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Frankie Walker
Frankie Walker says more and more people are turning to low alcohol alternatives. (Photo: Supplied / Design: Tina Tiller)

BusinessJuly 26, 2022

Dry July’s nearly over, but the 0% alcohol trend is here to stay

Frankie Walker
Frankie Walker says more and more people are turning to low alcohol alternatives. (Photo: Supplied / Design: Tina Tiller)

Getting off the booze? Staying off the booze? You’re not the only one.

The other day, a colleague bought Frankie Walker a drink during work hours. It was 2pm on a Tuesday – yet this wasn’t unusual. “He was working on some new cocktail designs [and] he bought me a variation of a Negroni (an Italian cocktail comprising gin, vermouth and Campari) to my desk,” says Walker, the founder of Auckland-based events company Black Pineapple. “There aren’t many places where that’s legit.”

Alcohol is Walker’s life. For the past 25 years, he’s worked in a range of positions across the hospitality industry, first as a bartender, then progressing to luxury spirits ambassador for alcohol juggernaut Lion Nathan, before founding Black Pineapple in 2016. He did so after attending one function too many where drinks were an afterthought. “It made me really pissed off,” he says. He thought: “Why do the drinks always suck?”

Now, he and his six-strong team design cocktail and drinks menus to order, hosting everything from corporate functions to weddings. Walker is, as we talk, “literally surrounded by the stuff” in his Kingsland office, which also houses a small cocktail lounge. Friday afternoon work drinks often mean polishing off everything that’s left over from the week’s activities. “Life’s too short to drink shit drinks,” says Walker’s website bio.

But, lately, Walker hasn’t been touching any of it. Driven to drink by lockdowns and the stress of running a business that went from “400% growth to zero revenue overnight”, Walker realised his life was out of balance. “For me, it’s about looking at my relationship with [alcohol],” he says. “There are times I’m … using it to escape or deal with the worries I have or deal with concerns that then come back twice as hard the next day. It’s an easy escape and the next day it’s horrific, it’s even worse.”

So, about three months ago, he stopped drinking. That fresh Negroni that landed on Walker’s desk? He didn’t drink it.“I had to just say to him, ‘Look, I’m actually not drinking at the moment.’” He hasn’t given up for good, but Walker says becoming “sober-curious” has helped him re-evaluate the role alcohol plays in his life. He says he’s fitter than ever, and able to deal with stress without alcohol. “Let’s just find some new patterns of behaviour,” he says. “Let’s find some new ways to deal with stress.”

Frankie Walker
Frankie Walker’s sober-curious journey lasted two months, and he says there will be more. (Photo: Supplied)

He’s not alone. After two years of alcohol dependency caused by pandemic-related stress, many are rethinking their relationship with booze. High-profile journalists Guyon Espiner and Patrick Gower both made compelling documentaries about their own journeys towards sobriety. Many others are looking to cut back: Walker cites an industry statistic that says 80% of drinkers are looking to drink less or abstain altogether. After my own lockdown incident with gin, I started doing the same thing.

That’s led to a huge rise in demand for low- and no-alcohol drinks. Some local beer companies, including Garage Project and Sawmill, say they can’t make enough zero-alcohol beers to keep up with demand. Recently, I met with Grant Caunter, Heineken’s former craft beer boss who gave up the booze and his high-flying career to start his own zero-alcohol brand called State of Play. He believes the zero-alcohol market is on the same trajectory that craft beers were before the pandemic. “It’s 2% of sales [now]. In 12 months it will be 3%, 4% in 18 months, 7% in three years…”

Caunter seems to be right. In fact, he might even be underestimating just how fast the trend has taken off. New research out today from Unleashed Software that surveyed 39 independent Australasian breweries includes a number of key findings:

  • No- and low-alcohol beer now accounts for 3.5% of the international beer market, and the industry category is worth a whopping $US10 billion.
  • Brewers who add a no- or low-alcohol product to their range average 41% of sales growth in the following 12 months.
  • Those that have a no- or low-alcohol beverage average 29% year-on-year growth, compared to 9% for those that don’t.
  • Some brewers have seen revenue more than double after adding a zero-alcohol drink to their range.

Clearly, there’s money to be made out of the craze. Businesses that don’t jump on the bandwagon are falling off in a big way. “[This] research shows, pretty unequivocally, that no- or low-alcohol offerings are a very good thing to have on the books,” says Unleashed’s Gareth Berry. “It’s opening up revenue streams and changing consumer behaviour.”

That’s also been true for Walker. He and his team have formulated 0% cocktail recipes using spirit alternatives to help cope with demand during Dry July. They’ve taken off online, where he offers cocktail recipes and supplies, a pivot that helped save Black Pineapple when lockdowns began. “It’s growing,” he says. “There’s more awareness … there’s more talking about it. There’s an acknowledgement that New Zealanders come from a bad drinking culture and we understand where that comes from. I think we’re unpicking that troublesome relationship.”

Walker’s also been getting more requests to cater functions – and weddings – with fully stocked ranges of 0% drinks. The night before our interview, he hosted a function for 200 insurance industry representatives that offered alcoholic and non-alcoholic versions of the same drinks. “We had an ‘old-fashioned’ drinks trolley with a non-alcoholic whisky,” he says. About 20% of those present chose not to drink, but they still had options. “We believe that whether you’re drinking or not drinking you should still have choices and you shouldn’t be singled out to look different,” he says. “We’re celebrating non-drinkers.” I’ll drink (a 0% beer) to that.

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an illustration of a car with a phone and the uber logo
Image: Toby Morris/Tina Tiller

OPINIONBusinessJuly 25, 2022

Uber must be reined in – and we all have a part to play

an illustration of a car with a phone and the uber logo
Image: Toby Morris/Tina Tiller

Further revelations about the toxic nature of the ride-sharing behemoth, which avoided up to $12.8m in corporate income tax in New Zealand in 2020, show we must stop turning a blind eye in favour of convenience, argues Terry Baucher.

The release of The Guardian’s Uber Files underline Uber’s reputation as an egregious example of modern capitalism at its worst, a toxic combination of amoral business ethics, greed, hubris and questionable economics. 

Although these had been thoroughly exposed by Mike Isaac’s 2019 book Super Pumped: The Battle for Uber, I was surprised by the Guardian’s details of how the Netherlands tax authorities cooperated with Uber. This included deliberately delaying responding to requests for information from tax authorities in France, Germany, Sweden, the United Kingdom and Belgium well beyond the normal six-month response period. The Dutch even secretly shared information about the positions and negotiating tactics of other EU countries where Uber operated. 

It would be convenient to dismiss these revelations as those of a few (OK, more than a few) bad apples – and essentially that is Uber’s official position. In the wake of the release of the Uber Files it put out a public statement that concluded:

We have not and will not make excuses for past behaviour that is clearly not in line with our present values. Instead, we ask the public to judge us by what we’ve done over the last five years and what we will do in the years to come.”

Fine words. The problem is, even if you put aside the Uber Files revelations, the company remains the exemplar of a confluence of greed, politics and questionable economics. Uber and other tech giants such as Google and Facebook illustrate how the public and politicians happily accept the benefits of often questionable business practices and aggressive tax planning but turn a blind eye to their consequences. In effect, we love the sin but hate the sinner. 

Taxi drivers protest against Uber in Budapest, Hungary, January 18, 2016. (Photo: Elekes Andor CC BY-SA 4.0)

As for changing its spots since founder Travis Kalanick stepped down in 2017, Uber decided in early 2019 to fine-tune its tax planning by moving a subsidiary previously located in Bermuda to the Netherlands. This was partly in preparation for its initial public offering but also in response to European moves cracking down on its aggressive tax planning. As a result of the move, Uber created a US$6.1 billion Dutch tax deduction which it will be able to offset against future profits (when and if they might arise). 

The Netherlands lies at the hub of Uber’s corporate structure and tax planning. Uber’s main New Zealand subsidiary Uber New Zealand Technologies Limited (Uber NZ) is wholly owned by Amsterdam-based Uber International Holding B.V. According to Uber NZ’s latest filed financial statements for the year ended December 31, 2020, Uber NZ’s principal activities are described as “to engage in the business activities of providing market research product and service marketing including promotion and support activities to its related companies”. The company reported service fee income for the year ended December 31, 2020 of $3,749,955 with a pre-tax profit of $150,000. Thanks to some prior year adjustments, Uber NZ paid no income tax for the year. 

Uber NZ’s financials give no indication of the true scale of its activities in Aotearoa. This is because currently authorities here accept Uber drivers are independent contractors. Uber NZ is not involved in the transactions between drivers and passengers. Instead, whenever a customer uses the Uber app the payment is initially routed offshore to the Netherlands which then sends back the net payment to the driver. Based on an examination of Uber Australia’s financials, the Centre for International Corporate Tax Accountability and Research estimates Uber avoided $6.4 million to $12.8 million in New Zealand corporate income tax in the 2020 tax year. 

Overseas, notably in France and the United Kingdom, drivers have been deemed to be employees. Uber is desperate to avoid this outcome (I doubt its financial model would remain viable if it were to widely happen) and based on its United States Securities and Exchange Commission filings for December 2021, is currently embroiled in ongoing disputes in several countries over the treatment of drivers. 

On the other hand, Uber is an example of the benefits for consumers of introducing competition. Its arrival, together with other ride-sharing apps such as Ola and Zoomy, has shaken up the taxi industry and delivered much greater choice at lower costs. But if Uber users have greatly benefited from its arrival, that’s not necessarily the same for drivers. 

Illustration: Toby Morris

Similar ethical issues arise when considering Facebook or Google. They also use aggressive tax-planning tactics although moving to so-called country-by-country reporting gives a clearer idea of the extent of their activities in Aotearoa. 

Google New Zealand Limited’s revenue from advertising reseller revenue for the year ended December 31, 2021 was $57.8 million. Its net profit before tax was $17.9 million and its corporate income tax for the year was $2.9 million after timing adjustments. However, the service fees Google New Zealand paid to other overseas companies in the Alphabet Group (the owner of Google) in the year amounted to $697.8 million. These indicate the level of advertising revenue activity actually going through Google New Zealand. 

Similarly, Facebook New Zealand’s December 2021 results reported $6.5 million in revenue with a tax charge of $605,000. It reported gross advertising revenue of $88 million but purchased over $84 million of services from Facebook Ireland where the corporate income tax rate is 12.5%. 

In summary, Google and Facebook appear to have extracted close to $800 million of advertising revenue from Aotearoa but paid just over $3.5 million corporate income tax on their reported profits for 2021. This has financially weakened our media at a time when its role is ever more important in combating misinformation and bigotry (sometimes spread through platforms owned by Alphabet and Meta). 

It’s not certain the international tax reform deal announced last year will make any significant difference once (if) it’s implemented. Alphabet, Meta and Uber are perfectly entitled to charge their subsidiaries in Aotearoa reasonable fees for the use of their intellectual property and providing other services. This limits the estimated potential benefit of the deal for Aotearoa to between $60 and $100 million annually. 

It’s clear from the Uber Files that the likes of French president Emmanuel Macron and several Dutch politicians were sold on the apparent benefits of deregulation Uber offered. They chose to ignore the downside of the gig economy for workers. Indirectly, Uber continues to enable our car dependency therefore delaying decarbonisation of the transport sector. 

Politicians should also be very wary of promises of additional tax revenue through offering favourable tax breaks. Ireland’s much-touted low corporate tax rate of 12.5% attracted multinationals like Apple and Facebook to invest in the country. However, just 10 multinational firms pay over half of Ireland’s corporate tax receipts, expected to be between €18 and €19 billion this year. This prompted John McCarthy, the Irish Department of Finance’s chief economist, to warn that this represents an incredible level of vulnerability for the Irish economy. 

Reining in the behaviour of the likes of Uber will involve action by governments. Investors too have a part to play, as they did when forcing out Travis Kalanick. The bigger change would be in the behaviour of we, the public, and politicians by looking beyond the immediate benefits of greater convenience and lower costs. We have to learn to stop loving the sin.


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