Global Insights – May 2022

China

China’s Covid elimination strategy continues to cause problems for Kiwi export businesses. Daily new cases remain in the thousands and across the country, many cities and provinces have enforced some version of a lockdown in an attempt to slow the spread of the virus. 

To get an idea of what it’s like on the ground and understand how consumers and customers are feeling this month we spoke to offshore Kiwi Ashwin Pillay, a Commercial Manager at RedFern Digital, a full-service Digital Marketing and E-commerce agency based in Shanghai. 

Ashwin says many businesses in Shanghai have been, and certainly are feeling major disruptions due to the hard lockdown across the board.Commodity-based categories such as Fresh, Seafood, Dairy etc are finding it particularly tough. Though China is an enormous market, Shanghai does make up a strong proportion of the overall consumer market for imported goods.                                                      

“Naturally, because Shanghai is such a core entry point for importation, the implications of lockdowns on wider disruption of transportation of products across the mainland are significant. With the zero-covid approach, there will almost certainly be future disruptions on the horizon in not just Shanghai but also other regions throughout China. This will result in a wider impact on offline retail/bricks and mortars as well as distribution. On the other hand, this will certainly bolster and drive e-commerce consumption and growth.”

Ashwin says China will most definitely rebound as was seen back when Covid first emerged in the mainland.

“Post-lock-downs we saw an evolution of consumption in terms of purchase channels, demand for particular products as well as new consumer segments entering the e-commerce space – more so a boom in elderly consumers who previously were not so ‘digital savvy’. The demand for New Zealand brands and products still remains very high in consumers’ minds, and we can only expect this to increase in a ‘post-covid’ climate where consumption and day to day life revert back to a sense of normality, as we have seen before.”

UK & Europe

Trade shows and events are back in full swing at the moment as new vintages and products are being launched in anticipation of summer. With borders open we look forward to reconnecting with New Zealand Food and Beverage producers and welcoming new businesses to the market. 

The UK Government has just published guidance on restricting promotions of products high in fat, sugar or salt by location and by volume pricing. This guidance has been developed ahead of new regulations, coming into effect on 1^st October this year. More details can be found here. These changes will impact how products are marketed and promotions are undertaken and will have an effect on some Kiwi exporters.

One such exporter is Epic Dairy – Dairy Collective, who have worked hard to plan and implement changes ahead of the new regulations. They are welcoming the opportunity to discuss their journey with fellow Kiwi F&B companies looking to understand the impact in the market. Please reach out if you would like assistance via our Kea Connect service.

The Food and Beverage industry in the UK is facing a lot of pressure at the moment with supply chain issues, sharp rises in energy, food and labour prices, the end to VAT relief and staffing troubles. To combat this we are seeing F&B businesses offer initiatives such as sponsoring visa arrangements, flights and accommodation support in order to secure great staff. This provides some incredible opportunities for those Kiwi looking to head offshore and get some international experience. 

If you’re planning a visit to the UK or Europe, make sure you take the opportunity to talk to your distributors and partners about the effect the UK FTA will have in terms of pricing and supply, and to look ahead to the European FTA completion and what that could mean. Also just a note most of the UK and Europe will be on Summer holidays at some point during July and August, so make sure you plan ahead.

Sara Fogarty, Kea UK/Europe Regional Director

North America

New Zealand’s food and beverage exporters continue their strides into this market, offering premium quality foods, wines, and non-alcoholic drinks to a discerning and eco-conscious US consumer. Since the pandemic, the US organic food business has been growing rapidly. There is an increasingly health-conscious consumer with an awareness of the environmental impact of where their food comes from. This target market demands more sustainable products and farm-to-table options and is happy to pay the higher prices organic products traditionally carry. 

A recent survey showed that around 82% of Americans buy organic foods, and most of the sales are through conventional grocery stores and markets. My local supermarket has expanded its offering from a small bespoke section to having products alongside more traditional ranges throughout the store. The original leader in organic and sustainable groceries was the now Amazon-owned Wholefoods market, where you can find many New Zealand products on offer. Other major supermarket chains like Walmart, Target, and Costco are increasing their organic offerings on their store shelves, improving consumers’ access to organic foods, which is good news for Kiwi exporters. A recent market report predicts this sector to grow from the $53 Billion posted in 2021 to over $90 Billion by 2027.

With summer fast approaching, airlines are reporting a huge increase in bookings for the summer holiday season. With Americans housebound for the past two years, the industry is seeing domestic bookings for flights at levels last seen pre-pandemic. Many airlines reduced staff levels during the pandemic and are struggling to replace staff. Our Kiwis should consider booking early if they plan to travel internally in the US because travel costs increased 10% in March from the previous month, and flights over the summer period are in great demand. 

As covid cases rise around the country again, some people are again being cautious about abandoning their masks just yet. Philadelphia has just reinstated its citywide mask mandate due to increasing Covid cases. And other US cities are on high alert with the new variant. New York has slowly lifted mandates, and our infection numbers are low. As we head into the warmer weather, we hope the high vaccination rates in the city will avoid any business or event disruptions. 

Gary Fortune, Kea North America Regional Director

New Zealand

With the Trade Recovery Strategy a high priority for New Zealand, the Prime Minister has just attended the first trade mission in over two years. Visiting Japan and Singapore, our fourth and fifth largest trading partners respectively, she was accompanied by the Minister for Trade and Export Growth Damien O’Connor. Also on the trade mission were 13 business leaders from dairy, food and beverage, technology, tourism, and renewable energy sectors. The mission focused on promoting sustainability and innovation, and will address future-proofing supply chains, as well as mark the 70th anniversary of diplomatic relations with Japan. 

This month also saw New Zealand moved into Orange in the Covid-19 Protection Framework, easing many restrictions related to indoor gatherings and the hospitality industry. Borders also reopened to fully vaccinated Australian citizens and permanent residents on 12 April, paving the way for the return of tourists in advance of the ski season. Reopening extends to fully vaccinated visitors from visa waiver countries, and visitors from other countries who already hold a valid visitor visa on 1 May.

Kiwi businesses have been quick to take advantage of newly opened borders and the removal of Managed Isolation and Quarantine [MIQ]. Kea is supporting businesses from diverse sectors through Kea Connect, making connections from within Kea’s global network in advance of upcoming international business travel.

Saya Wahrlich, Global Director, Government & Industry