Needle on Grocery and Tobacco Sectors: NZ’s health review report invites industry backlash

  • Jun 29, 2020 NZST
  • Team Kalkine
Needle on Grocery and Tobacco Sectors: NZ’s health review report invites industry backlash

Summary

  • New Zealand has successfully managed the spread of coronavirus and has only two active cases. However, the primary concern is the rising mental health problems.
  • The leading causes of the growing threat are obesity, poor diet, alcohol and tobacco consumption, and physical inactivity.
  • The Health and Disability System Review final report gave a few recommendations that support better health care services that work well for everyone.
  • Tobacco and grocery industry retaliated to the review report citing they have been adhering to the guidelines and making efforts to make contents of food and beverages healthier.

The Health Minister of New Zealand, on 16 June 2020, published the final version of the Health and Disability System Review report. It discusses various detailed suggestions related to all the elements that need to change for the New Zealand health and disability system to produce more reasonable health outcomes and to become more economically sustainable.

In the report, alcohol, tobacco, and unhealthy food sectors were highlighted. The review aimed those companies engaged in the marketing of products like tobacco, alcohol, and any harmful foodstuff as these are the main reasons for poor health and result in disabilities and premature deaths.

The report review highlighted the risk factors that contributed to the mortality and health loss during 2016 was due to the usage of tobacco, dietary risk, high body mass index, high blood pressure, elevated fasting glucose, and alcohol use.

In the recent reviews and inquiries, the mental health outcomes of the New Zealanders have been a significant concern. Like many health systems globally, New Zealand’s health system is facing new threats and rising challenges. New global and domestic threats to health like those arising from climate change, terrorism, geopolitical instability, pandemics and antimicrobial resistance. With the rising proportion of the population with chronic conditions will increase the demand for the health system. The main reason behind the health loss and health inequity in the country is the risk factors associated with obesity, poor diet, harmful alcohol consumption, physical inactivity and tobacco use, and these can be prevented.

The analysis in the final report makes it clear that New Zealand has an excellent health and disability system, which was evident from the excellent performance of the health services during the COVID-19 crisis.

The review sets out a way towards a better, more sustainable health system, and there is a need for health & disability services to work well for everyone.

The review suggestions include:

  • Shifting attention on population health.
  • Formation of new Crown Unit that would concentrate on operational delivery of health & disability facilities along with the financial performance.
  • Lessen the count of DHBs from 20 down to 8 – 12 within a time frame of 5 years & shift to fully selected Boards.
  • Formation of M?ori Health Authority to recommend on all facets of the M?ori Health plan as well as examine and report on the performance of the system in connection with M?ori.
  • Need for more co-ordination amongst primary & community care plus hospital/specialist facilities.

On this note, let us look at some of NZX-listed stocks and their latest update and stock performance.

Foley Wines Limited (NZX:FWL)

NZ-based wine group Foley Wines Limited owns wineries and iconic brands across New Zealand. The Company was founded in 1988 as Grove Mill Wine Company Ltd, and in September 2012, it entered a merger agreement with Foley Family Wines NZ Limited.

On 2 June 2020, Foley Wines provided harvest outcome, earnings outlook, and progress in Martinborough.

Foley Wines has finished the harvest for the 2020 vintage. The total harvest across the Marlborough, Martinborough and Mt Difficulty wineries was 7,802 tonnes, a drop of 6% as compared to the previous corresponding period (pcp). The decrease was due to contracted growers which declined 15% on pcp. On the other hand, there was an increase in the fruit from the Company’s own vineyards soared 1.8%

Commenting on the decline in the tonnage, CEO Mark Turnbull stated that the teams did an excellent job per the strict conditions related to Alert Level 4.

Outlook:

The Directors predicted that the operating earnings for the 12 months ended 30 June 2020 would be ~NZ$7.5 million, representing a growth of circa 50% on 2019.

Further, Foley Wines declared that it would start the creation of a multi-million dollar development at the Te Kairanga winery in Martinborough in the later part of 2020. The building would have an underground barrel facility, new tasting space plus a restaurant where there would be space for 100 individuals to sit along with an outside space where it would be possible to host a marriage ceremony as well as a private dining room.

There would also be a new distillery for Lighthouse Gin that would be created to make sure that it can fulfil the upcoming development for the brand.

 Stock Information:

On 26 June 2020, FWL shares last traded at NZ$1.709, in line with the previous close.

Delegat Group Limited (NZX:DGL)

Delegat Group Limited is the fourth-largest wine company in New Zealand in terms of the litres of wine sold. Founded in 1947, the Company is handled by Jim Delegat and Rosemari Delegat.

Delegat has a winery in Auckland and undertakes contract processing in Marlborough as well as Hawkes Bay.

FY2020 Profit Guidance Update:

On 23 June 2020, Delegat Group provided an update on its FY2020 (period ending 30 June 2020) profit guidance and now expects worldwide sale of 3.279 million cases, up 9% compared to the FY2019. DGL also altered its operating NPAT guidance to NZ$59.0 million (up from previous guidance of NZ$52.4 million), an increase of 16% compared to last year.  

2020 Harvest Announcement:

On 17 April 2020, the Company announced the conclusion of 2020 harvest which amounted to 38,129 tonnes, representing a growth of 7% on the 2019 vintage.

The growing conditions during 2020 spring and summer were ideal for yielding superior quality fruits and was as projected.

Further, the Company confirmed that the Group has appropriate inventories to attain its future sales growth.

Stock Information:

On 26 June 2020, DGL shares last traded at NZ$12.560, an increase of 2.11% compared to the previous close.

 


Disclaimer
The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.

 

   
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