Kiwi businesses betting on the United States and Canada amid the pandemic

01 Aug 2020 12:04 PM | Mike Hearn (Administrator)

New Zealand businesses are not letting a global pandemic get in the way of opportunity.

Wellington-based Antipodes Nature launched in the United States and Canada this month, despite ongoing concerns about Covid-19.

In June, peanut butter company Fix & Fogg opened its first shop outside of New Zealand in Texas, United States.

According to New Zealand Trade & Enterprise (NZTE), New Zealand exporters sold $10.5 billion of goods and services to the North America last year.

Antipodes founder Elizabeth Barbalich was in New York negotiating distribution for her skincare product range when the US began to lock down due to the spread of Covid-19 in February.

While the global situation was uncertain, Barbalich decided to forge ahead with the US and Canadian launch.

The US market had previous untapped potential for Antipodes, despite the uncertain economic environment, she said.

During the lockdown, Antipodes’ 50 staff continued to work to prepare for the launch.

Packaging had to be changed to meet US regulations, she said.

Making the decision to push forward during the Covid-19 crisis was not straightforward. Stores that would otherwise stock Antipodes products and uncertain supply lines were closed.

“It has been kind of exciting for us. I mean, we have been through the 2008 global financial crisis. We have seen the market go from hero to zero in a day. We have also seen the China market have massive swings. So, for us, this crisis is another market swing.”

The company was working with a distributor in the US that had close ties to Amazon and was set up to ship directly to customers as well as get products on the shelves in stores, Barbalich said.

Antipodes’ annual revenue target for this year was $100 million, with 85 per cent of sales coming from the company’s international markets, she said.

Barbalich expected the North American market to grow to 10 per cent of the company’s annual turnover.

Antipodes is now sold in New Zealand, Australia, in China through websites like Alibaba, Japan, the United Kingdom, France and in Sephora across the rest of Europe.

Global expansion has not been all smooth sailing, says Barbalich.

It took Antipodes Nature three attempts to find the right distributor in Australia, she said.

“If we get a partner that has the same thinking, that’s 50 per cent of the problems solved. Otherwise, we have this push-pull situation where we are trying to push a distributor, and they are not moving at the same pace as us and it just makes it a lot harder.”

Leigh Paulden, managing director at business advisory firm Scalable Sustainable Business Growth, said the US and Canada were still attractive markets for Kiwi businesses, even in the midst of the coronavirus pandemic.

North America offered a huge pool of potential customers, he said.

The US population was 331 million and the population of Canada 37 million.

But on the flipside, the sheer volume of product required to meet demand dwarfed anything New Zealand companies could imagine, he said.

Paulden encouraged his clients to limit what they offered when they launched.

“Your volumes are so big compared to New Zealand’s market, which is tiny in comparison. So you have to really narrow down what you enter the market with,” he said.

None of his clients had entered North America with their entire product range, and some focused on one state.

One client recently launched just in California, he said.

While they could technically try and launch in all 50 states, the company would struggle to manufacture enough product to keep up with demand, he said.

Covid-19 had not changed the need to consider who a business’s ideal customer was and how it would distribute their product around the country, he said.

By Debrin Foxcroft, Business Reporter, Stuff