Apr 29 2020
Amid unprecedented disruptions to the economy, sales teams need to think carefully about which industries they should be targeting in their efforts. IBISWorld examines five markets that could represent rare sales opportunities while the broader economy is under quarantine restrictions.
Cheese, Butter and Milk Powder Manufacturing
Firms in the Cheese, Butter and Milk Powder Manufacturing industry are expected to perform well relative to the rest of the New Zealand economy. Industry revenue is expected to rise by 2.1% in 2020-21, to $22.3 billion. Food product producers are expected to benefit from a resurgence of exports to China, following the reopening of ports and import terminals in April. Restaurants in China are beginning to reopen, following the lockdown period in March. Air New Zealand has been running daily cargo flights to China since the end of March, signalling returned demand for New Zealand’s goods, including food. China accounted for 33.4% of industry exports in 2019-20. Consumers in China have increasingly looked for high-quality and healthy produce, particularly in response to rising health consciousness. This trend will likely benefit New Zealand dairy and meat product producers, due to their clean and green reputation. The reduction to level three quarantine restrictions on 28 April is also expected to support the industry.
Data Processing and Web Hosting Services
The Data Processing and Web Hosting Services industry is expected to be positively affected by quarantine restrictions. Data storage service providers are benefiting from growing demand for their services, as businesses are shifting more operations to the cloud to enable remote working and minimise disruption to business operations. However, the technology used to operate and construct data centres is almost exclusively sourced from international manufacturers, and local providers may struggle to ramp-up their domestic offerings if demand rises sharply. Revenue for internet service providers is expected to increase by 17.2% over the current year, to $589.6 million, as more businesses and government departments shift their operations to cloud platforms to minimise disruptions related to COVID-19. Most of the activities done by industry firms can be completed remotely, reducing disruption as a result of levels four and three quarantine restrictions.
Fossil Fuel Electricity Generation
A reduction in total economic activity due to quarantine measures has exerted downward pressure on electricity demand. However, the Fossil Fuel Electricity Generation industry is expected to benefit from lower purchase costs. Significant declines in the prices of crude oil, natural gas and black coal are expected to support the competitiveness of fossil fuel power stations, relative to renewable and geothermal competitors. While revenue is expected to decline by 2.0% in 2020-21, profit margins may increase. Electricity generation is an essential economic service, helping reduce disruption as a result of levels three and four quarantine restrictions.
The COVID-19 outbreak has supported demand for the Beekeeping industry, as consumers value the anti-bacterial and anti-viral properties of honey. As a result, industry revenue is expected to grow by 10.9% in 2020-21. Despite supply chain disruptions in China due to the COVID-19 outbreak, exports of honey increased in February 2020 from the previous month. Similar growth is expected in March 2020 and the remainder of 2020-21, as global health consciousness rises. The same motivating factor is expected to boost domestic demand for industry products, encouraging more enterprises to enter the industry over the next five years.
Polymer Product and Rubber Product Manufacturing
Industries in this subdivision produce plastics, paints, adhesives, rubber products and a variety of intermediate products that are used in end-user consumables. These industries are expected to post a mixed performance throughout the COVID-19 pandemic. Firms are likely to contend with a drop in demand due to the disruption of manufacturing activities in New Zealand and in the global economy. However, firms are also expected to be supported by a significant decline in the price of oil, which is a key input in the production of petrochemicals and plastics. Revenue is also anticipated to significantly rise for subdivision manufacturers that focus on protective equipment such as gloves.
IBISWorld reports used to develop this release:
- Cheese, Butter and Milk Powder Manufacturing
- Data Processing and Web Hosting Services
- Fossil Fuel Electricity Generation
- Polymer Product and Rubber Product Manufacturing
For more information, to obtain industry reports or to arrange an interview with an analyst, please contact:
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3647