How NZ’s growth engine can keep running

The city is the major engine driving growth for the New Zealand economy, accounting for 35 per cent of national GDP. The region’s economy is growing at over 3 per cent per annum, creating opportunities across a range of sectors.

"The question many are asking is: can [NZ] convert this to greater productivity and wealth for the long term?"
Mark Hiddleston, General Manager, Commercial & Agri, for Auckland and Northland, ANZ

Auckland’s rapidly changing ethnic face means it is increasingly diverse and outward looking, particularly towards the growth markets of Asia-Pacific. The city is also considered one of the best places in the world to do business but - and it's a crucial but - that business activity is not yet producing world-class productivity.

GDP per capita, while higher than other New Zealand regions, is low compared with many other global cities ranked by the OECD.

With New Zealand’s economic growth now among the strongest in the developed world, the question many are asking is can we convert this to greater productivity and wealth for the long term?

A key part of the solution, for both Auckland and New Zealand, lies in adding value to exports and lifting a focus on premium products. There is a massive opportunity for the region if it can meet soaring demand from wealthy consumers in growing export markets.

As Asian markets expand and modernise, vast numbers of people are migrating to cities. The population in urban areas in China alone has soared to 700 million, outnumbering rural dwellers for the first time. Another 200 million will join them in the next 20 years.

City life means greater spending power for citizens, which many direct towards more upmarket and sophisticated products. When it comes to dining, they want food and drinks that are safe, high-quality and convenient. Many are turning to a diet richer in protein and vitamins, including seafood, meat and dairy, along with fresh fruit and vegetables.

It’s not hard to see the close match with the food and beverages New Zealand produces. Global demand for these is soaring. But NZ is not the only country to see the opportunity.

To make the most of its potential NZ must focus closely on the consumer. People at every stage of the value chain, including producers, processors and marketers, need to understand the preferences of our new customers and where and how they get their food.

NZ’s exporters stand to gain most if they target the wealthiest 10 to 20 per cent of urban households – where people not only consume more of New Zealand’s major exports, but will pay a premium for the privilege.

For example, the wealthiest Chinese households spend five times more on dairy and seafood and twice as much on meat than those on the lowest incomes. They will pay more per unit for quality, such as better cuts of meat, more premium varieties of seafood, branded, packaged or processed food, or upmarket beverages.

The people and businesses of Auckland will be centre stage in delivering on this opportunity for New Zealand. And the city stands to gain a great deal from the benefits. Auckland’s opportunity to drive this export-led growth stems from its strengths, not only as New Zealand’s largest city and business centre, but its gateway to the world.

Our infrastructure and role as a transport and logistics hub give the city a unique status as a crossroads between New Zealand’s primary producers and sources of ingredients and the dining rooms, restaurants and supermarkets of the world.

Auckland's sea and land ports handle nearly two-thirds of New Zealand’s imports, by value, and a third of all exports. Its airport handles three-quarters of international arrivals and 85 per cent of airfreight.

Auckland is in a prime position to draw on world-class food and beverage ingredients from across New Zealand, including dairy, meat, grains, seafood, fruit and vegetables – along with their associated reputation for world-class quality, safety and clean green production.

All of this means Auckland is the logical place to add value to our exports before they leave NZ shores. The region’s growing food and beverage sector can then add value - processing, packaging, marketing and exporting products to consumers around the world.

If New Zealand is Asia’s farm, Auckland is its pantry. The region’s food and beverage sector has critical mass, with a 40,000-strong workforce offering a wide pool of skills, experience and expertise.

Two-thirds of New Zealand’s top 50 food and beverage companies have their head office in Auckland, including household brands such as Fonterra, Sanfords, Sealord, Tasti Foods and Hubbards, and the industry contributes around $NZ3 billion a year to the local economy.

As the largest bank in New Zealand, and the one with the largest presence across Asia, ANZ can draw on its experience and networks to help connect local businesses to these opportunities in Asian markets. We regularly take companies to Asia to identify business leads and potential partners and network with other firms

The challenge for Auckland is to follow the lead of those companies already successful in the region and renew its focus on producing premium exports for high-end consumers in growing markets. Only then can Auckland’s place as New Zealand’s growth engine be secure, underpinning long-term prosperity for businesses andcommunities in the city and beyond.

Mark Hiddleston is ANZ's General Manager, Commercial & Agri, for Auckland and Northland.

Photographer: Arsineh Houspian.