(Photo: Tina Tiller)
(Photo: Tina Tiller)

MoneyNovember 19, 2020

The sustainable tourism start-up that keeps the cash in the community

(Photo: Tina Tiller)
(Photo: Tina Tiller)

With New Zealand tourism in a lull – and backpackers in the firing line – Queenstown-based start-up Kiwi Welcome is creating a new model of sustainable travel where visitors add value to the land.

For the past few years – up until Covid-19 began hoarding the headlines – one of New Zealand’s most pressing public issues was poo. It seemed like it was everywhere: on our beaches, in our public reserves, on our footpaths, and, perhaps most shockingly, on our sacred campgrounds.

Discarded faeces in our beautiful environment came to symbolise the limits of the booming tourism industry – a smelly consequence of the kind of high-intensity, low-value model that corralled too many frugal backpackers into too few places, where the main things they contributed was litter and Lord of the Rings fandom.

In remote regions where scarce ratepayers’ funds could seldom afford the necessary toilets and bins, freedom campers were starting to be viewed with the same contempt as stoats. The sight of a convoy of Toyota Estimas made entire South Island communities grimace and shudder, aware of the impending clean up at the local reserve once they moved on.

Then, as if overnight, Covid-19 came along and it all disappeared.

Freedom camper (Photo: Phil Walter/Getty Images)

The pandemic has been a mixed blessing for New Zealand tourism. It’s provided some much-needed respite from the hordes of backpackers and freedom campers, but it’s also forced whole businesses into liquidation, hundreds of redundancies and prompted the government to launch a $400m support package to prop up the crippled industry.

But for those lucky enough to be able to tough it out, it’s provided breathing room – some valuable quiet time for operators to reflect and ask earnestly what they want New Zealand tourism to be when the borders reopen; the same low-value, high-turnover hustle? Or something more sustainable and holistic? The issue was given more oxygen recently when minster of tourism Stuart Nash announced that low-budget backpackers were not in his plans for the recovering industry.

However, it was over seven months ago during New Zealand’s lockdown, that Sam Brough, founder of sustainable tourism start-up Kiwi Welcome, first started pondering the question: “What if we could encourage or incentivise visitors to not just see New Zealand, but to protect it or preserve it and contribute to it?”

Having seen the demand and prices for tourism services collapse, Brough spotted an opportunity within the vanished margin. Because customers were already paying less than they would have before Covid-19, the idea was to create a paid subscription to a website that directed visitors to registered tourism operators in Central Otago. Members would pay $79 to sign up and, in return, receive special discounts from registered merchants.

But the main point of difference for Kiwi Welcome was that the entire value of the $79 membership fee would stay in the community in the form of a donation to a local charity or trust.

Brough says the value to customers, local commerce and the community means Kiwi Welcome has been enthusiastically received by tourism operators. Currently there are more than 50 merchants registered since it launched in October.

“The more operators on the platform, the more savings customers can get with their $79,” he says. “But we want to also be really pushing our message about being purpose-driven and sustainability-led because that’s what separates us from the market; knowing full well that 100% of all that membership fee actually goes back into the land.”

Wanaka in Central Otago (Photo: Getty Images)

Brough says as a social enterprise, Kiwi Welcome is only covering its operating costs. Periodically it will collect the accumulated revenue from membership fees, and then ask a registered business at random which local cause it would like to see the money donated to.

“We don’t want responsibility for making the choice of which social or environmental cause will receive the money because we are not close enough to the real kinds of issues,” Brough says.

“The businesses that are registered with us, they live and work with the community, and they know what is it that really needs protecting and what would actually benefit this place for both people that live here, and people who are visiting.”

Kiwi Welcome has a simple criteria for the donation: it should be registered charity or charitable trust, and it should benefit the local region. While the type of cause isn’t stipulated, Brough says in Otago the vast majority of charities are environmental ones – such as the Kea Conservation Trust – which are already trying to offset the negative impact of too many visitors.

So what are the long term plans for the project?

“We would love to have 100 businesses before Christmas,” Brough says. “I guess it’s a bit of a snowball effect because we’re already starting to get inquiries come to us, which is great. Initially, it was a very much pound the pavement and knock on doors.

“And from a membership point of view, we want to hit 10,000 members in our first year. So by this time next year, if we hit 10,000, then over the course of that year we would have given back over $500,000 to a social or environmental cause, which is big money.”

Kiwi Welcome (Screenshot)

While Kiwi Welcome is only operating in Central Otago for the moment, Brough says he’s had inquiries from Hawke’s Bay, Wellington, Te Anau and even from Canberra in Australia.

“There’s a real desire for a community-led tourism platform like Kiwi Welcome to be helicoptered into those places and we have every intention to do that.”

“But as a start-up, we’ve said: ‘How about we prove the model in a real tourism mecca like Queenstown and then, if we can prove that model works, take it as far and wide as we can’.”

At this stage, Kiwi Welcome is only a website, but Brough says it’s easy for visitors to navigate around and find the businesses they’re looking for. Members can purchase vouchers at discount rates, and then redeem them with registered businesses. Brough says that a couple visiting for a long weekend could book a hotel, hire a rental car and do three activities through Kiwi Welcome and save about $400.

But what do the registered merchants think of it? Kate Mitchell, digital and sustainability coordinator at Edgewater Resort in Wanaka, says its best feature is that the website includes operators that invest a lot in the environment and the community.

“It’s not just anybody can be there,” she says. “They came to us and said: ‘We really like what you’re doing with your sustainability efforts and we feel like that you guys have a focus on domestic tourism that’s responsible for sustainability’.”

“So they may have got us on the hook with the flattery but the overall feel of the programme makes it a no brainer.”

Edgewater hotel (Photo: Supplied)

While Kiwi Welcome ultimately aims to improve the commerce of tourism operators, ultimately its main purpose is to create a partnership between like-minded businesses and visitors with a sustainable goal in mind. Brough says the Kiwi Welcome model will hopefully eliminate the many commission-taking intermediaries from the market and also remove the tension and stress that’s developed through the old high-turnover, low value dynamic.

“The people who live here have to bear the brunt of protecting and looking after the place. So as a traveller with Kiwi Welcome, you’re doing your bit and therefore you’ll perhaps be received more warmly.”

Of course, there’s a lot more needed to be done to fix the industry before the borders inevitably reopen and the tourists return. But Brough says offering something that helps create a sustainable option for both visitors and businesses is a start.

“You could say there’s a little bit of reflection happening, and people are asking themselves ‘why did I get into business in this industry in the first place?’ Most of them will say it wasn’t just to make money.”

“We’re taking the passion and desire of businesses and visitors to create change, and saying ‘you can be a part of that with us’. That’s where we’re getting the most enthusiastic responses of people that have felt that way but haven’t been able to act on it.”

“I think 2020 could be the year of silver lining to tourism.”

Keep going!
Photo: Getty Images
Photo: Getty Images

MoneyNovember 18, 2020

Price check: Government investigates high food prices at supermarkets

Photo: Getty Images
Photo: Getty Images

The Commerce Commission is undertaking a year-long study of supermarkets to see whether consumers are getting a fair deal, but it seems even the prime minister knows the answer will be an emphatic no, Justin Giovannetti reports.

There might be something rotten with New Zealand’s supermarkets. Food prices are high and increasing, producers are being squeezed, and there is little open competition between the two companies that control nearly the entire country’s food supply.

Speaking yesterday morning at the launch of the Commerce Commission’s year-long probe into food prices, consumer affairs minister David Clark made it clear that a lot of unflattering stories are reaching him about the country’s supermarket duopoly. Even his boss admitted a few hours later that consumers aren’t getting a fair deal.

“We often hear stories,” said prime minister Jacinda Ardern about suppliers and consumers not being treated well by Foodstuffs and Woolworths. The study will help things, she added. “This allows us to give some confidence to consumers that both them and our producers are getting a fair deal.”

The prime minister promised that after the study concludes, the government will ensure the country has a “competitive environment” for groceries. Both she and Clark today made it clear that the current situation is far from competitive.

Supermarkets are a powerful presence in the everyday lives of most New Zealanders. They control what brands shoppers see and the price of food. They constantly demand discounts and speedy deliveries from suppliers, in an unequal relationship where the all-powerful supermarket often then turns around and, according to Clark, delays payment as part of a negotiation over prices that never really ends.

New Zealand has one of the most concentrated grocery sectors in the world. In Australia, Canada, the US and UK, the top two grocers control about half of the market. In New Zealand, it’s about 99%. The final bill at the till reflects that.

“One of the things I’ve been really mindful of, and I know there will be a range of reasons for this, is that when we were able to travel into Australia and experience what it was to be a consumer at their supermarkets, there was a significant price differential,” said Ardern.

Australia’s consumer commission found in 2008 that prices in that country’s supermarkets began falling when German discounter Aldi moved in. Even though most people still shop at the established supermarkets, they’re paying lower bills. A similar change happened in Canada when Walmart moved into a grocery space that had previously lacked competition.

Aldi customers Hannah Walker and Mike Weekes in Sydney, Australia, 19 July 2015. (Photo by Frank Walker/picture alliance via Getty Images)

About 17% of a New Zealander’s weekly expenses go to the grocery bill. Labour made a promise during the election campaign to order a market study and make changes if necessary. That changes are coming seems a foregone conclusion.

“This study is the way of proving, one way or the other, whether there are anti-competitive practices. Certainly, there are indicators which show that markets have become more concentrated over time and they point to a lack of competition in the sector,” said Clark.

The Commerce Commission will have a wide mandate in its investigation. Once limited to looking into proposed mergers, the commission’s job was expanded in 2018 to looking into whether markets are functioning as they should. The first study concluded earlier this year and found that the petrol market needed a substantial overhaul to increase transparency.

Market studies can only be initiated if the government believes it would be in the public’s interest. A no-brainer in this case, said Clark.

According to the minister, the commission will look into whether the supermarket duopoly has been abusing its bargaining power through a number of tactics, including delaying payments to suppliers. There will be a bullseye on discounting practices and how some prices always seem to be marked “special”. The two companies have also been accused of land banking – snapping up all the useful land for supermarkets and sitting on it to keep out any new competition.

“There are stories around the static nature of the industry which might suggest a comfort with the status quo,” said Clark. The government will have “softer and harder” mechanisms to fix the market, he added. A lot of it will depend on whether the companies are willing to cede market power.

A code of conduct, like the one that exists in Australia and the UK, could put a stop to behaviour that isn’t illegal but drives up prices, said Consumer NZ chief executive Jon Duffy.

“We’ve long held concerns that there’s something not quite right in the supermarket sector. New Zealand has one of the most concentrated supermarket sectors in the world and the behaviour we’ve seen and the complaints we’ve received from consumers about supermarket conduct suggests that the market might not be functioning competitively,” he said.

One of the problems in New Zealand is what Duffy called “the Briscoes effect,” where an item is on special for so long that the marked-down price is really the regular price.

In an investigation, Consumer found that certain specials just aren’t. Pak’nSave kept its “extra-low price” on Nature’s Fresh bread for all 12 weeks that the probe was underway, while New World had a special on Vogel’s bread for 11 of the 12 weeks. Something can’t be on special for three months.

Some specials also changed over time. Pak’nSave had an “extra-low” tag on Persil laundry powder for all 12 weeks, but during that time the price varied between $8.88 and $11.99. Not helping things, most of the country’s groceries don’t show the regular price of an item beside the special tag.

In statements to The Spinoff, the two big grocery companies made it clear what they’ll be arguing over the next year: New Zealand has lots of competition for food.

“We’re proud to be a part of such a vibrant and ever-changing eco-system that makes such a difference to New Zealanders lives. The New Zealand retail grocery landscape is a busy, competitive market,” said Antoinette Laird, the head of corporate affairs for Foodstuffs, which owns Pak’nSave, New World and Four Square.

The competition includes butchers, discount stores, online startups like Hello Fresh, Asian supermarkets, as well as Uber Eats and other delivery services.

A spokesman for Woolworths, which owns Countdown, SuperValue and FreshChoice, provided a similar list of competitors in what she called an “intensely competitive” market. “We welcome the opportunity to demonstrate this in an open and transparent way, and will cooperate fully with the commerce commission,” she wrote.