MEDIA RELEASE 8 June 2020
The NZ Alcohol Beverages Council (NZABC) says the move to Alert Level 1 is not the panacea it appears to be.
“The hospitality sector was one of the first and hardest hit at Alert Level 4, and although Level 1 looks like ‘business as usual’ on paper the reality for the industry will be very different,” says NZABC Executive Director Bridget MacDonald.
“We still have a very long and rocky road to recovery ahead. Operational freedoms might be back for restaurants, cafes, bars and clubs to operate at capacity to try to drive more income and control costs, but there are still significant financial and social challenges in this environment.
“We’re delighted to have customers again, and we’re being optimistic and adapting, but we’ve still got some challenges ahead. Like all businesses, the industry is reliant on its customers, and we know they too are facing challenges.
“We’re aware consumer anxiety around socialising may remain an issue for some. Then there is the uncertainty of our economic environment and the impact on people’s spending decisions. People may continue to be conservative with their spending. We can expect to see reductions in discretionary income due to job losses and unemployment.
“Add to this the lack of international tourism and the coming winter and Level 1 will see the hospitality sector hit hard,” says Bridget.
In February and March, prior to moving into full lockdown for Alert Level 4, restaurants, cafes, bars and clubs were already affected by customers’ initial concerns about going out. This resulted in a significant downturn of around 40% before plunging to an all-time low of 95% over April. Alcohol sales were down 20-30% over lockdown, and for the spirits sector down 85%.
The limited opportunity to open doors at Level 2 under the 3S guidelines came with higher operational costs and the restrictions on capacity reduced the ability for businesses to generate income or manage debt – the higher-performing businesses only making 50-60% of revenue for the same period last year. Unfortunately for some businesses, the restrictions have meant not being able to open at all.
“We estimate a recovery period of up to three years for hospitality and the alcohol beverages supply chain of growers, brewers, distillers and winemakers, importers and exporters – and that sentiment is agreed globally,” says Bridget.
“We remain upbeat, optimistic and hopeful that we can revitalise the sector and get this economy moving again. A good number of Kiwis have been connecting with friends and family, and it’s been great to see smiling faces and hear the buzz of long-awaited catch-ups in local restaurants, cafés and bars. Socialising with good food and drinks in an environment of warm Kiwi hospitality is a vital part of our culture and the lifeblood of our communities. We may have a long and rocky road ahead, but the rockiest roads can also lead to the highest peaks,” she said.