In Marlborough, once confirmed as essential, the harvest continued at Marisco. The business completely changed its operating model and put staff safety front and centre, ensuring physical distancing and contact tracing were in place.
The contractors working on the Leefield Winery were keen to see the project through and have it up and running for the harvest, bringing it in on time and on budget.
Marisco’s production winemaker Emma Marris and her small team worked in their bubble and managed to get 2500 tonnes of fruit and another 1000 tonnes of juice through a brand new winery.
A large portion of the harvest will be blended to create another vintage of Marlborough’s world famous The Ned sauvignon blanc, with much of it destined for offshore markets.
Exports make up 80% of Marisco’s business and a surprising challenge was an unexpected boom in demand from supermarkets during lockdown. Getting wine into bottles, out the door and on to ships with much of the supply chain also operating under lockdown, proved to be a logistical challenge - but one they managed.
As a supplier into supermarkets, Arobake was confident it could operate under Level 4 lockdown. But the business had to close the café and lost its channel for direct sales.
Max Fuhrer acted quickly to switch the customer base away from hospitality and towards retail consumers, many of whom were now stuck at home.
They began home deliveries of essential items – bread, milk, flour and eggs - and it took off. Max scrambled to meet demand, purchasing a new delivery van, hiring another and calling in two mates with vans to help with deliveries.
Arobake used their customer email database and social media platforms to advertise the home delivery option and developed a loyal following through lockdown.
On its busiest day the company completed 430 home deliveries and all its stock was sold out within 15 minutes of going up on the website. Even though the country was in full lockdown through April, Arobake made 37 percent more sales than in the same period last year.
While the home delivery model is probably not sustainable in the long run - given their fixed overheads - the speed at which Max responded to change their business overnight means they’ll continue to have a business in future.
For Marisco international travel restrictions present an ongoing challenge around accessing the labour they need to work in the vineyards as well as building and maintaining relationships in export markets.
As we move towards a point where we start to see how we can recover and rebuild, what should businesses focus on?
Arobake and Marisco learnt valuable lessons through lockdown, adjusting their operating models to better meet customer demand and figuring out ways to run their businesses more efficiently.
As a business community we should look to follow their lead and challenge ourselves. We should look for opportunities in new and more efficient business models and accelerate innovation, while also controlling costs and carefully prioritising resources.
Early on ANZ New Zealand surveyed its business customers and around 70 percent indicated they weren’t keen to take on more debt. This shows the strength of many New Zealand businesses - they actually don’t need money thrown at them.
Up to this point they’ve thought carefully about taking on debt, they have taken advantage of the support options available from government, banks and concessions from landlords. This has given them the space they needed to reflect and to start to make a plan.
Heading into lockdown ANZ New Zealand’s business customers' overdrafts were on average only drawn down by 20 percent. They already had 80 percent headroom in existing facilities, and those facilities were kept open.
Customers have also used less of their available credit. Utilisation of short term debt facilities reduced from 39.9 percent at the start of March to a low of 29.8 percent during April.
This working capital headroom will be critical as businesses transition to new levels of economic activity, staffing, operating models and capital structures.
While government and other relief has provided a buffer in the short term, the impact of COVID-19 will be significant. There will continue to be a period of financial difficulty for many businesses as they navigate through the challenge.
Ongoing support will be needed and businesses need to find new ways of working which make every dollar count.
These extraordinary times have shown us that – whether you are in the bread or wine business – those that can think on their feet, remain focused on the shifting needs of their customers and also have a plan are the ones most likely to succeed.
Keeping key business partners, such as banks, abreast of these changes – whether that’s a drop in daily cash-flow or more ambitious longer-term planning - is equally important.
The relationship between a bank and a business has never been more important.
There is plenty of capital available, New Zealand banks are in good shape and there is plenty of support available for customers with a good plan.