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WORLD-READY GRADUATES With an ever-increasing demand for skilled graduates, the hospitality sector continues to provide great career opportunities for graduates from AUT’s School of Hospitality and Tourism. Ranked among the top 75 hospitality and tourism schools in the world, our education facilities are amongst the best in the world. The opportunity to gain real-life experience during study prepares students for exciting careers in New Zealand and abroad.
Ashley Squire
Sarah Waapu-Kumar
Rebecca Bunn
Paul Cho
Bachelor of International Hospitality Management in Event Management and Marketing
Bachelor of International Hospitality Management in Tourism
Bachelor of International Hospitality Management in Event Management and Human Resource Management
Bachelor of International Hospitality Management in Human Resource Management
Events Coordinator, Hilton Auckland
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Reservations Manager, Pullman Auckland
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Club Signature Manager, SO/ Auckland
HR Administrator, Pullman Auckland
LEADERS FORUM
Contributors 04 NZ Minister for Tourism,
Hon Kelvin Davis 06 R estaurant Association
of New Zealand CEO Marisa Bidois 07 AUT Faculty Dean of
04
Culture & Society, Professor Pare Keiha 08 Tourism Industry Aotearoa
06
CEO, Chris Roberts 10 N Z Inland Revenue
Department Commissioner, Naomi Ferguson 12 Sealord CEO, Tim Pankhurst 14 Sculpture Hospitality
Managing Director, Peter Nelson 15 Hospitality New Zealand
CEO, Julie White 16 A sureQuality CEO,
John McKay
PUBLISHED BY The Intermedia Group (NZ) Ltd PO Box 109 342 Newmarket, 1149, Auckland, New Zealand MANAGING DIRECTOR Simon Grover GROUP PUBLISHER Paul Wootton ASSOCIATE PUBLISHER Craig Hawtin-Butcher craig@intermedia.com.au GRAPHIC DESIGNER Adrian Tipper atipper@intermedia.com.au PRODUCTION MANAGER Jacqui Cooper jacqui@intermedia.com.au SUBSCRIPTION ENQUIRIES subscriptions@intermedia.com.au
Valuable Insight Welcome to the 2020 edition of Hospitality Business’ Leaders Forum. Heralding a new decade of growth, entrepreneurship and the challenges associated with it for our industry, this publication brings information useful to businesses, from key decision makers in New Zealand. Our contributors cover topics such as the new tax implications which come into force in April; immigration issues that continue to challenge the industry, and highlight initiatives such as the Data Hui and Go Tourism. Support networks offered by organisations such as the Restaurant Association of New Zealand and TIA all provide vital information to help the industry gauge its growth and direction. Our contributors provide insight – not quite 2020 vision – but nevertheless invaluable! Editor
Kimberley Dixon
Kimberley Dixon kdixon@ intermedianz.co.nz 0274 505 502 HOSPITALITY BUSINESS – LEADERS FORUM 2020
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LEADERS FORUM HON KELVIN DAVIS, MINISTER OF TOURISM
2020
2019 WAS another exciting year for tourism, with many significant successes and some real challenges. From a Government perspective, we’ve done a huge amount of work, which reflects the importance of tourism to the country and the busy nature of the portfolio. I’ve also been joined by an Associate Minister, Peeni Henare, and it’s been great to have another pair of hands on board. All the work we’re doing in the tourism space is now drawn from the New Zealand-Aotearoa Government Tourism Strategy, launched in May. The Strategy aims to deliver benefits to kiwis through productive, sustainable and inclusive tourism growth. An important tool in achieving this is the International Visitor Conservation and Tourism Levy, which has collected over $36 million since its introduction in July. Investments from the IVL will ensure our visitors have a great time in New Zealand, while our environment and local communities can continue to benefit from tourism. Improving the sector’s productivity and the tourism system’s capability is a focus of our Strategy. One in seven kiwis work in tourism, the industry is growing, and will need more workers in the years to come. I’m particularly interested in how we can create opportunities for our young people. 4
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Productive & Sustainable Growth
Go With Tourism Roll Out That’s why one of the first IVL investments was a $5.2 million boost to fund the national roll-out of Auckland’s Go with Tourism initiative. Go with Tourism has been successful matching people with employers in Auckland, Northland and Queenstown, and the investment will see it roll out to other regions in weeks and months to come. As part of looking ahead, in September we completed an independent report on Tourism NZ, which confirmed that TNZ is setting the global benchmark for destination marketing. We’re in great hands as we tackle important tourism issues, like softening international growth, fierce competition and ensuring that tourism is sustainable. The report also identifies opportunities to make greater use of TNZ’s capabilities. As a first step, I have asked TNZ to deliver an insight report on international market views on carbon emissions and tourism. We’ve also continued our work investing to improve the freedom camping experience for everyone. Summer 2018/19 piloted a range of initiatives, and we have enhanced those for roll out this season, partnering with 38 local councils to support activities including education and enforcement projects, ambassador programmes, real-time management of campsites and temporary facilities. Last
LEADERS FORUM HON KELVIN DAVIS, MINISTER OF TOURISM
A BIG FOCUS FOR 2020 WILL BE ON CONTINUING TO SUPPORT COMMUNITIES AND REGIONS WITH DESTINATION MANAGEMENT AND PLANNING; BUILDING ON THE SUCCESS OF THE DATA HUI”
Right Hon Kelvin Davis, the Minister of Tourism
season saw a dramatic fall in the number of issues local councils were dealing with and, with the latest initiatives in place, I am hopeful that councils, communities and campers will have an even more enjoyable summer this year.
Data Hui We know that data and information has always been a challenge, and we are addressing this. I called a Data Hui in October, which was very successful, with agreement on a vision for a collaborative data system that generates real value. We will continue to work with the sector to move towards a system based on collective impact. We are also in the process of replacing the Commercial Accommodation Monitor. I mentioned in my last Leaders Forum column that the China- New Zealand Year of Tourism would be a big focus for 2019. I’m pleased to say that this year-long event was a success, strengthening people-topeople ties and building a strong foundation for future cooperation. A big focus for 2020 will be on continuing to support communities and regions with destination management and planning; building on the success of the Data Hui and delivering an improved accommodation survey, and working to advance coordination across the tourism system. We will also be announcing our long-term IVL Investment Plan soon. Tourism is a vital part of New Zealand’s ongoing success, supporting national and regional economies, creating jobs and allowing us to celebrate who we are. We know the success of tourism depends on our people. One thing that really heartens me as Minister is the way the sector pulls together in times of challenge and tragedy. The gestures shown at these times are a real testament to the values of the sector and industry, its manaakitanga, its whanaungatanga, its tiakitangi in action. Thank you for the wonderful job you all do in working together to create a sustainable sector that gives back more than it takes to New Zealand. HOSPITALITY BUSINESS – LEADERS FORUM 2020
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LEADERS FORUM MARISA BIDOIS, CEO, RESTAURANT ASSOCIATION OF NEW ZEALAND
Continued Growth Expected? FROM POP ups in the alleys of Christchurch to grand scale projects on the roof tops of sparkling new shopping centres in Auckland, there have never been more places to spend our dining dollar. Our Hospitality Report released in October shows that seven new restaurants open up each day. And boy are we eating out. Our sector has experienced continued growth for the last five years. A quarter of all food spending in this country is in the nation’s hospitality businesses, and this number is growing each year. Last year total hospitality sales rose by 4.2 per cent to reach $11.7bn. But as the overall spend on dining out and takeaways continues to rise, spending on groceries is in decline. Stats NZ is now reporting more than a quarter of all food-spending in New Zealand is now spent at restaurants and on ready-to-eat meals. Approximately 34 per cent is spent on groceries, down from 39 per cent recorded in 2011. With increasingly busy lifestyles, Kiwis are eating out more often and for a wider variety of occasions. Our industry will continue to grow in 2020 although after several years of solid growth we anticipate that this will be at a more subdued level.
Challenges For The Year Ahead Despite the enormous opportunities this growth holds for hospitality business owners, this year will also present challenges. Business confidence, whilst improving is still relatively low across the board and with an election looming we expect this to take another dip. Our food systems are experiencing challenge and disruption. Our world is changing at a rapid pace, and we need to keep up. Environmental considerations, changing tastes and the demand for fast, casual food are all factors affecting the way we need to do business. Layer on top of that the challenge to find skilled employees, the increasing burden of government compliance and the slow erosion of our profitability by the demand for home delivery. All of this change and yet our structure and business premise has remained the same for centuries. Stable ground to manage our future growth is vital. We need to recognise our challenges face on, adapt our business models to respond to consumer demand and look to technology to offer solutions.
Protecting Our People Protection of our people is also vital. Hospitality establishments are high pressure working environments. The saying ‘if you can’t stand the heat, get out of the kitchen’ has long been a reality where long hours combined with the time pressures of service make it more difficult for managers to deal with workplace challenges. Over the past few years, there has been much more conversation around these issues and as a result there are a dedicated group of hospitality businesses, many of whom have worked in challenging environments, committed to doing business differently. These business owners are creating a new style of more caring and calmer working environments to ensure that we have happy, productive and healthy colleagues. As an association we are committed to being part of this change, by developing tools and training materials for our industry. 6
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Marisa Bidois, Chief executive Officer
BUSINESS CONFIDENCE, WHILE IMPROVING IS STILL RELATIVELY LOW ACROSS THE BOARD AND WITH AN ELECTION LOOMING WE EXPECT THIS TO TAKE ANOTHER DIP.” Training and support for members grappling with change is a key focus for the Association. We are continuously speaking to our members about the types of training support they need and these resources are highly valued by our members. This year we have put in place training and resources to assist members in promoting good mental wellness in the workplace. With funding from the Lewisham Foundation, RANZ teamed up with St John to design a training experience to address the mental health and wellness of the hospitality industry. IN addition to this we also have a leadership programme which will be traveling across the country – so be sure to keep an eye out for this in your region. Because people are everything to our industry. Colleagues, suppliers, customers - there is a human interaction that happens throughout all parts of a hospitality business that cannot be replicated. From the busy working mother whose 10 minutes of daily ‘me time’ is spent getting her morning coffee to the families out celebrating an important occasion, these moments are significant in the lives of our customers. Our establishments are so often the heartbeat of our community. A place to find the joy in human interaction and experience. In an increasingly remote world, we must protect it.
LEADERS FORUM PROFESSOR PARE KEIHA, DEAN OF THE FACULTY OF CULTURE AND SOCIETY AT AUT
Emphasising perfection is at the heart of successful hospitality HAPPY NEW Year, and welcome to 2020. What more opportune time could there be to look at our vibrant hospitality industry with 20/20 vision, with an eye for perfection and a clarity informed by what is happening in the world around us. Emphasising perfection is at the heart of successful hospitality. Daily, chefs, restaurateurs, sommeliers and more strive to deliver it in every meal, in the way service is delivered, in the way wine is appropriately matched. And yes, in the way that important smile is expressed. Whether that food perfected was a prawn cocktail, a la 1970 (who could forget), or the edible celebration of how vegans and vegetarians have influenced what we eat and how we have come to think about food, hospitality is arguably New Zealand’s most dynamic industry. The sector and its products represent more than ‘just’ food, beverage and their delivery; commercial hospitality in Aotearoa New Zealand represents the best of who we are as a people. We are after all, at heart, hospitable people. Manaakitanga defines us. Let’s celebrate the new year by recognising clearly what is right in front us: some of the world’s best pinot noirs, salmon, lamb, truffles, abundant kaimoana, and a catalogue of talented chefs who match the world’s best. These magicians of food and products are precious taonga. As a food-rich nation we are coming of age. New Zealand’s hospitality industry is starting to provide an active culinary landscape that can have its place at the world’s top table with an innovative approach to cuisine, integrated within environmentallysound practice.
Hospitality Graduates There is much work to be done to fully realise this exciting future. Yet, I have faith that the young hospitality graduates from the Auckland University of Technology’s School of Hospitality and Tourism will join with others in the industry to lead the way. We want to make sure that our students enter the workforce not only with world-class practical skills but also with sophisticated palates and a strategic and environmentally sustainable view of their business and the world we share. Because, let’s be clear: we must all become environmentally sustainable. It is from the soils and waters of Aotearoa that our food is sourced. Our students, the restaurateurs and hospitality managers of tomorrow, are wanting to mitigate our collective carbon footprint that imported food creates in our less abundant seasons. We need to start thinking local, using all our creativity and technology to maximise our abundance, whether it be freeze drying, dehydrating, or moving into old-fashioned preserving. Our young people are demanding that we reuse, recycle and reclaim waste. At the School of Hospitality and Tourism we have a worm farm that converts food waste into plant food in an environmentally friendly way. We also grow local, with a small gourmet-centric roof-top garden in the city that allows students to work with nature and produce many
of the items used in their daily learning. This connection to the land is also valuable in another way: it creates a closer relationship with food, something that many people lack in this age of supermarket convenience shopping.
Strength Of Our Manaakitanga In looking into the future of how we think and what we do, industry would be wise to embrace te ao Māori. Māori culture, world view and the practise of manaakitanga set Aotearoa apart from other nations. That Professor Pare Keiha, Dean of the Faculty practise of showing of Culture and Society at AUT respect, generosity and care for others is our biggest drawcard for our booming tourist market. Let’s move forward on a vision for the future of Kiwi hospitality that recognises tangata whenua and our shared food and culture within our menu offerings. Whether expressed on a plate, in a glass or simply by a warm “kia ora”, diners will receive a uniquely New Zealand experience. I want to encourage each of us in hospitality to stop and think about how we can contribute in meaningful ways to the health of our society and our environment, particularly when it comes to reducing the impacts of climate change. Think, act and eat local! If we can respond with pride to the demands of the next generation, they will thank us. I believe that within 20/20 vision, looking after the land and our waters is an act of a profoundly generous people characterised by the strength of our manaakitanga, our hospitality. *Professor Pare Keiha is Dean of the Faculty of Culture and Society at AUT, which includes the university’s School of Hospitality and Tourism.
THESE MAGICIANS OF FOOD AND PRODUCTS ARE PRECIOUS TAONGA. AS A FOODRICH NATION WE ARE COMING OF AGE.”
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Moving Ahead With Cautious Optimism 2019 WAS a transitional year, with a definite slowdown after five years of stellar growth. The tragic outcome of the sudden eruption on Whakaari-White Island meant we ended 2019 on a sombre note. Coupled with continued infrastructure challenges on the West Coast, New Zealand’s tourism industry didn’t have the start to the summer season that it would have hoped for. The performance of our international markets has been mixed. Hotel occupancies held up reasonably well – but we did start to see a softening in rates, particularly in Auckland. I think most operators accepted the inevitability of the growth rate slowing and for many 2019 was a welcome opportunity to catch their breath and plan for the future. For TIA, we continued to focus on the strategic issues that will determine the success of the tourism industry in the coming years. I want to look at five of those issues.
First Up Is Our Workforce. Recruitment challenges continue and haven’t been helped by processing delays in getting temporary work visas and significant declines in working holiday arrivals from our traditional markets like the UK, Germany, France, the USA and Canada. We will always have a need for temporary workers from overseas, but we must build a stronger local workforce. TIA, working with ATEED (Auckland Tourism, Events & Economic Development) achieved a huge win this year when we secured $5.2 million over three years from 8
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the new International Visitor Levy to help promote and attract talent into the visitor economy, through the expansion of Go With Tourism. The investment the Government made in their first ever round of IVL funding was a show of trust in the value of the research and initiatives already taken by TIA and ATEED. We know the hospitality sector in particular has been struggling with workforce issues. With the financial backing now received, we can look to make a real difference in building a quality tourism workforce in New Zealand. The second key issue is achieving genuine long-term sustainability – economically, environmentally and socially.
Sustainability Tourism 2025 & Beyond – A Sustainable Growth Framework Kaupapa - Whakapakari Tapoi was unveiled by TIA at another successful TRENZ trade show back in May. The framework now has sustainability firmly at its heart, built on a foundation of the Māori values of kaitiakitanga, manaakitanga and whanaungatanga. For 2020, there will obviously be a focus for some tourism businesses on short-term growth. However, we have also seen a very strong industry commitment to long-term sustainability. By the end of 2019, membership of the Tourism Sustainability Commitment (TSC) had grown to almost 1300. This framework helps individual businesses make progress on their own sustainability journey.
LEADERS FORUM CHRIS ROBERTS, CHIEF EXECUTIVE, TOURISM INDUSTRY AOTEAROA
Chris Roberts, Chief Executive, Tourism Industry Aotearoa
WE WILL ALWAYS HAVE A NEED FOR TEMPORARY WORKERS FROM OVERSEAS BUT WE MUST BUILD A STRONGER LOCAL WORKFORCE .”
levies – or bed taxes – to fund tourism-related infrastructure at a local government level. TIA strongly pushed back on this recommendation, and actively engaged with the Commission’s staff to broaden their understanding of how the visitor economy works.
TIA took up this fight on behalf of the accommodation sector and the wider tourism industry. We are delighted the Productivity Commission has recommended Councils should use the existing tools available to them. Bed taxes would miss the majority of travellers and add costs to a small set of operators already struggling with increased business and compliance costs, at a time when tourism is slowing. The Productivity Commission report said Councils already have a wide range of funding options available to them and need to make better use of these, including user pays, rates and debt funding. There is also a role for central government funding support, which could be targeted more efficiently to ensure Councils can plan and prepare for tourism. The report also noted that tourism is the only industry that is ‘double-taxed’ by the GST system – incurring 15% GST while the imports funded from its foreign-currency earnings also incur 15% GST. This observation supports TIA’s position that central government should consider distributing funds equivalent to a portion of the GST taken from international visitors to local government. The official Stats NZ figures for 2019 show that international visitors spend $17.2 billion a year in Aotearoa, $1.8 billion of this going directly to the Government in the form of GST. As the Productivity Commission quite correctly points out (in adopting one of TIA’s key messages!), international visitors more than pay their way. We’re looking forward to working with the relevant agencies to progress the work and recommendations of the Productivity Commission.
We revised the New Zealand Tourism Awards to align with the TSC, recognising environmentally sustainable and financially successful tourism businesses that embrace kaitiakitanga, with Sudima Hotels taking home the coveted Air New Zealand Supreme Tourism Award. Sustainability was top of mind for the Government last year too, and we worked closely with MBIE (Ministry of Business, Innovation and Employment) to help structure the New Zealand-Aotearoa Government Tourism Strategy. At Tourism Summit Aotearoa, we announced five joint priority areas for immediate action by government and industry. We all want tourism growth to be productive, sustainable and inclusive and can only achieve that by steering the waka in the same direction.
Issue Number Four Is Data And Insight.
Taxes & Levies
Social Licence
Issue number three is taxes and levies. TIA’s firm position is we don’t need more taxes. We were delighted that the strength of our arguments persuaded the Productivity Commission to drop its support for local bed taxes, accepting TIA’s position that international visitors are already more than paying their way through the GST system. The Commission’s Report into Local Government Funding and Financing was tabled in Parliament in mid-December. In its draft report issued back in July, the Productivity Commission had recommended the introduction of accommodation
Finally, issue number five is social licence. In order to widen support for tourism across New Zealand
An unpleasant surprise in 2019 was the sudden demise of the CAM, or Commercial Accommodation Monitor. With its disappearance, TIA’s monthly Hotel Sector Survey is the only reliable, regularly produced data, and of course only covers part of the accommodation sector. TIA has worked alongside government officials to identify a replacement for CAM, which should be up and running in 2020. The CAM debacle also sparked the Data Hui, where government and the private sector came together to work on modern, innovative insight solutions. TIA is determined to keep the momentum created by the Hui going in 2020, to ensure the short-term loss of data will lead to some much-needed long-term gains and improvements.
communities, we’ll continue to focus on telling the Tourism Story. We’ve been proactively creating positive tourism content for traditional and social media and enabling industry members to act as advocates. We’re looking forward to hosting our first ever Discussing Tourism Communications Hui at the end of March, to motivate regional tourism organisations and operators to share more of their genuine and inspiring tourism stories with New Zealanders. Ngā mihi. HOSPITALITY BUSINESS – LEADERS FORUM 2020
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LEADERS FORUM NAOMI FERGUSON, COMMISSIONER INLAND REVENUE
Making Tax Easier & Simpler THE HOSPITALITY industry plays a significant role in the New Zealand economy and at Inland Revenue we know how important it is to support you and make it easy for you to work with us. As a significant employer, whether staff are permanent, contract, casual, temping – year-round or seasonal, the hospitality industry is already benefitting from changes we’ve made to help make tax an everyday part of business processes.
Changes ahead In April 2020, employers will see further changes as the processing of financial information is moved into our new system, along with student loans and KiwiSaver. This means that changes to the onboarding process for new employees will be more streamlined, which can only be a good thing! For example, the ‘New Employee Details’ (IR346) and the ‘KiwiSaver Enrolment’ (KS1) will be combined into the Employee Details form, which means employers will only need to provide information for new employees once. Also, the existing service to update employee details will be broken down into smaller sections, allowing employers to update specific information as required, rather than providing full information details every time. Other changes will help Inland Revenue to check income exempt from KiwiSaver and reduce the likelihood of an employee using the wrong tax code. It’s just one of the ways we’re helping you get it right from the start. We’ll also be reducing the amount of correspondence sent to employers on a daily basis, by consolidating our communications to you.
Changes in myIR Hospitality is a 24/7 industry so it’s important you can access information when it suits you, whatever time of day or night. That’s why our online service, myIR, is so useful for hospitality businesses. From April 2020, you’ll see more changes in our myIR service. Your account will be called Payroll and that landing page will be redesigned, with a summary screen showing the account balance, registration details and any recent activity. All employer accounts that hold employment activities information based on the information employers have filed, will be combined into a single Payroll account. Providing a single view of all employment activities will make things easier for employers and transactions and payments will also show up a lot sooner in the single account. Employers will be able to pay when they file in myIR. The due date for payment isn’t changing, but employers can choose to file and pay if that works better for them.
Student loan and KiwiSaver changes Hundreds of thousands of Kiwis have student loans, some of who work in the hospitality sector. If you have employees with a student 10
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loan, from April 2020 you’ll now receive a letter when an employee’s student loan is expected to be repaid within three months, based on their repayment history. The letter will advise what to do after the final deduction has been made to reduce overpayments. Employers will also see a change in how often Inland Revenue contacts them to change an employees’ KiwiSaver deductions, as well as receiving new notifications specific to KiwiSaver contribution rates and enrolments. This will ensure employers are complying with their KiwiSaver obligations.
Getting it right Inland Revenue is here to help you get things right from the start. Our website has lots of information and resources so visit www.ird.govt. nz. We can support you to make sure you’ve got your records in order and have good tax practices – good books equal good business. We know that most business owners across all sectors are doing the right thing but you should be aware that Inland Revenue does prosecute businesses who are under-reporting sales, paying underthe-table wages, and under-paying GST. Businesses work hard to build a good reputation, so protect it by meeting your tax obligations. We can help and so can tax agents.
Helping you The changes we’ve made so far, and the coming ones, are all part of simplifying the tax system and freeing up time for you to focus on what you do best – and that’s providing great products, service and experiences for New Zealanders and visitors to our fantastic country. Thank you for your continued support for the changes we are making.
IN APRIL 2020, EMPLOYERS WILL SEE FURTHER CHANGES AS THE PROCESSING OF FINANCIAL INFORMATION IS MOVED INTO OUR NEW SYSTEM, ALONG WITH STUDENT LOANS AND KIWISAVER.” Naomi Ferguson, Commissioner Inland Revenue
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Innovation and the environment shine 12
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LEADERS FORUM TIM PANKHURST, CEO SEALORD
Sealord Chief Executive Officer, Tim Pankhurst
Electronic Reporting has been rolled out to the New Zealand fishing fleet, with all vessels now reporting their entire catch via computer, not manually on paper. At the same time, all vessels will have GPS, which will show their position in New Zealand waters at any given time. Reducing fishing’s impact on the marine environment and its creatures has again been a strong focus. Seabirds have long been the focus and vessels already use tori lines to scare birds away from the hooks, set the hooks at night when seabirds are less active and use weighted hooks that sink faster than the birds can target the bait. A new innovation, being trialled right now, is a collaboration between the industry and the Department of Conservation. It is a ‘wet tag’ which is attached to fishing gear and electronically records, and reports in real-time, the sink rate and depth of the fishing gear in the water. It is hoped this information will reduce seabird interactions by maximising depth and speed of the deployment of the lines and hooks. Young skippers around the country are also being trained to be ‘seabird smart’ with workshops and visits to petrel and albatross colonies to learn about the seabird chicks in their own environment and help the scientists. They are coming back much more aware of seabirds on the water and much more engaged in keeping them safe. The Southern Seabird Solutions Trust, of which the seafood industry is a partner and great supporter, continues to work with the industry on solutions to address the disappearance of some of our endemic birds in international waters as they migrate out of our Exclusive Economic Zone (EEZ) by liaising with foreign fishing fleets – albatrosses in particular. Sea lions are a great success story this year again. Sea Lion Exclusion Devices (SLEDS), which let the sea lions escape if they enter the net in pursuit of an easy dinner, have been fitted to the whole fleet in the squid fishery and, along with the southern blue whiting trawl fishery between Stewart Island and the Snares Islands, sea lion captures are in single figures each year. The industry also encourages partnerships with environmental NGOs and is grateful for the collaboration by WWF in multiple areas. We move into 2020 with optimism again. We will continue to air our successful Promise television campaign to build trust in the industry and improve its reputation. We know we are doing great things out there. For the environment, as champions of small communities across the country, and for providing some of the most sustainable seafood on the planet. We will continue to tell our story – because it is one to be proud of.
WE MOVE INTO 2020 WITH OPTIMISM AGAIN. WE WILL CONTINUE TO AIR OUR SUCCESSFUL PROMISE TELEVISION CAMPAIGN TO BUILD TRUST IN THE INDUSTRY AND IMPROVE ITS REPUTATION.”
2019 HAS, once again, been a successful year for the New Zealand seafood industry – although you may not think so given some media headlines. While opponents of commercial fishing continued their assault on the hard-working men and women who bring premium, fresh fish to the tables of New Zealanders, the industry got on with business. It was a year that saw the industry reach $2 billion in export sales and forge new ground in innovation and expansion. Sanford’s redesigned, refurbished and reinvigorated Auckland Fish Market opened its doors in February and has done a booming trade all year with the addition of eight new restaurants and a bar, as well as a rebranded fresh fish outlet, Sanford and Sons. In the innovation space, we saw King Salmon’s premium pet food range, Ocean Blue’s use of pāua shells in 3D printing, and Sanford’s partnership with Nanofibre company, Revolution Fibres, see groundbreaking work in producing a skin care range. Sanford also led the way with the launch of nutraceutical brand Sea to Me, a Greenshell mussel extract capsule with a long list of health benefits and inflammation management properties.
Fish stock flourishing The status of New Zealand’s fish stocks again proved the Quota Management System was doing a great job in keeping New Zealand waters flourishing with fish. The Ministry for Primary Industries annual Status of our Fish Stocks report showed 95 percent of all fish landed in New Zealand came from fish stocks that had been scientifically assessed as sustainable.
HOSPITALITY BUSINESS – LEADERS FORUM 2020
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LEADERS FORUM PETER NELSON, MANAGING DIRECTOR, SCULPTURE HOSPITALITY
A WELL INFORMED TEAM THAT UNDERSTANDS THE LOGIC BEHIND REQUIREMENTS WILL FUNCTION A LOT DIFFERENTLY TO A TEAM THAT DOESN’T.”
Who Is The CEO In Your Business? ONE THING in hospitality you can be assured of, is that if you are running your business the same way as you ran it five years ago then you were either well ahead of the times, or, are likely missing some key opportunities. With the ever-changing hospitality scene, the continual growth of new venues and the fierce competition for the discretionary consumer dollar it is more important than ever to be on top of your business. With the complexity, and in many cases scale, of hospitality businesses today do you have an equivalent of a CEO of your business? I ask that question because unless you have a very small venue that you can comfortably run yourself then you need to have a one. Most owners will assume this role but do not be afraid to have someone else in it if you feel you do not have the right skills or knowledge to carry the role out. So what are the core functions of being a Hospitality CEO? No different to any other business in driving and improving bottom line profit and leading a motivated team of professionals. Like any corporate business a hospitality business operates and has responsibility in areas such as Finance, Human Resourse, Purchasing, Customer Service and Sales & Marketing. The big difference in our business, as opposed to a corporate, is that you will not have a department for each with dedicated staff. This does not mean, however, that you cannot delegate some of these areas internally or bring expertise in from the outside, a good example of this would be in the complex world of HR, and Health & Safety law, where you will use expertise from professional specialists in these particular fields. Internally you will have a management team that has responsibilities for specific areas such as a Chef, a Bar Manager and a Restaurant Manager. It is important to develop accountabilities for these key staff and implement measurements that you hold them accountable to. Remembering that as the CEO you are driving the bottom line so it is essential to have budgets in place for all areas of the business. As an example in the kitchen your chef should be given a budget for food purchases, a food costing that they need to achieve, a waste percentage that they must not exceed and keeping stock levels so that they do not exceed a certain level. Similarly, your Bar 14
HOSPITALITY BUSINESS – LEADERS FORUM 2020
Manager must achieve a certain GP minimum, have stock levels set and not exceeding so many days and keeping waste under a specified percentage. In using companies such as our own you are able to monitor and measure what you are actually achieving in these areas versus what you want to achieve, again bringing another area of expertise to make your role more efficient, and independently measuring and knowing what you are achieving.
Measurement Vital Measurement is a key factor in any business and none more so than hospitality. You need to know what you are achieving and how that compares to whatever benchmark you may set. Areas such as what is the average customer spend, how many covers you are getting each service, what wage percentage you are achieving by the week, day and even hour, how does that measure as sales per staff member, what items/products are selling are just some examples. We have seen many operators puzzled when they look at what GP they have achieved, they are puzzled as that has been the only measure that they have used but they have no idea what has driven it, thus really flying blind asto what is driving their bottom line. I have regularly talked about the importance of staff as they are the people that are the front and back end of your business. It is important to share information with them, instead of telling your management team that you want to achieve a certain GP take the time and explain to them the things that drive that and the part that they will play in achieving it. Help them to understand the importance of areas such as waste control, portion control, staffing and roster management. A well informed team that understands the logic behind requirement will function a lot differently to a team that doesn’t. It is also as important to share the results with them, let them know what has or what not has been achieved and what has driven that result, get them to impute into how the results can be even better, make them feel the important part of your business that they are. *Peter Nelson is the Managing Director of Sculpture Hospitality New Zealand, Australia & South Pacific Islands
LEADERS FORUM JULIE WHITE, CEO HOSPITALITY NEW ZEALAND
By Industry, For Industry THE HOSPITALITY industry has and continues to play an important and meaningful role in people’s lives, bringing them together, providing people with a sense of comfort from their “local” or unexpected moments of joy when discovering the newest hospitality purveyor. In equal parts exciting, challenging and unique, Hospitality is more than an industry. We offer the social glue that helps build communities. Quite often it is the industry that communities depend on. Hospitality NZ members including key industry stakeholders support the wellness of the local community through employment, training, economic growth and are at the grass roots – sponsoring the all-important “player of the day”. Looking forward into 2020 and what the new year could hold we are cautiously optimistic. Risks are present and the global economy is slowing. Having said that, it is still growing.
Reflecting on a year that was Submissions, submitted, all year long… Last year the coalition government had submissions flowing thick and fast and the workload required by Hospitality NZ to contribute to 16 inquiries and reports, was phenomenal. A lot of work was done behind the scenes, ending the year on a high with the Productivity Commission’s inquiry into Local Government Funding and Finance Final Report. It was a big win for the accommodation sector as they recommended against introducing an accommodation levy. It was pleasing that Hospitality NZ was listened to and mentioned in the report three times. One week out from Christmas, we were still working on two further submissions; Cannabis Law Reform and Dependant Contractors and will keep you posted on the progress.
WE ARE DETERMINED TO KEEP DIALOGUE BETWEEN LOCAL AND CENTRAL GOVERNMENT ON POINT, TO ACHIEVE A ‘FIT FOR PURPOSE’ INDUSTRY.”
Looking forward in 2020 By Industry, For Industry. This is our main focus for 2020. Hospitality NZ continues to work with industry key stakeholders and central and local government to deliver greater benefits and opportunities for members. We are determined to keep dialogue between local and central government on point, to achieve a ‘fit for purpose’ industry. One where collaboration achieves greater common-sense business practices, efficiencies, and a fair playing field for our members.
Immigration Sector Agreement Workforce development and labour force availability is always a top priority for Hospitality NZ and this year the focus remains on ensuring Work Visa allocations fill staffing needs, peaks and
troughs. The industry, as ever, remains committed to employing and training Kiwis but it is simply not realistic when there is 1.1% unemployment in regions like Queenstown. Hospitality NZ already has already begun discussions with Immigration NZ on an industry led sector agreement designed Julie White, Chief Executive Officer, by industry. Hospitality New Zealand In terms of training and development, we are ensuring the Hospitality sector is well represented with a strong voice within the Workforce Development Council. It’s important that as an industry we lead the skills leadership plans and vision, and have influence on our sector’s vocational education and training system, to ensure it is fit for purpose today and in the future.
Night Time Economy Cities are proactively designed and planned for daytime, but they are not planned in the same way for night-time although cities still operate 24/7. The night time economy is not solely about the hospitality sector; it also adds value to numerous other industries including tourism, retail, transport, activities, attractions, entertainment and culture. We suggest that the Government considers appointing a Minister for Night-time Economy.
Working smarter Trends and cycles are becoming shorter. What was true a few months ago, might not be next week. Consider, for example, how quickly the Chinese visitor numbers dipped, and when the youth market began to stay for shorter periods. Small business needs to roll with this swift pace of change and that’s another reason why it’s vital that the industry framework facilitated by central and local government is completely fit for our purpose, so we can all perform better across the board. Consider natural disasters; in recent times they’re coming more frequently so business continuity plans need to be in place and up to date. At Hospitality NZ we’re committed to our members being fit for purpose as well, having better conversations with our partners to ensure, for example, that the likes of their insurance cover enables them to recover more quickly. Hospitality thinks well on its feet but footwork and speed needs to pick up and technology holds the key. Capturing and using data for better performance and embracing automated intelligence and digital assistants will all be featuring in 2020. Here’s to an exciting and successful 2020 with an election towards the end of the year! It is always our privilege to support and represent this industry, in its unwavering commitment to deliver world-class, Aotearoa-inspired hospitality to our own people and global friends. HOSPITALITY BUSINESS – LEADERS FORUM 2020
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LEADERS FORUM JOHN MCKAY, CEO ASUREQUALITY
The Food Act One Year In
WHEN THE New Zealand Food Act first came food safety training course. The flexibility of in to play a year ago, many food businesses this online resource has been particularly well approached it with a sense of reluctance. For received by the hospitality industry. some, navigating food compliance felt more In addition, because each Regional than a little daunting – particularly for smaller Council is different, so too are the ways they organisations and those for whom it was new. implement the Food Act. This has had a One year on, however, and the positive flow-on effect for the many food businesses impacts on the industry as a whole are clear with operations in several areas around to see. With an increase in the number of New Zealand. Because our large dedicated businesses being audited, and a reduction in team of auditors are also spread around non-compliance across most areas*, the Act the country, we can use our customised is starting to deliver on its core promise of reporting tools to consolidate multi-site making food businesses more accountable auditing under one single registration, and keeping their customers safe. driving consistency and removing a massive That said, there have undoubtedly been headache for multi-site operators, such as challenges in practice. There is still work franchises. to be done to get on board the many food businesses not yet signed up to either a Food Using Technology To Create Control Plan or a National Programme, and Greater Efficiencies John McKay, CEO AsureQuality to continue to drive down instances of nonGoing forward, we’re focused on how compliance across all areas. technology can be used to make the auditing For the past 12 months, at AsureQuality we’ve been at the forefront process easier. Already, AsureQuality uses real-time reporting which, of these changes, partnering with our customers as they adapt to the as well as creating efficiencies by eliminating double-handling of data, new legislation. As New Zealand’s largest provider of food assurance generates a sense of momentum and ensures that owners remain services, we take our shared role as guardians of the food world in control of their business. This is incredibly important to us – as seriously. We’re committed to helping our customers ensure their soon as the auditor leaves, a business operator has their final report, high standards of food safety are consistently maintained. meaning they can take immediately action on its findings. So, what are the key learnings one year in? How can we build on the Taking this technology a step further, these reporting tools make solid foundations laid by the Food Act so far, next year and beyond? it possible to use auditing data to benchmark, uncover patterns and And how can we harness the latest innovations to create greater trends, as well as predict what is likely to happen in certain areas of efficiencies and ultimately drive better outcomes for food businesses? a business in the future. For example, businesses can identify any clusters of non-compliance among their sites, or at what times of the Troubleshooting Early Challenges year they are encountering certain issues giving them the information Working alongside food businesses has given us a unique insight needed to make necessary changes ahead of another audit. into the challenges many are facing with the new requirements, and A key driver for us is also helping to keep auditing costs down. we believe there are several areas that can be addressed directly to One way we do this is by grouping customers according to their continue to streamline the process and make it as efficient and paingeographical location and auditing groups at the same time. However, free as possible. we always have an eye on the future and are investing heavily in such One of the biggest challenges has been around education as tools as remote auditing and verification services, particularly for business owners ‘school up’ on the new approach and changes those on a National Programme working in remote locations. It’s an around the food safety auditing process. This is particularly true for exciting prospect and one where we are making significant progress. those, such as Early Childhood Education Centres and Older Aged Care Facilities, for whom the food safety requirements are new. Future Food And The Growing Working closely with an auditing partner that has a deep knowledge Importance Of Traceability of the Food Act and are experts in the field has helped take the stress So where to from here? Ultimately, conversations around food are out of the process for these businesses and enabled them to put a changing and many of these are consumer-led. There is an increasing clear plan in place to ensure they are fulfilling their requirements. demand for greater traceability and transparency, and more ambiguity Small things like scheduling audits three months in advance so that about what the future food landscape will look like due to a rise in businesses feel prepared and can proactively work towards that audit meat and dairy alternatives and the like. Consumers are actively asking date, makes a big difference. Customers tell us that this gives them a where their food comes from and how it was produced. genuine sense of engagement and understanding of the Food Act, as At AsureQuality we see this as positive. We are one year in, but in the well as an element of control over the auditing process as a whole. years to come food businesses will face greater scrutiny on whether Another challenge for many larger operators – particularly those their products are sustainable, ethical, safe. I believe that the Food Act with a high staff turnover – has been the need for training around food will help future-proof the industry - making us all more prepared for, and safety. Businesses need to be providing consistent training to new staff accountable to, those questions. AsureQuality is excited to be playing a on the Food Act, which can put pressure on costs and resources. It’s role in helping you, our customers, deliver on these new expectations. one reason that the AsureQuality Academy has introduced an online *Based on data from AsureQuality customers 16
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SUSTAINABILITY AND INNOVATION Philip Gregan CEO, NZ Winegrowers International demand for New Zealand wine shows no sign of slowing, with total export value reaching a record $1.83 billion this year, as wine lovers all over the world continued to explore our diverse range of wine varieties and styles. This year’s export results again reflect the New Zealand wine industry’s strengths, and reinforce our international reputation for high-quality, diverse and sustainable wines. In September, the New Zealand wine industry celebrated 200 years since the very first grape vines were planted into New Zealand soils, by Reverend Samuel Marsden at Kerikeri in the Bay of Islands. This was a chance of us to pause and reflect on the past, and look to the future. The New Zealand wine industry is dedicated to ensuring that we celebrate another 200 years, through a commitment to sustainability and innovation that will protect the places that make our famous wines. Over 98% of New Zealand’s vineyard producing area is now Sustainable Winegrowing New Zealand (SWNZ) certified – and this is unmatched by any voluntary scheme around the world. But it does not mean we can take it easy. Consumers demand to know where their product came from, from grape to glass. As an industry we need to not only meet the international standards for sustainability practices, but continue to exceed them. This will require a clearer purpose and sharper focus. The industry has risen to the challenge and is currently undertaking a review of the SWNZ programme, to ensure we enjoy future success in the decades to come. A warm summer contributed to a superb 2019 vintage for New Zealand’s wine regions, and although it was smaller than anticipated, the quality of the harvest was deemed as exceptional from top of the North to bottom of the South Island. However, a succession of smaller vintages has impacted growers in some regions, as they face rising production costs. Meanwhile, the Brexit saga continues. The UK is New Zealand wine’s largest market by volume, and we have encouraged our members to retain extra stock in market in case there are supply constraints, and maintain a close relationship with their importers. New Zealand winemakers are becoming increasingly innovative, thinking outside the box in terms of exploring different winemaking techniques. I wrote last year about the phenomenal success story that has been the wine style Rosé. Well, the demand has only increased, and it is now our fourth largest exported style. More and more wineries are planting grapes intentionally to make great quality Rosé, which will add further to our reputation for producing a premium product. 2
THE SHOUT NZ - LEADERS FORUM 2020
“AS AN INDUSTRY WE NEED TO NOT ONLY MEET THE INTERNATIONAL STANDARDS FOR SUSTAINABILITY PRACTICES, BUT CONTINUE TO EXCEED THEM.”
Philip Gregan, CEO, NZ Winegrowers
The Shout Leaders Forum
THE ROARING TWENTIES Dylan Firth Executive Director, Brewers Association of New Zealand With the 20s at our doorstep, the face of the brewing and beer industry could not be more different than the 20s of the last century. January 1920 in the United States saw the introduction of prohibition, with 13 years of bootlegging, mob rule and speakeasys. In New Zealand, the initial referendum saw prohibition win over continuance (the status quo). However, the 32,000 special votes from our armed forces overseas swung us back in favour of still being able to enjoy a tipple. One hundred years later, we have a culture focusing on wellness, low and no alcohol beer, craft and hyper-localisation. These principles are likely to continue into the 20s. One of the biggest growth areas last year, which is seeing continued prevalence in the beer category, has been in the low carb and low alcohol products. With consumers looking to still have that beer occasion but thinking about the impacts of their consumption. We see that there has been a surge in the popularity of 0% beers in the last two years. From October 2017 – October 2019 there was a 169% increase in the total sales of 0-1.15% alcohol beer, this will likely continue to grow. Craft has been the primary growth area for beer in New Zealand for the last decade but we have already started to see that slow, with the number of breweries in New Zealand reaching a point where there is significant local competition for
the consumer’s dollar and some breweries looking to external markets for future growth. 2020 will likely see some continued growth in this area, but more breweries focusing on maximising their local markets through regional distribution and taprooms with a hospitality offering. The ability to sell direct to consumer increases margins by removing overheads such as distribution, retailer pricing and bottling. Having a physical presence also taps into the hyper-localisation trend in food and beverage where we see consumers seeking out the ‘straight from the source’ of local brands. In the regulatory space 2020 will see a few major developments progress. The final design of the mandatory pregnancy warning labels will be decided on, consultations on the possible requirements for mandatory Nutrition Information Panels for alcoholic beverages, consultation on the ability to make claims about low carb alcohol and the likely introduction of a container deposit/return scheme will all have producers looking hard at their packaging. So, what next? New Zealand takes many beer trends from the US and while not exactly a beer the rise of the hard seltzer is something that won’t be missed by brewers here. More low and no (alcohol and carb) beers, the increase of cans in the craft beer scene, more taprooms and likely the odd surprise or two. Cheers to that.
“CRAFT HAS BEEN THE PRIMARY GROWTH AREA FOR BEER IN NEW ZEALAND FOR THE LAST DECADE BUT WE HAVE ALREADY STARTED TO SEE THAT SLOW.”
THE SHOUT NZ - LEADERS FORUM 2020
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[ FMCG Business Leaders Forum ]
SUSTAINABLE AND ETHICAL PRACTICES Rory Glass Chief Growth Officer and Managing Director, Lion NZ
“BEVERAGES ARE NOW BEING TAILORED FOR CONSUMERS SEEKING NEW EXPERIENCES – UTILISING UNIQUE COLOURS, INTERESTING FLAVOUR PROFILES AND INGREDIENTS.”
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THE SHOUT NZ - LEADERS FORUM 2020
In 2020, I’d expect to see ‘lighter’ options across categories and non-alcoholic alternatives - like coffee and health drinks - continue their momentum in line with the mainstreaming of wellness and changing social occasions. People are now having nine coffee occasions for every one beer occasion on average a week! We’ll also likely see the continued rise in premium offerings, especially in the spirits category, which this year saw an exceptional resurgence driven by gin. This is expected to carry through to dark spirits like rum and RTDs, alongside premium mixers. I’d also expect to see brands with sustainable offerings continue to grow as consumers become increasingly active on sustainability issues. Beverages are now being tailored for consumers seeking new experiences – utilising unique colours, interesting flavour profiles and ingredients. Brands are also beginning to connect themselves to meaningful causes, from charities to environmental issues, which is expected to accelerate in the year ahead with consumers more conscious and concerned about things such as climate change, waste and plastics and willing to pay more for ethical products. We’re already seeing the industry respond to this, with many outlets now eradicating plastic straws,
and BYO and compostable packaging beginning to gain real traction. Can formats are also expected to continue as a more sustainable packaging option across categories. Gen Z and Millennials are now a major consumer market and influence on our industry. Trends like wellness, at-home entertainment and technology are taking a growing hold and impacting what and how people socialise - making it harder to drive customers out of their houses and into traditional hospitality outlets. With increased competition and more diverse social occasions, we now have to offer more than we ever have, providing a unique experience, meeting functional needs and acting as a social currency that people are proud to support. While presenting challenges, there is also huge opportunity for brands and businesses that are willing to adapt. Following the implementation of a major IT transformation project this year, 2020 for Lion will be about leveraging our new technology to take customer experience to the next level delivering best in class service and real time data to support customer business growth. We’ll also have some cool new projects coming out of Lion Ventures, our disruptive growth division, and will be welcoming some new brands and innovations into our portfolio.
The Shout Leaders Forum
FLOURISHING WITH FLAVOURS AND INGENUITY Sue James Chairperson, Distilled Spirits Aotearoa Globally the enjoyment of distilled spirits has had a revitalisation. Gin is cool again, rum is exciting, and whisky is adventurous. The view of spirits has now evolved to encompass both the tasting experience and the occasion – place and presentation. A long, cold, aromatic, ice-filled gin with matched tonic, dressed with signature garnishes to refresh on a hot day; a gently peated, golden-toned whisky to savour on a cold night. Straight, mixed or cocktails - spirits are versatile, complex and interesting, and undoubtedly refreshing. New Zealand has been slow to catch up but is now joining the celebration of all aspects of distilled spirits. And importantly – we are distilling our own spirits here in New Zealand to introduce to the world. Only eight years ago, the New Zealand government identified that there was a massive untapped potential in the distilled spirits sector in New Zealand. MBIE noted that “spirits stood out” as a segment that could drive the country’s future exports, and spirits’ tourism would expand concurrently. In 2015 there were only 33 companies producing distilled spirits in New Zealand, but today this has risen to around 75 distilleries of varying scale. Approximately half these distilleries are less than four years old. The spirits industry is flourishing with distinctly New Zealand flavours and ingenuity, new products, new processes, a focus on sustainability and responsibility, and a thirst to challenge the boundaries of global thinking. Despite this, New Zealand distillers are having an uphill battle to establish themselves in a capital intensive, initially cashflow-negative industry. New Zealand is at a disadvantage compared to other countries such as Australia and USA which stimulate their industries by providing significant tax excise relief for small distilleries. New Zealanders love an opportunity to enjoy food, beverages and music together. Over the last two years, the concepts of Spirits Festivals have taken the New Zealand public by storm. Gindulgence launched the first of its Spirits Festivals in Christchurch in 2019, and Gincredible is following the same successful model. The festivals include tastings, distiller talks, cocktails, great local food and live entertainment, and of course picnic blankets in the sun. Regional Food and Drink events now include spirits alongside wine and beer, and Wellington is claiming the title of Cocktail Capital with Highball, the two day cocktail and spirits festival, and Wellington Cocktail Week.
New Zealand distilleries are already beginning to develop diversity and a uniquely New Zealand signature in spirits flavour and styles which is gaining international attention. Many New Zealand spirits have already won international awards, and in March this year the second NZ Spirits Awards will be held to compare and benchmark spirits available on the New Zealand market, from both local and international origins. In the 2019 Awards, New Zealand spirits won seven of 13 trophies and 41% of the awarded medals, competing directly against the top overseas imports in blind judgings. There are exciting times to come as we enter the world market – watch this space as New Zealand spirits line up to claim their place alongside the best New Zealand wines and beers. THE SHOUT NZ - LEADERS FORUM 2020
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WELLBEING, SELF-INDULGENCE AND SUSTAINABILITY “MY BIG PREDICTION IS THAT 2020 AND BEYOND WILL SEE THE INDUSTRY CHANGE SIGNIFICANTLY IN NEW ZEALAND, DRIVEN BY GENERATIONAL AND GLOBAL TRENDS.”
Kevin Mapson Managing Director, Pernod Ricard NZ I wouldn’t go so far as to call it a revolution, but the alcohol industry is certainly going through a significant evolution at the moment as millennials and Gen Z come of age and start to outnumber previous generations. My big prediction is that 2020 and beyond will see the industry change significantly in New Zealand, driven by generational and global trends. One of the biggest trends that is both a threat and an opportunity is the ‘better for me’ movement, where consumers look for products that combine wellbeing, self-indulgence and environmental sustainability in a single package. Overlapping with this is the desire for a new take on things, with a focus on flavour and experiences. The threat here is that younger people are drinking less alcohol than previous generations, so producers playing a volume game are at risk. The opportunity is that these consumers are less wedded to tradition, and are more open to 6
THE SHOUT NZ - LEADERS FORUM 2020
products that offer lower alcohol, blur categories and are unbound by convention. The market is ripe for innovation that is done well. A major trend we are seeing is for experiences that combine the best night out with the intimacy of home. People are investing in their homes and want to share with friends, and they want to be able to bring the ‘going out’ experience into their homes in a convenient and simple way. This is new for us and something we are exploring in detail, both in terms of packaging and formats, as well as supporting marketing activations. For New Zealand producers, legislation around product definitions limits the ability to offer some of these category blurring products that don’t align strictly with conventions and this is a potential issue. More pressing though is one-sided reporting that gives voice to the anti-alcohol lobbyists. Overall, both the industry and the majority of consumers are responsible in their approach to alcohol however, media coverage tends to focus on the negative stories, without giving balance to the huge economic benefit that the wine industry in particular offers through employment and exports. Our concern is that the noisy minority will result in further restrictions on the sale of alcohol that will have flow on economic effects. Pernod Ricard globally is half way through its three-year ‘transform and accelerate’ strategic plan, which has seen a number of new products launched in 2019, including the acquisition of Malfy Gin, the launch of Method & Madness gin, as well as new innovation in whiskey and Champagne has given us a whole range of new products that tap into trends and broaden the premium portfolio available to New Zealand consumers. We have also had some fantastic international wins for our local premium Chardonnays and we are looking to promote these wins to tap into the resurgence of that variety.
The Shout Leaders Forum
CONSCIOUS CONSUMERS ARE CHANGING THE GAME Peter Simons Managing Director, DB Breweries The year is already shaping up to be an interesting one: an election, multiple referendums, another big sporting event in the form of the summer Olympics, and of course the usual challenges and opportunities we face in the beverage sector. We’ll all be busy! An interesting pattern I’ve been noticing, that I believe will really ramp up in 2020, is how quickly we are seeing consumers move in and out of categories. Previously, we could expect people to remain relatively dedicated to a particular style of drink (and brand), only deviating on rare occasions. However, now this life cycle is much shorter, people are less loyal. Research we conducted earlier this year confirmed this trend, consumers are all about new and exciting experiences and that translates to what they drink as well. This means our focus should be on catering to occasions, not need states, which is how the beverage industry has traditionally operated. In order to meet these occasions and reach consumers at the right times and places, we all need to be taking a data driven approach. The opportunity to capture and use consumer data is becoming greater by the day, if we don’t harness it then we will be left behind and miss chances to take the product to the consumer. We can no longer wait for consumers to come to us. We’ll also see the trends from 2019 tick over into 2020, particularly the exponential growth of the lighter choices category which continues unabated. Our biggest innovation in 2019 was DB Export Gold Extra Low Carb. It outperformed products like Monteith’s Phoenix which was one of the more popular everyday craft launches across the industry. Low and no alcohol beer is a big part of the future of the category. Hand-in-hand with this wellness trend comes the pressure from consumers for companies to be more sustainable. For us in FMCG, this comes down to things like less plastic, less sugar, less emissions, and generally ‘doing the right thing’. Despite the scale of this challenge, I am not daunted by it. We need to be doing what we can to protect the future of our planet and people. If not for your own conscience, for the fact that people will increasingly vote with their wallets when it comes to choosing which drinks to purchase. At DB we’ve got big plans on this front in 2020, including a switch to biomass at our site in Timaru, and carrying on with our initiatives to change attitudes towards drink driving, which we believe remains a big issue in New Zealand. So, what are we left with for 2020? A group of consumers who want to continuously be trying new things and in the process will move in and out of different segments at a rate we haven’t seen before. At the same time, they are health conscious, big on wellness and expect companies to be making an effort to be sustainable. Like I said, we’ll all be busy.
“OUR FOCUS SHOULD BE ON CATERING TO OCCASIONS, NOT NEED STATES, WHICH IS HOW THE BEVERAGE INDUSTRY HAS TRADITIONALLY OPERATED.”
THE SHOUT NZ - LEADERS FORUM 2020
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