Absorb or adjust: The impossible choice facing small businesses
Monday, 13 April 2026
Today the Sunday Star-Times kicks off Under The Pump, a new series investigating how the global fuel crunch is disrupting New Zealand businesses - but more importantly, how they’re planning to survive.
Auckland electrician Matt Bulmer was looking forward to upgrading his wheels.
But Bulmer, who struck out on his own late last year, will be waiting a bit longer to pimp his ride from an old Toyota Corolla, to a van.
“That doesn’t just pay off at the moment so I will hold on to the Corolla for as long as I can, and hope it starts to come right”.
He’s referring to the price creep that’s come with the global oil and fuel crunch as the Strait of Hormuz remains the political playing card as the US and Iran war in the Middle East.
“Everything is expensive, the cost of cable has gone up - everything is going up,and so is the freight cost - it’s already 10 to 15% on everything,” says Bulmer.
Read more:
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“The cost of the materials come through the wholesalers and we pass on those costs to the customer, so the prices push through almost straight away.”
His wholesaler had run a bulk end-of-financial year sale with the warning that price rises were coming.
“Pretty much all our fittings are plastic, to stay insulated, so that’s oil-based as well, and they mostly come out of China, so there’s shipping costs on top of that.”
Around the country boardrooms and small businesses are redrawing their spreadsheets and contingency plans as the effects of the freeze on oil through the Strait of Hormuz ripple through the globe.
As the Government has reiterated that businesses are largely on their own (more on this soon), owners the Star-Times spoke to either said they had little choice but to pass those costs onto customers - so expect your tradies’ bills and lattes to go up - or were stomaching them in the hopes the temporary albeit fragile ceasefire holds longterm, and supplies resume to normal.
In the Waikato, in the same period it enjoyed success at the World Whisky Awards distiller Matt Johns is considering buying six to nine months’ worth of cargo ahead of time and “watching and hoping” it makes it to New Zealand, while also considering either reducing his stock altogether.
The country’s largest single malt distiller is also a discretionary product, and Johns says the company is in a challenging place where they have to pay supplier surcharges, but can’t raise its own prices if it wants to keep sales volume up, especially at a time of already-soft consumer spending.
In addition, they have to import some of the critical components for their product because they are not manufactured locally, and there are no local alternatives.
Those products include the type of premium glass used for whiskey bottles from France, corks from Portugal, and capsules from Spain.
“There’s been surcharges on all these products, and as New Zealand is at the bottom of the world shipping and transport costs have also soared - then there’s the worry of whether we can even get the products here.”
The situation had left him looking at buying six to nine months worth of dry cargo ahead of time, and then “watching and hoping” the cargo makes it here.
“Forward buying goods has an impact on our bottom line. But there is nothing we can do about that because if we can’t get them it means we can’t make our product,” he says.
Local suppliers - of products such as boxes, packaging,and labels - are also raising their prices, and he is getting emails informing of more surcharges every day, he says.
A bottle of Pokeno Whiskey costs around $100, so if people are paying $100 more for petrol a week, that’s their whiskey budget decimated. Already, after a solid beginning to the year, March sales had “fallen off a cliff”.
“Basically, we either have to suck it up and absorb the cost increases, or risk putting our own prices up. At this point, we are just holding, absorbing the costs, and waiting to see what happens.
“And the situation could get even worse if the Government imposes another annual increase in excise costs on the industry in June-July. That would be the icing on the cake.”
Pokeno Whiskey doesn’t just survive on the domestic market, but having 32 international markets brings its own headaches at present. There are some, such as Dubai and Jordan, that are not possible to export to.
“If this situation continues we will need to reduce the stock of whiskey that we produce now. That means we’ll be buying less of the products we use for it, we’ll be doing less business with manufacturers of the local products we use, and it means we’ll need less staff.
“Yes, we’ll still be here as a business, but the business will look different. And that will impact on the people who work for us, and the businesses we work with.”
The Employers and Manufacturers Association, which represents more than 7000 local businesses, runs a Fuel Disruption Survey that this week showed more than three‑quarters of businesses hadn’t yet experienced difficulty securing fuel or petroleum products, even if expectations of disruption were building rapidly.
But rising prices, volatility and uncertainty led most to anticipate reduced activity, delayed investment and slower hiring - perhaps the even more substantial killer of business activity than a lack of fuel, and certainly a lot harder to turn around.
And that likely impact on consumer spending, which is already anaemic, is causing huge concern across businesses the Star-Times spoke to.
One small Auckland bar owner said he was now being charged a delivery surcharge on everything, including his beer, while the cost of carbon dioxide gas (to fuel his beer taps) had continued to rise and had essentially quadrupled in five years He is no longer making a profit.
Other hospitality owners report they are rethinking their business models- including pricing, menus and staffing. The Restaurant Association reported that in a poll of its members last week, only 6% reported no effect from the conflict, but “for everyone else, the impact is coming from multiple directions”, a spokesperson said.
Sixty-seven per cent reported reduced customer numbers, 62% were dealing with increased fuel and delivery costs, and nearly 40% were managing more cancellations and no-shows. More than 75% said the conflict was mostly or entirely to blame. Close to half named business viability as a top concern.
Fuel prices have pushed up costs and hurt custom at The Wharf Bar & Grill in Gisborne’s stunning marina on the Turanganui River.
Owner Grant Fussell has been through two recessions, Covid, cyclones Gabrielle and Pam, and a fire that ripped through the Wharf Bar in 2015 at the height of busy season but said he favoured not having “knee-jerk reactions”.
“We know where the little tricks are to make things work, and keep the customers happy.”
That’s not to say there aren’t challenges already evident. Gisborne relies on its roads, and with just three roads in, it makes the city susceptible to closures during extreme weather - Cyclone Vaianu was making a beeline for NZ today - but also means heightened fuel prices take a direct toll on businesses like The Wharf, with fewer tourists driving over from Hawke’s Bay, or Bay of Plenty.
There’s been a noticeable fall in the number of bums on Wharf Bar seats since the US started bombing Iran, Fussell says. He reckons all over New Zealand, smaller towns will have seen the same effect of declining visitor numbers, hitting receipts at bars and restaurants like his own.
ASB economists warned late last month that households would tighten their belts, and that eating out would be one of the things they would do less of. As well, The Wharf’s suppliers have lifted their prices - one lifting prices per kilo by $8 since Trump launched his war on Iran, Fussell says.
Investment in technology has made managing the effect of price rises easier, however.
“We've incorporated AI into our business because our costs change pretty much daily.”
That enables it to vary its responses, which can include changing recipes, portion sizes, and prices.
Where once menus and pricing were done twice a year, now it’s a case of constant evolution.
It also means that should the war end, and fuel prices drop, The Wharf can reflect that in what it offers to customers.
“We need to be able to put those savings back in their pockets.”
He remains optimistic that hostilities in the Middle East will pass, but acknowledges that you need to be an optimist to be in business.
Still, he says: “There's only one way from here: up.”
Michael Franks, the chief executive of one of the country's largest kiwifruit packhouse and orchard management companies, Seeka, says if the industry makes it to the end of this year’s harvest season, “we will think we’ve dodged a bullet”.
The company has 11 packhouses across Gisborne, Te Puke and in Northland, and serves a network of growers who provide fruit to supply onwards, mainly through Zespri.
Produce growers are facing ongoing pressure from the fuel crisis, with transport becoming more challenging and on-farm costs rising as well. They are taking on additional costs to ensure their goods could continue to be exported.
Fuel costs were the main of these - with the FAF, or fuel adjustment factor, being increased for transporters to compensate them for increases in the price of petrol. Ultimately, the growers pay the bill.
Franks says if fuel costs aren’t passed onto clients, the company’s transport operators would “go broke or refuse to truck for us”.
While fuel costs had been the biggest headache, another was fuel security, with some growers reporting their fuel supplies being stolen.
“We've got things like windmills, which have got these huge, big motors on the bottom of them to drive them, and fuel tanks. And so, there's been issues going on with people having fuel stolen from orchards, and that has certainly spiked.”
Once the harvest season ends, attention will turn to the next growing round. With that comes the issue of fertiliser, which has also seen price hikes.
“All the fruit at that point will be in store, or it will be on the way to market. We think that even if the fuel situation calms down … there's likely to be a lag effect. So July, August, September, maybe October, will also be difficult, because refineries have to come back up to speed, and we're at the bottom of the globe.”
Meanwhile, Todd Stephenson from Stephenson Transport Ltd says if he’s not able to pass fuel costs onto consumers, he “wouldn’t be in business”.
His Hawke’s Bay transport company specialises in the movement of livestock, fertiliser and produce - including moving apples from local orchards to an export packhouse. Over a year, the brand’s trucks can travel more than 258,000 kilometres.
“You know, the monthly invoices go out - we're just at this stage now - but we'll be getting a few questions fired at us as to why it’s justifiable,” he said.
Stephenson said that wages were at one point the biggest expense for the company, but fuel was “certainly” the biggest cost now.
“Everyone knows, it's over doubled. How far is it going to go? We don't know,” he said.
“We're all trying to run as economically as we can. Of course I'm not doing any stupid running … we haven't got underground bunkers that we can store fuel in!”
A spokesperson for the prime minister Christopher Luxon said the Government was committed to working closely with businesses to navigate the fuel challenges and that Luxon, along with Ministers Nicola Willis and Shane Jones, met with business leaders from BusinessNZ’s Major Companies Group on Thursday to discuss the impacts of the global fuel crisis on New Zealand businesses and the economy.
The priority was fuel supply but it was also looking at ways to support people under significant pressure from rising fuel costs, without worsening economic growth and inflation. “That includes exploring options to remove regulatory barriers that may be making businesses less fuel-efficient than they could be.”
For more in depth reporting about the Iran war’s impacts on New Zealand visit our dedicated section.