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SOLID FOUNDATIONS Minister Damien O’Connor shares a vision for a better world.

The products that come off the land and from the sea are the bedrock of our way of life. The export dollars they bring in each year build our schools, roads and hospitals. These products fly our flag in all corners of the world and are prized by discerning customers everywhere. It’s a testament to the rural communities at the heart of all this activity that we’re seeing continued, sustained growth across New Zealand’s food and fibre sectors. We can be justifiably proud, but challenges remain. Expectations, at home and abroad, are changing and we need to be innovative and agile to keep pace. In April 2018, I brought together a group of visionary agribusiness leaders to help the food and fibre sectors to capture more value from its work. Comprising 15 people from across the sector, the Primary Sector Council was formed to give independent strategic advice to the Government on issues confronting the sector – with an immediate focus on developing a sector-wide vision. The Council recently delivered that vision, and I’m delighted to say that it is supported by New Zealand’s major farmer and grower organisations. The vision, titled Fit For a Better World acknowledges that international customers increasingly want to know the story behind their food. They want to know it’s climate friendly and sustainably produced, with high animal welfare standards and by a workforce that’s treated with respect and paid fairly. By using Fit for a Better World as our guide, I’m confident we’ll achieve premiums in the marketplace from consumers seeking out our

food and produce. I think we can drive more value for our farmers and growers while protecting our unique environment. This work is very much the beginning, not the end. The Council is currently developing its final report and recommendations, which I expect it to deliver in March. The work then is about taking the vision and turning it into a practical workable plan. Continuing the theme of looking forward, New Zealand Food Safety has launched its strategy and action plan to maintain New Zealand’s reputation as a provider of trusted and safe food. The good news is that the safety and quality of New Zealand food is already recognised at home and with our trading partners. The strategy recognises the need to work hard to build on those solid foundations. It sets out a plan of action to 2024 and five priorities to: • ensure New Zealand’s world-class food safety system remains robust • proactively support consumers to make informed food choices • actively contribute to new thinking in international forums • work in genuine partnership with Māori • be innovative and forward-looking in meeting new challenges. Reducing foodborne illness will always be New Zealand Food Safety’s core business. The strategy allows us to look at that work in a wider context so we can do our part in achieving the vision that New Zealand food is trusted and recognised by everyone, everywhere.

Damien O’Connor Minister of Agriculture and Minister for Biosecurity, Food Safety, and Rural Communities Minister of State for Trade and Export Growth

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LOOKING AHEAD TO 2020 Focus on sustainability and health & safety.

The food and grocery scene in 2020 will no doubt be dominated by several significant occurrences that came to the fore in the second half of last year. The first of these was the formation by the NZ Food & Grocery Council of a committee to tackle one of the big issues of today: sustainability. For food and grocery companies that involves everything from efficient use of power and transport, to recycling water and all things packaging. For the new Sustainability Committee it will eventually be all of these things, but it’s taking a measured approach so it can achieve best effect. Chair Christian Abboud, Country Manager and CEO of Nestle NZ, says there was overwhelming interest from companies wanting to help drive what he calls an ambitious agenda. They will first tackle the huge issue of consumer packaging and the circular economy, taking on singleuse plastics, paper packaging, beverage containers and deposit systems, and compostable packaging. We’ll see and hear much of this issue during the year, with particular interest being their aim of establishing a New Zealand standard for compostable packaging. Then there’s the health & safety initiative ShopCare, which was formed after FGC received a grant from ACC to develop projects to reduce injuries across the sector. Led by Liz May, it includes leaders from retailers, manufacturers, transporters, and suppliers who will share knowledge and problem-solve to help influence cultural change and improve the safety, health and wellbeing of every employee involved in the creation, supply, delivery, and sale of food and grocery products. The sector has always had a strong focus on health & safety, and with 22,000 safety claims in the past year involving 192,000 claim days, it’s clear how vital this group’s work is. During the year they’ll build a picture of where the industry is at, identifying risk areas in transport, mobile plant and equipment, manual handling, in-store, health & wellbeing, leadership, and manufacturing. That will include overlapping responsibilities between companies along the supply chain. This will be a first for health and safety reporting in New Zealand, and I believe ShopCare will form a blueprint other industries will want to copy.

Katherine Rich Chief Executive, NZ Food & Grocery Council In 2018, the Government asked the food and beverage sector to identify practical measures it could implement to help reduce the rising incidence of obesity. A few months later, a taskforce representing the processing and manufacturing industry, the retail industry and the fast food, hospitality, restaurants, baking and service station sectors made 51 recommendations covering five areas: food and beverage formulation and innovation, employee health & wellness programmes, community and education initiatives, marketing, labelling and the Health Star Rating (HSR) system. It recommended reformulation, HSR, and education be given the highest priority. Last November the Government responded, acknowledging “the significant amount of work” the industry had already done, and urging the prioritisation of reformulation to reduce saturated fats, trans-fats, free sugars and salt/sodium, nutrition labelling, and greater uptake of HSR. This is work the industry has been doing for some years, and which will continue unabated. For example, there are now more low- and no-sugar beverage options available to consumers than ever, while the list of products displaying HSR labels continues to grow – up 1000 between March and September last year to more than 5100. The Government also said it wanted to work more closely with industry on all obesity initiatives, and as part of that FGC will be pushing for an updated children’s National Nutrition Survey and an education and awareness campaign for the HSR system – both of which we believe are essential. Along with sustainability and health & safety, this work will ensure 2020 is one of the sector’s biggest for some time. FMCG BUSINESS - LEADERS FORUM 2020 3


Lance Dobson

Executive Director, Nielsen New Zealand If I had to make a bet on the three trends that will accelerate in 2020, I’d put my money on premiumisation, convenience and mindful consumption. Premiumisation: We’re already seeing a growing number of consumers who are willing to pay more for hand-crafted authentic products with a compelling brand back-story. There will also be more emphasis on direct-to-consumer product models (like meal kits, deli packages, feed my fur baby, Dollar Shave Club, etc), with suppliers bypassing traditional retail models to form a direct relationship with their target consumers. Suppliers are responding by being more agile in their new product development funnel with local products that resonate more with Kiwi consumers. Fresh pasta, chilled dips, ice cream, coffee (pods/capsules), and pet food are just some of these. In addition, we see suppliers being more proactive in the development and the communication of sustainability initiatives to the public.


BE KIND TO THE ENVIRONMENT Catherine Beard Executive Director of Export NZ and Manufacturing NZ (divisions of Business NZ, representing thousands of businesses of all sizes). We are seeing the environmental concerns of consumers taking front and centre stage all over the world, including in New Zealand. This includes how we feel about our food and beverages. Consumers are increasingly wanting food to have a light environmental footprint. Further to a recent report by the Chief Science Advisor on reducing plastic and other waste, the Prime Minister announced the Government is looking at taking tough measures against the use of polystyrene and low value, hard to recycle plastic. Companies in the food and beverage business will have to look harder at their packaging as consumer concern about the impacts of the rubbish on the environment and in the sea are increasing. UK supermarket Waitrose recently announced they are only going to stock UK lamb and not New Zealand lamb anymore. The reason stated 4 FMCG BUSINESS - LEADERS FORUM 2020

Convenience: Globally, shoppers are on the hunt for more convenient food options and shopping experiences. As a result, retailers are trialling small store and metro formats aimed at capturing a greater share of the meal-mission and demand for a more aspirational shopping experience. These stores are designed with a vibrant marketplace feel and act as destinations for shoppers seeking out new and innovative products from deconstructed meal kits to natural pick & mix pet treats. Mindful Consumption: Products that resonate with mindful consumers are able to command an even greater price premium in the market. Shoppers are holding governments, retailers and FMCG manufacturers more accountable and voting with their wallet on issues of health, provenance, animal welfare and environmental sustainability. When it comes to reducing packaging waste, the resistance against single-used plastics will increase as consumers continue to adopt a zero-waste mind-set. Almost every day we see a new announcement by a supplier around packaging changes, circular economy, fair-sourcing, etc. The Coca-Cola Company, Unilever, and Nestlé are just some of the manufacturers who have been innovating in this space.

was to support UK farmers, particularly given uncertainty about what will happen with market access into the EU after Brexit. While Brexit might be the driver for this decision, there is also a consumer trend to eat food sourced locally. Some of that is due to provenance and wanting to know where your food comes from, some of it may be driven by concern about climate change and wanting to keep emissions down. This same trend applies to the increase in the number of young people that are taking meat and dairy out of their diets. We are also living in times where food intolerances seem to be on the rise, whether genuine or imagined and foods that fulfil ‘healthy for you’ claims will be in increasing demand, including ‘gut health’, which is an area of active scientific research. Alternative proteins are often in the news now, but I think there will always be demand for the real thing, particularly at the top end of the market. And let’s face it, New Zealand cannot feed the world, only a relatively small percentage of the world. So – be good to the environment, make healthy and tasty food and have a great provenance story.

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FOOD AND MEDICINE BASKET FOR THE WORLD With the planet on fire as we enter 2020 I predict that it’s going to be a year of intense heat in the FMCG space. A burning planet is nature’s appeal for attention. Not necessarily a cry for help but a sign that she’s had enough. A red light (literally) to say she wants change, and it has to be fast. Systemic change is needed in the FMCG industry. If food is medicine and we have a sickened planet, then I predict that the work this year in the FMCG space will be on producing high quality medicinal products from a healthy soil (did someone say Hemp?). Feeding the soil and producing a healthy array of food for New Zealand and the rest of the world is no small task. I predict that New Zealand is up to the challenge. Healthy soil means nutrient dense food, which means healthy animals, humans and pets if they consume that healthy nutrient dense food and ultimately if they can digest that food. As long as we nurture our microbiomes - understanding that gut health and our ability to fully digest this nutrient dense food is pivotal to the success of the system. Gut health is like soil health - you need an abundance of good bugs to nurture a happy gut. The gut-brain connection to the mental health of our nation is on high alert and I predict that products that play in this space will be having a very fun year. New Zealand is well placed to become the regenerative food/medicine basket for the world. My prediction is that consumers will be demanding food that is undeniably certified as having been grown with the planet’s health in mind. Environmental Outcome Verification as defined by the Savory Institute ( www.savory. global ) will become a normal requirement before any punter buys any product... not just a marketing back story but a genuine health tick. The ongoing health of any animal or plant used in the production of the end product will have to be known. Blockchain technology will be a necessary part of the certification process.

Dr Lyn Thomson (veterinarian) Regenerative Agriculture Project Leader, Sustainable Business Network Veganism won’t save the planet but a plant-based regenerative economy that nurtures ruminant animals to till the soil will definitely save the planet. Imagine the harmony - man and beast co-existing in an ecosystem involving healthy soil, soil organisms, insects (as sources of protein), a wide range of grasses on our plains and re wilded forests full of an array of different fruit and nut crops. Milk from a regenerative herd that have nurtured their own calves, and small amounts of high quality meats feeding a nation or perhaps a global population on nourishing bone broths instead of milk. Sheep grazing amongst the fruit trees and fuelling a fibre industry that solves our global reliance on synthetic fabrics. Seaweed being gathered to eat and to create plastics that are biodegradable and solve our plastics and packaging problems. Ah, it sounds like heaven on earth. Bring on 2020, we have a lot of work to do.




Chris Quin CEO Foodstuffs North Island At Foodstuffs North Island we are enormously conscious that being a sustainable business and a positive force for New Zealand demands more than banning single use plastic bags. The law which came into effect on July 1 is a symptom of a mass desire in consumerism, which as a retailer we must not only understand but work to anticipate. As compelling as the figures are for the 87% of Kiwis who believe we need less plastic in our lives, more relevant to us is the number committing to leading a much more sustainable lifestyle, 95%. Against this backdrop there has probably never been a time when our actions and activities have been the subject of such determined scrutiny by the consumers we serve, as members of our communities. Being a positive force for New Zealand is about a clear mindset that better enables us to contribute to a healthier, happier world, and doing so profitably. Sustainability is both the reason for and the subject of change because we and customers now want something that is better for us both inside and outside of the package. Selling to an empowered consumer base is a challenging business, so more than ever we must be customer-insights-driven, which means aligning our brand promises with the current and future needs of our customers. 6


There is no gap between focusing on our business performance and being customer driven because business is simple: it’s earning as many customers as we can with a better promise, getting margin from revenue because we offer value, and managing our costs so our business as a whole is efficient. At Foodies we earn a business return only two ways: assembling a range of products for customers in a way they find valuable, and creating customer solutions like meal kits, menu plans and delivery – all the while mindful of the values of our customers. We have millions of New Zealanders wanting us to give them more out of life everyday – more time, more healthy options, more value for their hard-earned money, more meaningful careers, and more community support. I have asked my team what New Zealand and the world will be like in 2030. The pace of change will be double what we’ve seen in the last 20 years. So, by 2030 we’ll have seen the same amount of change as we have in the last two decades. How we’ll get to where we need to be is simple: Continuing to enhance the privilege we have to operate in New Zealand by delivering healthy and affordable food and enabling meaningful work for our people. We will get there with a clear strategy of being In Tune, In Form and In Front for customers. In Tune is about being totally aware of what our customers want using customer data and insights. Being In Form means being fit and ready to compete. In Front is about winning in our key markets and with our brand propositions. This led to our acquisition of Leigh Fisheries; as well as the introduction of new anti-bullying, harassment, and discrimination policies and a new domestic violence support policy to support Foodstuffs people. We are very conscious that there is one component of all our efforts that will determine what we achieve – it’s our people. And as we say to them: “If you think you’re too small to make a difference, you’ve never spent the night in bed with a mosquito”.

[ FMCG Business Leaders Forum ]

Steve Anderson


CEO Foodstuffs South Island


WHILE CARING FOR OUR PEOPLE, PLANET AND THE COMMUNITY At Foodstuffs South Island, we recognise we have a simple mission, to ‘Feed the South Island’. Despite the complexity of this mission, there is a powerful motivation as more than half the food consumed in the South Island comes into homes through Foodstuffs’ 236 retail stores. We have the people and infrastructure to ensure that every week more than 600,000 customers get what they need, however, achieving this is a continuously evolving challenge in a rapidly changing retail landscape. Supporting our network of stores involves 550 daily truckloads. Through rain, hail and sun and despite mother nature’s sprinkling of disasters – our network and our people excel. We do everything in our power, and then some, to make sure life is better for our customers every day. The team strive to give people what they want in terms of product range, value, in-store experience and service. As consumers’ lifestyles change, so too does the retail landscape. Food trends and technology are essentially driven by the neverending ebb and flow of consumer expectations. As retailers, we need to continually review our strategy to ensure we remain relevant to our shoppers, all the while driving profit and growth. The digital age is our new normal, but now in the grocery game, the ground-swell of popularity of food-to-go, meal kits, takeout, convenience and home deliveries means we are thrust into competition with the wider food service sector. To this end, we are continually refreshing our strategy, ensuring our systems, people, processes and retail offering are delivering what our shoppers want. Another important consumer trend, not just in retail, is the rise of the conscious consumer. Wide-scale awareness and concern around sustainability, the environment and climate change is sharply

increasing. Foodstuffs has always been proactive in this space and continues to work aggressively across all areas. Key areas of focus include removing plastic and waste across our supply chain and moving to 100% reusable, recyclable or compostable packaging on all private label products by 2025. Over the past six years, in our supply chain alone, we have reduced our plastic wrap consumption by 43%, or 104 tonnes a year. We continue to place a microscope on all parts of the business to ensure we operate in the best interest of our planet, people, suppliers and customers. We have recently launched a national Corporate Social Responsibility Strategy, which allows us to better articulate what we stand for and our commitments in terms of our community and environment. We are committed to working with our retail members, customers and teams to uphold and advance these four key objectives: • Ensure all New Zealanders have access to healthy and affordable food. • Shape meaningful careers for our people and prepare them for the future of work. • Support a sustainable New Zealand in the way we operate our business and source our products. • Support the communities which support us in meaningful ways. We see our CSR strategy as our social licence to operate, and the commitments we have made are ones we are truly dedicated to. We have taken what is a highly complex landscape and articulated it in four simple pillars. Much like our mission, this might seem simple when boiled down – behind the scenes, its complex. But just like our mission to Feed the South Island, we will do everything in our power to achieve the values articulated within this strategy to be the very best corporate citizens we can be.



EXCITING TIME FOR RETAIL Scott Davidson Countdown – former General Manager Merchandise The way New Zealanders shop has changed dramatically in recent years - today, two working parents is the norm, constant technology and communication means we’re ‘always on’, and we all want supermarkets to be quick and easy, and to fit around our lives, not the other way around. At Countdown we’re steadily seeing Kiwis embrace the convenience of online shopping, with 38% growth in our July to September 2019 quarter to 8.5% of our total sales. In some stores we’re seeing more than 20% of sales online, which is phenomenal from a global retailing perspective. Over the next year, this continued demand for convenience won’t be slowing down and in April Countdown will be opening our first ever – in fact, New Zealand’s first ever – dedicated online grocery fulfilment centre, or eStore as we’re calling it. In the new Penrose eStore we’re also introducing and testing partial automation in partnership with US tech company Takeoff, which is designed to meet the changing needs of our customers and the global trend we’re seeing toward ultra convenience. We’re expecting to see our customers’ interest in the environment and social issues continue to evolve. The desire to reduce plastic is still top of mind for our customers, and suppliers are starting to listen and follow suit. We have some exciting plans in this space in 2020, and I’m hoping to see some real innovation in packaging come across our desks in the coming year too. Alternative proteins and vegetarian NPD has been a massive growth area in 2019 and this will continue to feature heavily in the New Year. Superfoods are resonating well with customers looking for an easy health boost, as are products using hemp. We think oat milk will really come to life in 2020, which uses far less water than almond milk to


produce and tastes great too. Products with reduced sugar and salt are also continuing to be actively sought out by our customers. Countdown’s breakfast aisle has recently had a complete makeover to reduce sugary products. Moderation is one of the key trends in New Zealand and lower-alcohol offerings are growing in popularity with our customers. We’ve been responding to these shifting drinking habits for some time, continuing to add or adjust our range to accommodate more low- or no-alcohol products. The quality of lower alcohol wines has improved significantly in the last few years and they’re becoming an increasingly appealing option for consumers. There is no doubt that this growing trend will continue as we continue to see more NPD from both local and imported suppliers. In chocolate, this year we’ve seen a mash-up of Kiwi classics and retro flavours really hit the mark with customers, with pineapple chunks in a Cadbury block, the return of Caramilk and Rolos all being very popular. Watch out for more suppliers joining forces and searching the vaults for retro hits in 2020. A trend for new sauces has launched this summer and we expect to see this develop even more in the coming months. We’ve seen an explosion of new flavours including Asian flavourings and American BBQ. In fact, we’re anticipating the American BBQ theme will start to appear across several new products. Don’t be surprised to see it pop-up in the meat department or across the snack aisle. It’s an innovative and exciting time for retail, and New Zealanders love to keep on top of new trends. If you’ve got a great idea you’d like to bring to market, we’d love to hear from you.


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Profound generational shifts in consumer preferences and the growth of personalisation

Managing Director, IRI “Change has never happened this fast before, and it will never be this slow again.” Wotif founder Graeme Wood’s celebrated words formed the core message for IRI’s 2019 State of the Industry presentation and is one of the most important messages manufacturers and retailers need to embrace as they look to 2020 and beyond. A significant shift in retail is emerging amid profound changes in consumer culture and technology advancement. The race to keep pace is fast and furious, while executing innovation is challenging albeit more important than ever. Within this context, IRI sees three macro themes emerging that will have a significant influence on both manufacturer and retailer performance over the coming years: 1. The continued growth of the smaller manufacturer 2. Profound generational shifts in consumer preferences and behaviours 3. Market fragmentation

Continued growth of the smaller manufacturer


Against a backdrop of solid pre-packaged Grocery market growth (3.4% in the last MAT period), fortunes within the FMCG manufacturer landscape have varied significantly over recent years. Top 100 5-year growth Compound annual growth rate (CAGR) now sits at 1.4%. If we look at the growth for manufacturers outside these top 100, 5-year CAGR growth sits at a significantly higher 6.6%. Size has been less of a competitive advantage when the opponent is fast and nimble. Barriers to entry are falling, with smaller manufacturers using tools like third party manufacturing to reduce costs and accelerate speed to market. There are more and more examples of smaller, disruptive companies winning hearts and minds through fast thinking and innovation, with large FMCG players ceding millions of dollars in sales. Ideas to consider: Large FMCG organisations need to be both big and fast. While this is far from easy to achieve, consider bringing in agile working methodologies, lifting the pace of innovation and failing fast. Better to have launched and failed than being too late to market.

FMCG consumers are both less predictable and less loyal (to both brands and stores) than previous generations. Younger consumers are device obsessed, multichannel shoppers with different preferences in terms of where they shop and what they buy. They eat out, shop online, and think green more than other generations. Meanwhile, aging populations are redefining the lifestyle norms of older age and this in-turn is driving real change in the product sets they consider. Both groups of consumers have more power via the information in their hands to aid their decision making, all the while sharing more information than ever before about their behaviour - most often through the various loyalty programmes to which they belong. Ideas to consider: To win in this complex FMCG marketplace, retailers and suppliers must tap into deep and broad consumer insights and work together to make mutually beneficial business decisions. Future industry winners will be those that embrace the big data collaboration approach and the latest technology that puts customers at the heart of their strategies and decisions. In short, share your knowledge and partner!

Market Fragmentation

The battle for omnichannel buyers continues to evolve. As marketplace dynamics continue to shift, digital touchpoints will create more opportunities for more direct contact with consumers. Meanwhile, competition for the consumer’s attention and wallet seems to intensify by the minute as the lines between discovery, research, shopping and entertainment blur. While in-store purchases of FMCG products remain the preferred method for most consumers, the level of omnichannel experimentation is intensifying, meaning suppliers and retailers will be forced to find new ways to stay relevant and stand out with their key consumers and shoppers. Ideas to consider: Ensure attention is paid to how your brand and products ‘show up’ not only in-store, but also on-line. All too often searchability and key product attributes/information is compromised on-line purely through a lack of consideration as to how this channel is shopped. Brands need to understand key consumer search and buying criteria to win in this space. FMCG BUSINESS - LEADERS FORUM 2020


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3. t he presence of any undue influence or pressure, or any unfair

Lucy Gould Solicitor in the commercial law team at Steindle Williams Legal. swlegal.co.nz The Government recently announced its intention to amend the Fair Trading Act 1986 (the Act) to better protect both consumers and businesses against unfair commercial practices. The announcement comes in response to submissions received on a Ministry of Business, Innovation and Employment discussion paper released in late 2018 on whether additional protections are needed for businesses and consumers against unfair commercial practices. The submissions received showcased a range of potentially unfair commercial practices including: • extended payment terms; • one-sided contract terms; • businesses being locked-in to contracts for long periods of time; • non-compliance with terms of existing contracts; • making excessive demands; • blacklisting; and • bullying.

Unconscionable Conduct The first proposed change is to prohibit conduct which is unconscionable. That is, serious misconduct that goes far beyond being commercially necessary or appropriate. The prohibition against unconscionable conduct will apply to the supply (or possible supply) and acquisition (or possible acquisition) of goods or services that is, in all the circumstances, unconscionable. The prohibition will apply to the formation of the contract, the terms of the contract and the way the contract is enforced. The Government does not intend to define what is unconscionable, but the prohibition is intended to address similar conduct as under Australian consumer law. Australian consumer law requires a high threshold to be met before a breach can be proven. A difference in bargaining power that results in one party being disadvantaged is not enough for the conduct to be unconscionable. Factors to be considered when determining whether conduct is unconscionable will include: 1. the relative bargaining power of the parties; 2. whether one party was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the other party;




tactics; and 4. t he extent to which the supplier and the customer acted in good faith. The prohibition would apply to both consumers and businesses with proposed maximum penalties of $600,000 for businesses and $200,000 for individuals.

Unfair contract terms

The second proposed change is to extend consumer protection under the Act to also apply to business contracts. The Act currently provides protection for consumers against unfair contract terms in standard form consumer contracts. Any such term cannot be enforced. The Government’s proposal would extend this to business contracts with a value below $250,000 in any given year. The Government is also proposing a stronger enforcement regime as an incentive to remove unfair contract terms from contracts. Currently, civil remedies are only available if the Commerce Commission has successfully obtained a court declaration that the term is unfair. A private party cannot apply for a declaration. As the Commerce Commission is the only entity that can seek a declaration that a contract term is unfair, there have been few unfair contract term cases in New Zealand.

What could this mean for you? The proposed changes will offer assurance for small businesses who are dealing with companies that will only trade on their own standard term contracts with no room for negotiation. As relevant bargaining power is a factor big national and global companies will be required to operate more fairly and openly. This will be particularly comforting for courier drivers, dependent contractors and franchisees. Those of you dealing with consumers and businesses with contracts below $250,000 in value should review your standard form agreements to check if any terms could be considered unfair. The Fair Trading Amendment Bill will be introduced to Parliament in early 2020.


AUGUST 2020 Melbourne Convention & Exhibition Centre

SAVE THE DATES For Australia’s largest and most important trade event for Convenience retailers, open to all banners and brands.

For more information visit www.candiexpo.com.au

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WAITING FOR ALDI Lew Bentley Head of Strategy at Shopper Marketing Agency Energi Over the past year or so we’ve seen some significant developments in the supermarket world. Countdown is taking on the guise of ANZ National Bank by looking more and more like a steady transition to one monolithic trans-Tasman Woolworths brand. The company name has changed, the brand logo is ready to go, and there is a lot of green paint splashing around. The alignment of Woolworths’ Trans-Tasman internal agency is also bringing a consistent voice to the brand and the efficiency of transTasman marketing. Countdown has recently set their sights in a couple of directions. Firstly, they are making a strong service play with the promise of ‘We can help with that’, which works very well across products, services, meal occasions and times of the year. Whoever developed their new green vegetable displays with the fine mist spray deserves a medal. Countdown is making a big play on fresh food and the first impression in stores is really inviting. I expect to see them building on this in 2020 through other fresh departments such as bakery, fresh meat, seafood and deli. The combination of high value product presentation and a strong service promise clearly says that Countdown is aiming high with a premium offering. Across town, New World is also vying for the premium supermarket position. At a brand level they are not as distinct as Countdown and they are offering us the opportunity to somewhat vaguely ‘Enjoy better’. A significant development at New World has been the introduction of Pam’s Finest. This marks the upgrade of the own brand stalwart into a high value proposition that includes fancy things like duck breasts and porcini mushroom mezzelune. This is stretching Pam’s from a trusted price-fighter to a high-end mass premium brand. I’d be nervous if I was in Delmaine’s shoes. New World stores continue to vary, but the quality intentions of Foodstuffs remains. I recently visited their Chaffers Park store in Wellington and was blown away by the quality of produce presentation, a truly impressive bakery with excellent pastries, and fabulous deli and fresh meat and fish departments. I look forward to seeing (and tasting)



more of this in more stores next year. One thing that stands out with both Countdown and New World is just how passive their leverage of One Card and Clubcard is respectively. The data accumulating behind these platforms must have incredible potential to add mutual value for shoppers and the supermarkets. Yet they seem to be lagging behind the direct marketing sophistication found in other categories such as travel and financial services. Perhaps 2020 will be the year when these platforms start to become real points of competitive differentiation? At the other end of the street Pak’nSave remains very yellow and onedimensional; trying to own the lowest price position along with a cheap and smug style of promotion. This is a territory that may come under genuine competition should low cost German chain Aldi ever come good on the persistent rumours and actually set up in New Zealand. They have been present in Australia for nearly 20 years and now have about 10% of the market. There are some subtle clues to suggest they might be considering New Zealand, like the appointment of an Australasian Managing Director. And there’s even a Facebook page imploring them to open in New Zealand. That would be the biggest news for 2020. But then again, they might never come.














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. 14 THE SHOUT NZ - LEADERS FORUM 2020


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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.




Nicola Voice

Three of the major forces of change currently in play in the New Zealand

have these changes been more evident than in the RTD category, one recent example of this is Scapegrace launching into the premium

liquor industry are the rise of the mindful consumer, premiumisation, and the importance that consumers place on ‘experience’. These shifts pose an opportunity for companies to premiumise their portfolios and to capitalise on a new generation of drinkers with changing preferences. Mindful consumers in the alcoholic beverage sector present in two key ways: those who care about sustainable packaging; and those who are happy to drink less so long as what they are consuming is of higher quality. This trend stems from a growing awareness of how the products we consume impact our overall health. Globally, suppliers are responding to these needs by developing high-end, hand-crafted products that have fewer ingredients that are natural in origin, contained in socially-responsible packaging and promoting an authentic mission that consumers can understand. Part-Time Rangers is the perfect example of this. Despite being a relatively new entrant, sales are already worth $5.9 million and growing, showing that there is demand at the intersection between ‘good for me’ and ‘good for we’. Premiumisation continues in craft beer and top-shelf spirits and has led to a proliferation of products being offered in these categories. The suppliers who are currently growing in this space have a more authentic offering that resonates with a new generation of drinkers. Nowhere

Gin RTD category with both gin & soda and gin & tonic variants. Consumers are also seeking new experiences with increasingly changing tastes and more adventurous flavour profiles. This has led to a blurring of traditional product lines and categories. Innovation in craft beer continues to speak to these trends with more experimental products hitting the market every week. We’re set to see these trends accelerate in 2020, with more suppliers increasing their range of low-alcohol products that help consumers to control and balance a health-orientated lifestyle. More products will cross traditional category lines, birthing collaborations between suppliers across industry groups. Finally, suppliers will dial-up their natural and sustainable credentials like ‘clean’ drinking, fewer (but more natural) ingredients, and natural flavours.

Director, Nielsen New Zealand

DRIVEN BY MILLENIALS Steve Mills Countdown Merchandise Manager Premiumisation continues to have an impact on the industry as millenials, if they do choose to drink, want good quality over quantity. Craft beer continues to be popular and we’re working with suppliers to support this demand as much as we can. In wine, the biggest increases we’re seeing is the renewed interest in 16 THE SHOUT NZ - LEADERS FORUM 2020

Rosé and Prosecco. Countdown has experienced great growth in these varietals throughout the festive season and through summer. With one in three millennials choosing not to drink alcohol, New Zealanders can expect to see a lot more innovation coming to market to respond to this trend. Over the last year, Countdown has seen a significant uptake in customers choosing low- or no-alcohol beer and wine, and as part of our broader responsibilities around the sale of alcohol, we are actively partnering with our suppliers to innovate and provide more of these choices in stores. Countdown’s range of zero or low alcohol products continues to grow, with sales increasing by more than 30% in the last nine months, as more options have become available. Light or zero beer sales have increased by 15%, and low- or zero-alcohol wine sales are growing at 12%. We recently introduced the popular Seedlip and Lyres non-alcoholic spirits into 30 of our 180 stores and sales are already exceeding our expectations.

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THINKING TOGETHER OUTSIDE THE BOX Chris Anderson Merchandise Manager – Chilled, Alcohol, Deli, Bakery, Eggs and Beverages, Foodstuffs North Island The advent of a new decade heralds both new and continuing challenges for New Zealand food and beverage producers. Consumers are becoming increasingly mindful, not just of what they purchase, but the product’s origins, how it’s made and how sustainable it is. Consumers are increasingly choosing brands with a strong focus on their social and environmental footprint, and these changes in buying behaviour signal a wider transformation in the way many Kiwi companies operate in 2020 and beyond. New Zealanders are mindful of climate change. They are aware of the parts we all play in the health and guardianship of our planet. Wineries who implement a farm to table concept in their on-site restaurants, and brewers who are finding ways of reducing their impact on the land, are all seeing increased presence on the supermarket shelves as their popularity increases. We have already started to see big changes in shopping habits, and the next decade will see significant transformations in the way we shop. The easy-come, easy-go, ‘disposable’ mentality is well and truly behind us. Consumers want to see evidence that the brands they are buying are being produced ethically and sustainably, and that organisations show a commitment to recycling and reducing waste. Brands carrying third-party certifications like B-Corp certification, Environmental Choice and FairTrade marks, verification of marine and forestry sustainability, recyclable or compostable packaging and ethical farming are becoming non-negotiable to consumers. At the recent Brewers Guild Beer Awards, the New World-sponsored Sustainability Award winner, Matakana-based Sawmill Brewery, was awarded for its significant contribution to reducing their environmental impact and making the most of their resources. Sawmill was the first brewery in New Zealand to earn B-Corp certification, an international accreditation awarded to businesses which meet the highest standards of verified social and environmental performance. Collaboration will be a watchword of 2020, and many New World stores are partnering with local sustainability and recycling companies to achieve better environmental practices. As we head into the third decade of the 21st Century, New World customers are actively seeking opportunities to support those brands who are demonstrating and improving on their sustainable practices. As the next decade unfolds, you can expect to see more New Zealand-made wines, ciders and beers on shelves that celebrate not just the local region, but the importance of focusing on our longer-term goals. New Zealand is beautiful – we want to keep it that way.



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 18 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.

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A COLOURFUL ARRAY IN 2020 Angela Hurst Head of Marketing and Customer Experience, Liquorland Big flavours, big changes, healthy alternatives and innovative packaging are the watchwords for drinks as we head into 2020, with a marked focus on colour. With social media playing an increasingly important part in drinks evolution, colour is everything. Aperol Spritz, Rosé wines, pink sparkling wines and white spirits with added fruits, berries, citrus or aromatics, are creating a rainbow of hues on the shelves, with some traditional beverages undergoing significant transformations. Our fascination with all things gin continues; over the past year, gin has overtaken bourbon and vodka to take the number two spot in spirits behind whisky. Gins flavoured with fruits, spices and even wine blends will continue to flourish, with colourful blush, sunset and even blue gins forming the base of many an Insta-worthy cocktail shot. ‘Better for you’ is the catchphrase for 2020; we’ll be enjoying high-quality, flavoursome white spirit drinks that deliver around 5% alcohol (wine delivers 11-15%). With a growing trend towards natural options, there’s a notable upsurge in low sugar, low calorie, low carb and lower alcohol white spirit options that cater for those more concerned with health and wellbeing. New Zealand company Clean Collective were the first to spot a gap in the market, creating natural vodka and gin-based drinks with no sugar, carbs or preservatives that especially appeal to a younger market; expect more of the same to come. Very new to the market, and already making a splash in many overseas markets, is the arrival of alcoholic sparkling water. Native Hard Sparkling drinks are made from sparkling water, fermented and distilled cane sugar, fruit and stevia. Each can has between 85-100 calories, providing more option for those embracing the ‘better for you’ mantra. A natural partner to better wellbeing is the socially-conscious drinks options, where profits are fed back into environmental causes. New Zealand producers have been quick to react; low-sugar canned pre-mixers producer Part Time Rangers gives 10% of their profits towards animal conservation initiatives, while Native Hard Sparkling are putting profits into protecting and sustaining New Zealand wildlife, in partnership with local iwi and the Department of Conservation. Craft beer is now a shelf staple, accounting for around 15% of overall beer sales. New Zealand is home to some world-class hops, growers and brewers. Most customers now choose their go-to session beer or lager and add a can or two of craft beer as a treat

to their taste buds. As with all alcohol categories, craftsmanship, sustainability and fairness are important factors; consumers want brands to take responsibility for their actions and will buy accordingly. Visually, liquor shelves are set for change. Craft beers, wines, cocktails and pre-mixers are increasingly being produced in fully recyclable cans. In addition to being a good sustainable option, they keep the product fresher, are cheaper to produce, are easier to stack and pack, and are lighter – an important factor when considering carbon footprint. Watch out for more craft beers, RTDs and innovation in this area. When it comes to food matching, spirits and beer take their places alongside traditional wines at the table. Slow-cooked meats with whiskies and beers, frozen and dessert categories with spirits and liqueurs, and aromatic drink-focused food matches will create a real buzz over the next 12 months, providing consumers with many more options to tantalise their taste buds. THE SHOUT NZ - LEADERS FORUM 2020 19

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FMCG Business Leaders Forum 2020