Dylan Firth, Executive Director of the Brewers Association of New Zealand, shares his insights into what the industry will look like moving forward.
Let’s start with the tough stuff. Getting back to ‘normal’ business for many sectors will likely take much longer than we actually spend at the alert levels, especially in the hospitality trade. Some will even question if that sector will ever get back to ‘what it was’.
Hospitality businesses and their suppliers are among the most severely impacted by the lockdown and the measured return to trading within the controls stipulated under the various COVID-19 response levels. Why? The majority of the sector is made up of small-to-medium enterprises which, as acknowledged by the Government, are unable to sustain lengthy periods of low-to-no income.
The time that business owners will be without a sustainable income is likely to be among the longest of any sector and sustainable trading for the majority of the sector will not be achieved until Kiwis can venture out again, our borders are opened and tourism is re-established.
Infometrics data and reports from Hospitality New Zealand have stated without additional assistance they believe that up to 30% of the sector will fail in the next 12 months [1].
One third, that’s huge.
But we can’t be all doom and gloom, can we? Well right now we need to be realistic and talk about what is happening and what will be coming our way. To understand what the impacts will be, present our case where needed to Government and councils and work through a response.
Having acknowledged the storm we are in and will likely need to ride out, how does the hospitality sector and its suppliers climb out of this mess?
This is where the industry, those who buy, sell and consume all sorts of different products – not just beer – can roll their sleeves up and say, ‘Right, let’s go’.
New Zealand’s broadly defined hospitality sector is quite the behemoth. It employs almost 170,000 people [1], Contributed over $6 billion to GDP to the year ended March 2018 [2] and put over $2.5 billion into the economy through cardholder spending (alone) in the day and night time economies to the year ended March 2019 [3]. Not to mention the value of New Zealand grown and crafted produce sold to hospitality businesses and then on to consumers.
By getting producers in behind the sector and its representatives like Hospitality NZ, industry can have a cohesive voice asking for assistance from the Government. To this end we are currently supporting an approach alongside other sector representatives asking for things such extension to wage subsidies, protection for tenants, a commercial Lease Code of Conduct, working capital grants, leniency around alcohol licensing, relief in commercial rates and funds to establish training grants. These are only immediate needs and not all of them require substantial capital expenditure by Government.
It’s important to acknowledge all the work that some of the associations have been doing for members and what suppliers are doing to support the retailers and hospitality businesses. The associations such as NZ Winegrowers, Hospitality NZ and the Restaurant Association have been keeping members up to date on what they need to know for their business at an unbelievable rate. From many suppliers including Brewers Association members there’s the financial support, such as taking back kegs, crediting stock, bespoke payment plans and future marketing campaigns to support industry.
Once we can start business flowing again at Level 2 and having hopefully received some of the Government support, while it won’t be 100% of normal trade. It will allow people the begin looking to how the sector can establish future growth and also make up for the huge hole the lack of international tourism will leave for many businesses.
People will always want to eat, drink and socialise. It’s just that for the next 12-18 months there will be restrictions on how we do it and the disposable income many have. Those businesses who can pivot quickly and target the market that has the means to spend on food and beverage, offer tailored services for a physical distancing environment and innovate with new technologies will likely do alright during this time.
They will then be set for things once the world begins to resemble what it once did, where we could all just pop into our local for a quiet pint, a bite to eat and a chat with friends in a relaxing environment. Because really, it’s that simple pleasure people are after.
[1] Infometrics. [2] Statistics NZ, February employment data. [3] Statistics NZ, National Accounts (Income and Expenditure): GDP breakdown, Year Ended March 2019. [4] Marketview card data
Did you know?
There are 6 ways you can catch up with The Shout NZ?
Our monthly print magazine. Subscribe here.
Online, updated daily with its own completely unique content and breaking news.
Our fortnightly newsletter – free to your inbox! Subscribe here.
Our digital magazines – the April issues are online now, here and here.
We are also on Facebook and Instagram!
