The focus over the last two months has been entirely on Progressive Enterprises and their parent company Woolworths in Australia.
It began with a change in what products Woolworths stocked in their stores, and the latest issue was over a Hepatitis A scare which affected both Progressives and Foodstuffs stores.
We have seen accusations of a blanket ban on all NZ products in Australia’s Woolworths supermarkets and cries of an “anti Kiwi” attitude, together with demands for ‘fair play’.
Next on the scene was Shane Jones, The Avenger: going to bat on behalf of suppliers who claimed they were being bullied and taken advantage of. He used inflammatory words like “Mafioso tactics” and “Dingo dealings” and was widely criticised for comparing Countdown to the Mob. Although the Commerce Commission had already been looking into these claims Jones’ attack forced the issue into the public spotlight and the CC confirmed a formal investigation would be undertaken.
As if that wasn’t enough, there have since been reports of LAPs being challenged, whole fish being disposed of at a waste processing plant to be turned into fertilizer and pet foods; and a recent Hepatitis A scare – although it has been confirmed that Foodstuffs has also been involved in both the challenging of LAPs and the Hep A issue.
With all this negativity focusing on Countdown and Progressive, no one seems to be looking very hard at Foodstuffs and their history. The NZ owned half of the supermarket duopoly has certainly been working overtime to win the hearts and minds of Kiwis and stay under the radar at the same time.
So what has Foodstuffs been up to in the last few years?
You may have read my previous topic regarding the fate of small business owner Keun Mook Yook, who faces being unceremoniously and forcibly ejected from the shopping centre where he has run Willy’s Dairy for the last 13 years, due to foodstuffs buying the land to rebuild their earthquake-damaged Halswell store. They have refused to lease him a space on the land, leaving him with nowhere to go and without the means to begin again elsewhere.
What follows is a brief timeline of Foodstuffs’ less than friendly – and often questionable – tactics and actions over the last five years.
- 120 workers at a Christchurch distribution centre are suspended after two one-hour strikes over pay conditions. The National Distribution Union criticised this action strongly and confirmed they were taking action over the incident, which they claimed was illegal and a heavy over-reaction to the workers’ action.
- In October Foodstuffs was ordered to pay back wages owed to the 120 workers involved in two one-hour strikes over pay conditions. The affected workers were denied 3 days’ pay in retaliation for their involvement in the move.
- Also in October, a small business owner in Dunedin, Masaud (no last name given) who at the time had recently opened an independent grocery store, claimed he was visited several times by high level representatives of local and South Island branches of New World.The representatives, he said, demanded to know who his suppliers were and then pressured these suppliers if they were also supplying to New World stores.
Masuad claimed that following these tactics by New World representatives some of his suppliers had asked him to ‘keep a low profile’, and one had even temporarily halted supply to his store. He said that representatives had also scrutinised his prices which were less than what the supermarkets were charging.
Foodstuffs General Manager Alan Malcomson denied knowledge of the visits but admitted it could have happened. He denied Musad’s allegations that his suppliers had been pressured by New World representatives.
- Early September:Foodstuffs announces a plan to force suppliers in the Wellington region to pay a 3% ‘promotional rebate’ levy.
The levy’s purpose is to cover the cost of advertising and marketing both in-store and through other sources such as mailers, Foodstuffs says. It is to include funding for their ‘own-brand’ labels Pams and Budget.
Suppliers report feeling helpless. They are angry and unhappy but feel like they cannot have a fair say, lest they are penalised by the supermarket giant by having their products removed from shelves or contracts suspended.
Sue Kedgley is outraged, and again calls for the government to investigate and consider
implementing a code of conduct to protect suppliers and prevent large chains forcing tactics such as additional levies on them.
- Late September:Foodstuffs are forced to back down over the proposed 3% ‘promotional rebate’ levy aimed at suppliers after numerous complaints.
Suppliers felt that Foodstuffs was attempting to engage in a ‘profits grab’ and feared that if the levy were imposed, supermarket rival Progressive Enterprises might follow suit with a similar scheme. Bowing to pressure, Foodstuffs announced that they would not be going ahead with the move, citing a need to ‘negotiate more’ with suppliers.
The food and Grocery Council said it was disappointed with Foodstuffs’ levy plan, with Chief Executive Katherine Rich saying that such a levy was too costly for most suppliers, who were already under financial pressure and could not afford the additional expense the levy would bring.
- April:After the government narrowly passed the youth wages law a range of companies including Progressive Enterprises, McDonalds, Bunnings, The warehouse, Kmart and Restaurant Brands announced it would continue paying youths the same minimum wage rate as adults.
Foodstuffs however were the singular exception, choosing to adopt the ‘starting out’ youth wage scheme which would see young persons between 16-19 paid only $11 an hour, or 80% of the adult minimum wage rate, currently $13.75.
First Union retail secretary Maxine Gray accused foodstuffs of adopting the youth rate scheme for monetary gain – saying they were aiming to use the law to ‘get away with paying youth workers less’.
Foodstuffs’ starting rate for front line employees is set at the minimum wage.
Progressive Enterprises pays a higher starting rate as well as a range of benefits including a 5% employee discount, health insurance and opportunities for training and development.
It is reported that a shopping centre up for sale in Orewa (located on the Hibiscus coast North of Auckland) has had a tender put in by Foodstuffs, with plans to build a New World supermarket on the site – which would require existing shops in the complex to be demolished if the sale goes ahead.
Exact dates for the proposed changes were not available at the time but shop owners feared losing their businesses.One retailer, CM Bakery owner Ty Lim, said his landlord had advised him to start looking for new premises and that he could exit his lease early without penalty.at the time the article was published, business owners were told they would receive letters in a month’s time which would provide more information and certainty around the matter.
- February:Plans to merge North Island Foodstuffs stores, which began in September 2013, have workers and locals worried that communities and families will suffer as jobs are moved up to Auckland, leaving previously employed workers facing a move or unemployment as the sector is restructured.
Initially Foodstuffs reassured employees and communities that redundancies would be minimal. But Wayne Guppy, who is the Mayor for Upper Hutt, claims that the community has been misled by Foodstuffs and described the action as a ‘hostile takeover’.When the merger began, the operations base at Silverstream employed over 300 staff. However as the merger had progressed all but one of the eight management jobs previously held in the Wellington area had been moved up to Auckland. In total there had been 28 redundancies.
Upper Hutt had previously been the Lower North Island headquarters for Foodstuffs. It is expected many more jobs in Wellington will be lost over the next 18 months as the merger continues. Affected staff are being told new roles are being offered in Auckland and they have the opportunity to relocate in order to carry on with the company. This in turn potentially affects Wellington as staff either relocate or are made redundant and are forced to look for work elsewhere in the region.
Christchurch small business owner Keun Mook Yook is facing eviction from his shop of 13 years, following the purchase by Foodstuffs of the shopping centre where his dairy is located. The existing shops will be demolished to make way for the planned rebuild of the Halswell New World, which was damaged in the earthquakes.
Foodstuffs also own a range of liquor outlets.
As well as selling beer, wine and cider in their supermarkets, Foodstuffs also owns and operates the Liquor Land (and Henry’s in the South Island) bottle stores which can be found throughout the country.
DB Breweries previously owned the Liquor Land brand, but sold it to Foodstuffs in 2008.
With over 70 Liquor Land stores and 18 Henry’s stores, Foodstuffs owns one of New Zealand’s largest and most powerful players in the alcohol industry.
Foodstuffs have not made information regarding the earnings brought in by their many liquor outlets available to the public.
Are Foodstuffs really caring and benign – or re they just as cut-throat s any other large business?
The evidence certainly suggests the latter.