Opportunities Abound – a Glimpse into the Future

Some time ago I commented on the effects that a lack of international travellers would likely be having on the duty-free market.

There is recent estimation that airport passenger traffic dropped nearly 40% in 2020 during lockdowns world-wide.  That is 3.6 billion passengers!  And it is likely that the travel industry will one of the last to return to “normal” – if indeed it ever does.

With the opening of our travel bubble with Australia some of the duty-free markets in NZ will have resumed, albeit to a limited extent.

But I suspect the most limiting factor is now going to be the supply line, especially in the alcohol arena.

The imposed down-turn in duty-free shopping since March 2020 has created some interesting workarounds for the industry.

With the market now gasping for new breath, a goodly part of the stock-holding is no longer there, sold to retail and leaving big spaces in the shelves of duty-free.

The glorious DNS duty-free at Singapore’s Changi Airport has been opened to on-line shopping with free delivery (if you live in Singapore).

In Brisbane, the Brisbane Airport Corporation launched an on-line trading platform called BNE Marketplace.  That allowed duty-free shops to continue trading, even though the airport was closed.  It’s brilliant:  the place is open 24/7 and seems to have the range of stocks that were in Brisbane Duty Free.  Downside is that it only ships to what the Australians define as “Oceania” – just the states and territories of Australia.

And the same approach was in NZ too.

In the concourse of the Auckland Airport domestic terminal, in the little corner shop next to the bar, I spotted a pop-up shop that appeared to contain the contents of the Auckland duty free but with duty added.

These have been really good ideas, effective during assorted lockdowns.

But, with the market now gasping for new breath, a goodly part of the stock-holding is no longer there – it has been sold to retail and leaves big spaces in the shelves of duty-free.

The assumption has to be that distilleries are mashing, distilling, fermenting and  bottling their hearts out trying to catch up

Stock availability

The latest reports from Scotland indicate that things are slowly returning to normal over April.

Businesses are back in business – the pubs and bars and restaurants are up & about and, although information is a bit hard to come by, the assumption has to be that distilleries are mashing, distilling, fermenting and (especially) bottling their hearts out trying to catch up.

A quick discourse on human behaviours.  You’ve been in and out of lockdown (mostly in) since mid 2020, stuck indoors with not a whole lot to do, bored rigid, and trying to entertain screaming kids.  Two things are likely to increase as a result: the birth rate and the consumption of mind-numbing liquids.

The getting of stock levels back to normal will be a long and slow process.

Stocks of whisky are dwindling on shelves around the world.   A recent (and highly unscientific) survey of whisky stock in NZ indicates that your choice of dram here is at least 35-40% down on normal levels.  Given that there has been a severe restriction in the production of whisky over the last 12 months and that there has been heightened consumption through lockdowns, it is my guess that the getting of stock levels back to normal in NZ will be a long and slow process.

Where will production go first?

In the UK super markets there are some very good whiskies available in Waitrose, Marks & Sparks, and Tescos,  But their stocks have been under tremendous pressure in the last six months.

Let’s face it – if you’re producing whisky in Scotland and a UK chain of supermarkets is screaming for stock, are you going to put all your hard-gotten bottles in a container and send them halfway around the world?  Or will you opt to fork-lift them on to a truck and driving them down the road to London?  Economically, really a no-brainer!

And with the US now tariff-free, there’s another place to try to recoup the estimated £500m the Trump years cost the Scottish whisky industry.

So, where is NZ in all this?  And what do we do now?

Local producers

There are suppliers closer to home and now is the time for New Zealand whisky distillers to take the initiative, get their product to market and build their brand awareness within NZ.

In no particular order, there is Cardrona in Central Otago, Thomson Whisky, Canterbury’s Divergence, Kiwi Spirit in Takaka and the Reefton Distilling Co currently claiming to produce whisky.  And I don’t believe that is an exhaustive list!

Other recent local output has come from Stoke Distilling Co in Nelson.

There are some seriously nice drops of whisky emerging from NZ’s West Island

And there is opportunity, too, for some Australian distillers to help.

Fannys Bay maturing room

Aussies may have issues with rugby and cricket skills, but there are some seriously nice drops of whisky emerging from NZ’s West Island – Lark, Fannys Bay, Nant and any one of the other 30-odd Tasmanian operators just for starters.

How about Starward Australian whisky?  They have just released some new expressions and are backed by Diageo as the distillery showed promise.  Judging by what I have tried they aren’t wrong: a particularly interesting offer is their Two-Fold double grain bottling or a batch-numbered Single Malt called Fortis at 50%.

The next year or two might well be very exciting in the New Zealand whisky world!

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