Woolworths U-turns on plan to stop selling cigarettes

Wednesday, 28 August 2024

Woolworths says it intends to continue selling cigarettes, and cites the Government’s tobacco policies for the decision.

Supermarket giant Woolworths has decided to carry on selling cigarettes, inspired by the Government’s stance on tobacco.

In 2023, Woolworths said: “As part of the New Zealand Government’s Smokefree Aotearoa Action Plan, our Countdown/Woolworths supermarkets will not apply for licences to sell cigarettes and we are readying to cease retailing these products from 1 July 2024.”

However, its 2024 sustainability report indicated it has continued selling cigarettes, and when asked why it U-turned on its plan, a spokesperson said: “This changed with the Government repealing some of the previous government’s planned changes to regulate smoked tobacco, including the retail reduction scheme.”

It has, however, stopped selling vapes, which it did from July.

Along with its annual report, Woolworths released its 2024 sustainability report on Wednesday which covers both Australia and New Zealand, although it will be a few more weeks before the New Zealand operation releases its own sustainability wrap.

Woolworths would not make its head of sustainability in New Zealand available for interview before the publication of the local report.

The continued sale of cigarettes in New Zealand is one of the insights into the moral and environmental stances of Woolworths revealed in its sustainability report.

Australian dirty power

New rules will tackle supermarket pricing errors, as Kiwis could be losing millions annually due to discrepancies. The Grocery Commissioner will mandate regular reporting of pricing complaints from supermarkets.

A little over a quarter of household’s “consumption” emissions come from the food they consume, Stats NZ says.

And over 93% of Woolworths emissions are Scope 3 emissions, that are the emissions of the food, beverage and other grocery makers, who supply it.

Woolworths has cut its own emissions by 42% from its baseline in 2015, in large part thanks to focusing on using clean energy like solar.

Because Woolworths is Australian-owned, and because it likes to stock “Australian-made” in its supermarkets in Australia and New Zealand, that leaves it exposed to the burning of Australian black coal.

Australia produces about 70% of its power from coal and gas, and as a result, some emissions-heavy products end up on on Woolworths’ shelves in New Zealand.

Woolworths’ “aspiration” is to have zero Scope 3 emissions by 2050, and it sees the pathway to that being “working with our suppliers to understand and reduce emissions across the value chain”.

Woolworths has a lot of power, and it is using it to influence supplier behaviour in a bid to get its Scope 3 emissions down.

One example of that is working with vegetable growers in New Zealand to integrate regenerative practices into intensive vegetable production, which has entered its second year.

A supply chain free of slavery, bonded labour and worker abuses

Woolworths signed up to the global KnowTheChain, which is a service that scores companies on how well they are doing to eliminate “forced labour” risks from their supply chain.

Woolworths has 13,500 direct suppliers around the world, but those suppliers have their own suppliers, which means an additional tens of thousands more.

“Like many global retailers, having full transparency of indirect suppliers at the lower end of the supply chain is challenging,” Woolworths says.

“No global retailer is immune to modern slavery risk,” the retailer says, adding: “ We continue to invest to build our suite of risk identification capabilities including third-party intelligence.”

Rice and seafood were two especially difficult products as brokers often stood between Woolworths and being able to trace product, and find out the conditions under which it was produced, the sustainability report said.

Slavery remains a huge problem, with the International Labour Organisation estimating 50 million people are living in slavery globally, though that figure includes not only industrial and agricultural slaves but also women forced into marriages in which they are forced to work.

The Walk Free Global Slavery Index reports Western countries and China to be largely slavery-free zones, but it persists in alarming numbers in some African, Arabic, Eastern European and central Asian countries.

KnowTheChain scores aspects of companies’ operations out of 100 to show how well they are doing.

Woolworths scored 34 out of 100 for data on supply chain risks, 34 out of 100 on worker freedom of association, and 20 out of 100 for worker grievance mechanism.

Plastic footprint

Plastic packaging is a huge issue for households, who have told Woolworths it’s one of their biggest concerns.

Vast quantities of plastic packaging, both recyclable and non-recyclable, enters homes after being bought at supermarkets.

Too much plastic waste coming into households is still not recycled.

Much, but not all, is recyclable, but that does not mean it gets recycled and it also does not mean it is recycled in New Zealand, which exports tens of thousands of tonnes of plastic to be recycled each year, which is damaging the countries to which it is sent.

Woolworths has managed to reduce “virgin plastic” in its own brand packaging by 31% since 2018, and has 85% recyclability of packaging on its own brands.

For suppliers, it has created a “preferred materials” list, but its sustainability report indicates progress has been slower than it had hoped. However, even small changes to packaging can lift recycling levels. In Australia, Woolworths had stopped using coloured milk bottle caps, which are able to be recycled into fewer products than uncoloured caps.

Food waste

In Australia and New Zealand one in five households has some form of food insecurity, so wasting food is offensive.

Woolworths has joined the Kai Commitment to try and reduce food waste. By next year, it intends to generate no food waste at all.

Royce Bold from Rescued Kitchen inspects unwanted 'waste' apples.

Across Australia and New Zealand, Woolworths claims to be now diverting 80% of its own food waste from landfill.

This has proven no easy thing. In Australia, Woolworths has partnered with Veolia to establish “depackaging” facilities to unwrap waste food so it can be re-used for things like farm feed.

In New Zealand, Woolworths works with KiwiHarvest and The Salvation Army, and across the two countries donated about 36 million meals-worth of surplus food.

But, it says that’s just 10% of food waste associated with it. “The greater impact lies within our supply chain (50%) and customers' homes (40%).”

Security and trolley problems

Woolworths in New Zealand contracts to companies to provide security at stores and trolley collectors. Last year, it started checking what the contractors were paying their workers.

Four of these contractors were found wanting, including potential underpayments for Kiwisaver, and incorrect payment for holiday pay.

The latest Woolworths sustainability report shows so far $100,000 has been paid to 96 workers who were short-changed.

Woolworths is just over half-way through the checking programme.

Deforestation target

Woolworths “aims to achieve no‑deforestation” across its own-brand primary deforestation-linked commodities by the end of next year 2025. That includes paper pulp and timber, palm oil, cocoa, soy in stockfeed, and fresh beef.

Cocoa and palm oil are the most problematic for Woolworths in terms of the proportion that were certified deforestation-free.

99% of Woolworth’s “soy footprint” is due to suppliers using soy in stock feed.

“Whilst alternatives to soy in feed supply chains exist, they are currently not widely available,” Woolworths said. “Prioritising poultry feed as a significant contributor, in F24, we engaged our poultry suppliers to understand the feasibility, impact and timeline of moving to net zero deforestation soy in poultry feed.”

Healthy food

Supermarkets are massive purveyors of both healthy, and unhealthy food and drink, and continues to put confectionery at its checkouts.

In New Zealand, Woolworths says it’s been working to meet the New Zealand Heart Foundation’s HeartSafe nutrition targets with its own brands, and two-thirds having met them last year. The goal of the programme is to reduce the sodium and sugar content of high-volume, low-cost foods like bread, sausages, sauces and ready meals.

But its newly launched Milk Run food delivery business has a heavy focus on convenience and snack food.

Clicking on Milk Run on Tuesday, for example, resulted in landing page adverts for Sanitarium choc crunch Weetbix bites, Up & Go, All Press Lattes in tins, Lindor chocolate, Arnotts Shapes, and specials of soft drinks like Pepsi Max and Mountain Dew No Sugar.

Uber drivers bring it to buyers’ doors. The buyers pay more for items than they would in store ($3.90 versus $3.15 for one litre of Anchor standard blue milk) and they pay a $7 delivery fee.