Quality food and beverage products based on the green and clean mantra is seemingly the way forward for New Zealand exports. But all is not rosy in the sector because of the disruption caused by the Covid-19 virus.
The 20 food and beverage respondents in the 2020 Mood of the Boardroom survey painted a contrasting picture on the state of their businesses, ranging from no impact by Covid to expecting a decline in production of 20-50 per cent in the next six months and later.
Erica Crawford, founder of Marlborough-based Loveblock Vintners, is worried about the continuous intermittent lockups to "eliminate" Covid. "Kindness does not heal the economy," she said.
Kevin Mapson, managing director of Pernod Ricard NZ, said "The Australian Government has a plan for business. In New Zealand we lack government engagement, let alone a plan."
Among respondents, five leading food companies reported business as usual — and even growth — in the past three months and one to six months from now; while three beverage firms including two wine exporters followed the same line.
A beverage multi-national had less than 10 per cent decline in production during the past three months, and from now on expects no impact and/or growth. Two food manufacturers, a food services business and a fishing company are also on the same recovery path.
One wine company had 50-80 per cent decline in production in the past three months and it expects this situation to come back to a 20-50 per cent decline over the next six months.
Two other food services companies and a fast food operator had 20-50 per cent falls in production in the last three months and are forecasting less than 10 per cent declines over the next six months. A food certifier also expects the same decrease in the next six months.
Nine respondents said they reduced their staff during the Covid crisis, ranging from 5-15 per cent. But only three would decrease staff over the next six months, while three others were unsure, and one reported it would increase staffing numbers.
Eleven food and beverage companies intend to spend more on IT in the next year and eight will be authorising more capital expenditure. Another eight companies said their capital expenditure will be less.
Nine businesses expect to increase their revenue and profit over the next year, but another nine estimated their revenue and profit will fall. Two companies — iconic names in New Zealand business — predicted their revenue would stay the same.
Twelve of the respondents did not apply for the wage subsidy, while six collected the first round of the subsidy and two went the full distance, also collecting the second round.
Pip Greenwood, an independent director with The a2 Milk Company, said favourable international trade relations are going to be extremely important for the recovery of New Zealand's economy in a Covid and post-Covid world.
"Our exporters must be able to continue to trade with our international markets and the Government must be able to assist in any regulatory hurdles such as visits by overseas regulators. Escalating tensions between US and China, and Australia and China are also of concern for us as a small export-reliant nation."
A food company executive said government spending was heading towards creating a welfare economy. Too much was being spent on benefits and not enough to create skills and to encourage people to seek employment.
John Freeman, managing director of Delegat Group, summed up priorities of food and beverage leaders for the next six months: Maintain revenues and profit; maintain full employment where possible; seek the growth opportunity within the noise.
"We feel it is obvious there will be an impact on global productivity, consumption and economy, but the resilience and recovery timing and speed is unknown and not easily mapped to earlier economic events."
On the question "Are you more or less optimistic than you were one year ago?" half of the 20 respondents said "slightly less" about the general business situation in their industry. Seven were "much less" optimistic, two were "slightly more" and one wine company said its optimism is the same as last year.
Fourteen companies felt much less optimistic about the New Zealand economy, six were slightly less, but the respondents were adamant about the global economy — 19 said they were much less optimistic, with another wine company being more confident with a "slightly less" response.
Volker Kuntzsch, former chief executive of fishing company Sanford
As producers of a healthy and sought-after protein, our industry should look into the future positively. This does, however, necessitate an enabling, collaborative environment. The challenge of bringing foreign workers in to perform jobs at sea that we cannot fill with domestic workers is an example where we quickly need to find pragmatic solutions. Internationally, issues between our major trading partners, trade and freight implications and repercussions of Covid-19 will create more uncertainty.