportunity behind the scenes and we’re currently embarking on a major, once in a generation, IT transformation that will equip Lion for the future of the digital world and allow us to provide a market leading, agile and responsive service for our customers. We’re also expecting to see the wellness trend go mainstream with consumers increasingly seeking out products and 16
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experiences that are transparent and support a balanced lifestyle. This is an important area of growth for Lion and in the year ahead we’ll be building adjacencies, with the growth of our Drinks Collective non-alcoholic portfolio, and continuing our innovation in the lower alcohol space to bring greater choice and facilitate evolving consumer needs. We’ll also be focused on growing our positive impact through a number of sustainability initiatives across the year. We know that Kiwis are gaining a better understanding of their food and drink and as a result are evaluating their purchasing decisions with more scrutiny. They now want to know not only what’s in their product but how, where, when and who has produced it and what ethical and sustainable practices underpin it. Sustainability is crucial to the future of all businesses and we see it as great opportunity for us to drive innovation and continue to improve our processes. We’re doing some really exciting work with our brands in the coming year that will really help put a spotlight on our sustainability agenda and reinforce our commitment to supporting the community, treading lightly and growing our positive impact.
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Andy Roberts, Operations Director, Joylab.
OVER THE past 12 months, our industry has faced continued challenges on a regulatory front with minimum wage increases, an incredibly tight labour market and a global economy that seems less sure of itself than it did this time last year. What this tells us at Joylab more than ever is that we can’t keep doing what we did yesterday, because that won’t work so well tomorrow. Another discussion that is happening is how much of these increasing costs can be fairly passed onto consumers. The market is changing – the only unique selling point for a pub is that it brings together a bunch of people with an opportunity to socialise. More than ever it’s critical to stay in-touch with trends happening in the marketplace, and for us to find ways both incremental and innovative to stay relevant.
Consolidation: Economies of scale is nothing new. The ability to share some overheads across multiple establishments seems to be occurring at a greater rate than in the past. In particular, the major centres are experiencing the growth of hospitality groups and investment by non-traditional players looking to extend their reach or potentially grow their business with complimentary acquisitions. How this plays out in the next period will be fascinating.
Technology: It could be said that as an industry, hospitality has not always been a fast adopter of technology; it’s everywhere, but it feels like the industry approach has been small steps only. Of course, what people still expect from hospitality is hospitality, so the
Innovate to stay relevant intersection of technology and real interaction with people will be a fine tightrope to walk in our industry. The trick will be identifying and leveraging technology applications that can add value to the consumer experience.
Data:
IT’S CRITICAL TO STAY IN-TOUCH WITH TRENDS HAPPENING IN THE MARKETPLACE, AND FOR US TO FIND WAYS BOTH INCREMENTAL AND INNOVATIVE TO STAY RELEVANT.”
Across most industries, the collection and use of data has become ever more frequent. Joylab has been launched to the market together with a Rewards Club that extends across our network of establishments. Whilst the ambition for the programme is to create better value for our loyal customers, the ability to collect and use data to assist in creating more focused experiences for the consumer is a big opportunity. As we gear up for 2019 one thing is very clear to us at Joylab - whilst technology or data may help us in ways we might never have imagined in the past, our lens should continue to be consumer first to make sure we are creating joy every day.
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Innovation in products & experiences IT’S AN exciting time to be working in the brewing industry and if there’s one word I can think of to sum up my predictions for 2019 it’s innovation. Innovation not just in our products, but in the experiences we offer consumers and harnessing the excitement we’ve seen injected into our category in the last couple of years. The innovation happening in craft continues to impress, with some of the products we’re seeing really pushing the envelope in terms of style and flavour. This experimental brewing will continue, but I think we’ll see a settling of the craft category this year Peter Simons, Managing as people continue to enjoy their Director of DB Breweries Pale Ales and Pilsners, while trying something new every now and then. Low and no alcohol broke through in 2018. We were fascinated by the diverse reactions to the launch of Heineken 0.0 and when the product sold out just before Christmas it became very clear that this category is here to stay. What this means for 2019 is that we’ll see more interest in the low and no category and perhaps more options available to consumers in this space. I’m encouraged
PEOPLE ARE DRINKING BEER AS PART OF AN EXPERIENCE AND APPRECIATING THE FLAVOURS AND STYLES.”
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by this because it means beer and cider is an option for more occasions, and people who might feel like a beer but don’t want the alcohol can find a drink that works. Innovation for us is also about sustainability and contributing to a better New Zealand. We’ll see the DB Export ‘Save the Entire World’ campaign culminate this year and with the premise of this campaign to involve consumers and encourage them to be part of our sustainability journey, I’m interested to see the results. In the same way that wine and food have been matched for years, in the hospitality space we’ll see more beer and food matching this year. We’ve been talking about it in the industry and I think this is increasingly trickling into mainstream. Fresh, crisp lagers with Asian food, IPAs and burgers, Porters with pudding – there’s no hard and fast rules but it means people are drinking beer as part of an experience and appreciating the flavours and styles of our product. I can only say cheers to that!
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What lies ahead for 2019? 2018 WAS an interesting year for beer in New Zealand. We continued to see changes in how people consume beer, with a greater focus on value over volume. A desire from consumers to be aware of their overall wellness, as well as the changing nature of how different age groups drink alcohol in general. According to the NZ Health Survey by the Ministry of Health, about four in five adults (78.7%) consumed alcohol in the 2017/18 year. Down from 79.3% in the 2016/17 year and overall down from 83.6% in 2006/7 (-4.9%). However, total sales value has remained relatively consistent in this time. This reinforces the desire from consumers to focus on the higher value products. For beer this will often equate to the premium and craft categories. This trend is likely to continue in 2019. Along with craft, the low and no alcohol categories have seen continued growth at around 13% per annum since 2016. With the introduction of some big players in the 0% space, this category is set to see greater interest in 2019. When it comes to Craft, the Pale Ale is still king, with half of all craft beer sales in 2018 being Pale Ales or IPA’s from supermarkets and traditional liquor retailing. In 2019 this will continue or even advance with the increase in Hazy or New England Style IPA’s available and becoming more mainstream. Some other considerations for brewers in the coming year, and to the future of the industry, are around the sustainability of the product. Recent research out of the USA highlighted most beer consumers are willing to pay a premium for ‘sustainable beer’. It showed consumers who already pay for higher-end products are more aware of their buying behaviour and how their consumption patterns affect the environment. So as consumers demand more ethically produced products, brewers should look to what inroads they can make into creating energy and water efficiencies in their production. If 2018 was anything to go by, 2019 will be a positive year for beer. Greater varietal choice, more quality low alcohol options and the continuation of innovation from a passionate bunch of people who make up this sector.
Dylan Firth, Executive Director Brewers Association of New Zealand
LOW AND NO ALCOHOL CATEGORIES HAVE SEEN CONTINUED GROWTH AT AROUND 13% PER ANNUM.” HOSPITALITY BUSINESS - LEADERS FORUM 2019
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