With many families across Australia barely covering home budget basics, and food relief agencies recording a huge increase in demand, high-quality treats or special gifts may be off the shopping list this Christmas.
That is a poor situation for regional producers, particularly small operators that traditionally do good business at this time of the year and have their own cost hikes to manage.
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Bendigo Brittle founder and chief executive Greta Donaldson would normally expect a pre-Christmas surge in demand for the confectionary she began selling at community markets in 2017.
But this year she has noticed fewer sales of gift packages, and an increase in orders for smaller sized products.
“During COVID-19 there were two groups of people — one that was financially okay and the other that was really in a dire spot,” Ms Donaldson said.
“So supporting local businesses and gifting was a big thing [for the people who could afford it], but then as the costs of living have crept up we’ve noticed there isn’t as much gifting.”
Ms Donaldson said while there was a flurry of online sales late November, with most orders exceeding $100, and a number of new stockists including Melbourne Museum and Melbourne Airport, her sales at community and artisan markets had been slow.
“The big corporate purchasers that helped keep the lights on, kept the rent paid during the pandemic, have dropped away,” Ms Donaldson said.
“But three weeks out from Christmas, I think a few of the corporates have realised we better get organised, so the last couple of days there’s been quite a few inquiries about big orders.”
Ms Donaldson said her rising costs of electricity, water, postage, freight and ingredients were not yet being passed on to customers.
“We buy A-grade pistachio, macadamia and Australian peanuts, cashews and almonds … the macadamias can be anywhere between $40 and $60 a kilo, same with the pistachios and the chilli is not cheap either, but that’s a local chilli so you know you’re supporting other local businesses,” she said.
“[But] the cost of actually getting everything to Bendigo, when you’re based in a regional area, is not going backwards. Those costs just keep escalating.”
Loyal customers feeling the bite
For free range Berkshire pork producers Belinda and Jason Hagan, based at Tooborac 100 kilometres north of Melbourne, the lead-up to Christmas had been “very slow” in terms of sales.
While McIvor Farm Foods would normally see a surge in orders for hams and roast leg joints throughout October and November, often selling out by December, it had only sold about 70 per cent of its stock.
Ms Hagan said that was taking into account an average 15 per cent growth rate every year for the past 15 years of retailing its own products.
She had noted a demand for smaller portions by loyal customers since the last festive season, as the cost-of-living crisis bites into family budgets.
Corporate sales were also down.
Where customers may have bought 20 hams as Christmas gifts for clients or staff, their orders have halved “so they may just be giving them to staff, not clients” this year.
Ms Hagan was quick to point out that as an ethical and sustainable small producer, operating under regenerative agriculture practices and with an on-farm butcher, they were not competing with larger pork producers and supermarket suppliers.
While pork sold in supermarkets might retail for $9 per kilogram, McIvor Farm pork sold at $45/kg, but their production costs could be five times higher.
“Our customers are paying for the ethics and providence. That’s our point of difference,” Ms Hagan said.
She added that 70 per cent of their costs went towards feed and staff wages, and that since COVID-19 they have had difficulties finding staff.
Ms Hagan said they were generally local people who had never worked in agriculture before, and often decided the work was not for them after 12 to 18 months.
“That’s the current economic environment. We just keep adapting. That’s what small businesses do,” she said.
Alcohol sales remain steady
Pre-festive season sales for sparkling wine have not been slow for Hanging Rock Winery in the Macedon Ranges north of Melbourne.
“There’s no doubt at this time of year we are shipping out sparkling wine like it’s going out of fashion,” sales and marketing general manager Ruth Ellis said.
“It really heads out the door at a very rapid rate from about the start of November through till the middle of January.”
In 1982, at a time when no one in Australia was really making “cool climate, traditional method, pinot noir and chardonnay sparkling wine,” founders John and Ann Ellis decided to pursue the style of wine they loved.
“Sparkling wine makes up about 10 per cent of what we produce,” Ms Ellis said.
“We make 20-odd wines or something on those lines, but sparkling is one of the things that we’re most famous for.”
The last three years have been fairly cool and wet in the Macedon Ranges, which means smaller harvests as a general rule.
Ms Ellis says they have less wine to sell this year and the cost of every part of production, from bottles, caps, labels, cartons, fuel and wages, has risen.
“This time of year, when everyone’s in celebratory-potentially-spending money mode, is really important for us, and any service industry,” she said.
Ms Ellis said their process means Macedon sparkling wine was only ready to sell after nine years, but it was still half the price of a bottle of French champagne that was only 18 months old.
“Those of us that are doing really boutique things absolutely rely on our local people to help support us, to keep us going, and I’d like to think that this Christmas people keep that in the back of their minds,” she said.