Latest / Best of Business / Sam MacKinnon: Hospitality NZ spokesperson on alcohol consumption dropping and what that means for the sector

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Sam MacKinnon: Hospitality NZ spokesperson on alcohol consumption dropping and what that means for the sector · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from news Talk zed Be
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  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Steep Drop and how we Consume Alcohol has reignited conversations
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  Speaker 2: around Texas on alcohol stats and z shows the volume
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  Speaker 2: of all alcohol alcoholic rather beverages found eight point three
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  Speaker 2: percent and twenty twenty five bear had a sharp drop
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  Speaker 2: at ten percent. Joining us now is Sam McKinnon. He
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  Speaker 2: is with Hospitality in New Zealand. Sam, thank you very
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  Speaker 2: much for your time this afternoon.
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  Speaker 3: Hey Sam, how much does comparatively high excise tax affest
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  Speaker 3: effect hospo businesses in New Zealand?
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  Speaker 4: Yeah, well, I mean, as you've already touched on, you know,
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  Speaker 4: the excise collection rate has stayed the same at about
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  Speaker 4: one point three billion, but that excise tex has risen
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  Speaker 4: twenty percent in the last five years. So given that
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  Speaker 4: that volume of consumption has dropped but excise text has
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  Speaker 4: gone up, you know, I guess that increases being covered
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  Speaker 4: by the businesses that produce them sell beer and so
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  Speaker 4: that's ultimately being born by the customer or at least
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  Speaker 4: those who are still enjoying alcohol. So, you know, if
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  Speaker 4: we if we're looking at the amount of XR is
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  Speaker 4: on a cake that's at about thirty percent. Now it's
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  Speaker 4: for forty five percent if you're including just so forty
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  Speaker 4: five percent of your cake is our tax and that's
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  Speaker 4: a significant cost that I guess our operator is our
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  Speaker 4: bars and bars and pubs are managing and having to
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  Speaker 4: figure out how they make some money on top of it.
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  Speaker 3: Is this the main reason people are drinking less? Do
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  Speaker 3: you think the cost?
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  Speaker 4: I think, I mean there's this is significant health trends
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  Speaker 4: that are kind of driving people away from consuming as
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  Speaker 4: much alcohol or you know, the zero The growth of
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  Speaker 4: the zero percent sector has been massive in the last
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  Speaker 4: couple of years. But yeah, certainly costs is becoming an
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  Speaker 4: increasing driver for people to choose to consume less. So
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  Speaker 4: it's a bit of a combination effect.
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  Speaker 3: What good does hospo do do for the country? Well,
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  Speaker 3: I mean we say that because XI tax is effectively
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  Speaker 3: a syntax, so you know, to offset the idea that
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  Speaker 3: people text through and say that they're they're the you know,
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  Speaker 3: the damage that alcohol does. So I just want to
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  Speaker 3: balance that with what good the good the hospital does
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  Speaker 3: for the country.
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  Speaker 4: Yeah, yeah, I mean at an economic level, we're obviously
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  Speaker 4: well spread across the country. So there's regional jobs and
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  Speaker 4: employment that's being generated generate significant cash flow through the economy.
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  Speaker 4: But from a community standpoint, we are a significant third
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  Speaker 4: space for people together. And not everyone's comfortable hosting people
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  Speaker 4: in their homes, but they still want to have social
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  Speaker 4: environments and so you know, we are a significant player
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  Speaker 4: in that space in terms of providing areas for people
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  Speaker 4: to gather and enjoy time together. And so I guess
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  Speaker 4: there's there's the social benefits that we see hospitality bringing
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  Speaker 4: to New Zealand, and they are benefits, it's not just
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  Speaker 4: the downsides that people like to point out.
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  Speaker 2: So why is it so hard seeming to get traction
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  Speaker 2: on something like removing ex size for hospitality. There's politicians
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  Speaker 2: on on you know, every sou of the aisle who
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  Speaker 2: come out strongly in support of hostpo and say that
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  Speaker 2: we need to do something to keep it propped up
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  Speaker 2: because it's so valuable for society. But this idea, it's
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  Speaker 2: been floated around for some time and nobody's really trying
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  Speaker 2: to progress it at the political level.
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  Speaker 4: Yeah, I mean, I think you know, alcohol is seen
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  Speaker 4: as a contentious political issue. You know, every MP will
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  Speaker 4: have a constituent who support hospitality but have some concerns
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  Speaker 4: around the role of alcohol in their community. And I
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  Speaker 4: guess from our perspective, you know, hospitality plays a key
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  Speaker 4: role in managing alcohol related harm because we're the safest
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  Speaker 4: place to consume. If you're going to have a drink,
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  Speaker 4: have it on premise. But I think the other sort
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  Speaker 4: of challenge that we've got around XIS specifically is that
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  Speaker 4: it isn't differentiated for kegs, so it's just the same
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  Speaker 4: rate whatever vessel you buy your alcohol in, whereas Australia
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  Speaker 4: does have a differentiated rate, so they're able to show
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  Speaker 4: that they're able to reduce the price of XS on
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  Speaker 4: kegs specifically, which is a direct link to obviously hospitality
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  Speaker 4: and a shoup support for the sector. Because we don't
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  Speaker 4: have that mechanism, it's not as easy. There's a bit
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  Speaker 4: more of a process to get there. But certainly the
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  Speaker 4: general political discussion as supportive of the sector, but a
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  Speaker 4: little bit I guess more cautious around anything to do
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  Speaker 4: with alcohol.
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  Speaker 3: Now. A lot of people are texting and saying, look,
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  Speaker 3: if there was less XIS tax, then HOSPO would not
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  Speaker 3: lower their prices. That this isn't that they're just charged
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  Speaker 3: through the charge to the roof anyway, is that true?
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  Speaker 3: Do you think that? Do you think that a hospo
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  Speaker 3: if there was some kind of freeze on xcise tax
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  Speaker 3: or you know my suggestion I'll give you later, that
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  Speaker 3: we get rid of it all on excised tax completely
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  Speaker 3: in hospo situations. But would that be handed onto the customer?
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  Speaker 4: Well, I mean for starters charging through the roof, as
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  Speaker 4: you know, as a little bit too black and white
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  Speaker 4: in terms of you know, what goes into running a
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  Speaker 4: hospitality venue, and I guess the cost pressures at play
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  Speaker 4: for a venue to be able to sell you a pint.
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  Speaker 4: You're not just paying for the product itself that you're
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  Speaker 4: also paying helping pay for the leaf, You're paying for
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  Speaker 4: the staff, if you pay for the electricity costs, all
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  Speaker 4: things that we know have gone through the roof over
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  Speaker 4: the last last little while, and so and the same
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  Speaker 4: would go for any of the household products that we
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  Speaker 4: all know what sort of cost of living pressure has
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  Speaker 4: put on households across his end. So yeah, I mean, look,
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  Speaker 4: there will be a number of businesses that will want
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  Speaker 4: to make sure that they're able to build some margin
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  Speaker 4: back into the product, and so you know, it's not
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  Speaker 4: to say that there's a direct link to lowering the
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  Speaker 4: costs of a pint specifically, but it does mean that
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  Speaker 4: the prices mon't go up as consistently, and certainly from
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  Speaker 4: our perspective, helps our venues to operate more sustainably.
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  Speaker 2: What to hospitality businesses broadly make more money off? Is
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  Speaker 2: it booze or food? I've heard they said that food
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  Speaker 2: can almost be seen as a bit of a loss
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  Speaker 2: leader to get people in to have, you know, some
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  Speaker 2: more glasses of wine.
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  Speaker 4: Is there any truth that, Yeah, I think traditionally alcohol
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  Speaker 4: has been that has been the significant sort of where
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  Speaker 4: your margin is at play, but that's increasingly being impacted
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  Speaker 4: by things like the increase in excise in the last
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  Speaker 4: couple of years. So the treat is that across your
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  Speaker 4: entire business, all of your margins it's in because there
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  Speaker 4: is a ceiling of what the customer is willing to pay,
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  Speaker 4: and we're obviously trying to find that balance between covering
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  Speaker 4: costs and making sure that you know, the prices are
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  Speaker 4: still palatable for the customer. So you know, in that sense,
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  Speaker 4: I guess there might be marginally making more compared to
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  Speaker 4: your food products, but it doesn't mean that you're making
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  Speaker 4: money hand over this for sure.
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  Speaker 3: So is there anyone at all pushing this idea that
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  Speaker 3: I came up with today that we remove excise tax
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  Speaker 3: on alcohol sold within restaurants and bars. Keep going hard
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  Speaker 3: on it, even increase it for bottle stores and supermarkets,
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  Speaker 3: but get rid of it completely in hosposon being that
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  Speaker 3: hospital employs people build things, and there's a huge onus
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  Speaker 3: on restaurants and bars to look after their patrons. Is
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  Speaker 3: there anyone at all that's pushing this idea?
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  Speaker 4: I mean from from a hospitality in New Zealand's perspective,
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  Speaker 4: we're campaigning for a reduction of excise tax on kegs,
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  Speaker 4: but given that you can specifically ring fence around on
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  Speaker 4: premise hospitality venue consumption, so you know it's a direct
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  Speaker 4: lever that links to the sector. We're not we're not
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  Speaker 4: pushing for a removal altogether. Certainly, if for politicians came
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  Speaker 4: to pick that one up, would be happy to support that.
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  Speaker 4: But I guess where we're sort of landed in somewhere
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  Speaker 4: that we think as a practical, a practical solution that
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  Speaker 4: that kind of can can keep as many people happy
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  Speaker 4: and that in that realm as we can.
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  Speaker 3: Well, I'm starting the campaign here, Sam, so yeah, I'll
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  Speaker 3: tell you. Oh could you updated with how I go?
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  Speaker 4: Yep, he's taken up the mentor for you.
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  Speaker 3: I've got almost no power unfortunately, Sam.
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  Speaker 4: Great to check appreciate.
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  Speaker 2: Yeah, good on you, Sam, good to chat with you.
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  Speaker 2: Thank you very much for joining us. That is Sam McKinnon,
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  Speaker 2: Hospitality New Zealand Communications Managers.
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