Part four of the Project Auckland series looks at 'Prosperity and Profile'
Anecdotal evidence suggests Auckland's food and beverage sector took a severe knock in the global recession but the underlying strength of the industry says otherwise.
Back in 2008 this diverse sector provided the region with nearly 70,000 full-time-equivalent jobs, contributed $4.71bn to national GDP and accounted for 7.4 per cent of regional GDP. It also generated 11 per cent of the region's jobs, nearly 22 per cent of the region's wages and household income and was responsible for 13 per cent of region-wide imports.
Given that nearly 50,000 fulltime-equivalent jobs, or 70 per cent of those employed regionally in food and beverage, earned their living from wholesaling, retailing, accommodation, restaurants and bars, it was logical to expect the sector would have been an early casualty of the recession.
Not so, according to the industry that has about 600 food and beverage manufacturing businesses in the Auckland region - the highest regional concentration in New Zealand.
Indeed, although the retail side of the business - accommodation, bars and restaurants - provides most of the jobs, food and beverage manufacturing and processing accounted in 2008 for more than 41 per cent of the sector's total output in Auckland.
The dominance of food and beverage manufacturing and processing has, if anything, increased since 2008 and Auckland is the main centre of that growth given that its food and beverage businesses are generally larger than those elsewhere in the country.
A report from regional development agency AucklandPlus in 2008 concluded that Auckland's strength in the manufacturing stages of the food and beverage sector pointed to a "key role in the future growth and prosperity of the sector".
Tony Nowell, who chairs the region's Food and Beverage Leadership Group, says although sector statistics are not available for 2010, confidence in added-value manufacturing is high. "Anecdotal evidence suggests that the industry has indeed weathered the storm better than many other industries," he says. "Our communities still consume at a relatively normal rate of caloric intake in tougher times, although consumption patterns worldwide have changed, and the commodity strength of the New Zealand economy also gets reflected in added-value exports that use those raw materials, hence benefiting the region as home to the majority of added value manufacturers."
Nowell says growth in manufacturing lies at the heart of the export economy and exhibits strong potential to become an even greater contributor over time.
"Most of the additional added value applied to achieve these outcomes will occur in the Super City region."
Many industries have suffered in the global recession but the food and beverage sector has held its own, generating more business and employing more people since 2008.
AucklandPlus, soon to be absorbed into the Auckland council-controlled Tourism, Events and Economic Development organisation (Teed), attributes Auckland's success to its particular focus on production, packaging and distribution for local and export markets. "The industry maintains its advantage through leadership in design of manufacture, processing and packaging systems," the agency says.
"Research and development is also central to Auckland's offer with advances in food production and new product development occurring here. Auckland also offers specialised tertiary college education opportunities. These strengths have gained the attention of numerous global food and beverage companies, which locate and invest in Auckland.
"Superb logistical operations support their export endeavours. New Zealand's reputation for quality raw materials and added-value innovation ensures that the food and beverage [sector] will continue to be a flagship industry."
AucklandPlus says it is possible to see in Auckland the full range of the food and beverage industry from raw produce to sophisticated products, food science and technological innovation.
Auckland's food and beverage sector is highly complex, its notable characteristics being a:
Major hub for distribution of products imported from elsewhere in New Zealand and overseas to other places in New Zealand
Major consumer of products produced, imported or manufactured in Auckland or elsewhere in New Zealand
Location of many of the major processing companies supplying the domestic market
Location of many wholesalers and suppliers to food and beverage manufacturers, including packaging, storage, and ingredients
Relatively unimportant source of primary commodities, but making specific contributions to seafood (such as from the Hauraki Gulf) and fresh market-garden vegetables and berry fruit (such as Pukekohe and Kumeu) and wine (such as Waiheke Island, Matakana and West Auckland)
The report concludes Auckland's prominence in the manufacturing stages of the sector points to a key role in its future growth and prosperity.
Underscoring the importance of the food and beverage sector, the Government announced in March it would spend up to $21m to set up open-access food development facilities across the country based on regional hubs in Manukau, Waikato, Palmerston North and Canterbury and an overarching network organisation.
Economic Development Minister Gerry Brownlee said the infrastructure would allow the high-value food export industry to develop more rapidly.
"The food and beverage sector is responsible for over half of New Zealand's export earnings. Given its importance, maintaining and improving the performance of this sector is essential to achieving the Government's economic growth agenda."
Brownlee said the absence of open-access facilities to enable product development and testing had been a "significant gap for our food and beverage industry and a constraint to growth".
Such facilities, he said, existed in most OECD countries.
Tony Nowell says the Manukau centre will help Auckland become a more dominant hub of added-value food processing in New Zealand.
He says it has the advantage of being close to labour, transport, logistics and commerce.
