Dairy and small business owners are currently “lying on a bleeding edge,” said Sunny Kaushal, Chair of the Dairy and Business Owners Group. As an industry that generates $1.8 billion annually for the government in tobacco excise and GST, they just “Want a safe shake of the stick in return.”
With crime levels going through the roof, Smokefree NZ threatening to debilitate livelihoods and navigating potential new wholesale agreements, there is plenty on Kaushal’s mind.
Crime
The government announced the allocations for Crime Prevention Fund back in May, as dairy and small business owners faced crippling security issues with ram-raids, theft and abuse. Kaushal’s concerns in May were that the announcement was just that, a media release, and they have been proven true. He believes that instead of listening to what his organisation has been trying to say for the last five years, the government threw a programme together without consultation with local governments or MBIE. Many businesses have lost faith as yet another Police Minister takes over.
“We needed at least $14 million in a contestable fund. Some businesses want roller doors, others fog cannons and bollards. The fund should have been available to offset costs for the 5,000 stores. Instead, the government is chasing the tale of ram-raids, responding to events rather than allowing our people to decide was is best fit for purpose.”
What would be the ideal way forward? Give businesses up to $2,500 to spend on approved security measures, on the conditions that they are still trading at least 24 months after, and they provide receipts. Permitting bollards on the public footpath would also offer extra help.
Smokefree NZ
“It’s no secret our biggest product is tobacco.”
So it is not a question of if but when the impact of Smokefree NZ will hit business owners. Nationals ‘road to zero’ concept has been transformed into law, and it feels as though owners cannot complain since they have known about things since 2011.
Unlike other organisations, Dairy and Business Owners agree with the Smokefree Generation - it is a good thing for the kids. What Kaushal asks for his members is wholesale and reengineering of the sector.
“It’s a transition time. We need licensing proposals and low nicotine tobacco to start from January 1, 2025, instead of in a few months. This is not unrealistic. Reducing the number of outlets will become a goldmine for lawyers, with licenses like a winning Powerball ticket. A couple of years with marketing freedoms to promote vaping could be in everyone's best interests. Low nicotine tobacco is currently only produced by one American GMO company, so there is plenty of opportunities.”
Submissions for the Smokefree Amendment Bill closed on August 24, with over 2,000 entries from daisies responding to the Dairy and Business Owners Group’s call. Kaushal personally watched the first hearing and joked that it might be 2025 before all the submissions are heard - but the report is due on December third, so it might pass before Christmas.
Wholesale
With the announcement of regulated wholesale and new powers for the Grocery Commissioner, the industry will likely not see any shape or results until the first or second quarter of next year - possibly not until after the 2023 General Election. Kaushal noted that these regulations look good on paper but will still be open to challenges from the courts. He still feels that the government has missed the trick; retail is just a small proportion of wholesale. There is still the supply chain, wet and dry distribution centres and supplier agreements to consider.
There was also no mention of a ‘cost to serve,’ which parts of Europe have banned as it increases the margin paid for by wholesale suppliers. It could have been a “low-hanging fruit here.”
While there is still so much to be done, Kaushal notes his industry is giving the duopoly trouble and gives Woolworths a big thumbs up for meeting with them. They are currently meeting with a range of suppliers and wholesalers in an attempt to re-engineer the dairy and convenience sector.
The issue is scale and access, so the Dairy and Business Owners Group is here to ensure they can level with the big players to make it worth their time. Foodstuffs already have a model in place for their Four Square stores, and Kaushal has ideas on how this might run for other stores but cannot socialise them just yet.
Dairy and convenience needs an ABT or ‘anything but tobacco’ strategy. With congestion and fuel costs rising, there is an opening. Partnering with bakeries, fruit and vege or butchers to have supermarket offerings at a local level would be ideal. While prices may not be as low as supermarkets, they could be within touching distance. Having fuel and saving on time could mean shoppers using this avenue over supermarkets. But they need the buying power that 82 percent of the market share brings. Think of it as the “Uber Eastisation” of convenience.
