19 dm241 section-b_new zealand_food & beverage

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GLOBAL BUSINESS ENVIRONMENT ASSIGNMENT
COUNTRY- NEW ZEALAND
INDUSTRY- FOOD AND BEVERAGE
SUBMITTED TO:
Dr. Jagdish Shettigar
Dr. Monika Jain
SUBMITTED BY:
CHAITANYA CHAUDHRY
ROLLNO.: - 19DM241
SECTION- ‘B’

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CONTENTS
EXECUTIVE SUMMARY ................................................................................................................. 3
INTRODUCTION............................................................................................................................ 4
General steps for starting business in New Zealand:......................................................................7
1. Visa for Business in New Zealand:...................................................................................... 7
2. Defining Business Structure............................................................................................... 8
3. License and Permits Required to Do Business in NZ:........................................................... 8
4. Registering Your Business..................................................................................................8
5. Get your business number in New Zealand:.......................................................................8
6. File for Taxation:............................................................................................................... 8
STEPS IN SETTING UP HOSPITALITY (FOOD) BUSINESS IN NEW ZEALAND: ......................................9
I. Find out guidelines for your type of food company you need to obey:................................ 9
II. Register a business under the Food Act:............................................................................. 9
III. Choicesin managing risk:............................................................................................. 11
IV. GET ‘VERIFIED’: ........................................................................................................... 12
MAJOR RISKS INVOLVED IN STARTING FOOD BUSINESS .............................................................. 13
OTHER KEY CHALLENGES............................................................................................................ 14
CONCLUSIONS............................................................................................................................ 15
RECOMMENDATIONS................................................................................................................. 16
Bibliography.............................................................................................................................. 17

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EXECUTIVE SUMMARY
According to the world bank, economies with highest score on the ease of doing business
ranking share many common features, including the extensive use of electronic systems.
The top 20 economies have online business incorporation systems, electronic tax filing
platforms, and require property transfer-related online procedures. What's more, 11
economies have electronic building procedures as well.
According to the latest Doing Business 2020 report from the World Bank, New Zealand is the
easiest place in the world to do business, which looks at the ease of developing, running,
and paying taxes in 190 territories around the world.
The reports intend to cover the steps required to set up a business in New Zealand, different
rules and regulations that are required. Also, what are the different steps required in setting
up a food business in the country.
The major risks involved in the business is also mentioned in regards to different business
factors involved such as skilled employees, capital availability and more. Some of the key
challenges for a business owner to be considered is also mentioned.
After looking at all the factors, a business proposal is made in regards to which segment of
the food industry is most viable to start a business, which turns out to be the catering
industry and how some of the business challenges are considered before starting the new
business.

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INTRODUCTION
New Zealand is an island country that is similar to Australia, situated in the Southwestern
Pacific Ocean. The country is known to be a developed nation and apart from tourism it is a
major business investment destination. The country is ranked by the World Bank as one of
the most enterprise friendly nations. In its recent rankings, the World Bank put New Zealand
on the first spot in ease of doing business in 2018, a parameter that evaluates how easy it is
to do business in a given country. The country has drawn huge investments from all over the
world, being this a factor.
As a result, the country saw a $100 trillion foreign direct investment in 2015, with most
coming from Australia, Canada and China. The nation has also stepped up in many other
business prospects. New Zealand ranked first in starting a business, registering a property
and receiving credit while dealing with building permits at third spot. It was second in
protecting minority investors while trading across borders was at 9thspot.
New Zealand was ranked second in the list of countries for best business in 2018 by The
Forbes. Similarly, the nation placed 2nd in the prosperity index. Many other institutes have
also rated New Zealand as the best country for doing business and investing in different
parameters, and ultimately it can be said that the country is good for investing in foreigners.
Considering Hospitality (Food) Industry in New Zealand at a glance:
For a wider range of reasons people in New Zealand now eat out more often than ever.
This is clearly evident from the growth of the food industry, though rivalry for the customer
dollar is fiercer than ever. New Zealand's hospitality industry generated total sales of more
than $11.2 billion in 2018 (year end of March). This reflects sales growth of 3.6 percent over
the previous year, which is settling at a more stable pace in 2018 after two years of
significant growth (9.7 percent from 2016–2017 and 8.5 percent from 2015–2016). This rise
also represents the sluggish economy in New Zealand over the past year, and is expected to
remain constrained in the near term. Challenges in the dairy industry, building constraints
on development and the unpredictable effects of the government's policies are likely to
affect the future trends in the industry.
There is still a lot to be looked forward to in hospitality though. An increase in sales carried
throughout the industry in 2018, excluding the clubs’ market, with the highest growth
reporting from take away.

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In 2018, sales to the food industry increased by 5.7 per cent. In dollar terms, this translates
into a $148 million rise in annual sales, marginally more than the leading restaurant and cafe
market, which rose by $138 million in 2018 to revenues of $5.6 billion.
Auckland, Wellington and Christchurch have the largest consumer spending. These three
regions all have annual sales of over $1bn per year. Nevertheless, regionally, the largest
percentage of revenue increases in 2018 were in the Bay of Plenty region (up 6.8% in 2018,
following a 10.6% rise achieved in 2017), Auckland (up 5.1%), and Rest of North Island (up
5.0%). The only region showing a small sales decline was the region of Manawatu /
Whanganui (down-1.7 percent).
The Ministry of Business Innovation and Employment (MBIE) predicts annual employment
growth for the hospitality sector until 2026 to be 2.7 per cent per year.
Each day of the year seven new hospitality businesses are open. The Bay of Plenty area
reported the largest percentage increase in outlets (5.9%), followed by 5.1% growth in
Canterbury, making this sector one of the most competitive sectors in New Zealand.
AFTER TWOYEARS OF VERY STRONG growth inrevenue (8.5% growthin2015–2016 and 9.7%
growthin 2016–2017), 2018 indicatesamore regulatedoutcome forthe hospitalitysector.Growth
insalesis3.6%. Our memberstell uscommerce hasstabilized.Currentlythere isuncertaintyabout

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the impact of proposedchangesinthe raft of legislationwhichaffectsbusinessconfidence inthe
sector.

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General steps for starting business in New Zealand:
1. Visa for Business in New Zealand:
If you are going to start a business in New Zealand or buy a company in New Zealand then
the country generally provides visas to international entrepreneurs. You may apply for a
further extension of the entrepreneur visa or for residential visa on the basis of your
requirements after a specific period of time. Here are some more details regarding visa
applications.
 Entrepreneur Work Visa:
There are two categories to this type of visa. The first category is the start-up stage whereas
the second category is the balance stage.
Start-up Stage: Subject to the acceptance of your application, if you buy or start a business
in New Zealand, you will be given 6 months of stay in the country.
Balance Stage: After you've demonstrated that you've taken concrete steps to start and
develop your company, you'll get another 24 months of stay in the country.
 Residential Visa for Entrepreneurs:
New Zealand also allows residential visas for persons wishing to settle for business purposes
in the country.
There are two Residential Visa groups:
 Two-year residential visa: to receive this visa you need to prove that your business is
doing great and you have been working here for at least two years, and that your
business has a significant contribution to the country.
 Six-month residential visa: You can get 6 months of residency you need to spend
NZ$500,000 in your company as an investment and provide NZ citizens or residents
with at least 3 permanent jobs.
Criteria for obtaining Visa:
 Minimum investment of NZ$100,000 is required, except working capital.
 Need a minimum of 120 points which includes business success points and how New
Zealand profits from it.
 You need to show your previous company clean records which include bankruptcy,
fraud, and business, character, and health failure.

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2. Defining Business Structure
There are essentially three types of business models operating in NZ and they are:
 Sole proprietorship
 Limited liability
 Partnership
As the word implies, a sole trader is the one who runs the company on his own and
he is the sole owner of the business.
A Partnership business is one that is run in partnership by more than one individual
and they all have a stake in the business.
The last is limited liability, meaning shareholders only have limited liability to the
number of shares they own unless they have insured. It is the most profitable type of
business.
3. License and Permits Required to Do Business in NZ:
Some forms of licenses that will be required:
 Health and Safety permits
 Regional Council permits
 Business License Insurance policies
 ACC levies Returns
4. Registering Your Business
Although there is no minimum capital requirement to establish a corporation in New
Zealand, when you register your company on the Companies Office website, you will
be required to pay a fee of NZ$ 150.
5. Get your business number in New Zealand:
NZBN is a unique number allocated to business entities to make it easier to share
information like your basic details. The exclusive number helps with doing business
with companies and guarantees that this number keeps the company exclusive.
6. File for Taxation:
If your company receives more than NZ$60,000 a year, you will file as a tax payer.
GST stands for Goods and Services Tax, a New Zealand tax structure which levies tax
on business houses, goods and services.

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In addition, do other things, like registering your business name, your trademark,
your logo, etc.
You may also need to:
 Have a bank account number to connect to your business
 Insurance for the company
 Hiring employees and sign them on the basis of rules and regulations.
 Adopting uniform rules of conduct, obtaining authorisations where
appropriate.
STEPS IN SETTING UP HOSPITALITY (FOOD) BUSINESS IN NEW ZEALAND:
I. Find out guidelines for your type of food company you need to obey:
Whether you cultivate, produce, import, store, transport, or sell food or beverage items,
you must meet certain requirements in terms of food safety. The way you deal in food
defines what laws you need to obey–maybe you need to work under the Food Act, Wine
Act, Animal Products Act, or Agricultural Compounds and Veterinary Medicines Acts.
II. Register a business under the Food Act:
You need to register with your local council or MPI (Ministry for primary industries) to
operate an undertaking under the Food Act.
Overview:
The 2014 Food Act helps ensure food sold across New Zealand is safe.
A central feature of the Act is a sliding scale where higher-risk businesses operate under
more strict food safety standards and controls from a food safety perspective than food
businesses at lower-risk. It ensures that the meat pie maker will not be treated in the
same way as a corner dairy operator who reheats meat pies.
The Act encourages food safety by focusing on food production processes and not the
premises where food is produced. For instance, someone who produces and sells food
from a food truck must obey the same rules as someone who makes and sells food in a
restaurant.
The Act, which has been in effect since March 2016, incorporated more amendments,
including: how food recalls are handled changes to fines and regulation for food
importers.
The Act has two food safety measures:

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Food Control Plans (FCPs): Written day-to-day plans for maintaining food safety. Those
are used by the companies at higher risk.
National programs: A collection of food safety guidelines for small and medium-sized
enterprises. You don't need a written plan (or establish written procedures) if you're
under a national scheme, but you need to register, follow food safety standards, keep
some records and get tested.
The entity with which you sign depends on where you are working and what kind of plan
or systemyou need.
Food control plan or national programme?
Model, or FCP custom?
Several companies can use a blueprint for food control plan (FCP), issued by the Ministry
of Primary Industries (MPI). Others will have to build their own FCP (a custom FCP), or
use a prototype developed by the industry.
Every year you will need to sign your plan and have a regular check (verification) to
ensure that your plan is being followed.
The types of businesses that can use an FCP prototype include:
Food service businesses such as restaurants, cafes, takeaways, catering or hospital
kitchens food retailers that prepare or manufacture and sell food–like retail butchers,
fishmongers, delis and supermarkets cheesemakers and cheesemongers.
Businesses that will use a custom FCP The types of businesses that will use a custom FCP
include those that want to create their own unique plan tailored to their way of doing
things have food activities not covered by national programs or the models above have a
variety of activities and don't want to run multiple plans to produce high-risk foods like
fresh ready-to-eat salads, meat, etc.
All National Programmes require:
Data keeping to prove that you are selling safe food registration business information to
your local council (or MPI if you are working in more than one local area) on one or
more MPI-recognized inspection visits if you are involved in food processing, you will
meet the requirements of the National Program processing.
There are 3 levels of National Programs, which are focused on the risk of food safety
from the activities that an organization does. As part of National Programs, there is a
produced guidance documents for food businesses that will help you manage the food
safety risks.

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National Programme 1:
National Program 1 may apply to businesses such as: transporters or distributors of
agricultural horticultural food producers and retailers of manufacturer-packaged ice
cream and iced confectionery packaging operations (packing houses).
National Program 2 may apply to businesses such as: jams, cookies, bread bakeries and
sauce manufacturers in confectionery.
Industries such as brewers and distiller’s food additive manufacturers of fruit drinks and
flour will be protected by National Program 3.
Where to register your company:
This table shows which association to join. It depends on your plan or program, the type
of organization you are operating, and where your business is located.
III. Choices in managing risk:
In New Zealand producing food and drink is governed by 3 different laws. Many food
companies will have a preference as to which food safety regulations work best for
them.
Overlap between the Food Act and the Animal Products Act, the food forms protected
by the Product Act and the Animal Products Act 1999 overlap: The Food Act generally
applies to whatever is product for sale.
The Animal Products Act refers to products which are consumed by humans or animals.

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Food businesses are expected under both Acts to operate under the risk management
systems.
These are for the Animal Products Act:
Risk management systems-controlled control schemes.
For the Food Act they are:
Food control programs for national programs.
Where food companies produce products, which are protected by both Acts, they may
be able to operate under one risk management program listed in both Acts.
They will still have to comply with the requirements of both Acts which apply to them,
however, whatever framework they use.
For example, if a company produces cheese for the domestic market and wants to work
under a food management program (under the Food Act), they still need to make sure
they fulfil the Animal Products Act requirements. All those criteria will need to be
expressed in the food safety program they report.
Many food companies do many different types of food operations. Various provisions in
the Food Act 2014 can cover the different activities.
When this occurs, the company can choose to use a combination of food safety systems
and national programs, or to use just one of those risk-based schemes.
If you opt for a single system, however, it must be at the highest level.
For example, as per the Food Act, a shop which sells cooked meats will have to operate
under a food control plan. If this company also operates a food delivery service, they can
opt to run that part of the business as part of the National Program 1.
IV. GET ‘VERIFIED’:
All food companies need to be tested to ensure they deliver safe food. This is called
being checked or verified. Somebody from the local council, or an impartial verifier,
should check you out.
How often you get tested depends on whether you're a high or low-risk company. It also
depends on how well you handle the health of food. Those who do well, are tested less
often.

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They will check to see to it that you follow good safety practices and keep records. The
priority will not be on looking at your kitchen in some way, but on making sure you do
the most important things to keep food safe.
How to locate a verifier:
If you're working under a national program or a custom food control plan, you'll need to
contact a checker before you apply, and get a letter from them to accompany your
application.
Independent auditors and local councils are charging their own rates. To find out how
much it will cost you should get those quotes.
MAJOR RISKS INVOLVED IN STARTING FOOD BUSINESS
Food businesses in the country need access to finance capital to be effective. MBIE
figures show that 94 per cent of food businesses with 6-19 workers reported being able
to access debt financing under acceptable terms.
But that's not the only reason– food companies need a capital plan in place to change
their business structure or access different types of capital when they might want to.
And the problem of being paid on time can be a real pain point in the food industry, or
sometimes at all. Late payments and resulting cashflow shortages could hamper these
businesses and threaten their ability to stay afloat.
Food companies may also feel hamstrung by their comparative lack of leverage
compared to larger organizations to which they provide services, but there are options
available to increase their chances of receiving payment and payment on time.
Factoring will turn unpaid invoices into cash for food businesses-firms can buy the
receivable accounts for about 85 percent of their value and retain the full value of the
firm in account with the service provider.
Food businesses can also benefit from technology–including the use of invoicing
software, electronic invoicing and reminders, or mobile payment solutions or
applications to ensure that invoices are sent and paid as quickly as possible.
Skill shortages can also hit the mentioned industry hard, as a lack of sufficiently and
properly skilled people to hire can constrain growth and progress.

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The key is finding the right people with the right skills and work ethics, which can be
challenging, especially outside the main centres.
OTHER KEY CHALLENGES
The difficulty of recruiting staff for business owners in the food industry is compounded
by the number of new businesses opening every week in New Zealand, but –to some
degree–this is offset by a comparable number of closing businesses. While more than
2,700 new businesses opened in 2017, the total volume of new outlets in 2017 was an
improvement of 534 new establishments due to these closures.

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CONCLUSIONS
As my business proposal is to open a food and beverage segment in the hospitality industry,
there are some visible challenges to open a business in New Zealand. The competition in
this segment of business is very high in New Zealand which does put a lot of constraints in
terms of implementing its marketing strategy as well as managing demand and supply in the
mentioned industry.
As in statistical numbers, we can clearly see that the catering business is a great opportunity
for people to open in the country.
Hence, with following the rules and regulations mentioned above, we can easily open a
catering business in the country.
Another reason of choosing this particular segment is that there is clear skill gap present in
the food industry. Hence, this deficiency will not hurt our business in any important way.
Along with that, a robust distribution network will also be pertinent in order for the success
of the business.

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RECOMMENDATIONS
As I am targeting the food and beverage industry, the food industry in New Zealand is a
highly competitive market; building and sustaining sales volume is another major
challenge, particularly when a larger pool of establishments divides the customer dollar.
Over recent years, the food industry has performed extremely well and although coming
years see the industry settling into a more stable role, the industry is well placed to face
the challenges of the competitive operating environment in the industry.
Although a more cautious outlook is anticipated for the rest of 2018, there are also
opportunities for operators to start new businesses, especially those who refine and
deliver their product well and those who embrace evolving customer dining patterns
and technology developments.

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Bibliography
https://www.mpi.govt.nz/haumaru-kai-aotearoa-nz-food-safety/
https://www.restaurantnz.co.nz/trends/2017-foodservice-facts/
https://www.euromonitor.com/consumer-foodservice-in-new-zealand/report
https://comms.anz.co.nz/businsights/article/report.html?industry=Food%20%26%20Beverage

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