Despite crime wave, 80 per cent of dairies could fold anyway due to Smokefree 2025

Author: Nathan Morton,
Publish Date: Tue, 6 Dec 2022, 4:02PM

While the spotlight on local dairies has intensified in recent weeks, after the alleged murder of a dairy worker in Auckland, the industry believes a bigger monster than crime is on the way.

Small businesses, dairies and convenience stores in particular have fought the past year’s crime wave, which saw many dairies ram-raided throughout 2022.

The spate of crime has led many dairy owners to question their future in the industry, they’re now selling up and telling others to do the same.

But while the Government scrambles to protect dairy owners vulnerable to targeted crime, industry representatives say the SmokeFree 2025 bill could wipe out most of their businesses anyway.

The bill, which aims to reduce the number of smokers in New Zealand to less than five per cent by the year 2025, had its first reading in July.

About 14 people die a day due to smoking, with Māori disproportionately impacted, according to the bill’s data.

About 14 people die a day due to smoking, with Māori disproportionately impacted, according to the bill’s data. Photo / File

Dairy and Business Owners Group chairman Sunny Kaushal said dairies support the initiative but have been left in the dust, as the Government fails to take them on the journey.

In most cases, cigarette sales make up more than 50 per cent of a local dairy’s revenue, according to Kaushal.

The bill would reduce the number of retailers permitted to sell cigarettes to only 600 nationwide by 2025. Kaushal said dairies need to have the chance to change their revenue models.

He said up to 80 per cent of dairies would not transition in time at the current rate, leaving them out of business.

“Currently, this wouldn’t be a good outcome where we’re heading,” said Kaushal.

“A few [dairies] might survive depending on their model and location, potentially, but many would not.”

One of those which wouldn’t survive would be Hillmorton Dairy in Hoon Hay. Owner Snehal Patel said the revenue lost from cigarettes would kill his business plan.

Cigarettes are the drawcard for his customers, who then spend additional money on other products in his store.

“If we aren’t selling smokes, the people won’t be coming inside and buying bread or milk,” he said.

“They’re long-term customers - without them, we would have to close down as we can’t pay the rent, it would be too high.”

Sunny Singh, the owner of the Gloucester and Stanmore Dairy in Linwood, said he purchased his dairy five months ago in the hopes Government would review the cigarette laws.

Kaushal said dairies need to have the chance to change their revenue models. Photo / Jed Bradley

They haven’t, and by the time he breaks even from purchasing the business, his main form of cashflow will be eliminated.

“Cigarettes make up 60 per cent of my revenue, I’d say the remaining forty per cent also relies on cigarettes as well - when they buy ciggies they buy other things as well,” said Singh.

“I’ll have to find another substitute, but I have no idea what the next steps are going to be.”

Singh said some dairies subdivide their business’ land and build vape shops or meal takeaway outlets, which would cover the dairy’s potential losses from cigarette sales.

However, the land surrounding his dairy wouldn’t accommodate this option.

“I can’t see any change I can do in our shop at this stage, I’ll have to talk to my landlord and see what changes we can make.”

“Dairies are not part of the problem, they’re part of the solution.”

Labour MP Sarah Pallett wouldn’t comment on the local dairy’s concerns, however, the Christchurch politician said independent studies - as well as submitters to the consultation that informed the bill - confirmed a low proportion of retail profits are from tobacco.

“Smoking kills 12 people a day in Aotearoa and these are wholly preventable deaths,” she said.

According to Ministry of Health data, dairies have boasted a 94 per cent compliance rate in the last year, which is the success rate that they’ve met guidelines around who they sold their cigarettes to.

Kaushal thinks this data reflects the notion dairy owners could be reliably brought on board by the Government to push alternative products.

His suggested alternatives include snus - a popular tobacco alternative common in Scandanavian countries. Prime Minister, Jacinda Ardern strongly opposed these products back in 2020.

“Eight thousand outlets can be part of the solution, we can be part of the plan to talk to smokers about tobacco alternatives and after the transition period leave most outlets selling much less harmful products,” he said.