Commerce Commission report 'disappointing' for Nelson cereal maker
Tuesday, 8 March 2022
Small artisan food producers will continue to struggle to get their wares on shelves following the 'disappointing' Commerce Commission report into the supermarket industry, a Nelson cereal maker says.
Sarah Hedger, of Yum Granola, said she was left “disappointed and angry” after the release of the long-awaited report on Tuesday.
Because the recommendations laid out in the draft weren’t included in the final report, there wasn’t enough left to shake up the industry, she said.
The competition watchdog’s final report found the industry – which is dominated by two players, Foodstuffs and Countdown – was making $430 million in extra profits. But it stopped short of recommending they be forced to sell parts of their businesses to increase competition.
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Instead, it recommended that more land be made available for new grocery stores and banning contractual clauses that prevent other retail grocery stores from being developed.
“Land banking” by the major supermarket chains should also be monitored.
Because the two chains also own the major wholesale distributors, it also planned to “improve access to the wholesale supply of a wide range of groceries at competitive prices” by requiring the major grocery retailers too “fairly consider” requests to supply competitors.
Countdown and Foodstuffs, which owns New World, Pak ‘n Save and Four Square, will need to draft terms and conditions for such a move.
Hedger has previously spoken out against the duopoly supermarket system, saying it forced small suppliers like her business to lower prices or risk being pulled from shelves.
Her comments came as Foodstuffs North Island was carrying out a product review, which would reduce the number of cereals it sold from more than 500 to about 200.
Small companies like hers were forced to cut prices to improve margins for the supermarkets, but would often still lose out to big companies like Coca-Cola, Bluebird or Hubbards, she said on Tuesday.
While reviews like Foodstuff’s were labelled “consumer driven”, they took the power away from individual store owners to decide what went on their shelves, instead making the decisions at head office, which reduced choice for consumers who wanted to buy local products, she said.
Her products managed to survive the cull, and she was in talks with Countdown, but other small suppliers hadn't been successful, and many were scared to speak up for fear of ruining chances of getting back onto the shelves.
“They couldn’t pay enough to get that space.”
The Commerce Commission had missed a chance to even the playing field by not breaking up the wholesale and retail arms of the bis supermarket companies, she said.
The suggested code of conduct was something “they should have done decades ago”, and would only help if it was well implemented and “policed properly”.
As it stood, small suppliers and the consumers were unlikely to see any major change from the recommendations, she said.
“You’re not given, essentially, a fair opportunity.”
Commerce and Consumer Affairs Minister David Clark said New Zealand would see a more competitive grocery market as a result of the recommendations, and work would begin immediately to progress the recommendations.